Texas Renewable Energy Resources

Texas: an Energy Leader Ever since 1901, when Captain Anthony Lucas struck oil at Spindletop, Texas has been renowned for its vast energy resources. Lucas's historic discovery ignited a frenzy of exploration resulting in the production of enormous amounts of oil, natural gas, coal and uranium. Since 1930, the state has collected more than $35 billion in taxes on oil and gas.⁽¹⁾ Those revenues have helped build some of the nation's best roads, schools and infrastructure. However, Texas energy production and the benefits the state receives from that production are shrinking. For example, contributions to the state's public schools from the Permanent School Fund, which depends on oil and gas royalties, have fallen by 76 percent since 1982.⁽²⁾ Over the past two decades, oil production in Texas has fallen by more than half⁽³⁾ and production is expected to continue its downward trend.⁽⁴⁾

During World War II, Texas exported vast amounts of oil that helped fuel the Allied advance on Germany. Texas now uses more energy than it produces⁽⁸⁾. In 1994, the state had net energy imports consisting of $1 billion worth of coal⁽⁹⁾ and $6 billion worth of oil⁽¹⁰⁾. Much of the growth in energy demand stems from the state's increasing population and surging economy. In just 40 years, Texas could be importing more than 80 percent of the energy required to meet its needs⁽¹¹⁾. Imports will make the state--and the U.S. as a whole-- highly vulnerable to price fluctuations and political upheaval in the Middle East and other oil producing regions.⁽¹²⁾

Although Texas is home to just seven percent of the U.S. population, the state accounts for about 12 percent of the nation's total energy consumption.⁽¹⁵⁾ Texas uses more electricity, natural gas, coal and oil than any other state.⁽¹⁶⁾ And demand for energy, particularly electricity, is increasing. Since 1970, residential use of electricity has nearly tripled.⁽¹⁷⁾ Most of the state's electricity is now generated by burning coal.⁽¹⁸⁾ However, much of the growing demand for energy in Texas and around the world can be met with clean, politically secure, renewable energy. Wind-powered turbines, solar panels and fuels derived from agriculture products (biomass) are well suited to our state. Currently, less than one percent of the state's energy needs are provided by renewable energy sources.⁽¹⁹⁾

Domestic oil and gas supplies are shrinking. If forced to rely solely on domestic oil production for all of its needs, the U.S. would be completely out of oil within 23 years.⁽²¹⁾ America now imports half of the oil it needs.⁽²²⁾ Over the next 15 years, that figure could rise to 70 percent.⁽²³⁾ For energy security and long-term economic growth, we must look beyond fossil fuels. Renewable energy offers a cost competitive option in an expanding range of applications, especially in rural areas. Over the past decade, solar, biomass and wind power costs have fallen dramatically and are now becoming competitive with fossil fuels.⁽²⁴⁾

Before others recognized the value of oil, Jett Rink, the wildcatter in the 1956 movie "Giant" was making a fortune in the energy business. Today, Texas has the opportunity to become a leader in the global market for renewables. The Lone Star State has more renewable energy potential than any other state.⁽³¹⁾ Wind power alone could generate up to 136,000 megawatts of electricity, more than twice the state's total generating capacity.⁽³²⁾ Much of the state's wind and solar power potential lies in the rural regions of west and south Texas, where jobs and economic development are sorely needed. By shifting to renewable energy, Texas can recapture some of the money now being used to import energy from other states and countries. A move toward renewables would also spur the economy, create jobs and increase our tax base.

For nearly a century, Texas has been a leader in the world's energy industry. Whether in production, refining or technology, the world looks to Texas for products and ingenuity. Today, the state has an opportunity to lead a new sector of the energy market. Armed with its vast expertise and resources, it can become a powerhouse in the renewable energy market. Already, windmills in Culberson County and solar panels in Austin provide clean, reliable and efficient power to thousands of Texans.⁽³⁴⁾ By building on that base now--nearly a century after Lucas's discovery at Spindletop--and committing to renewable energy, our children and grandchildren will reap benefits well into the next century.

¹ Texas Comptroller Data (provided by Susan Kimbrough) for oil and gas production (severance) taxes through FY 96 total $35,175,600,000. Ad Valorem taxes on oil & gas property comprise additional large amounts. Based on data provided by Paula Middleton of the Railroad Commission, school and county property taxes derived from oil& gas properties totaled $686 million in 1994. This annual total compares with severance tax collections of $848 million for FY 95.

² General Land Office data provided by Ron Calhous. Since 1848, deposits to the Permanent School Fund total $6,671,657,403. Oil and gas royalties, lease rentals and bonuses comprise 91% of the historical PSF deposits ($6,059,439,781). Royalties from renewable energy projects can also help finance schools. In fact, Texas' first commercial wind power plant, which is located on land leased from the General Land Office in Culberson County, has made deposits of $114,098 to the Permanent School Fund since it began operation in August 1995.

³ Railroad Commission data provided by Kathy Way report 1975 crude oil production as 1,185,683,000 barrels and 1995 production as 512,855,170 barrels, a drop-off of 57%.

