It's no secret that last winter was one of the worst on record for the United States. The natural gas industry may have been hit the hardest, with prices rising due to the high level of demand that comes along with below zero temperatures and diminishing supply.
Due to the extreme temperatures, the interstate pipelines worked hard to keep the gas flowing at maximum capacity in order to meet the high energy demands of the pipeline's customers. Absolutely nothing in the pipeline could fail without causing some fluctuation in price or supply at some point in the delivery chain.
TransCanada Pipeline (TCPL) experienced a fire on the Emerson lateral on Jan. 25 which caused prices for natural gas to skyrocket. Many interruptible and firm natural gas customers in the Midwest were curtailed, facing a reduction of gas deliveries for hours and even days due to a shortage of supply as demand for service exceeded capacity.
Some plants and facilities were prepared with emergency plans in place and access to alternative fuels; others were not. As a natural gas customer, it is important to know how to prepare for curtailment and the necessary plans to engage during curtailment. This article will explore how plants and facilities can do just that, rather than be caught off guard when curtailment occurs.
There are two types of curtailment. The first is what several major natural gas pipelines experienced in January, when the cold was so widespread from coast to coast and border to border that pipelines were unable to deliver adequate supplies. On these extended cold days, the pipeline does not have a chance to recover. The natural gas stored during the warmer months is often very low late in the winter due to heavy withdrawals and the lack of opportunities for replenishing storage volumes.
Normally, there are chances to increase this local inventory as the country experiences warmer days over the course of the winter season. Last winter, however, was especially bad due to the duration and frequency of each cold snap and the large geographic area affected. There was never an opportune time to refill gas storage, resulting in a higher probability of curtailment.
The other type of curtailment is caused by a rupture which is an extremely severe issue as both firm and interruptible customers can be affected. When a rupture occurs, pipelines are unable to meet load demand, so loads are cut drastically. Prices tend to follow supply and demand rules: demand...