The storm cuts off oil, gas and energy production in the United States, driving up prices

(Reuters) – Bitter cold and strong winds on Friday led to power outages and reduced power production across the United States, sending heating and electricity prices soaring as people prepared for holiday celebrations.

Winter Storm Elliott brought extremely low temperatures and severe weather alerts to about two-thirds of the United States, with hail and snow remaining in some areas through the Christmas holidays.

More than 1.5 million homes and power companies were out, Texas oil refineries cut gasoline and diesel production because of equipment failures, and heating and power prices soared because of the losses. Oil and gas production from North Dakota to Texas suffered a freeze, cutting off supplies.

About 1.5 million barrels of daily refining capacity has been shut down along the US Gulf Coast due to cold temperatures. Production losses are not expected to continue, but they have raised fuel prices.

TotalEnergies (TTEF.PA), Motiva Enterprises (MOTIV.UL), and Marathon Petroleum (MPC.N) facilities outside of Houston are excluded. The cold weather also disrupted the Texas plants of Exxon Mobil (XOM.N), LyondellBasell (LYB.N) and Valero Energy (VLO.N) that produce gasoline, diesel and jet fuel.

Sempra Infrastructure’s Cameron LNG plant in Louisiana said weather disrupted LNG production, without providing details. It added that the crews of the facility, which has a capacity of 12 million tons per year, were trying to restore production.

The freezes — in which ice crystals shut down oil and gas production — this week cut production at North Dakota oilfields by 300,000 to 350,000 barrels per day, or a third of normal production. In the Permian oil field in Texas, freezing resulted in more gas being withdrawn than injection, El Paso-based natural gas operator Kinder Morgan (KMI.N) said.

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

Energy prices on the Texas grid also rose to $3,700 per megawatt-hour, prompting generators to add more power to the grid before prices fell with the advent of thermal and solar supplies.

New England’s largest energy supplier said it expects to have enough to meet demand, but strong winds elsewhere have knocked out power in the Southeast and Midwest; North Carolina counted more than 187,000 without power.

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

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

In New England, Friday’s gas at Algonquin Center rose 361% to an 11-month high of $30 million British thermal units.

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

Gas production has fallen by about 6.5 billion cubic feet per day over the past four days to an initial nine-month low of 92.4 billion cubic feet per day on Friday. Wells in Texas, Oklahoma, North Dakota, Pennsylvania and elsewhere have also frozen.

This is the largest drop in production since a halt in February 2021 left millions in Texas without power.

One billion cubic feet of gas is enough to supply about 5 million American homes for one day.

(Reporting by Erwin Siba and Scott DiSavino) Additional reporting by Arathi Somasekhar and Laila Kearney. Editing by Jonathan Otis, Kirsten Donovan, Aurora Ellis and Leslie Adler

Our Standards: The Thomson Reuters Trust Principles.

Scott DiSavino

Thomson Reuters

Covers the energy and natural gas markets in North America.

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