Texas energy firms on Feb. 19 began to prepare for oil and gas production after days of frozen shutdowns as electric power and water service slowly resumed at darkened oil fields 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 face five- to seven-day restarts with low water pressure continuing to hamper operations even as power is being restored, people familiar with the matter said.
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 of natural gas, according to analysts. Texas refiners halted about a fifth of the nation’s oil processing amid power outages and severe cold.
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 Feb. 17 ordered gas producers to halt exports needed by state utilities through Feb. 21 sparking Mexico to call the U.S. envoy to press for natural gas supplies. But in the U.S., the move did not appear to affect deliveries beyond Texas’ borders. 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 Inc. 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 ConocoPhillips spokeswoman April Andrews, referring to the two major Texas shale fields.
ConocoPhillips, 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.
U.S. oil producer Apache raised its project spending forecast to $1.1 billion for this year as oil prices have improved since its previous outlook of keeping upstream expenses below a billion dollars.
Private equity’s interest in oilfield services is expanding the definition of what is investable in the OFS space.
Most Pioneer Natural Resources production in the Permian Basin is back online and storm damage repairs are “minor in the grand scheme of things,” CFO Neal Shah said.