Bass Energy & Exploration is independently owned and operated by the Bass family.
Bass Energy & Exploration
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Energy markets are entering 2026 with major shifts driven by technology demands and geopolitics. In Texas, the surging power needs of artificial intelligence (AI) and cloud computing are fueling a boom in gas-fired power plants, including the largest project ever permitted in the United States. At the same time, drilling activity is showing a cautious uptick – especially for natural gas – even as overall U.S. rig counts remain below last year’s levels. Internationally, geopolitical pressure is redrawing oil trade routes: India, under encouragement from Washington, is set to replace some Russian crude imports with oil from Venezuela. These developments underscore how technology and policy are reshaping the oil and gas landscape at the start of the year.
Key developments at a glance:
Each of these six points is explored in detail below, with implications for investors and industry stakeholders. Together, they highlight a dynamic of rising energy demand from new sectors, modest rebounds in domestic drilling, and strategic maneuvers in global oil supply.
Texas regulators have approved the largest gas-fired power project in U.S. history, a massive 7.65 gigawatt (GW) complex designed to power upcoming AI mega-data centers. The Texas Commission on Environmental Quality (TCEQ) issued an air permit for Pacifico Energy’s “GW Ranch” project in West Texas – a private, off-grid campus of gas power plants located near the Permian Basin. Pacifico, the project’s developer, calls it “the largest power project in the United States,” underscoring the unprecedented scale of this venture. The GW Ranch campus will directly supply electricity to hyperscale data centers and AI facilities, rather than connecting to the public grid. By operating a dedicated power campus, the project aims to meet soaring data center energy needs without straining Texas’s main electric grid. In fact, Pacifico’s design includes on-site battery storage and solar capacity alongside gas turbines to ensure reliability for its clients. Company officials say this private-grid approach provides the “scale, speed, and regulatory certainty that hyperscale... customers require” in Texas’s expanding data center market.
The sheer scale of GW Ranch reflects the growing energy appetite of artificial intelligence operations. At full capacity, the 7.65 GW plant could consume 1–2 billion cubic feet of natural gas per day, roughly equal to 4–7% of the entire Permian Basin’s daily gas output. “Even for something like the Permian, that’s a very material chunk,” noted Gabriel Collins, a researcher at Rice University, emphasizing how significant this single project’s gas draw would be. To put it in perspective, 7.65 GW is enough electricity to power a mid-sized city – and this power will be dedicated solely to data centers and AI computing. Texas-based data hubs for cloud services, cryptocurrency, and AI are expanding so fast that energy infrastructure is racing to keep up. Projects like GW Ranch illustrate how the tech sector’s growth is directly boosting fossil fuel demand in regions with abundant gas supply.
Notably, Texas regulators fast-tracked the permitting of GW Ranch despite its potential environmental impact. The facility is authorized to emit over 12,000 tons per year of air pollutants (such as soot, carbon monoxide, and volatile organic compounds) under its state permit. It could also release up to 33 million tons of greenhouse gases annually, roughly 5% of Canada’s total yearly emissions. Such figures have raised concerns among environmental groups. However, state officials and project proponents point out that the campus includes emissions controls and that having a dedicated site for data center power can avoid overloading public utilities. In short, Texas is embracing large-scale gas projects to secure its place as the go-to home for energy-intensive AI computing, betting that economic and technological gains outweigh the environmental trade-offs.
The record-breaking GW Ranch project is not an outlier – it’s part of a broader surge in gas power development that has made Texas a global epicenter for new capacity. In 2025 alone, nearly 58 GW of new gas generation was added to Texas’s development pipeline. To appreciate how massive this is: 58 GW exceeds the entire peak electricity demand of California, a state with 40 million people. According to Global Energy Monitor (GEM) data released last week, only China – a country 50 times more populous – has more gas-fired capacity under development than Texas. This Texan buildout includes dozens of planned power plants, many on a colossal scale similar to GW Ranch. For example, another developer, Fermi America, applied for permits to build 6 GW of gas generation to serve data centers near Amarillo, TX. And even oil major Chevron announced plans for its first-ever power plant: a 5 GW facility dedicated to AI processing, also in West Texas. These multi-gigawatt proposals underscore how the energy industry is responding to the booming power needs of cloud computing and AI in real time.
