Deja Vu? Texas NatGas Output Plunges Amid Cold Snap
U.S. natural gas futures rose late in the session on new data that showed a plunge in pipeline gas flows in Texas, which indicates the state’s power grid could be susceptible to failures amid a cold snap.
Front-month gas futures are up more than 3% to $3.84 around 1445 ET as commodity traders assess the situation in Texas.
“Production of the heating and power generation fuel in Texas fell on Sunday to the lowest since February’s freeze — when millions were sent into the dark for days — after temperatures plunged,” BloombergNEF pipeline data showed. Flows are expected to rebound when temperatures rebound.
Temperatures in The Lone Star State are expected to rebound in the coming days.
However, warmer weather might not return to much of the U.S. until next Tuesday. Mean temperatures will oscillate around a 30-year average for the next eight days, occasionally dipping to below-average levels. The coldest point is between Jan. 8-11.
Heating degree days for the U.S. show cold weather will increase the demand for energy to heat building structures.
A plunge in gas supplies comes right after the Electric Reliability Council (ERCOT) of Texas said the power grid is “winterized and ready to provide power.”
Last February, a cold snap froze wellhead across the state that parazyled gas flows. Power plants couldn’t get enough fuel to spin turbines, and combine that with extraordinarily high power demand from customers to stay warm, the grid was minutes from collapse — forcing ERCOT, the grid operator — to implement rolling blackouts.
Despite ERCOT’s confidence that grid stability can be achieved this winter, keep an eye on Texas and pray for warmer weather; if not, another energy crisis could be nearing.
