Group points finger on grid failure
Oil, gas association puts blame on power outages, lack of coordination
Texas’ largest oil and gas trade group said power outages and a communications breakdown between producers, pipeline operators and electric utilities were to blame for the catastrophic grid failure during the February winter storm.
The Texas Oil and Gas Association, however, stopped short of mandating that its members apply for special designations that would exempt them from rolling power outages during emergencies. The association said it supports broader efforts to improve coordination and communication between the natural gas and electric industries, as well as identifying critical gas facilities that should be prioritized for power.
“Although equipment freezeoffs forced wells to be shut down, very clearly we see this would have only been a temporary problem if electricity had been available to power their equipment,” Todd Staples, president of the Texas Oil and Gas Association said Thursday.
The oil and gas industry has come under scrutiny following the power grid failure that resulted in nearly 200 deaths and billions of dollars of property damage. Since the storm, TXOGA has launched a public relations campaign to deflect blame away from the industry.
In its latest efforts, the trade group commissioned Austinbased energy research firm Enverus to conduct an exhaustive review of the challenges facing Texas energy producers. The 41-page report, released Thursday, found the sharp drop in natural gas production during the storm was likely caused by power outages to producers and pipeline operators.
Natural gas production fell by nearly half during the storm, according to the U.S. Energy Department.
An Enverus survey of producers and pipeline companies found that power outages represented most of the challenges they faced
during the winter storm. Enverus and TXOGA did not say how many companies were surveyed or responded, but said they represented more than half of the states’ natural gas production.
“Based on our assessment of available data and the timing of outages, it is likely the issues started at power generation units,” Enverus’ report stated. “Once power outages began, natural gas production was impacted because surface facilities and infrastructure rely heavily on electricity for operations, which then exacerbated the ability for power generators to receive natural gas supplies.”
Enverus also noted that natural gas production started to drop significantly on Feb. 12, a day before the first natural gas power plant failed and two days before ERCOT ordered rolling power outages. Natural gas production fell by 200 million cubic feet on Feb. 12, and 700 million cubic feet on Feb. 13, before plunging even further during the worst of the winter storm.
On Feb. 14, Texas natural gas production fell by more than 2 billion cubic feet, Enverus said.
Bernadette Johnson, Enverus’ senior vice president of power and renewables, said the production declines on Feb. 12 and 13 were within the typical amount of fluctuation seen during the winter season. Some natural gas customers also declined to take the product, given prices had skyrocketed to $385 per million British thermal units, up from 5 cents per million British thermal units before the storm, she added.
“When we look at seasonally or during an event, it’s fairly typical that you get a fair amount of fluctuation day to day with production,” Johnson said. “There’s a significant amount of production in Texas, so that for us is not a red flag.”
Power generators have pushed back against natural gas producers, saying they share the burden of responsibility for the power grid collapse. Power plants said inadequate natural gas supplies caused some of their plants to shut down during the storm.
The Electric Reliability Council of Texas, which managed the state’s power grid, earlier said natural gas shortages accounted for more than a third of the outages at natural gas power plants.
Natural gas provided the majority of the power generation during the winter storm, Enverus said, but it also represented the largest share of outages.
Some industry analysts have called for natural gas producers and pipeline operators to weatherize their equipment and ensure backup power generators to prevent natural gas power plants from tripping offline during the next freeze. Houston pipeline operator Kinder Morgan this week reported that it earned $1 billion after it was able to keep its natural gas pipelines flowing during the winter storm, in large part because it had invested in winterization.
“Just as a lot of power plants need a steady supply of natural gas, gas facilities need to ensure they’re properly registered as critical to grid operation, and that they’re weatherized,” J.P. Urban, the acting chief executive of the Association of Electric Companies of Texas, said in an email.
TXOGA said there are more efficient and effective ways to ensure reliability in the state’s natural gas supply.
“Typically, we don’t have harsh winters,” Staples said. “Consumers are looking for the best deal and they want the lowest prices, and that’s what our system is designed to provide to them. Any additional factors that have a cost that doesn’t result in increased reliability is really a disservice to consumers.”
Ed Hirs, an economics fellow at the University of Houston, said the winter storm underscored the need for the natural gas and electricity industries to coordinate better. Political and industry leaders need to stop blaming each other, he said, and work together to solve the problems.
“No one wants to stand up and shoulder the blame because we’ve got almost 200 people dead and tens of billions of dollars of damage,” Hirs said. “That’s what’s so distressing about it. They appear to be trying to repair potholes on a bridge that’s falling down.”