Winter storms in the US could lead to power outages and a reduction of natgas supplies
According to energy analysts, the next few weeks could see massive power outages across the U.S. and a spike in natural gas demand.
As a result of the "freeze offs" of oil and gas pipes and wells, the demand for gas is expected to increase.
According to the U.S. Energy Information Administration, gas is responsible for 43% of America's electricity generation and 45% of its homes are heated by it. Prices could rise next week due to a combination of a surge in demand and fewer supplies.
Analysts at the energy consulting firm Gelber and Associates warned that temperatures below zero could cause production to freeze.
According to the EIA and LSEG, the U.S. produces approximately 105 billion cubic foot per day of gas, with a third coming from the Appalachia area of Pennsylvania, West Virginia, and Ohio.
According to LSEG data, in the past, gas production has been drastically reduced by freeze-offs. In January 2024 alone, around 16,5 bcfd was lost.
According to LSEG, cold temperatures in December 2022 reduced supplies by 19,4 bcfd and in February 2020, they affected output by 20,4 bcfd.
A billion cubic feet of natural gas can supply five million homes a day.
LSEG estimates that total U.S. Gas use, including exports on January 9, could reach 156.4 bcfd. This compares to the daily record of 168.4 BCFd set on Jan. 16, 2020 during another brutal winter.
Henry Hub spot gas prices in the U.S. rose due to a combination of rising demand and a freeze-off date in January 2024.
The Henry Hub's next-day price is currently $3.65 per MMBtu. This is the highest level since January 2024.
Prepare for the arrival of power companies
Meteorologists from AccuWeather say that 250 million people in 40 states will experience frigid temperatures over the next seven days. Meteorologists warned that significant ice buildups could lead to power outages over the weekend in Missouri, Illinois and Indiana.
CenterPoint Energy, a U.S.-based energy company, announced on Friday that it had a cold weather plan in place to protect its customers, who include those in Texas, Louisiana and Indiana as well as Ohio, Mississippi, and Texas.
Earlier this month, North American Electric Reliability Corp. (NERC), coordinator of the nation's reliability, urged all those involved in the supply chain for electricity to act now to achieve the highest level of reliability.
NERC stated that it was "particularly concerned about the natural gas supply, given the significant amounts of production in mid-Atlantic & Northeast."
The state's electric grid was scrambling to keep the system from collapsing as a result of extreme weather in Texas in February 2021. This led to over 200 deaths and millions without heat, power or water for days. (Reporting and editing by Liz Hampton, Sandra Maler, and Scott DiSavino)
(source: Reuters)
