Tag Archives: cold snap

Winners and losers in energy sector from Texas cold snap

(Reuters) – A winter storm that hit parts of the southern United States over the past week led several energy companies to report stronger-than-expected results after they were called on to provide more power at higher prices, while others faced millions of dollars in losses.

Here is a look at the winners and losers in the energy sector from the storm:

WINNERS:

Gas producers:

Comstock Resources said the last week was “like hitting the jackpot,” adding it was able to sell at “super-premium prices” a material amount of production at anywhere from $15 per million cubic feet of gas (mcf) to as much as around $179 per mcf.

EQT Corp said it also benefited from the high prices. The company mainly produces gas out of the Marcellus and Utica shale regions in Pennsylvania and Ohio.

Australia’s Macquarie Group, the second biggest gas marketer in North America after oil major BP, lifted its profit guidance on Monday due to the effects of the extreme winter weather. It expects 2021 profit to rise by 10%, after earlier anticipating earnings to drop.

Other natural gas-weighted production companies, including Cabot Oil & Gas, Southwestern Energy Co, Range Resources Corp and Antero Resources, may benefit from the freeze, Morgan Stanley analysts said in a note.

Refiners with limited exposure to Texas markets:

Shares of refiners such as HollyFrontier Corp and Valero Energy Corp rose after the freezing temperatures knocked a large swath of U.S. Gulf Coast refining offline, said Bob Yawger, director of energy futures at Mizuho. Eurozone refiners, including Shell and Total, are positioned to benefit as they ramp up their shipments of gasoline into New York Harbor, he said.

LOSERS

Utilities:

Just Energy on Monday raised doubt about its ability to continue as a going concern, after it forecast a $250 million loss from the winter storms.

Innergex Renewable Energy Inc forecast a financial impact of up to C$60 million ($47.48 million) on its Texas wind farms.

Algonquin Power & Utilities Corp said on Friday it expects the potential hit to adjusted core earnings for this year to be between $45 million and $55 million after the cold weather restricted production at its Renewable Energy Group’s Texas-based wind facilities.

Atmos Energy said on Friday it purchased natural gas for an extra $2.5 billion to $3.5 billion due to higher cost of the fuel, adding it was evaluating financing options to pay for the additional purchase cost.

Vistra Corp estimated a one-time adverse impact of between about $900 million and $1.3 billion, and said it was unable to reaffirm or adjust its 2021 guidance.

Oilfield Services:

Solaris said on Monday last week’s weather would have an impact on first quarter financials, but did not quantify the hit.

Shale oil producers:

Shale oil producers in the southern United States could take at least two weeks to restart the more than 2 million barrels per day of crude output that shut down. Some production may never return, analysts said.

Diamondback Energy said it expects the weather to wipe off up to five days of production in the current quarter.

Cimarex Energy Inc said it expects an up to 7% hit to production volume in the quarter.

Occidental Petroleum forecast first-quarter Permian production of 450,000 barrels of oil equivalent per day to 460,000 boepd, including a 25,000 boepd hit from downtime related to the winter storm.

Laredo Petroleum said its Permian Basin operations were affected for the last 12 days and estimated the combined impact of shut-in production and completions delays to reduce first-quarter total output by about 8,000 boepd and oil production by about 3,000 bpd.

Gulf refiners:

Refiners with oil processing facilities along the Gulf Coast, the main U.S. refining hub, such as Phillips 66 and Exxon Mobil, were forced to halt operations. By Thursday last week, the historic sub-zero temperatures in Texas and Louisiana shut at least 3.5 million barrels per day, or about 19%, of U.S. refining capacity.

($1 = 1.2636 Canadian dollars)

(Compiled by Arundhati Sarkar and Arathy S Nair in Bengaluru, Laila Kearney and Devika Krishnakumar in New York and Rod Nickel in Calgary; Editing by Sonya Hepinstall, Arun Koyyur and Sriraj Kalluvila)

Texas energy freeze stretches to sixth day, raises Mexico’s ire

By Jennifer Hiller

HOUSTON (Reuters) – Texas’s freeze entered a sixth day on Thursday, as the largest energy-producing state in the United States grappled with massive refining outages and oil and gas shut-ins that rippled beyond its borders into neighboring Mexico.

The cold snap, which has killed at least 21 people and knocked out power to more than 4 million people in Texas, is not expected to let up until this weekend. The deep freeze has shut in about one-fifth of the nation’s refining capacity and closed oil and natural gas production across the state.

The outages in Texas also affected power generation in Mexico, with exports of natural gas via pipeline dropping off by about 75% over the last week, according to preliminary Refinitiv Eikon data.

Texas Governor Greg Abbott directed the state’s natural gas providers not to ship outside Texas and asked state regulators to enforce that ban, prompting reviews.

The state’s electrical grid operator, ERCOT, was trying to restore power as thermal generators – those powered by natural gas, coal and other fuels – lost the capability to provide power as valves and pipes froze.

It is unclear whether Abbott or regulators will be able to enforce a ban on interstate or cross-border shipments. Abbott’s request to the Texas Railroad Commission, the state’s oil and gas regulator, set up a game of political football, according to a person familiar with the matter, between groups that do not have the authority to interfere with interstate commerce.

Texas exports gas via pipeline to Mexico and via ships carrying liquefied natural gas (LNG) from terminals in Freeport and Corpus Christi. It also supplies numerous regions of the country, including the U.S. Midwest and Northeast.

The ban prompted a response from officials in Mexico, as U.S. gas pipeline exports to Mexico fell to 4.3 billion cubic feet per day on Wednesday, down from an average over the past 30 days of 5.7 billion, according to data from Refinitiv.

