“Power is terrible in parts of New Mexico.”
That blunt assessment came from William Hickey, Co-CEO of Permian Resources Corporation (PR), during the company’s Q3 2025 earnings call. The comment wasn’t a complaint — it was context for one of the most innovative operational upgrades underway in the Delaware Basin: the transition from scattered well-site generators to centralized microgrids.
From 26 Generators to Three Microgrids
As Permian Resources pushes to lower lease operating expenses (LOE) and improve production uptime, the company took a major step this quarter by consolidating 26 individual well-site generators into three centralized microgrids across its New Mexico operations.
“We’ve had a lot of success in New Mexico where power is terrible on kind of combining well site generation to more central larger scale generation,” said Hickey. “I think we took 26 generators out of the field in Q3 over the 3 microgrids we put in… That’s a step change both in cost of power and in run time.”
This move is part of a broader infrastructure efficiency push across the Permian, where operators are confronting power reliability challenges head-on. Rural grid constraints, rapid growth in drilling intensity, and surging power demand from compressors, ESPs, and data-driven automation have all made on-site energy management a critical issue.
Why Microgrids Matter
The concept of centralized microgrids isn’t new — but its application in oilfield power systems is accelerating. Instead of running dozens of diesel or natural-gas-fired generators at each pad, a centralized microgrid can power multiple well sites from a single location, balancing load more efficiently and maintaining uptime when local grid power falters.
“A big part of our production outperformance over the course of this year has been improved run time,” Hickey explained. “If you can go stack lots of compressor or lots of power generation on one site, you get much better run time than you do when it’s spread out over lots of different places.”
For Permian Resources, this shift directly supports its ongoing cost optimization program. In Q3, the company reduced controllable cash costs by 6% quarter-over-quarter and trimmed LOE to $5.07 per Boe — an achievement tied partly to these field-level infrastructure upgrades.
Reliability as a Production Driver
Reliable power translates directly into production performance. Every hour of lost runtime at a producing well impacts output, and intermittent grid power has been a longstanding challenge in the New Mexico Delaware Basin. By consolidating generation into microgrids, PR not only reduces fuel and maintenance costs but also builds energy resilience — ensuring wells stay online longer and operate more efficiently.
The company plans to add one or two more microgrid sites before year-end, signaling that this model could expand across its asset base.
The Broader Trend
Permian Resources isn’t alone in this direction. Across the basin, producers are rethinking field infrastructure — from compression and water systems to power delivery — as a means to control costs, decarbonize operations, and stabilize production in volatile conditions.
Microgrids are emerging as a cornerstone of this evolution, integrating with renewables, battery storage, and natural gas generation to provide scalable, modular power systems that suit remote operations. In time, these systems could even tie into electrified frac fleets and AI-driven field automation, further lowering operating costs and emissions.
Infrastructure Is the Efficiency Engine
As Hickey and fellow executives emphasized throughout the call, infrastructure investments are now as strategic as drilling programs. They drive reliability, uptime, and cost stability — all critical enablers of record output in the Permian Basin.
“That’s a step change both in cost of power and in run time.” – William Hickey, Co-CEO, Permian Resources
By reimagining how power is delivered to the field, Permian Resources is turning a regional weakness — unreliable electricity — into a competitive strength. The move underscores a larger theme in U.S. shale today: operational innovation is no longer just about drilling faster or cheaper — it’s about building smarter, more resilient energy systems that keep production flowing, no matter the grid.
