With Texas facing its coldest weather in three decades, US oil production has been hampered as operators deal with the consequences of the atypical weather.
While oil producers in states like Alaska and North Dakota are accustomed to freezing conditions, the same cannot be said of the Permian operators of Texas, which produces more oil than any other US state. Some equipment and wellheads have frozen, and snow and ice on roads has hindered the transportation of supplies and the collection of oil by tankers. Electricity outages have also caused some rigs to shut down for lack of power.
Jim Wright, a Texas Railroad Commissioner for regulating the industry, told NBC News that:
“They haven’t had the electricity available to make the pumps work. Some producers in West Texas had to shut in entire fields when they lost power.”
ExxonMobil said its Permian operations were running at a lower-than-normal capacity, while Chevron, which makes Texaco gas engine oil, said a significant portion of its Permian rigs had been shut in due to the power outages.
While North Dakota is more used to cold weather, the state has seen temperatures drop as low as minus 46 degrees Celsius, which has inevitably affected production activities. As the severe weather started in early February, well completions dropped by 40%.
While the US is likely to see a drop in production for February, high oil inventories should mean there is unlikely to be any shortage of oil, and many natural gas rigs have been able to continue producing despite the cold weather.
