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Deep freeze shuts refineries in US Gulf

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Hydrocarbon Engineering,


As reported by Reuters, a deep freeze is continuing to wreak havoc on the US energy sector, bringing operations to a halt at the Houston Ship channel, while several of the biggest oil refineries remained offline in the nation’s largest crude-producing state.

Overall, around 5.3 million customers were without power in most states including Texas and New York, with around 4.3 million customers out in Texas alone, according to local power companies.

The weather, unusually harsh for US southern states, has knocked out more than 3 million bpd of refining capacity in the US Gulf, according to Reuters calculations, and industry analysts say crude production could be affected for days or weeks.

The cold snap sent oil prices to near 13-month highs, while front-month gas futures jumped to an over three-month high.

In the spot market, next-day power at the ERCOT North hub jumped to a record high of US$1489.75 per megawatt hour (MWh).

The Houston Ship Channel is crucial to US oil and fuel exports as well as shipments of grains and other products. About 13 vessels were waiting to depart the channel, while 18 were in a queue to come into the waterway, a dispatcher said.

“A lot of terminals are closed. That is mostly keeping employees out of the roads,” said the dispatcher of the Houston Pilots Association, which guides vessels in and out of the channel, a 53-mile (85 km) waterway connecting the busiest US petrochemical port with the Gulf of Mexico.

Some of the nation’s largest refiners had shut production including Motiva Enterprises’ facilities at Port Arthur, Texas – which can process more than 600 000 bpd of crude – the largest refiner in the country.

Valero Energy Corp, ExxonMobil and Total had also halted operations at their Texas plants by Monday.

About 807 000 bpd of crude processing was offline in the Corpus Christi area, while 1.2 million bpd was out in the Beaumont, Nederland and Port Arthur regions, energy consultancy Wood Mackenzie said.

About 1.3 – 1.8 million bpd remained offline in Houston, Wood Mackenzie said.

“The combination of increasing demand of heating fuels and refinery outages are likely to trigger a spike in prices across the suite of refined products from diesel to propane,” Rystad Energy’s vice president for oil markets Paola Rodriguez Masiu said in a note.

“The new outages will tighten supply for refined fuels as over 3 million barrels of capacity have been now hit.”

The Electric Reliability Council of Texas (ERCOT), which operates the power grid in much of Texas, said some 5-minute power prices approached US$11 000 per MWh over the past couple of days. That compares an annual average of US$26 at the Ercot North hub in 2020.

Read the article online at: https://www.hydrocarbonengineering.com/refining/16022021/deep-freeze-shuts-refineries-in-us-gulf/

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