Natural gas cuts necessary to hasten recovery, keep gas flowing

As Texas deals with a historic cold snap, a perpetual cascade of issues in the natural gas supply system has caused problems across the Midwest.

That cascade was set off as the cold weather slowed and stopped equipment used to pump natural gas from wells across Texas. The majority of electricity in Texas is produced by natural gas power plants. As gas production slowed, natural gas power plants slowed production and electrical outages began to occur. This further impacted the electrical equipment used to extract natural gas further impeding recovery efforts.

The only solution in the near future is hope for warmer weather.

Supply and demand impacts have spread up into the Midwest through suppliers facing a lack of natural gas. In response, these suppliers have cut back the amount of supply available for utilities.

In Jasper, one of the two natural gas supply lines feeding the city has already reduced the amount of natural gas allocated for Jasper.

Late Monday evening, Jasper Mayor Dean Vonderheide sent out a notice through the local media and social media pages asking Jasper gas customers to cut back their natural gas usage drastically.

According to Bud Hauersperger, City Utility Manager, they also reached out to their 12 largest natural gas customers and asked them to take whatever steps they could to reduce usage. “Everyone has come up with good ideas,” he explained. “Everything from setting back thermostats to switching to alternative fuel sources.”

Some factories have been able to revert to fuel oil or wood burning systems.

Hauersperger added that the current winter weather’s impact on closures and delays is also playing a part in reducing the natural gas usage by large customers.

The city is attempting to accomplish two things by asking for the reduction.

First, they are attempting to avoid fines for using more natural gas than they are allocated by their suppliers.

This isn’t normally an issue, the city has two pipeline systems supplying 5,000 decatherms (1,000 cubic feet of gas) each per day. But, Hauersperger reported the Trans Canada ANR Pipeline System — one of the two pipelines feeding the city — has restricted the city’s normal allocation of natural gas.

“If we go over our allocations, well, I’ve heard horror stories about the penalties they (suppliers) will be charging,” Hauersperger said.

Each month, the city negotiates a certain allocation of natural gas, and if it goes over that amount they potentially face penalties anywhere from four to ten times the normal cost of the natural gas per decatherm. Right now, the city pays about $5.50 a decatherm and uses about 8,000 decatherms a day for the winter.

Hauersperger said he’s heard of penalties being upped to $200 to $300 a decatherm in the current situation.

When the city has gone over in the past, if it is a small amount, they seek out a different supplier to cover the gap. If they are under their allocations, they attempt to sell the extra natural gas.

Now, with that allocation being squeezed by one pipeline system with no word on whether the second supplier will follow suit, the city is being preemptive in reducing the usage.

And, so far things have gone well. Hauersperger reported natural gas usage had been reduced from the normal 8,000 decatherms to about 6,000.

The second reason the city is taking action is to help relieve stress on the system to hasten the recovery.

“Texas Eastern (the second pipeline system serving the city) has been hanging in there,” Hauersperger said. “If they come with an order to reduce our capacity then we’re going to be asking for more drastic measures. There may be some mandatory shutdowns to ensure we can maintain gas to our critical facilities like the hospital.”

“The hospital is one of our biggest users,” he added.

Hauersperger said natural gas prices have not increased yet and if they incur the increased costs due to the allocation restrictions, that will be spread over the year for natural gas customers.

“The city will pay for it at the time,” he explained. “But, the tracker is designed to level out peaks and valleys like that. It would be put into our tracker calculation and spread out over a year’s period for a customer.”

Hauersperger has been with the city utilities for 15 years and he’s never seen anything like this before.

“Our consultant, Ron Ragan, has been doing this for 35 years and he’s never seen anything close to what’s going on right now,” Hauersperger added.