The Gas Department was well positioned during Winter Storms Fern and Giana to meet increased customer demand for natural gas thanks to the recent Liquified Natural Gas (LNG) Plant expansion.
Ultimately, having the extra gas storage at the LNG Plant saved GUC from having to pay $2.5 to $3 million extra by having to purchase gas when demand was high and pricing was volatile. The Gas Department makes strategic efforts to hedge gas prices and use LNG tank storage to protect customers and GUC from market fluctuations.
Many lessons in mitigating the volatile natural gas market were learned during Winter Storm Grayson in 2018 – also dubbed the “historic bomb cyclone.”
“Winter Storm Grayson was worse,” said Gas Systems Director Durk Tyson. “Some of the things we learned during Grayson put us in a better position for these recent storms.”
For nine days, natural gas interruptible customers did not use natural gas in order to curb demand on the system.
Even with curtailment in effect, on January 31st, usage was at a record high of 30,160 dekatherms.
“We did have record volumes on January 31st,” said Natural Gas Supply Officer Freddie Martin, “but our system is prepared to serve up [an even colder day], so it wasn’t as cold as what we designed it for. Neither of these storms were as intense as Grayson.”
Nationally, natural gas demand went through the roof causing record high natural gas spot pricing as the Eastern U.S. experienced extremely low temperatures.
Demand increased as Winter Storm Fern caused people along the East Coast of the U.S. to turn up their heat. Simultaneously, freezing weather in Pennsylvania forced natural gas production to drop 10%.
The U.S. Energy Information Administration indicates that prices jumped up 70% in a week. GUC paid $3.5 million in additional gas prices, which was due to historically high spot natural gas prices. Without the extra LNG tanks, GUC would have paid $6 million for gas during that timeframe.
“Customer usage has continued to grow since 2018, but we didn’t see natural gas prices this high during Grayson,” Freddie said.
