Cold Snap Cuts US Natural Gas Supply, Texas Faces Shortfall
The Americans are grappling with a significant gas supply crisis as the cold snap cuts US natural gas supply, reducing output to an 11-month low. This drop in natural gas production comes when demand for heating and power generation is expected to reach record highs.
In Texas, the situation is particularly dire following the cold snap cuts to the US’ natural gas supply. The state’s power grid operator, the Electric Reliability Council of Texas (ERCOT), predicts that electricity demand on Tuesday could surpass last summer’s all-time high. ERCOT has warned that power supplies might fall short on Monday and Tuesday. Despite normal operating conditions on Sunday, ERCOT has prepared contingency plans to boost supplies and reduce usage, including calls for conservation and encouraging businesses to use on-site generation.
The US’s gas availability decline this week is the most significant in over a year. Data from financial firm LSEG indicates that supplies are on track to drop by around 9.6 billion cubic feet per day (bcfd) from January 8-14, reaching an 11-month low of 98.6 bcfd by January 14. Although substantial, this decrease is smaller compared to the gas supply losses experienced during Winter Storm Elliott in December 2022 and the February 2021 freeze.
The February 2021 freeze caused widespread disruptions in Texas, leaving millions without power, water, and heat for days and resulting in over 200 deaths. ERCOT struggled to prevent a grid collapse as a significant amount of generation shut down, partly due to gas supply shortages caused by frozen wells and equipment, a phenomenon known as freeze-offs.
Demand for natural gas in the US, including exports, is soaring. LSEG forecasts that the demand will hit 164.6 bcfd on January 15 and 171.9 bcfd on January 16, potentially breaking the current record of 162.5 bcfd set in December 2022.
ERCOT’s forecast for Texas indicates that power demand may peak at around 85,564 megawatts (MW) on January 16, possibly surpassing the previous all-time peak of 85,508 MW set in August 2023. However, there are concerns that power usage could exceed available supplies by approximately 1,000 MW on January 15 and 16 mornings. These estimates are subject to change and don’t factor in any actions ERCOT might take to manage the situation.
Oregon is among the states hardest hit by the recent freeze, with approximately 164,000 homes and businesses without power on Sunday. Portland General Electric, the state’s largest power company, has been working on restoration efforts through the weekend.
The energy crisis has also impacted power prices, with next-day power prices at the Mid-Columbia (Mid-C) hub at the Washington-Oregon border soaring to a record high of around US$1,075 per megawatt-hour (MWh), a significant increase compared to the previous years’ averages.
Adding to the crisis, Northwest Pipeline, a major gas supplier in states including Washington, Oregon, Idaho, Wyoming, Utah, and Colorado, declared a force majeure following an outage at a gas storage facility but has since resumed operations. Williams Cos, the pipeline owner, confirmed that the challenges on the pipeline had been resolved and that its transmission systems were continuing to transport scheduled volumes.
This convergence of record low gas supply and unprecedented demand highlights the vulnerabilities in the US energy infrastructure, especially during extreme weather events. With the cold snap continuing, states like Texas and Oregon are bracing for more challenges in meeting their energy needs, underscoring the importance of robust and resilient energy systems in the face of climatic uncertainties.
Also Read: Winter Storm: Widespread Power Outages Hit US Ahead Of Severe Freeze