Genscape : Record Freeze-Offs Result from Widespread Winter Weather

Widespread winter weather over the past two weeks has led to new records on both the production and the consumption sides of North American natural gas. In addition to the well-documented Northeast price blowouts brought on by the 'bomb cyclone,' the rapidly intensifying storm that pummeled the East Coast with heavy snow and record-setting cold, Genscape has also seen a new all-time high for single-day production losses due to freeze-offs across much of the central U.S.

Freeze-offs occur when temperatures become low enough to freeze water and other liquids contained within the natural gas mixture, blocking the flow of gas out of the wellhead. Genscape has tracked the impact to production through a variety of methods, including daily Freeze-Off Summary reports via our Spring Rock Production group and Natural Gas Basis Commentary.

At the peak of this year's event, freeze-offs hit ~4.9 Bcf/d, equal to roughly 7 percent of prior 30-day U.S. production. This figure shattered the previous single-day record set during Winter 2013-2014 of ~3.2 Bcf/d, which back then was about 5 percent of pre-freeze-off production levels. During that winter, record-low temperatures spanned much of the continental U.S. due to a weakening of the North Polar Vortex which allowed frigid Arctic air to push southward (here on referenced as the '2014 Polar Vortex event'). A new record for 14-day cumulative impaired production of 28.96 Bcf has also been set this winter, surpassing the previous such record of 23.99 Bcf during the Polar Vortex by over 20 percent.

Since this year's freeze-offs began in earnest the day after Christmas, nearly 29 Bcf of cumulative production has been choked back in 14 days. In comparison, the 2014 Polar Vortex event impacted a cumulative 64.5 Bcf of production, but that was over the course of 90 days.

With temperatures currently rising across the U.S., production has started to rebound. The January 9 report noted that freeze-offs are no longer occurring in Texas, Permian New Mexico, MidCon, or Ohio. Total freeze-offs in the Lower 48 were ~2.2 Bcf/d for January 8, bringing cumulative freeze-offs to ~28.9 Bcf in Lower 48 and ~8.6 Bcf in Western Canada.

In addition to the macro Spring Rock Daily Freeze-Off reports, we also examined pipe-level impacts in the NatGas Basis Commentary reports. For example, impact in the Permian region of west Texas and southeastern New Mexico was mostly felt on El Paso Pipeline, which accounted for 86 percent of the drop despite normally representing only 62 percent of Permian production. We also referenced freeze-off notices posted by El Paso, including the pipeline's warning on January 1 about Strained Operating Conditions and a follow-up notice that its actual receipt volumes were still underperforming scheduled quantities by over 700 MMcf/d.

In addition to the impacts on Lower 48 production, Western Canada was also hit hard. At its peak on December 30, more than 1.55 Bcf/d of production was impacted. Freeze-offs in Alberta and British Columbia are less common than in the U.S. because the greater frequency of cold-weather events makes the economics of winterizing pipeline and gathering systems viable. However, radical and rapid temperature swings can still lead to freeze-offs here. Before this year's Western Canadian freeze-offs, daytime highs across Alberta were in the mid-40°s F, but starting on Christmas day, daytime highs failed to get above zero Fahrenheit for the next seven days.