The Atlantic hurricane season typically runs from June 1 through November 30, but investors should consider looking beyond those normal time parameters since winter supply disruptions can in some cases mirror lost natural gas production seen during summer storm season. This idea may warrant closer monitoring considering the polar vortex that has gripped much of the U.S. and the expectations we could see six more weeks of winter. 

Wellhead "freeze-offs" from winter storms were highlighted by the EIA in 2011, the last major cold U.S. winter season. In theory, these freeze-offs affect equipment and production output but will last much less than shortfalls typically seen during the summer hurricanes thanks to bouncebacks in temperatures. However, the fact more natural gas is used in the winter months to heat homes and buildings makes any hiccup to production a much bigger issue than investors may actually realize. Why? Freeze-offs or crystallization of water at the wellhead can block upstream gas flow across a much wider geographic footprint during a polar vortex versus any single hurricane which tends to isolate damage to a particular region (for example the Gulf of Mexico). 

Deja vu means higher natural gas still possible 
Consider this: In the winter of 2011, freeze-offs took over 7 Bcf/d of natural gas offline. That was more than the supply disruption taken offline during Hurricane Dennis (6.1 Bcf/d) and just under lost output seen during Hurricanes Gustav and Ike (9.5 Bcf/d). For those curious, over 12.2 Bcf/d of natural gas supply was disrupted during Hurricanes Katrina and Rita according to the EIA. 

In 2011, summer temperatures were then the second warmest on record (only trailing 1934), so its eerily similar to witness global warming creating another severely cold winter, this time on the heels of 2013 being the warmest year on record. This has me concerned about the amount of natural gas coming offline since this winter season has seen a polar vortex bring average national January temperatures to 32.2F (below the 33.7F average seen in 2011). That concern only intensifies with increased weather reports anticipating another monster snowstorm this weekend, which could drop one to two feet of snow in some areas of the Northeast, the largest consumer of heat.

Natural gas storage supplies are already 16.6% off 5-year averages according to the January 24 EIA Storage Report. This has me thinking the season's high price for natural gas hasn't been seen yet, which is scary considering some consumers are already seeing heating costs double from levels seen last year.

Another factor that makes freeze-offs more of a focus are the increased closures of coal plants, which should only further highlight the concern for lost natural gas production. Specific areas like the San Juan Basin, which runs from southern Colorado to northern New Mexico, and the Permian Basin, which spans the western part of Texas to the southeastern part of New Mexico, may also see increased delays of onshore drilling and increased freeze-offs because of increased water produced in those regions. 

Freezing temperatures can make diversified onshore companies and offshore gas plays more attractive for investors. At the same time, I'm hard-pressed to think companies in the Bakken, Mancos or even the Marcellus shale regions will remain immune to production shortfalls due to the extreme cold seen across the country, so I'm fully expecting E&P players to become increasingly more vocal in coming weeks about production shortfalls, delayed drilling plans and lower cash-flows due to freeze-offs. This to me further supports the short-term upside momentum in natural gas futures. 

Companies that could use some warmer weather 
On its website, Kinder Morgan lists the Southern Natural Gas pipeline as a key asset. The pipeline serves the entire southwest U.S. and may be susceptible to lower amounts of gas to transport due to freeze-offs. The same holds true for pipelines operated by Magellan Midstream Partners and Plains All American Pipeline (PAA -1.11%). Additionally, to think pipeline flow of gas is safe may optimistic thinking. Just ask the people of Manitoba . 

ConocoPhillips (COP 0.10%), which said on its recent Q413 earnings call that production was affected by weather in the Lower 48, also mentioned its was boosting unconventional activity in the Permian, an area I alluded to that could see increased freeze-offs. The company, which is the largest producer of natural gas in New Mexico, produces more than 1 billion cubic feet of natural gas per day in the San Juan basin. Granted, the company is very diversified but its exposure to the freeze-off-susceptible Permian and San Juan Basins can't be overlooked. 

ExxonMobil, which recently added 34,000 gross acres in the Wolfcamp formation in Midland and Upton Counties, now has over 1.5 million net acres in the Permian Basin through its acquisition of XTO Energy. Chevron (CVX 0.37%) has been ramping up its own presence in the Permian Basin, most notably in 2012 when it bought 246,00 acres from Chesapeake Energy (NYSE: CHK) and through an 8-year joint development deal for 104,000 acres with Cimarex signed just last summer.  

Apache controls over 3.5 million gross acres in the Permian and said during its Q313 update, "Production was affected by unplanned facility downtime resulting in deferred production of approximately 2,814 Boe per day." Occidental Petroleum (OXY -0.15%) has 2.5 million next acres in the Permian and is the top oil producer in the region. The company stated during its Q413 earnings release, "overall domestic production was lower due to severe weather conditions and plant turnarounds in the Permian operations and reduced domestic gas drilling."

Pioneer Resources (PXD -2.28%), which was looking to build upon previous drilling success in the Permian Basin's Spraberry field, had been anticipating increasing horizontal rig activity in the Northern Spraberry region from 5 rigs to 8 in 2014. So any prolonged freeze-offs could delay drilling plans by the company. 

Bottom line
Production of natural gas is very susceptible to production shortfalls in the winter months in ways that are quite similar to initial disruptions of output typically associated with hurricanes. This leads me to speculate that we could hear more about freeze-offs hurting natural gas supplies and delaying drilling projects in upcoming weeks. This scenario could boost the price of natural gas to new fresh season highs, as well as hurt cash flows for less diversified E&P players during this continued Arctic blast seen in many parts of the U.S. this winter.