Nearly half of all upcoming gas power capacity in Texas – about 40 GW – is slated to directly feed large data centers. This marks a striking convergence of the tech and energy sectors. “Massive fossil fuel infrastructure is being developed, often directly at the source of gas supply, in order to feed speculative AI demand,” observed Jenny Martos, project manager for GEM’s Global Gas Plant Tracker. In other words, tech companies’ hunger for reliable power has sparked an explosion of new gas projects. “There is just an explosion of these things. We’re having such a tough time staying on top of new projects,” said Griffin Bird, an analyst who monitors gas plants for the Environmental Integrity Project. Texas authorities have been issuing permits at breakneck speed to enable this growth. Some data center power plants of 300–500 MW (enough to power 200,000 homes) have won air permits in as little as a month, reflecting a pro-development stance aimed at attracting high-tech investment.
If all the gas plants in Texas’s current pipeline were built, they would more than double the state’s gas-fired generation capacity. Texas already has 11 gas power plants under construction, 102 in advanced development, and another 28 announced in early stages. Of course, not every announced project will reach completion or full capacity – some may be scaled back, delayed, or canceled due to financing and grid considerations. Even those that do proceed will likely come online gradually over several years, not all at once. Analysts caution against assuming the extreme scenario will fully materialize. However, even a fraction of the permitted capacity would mark a tremendous increase in generation. As Collins noted, “Even if they built just a small fraction of what that permit says, it’d still be a tremendous facility.” For investors and industry observers, the takeaway is clear: Texas is cementing its role as the premier growth market for gas power. The state’s friendly regulatory environment, proximity to cheap shale gas, and demand from AI and crypto sectors are driving a buildout of unprecedented scale. This trend could significantly boost natural gas demand and associated midstream infrastructure in the coming years, even as it raises questions about long-term emissions and grid evolution.
Turning to traditional upstream activity, Oklahoma’s oil and gas drilling is seeing a modest rebound. The state’s active rig count jumped to 46 rigs this week, up from 43 rigs the week prior. This marks the highest level of drilling activity in Oklahoma in a year, slightly above the 45 rigs operating at the same time last year. The three-rig weekly increase may seem small, but it is notable given the generally cautious mood in the drilling sector in late 2025. Oklahoma’s rig gains were concentrated in key producing basins and reflect steady demand for new wells, particularly in areas rich in natural gas and natural gas liquids. Producers in plays like the SCOOP/STACK and Anadarko Basin appear to be adding rigs to capitalize on improving economics and demand, especially for gas.
Industry analysts describe the uptick as a positive signal for Oklahoma’s oilfield service and supply companies, which endured a slowdown in drilling last year. The rig count increase suggests that operators are selectively ramping up projects, potentially due to slightly higher natural gas prices or favorable hedging positions entering 2026. It’s also possible that efficiency gains and lower drilling costs are encouraging more well completions even at moderate commodity prices. Importantly, Oklahoma’s rig count recovery is happening despite a nationwide dip in drilling over the past year. The state bucked the broader U.S. trend (which saw fewer rigs year-on-year) by essentially holding steady and now inching upward. This resilience underscores Oklahoma’s role as a steady hydrocarbon producer. For investors, an expanding Oklahoma rig count may signal renewed opportunities in the mid-continent region – from oilfield services to midstream infrastructure – if the trend continues. Stakeholders will be watching whether this momentum sustains in coming weeks or if it fluctuates with commodity prices.
Nationally, the U.S. drilling rig count ticked up slightly in the latest week, reflecting a nuanced outlook for oil and gas development. The total active U.S. rig count reached 546, an increase of 2 rigs compared to the week before. This small rise was driven entirely by natural gas drilling – the number of gas-directed rigs grew by 3 to a total of 125 gas rigs, while oil-directed rigs held steady at 411. The shift hints at a subtle change in industry focus: even as oil drilling has plateaued, gas projects are seeing a bit more action. Some producers may be responding to expectations of stronger gas demand (for example, from LNG export terminals or power generation projects) in 2026. Others might be reallocating capital from oil to gas plays due to price dynamics or the rich natural gas liquids yields in certain basins.
Despite the recent uptick, U.S. drilling activity remains below year-ago levels. There are 36 fewer rigs operating now than at this time in 2025. The downturn over the past year was largely in oil drilling: the oil rig count is down by 68 from a year ago, whereas gas rigs have increased by 27 over the same period. In other words, the industry pulled back on oil projects amid price uncertainty or capital discipline, even as it modestly expanded gas drilling. The result is that gas rigs now constitute a larger share of the total rig mix than a year prior. Regionally, the latest data showed divergent trends: for instance, Oklahoma added rigs while Texas dropped a few in the last week, highlighting how local factors (like basin-specific economics or weather) can influence activity. Major oil-producing states like New Mexico held steady, and gains in places like North Dakota and Louisiana offset minor declines elsewhere.
