Oil & Gas

18 Feb 2021

US Crude Output Down Sharply on Storm

18 Feb 2021  by Thomas Lee   

Power outages and freezing temperatures have forced US oil producers to shut down or reduce operations significantly, with impacts ranging from 2mn b/d to as high as 3mn b/d according to market sources.

Storm systems that swept into Texas starting over the weekend led to widespread power outages across much of the state, knocking off line oil and natural gas production facilities and pipelines. As much as 30pc of Texas' natural gas output and 13pc of total US dry natural gas production is offline because of power outages and "freeze offs."

US major Chevron warned that the storm, which has left more than 3mn people without electricity in Texas, has interrupted oil and gas production in its key Permian basin.

"With the record-setting weather affecting West Texas and southeastern New Mexico, along with widespread loss of power to residents and many of our facilities, we have a significant production shut-in of our Permian assets," the company said. "We will restore production to these assets when it is safe to do so."

The storm will curtail Devon Energy's production in the first quarter, although the company still needs time to measure the impact, chief executive Rick Muncrief said today.

It may be several days before normal power operations are restored the state's main grid operator said as many power plants need temperatures to remain above freezing to restore operations.

The cold weather and related power issues has also affected about 4.2mn b/d of refinery output, or 36pc of the refining capacity in the US Gulf coast, the US Department of Energy (DOE) said in a report.

Pipelines throughout the region have also been affected. Plains All American Pipeline issued a force majeure on pipelines including the 670,000 b/d Cactus 2 line and the 390,000 b/d Cactus pipeline which move crude from west Texas to Corpus Christi.

Other pipelines impacted include the Sunrise 2 pipeline, the Basin system, the Iatan gathering system, the McCamey pipeline, the Mesa pipeline, the Midland South pipeline, the Spraberry pipeline system, the Pinon pipeline, the Scurry pipeline, the Mesa pipeline, the Permian basin system, the west Texas gathering system and the Wolverine gathering system.

Crude movements are also impacted by numerous Texas port closures this week. The Houston Ship Channel and Port of Houston reopened to all vessel traffic at 10:30am ET today, according to the US Coast Guard, after closing yesterday at 7:30pm because of freezing weather. At that time six vessels were waiting to enter the channel, and four vessels were waiting to exit the channel.

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