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Texas Faces New Power Crisis: Prices Soar 10,000% As ERCOT Urges Power Conservation Amid Grid ‘Emergency’

Texas Faces New Power Crisis: Prices Soar 10,000% As ERCOT Urges Power Conservation Amid Grid ‘Emergency’

Texas’ power grid operator, Electric Reliability Council of Texas (ERCOT), which came under immense pressure months ago for mishandling the historic winter storm in mid-February, urged customers Tuesday afternoon to “reduce their electricity use” as a cold front swept through, causing power demand to spike.

ERCOT told customers to please “conserve energy at this time. Consumers and businesses are urged to reduce their electricity use this afternoon and into the evening.”

Texas’ power grid operator also said:

“Due to a combination of high gen outages typical in April & higher-than-forecasted demand caused by a stalled cold front over TX, ERCOT may enter emergency conditions. 

With a cold front moving through the Lone Star state some generation units were already down for repair work. Bloomberg reports one spot price for Texas power jumped as much as 10,000% on Tuesday.

In particular, the average spot on-peak electricity at Ercot’s North Hub jumped more than 10,000% to $1,975.96 a megawatt-hour as of 4 p.m, according to grid data compiled by Genscape. Prices are capped at $2,000 a megawatt hour, after regulators suspended the previous $9,000 cap following the energy crisis.

The grid has seen tight supply conditions as below-average temperatures pour into the state this week.

So far, “We do not expect customer outages. Declaring an emergency would allow us to access additional resources,” ERCOT said, although it requested energy conservation. 

The internet was not enthused by ERCOT’s grid warning today:

…click on the above link to read the rest of the article…

Texas Freeze Creates Global Plastics Shortage

Texas Freeze Creates Global Plastics Shortage

First, it was a demand slump across pretty much every manufacturing industry because of the pandemic. Then a surge in demand for electronics caused a shortage of microchips, which hit the automotive industry particularly hard. Now, the Texas Freeze has caused a global shortage of plastics. The Wall Street Journal reported this week that the cold spell that shut down oil fields and refineries in Texas is still affecting operations, with several petrochemical plants on the Gulf Coast remaining closed a month after the end of the crisis. This creates a shortage of essential raw materials for a range of industries, from car making to medical consumables and even house building.

The WSJ report mentions carmakers Honda and Toyota as two companies that would need to start cutting output because of the plastics shortage, which came on top of an already pressing shortage of microchips. Ford, meanwhile, is cutting shifts because of the chip shortage and building some models only partially. GM, on the other hand, has started building some pickup trucks without a fuel management module because of the shortages, which will affect the fuel economy performance of these cars.

Yet, the automaking industry is just one victim of the abnormal circumstances on the planet and the Gulf Coast. Another is the construction industry. The WSJ reports, citing industry insiders, that following the petrochemical shutdowns, builders are bracing for shortages of everything from siding to insulation.

More than 60 percent of polyvinyl chloride (PVC) production capacity in the United States is still out of operation a month after the Texas Freeze, Bloomberg reported earlier this month….

…click on the above link to read the rest of the article…

 

Why every state is vulnerable to a Texas-style power crisis

Why every state is vulnerable to a Texas-style power crisis

“The infrastructure we have built right now really isn’t ready.”

Workers repair a power line in Austin, Texas, on February 18, 2021.
Power outages in Texas after Winter Storm Uri left millions in the dark. Such outages are a growing threat throughout the country.
 Thomas Ryan Allison/Bloomberg via Getty Images

The blackouts that gripped parts of Texas for days as temperatures dipped to record lows last month were stunning for a state that prides itself on its diverse and abundant energy supplies. Texas is the country’s largest oil producer, largest lignite coal producer, largest natural gas producer, and largest wind energy producer.

Yet despite its bountiful resources, every electricity source — natural gas, coal, nuclear, wind, solar — fell short just as Texans needed to warm up the most.

Now that Texas has thawed out after an icy freeze left more than 4 million people in the cold and dark, heads are rolling.

This week, Texas Public Utility Commissioner Shelly Botkin resigned, leaving just one commissioner of the three-member group remaining. This follows a wave of resignations at the Electric Reliability Council of Texas (ERCOT), the group that oversees the state’s power grid.

