For Oklahomans, weather is always top of mind. Whether we’re tracking the latest cold front or just planning a family outing in the summer, we keep a close eye on how the weather may impact our ability to do the things we’d like. And, it’s no different here at Oklahoma Natural Gas. 😀
The cold weather we experienced in February gave us a good opportunity to apply some of the lessons learned during last year’s Winter Storm Uri. While our approach to purchasing gas and providing a reliable gas supply to our customers remained unchanged, we did make some adjustments that proved truly beneficial during this year’s cold snap. But before we discuss those, let’s look back on some key points about Winter Storm Uri.
What happened during Winter Storm Uri was historically unprecedented
Our suppliers (these are the companies who produce gas and process gas before we purchase it from them for you) faced operational challenges that were completely unexpected. We’re talking about systems freezing and making it impossible to get supply flowing to their buyers, like Oklahoma Natural Gas. This meant we lost access to additional supply, which is an uncommon event in severe cold weather.
While our team used all the resources and supply we had available to keep our customers’ homes warm during the storm, we were forced with the decision to purchase gas at high prices to help protect from customers going without heat in record-breaking and life-threatening cold temperatures.
Gas supply planning in advance of Winter Storm Uri helped customers
This is important: The planning we did in the months preceding Winter Storm Uri prevented us from having to purchase even more natural gas at the daily supply market (or spot market) prices that increased dramatically in February 2021. We’re talking twice the amount or more than $1.4 billion that we would have spent were it not for our supply plan efforts.
How our gas supply plan works
Every year, we secure the most reliable sources of gas supply necessary to meet our peak day demand.
What is peak day demand?
Peak day demand refers to the amount of gas customers use during a peak heating degree day (HDD), or an extreme cold weather day that requires high usage of gas and increased access to supply.
Our company’s supply portfolio is both financially and reliably diversified, consisting of a mix of storage gas, short-term, long-term and spot-market purchases, which are all based on historical demand.
Gas storage is the basis of our winter portfolio, with 40% of the gas supply needed to meet our peak-day demand coming from gas storage. If during Winter Storm Uri, Oklahoma Natural Gas had purchased gas supply in the day market equivalent to the supply provided from storage, the prices would have been exponentially greater. Our gas supply plan is designed to secure the most reliable supply at the most prudent price.
How we modified our processes since Winter Storm Uri
It’s no secret that the aftermath of Winter Storm Uri required some adjustments in how energy companies – from upstream suppliers to gas utilities like us – handle weather events in the future.
What is an upstream supplier?
Upstream suppliers are producers of natural gas. These companies are known as production companies, and they supply the natural gas that is processed and then delivered to customers.
We’ve taken steps to address potential supply issues during storms by updating our pipeline infrastructure and preparing our compressed natural gas (CNG) strategy to quickly provide gas to customers in areas that saw low pressures during Winter Storm Uri.
What is CNG?
Natural gas compressed to a pressure at or above 200-248 bar (i.e., 2900-3600 pounds per square inch) and stored in high-pressure containers. It is used as a fuel for natural gas-powered vehicles.
Lastly, we updated our modeling to calculate how much supply and storage to have on hand during the coldest winter months. In fact, our recent bout of cold weather in Oklahoma proved to be another test of our winter storm preparations and we were able to deliver service.
What else have we done in 2022
Before the cold weather hit, we advanced or rescheduled service-related activities to ensure our customers would be ready to weather the storm. In addition, we kept a close eye on weather forecasts and the supply and storage levels we had at our disposal.
Our purchasing strategy relies on historical data on registered extreme temperatures. While that practice has been standard for us for years, after Winter Storm Uri our company adjusted its purchasing strategy to address a newly reported extreme for low temperatures that were registered during the storm.
Though we don’t set the price of natural gas, it doesn’t make it any less frustrating to see that you’re going to have to pay for one storm’s gas supply over an extended period. However, we do believe that the mechanism approved by the Oklahoma Corporation Commission is the best course of action to recover those costs while keeping customers’ monthly bills manageable.
We want to assure you that our team remains hard at work to continually secure gas at the lowest prices possible for our customers. We are also committed to providing you with the reliability you expect from your natural gas company – even in the harshest, most severe conditions through historical events like Winter Storm Uri.
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