HomeNewsAs Power Returns, Texas Energy Firms Slowly Emerge from Deep Freeze

As Power Returns, Texas Energy Firms Slowly Emerge from Deep Freeze

2/19/2021

HOUSTON (Reuters) — Texas energy companies on Friday began preparing to resume oil and gas production after days of frozen shutdowns as electric power and water service slowly resumed at darkened oilfields and refineries.

It will take several days for oilfield crews to deice valves, restart systems and begin oil and gas production. U.S. Gulf Coast refiners are assessing damage to facilities. They face five- to seven-day restarts with low water pressure continuing to hamper operations even as power is being restored, said people familiar with the matter.

No additional outages were reported overnight, said the Electric Reliability Council of Texas (ERCOT), which runs the state's electric grid. It reported sufficient power for morning demand and predicted it would be out of emergency condition later in the day.

Millions of people across Texas shivered in the dark this week after a severe winter storm laid siege to the state, with demand for natural gas spiking and supplies needed to power electric generators and heat homes drying up.

Estimates vary, but the unusually cold weather in Texas and the Plains states curtailed up to 4 million barrels per day of crude oil production and 21 billion cubic feet (bcf) of natural gas, according to analysts. Texas refiners halted about a fifth of the nation's oil processing amid power outages and severe cold.

Goldman Sachs analysts estimate a 700,000-bpd average decline in U.S. onshore crude production in February, excluding Alaska. Only a minority of wells could face troubles restarting, it said.

U.S. Gulf Coast refineries are potentially less prepared for extremely cold weather than for seasonal storms, Goldman said, creating risks of "more prolonged refining downtime."

The freeze offs, which can occur when water in the gas turns to ice, led utilities to call for conservation measures from California to West Virginia.

Ford Motor Co halted production in Kansas City, Missouri, because of a lack of natural gas. Mexico, which imports large volumes of natural gas from the United States, experienced blackouts in northern states bordering Texas, with some factories reporting billions in losses on limited natural gas supplies from Texas.

Texas on Wednesday ordered gas producers to halt exports needed by state utilities through Sunday, sparking Mexico to call the U.S. envoy to press for natural gas supplies.

Pipeline gas exports from the U.S. to Mexico rose to 5.1 bcf on Friday after dropping to a 13-month low of 3.8 bcf per day on Tuesday, Refinitiv Eikon data showed.

In the United States, the move did not appear to affect deliveries to other states. California's power exchange and the MISO, an exchange that handles 15 U.S. states, both said they had not seen any impact.

More natural gas will soon be flowing. Chevron Corp and ConocoPhillips have begun restoring shale output, and Chevron will prioritize natural gas production. Texas oil and gas regulators and a DiamondBack Energy executive also reported that power was being restored to west Texas, where oil production was shut by record snowfall and power outages.

"The majority of our Permian and Eagle Ford volumes remain offline," said Conoco spokeswoman April Andrews, referring to the two major Texas shale fields.

Conoco, the top U.S. independent oil producer, is ready to bring back full operations across its U.S. operations outside of Alaska once power and other infrastructure outages end, she said.

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