For investors, the key point is that the U.S. upstream sector is in a holding pattern – not crashing, but not in high-growth mode either. The rig count hovering in the mid-540s suggests companies are maintaining output with an eye on efficiency rather than aggressively expanding. The relative strength in gas drilling implies confidence in gas market fundamentals going forward, possibly due to growing export capacity and domestic consumption (including the aforementioned AI-driven power demand). However, any significant change in oil or gas prices could quickly alter drilling plans. With the rig count still below last year’s pace, oilfield service capacity is ample and drilling costs have stabilized, which could set the stage for a faster ramp-up later if market conditions warrant. In summary, U.S. drilling is slowly recovering from last year’s dip, but remains cautious, with a notable tilt toward natural gas projects as 2026 begins.
On the global stage, India is making a significant pivot in its oil sourcing under pressure from the United States. President Donald Trump announced that India – the world’s third-largest oil importer – will begin buying crude oil from Venezuela as opposed to from Russia or Iran. “India is coming in, and they’re going to be buying Venezuelan oil as opposed to buying it from Iran. So, we’ve already made that deal,” Trump told reporters aboard Air Force One. This statement follows months of U.S. diplomatic effort to reshape where India, a key U.S. partner in Asia, gets its oil.
Throughout 2025, India had significantly increased its imports of discounted Russian crude, taking advantage of low prices after Western sanctions were imposed on Moscow for the Ukraine conflict. These purchases raised concerns in Washington, which is eager to limit Russia’s oil revenues. India, for its part, had long stopped buying Iranian oil due to U.S. sanctions (since 2019) and needed alternative suppliers. Russian oil filled that gap, propelling India to become one of the largest buyers of Russia’s seaborne crude. However, the U.S. made it increasingly clear that a shift was necessary. In August, Trump doubled tariffs on Indian exports to the U.S. – raising duties to 50% – explicitly to put pressure on New Delhi to cut back Russian oil imports. Facing this pressure, India did start to reduce its intake of Russian oil in late 2025, signaling willingness to cooperate.
Now the proposed solution is Venezuelan oil. Venezuela holds some of the world’s largest crude reserves, and re-routing Indian demand there serves multiple U.S. objectives. It helps replace some of the Russian volumes India would give up, without resorting to Iranian oil (which remains off-limits under sanctions). It also potentially provides an outlet for Venezuelan crude at a time when the U.S. is seeking to rehabilitate Venezuela’s oil industry under new political circumstances. For India, Venezuelan oil could be attractive if offered at favorable terms, and it allows diversification of supply. This pivot is being framed by the U.S. as a win-win: India secures needed oil, and Moscow loses a big customer for its sanctioned crude. Indeed, U.S. officials indicated they “already made that deal, the concept of the deal” with India’s agreement. While details of volumes and timing are still emerging, the geopolitical significance is clear. This would mark the first substantial Indian purchase of Venezuelan crude in years, since India had halted imports from Venezuela last year when new U.S. tariffs were imposed on buyers of Venezuelan oil. If India follows through, it could draw down its Russian imports further, adjusting the global flows of oil in a notable way.
To enable India’s shift to Venezuelan oil, the United States is offering a series of economic incentives and policy adjustments. One key move is the potential rollback of punitive tariffs on Indian goods. The additional 25% tariff that Trump had placed on Indian exports (raising total duties to 50%) may soon be removed, according to U.S. Treasury Secretary Scott Bessent. Bessent signaled in January that since India sharply reduced its Russian oil purchases, the U.S. is prepared to lift the extra tariff as a reward. This would bring tariffs on Indian products back down to their normal levels, smoothing over a major trade irritation between Washington and New Delhi. The prospect of tariff relief undoubtedly sweetened the deal for India to pivot away from Russia. Improved U.S.-India trade relations could be an added benefit of this energy arrangement, with Trump commenting that ties have “continued to improve” after a tense year.