⁴ Oil & gas production forecasts and history developed by W.L. Fisher for the State of Texas Energy Policy Partnership Final Report (March 1993)indicate that Texas production of both oil and gas will continue to decline from 1992 levels, even with the deployment of advanced technology.

⁵ Permanent School Fund data provided by Ron Calhous of the General Land Office.

⁶ Oil & gas severance tax data provided by Susan Kimbrough of the Comptrollers Office

⁷ Employment data compiled by Fran Sawyer of the Comptroller Office. "Mining" jobs reflect employment in production and exploration only. Total oil &gas sector employment (mining, refining, transportation, marketing, petrochemicals, heavy construction & support industries) totaled 440,066 in 1995, down from 603,170 in 1984.

⁸ Texas Energy: Past, Present, Future, a State Energy Conservation Office report prepared by Virtus Energy Research Associates, summarizes Texas declining production and rising consumption. By 1993 Texas had become a net importer of energy based on consumption of 10.12 quads (Energy Information Administration State Energy Data Report 1994) and production of 9.96 quads (sum of Railroad Commission's reported totals for crude oil, natural gas, and coal/lignite plus uranium production reported in the EIA's Uranium Industry Annual 1995).

⁹ Energy Information Administration's Coal Industry Annual 1994 reports Texas total production in 1994 was 52,346 thousand short tons worth $647,929,280 ($12.38/short ton). Nearly all Texas coal is consumed near the mine mouth resulting in very low delivery charges, adding about 6% ($40,000,000) to the cost (Texas Energy: Past, Present, Future). Total coal consumption in Texas during 1994 was 93,809 thousand short tons at a consumer cost of $1.86 billion ($19.82/short ton). Hence, net coal imports to Texas totaled roughly $1.17 billion in 1994.

¹⁰ In 1994, the net of Texas petroleum consumption (987.1 MMBbl, Energy Information Administration's State Energy Data Report 1994) and production (541.5 MMBbl, Railroad Commission) indicates net imports of 441.6 MMBbl. Assuming the average price per barrel for crude oil as reported by the Texas Comptroller of Public Accounts ($14.97/Bbl) results in net imports of petroleum to Texas of $6.61 billion in 1994. This number reflects an accounting for petroleum products consumed in Texas. Throughput of Texas refineries and ports is considerably larger. Two thirds of the product delivered to ultimate consumers by the Texas petroleum industry has its origins in crude oil from foreign nations. Imports of crude oil and petroleum products received at Texas ports during 1995 were 1,044.4 MMBbl (Michael Conner, EIA, January, 1997) while Texas total production of hydrocarbon liquids was 552.6 MMBbl (512.9 MMBbl of crude oil and 39.8 MMBbl of natural gas liquids -- Railroad Commission data). The value of petroleum products imported to Texas exceeded $17 billion in 1995 (1,044.4 MMBbl reckoned at the average price reported by the Texas Comptroller of Public Accounts for Texas crude oil, $16.30/Bbl)

¹¹ The State of Texas Energy Policy Partnership Final Report (March 1993) volume II, Outlook Committee Report, Reference Case projects that 81% of Texas energy supply will be provided by imports in 2040.

¹² Political instability in producing regions have major impacts on energy commodity prices. Based on American Petroleum Institute data, 36% of the world oil reserves are in Saudi Arabia & Iraq. Similarly, much of the world's natural gas supply is located in politically unstable regions. 55% of the world natural gas reserves are in C.I.S. (former Soviet Union) & Iran.

¹³ Consumption taken from the Energy Information Administration's State Energy Data Report 1994. Production of coal, crude oil and natural gas from Railroad Commission data (provided by Bill Chovanec and Kathy Way) and uranium from the Energy Information Administration's Uranium Industry Annual 1995. Projections to 1996 by Mike Sloan based on estimated uranium production by Uranium Resources, Inc. and preliminary data from the Energy Information Administration and the Texas Railroad Commission

¹⁴ Net energy imports and export taken from the State of Texas Energy Policy Partnership Final Report (March 1993) volume II, Outlook Committee Report, Reference Case. Energy values were converted into dollars by using historical prices obtained from Comptrollers Office data and by assuming constant prices for future imports fixed at 1993 energy commodities prices for Texas reported in the Energy Information Administration's State Energy Prices & Expenditures 1993.

¹⁵ Energy Information Administration's State Energy Data Report 1994 reports Texas consumption (10.3876 quads) as 11.7% of U.S. consumption(88.7886 quads). Corresponding data inferred from per capita consumption tables indicates that Texas population (18.41 million) was 7.1%of U.S. population (260.37 million).

¹⁶ Energy Information Administration's State Energy Data Report 1994. State rankings.

¹⁷ Energy Information Administration's State Energy Data Report 1994. Texas 1970 electric consumption (32,591 million kWh) is equivalent to 36.3% of 1994 electric consumption (89,793 million kWh)

¹⁸ Energy Information Administration's State Energy Data Report 1994 reports 2.6925 quads of energy input at Texas' electric utilities in 1994, which was comprised of 1.2999 quads of coal, 1.0733 quads of natural gas, 0.306 quads of nuclear power, 0.0157 quads of hydro power, 0.0035 quads of petroleum, and 0.0031 quads of biofuels. In 1993, coal represented 51.7% of utility input (1.3422 quads of coal; 2.5937 quads total). Data dating to 1960 suggest that coal was not used by utilities prior to 1971.

