Page 8 - NorthAmOil Week 08 2021

NorthAmOil PERFORMANCE NorthAmOil

Producers, refiners restart operations

after winter storm disruption

US REFINERIES on the US Gulf Coast – par- $63.50 per barrel this week, helped by an assur-
ticularly in Texas – have started bringing their ance from the US Federal Reserve that interest
plants back online following severe disruption rates would stay low for a while.
caused by the winter storm last week. US pro- Much of the disrupted upstream production
ducers whose operations were affected have has been restored already, and a number of Gulf
already restored most of their output. Produc- Coast refiners have started to bring their plants
tion, transport and refining of crude were all back online. This includes Valero Energy’s Port
disrupted, as was the processing of natural gas. Arthur refinery and Citgo Petroleum’s Corpus
(See NorthAmOil Week 07) Christi plant, as well as two ExxonMobil refin-
US oil production losses were estimated eries and a Marathon Petroleum facility – all in
to average 2mn barrels per day (bpd) over the Texas – among others.
course of several days in mid-February, though “The more refineries return to service, the
at its peak, the outage was estimated at 3.5mn more crude oil they will burn through, and the
bpd or higher. At least 4mn bpd of refining less crude oil will go to storage,” Mizuho’s direc-
capacity went offline as well, though consultancy tor of energy futures, Bob Yawger, was quoted by
IHS Markit estimated that the amount of refin- Reuters as saying.
ing capacity affected was closer to 6mn bpd. However, restarting refineries that went Refining runs
Refining runs fell to levels not seen since offline will take time. For example, Motiva
2008, according to the US Energy Information Enterprises, which operates the largest refinery fell to levels
Administration (EIA). in the US, with a capacity of 607,000 bpd, in Port
Texas saw some of the worst impact, given Arthur, notified the Texas Commission on Envi- not seen since
that the state – the largest for both oil produc- ronmental Quality (TCEQ) of plans to begin a
tion and refining capacity – is not accustomed 17-day restart on February 22. 2008, according
to extremely low temperatures. The majority of Indeed, while some units at certain facilities to the US Energy
Texas’ energy infrastructure had not been win- have been restarted, JPMorgan analysts warned
terised, which resulted in various facilities failing in a note this week that it may take until March 5 Information
or having to be shut down as equipment froze. for all of the shut-in capacity to come back online
This was compounded by the fact that Texas – and there is a risk of further delays. Administration.
relies on natural gas for most of its power gener- “As refiners assessed the damage to their facil-
ation. Gas output outages put additional strain ities, it became clear that the road to recovery
on the grid as demand for power for heating shot would be weeks rather than days,” the analysts
up, but at the same time, power outages affected wrote.
energy supply chains, further disruption pro- Illustrating this is Marathon, which had
duction and processing of oil and gas. restarted the co-generation unit at its Galveston
The crisis helped push oil prices to their high- Bay refinery, according to sources familiar with
est levels since 2019, with West Texas Interme- plant operations, cited by Reuters on February
diate (WTI) staying elevated this week even as 22. However, the sources added that process
temperatures rose and energy operations were lines, fittings and water pipes throughout the
being restored. Indeed, WTI climbed to around refinery needed repair.™

P8 www. NEWSBASE .com Week 08 25•February•2021