While New Mexico Gas Co. was strongly criticized for its alleged lack of preparedness, the interdependence of natural gas and electricity infrastructure drew much attention during a U.S. Senate Energy and Natural Resources Committee informational hearing Monday in Albuquerque, NM. The hearing was called in the wake of widespread natural gas service shutoffs early in February during a severe winter freeze that gripped the Southwest.

Sen. Jeff Bingaman (D-NM), chairman of the Senate committee, called the hearing in the wake of extreme cold in the Southwest (Feb. 2-4) that caused well freeze-offs, compressor failures and power outages, resulting in the curtailment of gas deliveries to thousands of customers in New Mexico, Arizona and Southern California supplied through El Paso Natural Gas and Transwestern Pipeline (see Daily GPI, Feb. 7). Sen. Tom Udall (D-NM) also participated in the hearing.

The New Mexico utility was accused of mishandling the crisis by a variety of public officials, and interstate gas pipeline and federal/state energy officials indicated that ultimately there needs to be closer coordination between the gas and power infrastructure in preparing for, and responding to, severe weather conditions. The lack of "winterization" by both power plants and gas processing facilities appeared to contribute to the situation that caused New Mexico Gas to curtail more than 27,000 of its customers in the northern, rural parts of the state, some taking up to five days to get service restored.

The CEO for the utility's parent company, Continental Energy Systems, George Schreiber, agreed that the his utility's performance was "unacceptable," but he put the onus on upstream energy infrastructure failures in the electric and natural gas systems. Schreiber said ultimately there needs to be better coordination between the regional electricity and gas pipeline grids, and he plans to reiterate this next month in testimony to the New Mexico Public Regulation Commission (PRC) in its ongoing investigation.

Bingaman and Udall heard testimony from two New Mexico members of the House of Representatives and several local city, business and Native American officials, along with representatives from the Transwestern and El Paso pipeline units, the Electricity Reliability Council of Texas (ERCOT), North American Electric Reliability Corp. (NERC) and the Federal Energy Regulatory Commission (FERC).

Bingaman said he was trying to gather information on the gas outages that had created "severe hardships" for many New Mexico families. He said the events are being examined "by a variety of agencies and authorities [FERC, NERC and the New Mexico PRC among them]." The issues are regional in scope, the senator said.

Bingaman and Reps. Martin Heinrich (D-NM) and Ben Ray Lujan (D-NM) reiterated that government officials at all levels need to make sure the outages and resulting hardships never happen again. "We need to assure that in the future both natural gas and electricity will be reliably available to families and businesses that are dependent on them," Bingaman said.

"We have no confidence in New Mexico Gas Co.," said Jack Torres, mayor of Bernalillo, NM. "I felt their attitude toward Bernalillo was condescending; and [the utility] stepped on my city." The utility's performance worsened during the crisis, said Torres, who alleged that the utility personally berated him at times during the ordeal. Alice Lucero, the mayor of Espanola, NM, echoed the criticisms of the utility's response to the severe freeze, as did Udall.

Nevertheless, Schreiber contended that the curtailments would not have been necessary if upstream disruptions to gas supplies had not happened.

"Customers depend on reliable natural gas delivery, and the fact that New Mexico Natural Gas was required to curtail these customers was and is unacceptable. As an industry we need to work with regulators and policymakers to make sure this does not happen again." Schreiber said the occurrence was a failure of reliability of the "regional energy infrastructure," and that is now an issue of national importance that needs to be dealt with.

In response to criticism that the poor, rural areas of the state were targeted for the curtailments, Schreiber said his company was forced by the design of its distribution pipeline system and the supply-demand imbalance caused by the weather to interrupt service to 28,707 of customers "in order to save the entire New Mexico gas delivery system" from crashing.

Executives with El Paso and Transwestern said their respective pipelines operated all right despite the severe weather, but at the processing end there were problems in getting sufficient supplies into the pipes to meet what were extremely high demands in the face of the bitter cold weather. They described a Catch 22-like situation in which the extreme weather conditions contributed to both record high demand on the system and supply delivery problems with getting more gas into the pipes to meet that extreme demand.

NERC CEO Gerry Cauley said his organization will be reviewing the "interdependencies of the natural gas and electrical systems," including the extent to which reduced gas supplies affected generator availability, and rolling blacks in Texas affected gas pipeline compressors. The NERC effort will be done in close coordination with the FERC staff driven investigation announced earlier this month, Cauley said.

FERC's Joseph McClelland, director of electricity reliability, outlined the federal commission's approach to its staff task force investigation (see Daily GPI, Feb. 16), mentioning the need for close coordination with various state agencies since some of the impact from the severe weather was felt by intrastate energy facilities, such as pipelines and gas processing equipment that fall outside the FERC jurisdiction.

Regarding the interdependency questions, ERCOT's Joseph Dumas, director of wholesale market operations, told Bingaman in response to his question that he did not know the extent to which seven-and-a-half hours of rolling blackouts ordered in Texas as a result of the extreme weather caused the ultimate curtailment of gas supplies in New Mexico. Nor could he speculate about how much gas field freeze ups in Texas and New Mexico contributed to the power generation problems.

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