Winter storm cuts US natural gas production: Update

Adds US Department of Energy information on freeze-offs and storage withdrawals in paragraphs 2-3.

A blast of arctic air that covered a large swath of the US and dipped as far south as the Gulf coast has resulted in natural gas well freeze-offs and pipeline curtailments, helping to cause widespread power outages in Texas.

Gas production in the US south central region is down by about 6.3 Bcf/d (178mn m³/d) because of wellhead freeze-offs and natural gas processing plant outages caused by extreme cold, according to the US Energy Department. These outages represent about 30pc of output in the region and about 7pc of total US production.

Gas suppliers are responding to high demand and lost output by withdrawing gas from storage. Storage withdrawals in the region are up by 10 Bcf/d compared with withdrawals made before the storm hit, the department said.

Natural gas supply outages are leaving "energy-rich Texas facing rolling blackouts," analysts with investment firm Tudor Pickering Holt said today.

Previous cold snaps in west Texas have resulted in equipment failures at processing facilities alongside wellhead disruptions, lowering production for the region, analysts with Energy Aspects said. Gas production freeze-offs occur when water and other liquids in the gas mixture freezes, stunting output. Power losses to natural gas processing plants near the wellhead can also restrain production.

Natural gas production from the Permian basin in west Texas and southeastern New Mexico — the second-largest US gas field by volume — topped 16.4 Bcf/d in December, according to the US Energy Information Administration. The Appalachian region produced the lion's share of US output at 34.1 Bcf/d.

"Natural gas production is well off its highs and does not look to recover any time soon," analysts at Energy GPS said today. "Natural gas infrastructure is having issues around pipeline pressures and finding molecules as well as trying to keep up with power demand. With outages and constraints, the supply stack is dwindling and load curtailments have to be in play to balance the system."

Major gas pipelines operating in Texas, including Transcontinental Gas pipeline and Texas Eastern Transmission (Tetco), issued pipeline restrictions for delivery today, with Tetco issuing a systemwide operational flow order to discourage both over-takes off the line and under-shipments onto it.

Gas-weighted heating degree days — a measure of demand for natural gas-fired power and gas for heating — for this week in the west south central region are forecast to jump by 80pc from the week prior amid the frigid weather, Energy Aspects said.

Texas oil and gas regulator the Texas Railroad Commission on 12 February issued an emergency order to prioritize natural gas supplies for gas-fired generation facilities in Texas to serve residential power needs with sustained below-freezing temperatures looming.

By T.L. Hamilton