Jan. 7 (Bloomberg) -- Record cold weather pummeled infrastructure across the U.S. as energy companies warned of reduced flows on natural gas pipelines, shut loading racks at fuel terminals and worked to restore refinery operations.
The cold snap pushed oil prices higher and boosted natural gas on the spot market for a third day. Temperature records fell in many cities, including New York, where a measurement of 4 degrees Fahrenheit (minus 16 Celsius), broke a mark for the date set in 1896, according to AccuWeather Inc. in State College, Pennsylvania.
All pipelines into New England from the West and South were at reduced rates today and flows into New York City were also constrained, according to a report by the Energy Information Administration, a division of Energy Department.
"The very cold temperatures widespread from Chicago east are driving up demand for natural gas, the price in that section of the country," said Tyson Brown, a statistician with the EIA. "Temperatures look to get a little bit more normal and ease off through the rest of the week."
Natural gas pipeline firm Kinder Morgan Inc. declared forces majeures in Alabama after a power outage and Georgia after a compressor outage, the company told shippers in notices today. Other gas pipeline companies issued forces majeures due to outages in Pennsylvania and Illinois.
Production of natural gas dropped at wells in the Rockies, mid-continent, Gulf Coast and Northeast, Luke Larsen, an analyst at LCI Energy Insight, an energy analysis and consulting company in El Paso, Texas, said by e-mail today.
Kinder Morgan also reported a force majeure today at its Argo, Illinois, ethanol terminal, a Midwest hub for the fuel, as ethanol futures advanced.
"At some point you have to have the gasoline blend with the ethanol, and that line from the ethanol tank to the rack is where you see a lot of those issues where it gets frozen," said Eric Rosen, vice president of sales, supply and trading for petroleum marketer Papco Inc., based in Virginia Beach, Virginia.
Refiners reported shutdowns at plants that amounted to 7.4 percent of 17.8 million barrels per day of total U.S. capacity, some of them citing severe weather and power outages.
Several oil refineries reported weather-related problems. Valero Energy Corp.’s plant in Memphis, Tennessee, had instruments freeze and units trip offline, a person familiar with operations said.
Marathon Petroleum Corp.’s 114,000-barrel-a-day Detroit refinery restarted several units today after shutting them when low temperatures caused a loss of instrument air, Jamal Kheiry, a Findlay, Ohio-based spokesman for the company, said by e-mail.
Exxon Mobil Corp.’s 238,000-barrel-a-day Joliet, Illinois, refinery is operating normally today after having unidentified problems with process units because of extreme cold yesterday, Tricia Simpson, a spokeswoman at the plant, said by e-mail.
Korea National Oil Corp.’s 115,000-barrel-a-day plant in Come-by-Chance, Newfoundland, is trying to restart after an island-wide power failure prompted by deep cold, Gloria Slade, a company spokeswoman, told CBC News.
Colonial Pipeline Co.’s system is operating normally after experiencing limited power failures earlier because of the weather, Steve Baker, an Alpharetta, Georgia-based spokesman for the company, said by e-mail. The Colonial system transports 100 million gallons of refined fuel a day on its 5,500-mile-long system that connects the Gulf Coast to the East Coast.
--With assistance from Christine Harvey, Christine Buurma and Naureen S. Malik in New York and Mario Parker in Chicago. Editors: Richard Stubbe, Dan Stets
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