Home NewsCommodities News Storm cuts U.S. oil, gas, power output, sending prices higher By Reuters

Storm cuts U.S. oil, gas, power output, sending prices higher By Reuters

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Storm cuts U.S. oil, gas, power output, sending prices higher By Reuters

© Reuters. FILE PHOTO: A driver makes their way through a flooded street at high tide during a winter storm in Gloucester, Massachusetts, US, December 23, 2022. REUTERS/Brian Snyder

By Erwin Seba and Scott DiSavino

(Reuters) – Frigid cold and blowing winds on Friday knocked out power and cut energy production across the United States, driving up heating and electricity prices as people prepared for holiday celebrations.

Winter Storm Elliott brought sub-freezing temperatures and extreme weather alerts to about two-thirds of the United States, with cold and snow in some areas to linger through the Christmas holiday.

More than 1.5 million homes and businesses lost power, oil refineries in Texas cut gasoline and diesel production due to equipment failures, and heating and power prices surged due to the losses. Oil and gas output from North Dakota to Texas suffered freeze-ins, cutting supplies.

Some 1.5 million barrels of daily refining capacity along the US Gulf Coast was shut down due to the bitterly cold temperatures. The production losses are not expected to last, but they have raised fuel prices.

Knocked out were TotalEnergies, Motiva Enterprises and Marathon Petroleum (NYSE:) facilities outside Houston. Cold weather also disrupted ExxonMobil (NYSE:), LyondellBasell and Valero Energy (NYSE:) 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-per-year facility were trying to restore output, it said.

Freeze-ins – in which ice crystals halt oil and gas production – this week trimmed production in North Dakota’s oilfields by 300,000 to 350,000 barrels per day, or a third of normal. In Texas’s Permian oilfield, the freeze led to more gas being withdrawn than was injected, said El Paso Natural Gas operator Kinder Morgan Inc (NYSE:)..

US benchmark oil prices on Friday jumped 2.4% to $79.56, and next-day gas in west Texas jumped 22% to around $9 per million British thermal units, the highest since the state’s 2021 deep freeze.

Power prices on Texas’ grid also spiked to $3,700 per megawatt hour, prompting generators to add more power to the grid before prices fell back as thermal and solar supplies came online.

New England’s bulk power supplier said it expected to have enough to supply demand, but elsewhere strong winds led to outages largely in the Southeast and Midwest; North Carolina counted more than 187,000 without power.

“Crews are restoring power but high winds are making repairs challenging at most of the 4,600 outage locations,” Duke Energy (NYSE:) spokesman Jeff Brooks wrote on Twitter.

Heating oil and rose sharply in response to the cold. US futures gained 4.3% while natural gas futures rose 2.5%.

In New England, gas for Friday at the Algonquin hub soared 361% to a near 11-month high of $30 mmBtu.

About half of the power generated in New England comes from gas-fired plants, but on the coldest days, power generators shift to burn more oil. According to grid operator New England ISO, power companies’ generation mix was at 17% from oil-fired plants as of midday Friday.

Gas output dropped 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.

That is the biggest drop in output since the February 2021 freeze knocked out power for millions in Texas.

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

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