US energy sector reels as winter storm knocks 2 million bpd crude production
Analysts and traders estimate that U.S. producers of oil lost up to two million barrels per day, or about 15% of the nation's production, over the weekend as a winter storm swept through the country, straining the energy infrastructure and the power grids.
According to a report by?consultancy energy?Aspects, oil production outages peaked Saturday. The Permian basin is likely to have been the most affected, as it lost around 1.5 million barrels of oil per day. Monday saw a decrease in production losses, with the Permian Basin shut-ins estimated to be around 700,000 barrels per day. Production is expected to be fully restored on January 30.
According to a source who is familiar with the situation but was not authorized to comment on record, ConocoPhillips Permian crude output was down 175,000 bpd by Sunday due to the frigid temperatures.
A spokesperson for ConocoPhillips said that the company does not usually comment on its day-today operations.
Justin Kringstad said that North Dakota's output, which is the third largest oil producing state, had been reduced by 80,000 to 110,000 barrels per day as of Monday morning. Natural gas production at wellheads was estimated to have decreased by 0.24 billion cubic feet per day to 0.33.
U.S. crude oil futures were trading around $60.60 per barrel at 2:00 pm EDT, about 50 cents lower than the previous day.
Chevron reported that hatches in its?Midland Texas refinery were frozen during the storm Sunday, according to regulatory filings. Several refineries on the U.S. Gulf Coast also reported problems related to the freezing temperatures. Exxon Mobil shut down units at its Baytown petrochemical facility?on Houston's east side.
TACenergy analysts wrote in a Monday note that there were more than 200 reports of disruptions in the first five days following a severe winterstorm in 2021.
According to LSEG's data, the average gas production in the Lower 48 States has dropped to 106.9 bcfd, from a record monthly high of 109.7 bcfd set in December. This is because producers have reduced their output.
Gas futures for the front-month are on course to close at their highest level since December 2022. They have risen by 80 cents or 15.2% to $6.75 per million British Thermal Units.
Power Sector Under Strain
On?Monday, 810,000 people in the U.S. were still without power after the Arctic blast that occurred over the weekend. The storm brought heavy snow and sleet from the Ohio Valley to the mid-South and New England. In the coming days, cold temperatures are expected in many parts of the U.S.
More than one million homes and business along the Gulf Coast and Southeast of the United States, including Texas, lost power over the weekend due to a snow and icestorm.
PJM, the largest U.S. grid, predicted generation outages of 22.4?GW on Monday, which is about 16% total committed capacity. According to PJM, the majority of these outages will occur in Dominion Energy’s Mid-Atlantic region.
PJM's operations data shows that demand on Monday was 124 GW, which is above the forecasted 123.3 GW. However, PJM continues meeting demand.
The spot wholesale electricity price was around $200 per megawatt hour, after a temporary spike over the weekend of $3,000 per megawatt hour.
Prices in New England rose by 82%, to $313 per Megawatt Hour, while PJM West in Pennsylvania and Maryland jumped about 360%, to $413. This is their highest price since January 2014. Reporting by Georgina and Arathy McCartney in Houston, Scott Disavino and Tim McLaughlin, in New York and Boston, respectively; editing by Liz Hampton and Nik Williams.
(source: Reuters)
