Energize Weekly, February 24, 2021
The near collapse of Texas’ electric grid was caused in the main by a failure of the natural gas system from the wellhead to pipeline to gas turbine, according to an analysis by the International Energy Agency (IEA).
“Texas has a power shortage because it has a gas shortage,” the agency said.
And the failure of the system – a result of the Arctic temperatures that blanketed the country – led to natural gas prices shooting up across the nation, according to BTU Analytics.
Natural gas prices along the Texas Gulf Coast were trading at more than $160 for a million British thermal units (MMBtu) during the cold snap compared to $3 a MMBtu in the week prior, BTU Analytics said.
In the first instance, it was the frigid temperatures and snow that created both supply and demand problems.
On Feb. 15, the high temperature in Dallas was 14 degrees Fahrenheit, about 47 degrees cooler than the average temperature for the month. “As 60 percent of Texans heat themselves with electricity, winter power demand is very sensitive to temperature changes,” the IEA said.
The unseasonably cold temperatures led to a new winter demand peak record rivaling the summer peak. Market prices hit the cap of $9,000 per megawatt-hour.
Demand soared, but electricity generation in the state could not meet it, leading to a mismatch between supply and demand that reached about 30,000 megawatts (MW) on Feb. 15 and was still 20,000 MW on Feb.17, according to the U.S. Energy Information Administration (EIA).
The day-ahead forecast peak for Feb. 15 was 74.5 gigawatts (GW) – 15 percent higher than the previous, all-time winter peak set on Jan. 17, 2018.
Faced with soaring demand and faltering generation, the Electric Reliability Council of Texas (ERCOT), the state’s grid operator, began rolling power cuts on Feb. 15 affecting four million customers.
On Feb. 15, ERCOT – which manages electric supplies for 26 million Texas customers and covers 75 percent of the state and 90 percent of its electric load – shed as much as 27 GW of load, about 35 percent of forecasted demand. The total load shed for the day was 500 gigawatt-hours (GWh).
By way of comparison, the rolling power cuts in California last summer, amid a rash of wildfires, led to about 1.5 GWh of lost load.
The IEA, based on those figures, calculated that the Texas blackouts on Feb. 15 and Feb. 16 represented an outage 500 times higher than the episode in California.
The major reason for the gap was the widespread failure of generating capacity due to the cold.
Some wind turbines were frozen, and winds were light, cutting in half winter wind generating potential to no more than 3 GW on Feb. 15 and 16.
Coal plants were operating at 60 percent of rated capacity, creating a shortfall of 6 GW, and one of the state’s four nuclear plants was shut down due to a weather-related loss of feedwater pumps.
It was, however, the systemic failure in natural gas supply and generation that created the crisis.
Natural gas accounts for 53 percent of ERCOT’s generating capacity, and gas generation is responsible for meeting peak demand. Some natural gas plants were hampered by frozen equipment and pipes, but the main problem was not enough natural gas to power the units.
Between Feb. 6 and Feb.15, the demand for gas in ERCOT more than tripled, an increase of 4 billion cubic feet a day, the IEA said.
During the same period, dry gas production in the U.S. fell by more than 15 percent, mainly due to wellhead freeze-offs across key producing regions.
The South-central producers, including those in Texas’ Permian Basin, were particularly hard hit, suffering a 20 percent cut in production. “As a result, there wasn’t enough to supply the system’s gas generators,” the IEA said.
“The decline in natural gas supplies to the ERCOT market area effectively led to the shut-in of an estimated 31 GW of gas-fired power generation capacity on 15 February and 16 and was the main reason for the capacity shortfall,” the agency said.
BTU Analytics estimated that U.S. production was down by 12 billion cubic feet a day when compared to output the week before the freeze.
Freeze-offs occur when water produced along with the natural gas crystalizes at low temperatures and blocks the well. The problem was particularly acute in the Permian, the Haynesville and Fayetteville plays, where freeze protection of wells is uncommon.
The Haynesville covers parts of Arkansas, Louisiana and Texas. The Fayetteville straddles Oklahoma and Arkansas.
Total U.S. oil production also dropped nearly 40 percent – more than 4 million barrels a day – the most ever, according to Bloomberg News. The Permian Basin – which is also the country’s biggest oil field – was hardest hit with production down between 65 percent and 80 percent from normal levels.
The drop in natural gas supplies adversely affected pipeline operators, who found it difficult to balance their systems.
Several pipelines and processing plants were reported to have closed or limited operations due to freezing, and some suffered horsepower issues at compressor stations.
More than 30 gas pipelines declared force majeure or issued operational flow orders, which effectively restricted deliveries to shippers, resulting in limited incremental gas supplies to customers.
Liquefied natural gas (LNG) demand was also affected as weather delayed travel in Gulf Coast shipping channels, forcing operations at liquefaction facilities to halt.
Texas was not alone in facing rolling outages. The Southwest Power Pool (SPP), whose system includes parts of Texas, Oklahoma, Arkansas, Missouri, Kansas, Nebraska and South Dakota, called for 1,500 MW of load cut on Feb. 15.
The Midcontinent Independent System Operator (MISO) was forced to call for rotating power outages briefly on the morning of Feb. 15. MISO includes parts of Texas, Louisiana, Arkansas, Missouri, Illinois, Indiana, Michigan, Wisconsin, Minnesota, Iowa and North Dakota.
The shortage of supplies and the cold weather that blanketed the continental U.S. led to a 15 percent increase in natural gas demand between Feb. 6 and Feb. 15. Gas deliveries hit a two-day record, Feb. 14 and 15, of more than 300 billion cubic feet, according to the American Gas Association.
The result was that natural gas prices were up all across the country, according to BTU Analytics.
“With demand soaring and production offline, natural gas prices across the country were sent upwards into triple-digits,” BTU energy analyst Anna Lenzmeier wrote in a note.
The highest daily trades in the Midcontinent, Midwest, Rockies, Southwest, and Texas were all over $150 a MMBtu. Midcontinent prices reached a high trade of $300 and the Chicago Citygate hit $250 a MMBtu.
“The experience in Texas and the U.S. Midwest follows on challenges recently faced by the power systems in Japan and last summer’s rotating outages in California,” the IEA said. “It is clear that extreme temperatures are putting today’s power systems in transition to fresh tests.”