The severe winter storm that swept through the United States this week likely shut in between 2 million barrels per day (bpd) and 4 million bpd of the total U.S. crude oil production, IHS Markit said in an analysis.
The Texas Freeze, which started in Texas and moved east across much of the U.S., has also impacted almost 6 million bpd of refining capacity, including 5.2 million bpd of the capacity in the Gulf Coast and 730,000 bpd of refining capacity in the Midwest, IHS Markit says.
Issues with power outages, frozen pipes, roads, and personnel have resulted in a large volume of U.S. oil and natural gas production being shut in. IHS Markit’s estimate of up to 4 million bpd production offline at the peak of the winter storm is close to other projections that as much as 40 percent of America’s crude oil production was shut in.
Nearly 20 percent of lower 48 U.S. natural gas production was shut-in in the first half of February, with the Permian accounting for the largest share, Point Logic by IHS Markit has estimated.
“While precise crude oil production figures are not available, an equivalent 20% cut in lower 48 U.S. crude oil production would imply a production drop of around 2-2.2 million barrels per day (MMb/d) of output, but this could prove to be even higher—perhaps as high as 4 MMb/d,” said IHS Markit.
In terms of impact on refining capacity, this week’s storm had a larger impact than Hurricane Harvey in 2017, which at its height resulted in the shutdown of 4.8 million bpd of refining capacity. The storm’s impact should be shorter in duration and have a more moderate impact on consumers compared to the aftermath of Harvey, Debnil Chowdhury, executive director, IHS Markit, said.
“There is always a question of how equipment and systems will respond to extreme weather conditions that they were not designed for, but it appears that the refineries and other facilities will come back online much quicker this time once power systems recover,” Chowdhury said.
By Tsvetana Paraskova for Oilprice.com
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