OKLAHOMA CITY — Amid fears that Oklahomans could be facing a severe winter, regulators called together some of the state’s top utility officials Tuesday to discuss whether the state will have adequate access to natural gas supplies.
Dana Murphy, a member of the Oklahoma Corporation Commission, said she’s a farmer and rancher who always looks at the Farmers’ Almanac, including predictions for Oklahoma’s 2022 winter.
“It lays out a map, and it says it calls it the ‘season of shivers’,” she said. “And it says the winter will be punctuated by positively bone-chilling, below-average temperatures across most of the United States. The coming winter could be one of the longest and coldest that we’ve seen in years.”
Based on that, Murphy said she felt compelled to look at how Oklahoma’s utility companies are planning to weather the upcoming winter.
She said the hearing wasn’t intended to examine February’s winter storm that resulted in rolling blackouts and billions of dollars in unexpected utility costs being passed through to consumers. Murphy said it could also serve as a time for the state’s most powerful utility companies and providers to discuss what had been learned since then.
Richard Easterly, a senior manager of gas marketing for Continental Resources, said one thing he’s learned over the 30 years he’s been involved in energy marketing is that he cannot predict the weather, which is difficult for even the most skilled meteorologists. However, his company has to deal with it because it affects two-thirds of the demand in the natural gas market business.
Easterly said the company will make changes to prepare for the upcoming winter, including adjusting contractual prices when there’s potential for freezing weather.
He said Oklahomans are blessed to live in a state where natural gas is an abundant resource and production is typically stable, so the question is how can everyone capitalize on the asset for Oklahoma ratepayers..
He said companies in Oklahoma and Texas produce more natural gas than is needed by consumers each day, which has led to it being exported to other regions. When demand spikes in Oklahoma, Continental works to bring the gas back into the state.
Easterly said it’s important that regulators understand that any price policy put into place that would restrict or limit natural gas prices in Oklahoma could potentially impede the ability of producers to bring that gas back into the state when it’s needed most.
Cathy Hibbard, director of gas supply for Oklahoma Natural Gas, which serves 900,000 customers, said the company relies on storage, fixed prices and financial call options to mitigate fluctuations or spikes.
While February’s winter storm and its costs wasn’t the primary objective of the meeting, it was on the mind of participants, including Commissioner Bob Anthony. He asked Hibbard who benefited from the increased natural gas costs that are passed on to consumers.
“Someone benefited from the high prices that have been mentioned,” Anthony said.
Hibbard noted the issue is complex, but said some marketers likely profited off the winter storm. She said ONG did not profit from increased spikes in gas costs.
Darrell Wilson, director of fuels, market operations and regulatory support for OG&E, said his company is preparing to make changes to improve the ability of generating plants to continue to operate in extreme weather, which in February shut down many coal and natural gas plants in the Midwest that weren’t hardened for the winter storm.
“We obviously learned a lot from the event, and we’re preparing to be prepared for the next event,” Wilson said. “I actually hope your Farmers’ Almanac is not correct, but none of us are the weather forecasters so we’ll take the advice wherever we can get it.”
Clint Stutler, manager of natural gas and fuel oil with PSO, said the company has had conversations about using onsite natural gas storage to try to better shore up supply. However, onsite natural gas storage is expensive, expected to cost more than $40 million. Storage tanks would require hundreds of acres on plant property, he said. It also carries an additional safety risk. Storage of a significant quantity of natural gas on plant property would require constant supervision.
“My group has been focused on using storm areas as a particular stress test,” said Aaron Doll, senior director of energy strategy with Liberty, based in Joplin, Missouri, which serves customers in Oklahoma as well as Arkansas, Kansas and Missouri. “However, we’re trying to be cognizant of not being so myopic that we expect the exact same extreme scenario, that we believe that there’s other supply interruptions that are possible.”
He said the company doesn’t want to redesign and shape a plan that accommodates one type of risk, but then leaves them vulnerable to other types.
“A lot of fuel oil was consumed during the storm, and to refill the tanks to the levels that we burn them has been a considerable effort, especially with some of the supply chain and logistics issues we’re dealing with,” Doll said. “So we’re currently efforting our way through that to make sure that we have a seven- to 10-day runtime of economic max for our dual fuel units.”