Cold weather hits Permian crude output: Update

Adds detail on power, refinery outages throughout

Extreme cold in Texas has forced grid operators to implement controlled power outages to avoid a system-wide collapse, causing disruption to crude output and refinery operations in the region.

Texas' grid operator, Ercot, asked generators to implement rotating outages to ensure the system does not overload. State governor Greg Abbott said yesterday that the federal government had declared an emergency in Texas. Rolling blackouts are likely to continue over the next few days as sub-zero temperatures persist.

The Midcontinent Independent System Operator said "conditions eventually deteriorated to a point where demand exceeded supply".

Oncor Energy, which operates the grid in parts of the Permian basin in north Texas, said 1.1mn of its 3.7mn customers were without power today, and CentrePoint Energy, which supplies power to Houston and the Texas Gulf coast, said the extreme weather is causing an "unprecedented power shortage".

There are signs of wider knock-on effects, too. SPP, which manages the grids in parts of Texas and neighbouring states, including North Dakota and Louisiana, said it is asking utilities to implement controlled supply interruptions.

The extent of the weather-related disruption to Permian crude production is unclear, with two market participants suggesting as much as 2mn b/d could be shut in, along with 2.7mn b/d of refining capacity. Citgo said it shut some units at its 157,500 b/d Corpus Christi refinery after the weather caused supply interruptions.

Other sources estimate the loss of output at a more modest 0.5mn-1.0mn b/d.

A trader said production losses would be likely to mount as the cold snap persists, while another said they expect constraints to ease within 5-7 days. The disruption to operations in the prolific Permian basin helped push the front-month March WTI contract to above $60/bl today for the first time in over 13 months.

By Tom Fowler, Ruxandra Iordache and Ben Winkley