Frigid temps cut US natgas supply as demand soars, Texas faces possible shortfall (updated)

Portland General Electric Co

14/01/2024 22:13

(Adds comment from Williams in final paragraph)
    By Scott DiSavino
       Jan 14 (Reuters) - U.S. natural gas output fell to a
preliminary 11-month low on Sunday as frigid weather froze wells
across the country, while gas demand for heating and power
generation was on track to hit record highs.
    In Texas the state's power grid operator, the Electric
Reliability Council of Texas (ERCOT), forecast electric demand
on Tuesday would top last summer's all-time high and warned
power supplies could fall short on both Monday and Tuesday.
    ERCOT, which said operating conditions were normal on
Sunday, has ways to increase supplies and reduce usage if
necessary. Those include calls for conservation and programs
that encourage businesses to use on-site generation.
    The drop in U.S. gas availability so far this week was the
most in over a year, with supplies on track to fall by around
9.6 billion cubic feet per day (bcfd) from Jan. 8-14 to an
estimated 11-month low of 98.6 bcfd on Jan. 14, according to
data from financial firm LSEG.
    That decline so far was small compared with gas supply
losses of around 19.6 bcfd during Winter Storm Elliott in
December 2022, and 20.4 bcfd during the February freeze of 2021.
    Electricity supply and demand forecasts can change quickly,
however, as power plant availability and weather patterns
develop. The February 2021 freeze left millions in Texas without
power, water and heat for days and resulted in over 200 deaths
as ERCOT scrambled to prevent a grid collapse after an unusually
large amount of generation shut.
    Some of those power plants shut because they could not
access enough gas supplies after frigid temperatures froze wells
and other equipment, known in the energy industry as
freeze-offs.

    DEMAND SOARS
    U.S. gas demand, including exports, will reach 164.6 bcfd on
Jan. 15 and 171.9 bcfd on Jan. 16, according to LSEG.
    Those daily demand forecasts would top the current all-time
high of 162.5 bcfd set in December 2022 during Winter Storm
Elliott, federal energy data from S&P Global Commodities
Insights showed.
    In Texas, ERCOT forecast power demand would peak at around
85,564 megawatts (MW) on Jan. 16 at around 8 a.m. local time,
which would top the current all-time peak of 85,508 MW set in
August 2023.
    ERCOT estimated power use could top supplies by around 1,000
MW during the mornings of both Jan. 15 and Jan. 16. Those
estimates, however, are subject to change and do not account for
steps the grid operator may take to boost supplies and reduce
demand.
    One of the states hardest hit by the freeze over the past
few days is Oregon, where roughly 164,000 homes and businesses
were without power on Sunday, according to PowerOutage.us. 
    Portland General Electric  POR.N , the state's biggest power
company, said in a post on social media platform X that
restoration efforts would continue through the weekend. Portland
General had about 126,000 customers still without power at
midday on Sunday.
    Next-day power prices at the Mid-Columbia (Mid-C) hub
 EL-PK-MIDC-SNL  at the Washington-Oregon border soared to a
record high of around $1,075 per megawatt hour (MWh), according
to LSEG data going back to 2010.
    That compares with Mid-C averages of $81 per MWh in 2023 and
$52 from 2018 to 2022.
    Northwest Pipeline, a 1,500-mile (2,400 kilometer) system
that supplies gas to states including Washington, Oregon, Idaho,
Wyoming, Utah and Colorado, on Saturday declared force majeure
following an outage at a gas storage facility but has since
resumed operations, company notices said. 
    Officials at U.S. energy company Williams Cos  WMB.N , the
pipeline's owner, said on Sunday challenges on the pipeline had
been resolved and that its transmission systems were continuing
to transport scheduled volumes.

 (Reporting by Scott DiSavino; Additional reporting by Liz
Hampton in Denver; Editing by Richard Chang)
 ((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters
Messaging: scott.disavino.thomsonreuters.com@reuters.net))