Texas: State of Energy

The US Nuclear Industry Council just wrapped its Advanced Reactors Summit, and wow did the Star of Texas shine bright.?

The conference was set in Houston, the seat of an oil and gas industry whose fracking revolution has upended decades of energy angina. That angina, with roots in a 70’s era Arab oil embargo and the ensuing “Energy Crisis”, was inverted in the teens when the US passed Saudi Arabia to become the world’s leading producer of oil and gas.

Unfortunately, the elation of the moment didn’t last, as the petro-heyday has run headlong into a new energy crisis:? the concern that the burning of fossil fuels is accelerating global warming and climate change.

The reason: All those public perceptions are substantially wrong.

Now coming to the rescue is nuclear power. The cold-war era technology often perceived as old, balky, expensive, and accident-prone is becoming the star of energy transformation.? The reason: all those public perceptions are substantially wrong. The industry has a superb safety record, new designs are walk-away safe, and the plants themselves have no effluents. Nuclear creates an exiguous speck of waste that is easy to consolidate and store. (Some of the designs showcased this week never require refueling.)? Only nuclear can bring energy in quantity and reliability sufficient to support both energy transformation, and the need to bring advances in health, hygiene, and standard-of-living to the developing world.

In the context of transformation, Texas was the Belle of the Ball at the USNIC conference. The State sent representatives in politics, policy, and regulation essentially saying to the nuclear industry:? “bring it”.

Several other states deserve an honorable mention.? Officials from Georgia, including Public Utilities Commissioner Tim Echols, were doing a well-deserved victory lap for the commissioning of Vogtle 3 and 4, two enormous nuclear units that started commercial operation this year.? That project confronted numerous setbacks including costs that ran over by 100%, a deployment planned for 7 years that took 14, and a bankruptcy by vendor Westinghouse that nearly left Southern Company holding the bag.? The US Nuclear Industry Council even awarded Southern Company CEO Tom Fanning a Trailblazer Award, largely on his force of will in seeing the project through. Echols punctuated his presentation by hinting that Vogtle could be soon seeing plans for Unit 5 (and Unit 6).

Other states rolling out the welcome mat for new nuclear include South Dakota, North Dakota, and Wyoming, with Wyoming farthest along.? It is partnering with Bill Gates-backed TerraPower to build a 300 MW small modular reactor (SMR) in Kemmerer, Wyoming.? It also made a grant of $10 M to BWXT to demonstrate a micro-reactor, pairing those funds with an advanced reactor subsidy program funded by the US Department of Energy.

Perry seemed giddy with the assignment, later calling it “The Coolest Job I’ve Ever Had”.?

But Texas, playing host to the event, saw its Lone Star shining brightest.? Former Texas Governor Rick Perry, who was also given a Trailblazer Award, served as US Secretary of Energy during the Trump administration.? In a meme so hackneyed by press I hesitate to mention it, Governor Perry, running for president, famously threatened to shut down the US Department of Energy and later forgot its name during a televised debate. Proving he has at least a tiny shred of humor, President Trump sentenced Perry to run the DOE. Perry seemed giddy with the assignment, later calling it “The Coolest Job I’ve Ever Had”.? I’ve worked for DOE myself and I know he’s right. It’s rare and refreshing to see a politician readily willing to admit his mistakes.

After acknowledging he had no prepared remarks, Perry went on to make one of the most compelling extem speeches I’ve ever seen. He had the crowd clapping real applause, not the obligatory kind you see at the State of the Union. This guy has incredible empathy, and his success in Texas politics is no longer a mystery to me. After acknowledging? he was born on a Texas farm without electricity (except for a low-tech windmill providing power a couple hours per day), Perry took credit / responsibility for the explosion of wind in the state.? During his term of office, wind in Texas went from near zero to a whopping 11 GW.? He mentioned that only 5 countries on earth have more wind capacity than the State of Texas. But he also said essentially “enough is enough”.? Texas doesn’t need more wind, and reliance on the unreliable had a material impact on the devastating effects of winter storm Uri.? You may not know what that is, but every Texan remembers, and calls the storm by name: In a February 2021 artic plunge, the Texas grid nearly collapsed, leaving millions without power for days to weeks and killing about 500 of the most vulnerable.

Today demand for electricity in Texas is booming. Since 2013, an era when total US demand was mostly flat, Texas increased by 25%.? It’s increased 10% since winter storm Uri alone. And that takes us to a new spirit of embracing nuclear. We heard from a parade of public officials eager to welcome a new era of energy to the State.? Jimmy Glotfelty, the state’s Public Utilities Commissioner said the only technology at the intersection of what Texas wants to build and what private industry wants to use is “nuclear”. Current governor Greg Abbott, who made a taped appearance, has directed the PUC to issue a forthcoming report on how to put state dollars to work on the technology.? According to Glotfelty, the state and the PUC are not just acting to develop favorable policy, but to develop specific sites, projects, and installations.?

The business of oil & gas is about turning rocks into cash flow. Same with nuclear.

