Winter Storm Disrupts US, Halts 2 Million BPD Crude Production
The recent winter storm that swept across the United States caused significant disruptions in oil production and energy infrastructure. Analysts estimate that the storm led to a decline of up to 2 million barrels per day (bpd) in U.S. crude output, representing roughly 15% of the country’s total production.
Impact on Oil Production
The Permian Basin was hit hardest, with production dropping by approximately 1.5 million bpd. By the following Monday, the situation improved, but the region still faced a shortfall of around 700,000 bpd. Production is expected to resume fully by January 30.
- Peak production loss on Saturday: 2 million bpd
- Permian Basin production loss: 1.5 million bpd
- Ongoing shortfall: 700,000 bpd
ConocoPhillips reported a reduction of 175,000 bpd due to the extreme cold. Chevron faced operational challenges in Midland, Texas, where hatches froze open, affecting their facilities. Additionally, ExxonMobil experienced multiple shutdowns in gas compressors necessary for oil production.
Challenges for Energy Companies
Energy companies encountered secondary challenges due to hazardous road conditions that impacted water transportation and technician availability. Occidental and Targa Resources reported disruptions, but these incidents were significantly lower compared to over 200 disruptions experienced during a severe winter storm in 2021.
North Dakota Production Overview
In North Dakota, the third-largest oil-producing state, output was down by approximately 80,000 to 110,000 bpd. Associated natural gas production also saw a decline, estimated between 0.24 to 0.33 billion cubic feet per day.
Refining and Gas Sector Effects
Refineries along the Gulf Coast also reported multiple issues due to the weather. ExxonMobil had to shut down certain units at its Baytown complex, while Cenovus Energy’s Lima, Ohio, refinery faced mechanical issues. Full operational recovery may take several days.
- Peak natural gas production losses: estimated at 20 billion cubic feet per day
- U.S. crude futures settled at $60.63 per barrel
Power Outages and Grid Strain
The storm resulted in widespread power outages, affecting over 810,000 customers. The PJM power grid anticipated generation outages to escalate, accounting for about 16% of its total capacity.
Electricity demand on PJM exceeded forecasts, prompting fluctuations in spot wholesale electricity prices. Prices peaked around $200 per megawatt hour, recovering from spikes that reached over $3,000.
Conclusion
The winter storm has brought significant challenges to U.S. oil production, natural gas output, and the energy infrastructure at large. As companies work to restore operations, energy consumers may face higher prices and potential supply issues in the coming weeks.
