Texas natural gas producers struggled to keep up with record demand during the historic winter storm that devastated the state's power grid and plunged millions of residents into cold darkness.
Companies were challenged by power outages at oil and gas operations, freezing temperatures that immobilized and damaged equipment, and dangerous road conditions that prevented access to well sites. These factors caused the state's crude oil production to drop by an estimated 2 million barrels per day and natural gas production to drop as much as 7 billion cubic feet per day, according to Bloomberg Intelligence and S&P Global Platts. The losses deprived Texas power plants of the natural gas needed to generate electricity for millions of Texas homes during times of high demand.
“These extreme weather conditions affected every aspect of the Texan energy supply chain,” said Todd Staples, president of the Texas Oil and Gas Association. “The entire Texas system, from the wellhead to the in-house gauge, is designed to last for several hundred-degree days, not several single-digit days.”
The arctic explosion created the perfect storm for power producers in Texas. According to a policy set by the state's power grid manager, ERCOT, regulators have given home heating priority over electricity generation. This created a vicious circle in which operators lost access to natural gas to power oil and gas operations, which further depleted gas supplies. The freezing also caused equipment failures, particularly valves and communication equipment required for remote operation of wells.
Natural gas, which is used to generate much of Texas' electricity, does not freeze in cold temperatures, but the water used in hydraulic fracturing to extract the gas from shale does. Natural gas also relies on pumps to move it through pipelines. When it's cooled, it loses pressure and needs electricity to keep the gas flowing, said Fernando Valle, senior energy analyst at Bloomberg Intelligence, a market research firm.
Much of that oil and gas production is expected to come back online within days if the winter storm continues and power is restored, Valle said. It doesn't appear that oil and gas facilities have suffered widespread damage, he added.
“This doesn't seem like a catastrophic event for the vital oil and gas infrastructure, so it shouldn't take more than a few days for power and supplies to normalize,” he said. “For the operators it is more of a nuisance that it is not a good time for them. It won't be a game changer for production in Texas. “
The blackouts caused by the winter storm fueled the debate over the drive for clean energy to fight climate change. While some have blamed frozen solar panels and wind turbines for the Texas power problems, analysts say the winter storm hit natural gas power plants the most.
“The Texas crisis wasn't caused by the state's renewable energy industry,” said Ed Crooks, America's vice chairman for research firm Wood MacKenzie. “The greatest loss in generation was due to gas-fired power plants, although wind farms were sold a long time ago. However, the blackout warns of the problems that will arise as the share of renewable energies in the grid increases. “
Industry leaders have promoted natural gas as a cleaner alternative to coal and as a backup source of electricity in the event that solar and wind production dips. Natural gas will continue to play a huge role in Texas' energy future, Staples said, despite the challenges producers faced this week.
“Natural gas plays a very important and very reliable role,” he said. “Without this product there would be almost no electricity in this state at the moment.”
However, this week's storm also shows that Texas needs to add power sources that can withstand freezing temperatures.
“We have to rely on more and more energy sources, especially when we're dealing with these extreme weather patterns,” said Valle.