U.S. natural gas production was on track to drop to its lowest since September as extreme cold blankets much of the country and freezes gas wells in Texas and other producing states, according to energy traders and data from Refinitiv.
The output drop reminds the market of last year’s February freeze when Winter Storm Uri killed over 200 people in Texas, caused power and gas prices to spike to record highs in many parts of the country and left around 4.5 million Texas homes and businesses without heat and power – in many cases for days.
To avoid a repeat of last year’s energy emergencies, the Texas power grid operator and several state agencies adopted rules requiring power and gas companies to winterize equipment and coordinate efforts to keep the lights on and gas flowing during extreme cold.
Lingering cold since New Year’s Day, however, has already depressed gas output through well freeze-offs and other weather-related equipment issues in several regions, including the Permian in Texas and New Mexico, the Bakken in North Dakota and Appalachia in Pennsylvania, West Virginia and Ohio.
In West Texas, high temperatures in Midland in the Permian basin will only reach 34 degrees Fahrenheit (1.1 Celsius) on Thursday, the coldest day of the winter, before rising to 49 on Friday, according to AccuWeather forecasts. That compares with a normal high of 61 F at this time of year.
Refinitiv said U.S. output averaged 94.4 billion cubic feet per day (bcfd) so far in January, down from a record 97.6 bcfd in December.
On a daily basis, output on Thursday was on track to drop to 92.4 bcfd, the lowest in a day since September, according to preliminary data from Refinitiv, with most of the declines expected in Texas, New Mexico, West Virginia, Oklahoma and Colorado.