U.S. oil producers lost up to 2 million barrels per day or roughly 15% of national production over the weekend, analysts and traders estimated, as a winter storm swept across the country, straining energy infrastructure and power grids.
Oil production outages peaked on Saturday, consultancy Energy Aspects estimated, with the Permian Basin likely to have experienced the largest share of that decline at around 1.5 million barrels per day. Production losses eased on Monday, with Permian shut-ins estimated at about 700,000 bpd and production set to be fully restored by January 30.
U.S. oil and gas producer ConocoPhillips’ Permian crude production was down by 175,000 bpd as of Sunday owing to frigid weather, according to a source familiar with the matter, who was not authorized to speak on the record.
ConocoPhillips typically does not comment on day-to-day operations, a company spokesperson said.
Output in North Dakota, the third-largest oil-producing state, was estimated to be down around 80,000 to 110,000 bpd as of Monday morning, said Justin Kringstad, Director of North Dakota Pipeline Authority. Associated wellhead natural gas production was estimated to be down by 0.24 to 0.33 billion cubic feet per day.
U.S. crude futures were trading at around $60.60 a barrel at 2:00 p.m. EDT, roughly 50 cents down on the day.
Chevron reported hatches were frozen open during the storm on Sunday in Midland, Texas, according to a regulatory filing, while several refineries along the U.S. Gulf Coast reported issues related to the freezing weather. Exxon Mobil shut units at its Baytown, Texas, petrochemical complex on the east side of Houston.
There were around two dozen reports of upsets at natural gas processing plants and compressor stations in Texas, according to regulatory filings over the weekend, but that paled in comparison to the more than 200 reported upsets during the first five days of a severe winter storm in 2021, TACenergy analysts said in a note on Monday.
Average gas output in the Lower 48 states dropped to 106.9 bcfd so far in January, down from a monthly record high of 109.7 bcfd in December, according to LSEG, as producers shut in production.
Front-month gas futures were on track for their highest close since December 2022, rising 80 cents, or 15.2%, to $6.075 per million British thermal units.
POWER SECTOR UNDER STRAIN
Some 810,000 customers across the U.S. remained without power on Monday following the Arctic blast over the weekend that brought heavy snow, sleet and freezing rain from the Ohio Valley and mid-South to New England. Cold temperatures are expected to persist for parts of the country in coming days.
The weekend snow and ice storm knocked out power to more than a million homes and businesses along the U.S. Gulf Coast and Southeast, including in Texas.
The largest U.S. power grid, PJM, anticipated generation outages for Monday would rise to 22.4 GW, or about 16% of total committed capacity. Most of those outages are expected in Dominion Energy’s Mid-Atlantic territory, according to PJM data.
Demand on PJM was 124 GW on Monday morning, above the forecast of 123.3 GW, but PJM continues to meet demand, PJM operations data show.
Spot wholesale electricity prices were around $200 per MWh, recovering from temporary spikes over the weekend that topped $3,000 per MWh.
Next-day prices in New England soared about 82% to $313 per megawatt hour, while PJM West prices in Pennsylvania and Maryland soared about 360% to around $413, their highest since January 2014.
(Reporting by Georgina McCartney and Arathy Somasekhar in Houston, Scott Disavino in New York, Tim McLaughlin in Boston; Editing by Liz Hampton and Nia Williams)