A worker repairs a power line in Austin, Texas.
Photographer: Thomas Ryan Allison / Bloomberg
Photographer: Thomas Ryan Allison / Bloomberg
When the Texas power grid was on the verge of collapse and its operator plunged thousands into darkness, it made no exception to the oil and gas field.
Power was unsurprisingly diverted to hospitals and nursing homes. Ercot, as the network manager is known, was avoiding a total catastrophe, his chief executive said later.
But leaving shale fields like the Permian Basin in the dark had an unintended consequence. Producers who depend on electricity to supply their operations cannot pump natural gas. And that gas was needed more than ever to generate electricity.
As one executive described it: It was like a deadly spiral.
The result was a vicious cycle that serves as a painful lesson for any grid operator and utility company dealing with continuous interruptions during extreme weather conditions.
Several energy companies say that while the infrastructure freeze and equipment malfunction caused a drop in gas volumes, the lack of energy also had a profound impact on supply. It is a phenomenon that highlights how interconnected – and interdependent – the Texas power grid is.
In Permian, most drillers target the most valuable crude oil, with gas normally considered an unwanted by-product. That was not the case during the days of forced power outages while almost all fuel sources faltered in the unprecedented cold that hit Texas.
Even with explorers focusing on oil, the state is the largest gas producer in the country, and fuel represents just over half of its power generation matrix.
A crucial part of the natural gas system was interrupted by power failures: compression stations that help keep the gas flowing through the ducts.
When Ercot started asking utilities to encourage big customers to reduce consumption on Sunday night, these stations fell and the pressure on several gas pipelines started to drop, eventually shutting down some utilities due to lack of fuel.
This, in turn, caused some areas of the Eagle Ford and Permian shale to simply shut down gas production completely.
The situation worsened much in the early hours of Monday, as demand continued to grow. Ercot simply had no power and millions of houses fell into darkness.
Ercot executives said utilities determine which circuits to shut down during a rotation interruption. The network operator had no information about the power cut at the gas compression stations, a spokeswoman said by email.
At its peak, almost 40% of US oil production was paralyzed due to extreme cold and associated blackouts. Three-quarters of the American frack fleet were lost this week, leaving 41 crews working to blow up water, sand and chemicals underground to release trapped oil and gas, Matt Johnson, CEO of Primary Vision Inc., said Friday.
Companies like Marathon Oil Corp. and Devon Energy Corp. began using restored power from local networks or generators to restart production, according to people familiar with the matter.
It is not yet clear how long it will take to restore the entire supply of lost oil and gas, but traders and oil executives said they have hope most of the lost production will return in a few days, as temperatures rise and energy becomes available.
– With the help of Sheela Tobben and David Wethe