New Mexico Gas Company is saying pipeline operators shirked their responsibility to communicate that natural gas the Company had ordered would not make it into the Company’s system, despite public notices from at least one of the state’s major pipelines warning customers of supply shortfalls 24 hours before the Company’s system had to be shut off.
Company documents filed with the state Public Regulation Commission show the Company ordered more than 1.4 million British thermal units of natural gas between Feb. 1 and 4. Those orders were supposed to be delivered either the same day they were ordered or the next day. However, 146,000 units were not delivered.
Company Supply and System Planning Manager Gary Murray said most of the gas the Company orders is ordered prior to the day it’s supposed to flow, but leading up to the Company’s Feb. 3 system shutdown, the Company placed a few orders for same-day delivery in anticipation of higher demand.
The Company ordered 103,853 units of gas for same-day delivery over the same span; 90,846 units of those units were delivered into the system.
The decreased supplies caused pressure to drop in the Company’s pipelines, leading the Company to shut off its line that runs from Española to Taos, eliminating gas service to about 30,000 customers.
When asked if the Company would penalize suppliers that didn’t make the deliveries, Murray said the gas industry doesn’t operate that way.
“What occurs there is we buy the gas from the producers, we schedule it on a pipeline and at that point the pipeline works with the (suppliers) to confirm that it’s going to deliver it,” Murray said. “Or if the pipeline has other constraints, they may notify us that the gas isn’t going to be the same quantity that we (ordered).”
He said it’s the pipeline’s responsibility to notify the Company when gas isn’t coming and how much gas it can deliver.
There could have been better communication from the pipeline about the missed shipments, Murray said. He said during this particular cold snap, the pipeline operators communicated that the supplies had been confirmed for delivery.
“Once we saw that scheduled, we thought we were getting it,” Murray said.
But Murray said the pipeline operators told the Company conditions were changing so drastically and so fast, the pipelines couldn’t keep up with failed shipments.
“That’s why gas was scheduled but not delivered,” he said.
The Company may have been able to replace the undelivered supplies if it had known sooner about the pipeline conditions, Murray said.
Murray said he’d like to see more accountability from suppliers, which have contractual obligations to deliver gas into a system. When cold or other weather-related events affect suppliers’ ability to deliver gas, most issue a notice of “Force Majeure,” or an act of God, which is generally allowed by each supplier’s contract, he said.
Requests to inspect the Company’s contracts with its suppliers have been denied by both the Company and the Commission.
“(Suppliers) said, ‘Hey, it’s an act of God, we can’t be held to our contract,’” Murray said.
Murray said suppliers can deliver whatever balance of gas is owed from such a declaration when they find the supply, which he said could be as soon as the next day.
But critical notices posted by El Paso Natural Gas Company, one of two interstate pipeline companies in the state, tell a different story.
The notices indicate El Paso Natural Gas issued a warning of strained operating conditions on its website, which contains live data about the El Paso Natural Gas system, the morning of Feb. 2, which then escalated to a strained operating condition declaration later that morning. By noon on Feb. 2, El Paso Natural Gas posted an emergency critical operating condition declaration due to supply shortfalls and high demand.
The emergency notice also states that companies like New Mexico Gas Company “should immediately evaluate the performance of their suppliers and ensure they are sourcing their supplies from locations that are capable of performing.”
Company Pipeline Services Director Ken Oostman said the Company failed to receive two consecutive gas deliveries, one the night of Feb. 2 and another the following morning at 8 a.m., and didn’t know about the failed shipments until they didn’t show up.
When asked whether the Company called its suppliers to inquire about the first failed shipment on the night of Feb. 2, Company Gas Supply Director Tommy Sanders said no.
Commissioner Jerome Block did not return calls for comment regarding the Commission’s investigation into the gas outage. El Paso Natural Gas spokesman Richard Wheatly also did not return a call for comment.