A day after the Super Bowl, the natural gas industry, its customers, regulators and state lawmakers were Monday morning quarterbacking what caused last week's gas supply shortfalls in Texas and neighboring states -- and consequent shortages of power generating capacity -- as exceptionally cold weather swept across the region (see Daily GPI, Feb. 7).

"The cold temperatures affected wellhead gas production in both the Rockies and the Texas/Oklahoma producing regions, cutting into gas supplies available to respond to the surge in power demand," analysts with Barclays Capital said in summarizing the crisis in a note Monday. "Bentek [Energy] reported that supply was reduced by as much as 5 Bcf/d on Wednesday. In addition, the power outages cut electricity to pipeline compressor stations, further hobbling fuel to power plants."

In New Mexico -- which bore the brunt of the gas deliverability failure with tens of thousands of consumers cut off from service during freezing temperatures -- the state's House Energy and Natural Resources Committee met to discuss the crisis.

El Paso Natural Gas -- which last week had to contend with low system linepack when supplies from the field fell short and consumers pulled hard on the system -- on Monday was dealing with high linepack conditions that materialized over the weekend.

Last Friday the Public Utility Commission of Texas called for the Electric Reliability Council of Texas (ERCOT) independent market monitor to investigate the causes of a level three emergency alert on Feb. 2 and power plant outages that followed. Additionally, Texas Sen. Troy Fraser was calling for hearings in the coming weeks on the protocol for curtailing gas-fired power plants in the state, which relies heavily on gas for power generation.

Last year 58% of Texas' installed generating capacity was fueled by gas, and 38% of its power came from gas-fueled plants, second only to coal-fired plants, which provided 40% of the state's power last year.

After meeting for about three hours Monday with representatives of New Mexico Gas Co., the state's Public Regulation Commission (PRC) and El Paso, the New Mexico House committee members said they would be investigating whether the state's plan for dealing with cold weather emergencies needs to be revised.

The committee is expected to launch an investigation into the causes of the gas shortage in the coming weeks. On Monday members seemed most concerned with reconnecting New Mexico Gas customers to supplies and making sure those eligible for compensation for losses would receive it.

There was brief discussion about keeping New Mexico gas that is bound for out-of-state sale in the state during times of crisis; it was quickly decided that was a question for federal regulators.

"This has been a long and productive hearing this morning...There is obviously a need for us to plow the same ground in our own way. This calls for a formal investigation as to what happened," PRC Commissioner Jason Marks said at the close of the meeting.

Meanwhile, thousands of New Mexico Gas customers were still without service Monday, according to utility spokesman Gary Murray, although the utility was scurrying to restore service and many pilot lights had been relighted.

Atmos Energy, the largest gas distributor in Texas, last Friday evening lifted a curtailment order for industrial customers north of I-30 in Dallas, Rockwall and Tarrant counties and all industrial customers in Denton, Collin, Cook and Grayson counties. Other areas remained under a curtailment order until Saturday morning. "Although the system operations are improving, the weather forecasts call for freezing temperatures to continue and we are asking customers to conserve energy..." the utility said.

Gas deliveries from El Paso and Transwestern pipelines had been constrained by under performance at receipt points caused by wellhead freeze-offs and other conditions last week. But in an abrupt about-face, El Paso said previously unavailable production had returned to such an extent over the weekend that it was struggling against excess linepack. Transwestern's website bulletin board had gone virtually blank over the weekend.

"Our system began normalizing on Saturday as a result of increasing temperatures as well as some supply areas and supply basins being able to flow gas once again," El Paso spokesman Richard Wheatley told NGI Monday. "What this meant was we had gas that was coming back into the system from key supply areas and basins. We had gas left on the system over the weekend as a result of decreasing demand; that served to boost the linepack to a point where we now have a high linepack situation versus a low linepack that we had last week.

"We're taking gas off the system; putting it back into the Washington Ranch storage field and expect conditions to moderate, but we're going to continue to watch that because there are predictions for some increasing cold temperatures this week in some areas."

Wheatley said he didn't know and would not speculate whether producers over responding to the previous low linepack were contributing to the high linepack situation.

He said the pipeline experienced no operational issues during the crisis; however, some pipeline compression capacity was knocked offline due to power outages. "We had made sure that we had adequate staff in our compression facilities so that if we had a problem and got knocked offline we could use backup generators to get compression back online, but it was very, very temporary if we had much of that."

ERCOT spokeswoman Dottie Roark told NGI the Texas system operator knew going into last week's cold front that gas-fueled power generators could experience gas supply curtailments.

"In an attempt to cut off that situation [the] ERCOT CEO issued and affidavit to QSEs [qualified scheduling entities] about the serious nature of the grid conditions at that time and that sufficient gas supply would be necessary to meet human needs conditions throughout the ERCOT region," Roark said. "We did not want gas curtailments, which would reduce generation capacity further and create a bigger problem at that time. The affidavit was a tool that we hoped would help the situation, and we sent it to the Railroad Commission [of Texas] because that agency has governing authority over the gas companies, not ERCOT."

In an interview with the El Paso Times newspaper, El Paso Electric CEO David Stevens said the company's plants went down due to the freezing of water lines as well as instruments. He noted that the company is a summer-peaking utility that designs and runs its plants in anticipation of summer peaks on days when temperatures are in the triple digits.

The plants are not designed for the extraordinarily low temperatures seen last week. Stevens said this is something the company would go back and look at "now that we have had this level of excruciatingly cold weather for the amount of time we have."

The Barclays analysts said ERCOT will not escape scrutiny over the crisis in the coming days and weeks.

"This event will not be brushed away as 'a freak storm causing a rare event,' in our view, and will undoubtedly call into question the grid operator's handling of the incident," the firm said. "The weather and resultant load caught the market somewhat by surprise. In addition, the fact that several generation units were forced offline or could not start because of temperatures that, while low and persistent, are not unprecedented will obviously force a review of the cold-weather readiness of the state's generating units..."

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