February 16, 2021 – S&P Global
Natural gas spot prices soar as US West freezes
By Bill Holland
Gas-fired power plants in Texas began shutting down for lack of the fuel on Feb. 15, according to Electric Reliability Council Of Texas Inc. officials. Wind turbines, a leading supply of Texas power, began icing up and going offline Feb. 15, but most of the 15 plant outages reported by ERCOT were thermal generators.
"The physical market, where schedulers at utilities and end-use facilities are responsible for ensuring there will be enough gas to meet demand day-to-day, was clearly sending catastrophic signals — a complete meltdown," RBN Energy analyst Sheetal Nasta said in a Feb. 15 note.
"The average for Midcontinent hubs was nearly $240/MMBtu — as well as many Western hubs, where even the lowest trades of the day were in the triple digits," Nasta said. "The national average price for all traded hubs on Friday [Feb. 12] was about $62/MMBtu, again, well above anything the market has ever seen."
Nasta said the cause of the price spike is twofold: The deep freeze was historic, and most pure-play gas production has migrated away from Texas and the Mid-Continent to the Appalachian shales, leaving only gas production associated with oil wells, which are more prone to freezing off.