It’s not yet clear how many Texans died amid the cold, but several people died after they lost power, including an 11-year-old boy. Others died from carbon monoxide poisoning as they burned fuel indoors or ran their cars in desperate attempts to stay warm. Millions lost drinking water for days.

The blackouts cost the state economy upward of $130 billion in damages and losses, and some people who did have power saw their bills spike by thousands of dollars. Grid operators say that the situation could actually have been a lot worse, with the system minutes away from a months-long blackout.

Texas politicians have not earned much sympathy from the ordeal. Texas Sen. Ted Cruz derided California’s “failed energy policies” when the Golden State suffered blackouts last year. Gov. Greg Abbott went on television to erroneously link the power outages to the Green New Deal. Other Texas politicos blamed iced-up wind turbines for the electricity shortfall when the majority of the power losses were from natural gas.

…click on the above link to read the rest of the article…

The First Texas-Freeze Casualty: Just Energy Implodes, Issues Going Concern Warning

The First Texas-Freeze Casualty: Just Energy Implodes, Issues Going Concern Warning

Just Energy’s shares crashed more than 21% in the premarket after the company released a statement about steep losses incurred during the winter storms that swept across Texas last week warning of doubts about remaining a ‘going concern’ (translation: it may not survive).

“The financial impact could change as additional information becomes available,” it said in the statement.

“Accordingly, the financial impact of the Weather Event on the Company once known, could be materially adverse to the Company’s liquidity and its ability to continue as a going concern.”

Just Energy hit a record low ($4.05) in premarket trading since it went public in 2002… and peaked above $600 in 2007.

The retail energy provider specializing in electricity and natural gas commodities, renewable energy options, and carbon offsets revealed that it lost $250 million due to Texas’s latest “weather event”.

“The sustained high prices from February 13, 2021 through February 19, 2021, during which real-time market prices were artificially set at USD $9,000/MWh for much of the week, it is likely that the Weather Event has resulted in a substantial negative financial impact to the Company.”

Based on current information available to the company as of the time of this press release, the company estimates that the financial impact of the Weather Event on the company could be a loss of approximately USD $250 million (approximately CAD $315 million), but the financial impact could change as additional information becomes available to the company,” Just Energy stated. 

The company warned the material impact could cause “liquidity” issues and raises doubts it can continue operating. It’s currently talking with top stakeholders regarding the impact of the weather event last week.

…click on the above link to read the rest of the article…

The Temporary Collapse Of Texas Is Foreshadowing The Total Collapse Of The United States

The Temporary Collapse Of Texas Is Foreshadowing The Total Collapse Of The United States

We are getting a very short preview of what will eventually happen to the United States as a whole.  America’s infrastructure is aging and crumbling.  Our power grids were never intended to support so many people, our water systems are a complete joke, and it has become utterly apparent that we would be completely lost if a major long-term national emergency ever struck.  Texas has immense wealth and vast energy resources, but now it is being called a “failed state”.  If it can’t even handle a few days of cold weather, what is the rest of America going to look like when things really start to get chaotic in this country?

At this point, it has become clear that the power grid in Texas is in far worse shape than anyone ever imagined.  When extremely cold weather hit the state, demand for energy surged dramatically.  At the same time, about half of the wind turbines that Texas relies upon froze, and the rest of the system simply could not handle the massive increase in demand.

Millions of Texans were without power for days, and hundreds of thousands are still without power as I write this article.

And now we are learning that Texas was literally just moments away from “a catastrophic failure” that could have resulted in blackouts “for months”

Texas’ power grid was “seconds and minutes” away from a catastrophic failure that could have left Texans in the dark for months, officials with the entity that operates the grid said Thursday.

As millions of customers throughout the state begin to have power restored after days of massive blackouts, officials with the Electric Reliability Council of Texas, or ERCOT, which operates the power grid that covers most of the state, said Texas was dangerously close to a worst-case scenario: uncontrolled blackouts across the state.

…click on the above link to read the rest of the article…

 

Who’s To Blame For The Texas Power Crisis?

