Just a decade ago West Texas was the very image of a thriving industry. Bobbing pumpjacks dotted the landscape as boomtowns like Midland exploded in a flurry of economic activity and an influx of workers to provide the labor force for the United States’ so-called shale revolution. Now, those boomtowns have gone bust and an ever-increasing number of those once industrious pumpjacks sit idle. The shale revolution was already in steep decline before the pandemic hit, but the novel coronavirus dealt that golden age its coup de grace during what some are now calling “Black April,” when North American oil prices did the previously unthinkable by plummeting below zero. On April 20th the West Texas Intermediate crude oil benchmark ended the day at nearly $40 in the negative.
While oil prices have somewhat recovered since, they haven’t seen nearly enough of a rebound to revive the U.S. shale industry to pre-pandemic levels. Oil demand remains devastatingly low, and bringing shut-in wells back online is a costly process. Already in 2018 there were more than 50,000 abandoned oil wells on state cleanup lists across the United States, with an estimated additional 200,000 to 750,000 more abandoned wells that weren’t documented on such lists. And that doesn’t even include idle wells, which still have an owner but haven’t pumped oil in years. Including such wells would bring the total abandoned well count to approximately 2.1 million, according to the U.S. Environmental Protection Agency. And now, thanks to the pandemic, that number is set to explode.
More and more oil pumps sitting idle translates and steadily dismal demand for oil all spells bad business for U.S. refineries, petrochemical plants, and other untold legions of rungs of the oil industry’s value chain. In some parts of the country, this has led to such large numbers of refiners pivoting toward biofuel production that refineries are reportedly fighting over feedstocks like used cooking oil and animal fats.
Others, however, are pondering an even bigger transition to another sector of the energy industry that has long been seen as anathema to oil–renewable energy.
While oil has stumbled and largely been unable to get up thanks to the ongoing COVID-19 pandemic, renewable energy has gotten a boost from green stimulus packages and the shaking of the world’s faith in the economic infallibility of fossil fuels. The writing is on the wall, and even Big Oil is looking to diversify. The new generation of energy giants are not tried-and-true oil supermajors but renewable energy companies.
This is why many industry insiders are approaching the economic fallout in places like West Texas with a plan to bring these communities into the future of energy instead of looking to revive the past. According to some experts, the solution to reinvigorating the economies in shale revolution boomtowns that have since gone bust lies in hydrogen.
Places like Midland, Texas already have a highly skilled workforce looking for the next opportunity and plenty of energy-generating facilities and infrastructure sitting idle. Why not convert those spaces into producing the next biggest, greenest thing in energy? Petrochemical plants, in particular, are the perfect conduits for green hydrogen and green ammonia production, the Houston Chronicle reported this week.
Ammonia can serve as a fuel for combustion engines which doesn’t create any carbon dioxide when burned.
“Because the world is already set up to produce and deliver liquid fuels, many innovators believe producing ammonia-powered vehicles will be easier than building a hydrogen refueling network,” reported the Chronicle. “Like hydrogen, though, the industry has a long way to go to produce enough green ammonia to replace gasoline.”
So what’s the solution? “A more immediate, and frankly easier transition is using hydrogen to store wind and solar energy.” Solar and wind are exploding and becoming more efficient and affordable than ever, but they are limited by the weather, and their production therefore waxes and wanes, making energy storage a vital–not to mention lucrative–part of supplying a steady stream of renewable energy to the grid. Texas could easily spin its current economic tragedy into gold if the local shale industry is able to position itself as the cradle of hydrogen energy storage for the nation’s rapidly growing renewables sector, which is certain to go gangbusters under the Biden administration. If oil country is able to let go of its ideological and identity-based attachment to fossil fuels, tomorrow could hold much greener pastures.