The extreme and sustained cold weather also disrupted crude oil and natural gas production, refinery, rail, and pipeline operations, and gasoline and distillate production and supply. The cold weather in January resulted in a slowdown in crude oil and natural gas exploration and production activity; EIA's February Short-Term Energy Outlook (STEO) expects that the reduced well-completion activity because of harsh weather conditions caused oil production to slow. Very cold temperatures require the use of additional heating equipment at drilling sites, which can slow the pace of drilling and completing new wells. In particular, large volumes of water used for hydraulic fracturing must be heated to prevent freezing. Heavy snow has an even greater effect on well-completion activity because poor road conditions restrict the movement of equipment. According to a report issued by the North Dakota Department of Mineral Resources on February 14, the state's oil production fell by 53,000 bbl/d in December, the largest monthly decline ever.
Winter weather caused refineries to reduce runs and in some cases suspend operations because of power outages and the effect of extremely low temperatures on unit operations. In the Midwest, where refinery utilization rates had been running above 94%, rates dipped to 87% for the week ending January 17, but returned to 94% the following week (Figure 3). East Coast weekly refinery utilization rates declined from 85% at the start of January to a low of 70%, also for the week ending January 17, a decline that is also partially the result of planned refinery maintenance, before recovering to 77% by the end of the month (Figure 4). While the Gulf Coast was also affected by unusually cold winter conditions, the effect on refinery operations was less significant compared to PADDs 1 and 2.
Refineries in the Northeast also faced secondary effects from the cold weather, including those associated with significant increases in the cost of natural gas. On January 22, natural gas spot prices in the Transco Zone 6 - non-New York Northeast region reached $124 per million British thermal units (MMBtu), up from $11/MMBtu one day earlier. Prices had been $4/MMBtu only one week earlier. As natural gas prices increased, refineries switched fuels or reduced operating rates. Natural gas prices have declined and as of February 21 were $8.66/MMBtu.
The extreme weather also has impeded transportation networks. In the upper Midwest, the cold and snow caused significant operational challenges for railroads, and in New York Harbor, the snow, ice and cold delayed vessel unloading. Snow and ice also disrupted tanker truck traffic, slowing propane and petroleum product deliveries. In the Midwest, where temperatures were well below zero, ethanol pipelines froze. Weather-related power outages disrupted both crude and product pipelines in the Midwest and East Coast. Along the U.S. Gulf Coast, winter storms and fog temporarily closed the 52-mile Houston Ship Channel, which connects many Houston area refineries and petroleum product terminals to the Gulf of Mexico.