SynMax Research:
Due to the inherent unpredictability of power outages - both in terms of occurrence and duration - our initial modeling attempted to isolate mechanical freeze-offs from power-related disruptions. Our thought process was to focus on factors, namely temperature forecasts, with higher confidence. Power outages, on the other hand, have many more variables that introduce increasing uncertainty. One of these variables is the snow/ice/rain mixture which is exceedingly difficult to predict in its probability and effect. The myriad possibilities create huge uncertainty. In reality, the impact of power outages has significantly more impact on total production. Given the current forecast, large-scale power outages are a distinct reality. The critical question remains: To what extent will these outages impact well performance and total production?
To address the power outage issue, we incorporated more data into our prediction modeling from the widespread power outages experienced during Winter Storm Uri (2021) and the Northeast Winter Storm of December 2022. The inclusion of the power outage estimates greatly expands the predicted potential production impact given the power outage uncertainty. Again, while temperature forecasts have inherent uncertainty, power outage predictions have even lower low confidence. Under this scenario, we project freeze-offs to reach a peak magnitude of 11 Bcf/d with a total production freeze-off loss estimate of up to 113 Bcf for the 01/22/26 through 02/06/2026 forecast period based on today’s GFS 12Z Operational weather forecast.
Our current base case continues to show an intensifying trend in freeze-offs over the forecast period.
We would also like to highlight that our models utilize localized temperature data from specific production hubs [Cities/Basins]. Our projections are driven by GFS Operational forecasts, which may differ from other third-party vendors. For your frame of reference, we have supplied the specific temperature inputs used in this model.
In summary, we have a total natural gas production freeze-off range of 44 Bcf all the way up to 113 Bcf depending on the extent and duration of power outages based on the 15 day GFS Operational weather forecasts. Widespread winterization efforts by the utility industry have likely increased the robustness of the grid. In ERCOT, there are several new programs with many more participants to maintain grid reliability. Thus, our bias is that power outages will remain minimal as current data suggests few power interruptions. If power outages remain minimal, production impacts should be on the low side of expectations.
For complete transparency for our customers and your own forecasting, we plan on putting out an in-depth freeze-off methodology white paper in the near future.
