RRC Statement on Reports of Cold Weather Impact on Natural Gas Production

January 7, 2022 -- Many media reports beat the warning drums of a dire situation with the state’s natural gas production last weekend. That is incorrect. The Railroad Commission’s objective is to help ensure there’s enough gas to protect Texas residents. Power stayed on, lights were on, and gas kept flowing to residences last weekend. Yes, production can fluctuate on any given day at any given hour for various reasons. However, the RRC has not received any indications that production decreased anywhere near the extent that has been reported. During the weekend and after, major producers we contacted did not report any drastic disruptions of gas production. We have looked at data, and according to S&P Global analysis, production on the Texas side of Permian was up 570 million cubic feet/day on Jan. 3, largely a function of a return to normal after a one day decrease in production on Sunday. This volume accounts for 2% of Texas’ daily production. Sunday’s temporary drop did not have a real impact on the gas market or the grid. Again, there was plenty of gas flowing to power generators and homes. The sources used in some media reports utilized pipeline nominations – which are basically contract requests for space in the pipeline system to transport gas – to estimate real-time gas production. That approach is speculative and does not paint a complete picture, especially given that gas trading markets were closed for the holiday weekend. The Permian Basin also saw a recent acceleration in drilling and completion activities. Since the start of the fourth quarter of last year, Permian operators have added more than 30 rigs to the basin, bringing the total to an estimated 300 in the week ended Dec. 29. In November, the number of wells drilled surged to a 19-month high at 300. From August to November, well completions averaged more than 400 per month – the highest since first-quarter 2020, based on data from the U.S. Energy Information Administration. Production is just one piece of the puzzle to help gas flowing to Texans and electrical power producers throughout the state. Gas storage plays a very important role, as well. Processed, dry gas that is already in storage, ready to flow to homes and facilities, including power plants, is critical. It can lessen the impact of potential gas market or production fluctuations. As of mid-December ahead of this winter season, the state had approximately 448 billion cubic feet of working gas already in underground storage. A final point to note, is that the first media outlet to claim significant problems from the cold weather, Bloomberg, has now revised some of its claims. Their early week article stated that nearly 1 billion cubic feet of natural gas had to be flared due to cold weather issues. But they have issued a correction that it was nearly 1 million cubic feet that was flared, a thousand-fold drop. One million cubic feet represents about 0.0035% of Texas production statewide.
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