US Sees Largest Production Disruption Ever
The recent disruption in U.S. oil production, which has been caused by extremely cold weather, is the largest on record, Rystad Energy’s head of oil markets Bjornar Tonhaugen has outlined.
A peak of up to 3.5 million barrels per day (bpd) of production has been shut-in, Tonhaugen highlighted in a statement sent to Rigzone on Wednesday, adding that this figure nearly matches the 3.6 million bpd refinery capacity shut-ins. The production decline could have sent crude prices “rocketing higher” if refinery demand wasn’t equally bad hit, according to Tonhaugen.
“The situation is still foggy and it will take a few days for the market to realize the actuality of the disruption on crude and products balances,” Tonhaugen said.
“If temperatures rise slowly, some of the shut production can restart from the weekend, which would allow producers to start resuming flows by the end of the week – if they have power and at affordable prices too,” he added.
Artem Abramov, Rystad Energy’s head of shale research, said the Permian Basin, which he described as the main engine driving the nation’s oil output growth, was experiencing one of the worst cold spells in over 50 years.
“This level of frigid weather conditions will be the first of such significance for the unconventional oil and gas industry in the area,” Abramov said in a statement sent to Rigzone.
“Currently it appears that ultimately the supply disruption in February, and a prolonged impact in March-April, might be even stronger as certain operational challenges experienced through the weekend, have still persisted, if not worsened, through the first few days of the week,” he added.
“Some parts of the basin have been completely without power since last Friday. But in general, it seems that operators are facing intermittent blackouts in different areas. Power outages result in temporary shut-ins of already producing wells, along with disrupting some infrastructure facilities such as regional gas processing plants,” Abramov continued.
Tonhaugen highlighted that the largest ever global outage in production happened in September 2019 following a drone attack on the Abqaiq processing facility and Khurais oil field in Saudi Arabia, which is said to have knocked 5.7 million bpd off the grid for a several days.
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