Icy weather in the central United States caused natural gas output to drop on Thursday to the lowest in a year in many producing basins, and prices to jump in Texas, Louisiana and Chicago to their highest since last year’s February freeze.
The output drop reminded the energy market of last February’s Winter Storm Uri, which killed over 200 people in Texas, caused power and gas prices to spike to record highs in many parts of the country and left 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 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.
High temperatures in the West Texas town of Midland in the Permian shale will only reach 25 Fahrenheit (-3.9 Celsius) on Thursday, which would be its coldest day of the winter, before rising to 37 degrees on Friday and 48 on Saturday, according to AccuWeather forecasts. That compares with a normal high of 63 F at this time of year.
Data provider Refinitiv said average U.S. output fell from a monthly record of 97.3 billion cubic feet per day (bcfd) in December to 92.9 bcfd in January and 91.3 bcfd so far in February.
On a daily basis, output on Thursday was on track to drop to 88.2 bcfd, the lowest in a day since last February, according to preliminary data from Refinitiv, with most of the declines expected in Texas, New Mexico, West Virginia, Oklahoma and Colorado.