¹⁹ Energy Information Administration, State Energy Data Report 1994. The sum of all renewable energy sources--biofuels (54.1) Hydroelectricity (15.7) and other (0.4)--represent 0.68% of the 10,387.6 trillion BTU consumed in Texas in 1994.

²¹ Based on all technically recoverable measured, indicated, inferred and undiscovered crude oil resources estimated in the most recent national assessments of U.S. oil and gas resources. Sources include the U.S. Geological Survey Circular 1118 for resources that are onshore and in state waters and the U.S. Mineral Management Service's An Assessment of the Undiscovered Hydrocarbon Potential of the Nation's Outer Continental Shelf for federal offshore resources. All categories were summed and divided by the U.S. petroleum consumption for 1994 as identified in the Energy Information Administration's State Energy Data Report 1994.

²³ State of Texas Energy Policy Partnership Final Report (March 1993) volume II, Oil Committee Report, page 175.

²⁴ U.S. Department of Energy, National Renewable Energy Laboratory. Cost history and cost projections provided by Jeff Goldstein, January 1997.

²⁵ Based on all technically recoverable measured, indicated, inferred and undiscovered crude oil resources estimated in the most recent national assessments of U.S. oil and gas resources. Sources include the U.S. Geological Survey Circular 1118 for resources that are onshore and in state waters and the U.S. Mineral Management Service's An Assessment of the Undiscovered Hydrocarbon Potential of the Nation's Outer Continental Shelf for federal offshore resources. All categories were summed and divided by the U.S. petroleum consumption for 1994 as identified in the Energy Information Administration's State Energy Data Report 1994.

²⁶ Based on all technically recoverable measured, indicated, inferred and undiscovered natural gas resources estimated in the most recent national assessments of U.S. oil and gas resources. Sources include the U.S. Geological Survey Circular 1118 for resources that are onshore and in state waters and the U.S. Mineral Management Service's An Assessment of the Undiscovered Hydrocarbon Potential of the Nation's Outer Continental Shelf for federal offshore resources. All categories were summed and divided by the U.S. natural gas consumption for 1994 as identified in the Energy Information Administration's State Energy Data Report 1994.

²⁷ Remaining supply taken from Energy Information Administration's Uranium Industry Annual 1995. All categories were summed and divided by U.S. nuclear power consumption for 1994 as identified in the Energy Information Administration's State Energy Data Report 1994.

²⁸ Remaining U.S. coal supply taken from Energy Information Administration's U.S. Coal Reserves: A Review and Update. All categories were summed and divided by U.S. coal consumption for 1994 as identified in the Energy Information Administration's State Energy Data Report 1994.

²⁹ The sun, which is the principal renewable energy source, is estimated to contain approximately 2,000,000,0000 years of fuel. In the context of human time scales, renewable energy is considered non-depletable.

³⁰ U.S. Department of Energy National Renewable Energy Laboratory. Cost history and cost projections provided by Jeff Goldstein, January 1997.

³¹ Renewable Energy Sources for Fuels and Electricity (1993), chapter on Solar Hydrogen by Ogden & Nitsch, page 975. Estimates based on consistent development scenarios representing the solar hydrogen potential of each state in the contiguous United States.

³² Texas Renewable Energy Resource Assessment: Survey, Overview &Recommendations , July 1995, chapter on Wind Energy by Vaughn Nelson, page 67.

³³ Renewable Energy Sources for Fuels and Electricity (1993), chapter on Solar Hydrogen by Ogden & Nitsch, page 975. Estimates based on consistent development scenarios representing the solar hydrogen potential of each state in the contiguous United States.

³⁴ The Lower Colorado River Authority's wind power project in Culberson County produced 84,961,809 kWh in 1996 (Peter Tucker, LCRA). Texas average residential customer uses 12,879 kWh/yr (EIA). Hence the Culberson County wind plant alone provides an equivalent quantity of electricity to meet the needs of approximately 6,600 electric customers.

³⁵ Average generation costs for existing nuclear, gas & coal plants operated by Investor Owned Utilities in Texas were provided by Dan Jones of the Public Utility Commission of Texas, January 1997. Prices appropriate for new wind (4.25 cents/kWh) and biogas (4.00 cents/kWh) plants provided by the Texas Renewable Energy Industries Association (TREIA) based on estimated prices representative of a wide range of applications. Renewable energy projects at exceptional sites can be even less expensive. Recent bids submitted to Texas New Mexico Power included wind projects ranging in cost from 3.55 to 6.80 cents/kWh and biogas/biomass projects ranging from 2.00 to 6.00 cents per kWh (PUCT Docket #15,560, TNP response to EDF second RFI, Q.2-40). It is noted that all reported renewable energy bids submitted to TNP were less expensive than TNP's current cost of generating electricity (8.45 cents/kWh, for a lignite-fueled power plant, provided by Dan Jones, Public Utility Commission of Texas).