Oil giant Shell to buy power from New Mexico wind farm amid transition to renewable energy

Global oil and gas giant Shell planned to buy renewable power from a New Mexico windfarm through an agreement that also includes the University of California.

Pattern Energy’s SunZia Wind project was planned to be built by 2026, generating about 3,500 megawatts of wind energy in south-central New Mexico.

Turbines are in Lincoln, Torrance and San Miguel counties and will connect to western markets via the in progress SunZia Transmission line, traveling 550 miles into Arizona with a capacity of 525 kilovolts.

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The producer said it signed long-term power purchase agreements with Shell Energy North America and with the regents of the University of California for a portion of the energy generated by the facility.

It’s part of Shell’s recent agenda of increasing its renewable power output, after the company last year launched its Shell Energy residential power brand in the U.S., offering 100 percent renewable energy plans to customers in Texas, initially.

The efforts mark a transition for the British multinational oil major, which drills for shale oil and gas in Canada and Argentina in the Americas, having sold its Permian Basin assets in 2021 to ConocoPhillips.

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"We're excited about this entry into the residential electricity market and look forward to providing a suite of 100 percent renewable electricity plans to customers across the state," said Glenn Wright, vice president of renewables and energy solutions.

In 2022, Shell reported it “more than doubled” its solar and wind generation compared to 2022, with a total capacity of 6.4 gigawatts, while also reporting two thirds of the company’s capital spending remained on oil and gas, but also curbing emissions by 30 percent compared with 2016 levels.

“Shell is widely known for its leadership in developing and delivering low-carbon solutions for commercial customers,” Wright said. “Now, backed by our extensive energy trading and marketing expertise, we can offer new products to residential customers who want sustainable, innovative energy plans for their homes."

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University of California Vice President of Capital Programs David Phillips said the purchase agreements for Pattern’s wind energy in New Mexico followed the university’s initial solar contracts signed in 2015.

He said the university’s interest in using renewable energy was intended to reduce pollution.

“This wind contract represents another milestone achievement for the University of California,” Phillips said. “Eight years ago, we signed our first utility-scale contracts for solar and today we are adding another important renewable resource to our portfolio – wind.

“The University is excited to be part of such a significant renewable project that will reduce carbon emissions and provide more resilience to the California grid.”

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Pattern touted a “deep commitment” to local communities around the SunZia projects, intending to restore “thousands of acres” of wildlife habitat nearby and investing in conservation research.

The projects were expected to mark an $8 billion capital investment in the region, and $20.5 billion in total economic benefit, according to a study by research firm Energy, Economic and Environment Consultants.

That included $1.3 billion in fiscal impacts for local governments, community organizations and schools, the study read, via sales and use taxes, property taxes and community and land payments to federal and state agencies.

More:500-mile wind power lines in New Mexico seek feds' final approval. Could be built this year

The wind farm and transmission line were being finalized via the federal Bureau of Land Management and stakeholders, after almost a decade of planning, and construction was expected to start this year.

The BLM issued its final environmental analysis for the transmission line earlier this year, noting alterations to the line’s route to avoid impacting White Sands Missile Range’s Northern Call-up Area, enroute from Torrance County to Pinal County, New Mexico.

“We welcome these exciting new relationships with Shell Energy and UC Regents on the delivery of New Mexico wind power,” said Pattern Chief Executive Officer Hunter Armistead. “SunZia is providing access to some of the best wind in the world, which has a powerful generation profile with an evening peak that is a perfect complement to daytime solar.

He said Pattern would continue to seek additional commitments to purchase the wind energy generated in New Mexico in the coming years.

“We are committed to harnessing New Mexico’s wind to generate clean power for 3 million Americans and continuing to have conversations with interested customers throughout the western region,” Armistead said.

Adrian Heddencan be reached at 575-628-5516,achedden@currentargus.com or@AdrianHedden on Twitter.