Texans will be responsible for $3.6 billion in natural gas expenditures spent by utilities during one very cold week in February, a burden that will last a decade or more. Several natural gas pipeline operators and dealers made billions of dollars during that same winter week by transporting and selling natural gas at astronomically high prices while supplies were scarce.
According to company filings and analyst estimates, pipeline companies Energy Transfer of Dallas and Kinder Morgan of Houston made $2.4 billion and $1.1 billion, respectively, while British oil major BP made more than $1 billion from its natural-gas trading business during the deadly, historic storm. Enterprise Products Partners, a Houston pipeline business, said it made $250 million during the hurricane by delivering and selling natural gas at high prices to utilities, industrial clients, and power producers.
According to Jim Krane, an energy fellow at Rice University’s Baker Institute for Public Policy, Texans would ultimately support these businesses’ profits. More than 1.8 million CenterPoint Energy customers in the Houston region are accountable for the $1.14 billion natural gas bill sustained by the Houston utility when demand surged and supplies plummeted during the hurricane, forcing it to acquire natural gas at exorbitant costs.
During the storm, natural gas wells and pipelines that hadn’t been weatherized to withstand extended freezing temperatures froze and lost pressure. Natural gas output fell by over half due to weather-related issues and power outages at remote oil wells, just as Texans were attempting to stay warm during days of below-freezing temperatures. As a result, natural gas spot rates at the Houston Ship Channel rose to $385 per million British thermal units, up from less than $3 per million British thermal units just before the hurricane.