Diamondback Eyes Natural Gas to Generate Power in Oil Patch

(Bloomberg) -- Diamondback Energy Inc., one of the Permian Basin’s biggest oil companies, is considering using some of the natural gas it produces to generate electricity to run drilling and fracking operations.

Permian producers have increasingly shifted operations from diesel generators to electricity supplied by the local power grid. But the Texas grid can be unreliable at times, especially in remote parts of the oil patch.

“Texas is in a bind,” Diamondback Chief Executive Officer Travis Stice said Tuesday at the Pickering Energy Partners investor conference in Austin. “What we’re trying to think about is how can we solve some of the electrification demands that our investors have placed on us.” 

The Midland, Texas-based company, which recently finalized its acquisition of Endeavor Energy, has also signed a nonbinding letter of intent with nuclear power developer Oklo Inc. to deploy small reactors for some of its future electricity needs.

When asked if Diamondback was interested in developing its own gas-fired power plants, Stice demurred. 

“I don’t think you’d ever see Diamondback saying, ‘OK, we’re going to go build one,’ ” he said. “But is it possible we participate with our balance sheet in some of these investments?”

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