The night before natural gas service was cut off to nearly 30,000 Northern New Mexicans in the middle of winter, the New Mexico Gas Company did not follow up with its still-unidentified suppliers when they failed to deliver gas the Company had ordered.
Company Gas Supply Director Tommy Sanders said last week in a state Public Regulation Commission hearing that beginning Jan. 30 the Company purchased upwards of 60 percent extra natural gas in anticipation of an approaching cold spell. He said the Company saw a winter storm brewing approximately 10 days from the outage.
Pipeline Services Director Ken Oostman said the Company could not have known the magnitude of the situation.
“At that time, there was no reason to curtail,” he said.
Sanders said suppliers didn’t get the gas the Company bought into its pipelines for various reasons, including substantial freezing at gas well-heads and off-line compressor stations that lacked electricity due to rolling blackouts in Texas.
Oostman said the Company contacted 42 different large industry and commercial customers Feb. 2 asking them to voluntarily dial back on their natural gas usage. Approximately half complied, he said.
Still, Oostman said the Company didn’t anticipate a shortfall with its recent natural gas purchases.
“We could never have foreseen a supply shortfall,” he said.
He said the Company failed to receive two consecutive gas deliveries, one at 9 p.m. Feb. 2 and the other at 8 a.m. Feb. 3. He said El Paso Natural Gas, which owns one of the two major pipelines that run through the state, was told about the possible effect on the system at that time.
When asked whether the Company called its suppliers to inquire about the first failed shipment, Sanders said no.
“We did not know pressure was not going to rise,” Oostman said. “We truly believed we had a gas delivery at 8 (a.m.) and that we would not need to do (involuntary curtailments).”
Oostman said pressure in the pipelines was dropping extremely rapidly the morning of Feb. 3 and at 7:12 a.m. a system emergency was declared. At that point, the Company had 30 to 40 minutes to decide where to shut off gas service in order to avoid a full system collapse, Oostman said.
The Commission was notified of the shut-offs at 8:30 a.m. and the Ottawe valve, which controls gas flow to Española and Taos, was cut off at 8:37 a.m.
“We had no time; we had no other choice,” Oostman said. “It was easy from a logistical standpoint, but not an easy decision.”
He said because the Northern New Mexico line was a “closed system,” it could be easily taken off-line — unlike other communities, like Rio Rancho, which has several valves buried deep beneath the ground.
Sanders said it was an occurrence he had never seen before in his 30-year career in the natural gas industry.
Asked why the Company didn’t contact its gas suppliers about the failed shipments, Sanders said the Company is usually not directly in discussion with them and said the Company received no notification from suppliers that deliveries would never arrive.
Sanders added the Commission doesn’t have jurisdiction over the suppliers.
“We don’t know who has jurisdiction,” he said.
Secret Suppliers
The Company, the Commission and the Federal Energy Regulation Commission are all withholding information about the Company’s gas suppliers.
Company spokeswoman Monica Hussey has refused to say who produces and processes the natural gas for the Company. The private Company is not required to tell the public from whom it buys gas, Hussey said.
“We are prevented by contract from disclosing this information,” she stated in an e-mail.
Hussey added the gas the Company buys originates in the San Juan and Permian Basins in northwest New Mexico, and southeast New Mexico and west Texas, respectively. She said the Company has 60 suppliers or more.
“The difficulty is that we don’t know which suppliers didn’t give us the gas we ordered,” Hussey said.
Oostman confirmed Hussey’s statements.
The Company places an order for gas and as soon as it’s confirmed for delivery by the interstate pipeline, it’s usually delivered, she said. But this time the Company didn’t get it.
“(The interstate pipelines) don’t tell us who shorted them,” Hussey said. “So really right now we don’t have that information — we don’t have it.”
When asked who holds gas suppliers accountable, Hussey said producers are not regulated.
The Company is beginning an investigation Wednesday (5/11) with the Federal Energy Regulation Commission to learn more about what happened during the first week in February, Hussey said.
Permian Basin Gas Processors Association President Cedric Flowers said some of his members also had problems around the same time as the gas outages but refused to say which processing plants were affected.
In Sanders’ prepared testimony to the Commission, he stated the majority of the gas the Company buys comes from within the state and is received into the Company’s pipelines directly from the San Juan Basin near Farmington, or through Transwestern Pipeline Company and El Paso Natural Gas pipelines. He said normally 20 percent of the gas the Company buys is from the Permian Basin, east of El Paso, and 80 percent comes from the San Juan Basin. However, during extremely cold weather the San Juan Basin is very susceptible to well-head freezing, so the Company buys less from there and more from the Permian, Sanders said.
Sanders also provided the Commission a partial list of the company’s suppliers, which include Williams Partners, BP, ConocoPhillips, Enterprise Product Partners, Elm Ridge Resources, Red Cedar Gathering Company, DCP Midstream, Frontier Field Services, Targa Midstream Services, Southern Union Gas Services and Agave Energy. Calls to these companies were not returned, except for two: BP responded via email stating it does not operate any gas plants in New Mexico, and Frontier Vice President of Commercial Services Bryant Frihart said his company’s system in southeast New Mexico did experience well freezing, but said Frontier’s contract with the Company ended Jan. 31.
The Commission has denied a request submitted under the state Inspection of Public Records Act for documents pertaining to the Company’s suppliers, citing a Commission utility case amending the state’s administrative code. The Commission’s denial references a 2003 order for protection from “disclosure, dissemination and use of information concerning (a) the contracted portfolio of each gas utility; (b) the major suppliers of each gas utility; (c) the transportation volumes of each gas utility; and (d) the contract pricing of each gas utility on a contract-by-contract basis that is identified by any utility as being confidential and is included in the gas supply plan.”
A protective order in the case states the information must remain confidential for two years from when the documents are filed with the Commission. The public does have access to redacted forms of the information and may only view the un-redacted form by adhering to a confidentiality agreement, the order states.
The Federal Energy Regulation Commission also denied a request under federal sunshine laws to inspect documents pertaining to gas processing plants in Texas that Company officials have previously said experienced power outages leading to its supply shortages. The federal denial letter cites an exemption for “information compiled for law enforcement purposes, but only to the extend that the production of such law enforcement records or information ‘could reasonably be expected to interfere with enforcement proceeding(.)’ An enforcement ‘need not be currently ongoing; it suffices for (it) to be reasonably anticipated.’”
As of Tuesday, neither the state nor the federal agency had responded to complaint letters filed in response to the denials.