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Utility Dive: North American Electric Reliability Corp Sounds Alarm Over Maintaining Sufficient Winter Natural Gas Supplies To Address Extreme Winter Conditions; PA Gas Producers Cutting Production, Pulling Drill Rigs

On September 19, Utility Dive reported the North American Electric Reliability Corp issued a statement that it "remains concerned about maintaining sufficient natural gas supplies to address extreme winter conditions."

December could be colder than normal across the northern U.S., and grid operators and the natural gas sector say they are preparing, said Utility Dive.

[The Independent Fiscal Office reported in March Pennsylvania’s electricity grid is dependent on one fuel for 59% of the state’s electricity generation-- natural gas-- followed by nuclear power-- 31.9%, coal-- 5.4% and 3.7% from other sources. Read more here.

[In July, the PJM Interconnection auction for wholesale electricity generation capacity to be delivered in 2025-26 resulted in a 933% increase in electricity costs over 2024-25. Read more here.

[PJM said one of the factors in raising prices was improved risk modeling for extreme weather and accreditation that more accurately values each resource’s contribution to reliability.

[In plain language that means accurately factoring in the potential unreliability of natural gas, among other factors.

[The next PJM auction is in December. Read more here.

[In addition, Pennsylvania natural gas producers like EQT, CNX Resources, Coterra Energy, Chesapeake Energy and many others have been deliberately cutting back production-- EQT alone by 1 billion cubic feet per day-- in an attempt to raise natural gas prices.

[From August 23 to September 13, Baker Hughes reported the number of shale gas drilling rigs in Pennsylvania dropped from 21 to 14-- a 33% decline.

[Marcellus Drilling News reported on September 10 Coterra Energy has pulled all its active shale gas drilling regs from Susquehanna County until natural gas prices ‘recover.’ Read more here.]

NERC Statement

Next month marks the one-year anniversary of the FERC/NERC/Regional Entity staff report on Winter Storm Elliott—a wide-area extreme cold event that affected states in the Eastern Interconnection from Georgia to Maine and from Nebraska to Pennsylvania.

This revealing event is just the latest among numerous others demonstrating the inextricable link and interconnection between the natural gas and electric systems.

As winter approaches, the Elliott experience demonstrates the increasing importance of reliable natural gas supply to support electric reliability and our way of life as well as the importance of winter readiness in both the electric and natural gas sectors.

On December 23–24, 2022, Winter Storm Elliott gripped the eastern United States, with low temperatures that were 15 to 30 degrees below normal.

Temperature extremes precipitated a sharp spike in peak electricity demand, driving energy emergency declarations by many grid operators.

During the event, unplanned generation outages at one point totaled 90,500 MW, equivalent to 13% of the resources in the U.S. Eastern Interconnection.

To maintain grid reliability over the course of the storm, transmission operators in the Southeast ordered firm load shedding at various periods that exceeded 5,400 MW in total.

It was the largest recorded manual load shed in the history of the Eastern Interconnection.

Natural gas supply disruption was a central cause of generator failures that led to load shedding.

The extreme cold conditions caused major declines in natural gas wellhead production, with additional impacts to processing activity, challenging the gas system’s ability to meet demand from electric generation and home heating.

Natural gas production declined most significantly in the eastern United States—in the Marcellus and Utica Shale formations—where production dropped by 23 to 54%.

The Elliott report found that natural gas fuel supply issues accounted for 20% of unplanned generating unit outages, derates, and failures to start.

Analysis also revealed a close call in the New York City area. Due to a dearth in fuel supply, ConEdison, the natural gas provider for Manhattan, faced rapidly declining pressure at its citygate that threatened the reliability of supply to their system.

If not for ConEdison’s ability to tap their own LNG supplies and other measures, the gas distribution system would have been at high risk of widespread gas system outages on a scale that risked the safety and lives of millions.

Although unrelated to generation outages, this close call underscores the societal importance of a reliable natural gas supply.

Winter Storm Elliott is by no means an isolated example of the link between natural gas supply and electric reliability.

In the United States, Elliott was the fifth event in the past 13 years in which natural gas supply disruption was a factor in cold weather-related generation outages that jeopardized bulk power system reliability.

The path to resolving interdependency and interconnection of the gas and electric sectors is complex.

Jurisdictional responsibilities are spread across the states and different federal agencies.

The number and diversity of entities across the natural gas value chain adds further complexity.

As the electric system increasingly relies on natural gas, more gas infrastructure, including pipelines and storage, is needed to enhance deliverability.

In fact, the natural gas-fired units are enabling the transformation to a reduced carbon future.

The natural gas industry is making encouraging progress on commercial practices and has made voluntary commitments to improve winter preparation.

Efforts such as the North American Energy Standards Board (NAESB) Forum report continue to prompt positive action.

NARUC has launched its GEAR Taskforce with results expected later this year or by early next year. For its part, NERC continues to collaborate extensively with industry and policymakers.

NERC has enhanced its Reliability Standards to better prepare generators for winter extremes, implement training, and establish communication protocols between generators and grid operators.

Current standards projects encompass extreme weather planning and energy assurance requirements.

NERC and NPCC are jointly studying the Northeast gas system, with results anticipated later this year. NERC remains committed to continued collaboration on this critical interdependency.

As we approach the upcoming winter season, NERC encourages all entities across the gas-electric value chain—from production to the burner tip and the busbar—to take all necessary actions to prepare for extreme cold, keep gas flowing, and keep the lights and furnaces on.

Click Here for a copy of the NERC statement.

NewsClips:

-- Utility Dive: North American Electric Reliability Corp Sounds Alarm Over Whether There Will Be Sufficient Winter Natural Gas Supplies To Address Extreme Weather Conditions This Winter [Click Here for NERC statement]

-- Utility Dive: PJM Is Blocking Battery Storage Interconnection Pathway That Could Unlock ‘Tens Of Thousands Of Megawatts’ Of Additional Capacity For The Grid

-- Baker Hughes: PA Natural Gas Drilling Rigs At 14, Same As Last Week - Down 33% Since Aug. 23 [Industry Efforts To Increase Natural Gas Prices Continue]

Resource Links - Electric Grid:

-- Pennsylvania’s Electric Grid Is Dependent On One Fuel To Generate 59% Of Our Electricity; Market Moving To Renewables + Storage [PaEN]

-- Guest Essay: Pennsylvania May Not Be Able To Keep All The Lights On In Four Years - By Terry Fitzpatrick, Energy [Utilities] Association of PA

-- PJM Makes Multiple Reliability-Focused Improvements To Prepare For Winter To Deal With 70% Natural Gas, Other Generator Nonperformance In 2022 [PaEN]

-- PJM Reports Natural Gas Power Plants Were Over Half The Forced Outages During Winter Storm Gerri In January; Special Procedures Used For Gas Generators Raised Questions About Market Impacts [PaEN]

-- New NERC Winter Reliability Assessment Finds Elevated Risk Of Blackouts In Extreme Weather Conditions; Natural Gas Supplies Still Vulnerable To These Conditions With 'Devastating Consequences' [PaEN]

-- US EIA Report Shows How Winter Storms Have Reduced US Natural Gas Production, But Disruptions Can Happen Any Time Of The Year [PaEN]