Severe Weather Keeps Energy Producers Cold in the South, a Weather Impact Update by Industrial Info
Temperatures have remained near or below freezing for several days in the southern U.S., idling production operations for much of the oil, gas, petrochemical and petroleum refining industries in Texas, Oklahoma, Kansas and Louisiana. The extreme cold has caused instrumentation failures and ice formation has made valves and safety equipment inoperable.
On Monday, there were an estimated 28 billion pounds of ethylene capacity offline. As of late Wednesday, there were 34 ethylene units offline in Texas and Louisiana, with a total production capacity exceeding 50 billion pounds per year. Only a couple of units in Louisiana remain operational at this point, meaning that a majority of installed capacity is currently offline. How quickly these units return to service depends on the level of freeze-related damage and the restoration of reliable power.
More than 1.3 million customers in the Greater Houston area were without power, according to CenterPoint Energy, which delivers electricity to the area. CenterPoint's transmission and distribution systems are in working order; the constraint is a shortage of available power for delivery from the generation fleet. The impact on the industrial market isn't limited to just the energy market. Food producers like Cargill have idled several plants, as natural gas supplies were curtailed to serve retail customers and critical infrastructure. The Houston Ship Channel, which was temporarily closed earlier this week, resumed operations early Wednesday.
TC Energy shut down its U.S. Gulf Coast pipeline, the Marketlink Pipeline, on Tuesday. This affects receivers of crude oil from Cushing, Oklahoma, south to various Texas Gulf Coast points near Houston, Sour Lake and Nederland. More than a dozen pipeline systems feeding into the Marketlink system will have their batches that are destined for the Gulf Coast held at Cushing until further notice.
Some liquefied natural gas (LNG) liquefaction facilities in Texas have reduced natural gas flows, as they are shutting down trains to reduce natural gas and electricity consumption as well as deal with disruptions due to waterway closures and freezing temperatures.