Simultaneously, the White House is easing some sanctions on Venezuela’s oil sector to ensure that Venezuelan crude can reach India (and other buyers) more easily. This week, the U.S. government lifted certain restrictions to “help flow existing product” from Venezuela. In practical terms, this means U.S. companies and global traders have fewer legal obstacles to handling Venezuelan oil. For example, licenses for American firms to engage with Venezuela’s state oil company may be expanded, and sanctions that prohibited third parties from transporting Venezuelan crude might be relaxed. These steps come on the heels of earlier measures: back in March 2025, as tensions with Venezuela’s then-government escalated, Trump had imposed a 25% tariff on countries buying Venezuelan oil and even threatened India with such a tariff. Those hardline measures contributed to Venezuela’s isolation. Now, with a change in approach, Washington is effectively welcoming Venezuela’s re-entry into global oil markets under U.S. oversight. President Trump has even suggested that China “could make a deal” to buy Venezuelan oil as well, indicating a broader strategy to redirect multiple big importers towards Caracas’s barrels.
For investors and market watchers, these developments hint that Venezuelan oil exports could rise in 2026, assuming political and logistical hurdles are addressed. Venezuela’s oil production has been severely curtailed by years of sanctions and mismanagement, but it still has the potential to ramp up output if given access to markets and investment. India’s newfound demand, backed by U.S. approval, might be the catalyst needed to increase Venezuela’s exports. Additionally, the easing of tariffs and sanctions reflects a pragmatic turn in U.S. policy: instead of trying to block oil flows (from Russia, Iran, or Venezuela), the focus is shifting to rechanneling flows in ways that align with U.S. strategic interests. This could create opportunities for companies involved in Venezuelan oil (under careful compliance) and might alter global crude price dynamics. In the near term, more Venezuelan barrels on the market – and fewer Russian barrels headed to India – could modestly affect the supply-demand balance for certain grades of crude. It’s a space to watch, as further U.S. announcements on Venezuela policy are expected soon.
Big picture – investors should note the convergence of technology trends, domestic production signals, and geopolitical maneuvers shaping the energy sector’s outlook. Texas’s greenlighting of an unprecedented 7.65 GW gas power project highlights how AI and data centers are emerging as major energy consumers, driving demand for natural gas infrastructure. This trend could bolster gas markets and midstream operators, but it also introduces new questions about environmental impact and regulatory oversight in traditionally oil-focused regions. Meanwhile, the slow climb in rig counts – particularly the rise in gas-directed drilling – suggests a subtle rebalancing in U.S. upstream activity. Companies appear to be positioning for future gas needs, which may benefit investors exposed to natural gas basins or services, even as overall drilling remains disciplined compared to a year ago.
Internationally, India’s pivot to Venezuelan oil under U.S. guidance is a reminder that geopolitics can swiftly redirect trade flows, creating both opportunities and risks. For one, integrating Venezuelan crude back into world markets could relieve some supply tightness and present openings for ventures in Venezuela (for those able to navigate the sanctions landscape). It also underscores the U.S. government’s active role in influencing who buys oil from whom – a factor that energy investors must keep on their radar when assessing country risk and market access. The easing of tariffs on India and sanctions on Venezuela is essentially a diplomatic bargaining chip turning into economic reality, potentially improving U.S.-India relations and stabilizing Venezuela’s oil revenues. Investors in refining and shipping may want to track how Indian refiners handle the heavy Venezuelan crude and whether new shipping routes develop as a result.
In summary, today’s oil and gas landscape is being reshaped by forces old and new. Traditional metrics like rig counts are inching up, but the drivers include novel demand sources like AI alongside strategic policy decisions. The key takeaway for investors is to stay agile and informed: the energy transition is not only about renewables vs. fossil fuels – it’s also about evolving uses of fossil energy (like powering data centers) and changing political winds (as seen in the India-Venezuela deal). Keeping an eye on regulatory signals and cross-sector trends will be critical. At Bass EXP, we don’t just follow the news — we put it to work. These developments may open avenues for direct participation in energy projects, whether in natural gas ventures capitalizing on tech-driven demand or in repositioning portfolios to account for shifting oil flows. Learn more about direct participation in oil and gas at bassexp.com.
Preston Bass is the founder of Bass Energy Exploration (BassEXP) and an experienced operator in the private oil and gas sector. He helps accredited investors evaluate working-interest energy projects with a focus on disciplined execution, cost control, and transparent reporting. Preston also hosts the ONG Report (Oil & Natural Gas Report), where he breaks down complex oil and gas investing topics—including tax considerations and deal structure—into clear, practical insights.
Read Full BioBass Energy & Exploration is independently owned and operated by the Bass family.
Bass Energy & Exploration
7 NE 6th Street
Oklahoma City, OK 73104