A powerful winter storm sweeping across the United States is beginning to interrupt operations for major oil, gas and industrial users along Texas’ Gulf Coast, with refineries, chemical facilities and manufacturers scaling back activity as temperatures plunge, Bloomberg news reported Sunday.
Roughly 10% of U.S. natural gas production is estimated to be offline as freezing conditions interfere with wells, pipelines and processing facilities, placing the brunt of the disruption on gas markets.
Goodyear Bayport (GT) shut down its chemical plant in Pasadena, Texas, on Saturday ahead of the cold snap, according to a notice posted Sunday on the Community Awareness Emergency Response website.
Exxon Mobil (XOM) said it had taken some units offline at its Baytown refining complex due to freezing weather, while Celanese (CE) reported winding down operations at its Houston-area chemical facility as conditions deteriorated.
The storm has also affected manufacturers outside the Gulf Coast. Texas Instruments said its utility curtailed natural gas deliveries to its Richardson, Texas, site in the Dallas area, according to a regulatory filing.
U.S. natural gas output has fallen by roughly 10 billion cubic feet in recent days as extreme cold has frozen infrastructure and restricted supply. At the same time, demand for heating fuel has jumped by about 18 billion cubic feet, according to data from BloombergNEF.
For oil markets, the slowdown in industrial activity adds a layer of uncertainty. Some traders had expected weather-related production disruptions to support crude prices, but reduced fuel consumption from shuttered facilities could offset that effect.
Energy Transfer (ET) said one of its gas plants in the Permian Basin received off-specification gas heading into the weekend, a problem that worsened as temperatures dropped. Off-spec gas does not meet standard quality requirements and can complicate processing and transport.