Severe cold, supply disruption required AOG to ‘curtail’ gas to business customers

Because of unprecedented winter weather and a sudden shortage of natural gas from a supplier, Arkansas Oklahoma Gas Corp. (AOG) has curtailed industrial and commercial customers in the Fort Smith metro.

“We are experiencing an unprecedented weather event that is impacting gas supplies throughout the Midwest,” said Fred Kirkwood, chief customer officer of AOG. “Our team has been working around the clock to preserve gas access for our customers. Unfortunately, we’ve been notified that our gas supply is being reduced due to circumstances beyond our control. In order to do everything possible to preserve gas access to our most critical customers including nursing homes, hospitals, churches, and other human needs organizations, industrial customers must reduce their gas load to zero …”

Stacie Smith, AOG public affairs manager, said it is uncertain how many business customers are impacted by the restrictions because the number in each tier fluctuates often. There are four tiers of customers: Level four, largest customers, which includes the large manufacturing companies; tier three are large business; tier two are small business; and tier one are residential.

AOG started conservation efforts with the tier four customers first. Tier three and tier two businesses were added by Tuesday evening (Feb. 16). At this time, tier one businesses are not being restricted, Smith said. She also noted that businesses have been curtailed at different levels based on needs.

“Some meters are shut off completely, some are just asked to keep their heat at the barest minimum. There are some with equipment that could break or be damaged without certain efforts, and there are allowances for that,” Smith said. “Keep in mind this is completely unprecedented. We are doing what can.”

The issue stems, from AOG, which is owned by Centennial, Colo.-based Summit Utilities Inc., not being able to get gas from its suppliers.

“To be clear, we purchased enough gas to meet all our customer needs and our system stands ready to serve. Our suppliers simply don’t have enough gas to deliver what we’ve purchased to us,” Smith said.

There is a gas supply shortage throughout the Midwest due to increased demand and gas wells that have frozen due to cold temperatures or simply weren’t producing because of COVID-19, Smith said. Because of the severe winter weather system that hit the entire Midwest, bringing very cold temperatures for many days over multiple states, means gas demand has been higher than normal, she added.

“The gas supply issues are beyond our control and is affecting gas and electric utilities throughout the Midwest including Kansas, Texas, Oklahoma, Missouri and Arkansas,” she said. “And no one could have predicted this weather.”

The combination of the unusual factors led to a situation the company has never before seen. Smith said AOG has been operating in the Fort Smith area for 75 years and has never experienced something like this.

“These gentlemen are devastated. Some have been working here for 40 years. They have never had to turn off a customer’s gas because of the weather,” Smith said.

AOG was only told by their suppliers they had to reduce by 33% on Tuesday, Smith said. And then they had to work quickly.

“Due to natural gas supply constraints beyond our control, we had to curtail industrial and commercial customers last night to preserve gas access for residential and essential service customers that meet human needs,” she said.

AOG’s tariff, which is approved by the Public Service Commission, outlines the process to curtail customers, and they have been following that process, she said. Along with the curtailing, AOG used text messages, social media and other avenues to ask customers to turn their thermostats down overnight to conserve gas usage. AOG also shut down its CNG stations in the Fort Smith area.

“We are grateful for the overall positive response of the river valley business community. Because of those efforts, we were able to maintain enough gas supply to meet residential and essential service customer needs during peak demand hours (Wednesday) morning (Feb. 17),” Smith said.

Many commercial and industrial businesses affected by curtailment have closed for the next few days, according to Facebook posts.

“AOG is requiring small businesses to take our gas consumption to zero, right here in the Arkoma basin, where we are our ‘up line;’ therefore we are closing today (Wednesday) and awaiting updates from AOG,” Boondocks Sports Grill in Fort Smith posted. “Between COVID long-term reduced capacity and the fact that we now are being forced to not operate we hope that as a community we can all pool together and support small businesses once this crazy weather passes. It hurts us all, our staff, our food vendors, our guests who rely on us for their dinner, who potentially have utility issues of their own. We are sad and frustrated that big corporations (and big box chains) are able to operate business as usual while we lock our doors. Small business is the heart of America.”

Many other restaurants, bakeries and coffee shops also posted they were closed, including The Daily Bread Baker and Deli in Van Buren, Fort Smith Coffee Co., Ed Walkers Drive-in, The Brain Freeze & Coffee Shop, Miss Anna’s on Towson, R Landrys New Orleans Café and George’s Restaurant. Other businesses, such as La Huerta, Village Inn and Wok ‘N Eggrolls, posted they were open Wednesday.

Tim Allen, president and CEO of the Fort Smith Regional Chamber of Commerce, said Wednesday he has heard from a number of businesses about the situation over the past 24 hours and that he has been in conversations with AOG.

“Every one of the manufacturers completely understands that residencies and hospitals are vital and have to keep gas. Not a single one is wanting to make products. They are asking to be able to keep their heat set at like 40-45 degrees, a temperature so the pipes won’t freeze,” Allen said.

If pipes burst, it could cause problems not just in the normal ways that burst water pipes cause. Some of the equipment used in advanced manufacturing uses cold water to cool the equipment as it is used. Those would all be affected. In situations like that, manufacturers would not be able to get back to work Monday after temperatures rise over the weekend. It could mean some businesses have to remain closed for much longer.

“It’s the ripple effect that makes me nervous, the what ‘could’ happen,” Allen said.

Smith said the curtailment is temporary. Businesses were told it was for three days.

“Our hope is that as temperatures warm tomorrow (Feb. 18), it will free up gas supply so we can turn the corner on this situation. Our operations team is working right now to develop a plan of how we can begin turning industrial and commercial customers back on when we have the supply to do so,” Smith said.

Following are AOG customer sales in 2019 and 2018, according to an April 2020 filing with the Arkansas Public Service Commission. The filing is the most recent AOG annual report available.

• Sales
2019 Residential: $26.382 million
2018 Residential: $26.844 million

2019 Commercial: $16.023 million
2018 Commercial: $15.56 million

2019 Industrial: $285,123
2018 Industrial: $244,375

• Number of customers
2019 Residential: 40,058
2018 Residential: 39,864

2019 Commercial: 5,275
2018 Commercial: 5,271

2019 Industrial: 6
2018 Industrial: 4