Extreme cold weather in Texas renders shutdowns of several oil refineries and petrochemical plants

Extremely cold weather is creating a havoc for the Texas state in the South Central region of the United States with dozens of manufacturing units forcing closure and rendering thereby a severe squeeze in the availability of energy and its derivatives. The sweeping of an arctic blast across the United States prompted closure of several oil refinery and resin manufacturing units ever since the cold waves started.

At least two major petrochemical resin producers have shut down their production in Texas as a precautionary measure. Other units are also monitoring the weather conditions, but have signaled to take similar action against cold weather.

Chevron Phillips Chemical said in a filing with the Texas environmental regulator that it was shutting down three polyethylene plants in Baytown, Texas due to the prolonged freezing temperature forecasts. Also, Cedar Bayou plant has written to the regulator that it was shutting down ethylene manufacturing plant. Similarly, Braskem announced that it has already shut down its polypropylene operations in Texas.

On Saturday, the 312,500-barrels-per-day (bpd) Deek Park Refinery in Texas announced idling of the project due to the severe winter storm. Its most units at the facility remained shut on Sunday. Earlier this week, several other units in oil and derivatives segments also announced plant shut down to avoid any mischief including blast and accident at plant location or otherwise.

This is worth mentioning here that the severe storm swept through Canada and the Unites States ahead of the Christmas holiday weekend that brought freezing temperatures, slow and icy conditions. Power supply was interrupted in some areas, thousands of flights were cancelled and the New Year travel plant got disrupted. According to an estimate, almost 250 million US and Canadian residents were affected by the storm in one way or another just ahead of the Christmas holiday weekend. Dozens of citizens died of cold waves including icy blast and the severe winter conditions.

The US Climate Bureau has issued hard-freeze warnings for all the states along the US Gulf Coast, where most of the US refining capacity is located. Consequently, industry experts estimate as much as 1.5 million bpd of the Gulf Coast’s refining capacity was shut down due to the freezing temperatures. Marathon Petroleum, the refinery operated by Motiva Enterprises and TotalEnergies outside Houston were shut recently. Operations at other refineries in Texas, run by LyondellBasell, Valero Energy, and ExxonMobil, were also disrupted by the severe winter storm. Refinery outages were not expected to be prolonged earlier.

All these refinery closures have create a temporary shortage of crude oil and gasoline in the market as the storm was approaching. Both these energy variants gained on Monday in the international markets. Both the WTI and Brent crude oil prices jumped by 2.6 percent in the international markets to trade at US$79.56 a barrel and Brent crude oil US$83.92 a barrel in the afternoon trade session in India. Prices of natural gas, also moved up albeit marginally to trade at US$5.08 per mmbtu.

In fact, the extreme weather condition came nearly two years after Winter Storm Uri that had hit Texas in February 2021 and shut down petrochemical and resin production in the state. The shutdown also paralyzed logistics inward and outward in the state and also sent polyethylene and polypropylene prices at their record highs in January-March 2021. Residents in the Texas state did not expect the winter storm to be as severe as the return of Uri.


DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com