Who’s To Blame For The Texas Power Crisis?

Our last report focused on the uniqueness of the Texas wholesale electricity market, ERCOT, and how it was specifically designed to evade federal utility regulation. And as if he were our paid spokesperson, former Texas governor Rick Perry stated publicly that Texans were happy to suffer blackouts and other hardships if it meant evading federal regulatory scrutiny. Whether the good (and shivering) citizens of the Lone Star State agree is another matter. But today, instead of dealing with politics, we’ll take a closer look at ERCOT as a state planning agency.

First the good news. One of the hardest parts of every planning agency’s job is correctly estimating future demand. This is doubly hard in a dynamic, fast growing economy like Texas. Consequently we were surprised at how good their planning estimate was for this winter’s electrical load of about 67,000 megawatts. Because of the blackouts we can’t precisely know what peak electrical demand in Texas would’ve been given the extreme winter demands from home heating and the like. But the shadow estimates published by ERCOT suggested about 72,000 megawatts of peak demand.

In total, ERCOT has the ability to supply electrical capacity of about 80,000 megawatts. This amount of available electric power generation should have been adequate to meet demand this week. Not by a wide margin but adequate. Barely. As an aside we should point out that ERCOT runs “light” in terms of electric system reserve capacity with reserves typically about 8%. This compares with other US grids where targeted reserve margins are about 15%. Lower reserve margins are cheaper but mean less back up for emergencies.

Our first tentative conclusion is that Texas would have withstood this recent snowstorm and polar vortex event in pretty good shape from a grid perspective IF thermal plants were available to meet skyrocketing demand.

…click on the above link to read the rest of the article…

Is Texas Facing A Humanitarian Crisis?

Is Texas Facing A Humanitarian Crisis?

Up to 15 million Texans remain without heat and electricity as temperatures across the state are well below freezing. Another round of winter weather is battering parts of the state Wednesday morning, as many Texans have been without electricity since Sunday are desperately scrambling to find shelters. Weather-related deaths have already been reported as one of the nation’s wealthiest states can barely supply electricity to its residents. And some of those residents have written to us to share their painful realities…

…my house is now resembling a refugee camp. yeah these are all my friends but crazy cause they all have young kids

hence i’m escaping the chaos…

what’s insane is that big swathes of population in surrounding areas are without power and *water supply*

… bottled water flying off shelves & stores bout to run out.

… so much for Green New Deal shit… all our turbines and solar don’t work now in freeze, LOL

i live in an area behind a major hospital so i’m thinking that’s why my grid has been up and running this whole time. 

The unprecedented polar vortex split, dumping Arctic air down to the Gulf of Mexico, resulted in frozen wellheads that impeded the flow of natgas to power stations, triggering electric shortages as demand overwhelmed the grid. Considering ERCOT, which manages 90% of the state’s electric load, has a high percentage of electrical generation produced via natgas, power has yet to be restored to millions of folks.

The cascading effect of blackouts and controlled power outages has resulted in some critical infrastructure such as cellular networks and water treatment plants going offline.

…click on the above link to read the rest of the article…

 

‘Grid Chaos’ Sparks Massive Rolling Blackouts Across Texas 

‘Grid Chaos’ Sparks Massive Rolling Blackouts Across Texas 

Rolling power outages are in effect across the state of Texas as the polar vortex split has poured some of the coldest air ever into the central US. There are nearly 2 million Texan customers without power as of Monday morning.

Texas power grid operator ERCOT warned Sunday of an “energy emergency” and threatened “rotating outages.” By Monday morning (0125 local time), ERCOT began “rotating outages” to “reduce demand on the electric system.” It continued: “Traffic lights and other infrastructure may be temporary without power.”

As of 0700 ET, PowerOutage.US shows 1.834 million customers are without power across the state amid frigid temperatures.

ERCOT officials said outages are expected to last between 15 and 45 minutes. They say blackouts are “necessary to maintain the system’s reliability.” Power demand is expected to remain at record levels through Tuesday as record-low temperatures will stay in the region through the week.

“Every grid operator and every electric company is fighting to restore power right now,” said Bill Magness President and Chief Executive Officer of ERCOT. 

