The February decline in production was linked directly to the unprecedented cold spell in Texas, where the average monthly temperature stood at 4 degrees Celsius lower than in February 2020 (5.7 degrees instead of 9.8 degrees, according to data from Texas A & M University). And on the coldest day, 16th February, temperatures sank to -20 C, leading to not only power outages but also disruptions in hydrocarbon production.
On 17th February, oil production in Texas dropped by 21 % compared to the average weekly level set on 13th February (11.8 billion cu.ft. per day compared to 21.3 billion cu.ft. according to the EIA, quoting data from HIS Markit).
Similar problems hit oil production companies in the Permian Basin straddling Texas and New Mexico. Argus Media said petroleum equivalent production at Occidental Petroleum would decline by 25,000 bpd in the first quarter. Pioneer Natural would dip by 55,000 bpd and the decline at Cimarex Energy would be no less than 205,000 bpd.
Oil refineries also suffered lost production. Seven-day refinery loads for the week ending 12th February stood at 83.1 %, but fell to 68.6 % for the week ending 19th February and to 56 % for the week ending 26th February, according to EIA figures. Thanks to improved production, refinery loads rose in the week of 5th March to 69 % but remained the previous month’s levels.
The next EIA report, to be issued on 17th March, will almost certainly show further rises in production – given that the number of oil drilling sites in use remained practically unchanged even in the most critical weeks of February.
That applied to the Permian Basin where, according to analysts Baker and Hughes in the period from 12th to 19th February there was no change in the figure (203) , while in the periods ending 26th February and 5th March it rose to 207 and 210 respectively. It also applied to the United States as a whole – over those three weeks, the figure rose from 306 to 310 — the highest level over the past nine months.
The oil refining sector may take somewhat longer to recover as not all Texas refining facilities have restarted their operations. Galveston Bay, operated by Marathon Petroleum, is to resume operations next week for 585,000 bpd of primary oil refining. At Port Arthur, run by French giant Total, no decision has yet been taken on a restart of 76,000 bpd of catalytic cracking.