US energy firms prepare as extreme freeze could hit natgas supplies
By Scott DiSavino
(Reuters) — U.S. power and natural gas companies were preparing on Friday for extreme cold over this Martin Luther King Day holiday weekend that is expected to cause record gas demand while also cutting supplies by freezing wells.
Lower gas supplies at a period of surging demand could test power systems in hard-hit areas. Winter storms in 2021 and 2022 caused widespread damage and power outages in part because many power plants lacked sufficient fuel to operate.
U.S. gas output was on track to drop by 3.7 billion cubic feet per day (bcfd), or 3.4%, over the past five days to a preliminary 10-week low of 104.5 bcfd on Friday, according to financial firm LSEG. [NGA/]
That decline so far was small compared with total gas supply losses of around 19.6 bcfd during Winter Storm Elliott in December 2022, and 20.4 bcfd during Winter Storm Uri in February 2021, according to LSEG data.
Still, U.S. gas demand, including exports, was on track to reach 165.9 bcfd on Jan. 15, 174.3 bcfd on Jan. 16 and 172.9 bcfd on Jan. 17, according to LSEG.
Those daily demand forecasts would top the current all-time high of 162.5 bcfd set on Dec. 23, 2022 during Elliott, according to federal energy data from S&P Global Commodities Insights.
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The freeze is expected to move from the U.S. Pacific Northwest to the central and eastern parts of the country over the next few days. Power grid operators in its path have already told generator owner members to prepare their units to run before electric demand starts to increase.
In a sign of what may be coming, next-day power prices at the Mid Columbia hub in the Pacific Northwest soared to a 16-month high of around $850 per megawatt hour (MWh) over the past couple of days.
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