Storm cuts oil, gas and power generation in the United States, pushing prices up

Storm cuts oil, gas and power generation in the United States, pushing prices up

Dec 23 (Reuters) – Bitter cold and gusty winds on Friday knocked out power and shut down power generation across the United States, sending heating and electricity prices soaring as people braced for the parties.

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

More than 1.5 million homes and businesses lost power, Texas oil refineries cut gasoline and diesel production due to equipment failures and rising heating and oil prices increased due to losses. Oil and gas production from North Dakota to Texas suffered freezes, cutting off supplies.

Some 1.5 million barrels of daily refining capacity along the US Gulf Coast have been shut down due to freezing temperatures. Production losses are not expected to last, but they have driven up fuel prices.

Facilities of TotalEnergies (TTEF.PA), Motiva Enterprises (MOTIV.UL) and Marathon Petroleum (MPC.N) outside of Houston have been eliminated. Cold weather also disrupted Exxon Mobil (XOM.N), LyondellBasell (LYB.N) and Valero Energy (VLO.N) plants in Texas that produce gasoline, diesel and jet fuel.

Sempra Infrastructure’s Cameron LNG plant in Louisiana said weather disrupted its production of liquefied natural gas without providing details. Crews at the 12 million tonne-a-year facility were trying to restore production, he said.

Frosts – in which ice crystals halt oil and gas production – reduced production at North Dakota’s oil fields this week by 300,000 to 350,000 barrels a day, a third of normal. In Texas’ Permian oilfield, freezing caused more gas to be withdrawn than injected, said El Paso natural gas operator Kinder Morgan Inc. (KMI.N).

Benchmark oil prices in the United States jumped 2.4% to $79.56 on Friday, and gas the next day in West Texas jumped 22% to around $9 per million. British heat units, the highest since the state’s deep freeze in 2021.

Electricity prices on the Texas grid also soared to $3,700 per megawatt hour, prompting generators to add more power to the grid before prices fall as thermal and solar supplies come online. .

New England’s wholesale electricity supplier said it expected to have enough to meet demand, but elsewhere high winds led to outages largely in the Southeast and the Midwest; North Carolina had more than 187,000 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 fuel oil futures gained 4.3% while natural gas futures rose 2.5%.

In New England, Friday gas at the Algonquin hub soared 361% 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 the electric generators move in to burn more oil. According to network operator New England ISO, the generation mix for power companies was 17% from oil-fired plants as of Friday noon.

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 as wells froze in Texas , Oklahoma, North Dakota, Pennsylvania and 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.

Reporting by Erwin Seba and Scott DiSavino; additional reporting by Arathy Somasekhar and Laila Kearney; edited by Jonathan Oatis, Kirsten Donovan, Aurora Ellis and Leslie Adler

Our standards: The Thomson Reuters Trust Principles.

Scott Disavino

Thomson Reuters

Covers the North American electricity and natural gas markets.

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