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Permalink Reply by Skip Peel - Mineral Consultant on February 16, 2021 at 4:41

As Freeze Grips U.S., One Gas Producer Rushes to ‘Open the Taps’

Rachel Adams-Heard  Fri, February 12, 2021, 9:00 PM·4 min read

 

(Bloomberg) -- Chris Bird first saw the rumors Friday morning on Twitter.

Physical natural gas prices were soaring in Oklahoma amid a cold blast that was gripping much of the U.S. and only stood to get worse. Bird, owner of a small gas producer in Tulsa, called one trader who confirmed the heating fuel was going for a staggering $350 per million British thermal units. Then he called another who said it had risen to $395.

That’s all Bird needed to know. He and his production technician grabbed some winter clothes at the dollar store and drove the stretch of highway to Osage County some 20 miles north. They met up with a buddy who owns a propane torch and began melting ice off idled gas wells to get them back online.

“We’ve got four of us in the office turning on every single gas well that we’ve got,” Bird said. “We have old wells that haven’t produced in 10 years, and we’re like, ‘open the taps, let’s go.’”

After years of depressed prices and weak margins, U.S. natural gas producers -- at least those with wells and equipment that aren’t frozen -- are cashing in on an unusually extreme blast of cold. The freeze is giving a rare boost to a market that’s never recovered from a crash more than a decade ago, flooded by cheap supplies from shale fields.

Prices have surged more than 4,000% in two days in Oklahoma, while gas processing plants across Texas are shutting as liquids freeze inside pipes, disrupting output just as demand for the heating fuel jumps.

The Arctic blast that’s unleashed deadly ice storms as far south as Houston is also disrupting oil output in the Permian Basin of West Texas, potentially impacting several hundred barrels a day of oil output, and has sent electricity prices surging.

As much as 6 inches (15 centimeters) of snow could fall in Fort Worth, Texas, over the weekend, with temperatures possibly plunging into the single digits Fahrenheit on Monday. Freezing rain has already created treacherous driving conditions there, with a 130-vehicle pileup on Thursday leaving six dead and dozens injured.

Texas’s top energy regulator adopted emergency measures to ensure households, hospitals and churches get first dibs on gas for furnaces as the coldest weather in decades descends on the Lone Star state.

Electricity prices in northern Texas averaged more than $300 a megawatt-hour Friday afternoon, compared with an average of about $18 so far this month, according to grid data compiled by Bloomberg.

Texas facilities operated by pipeline companies DCP Midstream LP and Targa Resources Corp. were reported shut on Thursday due to the cold, while Enbridge Inc. said it was limiting requests to transport gas on a pipeline stretching from Texas to New Jersey. Gas production in the mid-continent region is down 35% from the 30-day average, BloombergNEF said Friday.

Meanwhile, Bird estimated that his company will bring in $600,000 to $700,000 a day for as long as gas prices in Oklahoma remain at these levels -- up from just a few thousand dollars a day normally. That’s enough to make conventional wells drilled years ago, and all but forgotten, profitable again. “We’ve got a roustabout crew hooking up wells that are so old they were disconnected,” he said.

His company, Exponent Energy, owns a few hundred wells in Osage County, though these aren’t the gushers out in West Texas. Three-quarters of them had been shut because they no longer made any money at recent prices.

On Friday, that changed.

“We’ve got every single person who works for us in the field turning on wells,” he said.

A weekend of crazy prices could pay for a purchase he made three and a half years ago. By the time he and his team were sipping celebratory margaritas, prices had climbed even higher -- soaring above $500 per million British thermal units.

“We’re paying off 10% of the acquisition value of the deal every day -- today, tomorrow, Sunday and probably Monday,” he said on Friday. “In three to four days, we’re going to pay off the value of the asset from when we bought it.”

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Permalink Reply by JHH on February 16, 2021 at 6:07

I suppose we'll see this show up on our utility bills... gas and electric.  if you have any early information or best guess... pass it along.  in the meantime, I'll be shutting down just about EVERYTHING just in case the bill is something astonishing.

