U.S. shale oil and gas executives are increasingly shifting toward electric rigs and fracking as part of efforts to cut diesel emissions, according to a new quarterly energy survey from the Federal Reserve Bank of Dallas. However, the report also highlights the significant hurdles companies face, such as grid infrastructure issues and high costs associated with electrifying their operations.
The survey, which covered executives in Texas, Louisiana, and New Mexico, showed mixed results for production in the third quarter. Oil production seemed to increase, while natural gas production saw a slight decrease.
One promising trend is the move towards electric-powered drilling rigs and hydraulic fracturing. Nearly 20% of the executives surveyed have fully transitioned to electric rigs and fracking equipment, reducing pollution caused by traditional diesel-powered machinery. Another 6% of respondents indicated they plan to fully electrify their production in the near future, and an additional 31% expect to partially electrify their operations. These shifts not only reduce emissions but also eliminate much of the noise and pollution associated with diesel-powered rigs.
Electric rigs are increasingly being seen as a key tool for reducing emissions in oil and gas operations. Traditional diesel engines used in drilling and fracking generate significant amounts of carbon dioxide and other harmful pollutants. By moving to electric rigs—especially those powered by renewable energy—companies can significantly cut their emissions while improving energy efficiency. Electric rigs tend to have fewer moving parts than diesel rigs, reducing maintenance costs and downtime. This efficiency boost could eventually help offset the upfront costs of transitioning to electric systems, making the move both environmentally and economically beneficial.
However, the road to electrification isn’t without challenges. Around 29% of respondents with operations in the Permian Basin—the largest oil-producing region in the U.S.—said their biggest concern was uncertainty about future grid access. Another 25% pointed to infrastructure issues, such as the limited capacity and outdated systems of the current power grid. These issues make it difficult for companies to fully commit to electrification.
Many oilfield service executives also expressed frustration with the permitting process, which they said is slowing down the industry’s push toward electric rigs. One executive noted that statutory requirements for utilities to approve grid interconnections have no real enforcement, with processes that should take three months instead stretching to 12 to 18 months. The slow speed of approvals, coupled with the high costs of electrifying equipment and operations, is creating a significant bottleneck.
Despite these hurdles, there’s a growing recognition within the industry that electric rigs are a critical component in reducing the sector’s carbon footprint. By shifting away from diesel-powered machinery, companies not only lower emissions but also position themselves to meet increasingly strict environmental regulations and reduce operational noise and pollution.
The Dallas Fed survey also touched on broader industry trends, showing a modestly positive employment index for the 15th consecutive quarter, though the low single-digit result suggested minimal hiring.
As the push for reducing emissions gains momentum, electric rigs offer a pathway for oil and gas companies to make meaningful changes. The benefits of e-rigs and electrified fracking equipment are clear—lower emissions, quieter operations, and more efficient production. However, the industry will need to overcome grid access challenges, infrastructure limitations, and the high costs of transitioning if they are to truly embrace electrification on a large scale.
