01 Mar Texas Freeze Highlights Energy Paradox
In this week’s Rigzone market commentary, Validere’s Mark Le Dain sat down with Matthew V. Veazey at Rigzone to discuss the Texas power outages and the interconnectivity of the world’s energy economies alongside Energy Advisor Phil Kangas. Keep reading for details.
The Electric Reliability Council of Texas (ERCOT) has received much public scrutiny for ordering blackouts during the cold weather conditions. Kangas highlighted that there are relative benefits and risks of having the ERCOT as a stand-alone utility.
After this week, it is easy to see how the US and world energy economies are closely connected to Texas. The disruptions in Texas increased gasoline and natural gas prices across the US. Energy markets and it was also felt globally. When Governor Greg Abbott banned natural gas exports, several million people in Mexico went without power. It is estimated that the millions of barrels per day production drop represented two to four percent of global supply.
Valiere’s Mark Le Dain added that the week started with Michigan declaring a state of emergency due to a lack of propane.
As for market surprises, Mark Le Dain mentioned that natural gas had the largest increase in contribution to the grid during the week. To read more of last week’s review, click here.
Validere’s Mark Le Dain also shared his thoughts on the extended period of unusually cold weather that tested many of Texas’ energy producers in this week’s preview.
Analysts estimate that over 2 million barrels per day of crude output were lost due to Texas’s cold weather. The main focus will be on how quickly refiners can recover after the extreme weather. To read more, click here.