Texas’ deep freeze partially hits Colorado’s energy sector

HOUSTON — The ongoing arctic blast hitting Texas and much of the central U.S. has led to crisis in the energy industry, something that may prove a boon for Colorado’s oil and gas operators and a burden for consumers.

A graph showing daily prices for next-day natural gas delivery at the Cheyenne Hub in Weld County in the past six months. Courtesy Natural Gas Intelligence

Occidental Petroleum Corp. (NYSE: OXY), which is the largest operator in Weld County and the Denver-Julesburg Basin, reportedly issued a “force majeure” notice on Tuesday to customers in Midland, Corpus Christi and Houston in Texas due to frozen wellheads and tankers unable to navigate road conditions.

Occidental declined to comment when asked by BizWest if the force majeure affects its operations in Colorado.

Bernadette Johnson, a senior vice president of power and renewables at Denver-based energy analysis group Enverus, said operators in Texas were caught not having their equipment winterized to keep running in a once-in-a-decade cold snap. Operators in Colorado and more northern states already invest in winterizing their wells and pipelines because extreme cold is fairly common.

Several operators in Texas also had to turn off wells or refineries because they were connected to the state’s power grid when it was balking under the weight of a record 69,150 megawatts of electric demand.

“There’s transportation issues if you truck it, and even some of these facilities require electricity for transportation,” she said. “If that electricity is offline, you can’t move the commodity. So it sounds like it’s like a mix of all those things.”

A shutdown of operations in Texas won’t cause a spike in production in Colorado, she said, as the midstream section of the industry will remain frozen until the weather improves in Texas and allows wellheads and roads to thaw.

Nor will the oil markets see particular whipsaws in prices, since most oil is purchased 30 to 45 days in advance due to the time it takes for the commodity to be transported through a pipe or tanker.

However, Johnson expects that Coloradans will see major spikes in their heating bills for this month due to the extreme jump in spot prices for natural gas, both due to the events in Texas and the state’s own brush with sub-zero temperatures over the weekend.

Prices for next-day gas deliveries at the Cheyenne Hub, a natural gas facility in northwest Weld County that counts Xcel Energy Inc. (Nasdaq: XEL) as a pipeline customer, went from trading in single-digits per mmBTU to just more than $190 per mmBTU over last weekend’s cold snap, according to data from Natural Gas Intelligence.

That brief spike in pricing may end up benefiting producers if they manage to sell high.

“It’s almost a zero sum game,” she said. “For anybody for that it costs a lot of money, someone else is going to make money,” Johnson said.

© 2021 BizWest Media LLC

HOUSTON — The ongoing arctic blast hitting Texas and much of the central U.S. has led to crisis in the energy industry, something that may prove a boon for Colorado’s oil and gas operators and a burden for consumers.

A graph showing daily prices for next-day natural gas delivery at the Cheyenne Hub in Weld County in the past six months. Courtesy Natural Gas Intelligence

Occidental Petroleum Corp. (NYSE: OXY), which is the largest operator in Weld County and the Denver-Julesburg Basin, reportedly issued a “force majeure” notice on Tuesday to customers in Midland, Corpus Christi and Houston in Texas due to frozen wellheads and tankers unable to navigate road conditions.

Occidental declined to comment when asked by BizWest if the force majeure affects its operations in Colorado.

Bernadette Johnson, a senior vice president of power and renewables at Denver-based energy analysis group Enverus, said operators in Texas were caught not having their equipment winterized to keep running in a once-in-a-decade cold snap. Operators in Colorado and more northern states already invest in winterizing their wells and pipelines because extreme cold is fairly common.

Several operators in Texas also had to turn off wells or refineries because they were connected to the state’s power grid when it was balking under the weight of a record 69,150 megawatts of electric demand.

“There’s transportation issues if you truck it, and even some…