Winter Freeze Shuts In 15% of Gulf Coast Refinery Capacity

The cold spell that began earlier this month has prompted the shut-in of 15% of refining capacity along the Gulf Coast.

The data comes from Wood Mackenzie, as quoted by Bloomberg, and translates into 1.5 million bpd in throughput capacity.

While the outage is not expected to last for a very long time, at some refineries they may extend into the start of spring maintenance season, according to Wood Mac analyst Lee Williams.

Subzero temperatures can cause malfunctions at refineries that have not been equipped for such weather conditions and they can also cause power outages that would force the shutdown of the whole facility.

There has not been much of an impact on fuel prices so far thanks to ample supply: over the last three weeks, gasoline and distillate fuel inventories swelled substantially, according to the Energy Information Administration.

Still, there is always the potential danger of a prolonged refinery shut-in, depending on the weather. For now, the forecast says warmer temperatures are on the way.

The cold spell that spread across much of the United States earlier this month caused production outages in North Dakota that took down as much as 700,000 bpd of production. By Thursday, this had declined to about half a million barrels daily as production began to recover.

There were fears of power outages in Texas if gas wells and pipelines froze, as they did in 2021, but Texans lucked out and it never came to that. Gas wells, however, did freeze in some parts of the country, leading to a drop in gas output to the lowest since February 2023, Reuters reported at the time.

Gasoline prices are slightly up, however. Per AAA data, the price of a gallon of regular on Thursday was $3.094, which compared with $3.088 on Wednesday and $3.077 a week earlier.

By Charles Kennedy for Oilprice.com

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