The “big takeaway” from a recent investigation of power outages and curtailed gas deliveries during extended cold weather in the Southwest earlier this year is the need for more natural gas storage capacity, according to some FERC commissioners.
“Additional natural gas storage could have in whole or in part obviated the need for these customers to lose service as a force majeure, and that’s something that has been brought up in the state commissions in New Mexico and Arizona,” said Commissioner Marc Spitzer during the Federal Energy Regulatory Commission (FERC) meeting in Washington, DC, Thursday. “Let’s apply these lessons learned to try and deal with some of the frankly political hurdles that existed, as well as regulatory hurdles. This is a wake-up call of great significance.”
Extreme cold in early February caused well freeze-offs and compressor failures due to power outages, curtailing 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).
A report issued last month by FERC and the North American Electric Reliability Corp. (NERC) concluded that more storage in the Southwest could have mitigated the situation (see Daily GPI, Aug. 18). “Additional gas storage capacity in Arizona and New Mexico could have prevented many of the outages that occurred by making additional supply available during the periods of peak demand,” according to the report.
The investigation found that producers, local distribution companies (LDC) and processors in the Southwest may have believed they were prepared to meet natural gas demand during extreme cold weather events, but their weatherization programs were woefully inadequate. The report also called on the gas and electric sectors to work together with state regulators to determine whether critical natural gas facilities can be exempted from rolling blackouts, and recommended that state utility commissions should work with LDCs to ensure that voluntary curtailment plans can reduce demand on the system as quickly and efficiently as possible when gas supplies are disrupted.
“The reality was we kind of had an electric problem affecting the gas side, and a gas problem affecting the electric side,” Commissioner Philip Moeller said Thursday.
The electric piece of the problem was found “primarily in the Permian Basin and the Fort Worth Basin, where roughly 25% of the supply outages were due to electric blackouts and curtailments, while…about 12% of the derates in ERCOT [Electric Reliability Council of Texas] were due to gas pressure or quality problems,” said Loye Hull of FERC’s Office of Electric Reliability.
Moeller and Commissioner Cheryl LaFleur suggested that the results of the investigation be shared with the National Association of Regulatory Utility Commissioners and state regulators and legislators. “These lessons, although felt in Texas and New Mexico and Arizona, could really apply across the South, and indeed beyond the South,” LaFleur said.
Last week FERC announced that it had launched a new joint investigation with NERC into a widespread power blackout Sept. 8 that started during maintenance of a high-voltage transmission line near Yuma, AZ, leaving more than four million people in the dark (see Daily GPI, Sept. 12). Electricity supplies, including those from several natural gas-fired plants and a major coastal nuclear facility, were affected across southwest Arizona, northern Mexico and parts of San Diego and Imperial counties in Southern California.
The entities involved in that investigation have been cooperative during preliminary interviews, and more extensive interviews are scheduled to begin Monday, according to Joseph McClelland, FERC’s director of electricity reliability.
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