October 18, 2021
By Todd Staples, President of the Texas Oil & Gas Association
Vast improvements, particularly in communications, have been made since Winter Storm Uri to better prepare the natural gas supply chain for the winter season in Texas. The oil and natural gas industry has been working with a sense of urgency to improve the readiness of the system.
Industry is working closely with state regulators to implement Senate Bill 3, which wisely calls for more clarity in the “critical load” designation process, mapping of natural gas facilities that are directly tied to power generation and weatherizing those facilities. We also agree that Texas’ vast supply of natural gas in storage plays an important role to help power generators better prepare for emergency weather events.
Multiple reports have confirmed that loss of power was the greatest disruption to natural gas production and transportation during the storm. Pre-storm, the Electric Reliability Council of Texas (ERCOT) critical load designation form excluded the majority of the natural gas supply chain, and, during the storm, those facilities lost power. Keep in mind, this form does not guarantee a facility will keep its power during an emergency. Transportation Distribution Utilities (TDUs) must prioritize all critical assets such as hospitals, nursing homes, and EMS, in addition to those facilities necessary for power generation. Not every natural gas facility is a priority from a power perspective during an emergency. This is why mapping is the most crucial part of the process.
Identifying natural gas facilities directly tied to power generation is well underway. There are hundreds of thousands of natural gas facilities in the state and not all of them supply natural gas for power generation. Industry is working with the Public Utility Commission, Railroad Commission and Texas Department of Emergency Management to determine which facilities are directly linked to power generators to ensure those facilities weatherize and maintain power during an emergency. Mapping hundreds of thousands of assets will take time, and many operators are charting their assets internally to assist in the process.
TDUs must be able implement “load shed” during an emergency, intentionally cutting off power to some to ensure that there is enough power for the most essential. If TDUs were required to maintain power to every natural gas facility in Texas, it would create a dangerous situation by diverting power that may be needed elsewhere. Consider, too, that in certain cases, it may take more power from the grid to keep some wells on than those wells’ natural gas could make in more power.
While we know the best way to keep natural gas moving during an emergency is to maintain power to facilities, natural gas operators also employ necessary techniques to appropriately winterize equipment, such as methanol injection units, pipe insulation, heat tracing systems, equipment shelters, and seasonal wind breaks.
Much discussion surrounds a so-called “opt out” provision in the law related to critical load designation and weatherizing. To be clear, facilities identified through mapping as being directly tied to power generation and deemed critical are not expecting to be eligible to “opt out” of weatherizing required by law.
Finally, natural gas in storage is critical to emergency preparedness. Texas has 544 billion cubic feet of working natural gas storage. The electric generation sector only consumes about 4 billion cubic feet daily during normal winter conditions. Natural gas storage must be planned for and purchased before a storm to be prepared. Texas needs to focus on how power generators can fairly be compensated for storing natural gas, or purchasing it from storage, as part of readiness plans, while maintaining and encouraging a competitive process that benefits consumers by keeping prices affordable.
Fortifying the electricity grid and natural gas supply chain is a multi-step process and significant, meaningful changes are already underway to ensure that our state’s system is winter ready.
Todd Staples is president of the Texas Oil & Gas Association and former Texas Agriculture Commissioner.