Last week's freezing temperatures in the Southwest, which froze some natural gas wells in Texas' Barnett Shale and caused rolling blackouts in much of the state, were the most severe test of Texas natural gas deliverability since the winter of 1989, a reliability council representative told the Railroad Commission of Texas (RRC) Tuesday.

After listening to Ron Kitchens, chairman of the Texas Energy Reliability Council (TERC) for less than an hour, RRC commissioners seemed as if they were thinking it might be time to revisit RRC Order No. 489, which dates back to the early 1970s and pertains to curtailment of natural gas deliveries within Texas.

While customers with interruptible delivery contracts -- including power generators -- saw their gas supplies curtailed last week, Kitchens said he was not aware of any entity holding a noninterruptible contract that did not get its gas. Kitchens lamented what he said is a general lack of understanding among the public of what an interruptible contract is in the natural gas world.

"The interruptible transporter knows the rules of the game but he's willing to take the risk to have his transportation interrupted," Kitchens told the three RRC commissioners. An end-user might choose an interruptible contract in exchange for lower rates, or it might be forced to take such a contract when there is insufficient capacity to allow for firm service, Kitchens said. In either case, the end-user knows what it's getting.

Kitchens said there was "a substantial loss of wellhead [natural gas] production" last week, but he couldn't say how much production was lost.

Besides wellheads freezing in the icy temperatures, some producers had trouble getting produced water and condensate hauled from their drillsites as road conditions were icy, Kitchens said. This also resulted in the shut-in of some production, as did the shutdown of several gas processing plants (see Daily GPI, Feb. 8; Feb. 7).

Further, electric power interruptions tripped the controls on some natural gas pipeline compressors and equipment at production facilities, which then had to be restarted manually. Some compressors are electric-powered, too, Kitchens said. Icy roads also affected workers traveling to remote sites to restart equipment.

Regulator devices at some local distribution company citygates also froze, but these were localized instances and brief in nature, Kitchens said.

Natural gas storage withdrawal capacity in Texas of about 16 Bcf/d was called on heavily, Kitchens said, noting that many facilities are salt domes, which can sustain very high deliveries but only for a few days. "The industry has been able to partially replenish these salt dome facilities over the last few days in anticipation of the next cold event," Kitchens said.

Besides the storage capacity, Texas gas well productive capacity is about 20 Bcf/d, Kitchens said. However, much of both the storage and productive capacity is dedicated to interstate commerce.

Kitchens emphasized that firm service to power generators was not curtailed, and he noted that some power generators received more than their contracted volumes in order to maintain electric service.

"I'm not aware of any curtailment of gas deliveries to any power plant that contracted for firm service," he said.

"I'd have to conclude that the gas industry from the wellhead through the end-user performed its firm obligations very satisfactorily during last week's event. Those customers that contracted for firm service received firm service. Those customers that chose interruptible service were in many instances interrupted during the height of the cold event."

Commissioner Elizabeth Jones said she was aware of a natural gas-fired peaking plant that was out of commission because it had an interruptible contract for gas delivery. While the plant operator was warned in advance of the coming curtailment, it could not schedule gas delivery because capacity was not available.

Kitchens said he knew which plant Jones was talking about. "In the summertime it works great...because there is capacity. This was the first real wintertime test of electric power generation since the restructuring [to a competitive retail power market]," he said.

TERC was formed in the early 1970s, and its membership is composed of major intrastate pipeline operators, some natural gas producers, the Texas Oil & Gas Association, storage and facility operators, major gas utilities and the RRC as well as the Public Utility Commission of Texas, the Electric Reliability Council of Texas and the Texas General Land Office.

Near the end of his presentation, Kitchens asked the commissioners to tread lightly on private enterprise when weighing any reforms suggested by last week's weather-induced energy crisis.

"I think private business has a way of trying to make things work in periods of stress and generally they get things done," he said. "So I would suggest that you respect the private industry decisions and how they run their businesses. I do also realize that you have an obligation to the citizens of the state to make sure they have the services that they need. And it's a tough balancing act."

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