The storm cuts production of oil, gas, electricity in the US, increasing prices

Dec 23 (Reuters) – Bitter cold and gusty winds knocked out power and cut power across the United States on Friday, raising heating and electricity prices as people prepared for holiday celebrations.

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

More than 1.5 million homes and businesses lost power, oil refineries in Texas shut down gasoline and diesel production due to equipment failures, and heating and electricity prices rose due to the losses. Oil and gas production from North Dakota to Texas suffered a freeze, which led to lower supplies.

About 1.5 million barrels per day of refining capacity along the US Gulf Coast has been shut down due to extremely cold temperatures. The production losses are not expected to last, but they have pushed up fuel prices.

TotalEnergies ( TTEF.PA ), Motiva Enterprises ( MOTIV.UL ) and Marathon Petroleum ( MPC.N ) facilities outside of Houston were dropped. The cold weather also disrupted Exxon Mobil ( KSOM.N ), LiondellBasell ( LIB.N ) and Valero Energy ( VLO.N ) plants in Texas that make gasoline, diesel and jet fuel.

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

The freeze — in which ice crystals halt oil and gas production — this week cut output at North Dakota oil fields by 300,000 to 350,000 barrels a day, or a third of normal. In Texas’ Permian oil field, the freeze caused more gas to be withdrawn than injected, El Paso natural gas operator Kinder Morgan Inc. said. (KMI.N).

Benchmark U.S. crude jumped 2.4% to $79.56 on Friday, and West Texas Intermediate gas jumped 22% the next day to around $9 a million British thermal units, the highest since the state’s deep freeze in 2021

Electricity 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 as thermal and solar supplies came online.

A major New England power supplier said it expected to have enough to meet demand, but elsewhere high winds caused outages mainly in the Southeast and Midwest; North Carolina counted more than 187,000 without power.

“Crews are restoring power, but strong winds are hampering repairs at most of the 4,600 outage locations,” Duke Energy spokesman Jeff Brooks tweeted.

Fuel oil and natural gas futures rose sharply in response to the cold snap. US fuel oil futures rose 4.3%, while natural gas futures rose 2.5%.

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

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

Gas production fell by about 6.5 billion cubic feet per day (bcfd) in 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’s the biggest drop in output since a February 2021 freeze knocked out power for millions in Texas.

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

Reporting by Ervin Seba and Scott DiSavin; additional reporting by Arathi Somasekhar and Laila Kearney; editing: Jonathan Oatis, Kirsten Donovan, Aurora Ellis and Leslie Adler

Our Standards: Thomson Reuters Trust Principles.

Scott Disavino

Thomson Reuters

It covers the North American electricity and natural gas markets.

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