Risk Management (or Lack Thereof) and Texas’ Deep Freeze Energy Failures

Risk Management (or Lack Thereof) and Texas’ Deep Freeze Energy Failures

2021-02-25 23:50:20

While renewable energy sources such as wind turbines and solar panels power a fraction of the state's power grid, most of Texas's electricity is provided by natural gas, coal, and nuclear power plants, with natural gas plants generating nearly half of the state's electricity. according to the state inspector. Regardless of the source, however, a lack of wintering was a major factor in the failure of Texas power-producing operations during the historically severe and protracted freeze that enveloped the state from the second week of February, leaving millions of days without electricity. But it didn't have to be that way, says an expert in oil and gas insurance and risk management.

“Winterizing is to protect the equipment and instruments, so it won't be susceptible to cold weather disturbances, like it would be in Canada or North Dakota or any other cold-weather place. 39; & # 39; says David Robertson, Global Head of Energy Risk Consulting at Allianz Global Corporate & Specialty.

With natural gas, for example, the problems start at the wellhead, Robertson said. "Texas has so much gas that they don't have much online storage space. It's in the ground when they need it. They just open the valve a little bit more and take more out and it connects directly to the whole system."

'Well, the cold weather affects the gas, the well itself, the instrumentation, it affects the pipelines a little bit. Even natural gas pipelines are sensitive to cold weather, especially when the cold weather is harsh and long-lasting. "

During the recent big Texas freeze, reduced gas production at the wellhead created a knock-on effect – reduced supply to natural gas plants meant utilities couldn't produce enough electricity to keep up with demand. As the temperature dropped, people across the state increased heat in their homes and businesses, but power plants were not getting enough fuel to respond to the wave.

The generating plants & # 39; also suffered from the same problem: not being properly winterized. So their equipment started to fail. Instrumentation, utility lines, things like that, freezing, don't work well. So not only did they not have enough throttle to turn, but they also began to suffer from their own inability to turn at full speed just because their own equipment was not working properly in cold weather, & # 39; & # 39; said Robertson.

As an energy risk advisor, it is the job of Robertson and that of his team of engineers to analyze the risks in energy production facilities, be it in the exploration and production of oil and gas – or upstream – operations, the transportation systems and storage facilities for raw materials in the middle of the stream. the downstream petrochemical plants.

“We go out to see the facilities, we meet senior management, we spend some time exploring the facilities with the people who work there, and we develop a sense, an image of how they do their business and how safely they do it relative to their peers, ”said Robertson.

It's complicated without strict regulations like in Europe, where companies have to meet certain clearly defined standards, he said. “In our world it's not that clear.… We go out and we meet our policyholders and we visit their facilities, and we meet their management. And when we see opportunities for them to improve, we try to sell our ideas to them and convince them that it is in their best interest to do it themselves. "

Robertson added, however, that "it is up to the business owners to make the changes, to make the investments."

Robertson said he and his team are trying to help "make the world a safer place" by working with policyholders to identify risks and educate customers on "best practices or ways to mitigate those risks." And in this case it is probably a better implementation of winterization practices. "

For example: “On the renewable side, the windmills and turbines have wintering packages. There are kits you can install to defrost the blades, keep the engines and gearboxes warm and running. They run very well in Scandinavia and Canada and in the northern United States, ”he said.

Those winterizing packages aren't apparently installed on many Texas turbines, but it's "pretty clear it wouldn't have been a bad investment," he said.

Likewise, there are options for winterizing oil and gas operations at any point from upstream to downstream, Robertson said. As an example, he used North Dakota, which is now one of the top states for oil and gas production and is well equipped to handle extended and extremely cold weather. While some parts of North Dakota experienced controlled rolling blackouts during the recent record low temperatures, it avoided the intense and widespread power disruption that plagued Texas, according to several local media reports.

So it's just a matter of … I mean I hate to say it, spend the money on the installation and maintenance of winterizing, be it insulation, track heating, building enclosures to getting stuff out of the weather, things like that. He added that his group at Allianz uses "wintering checklists that we share with our policyholders to help them."

About the photo: A team from Oncor Electric Delivery is working to restore power to a neighborhood after the winter storm that swept through Texas in Odessa, Texas on Thursday, Feb. 18, 2021. (Eli Hartman / Odessa American via AP)


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