Thinking ahead: NM Oil and Gas Association considers AI, power grid energy demands

When you think of artificial intelligence, your thoughts may not go immediately to oil and gas. But it’s a topic the New Mexico Oil and Gas Association is keeping in mind.

It’s one of seven main legislative priorities and issues the organization, which represents more than 1,000 members, listed at an Economic Forum in September.

The energy demand for data centers hosting AI technology is already massive, and the International Energy Agency forecasts that global electricity consumption from data centers, AI and cryptocurrency could double by 2026.

“Power and technology companies have expressed concern that the country's electrical systems are not expanding fast enough to meet the rapidly growing power needs of technology such as generative AI,” said Ashley Wagner, NMOGA’s vice president of governmental affairs.

That’s where oil and gas comes in, she said.

Wagner said renewable energy, which requires battery storage, won’t meet the “rapid growth of electricity-starved data centers.”

“And a spike in power usage from AI data centers could significantly boost natural gas demands in the second half of the decade,” she said.

She said the boost could mean as much as an 8% increase in natural gas demands.

“Natural gas generation helps to keep greenhouse gas emissions low, is affordable, immediately deployable, extremely reliable and the key to meeting the demands of the current and future AI,” she said.

Another consideration for future demands for NMOGA is grid modernization.

It’s a way to make the existing, antiquated power grid smarter and more resilient through newer technologies to handle the nation’s growing demand for energy.

Wagner said policymakers and energy experts have been discussing grid modernization a lot during interim legislative committees. Issues with the power grid, as well as water supply, are major setbacks in the oil and gas industry, she said.

For example, she said, many oil and gas companies working in the Permian Basin have net-zero goals to meet and some of the operators have electrified their operations by as much as 40%.

“However, this is causing a shortage in energy supply and will affect other industries as well,” she said.

Other priorities and issues Wagner listed out for the interim and 2025 legislative sessions include a reclamation fund proposal, tax exemptions for small oil and gas operators, changes to the existing Oil and Gas Act, royalty rate increases and a strategic water supply.