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Permalink Reply by Skip Peel - Mineral Consultant on February 16, 2021 at 6:42

Be careful.  If you do that, you may find the cost to repair broken water pipes is considerably more costly than a one month bump in your utility bills.  I'm working on my partially frozen pipes now and hoping for the best.  It was 4 degrees this morning in Shreveport.

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Permalink Reply by JHH on February 16, 2021 at 15:06

2-degrees here in East Texas.  so far so good.  neighbors have some water issues.   ready to take some in as long as I have working utilities.

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Permalink Reply by Skip Peel - Mineral Consultant on February 16, 2021 at 15:24

That's nice of you, JHH. Remember to keep those sink cabinets open and the faucets dripping.  Although no burst pipes at this time, I'm having some partially frozen pipes and very low water pressure. That's from a 4 degree overnight temp.  When the water system pressure drops below a certain point, you may need to boil any tap water you plan to consume.  You might want to check with your utility.  Hope your power stays on and you avoid any burst pipes.  I'm keeping a crescent wrench by the door in case I need to shut off the water to the house in the event that I do have one or more burst pipes when the thaw comes.  Whenever in the hell that may be!

Permalink Reply by JHH on February 16, 2021 at 6:17

and then there's this.

https://www.click2houston.com/news/local/2021/02/16/frustration-exp...

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Permalink Reply by Skip Peel - Mineral Consultant on February 16, 2021 at 6:45

That's disturbing.  The heat should stay on in those buildings but not the lights.

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Permalink Reply by full name on February 16, 2021 at 8:26

It is the same way in Austin.  They even left the lights on at the new soccer stadium while 40% of customers are without power.  Pictures of indoor fans with ice hanging off the blades due to no heat.  About 8 years ago we had the same issue.  Austin Power at that time said there were too many critical circuits to do rolling blackouts.  At that time they said they were going to rearrange the circuits.  Of course that never happened.

On the other hand I am on a co-op and have had no problem.  I have had no water and low pressure and they actually called me a few minutes ago, but it is a small water district.

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Permalink Reply by Chad Ellis on February 15, 2021 at 11:46

The long and short of it is that renewables cannot handle the winter load.  Solar and wind are unequally diminished during winter compared to traditional sources.  Currently, Texas (Ercot) is predicting a 77,000 Megawatt/hr usage.  This compares to a 100 degree day in the summer.  The problem is in the supply mixture.  Texas has in excess of 22% of its supply as renewables (solar/wind).  As of today, 12,000 megawatts/hr are unavailable due to wind turbines being frozen around Sweetwater.  The solar panels are also diminished for the same reason.  What could also be of concern to local areas is the shutting in of natural gas production.  if power plants are not connected to a hub, then they may be subject to shut ins.  Untreated gas  is subject to freeze offs because of the hydrates.  y 

To answer the next question, no, battery back up is not a reliable solution,  Battery's are good for short term draws.  Overnight or storm shut-ins.  They cannot be economically sized for multi-day cloud cover or ice.  

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Permalink Reply by Max on February 17, 2021 at 3:08

Our governor went on Fox news and said our electric problems are due to green energy.  That's a lie.  Ninety percent of Texas energy comes from Coal, NG, and nuclear.  

Windmills are taking a bad rap here in Texas.  There are windmills in Sweden.  Get's cold there with lots of snow and ice and they work fine.

Solar.  Yep, doesn't work nearly as good when it's cloudy, but still works some.  Coal units: conveyers, waste systems, and control air supplies all freeze.  Why?  Because here in Texas, they don't enclose their units like they do up north.

NG units: A lot less equipment on these units but still have freezing issues.  Valves, control air, and water systems.

28 degrees.  That was the temperature in my daughter's house in Houston yesterday.  Still no power and warmed up to 30 inside.  Unreal.

We need to place the blame where it needs to be.  Failed leadership within our state. 

  

   

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Permalink Reply by Skip Peel - Mineral Consultant on February 17, 2021 at 3:22

Max, I agree that Governor Abbott is attempting a right-wing spin job on the debacle but I don't think he will find much in the way of agreement from Texans shivering in their own homes for days, regardless of their political leanings.  The real problem, and where the blame truly lies, is the government and it's "go it alone" grid system and deregulation of the electrical market.  There will be plenty of partisan back and forth on the question of blame but the real need is a complete regulation overhaul and requirements to harden all forms of generation to catastrophic weather events.  That overhaul should include an expedited timeline for retiring all coal fired generation, reinvestment in Texas grid infrastructure and connections to other regional grid systems. 

