U.S. Oil Wells, Refineries Shut As Winter Storm Hits Energy Sector

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A deep freeze across the United States is taking a toll on the energy industry in the largest U.S. crude-producing state, halting Texas oil wells and refineries on Monday and forcing restrictions from natural gas and crude pipeline operators.

The rare deep freeze prompted the state’s electric power suppliers to impose rotating blackouts, leaving nearly 3 million homes and businesses without power. U.S. President Joe Biden issued an emergency declaration, unlocking federal assistance to Texas.

Texas produces roughly 4.6 million barrels of oil per day and is home to some of the nation’s top gasoline and diesel producing refineries.

In Midland, heart of the West Texas shale region, a record snowfall and temperatures that hit a 32-year low closed offices and businesses. Temperatures are expected to rise above freezing on Tuesday.

“Some producers, especially in the Permian Basin and Panhandle, are experiencing unprecedented freezing conditions which caused concerns for employee safety and affected production,” the state’s energy regulator said on Monday.

Oil refiner Motiva Enterprises said it was shutting its 607,000 barrel-per-day Port Arthur, Texas, refinery, the largest in the United States. Valero Energy Corp and Total SE separately moved to shut their 335,000 and 225,000 bpd plants in Port Arthur, Texas, due to Monday’s severe cold, sources familiar with plant operations said.

Exxon Mobil also began shutting its 369,024 bpd Beaumont refinery and 560,500 bpd Baytown refinery and chemical plant in Texas, sources familiar with plant operations said. Its Baton Rouge, Louisiana, plant also suffered operational issues.

Citgo Petroleum Corp said some units at its 167,500 bpd Corpus Christi, Texas, oil refinery were shutting due to weather-related power disruptions.

The plant’s crude distillation unit, a reformer and a hydrotreater were shut by cold weather, sources familiar with plant operations said, with all other units also being powered down.

The cold snap forced LyondellBasell’s 263,776 bpd Houston refinery to operate at minimum production and shut most units at Marathon Petroleum’s 585,000 bpd Galveston Bay plant.

Reports of power outages across the Permian may result in a moderate impact on Permian oil production for the month, Rystad Energy’s head of oil markets, Bjornar Tonhaugen, said in a note.

Energy distribution was stalled across large parts of the United States.

Kinder Morgan reported gas-pipeline capacity constraints at locations in Arkansas, Illinois, Louisiana, New Mexico and Texas, while Enable Gas Transmission said it was taking measures to ensure adequate supply for customers.

Oil pipeline operator Enbridge Inc. said a 585,000 bpd crude oil pipeline that runs from its terminal near Pontiac, Illinois, outside of Chicago, to the largest U.S. oil storage hub in Cushing, Oklahoma, was halted because of power outages.

“Crews are working with electric utility providers to restore power to Line 59,” as the pipeline is called, said Enbridge spokesman Michael Barnes.

Colonial Pipeline Co, the largest oil products pipeline in the United States, said its system had no significant impacts to operations due to the weather.

The icy weather conditions also prompted Port Houston public terminals to cease vessel operations from Sunday evening through Monday.

– Reuters

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