Amigo, It's Cold Outside


 
It's warmed up to zero from -2.
The powder snow was blowing all over, not sure how much we have, but it's more than we want.

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Lynn Dollar said:
Well, " gas pipes starting to freeze " is pretty generic. That sounds good in a media story.
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I'm with you Lynn. Something isn't adding up. I will say I don't ever remember it being this cold in my lifetime here in Oklahoma, at least since I've lived here. This is unbelievable. We are definitely not prepared or designed to handle this sort of extreme in Oklahoma. Of course the wife and I just moved into a 100 year old house and while it has modern HVAC, it's still struggling to keep it above 65 degrees in the house when it's in the negative air temps outside. My folks have a 4200 square foot, foam sprayed insulated house with geo-thermal so they spend about $50 a month to keep it at whatever temp they want without even trying. lol. I'll probably have a $300 gas bill this month along with a big electric bill because of the space heaters and being stuck inside so much. Hopefully by next week we are done with this mess. I don't know how the yankees deal with this every winter. Just sayin.
 
Well, I got my idea on what's happening , I could be right and I could be wrong ................ but look at the spot market nat gas prices in that article posted by Brian. $600 per mmbtu when it was $4 two weeks ago. That's incredible !

Going into the winter nat gas producers and utilities hedge, they contract for at least 80% of their planned usage, if not more. What they need above and beyond what they've contracted for , they go buy on the spot market. Right now, there's tremendous demand on the spot market driving those prices sky high.

Spot market is a small part of the producers revenue, stock prices for companies I know to be large nat gas producers, are not that much higher over the past week. Some I looked at are lower over the month. So investors don't see a big windfall for producers.

Utilities have their rates set by each state's regulating body, with us its the Corporation Commission. They don't have a lot of latitude for a rate increase if they have to pay these spot market rates for very long. They're gonna have to eat these high spot market prices or more likely, they will be in front of the Corp Comm asking for rate increases in the next few months.

I would guess , the utilities are gonna try to reduce demand , rather than pay those high prices. I just don't believe a region as rich in natural gas as Oklahoma and Texas, has a gas shortage. Maybe its a shortage created by high spot market prices ? I'm highly suspicious.

That said, in Texas I'm sure they have other unique problems. I'm seeing all kinds of strange stuff, like a nuke plant off line due to freezing. Texas is really not built for freezing temps. Its part of the reason a lot of refineries and chemical plants are on the Gulf Coast where it rarely freezes. And they may have become over dependent upon wind, a very unreliable source of energy.
 
Lynn Dollar said:
I would guess , the utilities are gonna try to reduce demand , rather than pay those high prices. I just don't believe a region as rich in natural gas as Oklahoma and Texas, has a gas shortage. Maybe its a shortage created by high spot market prices ? I'm highly suspicious.
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From another perspective.... the utilities want to maximize profits. Reduce demand, better contracts.... left as an exercise for the students. But, at the end of the day, it's about the money, it's not about you & solving your needs.
 
JKalchik said:
From another perspective.... the utilities want to maximize profits. Reduce demand, better contracts.... left as an exercise for the students. But, at the end of the day, it's about the money, it's not about you & solving your needs.
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There has to be limited supply to drive prices that high. But the utilities should have most of their usage covered under contract. Maybe the producers have locked up a lot of their production and they don't have a lot of gas to put on the spot market ? Man, IDK.

All speculation on my part. Lotsa pieces to the puzzle that I don't have access to.
 
I saw a photo of a "fossil fuel helicopter" spraying deicer on a wind turbine in Texas.
No doubt meant as a dig to alternative power advocates.
 
Right after I finished writing the initial post, the power went out. It's settled into a 2-3 hours on/2-3 hours off rolling cycle. Roads are still impassable here. Crazy. It'll finally creep above freezing tomorrow afternoon. Fortunately, there is much beer, wine and whiskey to hold us over.

Jeff
 
Well, it is a windfall for some small producers and the supply crunch is very real, the high prices bringing all available production on line

Record cold brings a windfall for small U.S. natural gas producers

HOUSTON (Bloomberg) --Chris Bird first saw the rumors Friday morning on Twitter.


Physical natural gas prices were soaring in Oklahoma amid a cold blast that was gripping much of the U.S. and only stood to get worse. Bird, owner of a small gas producer in Tulsa, called one trader who confirmed the heating fuel was going for a staggering $350 per million British thermal units. Then he called another who said it had risen to $395.