Temperatures across Texas and the central US are expected to be well below normal through the end of the week.

ERCOT’s decision to implement rolling power outages comes after we first warned of an imminent grid crisis on Thursday, when we reported that natgas prices across the plains states had soared to never before seen levels as a result of a brutal polar vortex blast.

… which cut off natgas supply amid wellhead freeze-offs, cutting production receipts just when customers’ demand for heating most needed them. By Friday, frigid temperatures caused equipment failures, temporarily shutdowns in at least four natgas plants.

Over the last 24 hours, hundreds of daily records for cold temperatures were broken as Arctic air pushed all the way down to the Gulf of Mexico.

…click on the above link to read the rest of the article…

 

“Energy Emergency” – Texas Power Provider Warns Of Rotating Outages As Cold Weather Tests Limits Of Grid

“Energy Emergency” – Texas Power Provider Warns Of Rotating Outages As Cold Weather Tests Limits Of Grid

With the situation in Texas doing from bad to worse:

Weather forecast models suggest the polar vortex will continue pouring Arctic air into much of the central US through Feb. 20. This means nat gas prices could rise even higher early next week as electricity demand continues to soar over the weekend as Americans crank up their thermostats and watch Netflix shows or mine Bitcoin.

Texas power grid operator ERCOT, has issued a statement warning of an “energy emergency” and threatening “rotating outages” just when residents need the power to heat their homes the most:

The Electric Reliability Council of Texas (ERCOT) is asking consumers and businesses to reduce their electricity use as much as possible Sunday, Feb. 14 through Tuesday, Feb. 16.

“We are experiencing record-breaking electric demand due to the extreme cold temperatures that have gripped Texas,” said ERCOT President and CEO Bill Magness.

“At the same time, we are dealing with higher-than-normal generation outages due to frozen wind turbines and limited natural gas supplies available to generating units. We are asking Texans to take some simple, safe steps to lower their energy use during this time.”

Here are some tips to reduce electricity use:

  • Turn down thermostats to 68-degrees.
  • Close shades and blinds to reduce the amount of heat lost through windows.
  • Turn off and unplug non-essential lights and appliances.
  • Avoid using large appliances (i.e., ovens, washing machines, etc.).
  • Businesses should minimize the use of electric lighting and electricity-consuming equipment as much as possible.
  • Large consumers of electricity should consider shutting down or reducing non-essential production processes.
  • Given the prolonged, below-freezing temperatures, conservation measures should be implemented safely and within reason.

…click on the above link to read the rest of the article…

Dramatic Photos: Desperate For Provisions, Thousands Of Cars Line Up At Texas Food Bank

Dramatic images released this week show thousands of cars  stretching for miles, lining up for provisions at a Texas food bank as the state continues to deal with the effects of its coronavirus outbreak.

At a food drive held in Dallas County on Tuesday, cars from “the other side of the state” showed up, according to the Daily Mail. Photographs show cars bumper to bumper while 90 volunteers worked to distribute 10,000 boxes of food. People had started lining up for the food before dawn, hoping to get boxes that included dairy, canned goods, noodles, peanut butter and other basics.

Richard Archer, who showed up at the food bank this week, said: “If it wasn’t for this, we’d probably go hungry. With unemployment benefits cut, [my daughter’s] husband’s been laid off for three months. So, it’s just been a struggle. If it wasn’t for church, and food giveaways, the kids would be going hungry.”

Diana King, another person at the food drive, told CBS: “There’s times I open the refrigerator and there’s little there. We make do with what we have and we make it stretch. It helps pay a bill, so the water doesn’t get turned off. The gas doesn’t get turned off. Mortgage? We are right there on the borderline.”

The scramble for free food comes as about 30 million Americans surveyed last month said that they “didn’t have enough to eat”. This marked about 12% of all people polled. At the same time, the country is mired with record unemployment numbers. 28 million people remain unemployed nationwide as a result of the pandemic.

According to the Daily Mail, the numbers in Texas are dire: “Dallas County has recorded 55,787 cases of coronavirus and 794 deaths. In Texas there are 524,814 cases and 9,552 deaths. The positivity rate in Texas is 24.5 percent – the highest since the start of the pandemic.”