I hope you and all Texans get your power back on soon.

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Permalink Reply by Skip Peel - Mineral Consultant on February 17, 2021 at 3:33

Your daily policy charge.

Presented by ExxonMobil Washingtonpost.com

Frozen wind turbines aren't why Texas can't keep the lights on

It's not just wind turbines. The whole Texas power system wasn't ready for this. 

The ongoing electricity crisis in the Lone Star State hasn't stopped a chorus of conservative pundits and even some Republican lawmakers from pointing fingers at the state's fleet of wind turbines as the reason for the rolling blackouts, as nearly 3 million remain without power throughout the state. Even the state's own governor, Greg Abbott (R), joined in.

In reality, frozen wind turbines are just a small part of a much bigger problem. All types of energy systems in Texas are struggling with subfreezing temperatures. The rolling blackouts are the result of a systematic failure of Texas's power plant and grid operators to prepare for a record-shattering Arctic freeze.

It is Texas's traditional thermal power plants, which rely mostly on natural gas, that were supposed to provide the bulk of power during the harshest winter months, but failed to do so, according to Texas grid officials and outside energy expects. 

“The entire system was overwhelmed,” said Joshua Rhodes, a research associate on energy issues at the University of Texas at Austin.

Yet as if an on cue, Republican lawmakers — even some from Texas — want to blame the power failures on renewable energy.

The crisis in Texas shows the degree to which energy policy has been politicized along party lines in the United States.

Abbott, Texas's governor, suggested on Fox News Tuesday that the crisis unfolding his state “shows how the Green New Deal would be a deadly deal," referring to a sweeping manifesto from progressive Democrats to cut greenhouse-gas emissions that was never implemented in his state.

He went on to single out renewables for Texas's power woes, saying “our wind and our solar got shut down," without mentioning the steep decline in output from gas, coal and nuclear plants during the cold snap.

Anchors elsewhere on the conservative news network spent much of Tuesday making dubious ties between the outages in Texas and proposals from Democrats for building out renewable energy resources in order to tackle climate change 

Under the chyron “Texas Power Issues Blamed on Frozen Wind Turbines,” for example, host Pete Hegseth asked, “Is this what America would look like under the Green New Deal?” Another Fox News host, Dana Perino, similarly said the outages are “raising questions about the Lone Star State’s increasing reliance on renewable energy.” 

Meanwhile on Twitter, GOP lawmakers such Rep. Lauren Boebert (R-Colo.) linked the outages to the growth of Texas's renewable energy sector.

The truth: Traditional power plants, not wind turbines, are responsible for most of the energy shortfall.

The loss of power from thermal plants — that is, gas, coal and nuclear — is more than five times greater than decline in output expected from the stalled wind turbines, according to the Electric Reliability Council of Texas, with manages most of the state's grid. Texas only planned to get a tenth of its power anyways from wind energy during the peak winter season.

“There is significantly more megawatts in that thermal unit category than in the renewable category, as far as what's out during this particular event,” Dan Woodfin, a senior director for the Electric Reliability Council of Texas, told reporters Tuesday.

Sky-high demand for gas for heating homes during the winter chill, along with power plant equipment designed for warmer weather being hobbled by frigid temperatures, is what is straining output from the state's gas, coal and nuclear generators during the cold snap.

More fundamentally, well before the storm Texas declined to put in place financial incentives for power producers to prepare for winter and ensure they could meet energy needs during periods of extreme demand, as our colleague Will Englund explains. 

The Lone Star State also runs an electric grid largely disconnected from the rest of the country, allowing it to operate with less federal scrutiny but making it difficult to draw power from neighboring regions during times of crisis.

Iced wind turbines, said Daniel Cohan, an associate professor of civil and environmental engineering at Rice University in Houston, are “so far down the list of what has gone wrong.”

“Overall," he added, "wind has come closer to expectations than many other sources.”

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