Winter Storm Cripples U.S.Energy Production, Disrupting Oil & Gas Supplies
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A severe winter storm swept across the United States over the weekend, causing notable disruptions to energy production and leaving hundreds of thousands without power. Analysts estimate U.S. oil producers lost up to 2 million barrels a day, representing as much as 15% of the nation’s total output, as freezing temperatures and hazardous conditions impacted infrastructure and operations.
oil production plummets, Permian Basin Hit Hardest
The most substantial declines in oil production were observed on Saturday, with disruptions peaking at 2 million barrels per day. According to consultancy Energy Aspects, the Permian Basin bore the brunt of the impact, experiencing a reduction of approximately 1.5 million barrels per day. While production began to recover on Monday, shutdowns in the Permian still amounted to around 700,000 barrels per day, with a full restoration anticipated by January 30.
Production from ConocoPhillips in the Permian Basin fell by 175,000 barrels per day on Sunday due to the extreme cold, a source with knowledge of the matter revealed. A company spokesperson stated that ConocoPhillips does not typically comment on daily operational details.
Further illustrating the storm’s impact, Chevron reported frozen hatches on equipment in Midland, Texas, in a regulatory filing. The company did not promptly respond to requests for additional comment.
Transportation Challenges Compound the Crisis
the storm’s effects extended beyond production facilities. “Third-party transportation remains a sign
Refinery Issues Add to Supply Concerns
Cenovus Energy’s Lima, Ohio, refinery, with a capacity of 172,000 barrels per day, experienced mechanical problems on Sunday, and a full restart may be delayed until the end of the week. Calumet’s Shreveport, Louisiana, refinery, with a capacity of 60,000 barrels per day, also reported storm-related issues.
Natural Gas Production and Prices Surge
Maximum losses in natural gas production are estimated at around 20 billion cubic feet per day, according to Rystad Energy. Average gas production in the continental United States has fallen to 106.9 billion cubic feet per day in January, down from a record high of 109.7 billion cubic feet in December, as producers halted operations.
The reduced supply drove up prices, with gas futures for the next month closing Monday at $6.80 per million British thermal units – the highest level as December 2022, representing a nearly 30% increase on the day.
Power Grid Strain and Outages
The storm’s impact extended beyond oil and gas, placing significant strain on the electricity grid. Approximately 810,000 customers across the United States were without power on Monday following the weekend’s Arctic surge, which brought heavy snow, sleet, and freezing rain from the Ohio Valley and Midwest to New England. Over a million homes and businesses lost power along the Gulf Coast and in the southeastern United States, including Texas.
The largest U.S. power grid, PJM, forecasted generation outages to rise to 22.4 GW on Monday, or about 16% of total committed capacity, with most outages expected in Dominion Energy’s Mid-Atlantic territory. Despite higher-than-forecast demand of 124 GW, PJM data indicates the grid continues to meet current needs. Spot wholesale electricity prices recovered to around $200 per MWh after temporary weekend spikes exceeding $3,000 per MWh. Prices in New England rose approximately 82% to $313 per megawatt-hour, while PJM West prices in Pennsylvania and Maryland jumped about 360% to $413, the highest level since January 2014.
The Southwest Power Pool, which manages the grid in 14 Midwestern and Western states, extended its severe cold warning until midday Wednesday to alert the public to potential outages.
The widespread disruptions underscore the vulnerability of U.S. energy infrastructure to extreme whether events and highlight the need for continued investment in grid resilience and winterization efforts.
