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Arctic blast disrupts operations on US pipelines, LNG terminals

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Arctic blast disrupts operations on US pipelines, LNG terminals

Some Gulf Coast oil and natural gas midstream infrastructure remained sidelined Feb. 16 as Texas bore the brunt of historically harsh winter weather and extended power outages.

Andy Weissman, CEO of energy research and consulting firm EBW AnalyticsGroup, told clients on Feb. 15 that "at least 7 Bcf/d of [gas] production was shut-in and ... at least 1.5 million [barrels/d] of oil production is lost" as drillers halted operations.

As of Feb. 16, these supply disruptions were still trickling down to the pipelines that transport oil and gas volumes from shale plays like West Texas' Permian Basin and the Mid-Continent.

Interstate natural gas pipelines, which have informational postings that are publicly available, updated customers about capacity constraints and, in some cases, declarations of force majeure. Kinder Morgan Inc.'s 70,000-mile Natural Gas Pipeline Co. of America LLC system on Feb. 15 invoked force majeure at two compressor stations in Cameron Parish, La., and said the delivery point at Cheniere Energy Inc.'s Sabine Pass LNG export facility would be unavailable starting Feb. 16 until further notice.

"America's natural gas pipeline and storage companies are working around the clock to safely and reliably deliver much-needed natural gas across the country during this unprecedented weather event," a spokesperson for the pipeline trade group Interstate Natural Gas Association of America said in an email.

El Paso Natural Gas Co. LLC, another Kinder Morgan pipeline, said it remains concerned about several receipt points along its 10,140-mile system after reporting a linepack decrease.

"Linepack is currently at 7,748 MMcf, which is a decrease of 321 MMcf since this morning," the pipeline told customers Feb. 15. "[El Paso Natural Gas] is concerned that overnight recovery will not be sufficient for tomorrow's loads due to the increasing severity of the supply loss in the Permian Basin."

Katie Bays, managing director at FiscalNote Markets, said pipelines like El Paso can prevent that kind of disruption by following the winter emergency procedures of Northeastern pipelines. "In a future scenario, you can pack more gas into the system ahead of these extreme weather days so that ... pipelines aren't experiencing lower pressure than is necessary," she said in an interview. "Those are the challenges that the Northeast dealt with during the polar vortex in 2014."

Another big pipeline, Energy Transfer LP, warned about potential gas transportation capacity reductions for systems including Transwestern Pipeline Co. LLC and ETC Tiger Pipeline LLC on Feb. 16. Williams Cos. Inc.'s Transcontinental Gas Pipe Line Co. LLC reduced some flow on its 10,000-mile system that same day.

Enable Midstream Partners' Enable Gas Transmission LLC, meanwhile, notified customers in certain pooling areas that "supply on its system is not sufficient to meet any loads in excess of those designated as human needs requirements."

On the oil transportation side, Magellan Midstream Partners LP spokesman Bruce Heine said the master limited partnership "has been affected by rolling electricity blackouts," but the company declined to give any specifics.

Oneok Inc., whose natural gas liquids gathering and processing services include a fractionation complex in Mont Belvieu, Texas, said that while "assets remain largely operational," the company has noticed reduced production supply.

Enterprise Products Partners LP and Plains All American Pipeline LP, which also handle the gathering, processing and transportation of crude oil and NGLs, had not responded to requests for comment at the time of publication.

Downstream, total deliveries of feedgas to the six major U.S. LNG export facilities operating in the U.S. plummeted to about 5.3 Bcf/d on Feb. 15, down from more than 10 Bcf/d, according to pipeline flow data from S&P Global Market Intelligence. In addition to the impacts at the Sabine Pass terminal, there were pronounced declines at Cheniere's Corpus Christi LNG export plant and the Freeport LNG Development LP terminal in Texas and Sempra Energy's Cameron LNG terminal in Louisiana, which lost power on Feb. 15.

Sempra spokesperson Paty Ortega Mitchell said the outage at Cameron stemmed from a fault on the transmission lines feeding the plant, and not from the controlled blackouts on the Gulf Coast. Cameron relies on power from Entergy Corp. "We will begin the process of restoring operations at the site as soon as reliable power is restored and are in close coordination with Entergy," she said.

Market observers expected the Gulf Coast LNG plants to bounce back quickly as long as the facilities and the infrastructure that feeds them did not suffer major damage from the winter weather. There was little to suggest by Feb. 16 that the freeze would cause a sustained disruption to U.S. LNG exports, said Jason Feer, head of business intelligence at Poten & Partners, in an interview.

"The Gulf Coast is just not set up to handle this kind of weather," Feer said. "This just doesn't happen very often, and you just wouldn't spend the money to build a system that could take this kind of abuse when you are only going to use it occasionally."

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