Texas Power Supplies Sink Amid Restoration Effort: Energy Update

(Bloomberg) -- The energy crisis crippling power grids across the U.S. showed few signs of abating Tuesday morning as blackouts left almost 5 million customers without electricity during unprecedented cold weather.

To prevent the collapse of their networks, suppliers from North Dakota to Texas are instituting rolling power cuts for the second consecutive day to limit demand. The severe shortages are likely to continue throughout Tuesday, and the deep freeze is forecast to remain until Wednesday at least.

Officials have reported two people dead, likely from cold, according to the Associated Press. Medical centers are rushing to administer vaccines before they go bad. Flights are grounded. More than 2 million barrels a day of oil and 10 billion cubic feet of gas production are shut and massive refineries have halted gasoline and diesel output.

The Southwest Power Pool, which controls a grid spanning 14 states from North Dakota to Oklahoma, ordered rotating outages for a second consecutive day. President Joe Biden approved an emergency declaration for Texas, making more resources available to help.

All time stamps are EST.

Texas Electricity Supplies Keep Falling (12:13 p.m.)

Texas’s power supply declined further Tuesday morning even as the state’s grid operator said it hoped to start restoring electricity to some homes.

The Electric Reliability Council of Texas, which operates the state’s main grid, supplied less than 44 gigawatts of power as of 11:53 a.m. on Tuesday, according to data compiled by Bloomberg. That’s down from 47 gigawatts earlier in the day, and less than at the same time on Monday.

Power Plants Shut Down After Instruments Froze, Ercot Says (11:00 a.m.)

Frozen instruments at natural gas, coal and even nuclear facilities, as well as limited supplies of natural gas, are the main reasons behind the blackouts in Texas, according to Dan Woodfin, a senior director for the Electric Reliability Council of Texas, which operates the state’s power grid.

One of the reasons power is coming back slower than expected Tuesday is “natural gas pressure,” he said. While some wind turbines in West Texas shut down, that’s been the least significant factor in the blackouts, said Woodfin. Strong winds helped boost output from the turbines that remained in service, offsetting some of the losses.

Texas lost about 30,000 to 35,000 megawatts of generating capacity in recent days as bitter cold swept across the region, he said. On Tuesday morning, the grid was unable to meet about 18,500 megawatts of demand. A megawatt is enough to power about 200 homes.

Ford, GM and Toyota Plants Lose Shifts (10:18 a.m)

Several automakers, including General Motors Co., Ford Motor Co. and Toyota Motor Co., were forced to idle production at U.S. plants in the center of the country as a winter weather pattern caused power outages and other disruptions.

GM canceled the first shift Tuesday at its factory in Arlington, Texas, after shutting down Monday due to rolling blackouts and workers having difficulty getting to the facility in the snowstorm. The automaker has not made a decision yet on whether it will operate a second shift, a spokesman said.

Blizzard Cuts U.S. Oil Output by Over 2 Million Barrels a Day (10:06 a.m.)

U.S. oil production has plunged by more than 2 million barrels a day as the coldest weather in 30 years brings havoc to key producing states that rarely have to deal with frigid Arctic blasts.

Oil traders and company executives, who asked not to be identified, lifted their forecasts for supply losses from an earlier estimate on Monday of 1.5 million to 1.7 million barrels. They said the losses were particularly large in the Permian Basin, the most prolific U.S. oil region, which straddles West Texas and southeast New Mexico. Output cuts were also significant in the Eagle Ford, in southern Texas, and the Anadarko basin in Oklahoma.

Natural Gas Jumps Amid Production Plunge (9:55 a.m.)

U.S. natural gas futures surged to highest level in more than three months as the Arctic blast boosted demand for heating and curbing output from shale wells.

Futures for March delivery jumped as much as 10% to $3.214 per million British thermal units, the highest since Nov. 3. That’s the biggest gain among major U.S.-traded commodities.

Shale Producers Postpone Earnings on Energy Crisis (9:15 a.m)

Pioneer Natural Resources Co. is delaying the release of its fourth-quarter earnings, joining Occidental Petroleum Corp. in moving its results to next week as Texas endures a second day of widespread power outages.

Occidental will announce its earnings on Feb. 22 and Pioneer the next day. Roughly 4 million Texans remain without power, and blackouts have extended to affect much of the southwest U.S.

Key U.S. Crude Spread Flips Into Contango First Time In a Month (9:04 a.m.)

U.S. benchmark crude futures’ nearest timespread flipped into contango, a market structure indicating oversupply, for the first time in about a month on Tuesday.

The largest refineries in North America were in the process of shutting Monday because of arctic conditions that have cut electricity, water and fuel supplies across Texas. With plants closed, the demand for crude weakens.

Texas Grid Operator Expects Power to Be Restored by Tonight (8:50 a.m.)

The operator of the Texas power grid expects electricity to be restored in the state by Tuesday afternoon or evening.

“It’s a function of how much generation we are able to get back on line, especially gas and coal,” Dan Woodfin, a senior director for the Electric Reliability Council of Texas, said in an interview. “It could be as early as early afternoon today. But then it is also possible it could go into the evening hours tonight.”

Woodfin estimated that 2 million to 3 million homes and businesses remain without power after a winter storm drove demand for electricity to record levels, overloading the power grid.

Texas Railroad’s Wright Says Renewables Hurt Grid Reliability (8:47)

Renewable energy sources like wind turbines are diverting resources away from reliable fossil fuel sources like natural gas, Texas Railroad Commissioner Jim Wright said in an interview on Bloomberg TV.

“I think that we’re going to have to take a stronger look at who’s allowed priority on our grid system,” Wright told Bloomberg Surveillance’s Tom Keene.

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