That’s all Bird needed to know. He and his production technician grabbed some winter clothes at the dollar store and drove the stretch of highway to Osage County some 20 miles north. They met up with a buddy who owns a propane torch and began melting ice off idled gas wells to get them back online.


“We’ve got four of us in the office turning on every single gas well that we’ve got,” Bird said. “We have old wells that haven’t produced in 10 years, and we’re like, ‘open the taps, let’s go.’”


After years of depressed prices and weak margins, U.S. natural gas producers -- at least those with wells and equipment that aren’t frozen -- are cashing in on an unusually extreme blast of cold. The freeze is giving a rare boost to a market that’s never recovered from a crash more than a decade ago, flooded by cheap supplies from shale fields.
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And Oklahoma's nat gas production has dropped off much much faster than I thought possible

This by Robert Hefner , a young man in his 30's who comes from one of Oklahoma's pioneer oil and gas families.

https://www.hefner.energy/articles/the-failures-of-government-power

. As Robert Clarke of Wood Mackenzie tweeted, as of February 15th, an estimated 7 billion cubic feet (BCF) of natural gas is offline due to freeze-offs with the majority of that coming from Oklahoma (est. 2.5 billion cubic feet of gas per day).
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For perspective, the entire state of Oklahoma produces about 5.8 billion cubic feet of gas per day (source: Hefner Energy LLC; Enverus). That’s roughly half of Oklahoma’s natural gas going offline, and another 3.3 BCF offline in other states when utilities need it most.
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As a result, America has gone from producing a record 13 million barrels of oil per day (mmbopd) in November 2019 to producing just 10 mmbopd just a year later.

In Oklahoma, we have gone from producing a record 230 billion cubic feet of gas (BCFG) in May 2019 to produce just 137 BCFG in November 2020, the most recent full month of gas production data available. That lack of investment amounts to a 41% decline during that very short period.

The starvation of capital and the lack of profits the oil and gas industry has endured created the perfect storm for natural gas inventories to fail. This, more than any other single reason I’ve observed thus far, seems to explain natural gas’ failure.
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All things are relative. It's finally getting *warmer* here again (-15c (5f)) so got out of the office today to go for a nice walk!! After a couple weeks of -35, it's crazy how nice -15 feels. Above freezing by end of the week...we'll have people out wearing shorts and t-shirts!

Goes to show how the human body adapts. As a Canadian in Texas (Houston) some years ago in the summer months, I pretty much melted!!
 
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It was about 2F this morning. Freezing cold. The temperature in the house was down to 51. power came on from 7:30 to 10am. Then back off. Now back on at 2:30pm. Lets see for how long. Looks like they are doing 6-7 hour cycles.
House is fine. I have not discovered frozen pipes yet. But the pool is a different story. I hope it will survive. The water is not yet frozen in the pipes. I have insulated the above ground plumpbing with christmas lights and lots of blankets. Of course the lights only provide some warmth when we have got power. But the top of the pool has 1"-2" of ice .
I just do not understand why they did not prepare better here in Texas. We knew more than a week ago that this weather was coming in. Also there is zero information from the network providers about the schedules. Theis no information when the power will be on or off that we could plan a bit.
 
We got up to 19 today. Nice break from the below zero temps and wind chills over the last week or so.
Got about 12" of snow on my roof with a few 2' drifts.
But hey pitchers and catchers report tomorrow and Thursday(y)
 
I retired from the natural gas industry as a Gas Controller. I can guarantee it sucks to be those people right now! During extended cold periods natural gas wells would freeze off at the wellhead and the producers could not meet their customers demands. When that happens the pressure in the interstate pipelines get dangerous low. The result is industrial customers get curtailed, starting with power plants that burn natural gas as fuel. Natural gas in storage can be depleted in a matter of just days when demand is high in a large area of the country. Damn, I'm glad to be retired!!!
 
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Colin said:
I retired from the natural industry as a Gas Controller. I can guarantee it sucks to be those people right now! During extended cold periods natural gas wells would freeze off at the wellhead and the producers could not meet their customers demands. When that happens the pressure in the interstate pipelines get dangerous low. The result is industrial customers get curtailed, starting with power plants that burn natural gas as fuel. Natural gas in storage can be depleted in a matter of just days when demand is high in a large area of the country. Damn, I'm glad to be retired!!!
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Yes, I was in denial earlier today. I just could not believe we had a gas shortage. But that's what it is.
 
We have had rolling power outages here in KC yesterday and today but there is light at the end of the tunnel. Tomorrow's high is supposed to be near 20* and 30* on Thursday.
 
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