A Texas natural gas marketer has sued a unit of Chevron USA Inc in Houston federal court, asking for nearly $85 million from the oil giant for failing to make natural gas deliveries during a deep freeze across the state in February.
In a complaint filed on Friday, Cailip Gas Marketing LLC located in Houston accuses Chevron Natural Gas of breaching a sales contract by delivering lower-than-agreed volumes of natural gas to a facility near Houston just as Winter Storm Uri knocked out power and sent natural-gas spot prices soaring.
Chevron did not immediately provide a comment. The complaint says that the San Ramon, California-based company has said force majeure excused the missed and incomplete deliveries.
Cailip, which is represented by Anthony Arguijo of Scott Douglass & McConnico, claims that Chevron agreed to deliver 90,000 million British thermal unit (MMBtu) of gas daily but did not make full deliveries from Feb. 14 to Feb. 22.
Uri caught Texas’ utilities off-guard, killed more than 100 people and left 4.5 million without power.
Cailip says Chevron’s failure is not excused by force majeure because, among other things, Chevron says the mishap is the result of loss of production capacity, which the transaction confirmations excludes as grounds for force majeure.
It asks the court to be awarded, as per the contract’s language, a sum equivalent to the difference between the natural gas’ contract price and its spot price for the undelivered gas. That calculation amounts to $84.5 million.
Demand for heat during Uri pushed natural gas spot prices to record highs.
At the beginning of February, gas prices ranged from $2.50 to $3 per mmBtu at hubs from Houston to Tulsa, Oklahoma. Prices began climbing on Feb. 11 into the hundreds of dollars, with Tulsa’s hub surging to a record $1,192.86 on Feb. 17, according to government data.
The case is Cailip Gas Marketing LLC v. Chevron Natural Gas, A division of Chevron U.S.A. Inc, U.S. District Court for the Southern District of Texas, No. 4:21-cv-02226.