The February 12-17 Natural Gas Price Debacle
by Mayor Greg Beaner
The Northern Natural Gas Pipeline is the natural gas pipeline that services a large part of Iowa and our community. We were notified on Friday, February 12th that the Northern Natural Gas Pipeline would be declaring Saturday, Sunday and Monday of this week a “Critical Day”. The crisis was declared because of the extreme cold weather and operational issues with the pipeline. The NNG pipeline feels that their pipeline is in jeopardy and this is basically a self-defense mechanism for them to protect their pipeline. To make this matter worse, the extreme cold in the South has caused wellhead gas to freeze-off. This reduces the overall volume of the pipeline. To be clear this is unprecedented and will be affecting a lot of people all over the United States. A similar incident occurred in December of 2017 but not to this extent. Our natural gas buyer has been working to limit the overages caused by this declaration.
In the winter time, with severe cold, we go over the daily allotted capacity that we have reserved. This is normal operations for most systems. We need to purchase this extra amount at the market rate. By declaring a “Critical Day” the prices have changed from $17.50/dekatherm on Friday to an estimated $200-$400/dekatherm. The other problem that has hurt everyone is that the market wasn’t open on Monday because of President’s Day. We were also just notified this morning that the “Critical Day” will be extended through Tuesday, February 16th with prices being traded at $475/dekatherm.
The city council is being updated with the changes that are occurring. We are in contact with our lawyer to see what actions we should take to get help from Pierre regarding this issue. The Governors’ of Iowa and Kansas have been asked to declare a State of Emergency because of this shortage. We will not run out of gas but we will need to pay significantly higher rates for our February natural gas bill. This is also going to affect electricity prices and is the cause of the black-outs that are occurring in our area. The warm weather in the forecast will also be a big relief. I apologize to have to bring forward this bad news. We will keep our utility customers updated.
