Diesel engines operating the rig pose the problems of low efficiency and large amount of emissions. In addition the rig power requirements vary a lot with time and ongoing operation. Therefore it is in the best interest of operators to research on alternate drilling energy sources which can make entire drilling process economic and environmentally friendly. One of the major ways to reduce the footprint of drilling operations is to provide more efficient power sources for drilling operations. There are various sources of alternate energy storage/reuse. A quantitative comparison of physical size and economics shows that rigs powered by the electrical grid can provide lower cost operations, emit fewer emissions, are quieter, and have a smaller surface footprint than conventional diesel powered drilling. This thesis describes a study to evaluate the feasibility of adopting technology to reduce the size of the power generating equipment on drilling rigs and to provide ?peak shaving? energy through the new energy generating and energy storage devices such as flywheels. An energy audit was conducted on a new generation light weight Huisman LOC 250 rig drilling in South Texas to gather comprehensive time stamped drilling data. A study of emissions while drilling operation was also conducted during the audit. The data was analyzed using MATLAB and compared to a theoretical energy audit. The study showed that it is possible to remove peaks of rig power requirement by a flywheel kinetic energy recovery and storage (KERS) system and that linking to the electrical grid would supply sufficient power to operate the rig normally. Both the link to the grid and the KERS system would fit within a standard ISO container. A cost benefit analysis of the containerized system to transfer grid power to a rig, coupled with the KERS indicated that such a design had the potential to save more than $10,000 per week of drilling operations with significantly lower emissions, quieter operation, and smaller size well pad.