Extreme blizzard conditions wreaked havoc on North Dakota energy infrastructure last weekend, taking offline as much as 60% of the state’s crude oil production and more than 80% of natural gas output, and leaving utility poles and power lines strewn across the landscape. On the gas side, the unprecedented supply loss is having a never-before-seen impact on regional and upstream flows and storage activity. It is also compounding maintenance-related production declines in other basins, leaving Lower 48 natural gas output at its lowest since early February. Moreover, the extent of the storm-related damage to local infrastructure could prolong the supply recovery. In today’s RBN blog, we break down the aftereffects of the offseason winter storm on regional gas market fundamentals.
This was the third bout of severe weather to hit North Dakota in April — a shoulder month to boot — and the second major storm within a two-week span, with the most recent two events being the result of a “Colorado Low” — a type of storm system that develops in southeastern Colorado or northeastern New Mexico and builds as it moves northeast into the central/northern Plains. In fact, production had not entirely recovered from the previous storm that hit April 13-15. That storm brought record snowfall and cut production from around 1.9 Bcf/d to as low as 1.2 Bcf/d on April 15. Production was still on the rebound and 150-200 MMcf/d shy of early April levels when this latest Colorado Low struck.
Pipeline flows show that natural gas receipts from gathering, processing and production meters in the Bakken Shale plummeted by more than 1 Bcf/d (62%) on Sunday, April 24, to 670 MMcf/d, marking the biggest single-day drop. By Monday, nearly 90% was offline, with volumes falling to a little more than 0.2 Bcf/d, the lowest since May 2011 (Figure 1).
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