AUSTIN, Texas — The majority of the Texas power grid is cut off from the rest of the country. It’s managed by the Electric Reliability Council of Texas (ERCOT).
Most of Texas electric power comes from natural gas. Natural gas exports from Texas ship around the world.
So when world events impact natural gas, Texas is impacted.
“The Texas gas markets are now coupled to the global marketplace,” Michael E. Webber, Ph.D., Josey Centennial Professor in Energy Resources at the University of Texas at Austin, Professor, Mechanical Engineering and CTO of Energy Impact Partners, said.
KVUE asked Webber how conflict in Ukraine may impact our natural gas supply. The Russian military is at the border of Ukraine, escalating conflict with the North Atlantic Treaty Organization (NATO).
The U.S. and most countries in the European Union are part of NATO. The European Union gets most of its natural gas from Russia, and Russia had already reduced its natural gas exports to Europe.
With the current conflict, Russia threatens to cut off all natural gas going to the EU. The U.S. has already been sending more natural gas to the EU, before tensions in Ukraine escalated.
Texas natural gas producers make up much of those exports.
KVUE wanted to know how that international supply and demand could impact us with freezing days ahead.
“What happens in Ukraine might affect our prices, but it should not affect reliability. Their reliability really is driven by whether the equipment works the way you want it to work, whether the gas is available, the way you need to,” Webber said.
Reliability rests on how Texas manages its grid, not international conflict. Webber said international relations do play another role.
“Gas will affect global prices, which will affect prices in Texas as well. That, coupled with a cold front coming to Texas, might mean gas prices could go higher,” Webber said.
During last winter’s storm, it shot up during the freeze.
In July 2021, researchers with UT Austin released “The Timeline and Events of the February 2021 Texas Electric Grid Blackouts.”
“Natural gas prices, normally much less than $10/MMBTU, spiked to over $400/MMBTU at Texas trading hubs. Natural gas providers that were able to produce and transport gas reported windfall profits,” the report showed.
That’s a 3,900% increase in natural gas prices trading on the open market.
The Department of Energy shows gas prices have not surged at this time. The U.S. Energy Information Administration (EIA) website shows natural gas sold for $4.24/MMBTU Jan. 25, 2022.
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