Government gas resources were halved during the deep freeze, but sellers made a good profit. Natural gas traders and pipeline companies earned as much as $11 billion as Texans froze and natural gas power plants idled during the February cold snap. In just five days, these lucrative profits were attributable in part to a system of leaving utility companies and customers dependent on the natural gas market under little government oversight, which some compare to a black box. p>
READ MORE The Texas government was aware of the natural gas shortage a few days before the blackout, but blamed it on wind. The accident was caused mostly by coal, natural gas, and nuclear power plants that were shut down due to equipment not being prepared for cold temperatures. Equipment problems at gas power plants increased with the lack of resources. In the days before the blackout, the chair of the Texas Public Service Commission spoke with the governor's office 32 times about reducing natural gas shortages.
According to a new Bloomberg NEF report, the initial gas shortage may be more severe than previously known. In the six days before the blackout began, Texas' daily gas production was down by about 6 billion cubic feet, about a quarter of the state. This is partly due to the shutdown of producer wells before cold weather. Manufacturers' equipment is also not immune to the winter, and breaking the part requires a lot of water, which can lead to freezing of pipes and wells. After the blackout began, gas production declined by another 5 billion cubic feet over the next few days, as wells continued to lose their operation. By the end of the blackout, nearly half of the state's natural gas production was offline.
Gas suppliers have canceled their contracts with power and generator companies, forcing them to turn to volatile markets to make up for the shortfall. . With gas supplies dwindling, merchants and pipeline companies can get "almost any price they want." Power executives told Bloomberg.
Two major players in the Texas gas pipeline system have picked up quite a bit of wind from the disaster. Energy Transmission Partners reported first-quarter revenue of $3.29 billion, compared to a loss of $855 million in the same quarter of 2020. Kinder Morgan, another Texas gas retailer, earned $1.41 billion in the first quarter of this year, with a loss $306 million in the first quarter of 2020. We've contacted both companies for comment and if they hear the story we're updating that story.Advertising
An app, CPS Energy, blames energy. transfer to his problems. Paula Gold-Williams said the company carried out the pipeline "openly and illegally raised prices" and used this surprise hit "in the first quarter of 2021 alone, profits from more than two years of 'earning gasoline sales.'" CPS has sued the company. Energy Transfer to make up for part of the $1 billion it lost in the storm.In a statement to Bloomberg, Energy Transfer CEO Tom Long blamed "miscalculations about storm severity and a lack of proper planning."
If prices don't go up Immediately, gas suppliers would have been in a common pain when producers started closing wells. But high market prices more than compensate for these issues. An unnamed executive told Bloomberg: "If you produce half of the natural gas but you sell it at 70 to 100 times the price. This math is good for you.” “You just had the biggest week in the history of the gas market.”
In addition, the lightly controlled Texas gas industry does not require public prices to be disclosed, which means buyers do not They use it like electricity and utilities. You don't know if the deals They are reasonable or not. Before the onset of cold weather, Texas natural gas was trading at about $3 per million British thermal units. During the height of the cold, the CEO spotted a major hub selling gasoline at $50 per million British thermal units, about 17 times the regular price. When the gas passed through the Texas pipeline system and companies learned about the product, it sold for $300 per million British thermal units, which is 100 times more than the usual price.
READ MORE Minnesota residents are outraged that they have to pay for Texas payments to be frozen across the country, especially in Texas, who will be paying for natural gas for years. The Texas legislature has proposed a multibillion-dollar bailout of economic aid that pays high costs for natural gas and production capacity. In other states, such as Minnesota, where market rates have risen, customers are at risk of hundreds of millions of dollars because city services can incur additional costs.
If gas and power plants prepare their equipment in the winter, many of the misfortunes of blackouts can be avoided. "At least a quarter of the blackouts could have been prevented," Daniel Cohan, assistant professor of environmental engineering at Rice University in Houston, told Bloomberg. “If we supply winter power plants only with gas without wintering, then my fear is that in the future we will not be enough in terms of fuel.” p>
$11 billion in 9 days - Texas natural gas sellers benefit from deep freeze
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