Permian Basin Oilfields Freeze, U.S. Energy Production Falls 40%

Texas Oilfield Accident Lawyer | Permian Basin Drilling Slows Amid Cold Snap


An unprecedented cold snap has shut-in the Permian basin oilfields, the latest disaster to hit the already-fragile Texas energy sector following months of low oil prices and coronavirus shutdowns.

Permian Basin Oilfields Operating at Less than 50% Capacity

The largest oilfield in the United States, the Permian is operating well under half its normal capacity. The winter weather catastrophe has caused total energy production to plunge 40% nationwide, while oil prices have jumped to more than $60 per barrel for the first time in more than a year.

With output down between 65% and 80% from normal levels in the Permian, it could be some time before production fully ramps up again. The hardest-hit producers include Occidental Petroleum Corp., which has issued a force majeure notice to suppliers.  Chevron Corp. was also forced to shut in compression and production at wells in Culberson County.

“As producers need pipes to be fully running and power prices to normalize before they return production, a substantial return in production may not occur until this weekend at the earliest,” Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd, said in a recent note to clients.

Winter Storm Left Millions of Texans Left without Power and Heat

Texas has been in the grip of frigid weather for nearly a week now. With pipelines and other vital energy infrastructure frozen over, The Electric Reliability Council of Texas said 46GW of power generation — more than half of the state’s grid – remained offline as of Wednesday. Millions of people across the state have been without power and heat for days.

Temperatures should rise above freezing over the weekend. But depending on the extent of damage to the state’s energy infrastructure, rolling blackouts and supply disruptions could continue for weeks.

The Federal Emergency Management Agency has supplied generators to Texas and will be moving diesel fuel into the state to provide backup power to hospitals and other key critical infrastructure.

Texas Lost Almost 60,000 Oilfield Jobs in 2020

The past year has been an extraordinarily difficult one for the Texas energy sector.

Low demand brought on by the coronavirus pandemic cost the state nearly 60,000 oilfield jobs in 2020 alone. According to a recent report from the Texas Alliance of Energy Producers, the state’s upstream oil and gas industry currently employs just 150,000 people – the lowest number in 15 years.

A price war between Saudi Arabia and Russia did not help matters. At one point,  the price of West Texas crude – the lifeblood of the Permian basin – briefly fell into negative territory for the first time in history.

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