Also in the mix was the Honorable Bill Flores – vice chair of ERCOT, the authority managing that wobbly Texas grid.? As he took us through a forward peak demand scenario projected to 2035, I was surprised to learn that those scenarios only rely on about 3% of installed wind capacity.? It gets very still on the coldest and hottest days. Cody Harris of the Texas House said (in my gratuitous paraphrase), “We barely know how to spell nuclear, but we know we need it.? We only meet to make laws every other year, so if there is something you need from the legislature, tell us early and often, because we will help you.” And for someone who can’t spell nuclear, he knew a lot.? The State needs nuclear to support the Texas “economic miracle”.? “We have 1,100 people who move here every day, driving the economy, and none of them are bringing their own electrons.”? “We need clean reliable energy to support the Texas grid.”? He was also mentioning advanced applications like desalination of the brackish aquifer that sits under Dallas / Fort Worth.? Harris is involved in the Texas Nuclear Caucus, which counts one-third of the 150 member Texas house as members.

But Governors, regulators, and policy makers are just one side of the coin, since no Texas economic miracle would be complete without the wildcatters. We saw that in spades with Natura Resources founder Doug Robison. Natura, a major sponsor of the event, is performing its own economic miracle in developing an SMR scale molten salt reactor. A research reactor to support the project is going in at Abilene Christian University – the first new research reactor in the US? in 60 years. That project is built in cooperation with three no-slouch university partners: Georgia Tech, Texas A&M, and the University of Texas.? Natura’s? production scale technology can be truck-shipped and is walk-away safe.? Robison is also the co-founder of ExL petroleum, a Permian oil and gas exploration and production company.? He bankrolled Natura in its early days, and he seems to embody the wildcatter spirit: taking risks and keeping chips on the table.? Clay Sell, another eminent Texan, is the CEO of X-energy.

Elsewhere in the conference Caleb Tash, director of sustainability at Diamondback Energy made the point that the Oil & Gas industry is about turning rocks into cash flow, to which one reactor vendor quipped that nuclear has the exact same model. Tash said that he has access to 4 GW clean power supporting Diamondback’s oilfield services, but he needs 17-. “I have the wires and I have the distribution, I just need the electrons.”? Diamondback is partnering with Oklo to bring that clean power to the Permian basin.

Diamondback kicked off what turned out to be a major theme at the conference: “behind the meter” users. The parlous state of the US electrical grid has forced major buyers of power to take reliable energy into their own hands. These users need clean scale power that is 24/7 and that can fit on a couple of acres. Edward Stones gave a fascinating background on Dow Corporation’s decision to commit to support the construction of four 100 MW small modular reactors from X-energy which will deliver power and process heat at its Seadrift, Texas facility. I have to confess when I first read the press on this deal I thought it was a “Barney Deal”: I love you, you love me. Sitting in that session, I realized this deal is as real as a heart attack.? Dow is putting up $25 M for engineering work and has its own dedicated engineers working full-time on the project.? Stones said, “We won’t turn over the first shovel on this project until we have a 100% complete design fully licensed. We go slow to go fast. But once we turn over the first shovel, we will go hard to turn over the last. Don’t treat us like a utility.”? Dow builds complex facilities. Projects over $1 B are routine. Stones has done eight of them. He called X-energy’s technology “the most commercially ready” and Dow is ready to drive forward.?

That need for steady reliable energy behind the meter is increasingly urgent as the U.S. decouples from China in industries like Steel, mining, and semiconductors, all of which are driving Texas demand. In addition to Dow and Diamondback, we heard at the conference from Nucor Steel during a panel on BTM applications, and Google sent a representative speaking on a panel about the needs of hyperscale data centers (massive reliable on-site power). We learned that Microsoft has four employees with the word “nuclear” in their title.

This conference wasn’t all about Texas.? The US Nuclear Industry Council pulled together a superb event with the contingencies from Georgia, Wyoming, and the provinces of Canada, the US Department of Energy, the NRC, national labs such as INL and Oak Ridge, global and national vendors in uranium mining and enrichment, and of course those innovators and sellers of micro- and small modular reactors.?

But TEXAS in my eyes was the star of the show. I'm partially Texan having attended high school in Kingwood (I hear Texans laughing). But for me, it's been way too long. I had forgotten that spirit of liberty and independence that makes Texas singular.? That spirit is embodied in the mythology of the wildcatter.? Full speed ahead. State officials took glee in talking the chaos in California … “California won’t welcome your industry” … “California has budget chaos and is looking at an $80 B shortfall. Texas has a $30 B surplus”.? Smashmouth stuff ... and true too. Ouch

The modern Oil & Gas industry had its roots early last century in Humble, Texas, just a few miles away from the USNIC conference.? If you had asked me a few years ago, I would have said that this industry, with its strong Texas roots and defense of tradition, was resisting the upheaval of global energy transformation. Today I sense a change in that mood.? So many strengths of the Oil & Gas industry apply to energy transformation.? Hydrogen, which is the future of clean transportation, is a refinery-like carrier that can be transported on the same infrastructure as natural gas. Geo-thermal energy leverages wells and sideways drilling.? Methane reforming and carbon capture all fit the refinery model.

Texas is evolving itself. Governor Perry might have kicked over the first domino by embracing the wind. Texas conquered the wind, and now there is a sense of “what’s next?” Leaders seem to be gaining comfort that Texas isn’t only a petro-state, it’s an energy state. No more grasping at the past. “Tell us your needs. Your Hydrogen. Your Nuclear. Your LNG.? We can. We will.”? It's that wildcatter spirit applied to a new set of energy challenges.? At the end of the day, its all about how fast you can turn rocks into cash flow.? The Lone Star State is no longer just the oil patch.? Texas: State of Energy.