BY MIRABEL ODETA
A powerful winter storm sweeping across the United States over the weekend caused major disruptions to the country’s oil production and energy infrastructure, with analysts estimating losses of up to 2 million barrels of oil per day, roughly 15% of national output. The extreme weather, which brought heavy snow, sleet, and freezing rain to large parts of the country, also strained power grids and left hundreds of thousands of Americans without electricity.
Oil production disruptions were most severe on Saturday, according to consultancy Energy Aspects, with the Permian Basin in Texas and New Mexico experiencing the largest share of the outages. Estimates suggest the Permian Basin alone lost approximately 1.5 million barrels per day at the height of the storm. By Monday, the impact had begun to ease, with shut-in production in the Permian reduced to around 700,000 barrels per day. Analysts expect full production to be restored by January 30.
ConocoPhillips reported that its Permian crude production was down by 175,000 barrels per day as of Sunday due to extremely cold conditions. While the company typically does not comment on daily operations, the drop highlights how sensitive oil production can be to severe winter weather. In North Dakota, the nation’s third-largest oil-producing state, production was estimated to have declined by 80,000 to 110,000 barrels per day as of Monday morning. Wellhead natural gas production in the state was similarly affected, dropping by an estimated 0.24 to 0.33 billion cubic feet per day.
The disruptions had an immediate effect on energy markets. U.S. crude futures were trading near $60.60 per barrel on Monday afternoon, down approximately 50 cents for the day. Meanwhile, natural gas futures surged, with front-month contracts rising 15.2% to $6.075 per million British thermal units, signaling market concerns over ongoing supply interruptions.
Several major oil and gas companies reported storm-related issues. Chevron experienced frozen hatches at its Midland, Texas, facilities, and multiple refineries along the Gulf Coast faced operational challenges. Exxon Mobil also shut units at its Baytown petrochemical complex east of Houston. Across Texas, there were about two dozen reported disruptions at natural gas processing plants and compressor stations over the weekend, though analysts noted these were far fewer than the over 200 incidents reported during a severe winter storm in early 2021.
The storm also left a significant mark on electricity systems. Approximately 810,000 customers across the country remained without power on Monday following the Arctic blast. More than a million homes and businesses were affected along the Gulf Coast and Southeast states, with Texas particularly hard hit.
The largest U.S. power grid, PJM, expected generation outages to reach 22.4 gigawatts, about 16% of its total committed capacity. Most of the outages were concentrated in Dominion Energy’s Mid-Atlantic territory. Despite these challenges, demand on PJM grids reached 124 gigawatts Monday morning, slightly above the forecast of 123.3 gigawatts, and operators continued to meet electricity needs.
The storm also caused dramatic spikes in electricity prices. Spot wholesale electricity prices averaged around $200 per megawatt-hour on Monday, recovering from extreme weekend spikes that exceeded $3,000 per megawatt-hour. Next-day prices in New England soared 82% to $313 per megawatt-hour, while prices in Pennsylvania and Maryland within PJM West jumped 360% to roughly $413 per megawatt-hour, marking their highest levels since January 2014.
Experts warn that cold temperatures are expected to persist in parts of the country over the coming days, prolonging the strain on energy production and electricity supply. The combined impact of extreme weather on oil, gas, and power infrastructure highlights the vulnerability of the U.S. energy system to sudden winter storms, emphasizing the importance of preparedness and rapid response to minimize disruptions.