Winter storm Fern has slashed U.S. oil and gas production as operators curtailed output amid the big freeze.
Over the weekend, the storm led to producers losing up to 2 million barrels per day (bpd) of oil production, or about 15% of total U.S. oil output, according to estimates by analysts and traders cited by Reuters.
According to estimates by Energy Aspects, the Permian alone saw production outages of around 1.5 million bpd. However, production is already recovering, and the lost output in the Permian is down to some 700,000 bpd. Output is expected to be fully restored by the end of the month.
The average monthly impact of the big freeze for the whole month of January could be about 390,000 bpd, mostly due to disruptions in the Permian, independent consultants Rystad Energy said on Tuesday.
The impact should be more limited in other oil regions such as the Bakken in North Dakota, or the Rockies and the Mid-Continent. The maximum downside scenario could feature an additional impact of 273,000 bpd, according to Rystad Energy.
In natural gas output, the winter storm led to losses of up to 11% of U.S. production.
The total impact on January output, based on Rystad Energy’s initial intelligence of the freeze, suggests that America’s natural gas production would be down by 3.3 billion cubic feet per day (Bcfd) compared to an average of 104 Bcfd for the Lower 48 region expected earlier in January.
The Permian would be the main contributor to curtailments in gas output, too, Rystad Energy reckons. There is a potential for an additional 2.3 Bcfd loss for January, primarily driven by a significant curtailment scenario in the Permian similar to Winter Storm Uri in 2021.
The cold snap sent U.S. benchmark natural gas prices more than doubling in just one week in the strongest rally since the 1990s. Prices eased on Tuesday morning, following a 117% rally in recent days, as traders turned to profit-taking.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com
- U.S. Natural Gas Prices Hit $6 For First Time Since 2022 amid Big Freeze
- India Deepens Energy Ties With the Gulf While Balancing Russian Oil Risk
- Indian Refiners Boost Middle East Supply To Offset Lost Russian Oil
