UNITED STATES (From staff and news reports) -- U.S. natural gas prices have hit record highs after the temperature in many parts of the country fell far below forecasts.
Paperitalo Publications CEO Jim Thompson has been calling mills this morning (15 Feb 21) and found general reports of widespread abnormal conditions due to the extremely cold weather. If the mills can get natural gas, they are slowed down, just trying to keep the mills from freezing up. Spot natural gas prices are as high as $300/mmBtu and purchased electricity is on curtailment in many places.
In Oklahoma, gas traded at as much as $600 per million British thermal units during the long weekend, pushed up by freezing temperatures across much of the central and western U.S., media outlets reported, citing traders who wished to remain unnamed.
In southern California, natural gas traded at $195 per mmBtu as a result of the weather.
Wholesale electricity prices were also soaring sky-high, reaching between $3,000 and $7,000 per megawatt-hour on Sunday. In Texas, wholesale electricity prices hit $7,000 that day. This compares to an average of $25 per MWh on the state's grid.
As temperatures drop into single-digit territory, Texas's wind power might is being compromised, too. The biggest producer of wind energy in the United States saw half of its wind turbines frozen by the icy winds blowing from Canada to parts of the U.S. unaccustomed to such temperatures. Of a total 25 GW in wind power capacity, 12 GW were knocked out by the freezing spell. At the same time, there is a shortage of natural gas, likely because of the sudden spike in demand.
Following these developments, the Texas Electric Reliability Council has asked Texans to try and conserve energy as much as they can despite record-breaking demand.
"We are dealing with higher-than-normal generation outages due to frozen wind turbines and limited natural gas supplies available to generating units," ERCOT said.
For natural gas producers, the cold spell has turned some wells into profitable territory again, according to reports. This is prompting some companies to even reconnect older conventional wells that have been shut for quite some time, now that the economics support doing so.