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Texas gas supplies plunge during winter storms. This is a problem for the grid.

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(Bloomberg) – For two back-to-back winters, cold weather has plunged Texas gas production, but the size of those drops depends on who you ask. Days after the most recent chill, state regulators said only 2% of production had been lost, although independent researchers claim it was more than triple.

Why the gap? Despite being the largest supplier and consumer of gas to the world’s largest economy, Texas does not track production disruptions in real time. This can be a big problem for the power grid, which relies on the 24/7 flow of gas to keep the lights on.

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During the cold snap of less than two weeks ago, fuel supply issues forced more than a gigawatt of electricity offline, enough to potentially darken 250,000 homes, according to the main operator of Texas network. Last winter, when a multi-day frost gripped Lone Star State and crippled gas production, millions of people lost consciousness for nearly a week and hundreds died.

These once-abnormal extreme events are becoming the status quo as climate change disrupts weather patterns, a reality most U.S. grid operators are now factoring in operational planning. But Texas has been slow to respond to the peril, despite the fact that gas underpins more than half of the state’s electricity production.

The lack of real-time data on well failures is a particular problem in Texas, as many of its power plants cannot operate without a constant flow of gas. Unexpected interruptions can quickly shut down a power plant, interrupting the flow of electricity to consumers. Yet the state’s main regulator does not require drillers to immediately disclose when production weakens, and the production data the state collects is typically several months old: Wednesday night, the lowest production figures. most recent published by regulators were those for October. .

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“The gas market is murky,” said Michael Webber, a professor at the University of Texas at Austin. “That’s how it’s set up. There isn’t much justification for this other than some sort of inertial laziness – that the current system benefits producers. “

The confusion arises amid growing concern in the United States and abroad about the sufficiency and resilience of gas supplies to avoid the colder winter months of the northern hemisphere. Futures on the US benchmark gas have climbed 30% since late 2021 for the best start to the year since entering the New York Mercantile Exchange more than 30 years ago.

While last year’s deadly freeze sparked calls for more market transparency and extreme weather precautions, none have happened. The Texas Railroad Commission, which has overseen the state’s oil and gas production for more than a century, has until March 2023 to adopt weatherization standards for gas producers, although lawmakers have taken provisions to allow certain drillers to withdraw. The commission did not respond to a request for comment for this story.

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When the January 2-3 cold blast halted part of production, the agency was unable to quantify the extent of the outages – ultimately relying on third-party business data to extrapolate a drop much lower than even the industry reported later. .

“There’s not a lot of justifications for this other than some kind of inertial laziness” -Michael Webber, University of Texas

Citing an analysis from S&P Global Inc., the commission said in a post-storm statement that the production decline “represents 2% of daily Texas production.”

This came up against separate figures from IHS Market Ltd. and BloombergNEF which reported a production drop of at least 7%, the biggest drop since the disaster in February. Fortunately, this month’s cold weather was short-lived, the grid remained well supplied, and Texas avoided all kinds of blackouts.

Gas production returned to normal as soon as temperatures moderated, a fact the Railroad Commission cited in support of its conclusion that “there was apparently no apparent significant impact on the market or the production of energy”.

But if the cold had persisted for several days, as it did during the event 11 months ago, the impacts could have been much more pronounced.

© 2022 Bloomberg LP

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