The Mexican government called the top U.S. representative in Mexico on Wednesday to press for natural gas supplies as power cuts there have hit millions of residents.

While the storm is moving out of Texas, freezing temperatures remain and refining operations in particular might take days, if not weeks, to resume.

“The oil and gas industry is finally getting some power into these fields. The Delaware Basin is getting back online and gas is starting to move out of it,” Christi Craddick, Texas railroad commissioner, said on Wednesday night during an emergency meeting.

Nonetheless, U.S. West Texas Intermediate (WTI) crude futures were near their highest since Jan. 8, 2020. Natural gas futures hovered near a three-month peak. Next-day prices at Waha hub in the Permian basin in West Texas eased from all-time peak of $209.75 per mmBtu.

BIG OPERATIONS IN TEXAS

Texas is the nation’s biggest fossil fuel energy producer, but its operators, unlike those in North Dakota or Alaska, are not used to frigid temperatures.

The state accounts for roughly one-quarter of U.S. natural gas production. As of Feb. 10, Texas was producing about 7.9 billion cubic feet per day, but that fell to around 2 billion on Wednesday, according to Refinitiv Eikon data.

Overall U.S. natural gas output also slumped to the lowest level since January 2017. One billion cubic feet of gas can supply about 5 million U.S. homes per day.

About 4 million barrels of daily refining capacity has been shuttered and at least 1 million barrels per day of oil production is also out.

The Houston Ship Channel, a key export waterway, was shuttered again on Wednesday evening, but that was because refineries were not loading enough vessels and not due to the weather, a Houston Pilots dispatcher said.

“We have two departures at 09:30 (local time) this morning and two inbound vessels who are waiting for the water levels to come up,” the dispatcher said.

Next-day power for Thursday at the ERCOT North hub, which includes the cities of Dallas and Fort Worth, were mired near a record high of $8,800 per MWh hit in the last session. Prices were below $50 per MWh before the cold blast.

(Reporting by Jennifer Hiller and Gary McWilliams in Houston; additional reporting by Marianna Parraga and Diego Ore in Mexico City and Scott DiSavino in New York; editing by Richard Pullin and Jonathan Oatis)

Inmates shiver in frigid cells at New York jail, lawmakers say

Protesters attend a rally at Metropolitan Detention Center demanding that heat is restored for the inmates in the Brooklyn borough of New York City, New York, U.S., February 2, 2019. REUTERS/Go Nakamura

By Jonathan Allen

NEW YORK (Reuters) – Inmates at a federal jail in Brooklyn have suffered for days without heat or power during a wintry cold snap, according to lawyers and U.S. lawmakers who rallied outside the jail on Saturday demanding the problems be fixed and ill inmates moved.

A fire last Sunday at the Brooklyn Metropolitan Detention Center cut off power and heat to parts of the jail just as freezing Arctic air began rolling towards the East Coast, according to motions filed this week in federal court by lawyers from the Federal Defenders who represent some of the inmates.

Since then, at least some of the more than 1,600 men and women incarcerated at the jail have suffered in near-freezing temperatures and in darkness after the sun goes down while locked in their cells for 23 hours a day, according to the court filings. On Wednesday night, the temperature in New York City dropped to nearly 0 Fahrenheit (minus 18 Celsius.)

“Inmates were wrapped head to toe in towels and blankets,” Deirdre von Dornum, who oversees the Federal Defenders’ Brooklyn team, said in a telephone interview on Saturday, recounting her tour of the jail the day before. “Their windows were frosted over. Even more disturbingly perhaps for the inmates, their cells were pitch black and they don’t have flashlights.”

She said senior officials at the jail were “indifferent” to the problems during her tour even as guards complained to her of the cold. The power problems have also meant inmates cannot easily call family or lawyers nor get any needed medication refilled, lawyers said.

Telephone calls to the jail went unanswered on Saturday, but it said in a statement that power had been affected in one building and that repair work should be completed on Monday. Additional blankets, provided by New York City’s government, and clothing were to be given to inmates on Saturday, the statement said. A notice on the jail’s website said all visits have been suspended until further notice.

Officials at the jail and the Bureau of Prisons had said in emails this week to the New York Times, which first reported the problems on Friday, that the cells still had heat and hot water.

One inmate, Dino Sanchez, has only a short-sleeved jumpsuit, a T-shirt and a single standard-issue thin blanket to keep him warm, according to a court filing by his attorney. Sanchez has asthma, which the cold has exacerbated, and fears collapsing in the dark without anyone noticing and coming to his aid, his lawyer wrote.

Nydia Velazquez, who represents parts of New York City in the U.S. House of Representatives, was one of the lawmakers who visited the jail on Saturday. She said the Bureau of Prisons was disregarding inmates’ rights.

“This appalling situation needs to be fixed,” she wrote on Twitter. She noted that some heat had been restored, but that the heating system was still “not at full capacity” and that staff at the jail were still complaining about the cold on Saturday.

Hugh Hurwitz, the Bureau of Prisons’ acting director, told lawmakers in telephone conversations he agreed that conditions in the jail were “unacceptable”, according to Velazquez.

New York Governor Andrew Cuomo said in a brief statement that the conditions at the jail were unconstitutional and demanded an immediate fix.

Judge Analisa Torres ordered the Bureau of Prisons to produce witnesses at a hearing in federal court in Manhattan on Tuesday to explain how the complaints raised by inmates’ lawyers were being addressed.

(Reporting by Jonathan Allen; Editing by Daniel Wallis)