US energy sector reels as winter storm knocks 2 million bpd crude production

Analysts and traders estimate that U.S. producers lost as much as 2 million barrels per day or 15% of their production during the weekend. This was due to a winter storm which ravaged the nation, straining the?energy grids and infrastructure. Energy Aspects estimates that oil production outages peaked at 2 million barrels per day on Saturday. The Permian basin is likely to have experienced the greatest share of this decline, at about 1.5 million bpd. Production losses decreased on Monday. Permian shutdowns were estimated at 700,000 bpd, and production is expected to be fully restored by the end of January.

According to a source who is familiar with the situation but was not authorized to comment on record, the U.S. oil producer ConocoPhillips saw its Permian crude output drop by 175,000 bpd due to the frigid temperatures as of Sunday.

A spokesperson for ConocoPhillips said that the company does not usually comment on its day-today operations.

Chevron stated that hatches in Midland, Texas were frozen during the storm Sunday. Chevron didn't immediately respond to an?request for comments.

The Texas Oil and Gas Association stated in a report that "Third party takeaway is a challenge because of the hazardous road conditions. This is especially true for water hauling and dispatching technicians to repair equipment."

Occidental, Targa Resources and other companies were reported to have experienced upsets in natural gas processing and compressor stations throughout Texas over the past weekend. However, this pales in comparison to more than 200 reports that occurred during the first five day of a severe winter storm 2021.

Occidental Resources and Targa Resources didn't immediately respond to comments.

Justin Kringstad is the director of North Dakota Pipeline Authority. He said that North Dakota's output, which is the third largest oil producing state, had been reduced by 80,000-110,000 bpd since Monday morning. Natural gas production at wellheads was down 0.24 to 0.33 billion cubic feet per day, according to Justin Kringstad, director of North Dakota Pipeline Authority.

U.S. crude oil futures were settled at $60.63 per barrel, a drop of 44 cents. According to LSEG's data, the average gas production in Lower?48 U.S. States has dropped to 106.9 bcfd, down from a record monthly high of 109.7 bcfd set in December. Producers have also cut back on their output.

Exxon Mobil, which has a Baytown, Texas petrochemical facility on the east side Houston, shut down units due to freezing temperatures over the weekend.

Cenovus

The storm that hit Sunday caused mechanical problems at Energy's 172,000-bpd Lima refinery in Ohio. IIR, an industry monitor, said that a full restart could be delayed until this week because of extreme cold.

Calumet's

Shreveport

IIR reported that the Louisiana refinery with a capacity 60,000 bpd also had problems related to winter storms.

Rystad Energy estimates that peak natural gas production will be down by around 20 bcfd due to the storm. On Monday, front-month gas futures reached their highest level since December 2022. They rose nearly 30% in one day to settle at $6.80 for a million British thermal unit.

The power sector is under strain. Some 810,000 people in the U.S. were without electricity on Monday after the Arctic blast over the weekend brought heavy snow and sleet from the Ohio Valley, the mid-South and New England. In the coming days, cold temperatures are predicted to continue in many parts of the United States. More than a half-million homes and businesses in the U.S. Gulf Coast, Southeast and Texas lost power due to a weekend snow and icestorm.

PJM, the largest U.S. grid, predicted that generation outages would reach 22.4 GW on Monday, or approximately 16% of total committed capacity. According to PJM, the majority of these outages will occur in Dominion Energy’s Mid-Atlantic region.

PJM data shows that demand on PJM on Monday morning was 124 GW. This is above the forecasted 123.3 GW but still meets the 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 for next-day delivery of megawatt-hours soared by 82%, to $313. In Pennsylvania and Maryland, prices PJM West soared by 360%, to $413. This is their highest level since January 2014.

Southwest Power Pool operates the grid in 14 states across the Midwest and West. It has extended the cold weather advisory by two days, and will continue to do so until noon on Wednesday. The cold weather advisory is intended to warn the public of possible disruptions due to the freezing temperatures. However, it does not mandate that homes and businesses conserve energy. Reporting by Georgina Mcartney, Arathy Sommesekhar, Sheila Dang and Scott Disavino in Houston; Laila Kearney and Scott Disavino in New York; Tim McLaughlin and Nia Williams in Boston. Editing by Liz Hampton and Nia Williams.

(source: Reuters)