As winter approaches, the risk rises that natural gas utilities and pipeline operators across North America may issue Operational Flow Orders (OFOs). These are formal directives requiring gas shippers and end-users to keep their usage and deliveries tightly balanced. They are typically issued during extreme cold weather and can pose real challenges for companies that are not prepared.
Why OFO are Important
An OFO is issued when system operational integrity or reliability is at risk, often during demand spikes or extreme weather. When that happens, consumption flexibility disappears. Pipelines may impose strict limits and penalties for non-compliance that could result in very significant financial penalties. For manufacturers, food processors, and other heavy natural gas users, even a brief disruption can halt production and drive up costs.
Where Companies Get Caught
For customers caught out by an OFO, itโs typically not due to a lack of awareness but to a lack of coordination. OFO notifications may go to a generic mailbox, or the recipient may understand the urgency (and financial consequences) of the notification. By the time operations or procurement teams are informed, the compliance window may have closed, and penalties may be unavoidable.
How to Prepare for OFOs
There are some simple steps an organisation can take to prepare for the potential issuance of OFOs.
- Assign responsibility. Identify a small response team to monitor supplier and pipeline notices. Keep contact details up to date and include after-hours phone numbers.
- Test the process. Before winter, run a short drill to ensure OFO notices reach the right people and that corrective actions can be taken within minutes.
- Coordinate with plant operations. Make sure site managers know what an OFO is, what it means for their equipment, and how to reduce loads or switch to backup fuel if needed.
Consequences of Inaction
Failure to address an OFO typically results in significant financial penalties. Additionally, it can undermine the integrity of the system and put supplier relationships at risk. In a constrained winter gas market, thorough preparation is both essential and a standard business practice.
The Takeaway
The issuance of OFOs is commonly during the winter months. Companies that take the time now to define roles and improve communication are more likely to maintain operations while others struggle to keep up.
For more information on how OFOs may affect your business this winter, please contact your NUS Consultant or contact us here.