PROPWR, the distributed power arm of ProPetro Holding Corp., has secured a contract with a Coterra Energy subsidiary to develop and operate microgrids in the New Mexico portion of the Permian Basin. Deployment is expected to begin in the first quarter of 2026. However, the importance of the agreement extends well beyond its start date.
More broadly, the deal reflects a structural shift in oilfield energy strategy. Permian operators are steadily moving away from centralized grid reliance. Instead, they are adopting on-site, modular power systems. As a result, speed of deployment, reliability, and cost control are becoming decisive factors. Meanwhile, grid congestion, price volatility, and permitting delays continue to limit traditional power access.
Microgrids Move From Stopgap to Core Infrastructure
Under the agreement, PROPWR will deliver turnkey power solutions designed for oilfield operations. In practice, this reinforces the transition of microgrids from temporary stopgaps to permanent infrastructure.
By comparison, centralized grids expose operators to outages and scheduling risk. Distributed systems, on the other hand, allow power supply to align closely with drilling and completion timelines. At the same time, they reduce fuel logistics risk. For PROPWR, the Coterra contract pushes total committed capacity beyond 220 megawatts. Notably, the average contract term is about five years at commencement. Taken together, this signals rising confidence in dedicated on-site power across the Permian.
Longer-Term Capacity Buildout
To support growth, PROPWR has ordered an additional 190 megawatts of generation equipment. As a result, total delivered or on-order capacity now stands near 550 megawatts. Within that portfolio, high-efficiency natural gas reciprocating engines dominate. Meanwhile, modular turbines make up the balance. This mix, in turn, reflects a trade-off between rapid deployment, emissions performance, and fuel flexibility.
Looking ahead, all units are expected to arrive by the end of 2027. Before then, PROPWR expects contracts to be secured. Beyond 2027, the company projects total capacity of roughly 750 megawatts by the end of 2028. Ultimately, it is targeting one gigawatt or more by 2030. At present, the average cost for the 550 megawatts ordered stands at about $1.1 million per megawatt, including balance-of-plant infrastructure.
While oilfield demand remains central, PROPWR is also positioning for data center customers. In parallel, AI-driven workloads are pushing regional grids toward capacity limits. Consequently, distributed generation is gaining traction beyond oil and gas.
To finance expansion, PROPWR has raised its projected 2026 capital expenditure to $250–275 million. Previously, guidance stood at $200–250 million. In addition, the company is negotiating a $350 million lease finance facility with an investment-grade partner. Even so, management has emphasized that free cash flow from ProPetro’s completions business remains the preferred funding source.
A Broader Signal From the Permian
Taken as a whole, PROPWR’s rapid build-out, just one year after launch, highlights a deeper shift in the Permian Basin. Historically, power was treated as an external utility issue. Now, it is moving inside the operational boundary.
As grid constraints intensify and demand rises from both hydrocarbons and digital infrastructure, distributed power providers are gaining strategic importance. Ultimately, companies like PROPWR are positioning themselves at the intersection of energy production, reliability, and infrastructure finance.
