A powerful storm system known as a bomb cyclone is blasting parts of the Midwest with blizzard conditions for the second time this spring. The new storm presents risks for natural gas customers in a region still reeling from the mid-March bomb cyclone, according to Engie Insight.
As much as 18 inches of snow had fallen in some areas by Thursday morning, the Associated Press reported. Thousands of businesses in South Dakota lost power and the National Weather Service predicted winds reaching 50 miles per hour.
“The Central Plains and Midwest are expected to bear the brunt of the storm, which will only exacerbate the major flooding problems already plaguing the region,” Jonathan Lee, manager of Engie Insight’s energy and sustainability analytics intelligence team, told Energy Manager Today.
Lee shares what the storm means for businesses in the region that rely on natural gas:
How is the Midwest storm affecting the natural gas infrastructure?
As floodwaters rise, the region’s natural gas infrastructure is at risk as water potentially penetrates pipelines in low-lying areas. An increase in rushing water can also erode the ground around buried pipelines, exposing them to the risk of rupturing.
Additionally, as an effort to reduce damage, utilities may preemptively shut off natural gas service. With the region still recovering from last month’s bomb cyclone — which caused $1 billion dollars worth of damage — homes, businesses, and the agriculture industry are at greatest risk.
Is this storm different from others this season?
In terms of intensity and snowfall, this storm is similar to the one that occurred in March. We should not underestimate its power. Since the infrastructure is already a bit weakened from a winter filled with turbulent weather and there’s the likelihood of more spring flooding, it could cause further damage that hinders business operations in the coming weeks.
What are the main effects for commercial and industrial natural gas customers?
Multi-site commercial businesses are in a unique position when it comes to storm preparation. Facility managers must consider a variety of variables, including damage and employee communication, when creating a storm preparedness strategy.
However, for natural gas in particular, businesses should be most concerned with usage levels and how they will affect their upcoming bill payment cycle. Increased heating levels, used to help facilities withstand the bitter cold and help keep operations running, can create a spike in operating costs. The increased demand could potentially deplete the region’s supply level, causing utility costs to move higher. This cycle can have a long-term impact on the region as natural gas companies struggle to keep up with the increased demand and are forced to charge businesses more.
What advice do you have for customers?
Multi-site businesses must be prepared to continue operations during extreme weather events like bomb cyclones. To start, they must work with utilities to effectively adhere to curtailment notifications, which will help reduce strain on the infrastructure when necessary.
Open lines of communication with facility managers gives companies a broad overview of their buildings’ performance throughout the region. This valuable insight will allow companies to optimize natural gas usage in locations with greater needs, offsetting potential pricing spikes.
Where do you see the natural gas supply levels and pricing headed?
This storm may lead to a smaller natural gas storage injection in the coming weeks or even result in a small storage withdrawal. However, this is not uncommon during this early stage of the injection season.
The industry will be working hard over the next several months to replenish storage supplies, which are at the lowest level since 2014. Even so, natural gas prices will likely experience limited volatility heading through spring and early summer due to the strong rate of production until the market can reasonably forecast pre-winter levels.
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