Oil giant ExxonMobil has signed a 12-year deal to buy 500 MW of renewable energy generation to power its operations in the Permian Basin of West Texas.
According to Bloomberg New Energy Finance (BNEF), this is the biggest ever contract for renewable energy involving an oil major.
Ørsted of Denmark will be providing the energy under undisclosed terms. This company used to be called Danish Oil and Natural Gas, or Dong for short, before moving away from fossil fuels to become the world’s leading builder of offshore wind farms.
ExxonMobil, which is also behind the lubricants at Mobil UK distributers, has extensive upstream operations in the Permian Basin. While the purchase will no doubt enhance the company’s green credentials, it may also have a sound economic case for the deal.
The fast-paced growth of production in the Permian Basin has meant that infrastructure, including power generation, has struggled to keep up. With power demand expected to continue growing, it makes sense for ExxonMobil to secure a deal for future power generation. Furthermore, the cost of wind and solar power has plummeted over the last decade, and both have become slightly cheaper than gas-based generation, and massively cheaper than coal or nuclear.
The deal includes a mix of solar and wind power. According to Ørsted, half of the power will be provided by the Sage Draw wind farm, expected to come online in 2020, and half will be generated by the Permian Solar Farm, which is due to be completed in 2021.