…click on the above link to read the rest of the article…

As Trump Leaves Permian Oilfield, Industry Insiders Question If 2020 Bust Marks Texas Oil’s Last Big Boom

As Trump Leaves Permian Oilfield, Industry Insiders Question If 2020 Bust Marks Texas Oil’s Last Big Boom

Yesterday, President Trump left Midland, Texas, after arriving in the state’s Permian oilfield region for a $2,800 a plate luncheon and a “roundtable” that required each participant to pony up $100,000.

The west Texas Mr. Trump left behind bears little resemblance to the region as it was when he first took office in January 2017, as the shale rush resumed following 2016’s oil price plunge.

Today, the shale boom of the 2010’s is officially bust, battered not only by the US’s outsized failure to control COVID-19 outbreaks and an oil price war in which foreign producers proved their ability to steer oil prices, but also a wave of multi-billion dollar write-downs by oil giants — write-downs that predated both the price war and the pandemic and resulted from the industry’s perpetual struggles to generate profits from shale drilling and fracking regardless of the price of oil.

Last Friday, just 103 active drilling rigs dotted Texas, according to data from Baker Hughes. That’s down from 403 drilling rigs as 2020 began and the state’s peak this decade of 930. Just 251 active oil and gas rigs could be found across the entire United States, the lowest number recorded since Baker Hughes began tracking the rig count back in 1940.

In late February, the nighttime horizons around Midland and Odessa were still dotted with brightly burning oil well flares, dozens of flickering licks of flame that cast an uncertain light across the mesquite and cotton fields of west Texas. Mancamps and hotels already appeared partially emptied out, even while a constant flow of truck traffic streamed along the desert highways.
Empty worker housing at FTSI in Odessa, Texas. May 27, 2020. Credit: ©2020 Justin Hamel

…click on the above link to read the rest of the article…

‘Catastrophic Flooding Expected’ – Hanna Hammers Virus-Infected South Texas

‘Catastrophic Flooding Expected’ – Hanna Hammers Virus-Infected South Texas

Tropical storm conditions are expected for South Texas and northeastern Mexico on Sunday after Hurricane Hanna roared ashore on Saturday as a Category 1 storm. 

Hanna was the first hurricane of the 2020 Atlantic hurricane season and came ashore on Saturday afternoon around Port Mansfield, Texas, with maximum sustained winds of 90mph. The National Hurricane Center (NHC) downgraded the hurricane to a tropical storm early Sunday.

Chris Birchfield, a meteorologist with the National Weather Service (NWS) in Brownsville, told AP News the storm’s real threat continues to be heavy rainfall. “We’re still expecting catastrophic flooding,” he said. 

Rainfall estimates are in the range of 6 to 12 inches through Sunday night, with isolated areas could receive upwards of 18 inches. Willacy County, Texas, which is near Brownsville and the border with Mexico, has already reported 12.6 inches. Brownsville is reporting 5.6 inches and Reynosa, a city in Mexico, has already seen 11 inches. 

Here’s the latest update on Hanna via NWS: 

Here’s the latest update on Hanna via the National Oceanic and Atmospheric Administration (NOAA).

…click on the above link to read the rest of the article…

Daily on Energy: Texas debates mandating oil production cuts

Daily on Energy: Texas debates mandating oil production cuts

TEXAS DEBATES PRODUCTION CUTS: Texas can lead in producing a “real” U.S. oil production cut to save the shale industry, Scott Sheffield, CEO of Pioneer Natural Resources, argued Tuesday in calling for the state to take action to force companies to hold back their production for the first time since 1973.

Sheffield opened all-day testimony before the Texas Railroad Commission, which is considering imposing “pro-rationing” on oil companies in the largest-producing state. The measure would require drillers to reduce their production by certain percentages until it no longer exceeds market demand.

Pioneer is one of two Austin-based companies with Parsley Energy that has called on the Texas oil regulator to act, despite the overwhelming opposition from large oil majors, refiners, and the trade groups that represent them, who fear a mandate would upset the free-market system in the U.S.

