Selected natural gas facilities would have to adopt improved weatherization under a new proposed rule from the Texas Railroad Commission. However, the identity and number of facilities required to prepare for extreme weather will only be known to those involved in the process.
The commission adopted the proposal June 28 in an effort to avoid a repeat of the impacts of a multiday Arctic blast that left residents in the dark and cold for days, killing dozens.
Citing a legislative mandate regarding confidentiality, the Texas Railroad Commission, or TRC, said the natural gas upstream, pipeline and storage facilities that it has identified as parts of the state's electricity supply chain will be subject to the weatherization rule and be designated as critical infrastructure by the commission.
As a result, the gas facilities subject to the proposed rule will not be known to the public, nor will the larger group of facilities in the newly identified electricity supply chain. The commission said it will, however, notify operators which facilities are on the map.
Commission Shift, a Texas-based group that has been critical of the TRC, said that the confidentiality of the electricity supply chain map could prevent companies from being held accountable for weatherization requirements because the public would not know which facilities must comply with the rule.
"Public trust in the agency's determination to enforce weatherization has been weakened by past performance, as well as by commissioners' personal financial interests and overwhelming reliance on campaign funds supplied by the same companies they regulate," the group said in a recent report on TRC performance.
Penalties, preparations
The TRC's new proposal includes fines or penalties for gas facility operators that do not comply with the weatherization requirements, with the dollar figures based on the severity of any violation and the amount of natural gas involved in any outage. Producing wells that average between 250 Mcf/d and 5,000 Mcf/d are assigned different penalty factors if they experience weather-related outages, with minor penalties around $5,000 and major penalties between $5,000 and $1 million "if the violation is not remedied within a reasonable amount of time," the TRC said.
Any violations would also be reported to the state attorney general.
The commission's weatherization rule is part of a spate of activity by Texas officials to prevent a repeat of February 2021, when severe winter weather knocked out power to millions of Texans for days after power plants and gas infrastructure froze up.
As part of that effort, the Public Utility Commission of Texas in April approved an electricity supply chain map of critical infrastructure that included oil and gas production and processing facilities and pipelines. That was partly to prevent cascading problems that occurred during the February 2021 winter storm when grid operators conducting controlled power outages inadvertently cut power to gas supply infrastructure, cutting off fuel to generators and exacerbating the power outages.
Proposal requirements
The TRC's proposed weatherization rule includes provisions for extreme heat or differing weather patterns in each county of the state, but the primary focus is to have gas facilities better prepared for winter temperatures.
"By December 1st of each year, a gas supply chain facility operator or a gas pipeline operator shall implement weather emergency preparation measures intended to, first, ensure the sustained operation of a gas supply chain facility or a gas pipeline facility during a weather emergency," the TRC said in the proposal.
Preparation measures include inspecting and testing critical components and training personnel on weather emergency operations, said the commission. The measures are based on the type of facility, its location and local weather, and lessons learned from past weather-related outages, according to the proposed rule.
Preparation measures also include use of heat tracing devices to keep water or fluid lines operating, thermal insulation and chemical injection systems, according to the TRC.
The proposal notes that if a gas facility operator discovers a weather-related outage, it is to notify the TRC through a 24-hour telephone number. The agency will then conduct an inspection to determine if the outage was caused by a failure to adhere to TRC requirements.
"In determining whether a facility that experiences a weather-related forced stoppage during a weather emergency has violated [the rule], the relevant inquiry is whether the weather-related forced stoppage was due to the operator's failure to implement measures to prepare to operate in a weather emergency," the TRC said.
Role of gas
TRC Chairman Wayne Christian said that the weatherization plans are critical for ensuring oil and gas production is available during inclement weather, and Christian suggested that was the first step in boosting reliability of the state's grid.
Although the vast majority of planned generation in the state is solar-powered, Christian said that with more people moving to Texas, "the long-term solution for our state's energy needs is to invest and build more cheap, reliable natural gas-fired electric generation."
"Now is the time to end all preferential market treatment and taxpayer subsidies for unreliable, intermittent forms of energy and to invest in reliable, resilient forms of electric generation, like fossil fuels, instead," Christian said in a statement.
The TRC is taking comments on the proposed rule through Aug. 15. Commissioners intend to adopt a final rule "before the end of the summer," the TRC said in a statement on the proposal.
Commodity Insights reporter Tom Tiernan writes for S&P Global IHS Connect. S&P Global Commodity Insights is owned by S&P Global Inc.