The cold has paralyzed oil and gas production in Texas, leaving millions of residents without power in the US and Mexico.
Freezing temperatures in the United States will wreak havoc on oil and gas production for days, if not weeks, according to industry experts, as companies grapple with frozen equipment and a lack of power to operate.
Texas produces more oil and natural gas than any other state in the country, and its operators, unlike those in North Dakota or Alaska, are not used to dealing with cold temperatures. Numerous refineries in Texas have also been shut down.
About 500,000 to 1.2 million barrels per day of the state’s oil production was halted by the weather, which hit Texas with the coldest temperatures in 30 years, according to analysts at Rystad Energy. The domino effect of the cold is likely to reduce production for several weeks.
Road ice in the Permian Basin, the main shale field in the United States, stopped the transport of everything from supplies of sand to cement, while the loss of energy that affected millions of residents of Texas and Mexico it also cut power to oil pumps and saltwater disposal facilities.
In some cases, the well heads froze. Cellular service, used to send data from wells to bases, was also lost.
“They haven’t had electricity to run the pumps,” said Texas Railroad Commissioner Jim Wright, one of the state’s three elected industry regulators. “Some West Texas growers had to shut down entire fields when they lost power.”
Chevron said the widespread power loss had led to “a significant shutdown of production from our Permian assets,” while Exxon indicated that its shale operations in the region were operating at “reduced capacity.”
Permian wells produce prolific amounts of water, so production streams can easily freeze at surface valves. That, along with the loss of electrical power, contributed to the loss of production, Wood Mackenzie analysts said.
Many wells rely on gas lift, and those lines also freeze easily.
“There is no recent precedent for this and it really is due to the severity and duration of the cold weather,” observed Marc Amons of Wood Mackenzie.
The state’s oil production declined by 35,000 barrels a day in December from November, and will fall further in January and February, said Lynn Helms, North Dakota’s director of mineral resources.
“We could see twice the drop in production in January and see similar drops in production in this cold weather,” Helms said.