Texas’ vast shale basins are home to some of the world’s most resilient hydrocarbons, a vital source for US and global energy security at a critical time.
Thanks to breakthroughs in modern shale drilling, US energy companies have unlocked deep reservoirs of oil and gas trapped in layers of shale rock previously thought inaccessible. Over the past two decades, the shale revolution has vaulted the US into becoming the world’s top oil and gas producing country with Texas as its top producing state.
Texas – home to prolific shale basins such as the Permian, Eagle Ford and Haynesville – is a central part of bp’s transformation into an integrated energy company. The Lone Star State’s shale resources are uniquely positioned to be one of the most important US and global sources of secure, affordable and increasingly lower-carbon energy.
That’s why bp is investing in—and growing—production from the Permian, while at the same time reducing emissions from its operations. The company is proving how growing production and lowering emissions are not mutually exclusive – both can be achieved.
“Texas is a key contributor to keeping global energy markets balanced,” says Michael Cohen, bp’s chief US economist.
Here’s why bp’s oil and gas operations in Texas are central to its journey to net zero by 2050, or sooner.
Everything is bigger in Texas
Texas’ outsized role in the global energy market cannot be overstated. The state is responsible for about 45% of US oil production, and a quarter of the nation’s gas production, according to the federal Energy Information Administration (EIA).
Most of this production comes from the Permian Basin, a sprawling shale patch that stretches across West Texas into New Mexico. The Permian produced 5.8 million barrels of oil per day in August 2023, nearly half of the 12.8 million barrels per day that the EIA projects the US is expected to produce on average in 2023, according to the EIA.
Texas—and particularly the Permian Basin—will continue to drive US oil and gas production growth to meet rising demand for energy amid tight global supplies. The EIA forecasts Permian production will increase by 430,000 barrels in 2023, compared to 2022.
bpx energy, bp’s US onshore shale business and one of Texas’ major oil and gas producers, is doing its part to help bolster US energy security by continuing to invest in Texas, in particular in the Permian, Eagle Ford and Haynesville basins.
In 2023, bp is investing more than $2 billion to increase its shale production by between 30 to 40% by 2024, compared to a 2022 baseline. bpx produced on average 325,000 barrels of oil equivalent per day in 2022.
“We’ve been in Texas for decades, and we’re committed to Texas and America today and for the long-term,” says Dave Lawler, bpx energy CEO and president and chairman of bp America Inc. Noting that bp America’s headquarters is in Houston, where the company also has 4,000 employees based, Lawler adds: “Our Texas team is working to deliver the energy people need today, and – not or – develop the energy people need tomorrow.”
Journey to net zero
At the same time, bpx is working to reduce emissions from its operations through massive investments in infrastructure – electrification, pipelines and centralized processing facilities. Since acquiring its Texas shale assets in 2018, bp has invested more than $1.3 billion to reduce operational emissions.
A significant part of bp’s investment is to electrify its operations. In recent years, bpx has been building its own electrical substation and distribution network to help power its Permian operations. Virtually all Permian wells will be connected to the grid to produce oil and gas with electricity, replacing traditional diesel-powered generators and compressors. The company expects to electrify nearly 95% of its operated wells in the Permian by the end of this year, up from just 4% of wells in 2018.
Already, bpx has built an electrical substation network in the Permian with a nameplate capacity large enough to power nearly all the homes in Austin. The company plans to double this by 2025.
And by 2025, the company expects that much of its hydrocarbon production in the Permian will go through an interconnected pipeline network to four centralized processing facilities: Grand Slam, Bingo, Check Mate and Royal Flush. These state-of-the-art facilities – powered by electricity –use a sophisticated separation and compression system to recover natural gas that would otherwise be burned off. Grand Slam came online in 2021, and Bingo earlier this year.
In addition, bp is testing and deploying new innovations in methane monitoring, including aerial surveys, planes and drones, and continuous onsite monitors. One of bp’s aims is to install methane measurement at all its existing major oil and gas processing sites by the end of 2023, publish the data and then drive a 50% reduction in methane intensity in its operations. bp is on track to deliver.
“This is an imperative,” says Cohen, bp’s economist. “Our industry realizes that to maintain our license to operate, we have no other choice but to figure out ways to efficiently, reliably and safely reduce emissions from our operations. Our customers increasingly demand a lower carbon intensity version of our hydrocarbons going forward.”
Performing while transforming
There’s still work to be done, but bp has made significant progress in reducing operational emissions while growing production in Texas.
Since 2021, bpx has delivered nearly 1 million metric tons of carbon dioxide equivalent emissions reductions, and has cut the amount of gas that is burned off per volume of oil and gas produced by over 95%. bpx’s flaring intensity averaged less than 0.5% in 2022, the lowest on record for the company.
The company’s work to reduce operational emissions is getting noticed. bpx was listed among the top five lowest methane-emitting producers in the Permian Basin by the Basinwide Alliance, a partnership between aerospace company Kairos, Stanford and Columbia universities. Earlier in 2023, MiQ independently audited and certified all of bp’s natural gas facilities in Texas and Louisiana.
Looking to the future, bp can take the lessons learned from its Texas shale operations to new endeavors. Its subsurface geologic and drilling expertise can be applied to projects that can capture and store carbon deep in the earth. Its electrification and emissions reduction projects can transform hard-to-abate industries globally. bpx’s transformation can serve as a model for how Texas, the US and the world can achieve energy security while also meeting the challenge of climate change.
“Driving down emissions from our operations is critical to our journey from an international oil company to an integrated energy company,” Lawler says. “The bpx energy team is showing that we can dramatically reduce emissions while growing production from our portfolio assets.”