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Thursday, October 21, 2021

New Report Urges End To Finger Pointing Amid Messy Fallout

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The messy fallout in reaction to last month’s arctic freeze event that led to power blackouts for millions and the deaths of dozens of Texans continued this week with more resignations, a series of proposed bills containing “solutions,” and a new report from Enverus laying out compelling data documenting what exactly happened in February.

“The finger pointing resulting in 4 million without power and 70 deaths really needs to stop. There is plenty of blame to go around,” says Bernadette Johnson, senior vice president of power and renewables at Enverus. “Texas was not prepared for this cold snap. And that’s truly unfortunate because this event looks eerily similar to what happened the first week of February 2011,” she added, echoing what I wrote from my electricity-devoid home office on the morning of February 15, as the temperature outside had dropped to 12 degrees.

In the four weeks since the first of three major arctic fronts began to roll into the state on February 10, the fallout has been swift and severe. Texas government has seen the resignations of two of the three members of the Public Utilities Commission, six of the 15-member board of the Electric Reliability Council of Texas (ERCOT), which manages the state’s power grid, and the firing of ERCOT CEO Bill Magness after he had refused calls for his resignation.

For reasons I detailed here last week, ERCOT’s board would have undoubtedly been reconstituted in any event – the only question is how that would be done. One of the bills now being considered by the Texas legislature would eliminate the current process for selecting members of that board and replace it with a process that would feature appointments by the governor, lieutenant governor and speaker of the house.

Ed Hirs, energy economist at the University of Houston, was unclear about how such a change would improve things. “How would this change anything?” Hirs told the Texas Tribune. “The whole problem is the Public Utility Commission has oversight of the ERCOT board and they’re appointed by the governor. This doesn’t address the issue of why the grid failed in the first place. Putting more political cronies on the board of ERCOT is no solution.”

Others of the seven priority bills rolled out this week by House Speaker Dade Phelan would actually address the central weakness that caused the blackouts, requiring power providers and natural gas pipeline companies to buttress their facilities to withstand the extreme temperatures seen in February, an action neither the legislature nor the PUC chose to take in the wake of the similar freeze event in 2011. This would be consistent with Governor Greg Abbott’s stated goals, which include the legislature finding ways to fund the expensive winterization of such facilities rather than passing the cost onto consumers.

Another bill would attempt to mandate “improved communications” between the PUC, which regulates the state’s power sector, and the Texas Railroad Commission, which regulates pipelines in Texas. It remains unclear what currently prevents these two commissions from implementing improvements in communications between themselves and with ERCOT during emergency events without the legislature having to require it to happen. Anyone who has ever written a corporate crisis management communications plan could likely accomplish the task in a month.

Both natural gas and renewables have taken a huge amount of criticism in the wake of what was a failure of every power source on the grid to meet the needs of Texas citizens during this weather emergency. The Enverus report makes it clear that the search for and implementation of real solutions is crucial for both of these industry segments.

“Despite what some wish, renewables will continue to be part of the electric grid,” Johnson said. “But flexibility is needed, and natural gas is the ideal fuel to back up renewables because a power generation plant can turn it on quickly and start generating power quickly. While it’s easy to blame frozen wind turbines on those who promote renewable energy, or elected officials or transmission companies or ERCOT, this is a record event. No system in the country is immune to this. Some systems are more fragile, but no system is without risk and that’s an important lesson not only for Texas but the nation.

“Gas is the most economic dispatchable power source and provides a plurality of generation in the U.S., as well as in Texas,” she continued. “But wellhead, pipeline and plant reliability challenges point to questions about how big its long-term role can be in domestic power generation.”

For natural gas, that is a stark warning, one that should be taken seriously. Enverus further notes that the issue extends beyond keeping pipelines online to keeping the wells themselves online and producing. From the report: “Based on Enverus’s sample of interstate receipts and deliveries, grossed up to account for intrastate volumes, production began to drop off on Feb. 12, when temperatures dropped below freezing in Dallas and Austin. As the deep freeze extended to all counties in Texas, ~5 Bcf/d of supply was off-line. Freeze-offs and pipeline force majeures cut production. Winterization measures common in northern states aren’t in place in Texas.”

The ability of natural gas to provide over 70% of the available power supply on the Texas grid during the depths of the freeze on February 14-16 is the only reason why the entire system didn’t collapse into an unimaginably catastrophic event, one that ERCOT officials said came within 5 minutes of happening. But the Enverus report indicates that, for its own good, the natural gas industry in Texas must recognize the weaknesses in its infrastructure that contributed to last month’s disaster, and take ownership of fixing them.

As the Texas government continues its messy search for reforms designed to avoid similar future disasters, the Texas natural gas industry should be very publicly seen as a willing and active participant in finding and implementing real, effective solutions. If it is seen as an impediment to progress, its future as the dominant power source in Texas – and the country – will be placed in jeopardy.

The time for pointing fingers is over.

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