Texas Refineries Prepare for First Winter Storm, Frigid January

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(Bloomberg) — Texas refineries are bracing for an onslaught of hail, snow and freezing rain as the first major winter storm sweeps through the southern U.S. in a month expected to be extremely cold.

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While temperatures in the upcoming storm are not expected to stay below freezing for long, the Commodity Weather Group forecasts that January will likely be the coldest in 11 years, according to the value of temperature days, a way to measure energy demand due to weather. .

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The situation threatens to freeze pipelines, disable devices and processing equipment, and test the state’s electricity grid, all of which are potential obstacles in the region that has the majority of refining capacity in the United States and represents a large portion of the country’s fuel supply. So far, refiners and analysts say the sector is better prepared to weather winter’s wrath after learning from frequent storms in recent years.

“If you have two events in a row, you become more focused, almost like a science experiment,” said Austin Lin, principal analyst for North America refining and products at Wood Mackenzie. “The winter preparation list is getting longer and more focused.”

Motiva Enterprises LLC’s 626,000 bpd Port Arthur refinery, the largest in the country, has been preparing for months, including adding more insulation, while ExxonMobil’s 609,000 bpd Beaumont refinery has By doubling the number of employees in work shifts. According to people familiar with the preparations.

Global Partners, which operates six gas stations across Texas, said proactive measures it has taken include managing water levels to prevent freezing and fueling backup generators to address potential power outages. Citgo Petroleum Corp. said its refineries in Texas, Louisiana and Illinois have been winterized “to ensure safe and continued operations in the expected low temperatures.”

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However, the Electric Reliability Council of Texas, the state’s grid operator, warned that power could be limited through Friday due to the storm. About 23 million people from Texas to the southern Appalachians are under a winter storm watch, said Peter Mullinax, a meteorologist at the U.S. Weather Prediction Center.

Grid integrity and the availability of enough heat to operate processing units at refineries are major concerns, said Andy Lipow, president of Lipow Oil Associates in Houston.

“In West Texas, the biggest issues are going to be the ice and the net,” LeBeau said. “Ice on wires could lead to power outages.”

Texas is no stranger to winter storms, especially in the past four years. In February 2021, Winter Storm Uri led to power outages and halted production at two-thirds of regional refineries. At its peak, Storm Elliott of December 2022 disabled more than 2 million barrels of crude energy.

With supplies plentiful, the biggest problem facing the industry may be falling demand due to weather keeping people indoors, Wood Mackenzie’s Lin said. He added that since the storm is not expected to last for a long time, refineries are likely to choose to continue operating at high rates rather than reduce production or shut down.

-With assistance from Brian K. sullivan.

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