The winter storm that hit the northeast and eastern seaboard a few weeks ago knocked out power to millions of people. It also had effects on crude transportation and natural gas sales.
The effects were rather mild compared to previous storms, slightly increasing natural gas demand and putting a few refineries and transportation services offline temporarily.
Many states, including the District of Columbia declared a state of emergency preceding the storm, with several indicating possible interruptions in heating and fuel sources. Winter storm Jonas dropped almost 2 feet of snow between Washington D.C. and New York, with 14 states receiving over a foot of snow. The storm set records in multiple states and knocked out power, natural gas, and crude transportation to millions within the region.
Natural gas production reached moderately higher levels in anticipation of the lower temperatures, but the effects were significantly less compared to that of the winter storms in 2015. Two days before the storm hit, futures rose 2 cents to $2.138/MMBtu, after the US Energy Information Administration (EIA) storage report reported drawdown from inventories that were smaller than expected. Natural gas has seen a season increase due to El Nino weather conditions, but remains almost $1.00/MMBtu lower than average values last year.
The week of the storm, natural gas saw a withdraw of 178 Bcf, leaving gas-in-storage levels at 3,297 Bcf. Raymond James quoted this weekly withdrawal 3.3 Bcf/d higher versus the previous year, with seasonally adjusted data, but did very little to reduce the 660 Bcf surplus compared to last year. Rig counts are down in the region, with only high producing gas wells from the Marcellus and Utica plays still dominating the area.
Although prices remained stable and are remain low today, regional spikes did occur in areas battered by the storm. The Wall Street Journal reported that some areas saw prices reach $5/MMBtu, way above the seasonal and national average. These gains were only temporary however, as Bill Costello, portfolio manager Westwood Holdings Group pointed out that winter weather of that magnitude would need to last until early March “to get a semblance of balance back in the market.”
The storm had limited effects on transportation, refinement, and other crude related processes. PBF Energy’s Delaware City refinery reported power outages for over 24 hours. Responsible for 15% of the East Coast’s total operable refining capacity, the plant produces around 190,000 barrels per day. This however was the only refining stall and did not have any effects on crude prices or storage. DuPont’s headquarters located in Delaware, along with Phillips 66 and Energy Solutions plants in New Jersey and Pennsylvania remained undisputed. The Norfolk Southern railroad company reported several disruptions in operations in the southeast, mid-Atlantic and northeast US, but delays were limited to 24 hours.
The storm had mild effects on natural gas and crude processes. The oil glut continues to dominate the market, driving prices and rig activity lower each day. While thousands sustained power outages, the storm proved anemic in boosting natural gas production in the area and only seemed an annoyance to processing and transportation.