There’s not much on the record books to compare this week.
Spot gas prices in some areas ballooned to the thousands and one of the biggest states in the country left more than four million of its residents in the dark and cold during a prolonged, unprecedented Arctic freeze.
And that’s only a fraction of what occurred in probably the longest short week of the year, during which NGI’s Weekly Spot Gas National Avg. rocketed $16.855 higher week/week to $33.680.
A major component of that gargantuan increase stemmed from jaw-dropping gains in Oklahoma, where overnight temperatures plunged to within 10 degrees of zero beginning on Saturday (Feb. 13) and remained there through Friday. Daytime highs barely hit the freezing mark by the end of the week.
With operational issues on dozens of natural gas pipelines restricting gas flows, and power demand surging to winter highs, OGT, aka Oneok Gas Transmission, soared as high as $1,250.000 before crashing back to the $3.000 range by Friday. Weekly OGT spot gas prices averaged $538.685, up $446.240 from the prior week. Several other pricing hubs in the Midcontinent posted similarly stout gains.
The meteoric rise in gas prices did not stop there, with the polar air plunging deep into Texas. Spot gas at the Houston Ship Channel shot up as much as $400.000 during the week and averaged $201.795, up $162.390 on the week.
The hefty premiums were a reflection of the myriad of pipeline issues that ensued as the bitter cold descended into the state. In addition to operational flow orders, forces majeure and other issues, pipelines in West Texas also contended with wellhead freeze-offs. RBN Energy LLC reported that Permian Basin associated gas bottomed out at around 3 Bcf/d but by Friday, output was back at above 5.5 Bcf/d. Earlier this month, it was around 11.5 Bcf/d.
Total Lower 48 production levels, meanwhile, fell below 70 Bcf during the week, the first time production has dropped below that level since January 2017, according to Wood Mackenzie.
But the crisis in Texas extended far beyond natural gas.
The state’s electric grid operator, the Electric Reliability Council of Texas (ERCOT), implemented what were initially expected to be rolling blackouts that ultimately ended up being prolonged, multi-day outages that left millions of Texas residents without electricity. The lack of power eventually led to water issues as several cities had to initiate boil notices since their treatment facilities lacked power. The one in Houston was still in effect late Friday.
At the start of the week, ERCOT said it had lost more than 30,000 MW of generation because of the extreme winter weather. It was another two days before the grid operator provided an update on its website. By then, the amount of generation offline had grown to 46,000 MW, including 28,000 MW of natural gas and coal generation and 18,000 MW of wind and solar. Altogether, “approximately 185 generating units had…
Read More: Historic Freeze Fuels Monstrous Weekly Natural Gas Price Rally, Leaves Texas Left Out