U.S. shale drillers to reduce Permian drilling emissions, increase reliability with nuclear reactors

(Bloomberg) – U.S. oil and gas companies including Diamondback Energy Inc. are considering small nuclear reactors to power drilling operations in Texas’s Permian basin, a move aimed at cutting carbon emissions and ensuring reliable access to electricity.

Diamondback, the largest independent producer headquartered in the shale-oil region, has signed a nonbinding letter of intent with Oklo Inc. to deploy small reactors for some of its future power needs, according to Diamondback President Kaes Van’t Hof. Oklo, which is developing an advanced fission reactor, has held similar discussions with other oil companies, its chief executive officer said in an interview.

Permian producers have increasingly shifted their operations from diesel generators to electricity supplied by the local power grid. But the Texas grid can be shaky, especially in remote parts of the oil patch. A drilling site with its own nuclear plant would offer reliability without greenhouse gas emissions, since reactors generate power without spewing carbon dioxide.

“Small nuclear reactors could make sense as a low-cost, low-carbon, high-reliability alternative energy source for a company like Diamondback whose energy needs continue to increase,” Van’t Hof said by email.

It won’t happen soon, however. Oklo and other companies developing small reactors are years away from delivering commercial systems.

Oklo’s 15-megawatt system would be far smaller than the conventional reactors used today, which typically produce 1,000 megawatts of electricity. (A megawatt is enough to power 200 typical Texas homes.)

Supporters say small nuclear plants would be a good fit for powering industrial sites, especially in far-flung locales. Some companies are also interested in tapping heat from reactors, such as chemical giant Dow Inc., which has said it’s planning to power a Texas facility with a system from X-Energy Reactor Co.

Nuclear power is increasingly seen by policy makers as a key part of the fight against climate change. While there’s a growing push to eliminate fossil fuels, Oklo CEO Jacob DeWitte said it’s going to take a long time to curb the demand for oil. Incorporating nuclear power into the drilling process would help reduce greenhouse gases while oil is still needed.

“These fossil fuels are going to be produced. Do we want to burn carbon to produce them, or do we want to not burn carbon to produce them?” DeWitte said in an interview. “There’s a pretty obvious answer.”

Lead image: A Diamondback Energy oil production facility in Midland, Texas. (Photographer: Callaghan O'Hare/Bloomberg)