FERC Texas Grid report ignores elephant in living room


A new report from the Federal Energy Regulatory Commission (FERC) attributes most of the blame for last February’s power outages in Texas during winter storm Uri on the natural gas production and delivery system of the state. As it did following a similar event in 2011, FERC recommends that Texas regulators formulate firm winterization requirements not just for natural gas but for all types of production, rather than simple suggestions and guidelines such as those published in 2011.

While the Texas media, always keen to criticize the state’s oil and gas industry, echoed FERC’s direction on the issue, the industry and those who regulate it have highlighted the flaws in the report. While there is no doubt that the lack of winterization of generation and delivery systems is a chronic and continuing weakness in the Texas power grid that everyone has been aware of for many years now, the map compiled by FERC above clearly illustrates that the problem in February was far from unique to natural gas.

Texas Railroad Commissioner Jim Wright said he was concerned that the report overlooked one of the main causes of freezing natural gas production facilities and pipelines – that these facilities would continue to operate. if the state grid operators at ERCOT do not cut off their power. “In the event of weatherization, if a natural gas production facility or pipeline is running, it won’t freeze,” he told me. “The power cut causes the pumps to freeze and the gas stops. ”

Electricity was cut off at many natural gas facilities because their operators had not completed an annual form designating their facilities as critical infrastructure for the electricity grid. Todd Staples, president of the Texas Oil and Gas Association, said the companies were working diligently to ensure the situation does not happen again this winter. “Improvements in communication have been made between top-to-bottom stakeholders in the Texas power grid,” he said. “Many operators have proactively implemented wintering measures and reported that the loss of power was the main reason for the lack of production during this historic storm.”

Staples also pointed out that despite the freezes, “the amount of gas in the market available for purchase and delivery to natural gas users was plentiful, as Texas has 544 billion cubic feet of natural gas storage.” . This is a key reality that the FERC report downplays.

Ed Longanecker, president of the Texas Independent Producers and Royalty Owners Association (TIPRO), reminded me that the FERC report ignores the fact that while all other power sources on the grid have contributed to generating capacity Available from ERCOT during the storm’s fall, natural gas production quadrupled between February 7 and 11 before dropping largely due to the loss of electricity.

“The data from winter storm Uri is clear – natural gas has risen to meet demand in a way that no other resource could,” Longanecker said. “Without the flexibility of natural gas-fired generation, the effects of the storm could have been much worse. What we need is more – not less – of natural gas supply to meet growing and sometimes unexpected demand. “

Jason Modglin, president of the Texas Power Producers Alliance, expressed frustration with the media coverage of the report, saying “the headlines don’t match the actual report. “

Modglin noted that the FERC report is lengthy and contains a lot of valuable information that Texas regulators should consider as they continue to develop suggested and mandated solutions. “Unfortunately, it was designed to throw oil and gas producers under the bus in an attempt to force operators to maintain 100% flow during an event – regardless of employee safety, protection of the environment and the myriad of other problems (loss of electricity, roads, pipeline interruption, voluntary shutdown) beyond 16.2% of freezing equipment resulting in loss of natural gas production ” , he added.

Address the elephant in the living room

As the debate over the FERC report and its focus on the wintering issue unfolded, a member of the Texas Public Utilities Commission (PUC) proposed what he called a “straw man” of a plan to remedy another chronic gap in the network. This problem is a long-known shortage of distributable thermal reserve capacity.

At the PUC meeting on November 18, Commissioner Will McAdams proposed a plan that would create what he calls state-funded distributable energy credits that would incentivize the construction and implementation of this new capacity. “The Texas economy is growing rapidly and we need to tackle it head on. If the electricity consumption in the ERCOT region only increases by 2% per year, which is prudent considering the number of people and industries moving here, then we will need 15 GW of generating capacity. extra in 10 years just to keep up with growth – and that does not imply any withdrawal of existing production resources, ”McAdams wrote in a note to the Commission.

As Staples, Longanecker, and Modglin have all told me, natural gas producers and pipeline operators whose facilities actually play a role in the system are currently working to prepare their facilities for winter. But the elephant left in the living room is this continuing shortage of shippable heat capacity, an issue that will only get worse unless regulators fix it now.

Wright stressed that this is a role that cannot be fulfilled by wind and solar, which have no obligation to provide alternate capacity when their own facilities fail, an exemption from which the other energy sources do not benefit. “We can add all the wind power we want,” he said, “but if it doesn’t have an obligation to participate in the market on the same footing and under the same obligations as other sources, you you always end up with unreliable energy. ” Failure to correct this imbalance of obligations was just one of many issues that the Texas Legislature has failed to address in its various regular and special sessions held since the deadly February freeze.

Conclusion: The FERC report focuses on a wintering issue from a retrospective perspective, which ERCOT already did months ago. Texas regulators are now trying to fix the other big, lingering problem on the network that no one properly addressed ten years ago. All Texans are watching and hopefully this time around they are doing it right.


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