Texas politicians vow fix for loophole that kept natural gas facilities offline

Texas politicians vowed March 24 to fix loopholes that allowed paperwork failures to keep natural gas facilities from being deemed "critical infrastructure" during the historic February freeze that left much of the state without power for days at a time.

Without the gas facilities formally considered to be critical, far too many were left without power and unable to deliver natural gas to power plants to generate enough electricity, worsening a downward spiral that kept Texas without power for far longer than anticipated.

But some of the problems could have been fixed by natural gas companies having filled out paperwork to list their facilities as critical infrastructure – documents that many of the companies said they did not even know existed.

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Now the Texas Legislature is working to figure out how to fix the seemingly simple loophole and avoid such a disaster again, said Texas House Speaker Dade Phelan, R-Beaumont, while speaking at the Texas Oil and Gas Association-organized Texas Energy Day, which was held online.

"That is mindboggling to me. They didn't check a box on a form," Phelan said, and in many cases they did not even know about it.

"The lack of communication was pretty astonishing to me across the board." Phelan said, calling it a big, but fixable, failure that must be addressed. "If it can happen once, it can certainly happen again."

There are hundreds of bills filed related to the winter storm, he said, and the legislators are working hard to prioritize the right fixes.

Historic storm

The winter storm, named Uri, and the associated power grid failures caused blackouts for more than 4 million electricity customers and contributed to the deaths of 57 people. Much of the leadership and board membership of the Electric Reliability Council of Texas and the Public Utility Commission of Texas have either resigned or been removed.

During the storm, ERCOT raised wholesale electricity prices to a maximum allowed of $9,000/MWh, costing the market $16 billion, and natural gas spot prices hit Texas records, including $400/MMBtu at the Houston Ship Channel.

Natural gas-fired electricity generation is the primary source of the insulated, ERCOT-managed grid, representing more than 40% of the total fuel mix.

Much the the state's natural gas production and processing were struggling during the storm even before they lost power because of the weather, causing problems at the wellhead and the plants. But the failures were exacerbated by widespread power outages in the Permian Basin and Eagle Ford Shale, creating gaps where the gas could not be delivered to the gas-fired power plants that desperately needed supplies to generate electricity.

At the peak, more than half of the state's natural gas supplies were knocked offline by power losses, according to ERCOT, causing at least 20% of the total power outages during the week.

Hundreds more natural gas facilities already are being added to the state's critical infrastructure list, but legislators are deciding if a more permanent fix in the law is required.

"This session is not going to end until we address all of the issues caused by the winter storm," Governor Greg Abbott said during Texas Energy Day. "We expect the power to stay on, and we will end the session with that result."

Phelan also mentioned the possibility of an additional legislative special session later in the year if necessary.

The Legislature may need to require more winterizing of production and power generation facilities, Phelan said, but he opposes any "one size fits all" approach. After all, he said, it would be wasteful to require winterization work of facilities in Brownsville in the warmer, southernmost part of Texas.