Sheffield, in strikingly blunt comments, suggested the financial problems of shale producers existed before the current crisis driven by the coronavirus, as companies took on too much debt amid the shale rush and produced more than the market demanded.

“No one wants to give us capital because we have all destroyed capital and created economic waste,” Sheffield said. But he said regulators could bring the market back in balance when it’s needed most.

What’s a ‘real’ oil cut?: Sheffield said the OPEC+ plus agreement to cut oil production nearly 10 million barrels per day, coupled with some 5 million barrels per day in market-driven cuts from G-20 countries like the U.S., won’t be sufficient to compensate for the lost demand from the coronavirus.

“Texas can lead in getting a real G-20 cut of 5 million, not a fake 5 million barrels per day,” Sheffield said.

…click on the above link to read the rest of the article.

‘Texas Miracle’ “On Ice For Time Being” As Crude-Carnage & COVID-Chaos Double-Whammy Strikes Lone-Star State

‘Texas Miracle’ “On Ice For Time Being” As Crude-Carnage & COVID-Chaos Double-Whammy Strikes Lone-Star State

West Texas Intermediate (WTI) spot prices plunged 7.5% to the 19-handle on Sunday evening, hitting lows not seen since 2002. 

WTI has crashed 70% in the last 56 trading sessions amid the COVID-19 crisis triggering a demand bust across the world. As a result, an economic storm risks triggering a shale debt bomb in Texas, jeopardizing the state’s $1.8 trillion economy and may damage crude output from the Permian basin that has more than quadrupled in a decade.

In three weeks’ time, Saudi Arabia and Russia launched an oil price war that has sent WTI prices tumbling 57% and now risks imminent doom for US shale (and its junk bonds). More specifically, Texas accounts for 42% of US crude output and has been hit with twin shocks: one from waning crude demand, and another from the COVID-19 outbreak forcing the state to issue a “stay at home” public health order – restricting the travel of residents.

The collapse in oil prices this time around is more unique than past ones, mostly because demand has evaporated overnight due to a pandemic with no clear timetables of when it will return. A major concern for producers is that the recovery might not be V-shape… 

 “As much a tragedy as the coronavirus is, most states are dealing with one problem. Texas is dealing with two because we’re dealing with coronavirus and the dramatic drop in oil and gas prices,” Dale Craymer, president of the Texas Taxpayers and Research Association and a former state budget director, told Financial Times.

Plains All-American, a pipeline company, was offering WTI per barrel for $17.50 on Friday, a drastic discount from $63 in January. Drillers need about $49 per barrel to stay profitable, a prolonged downturn under $40 for several years could bankrupt 40% of all US shale.  

…click on the above link to read the rest of the article…

Texas Or Canada: Where Will Oil Hit $0 First

Texas Or Canada: Where Will Oil Hit $0 First

Looking at the future of oil prices, Goldman was downright apocalyptic in its short-term forecast, when in a note published this morning, the bank’s chief commodity strategist Jeffrey Currie speculated that as the current production glut “shock” cripples the crude transportation networks, “a producer would be willing to pay someone to dispose of a barrel, implying negative pricing in landlocked areas.” To wit:

The global economy is a complex physical system with physical frictions, and energy sits near the top of that complexity. It is impossible to shut down that much demand without large and persistent ramifications to supply. The one thing that separates energy from other commodities is that it must be contained within its production infrastructure, which for oil includes pipelines, ships, terminals, storage facilities, refineries, and distribution networks. All of which have relatively small and limited spare capacity. We estimate that the world has around a billion barrels of spare storage capacity, but much of that will never be accessed as the velocity of the current shock will breach crude transportation networks first, which we are already seeing evidence of around the world. Indeed, given the cost of shutting down a well, a producer would be willing to pay someone to dispose of a barrel, implying negative pricing in landlocked areas.

A quick look at two of the most popular landlocked oil producing areas demonstrate that Goldman is spot on, and as the following chart shows as of this moment Texas Midland WTI was trading at just baove $10/barrel, while the price of oil produced in the notoriously landlocked Western Canada, as represented by Canada Western Selected index, was just above $4 per barrel, or a little more than what a gallon of gas costs in California.

…click on the above link to read the rest of the article…

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