Texas natural gas producers struggled to keep up with record demand during the historic winter storm that wreaked havoc on the state’s electricity grid and plunged millions of residents into frigid darkness.
The companies were challenged by power outages to oil and gas operations, freezing temperatures that immobilized and damaged equipment, and hazardous road conditions that hampered access to well sites. These factors caused the state’s crude production to fall by an estimated 2 million barrels per day and natural gas production to plummet by as much as 7 billion cubic feet per day, according to Bloomberg Intelligence and S&P Global Platts. The losses deprived Texas power plants of the natural gas needed to generate electricity for millions of Texas homes during periods of peak demand.
“These extreme weather conditions impacted every aspect of the Texas energy supply chain,” said Todd Staples, president of the Texas Oil and Gas Association. “The entire Texas system from the wellhead to the meter on the home is designed to deal with multiple 100-degree days rather than multiple single-digit days.”
The arctic blast produced the perfect storm for Texas energy producers. Under a policy established by the state’s power grid manager, ERCOT, regulators prioritized home heating over power generation. That led to a vicious cycle in which operators lost access to natural gas to power oil and gas operations that further depleted the gas supply. The hard freeze also caused equipment failures, particularly of valves and communications equipment needed to operate wells remotely.
Natural gas, used to generate much of Texas’ electricity, does not freeze in cold temperatures, but the water used in hydraulic fracturing to extract the gas from shale rock does. Natural gas also relies on pumps to move it through pipelines, which if cooled lose pressure and require electricity to keep the gas flowing, said Fernando Valle, a senior energy analyst with Bloomberg Intelligence, a market research firm.
Much of this oil and gas production is expected to come back online within days as the winter storm moves on and power is restored, Valle said. It does not appear that there has been widespread damage to oil and gas equipment, he added.
“This doesn’t seem to be any catastrophic event to key oil and gas infrastructure, so it shouldn’t be more than a few days until power and supply are normalized,” he said. “It’s more of a nuisance for operators that comes not a great time for them. It won’t be a game-changer for production in Texas.”
The power outages caused by the winter storm have inflamed the debate over the push to cleaner energy to battle climate change. While some have blamed frozen solar panels and wind turbines for Texas’ electricity problems, analysts say the winter storm affected natural gas power plants the most.
“The crisis in Texas was not caused by the state’s renewable energy industry,” said Ed Crooks, vice chairman of the Americas for research firm Wood MacKenzie. “The largest loss of generation came from gas-fired power plants, with the drop-off from wind farms a long way behind. However, the loss of power has been a warning of the issues that will be raised as the proportion of renewable generation on the grid rises.”
Industry leaders have promoted natural gas as a cleaner alternative to coal and as a source of backup power for when solar and wind generation dips. Natural gas will continue to play a big role in Texas’ energy future, Staples said, despite the challenges that producers faced this week.
“Natural gas is playing a very important role and very reliable role,” he said. “If it weren’t for that product, there would be almost no power in this state right now.”
This week’s storm, however, also points to Texas’ need to add power sources that can withstand freezing temperatures.
“We need to count on more and more energy sources especially as we go into these extreme weather patterns,” Valle said.
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