Storm slashes U.S. oil, gas and power output, pushing prices up

Winter Storm Elliott brought freezing temperatures and severe weather warnings to about two-thirds of the United States, with cold and snow in some areas that will last through the Christmas holidays.

More than 1.5 million homes and businesses lost power, Texas oil refineries halted gasoline and diesel production due to equipment failure and heating prices and electricity increased due to losses. Oil and gas production from North Dakota to Texas has been hit by a freeze, which has reduced supplies.

About 1 million barrels of daily refining capacity on the U.S. Gulf Coast has been shut down due to freezing temperatures. The plants involved included the Motiva Enterprises complex in Port Arthur, Texas, which can process more than 600,000 barrels of oil per day, making it the largest refinery in the United States.

Sempra Infrastructure’s Cameron LNG plant in Louisiana said weather conditions disrupted liquefied natural gas production, without giving details. Staff at the 12 million tonne-a-year plant are trying to restore production, the company said.

Frosts – in which ice crystals have halted oil and gas production – this week reduced production at North Dakota’s oil fields by 300,000 to 350,000 barrels a day, a third of normal. In Texas’ Permian oilfield, the freeze led to more gas being extracted than injected, according to El Paso natural gas operator Kinder Morgan Inc.

Benchmark U.S. oil prices rose 2.5% to $79.46 on Friday and West Texas gas rose 22% the next day to around $9 per million units British thermal power, the highest level since the state’s deep freeze in 2021. Electricity prices on the Texas grid also rose by $3,700 per megawatt-hour (MWh), forcing generators to add more electricity to the grid before prices fall to around $58 MWh as thermal and solar supplies come online.

New England’s bulk utility said it expected to have enough to meet demand, but high winds caused outages elsewhere, mostly in the Southeast and Midwest; North Carolina had more than 187,000 people without power.

“Crews are restoring power, but high winds are making repairs difficult at most of the 4,600 outage sites,” Duke Energy spokesman Jeff Brooks wrote on Twitter.

Fuel oil and natural gas futures rose sharply in response to the cold. US heating oil futures rose 4.1%, while natural gas futures rose 1.7%.

In New England, gas at the Algonquin hub rose 361% on Friday to a nearly 11-month high of 30 mmBtu.

About half of the electricity generated in New England comes from gas-fired plants, but on colder days, power producers turn to burning more oil. According to grid operator New England ISO, as of Friday afternoon, 17% of the utility’s generation mix came from oil-fired plants.

Gas production fell about 6.5 billion cubic feet per day (bcfd) over the past four days to a preliminary nine-month low of 92.4 bcfd on Friday, along with wells in Texas, Oklahoma, North Dakota, Pennsylvania and frozen elsewhere.

It’s the biggest drop in production since the February 2021 freeze that knocked out power to millions of people in Texas.

One billion cubic feet is enough gas to power about 5 million American homes for a day.