Texas Airlifts Water With Ice Covering Roads: Energy Update

(Bloomberg) -- The Texas power grid has returned to normal operations as a historic cold blast eases, but the impact of the deep freeze is still leaving towns without water, homes yet to be reconnected to electricity supplies and highways chocked with ice and snow.

Texas emergency officials are airlifting pallets of bottled water to cities and towns where water supplies were knocked out or disrupted by this week’s widespread power failures. About 1,000 of the state’s 7,000 local water utilities were offline or unable to ensure supplies were fit for human consumption as of Friday afternoon. More than 140,000 homes and businesses were still in the dark.

Shale explorer Devon Energy Corp.’s chief executive officer, Rick Muncrief, said Friday in an interview on Bloomberg TV that the “worst is behind us” from an oil production standpoint. But the number of fracking crews active in the U.S. shale patch plunged this week to a record low, and damaged oil refineries could take weeks to get back online, raising the potential for prolonged fuel shortages that could spread across the country.

The Electric Reliability Council of Texas, which manages the grid, said it had exited emergency conditions Friday. But the region set a record for the most expensive week in U.S. power market history, topping $50 billion in sales since Sunday, according to BloombergNEF. Damage and economic losses from the winter storms will reach roughly the same amount, AccuWeather Inc. said.

The seven-day U.S. vaccination average fell the most ever on the cold, and oil and gas fracking activity dropped to a record low. Representative Alexandria Ocasio-Cortez planned to fly to Texas Friday to distribute supplies, while President Joe Biden said he’ll declare a major disaster there and wants to visit the state soon. About 180,000 Texas homes and businesses were without power, according to Poweroutage.us.

All time stamps are EST.

A Giant Flaw in Texas Blackouts: It Cut Power to Gas Supplies (7:52 p.m.)

When the Texas power grid was on the brink of collapse and its operator plunged thousands into darkness, it didn’t make an exception for the oil and gas field.

Power was, unsurprisingly, diverted to hospitals and nursing homes. Ercot, as the grid manager is known, was staving off utter catastrophe, its chief executive later said.

But leaving shale fields like the Permian Basin dark had an unintended consequence. Producers who depend on electricity to power their operations were left with no way to pump natural gas. And that gas was needed more than ever to generate electricity.

As one executive described: It was like a death spiral.

The result was a vicious cycle that serves as a painful lesson to any power grid operator and utility company dealing with rolling outages during extreme weather.

Texas Attorney General Launches Investigation Into Power Failure (7:28 p.m.)

Texas Attorney General Ken Paxton launched a probe into the power failures that paralyzed the second-largest U.S. state for the better part of a week after a historic winter storm, according to a statement late Friday.

Permian Driller Ramps Up to Two-Thirds Capacity After Big Freeze (7:07 p.m.)

Mewbourne Oil Co. has restored about two-thirds of its oil and natural gas production across the central U.S. and expects to reach pre-storm levels by early next week, said Chief Executive Officer Ken Waits.

The Texas-based company been working with pipelines, gas plants and oil purchasers to restore supplies that were shut in the Permian and Anadarko basins, Waits said by phone.

Energy producers are slowly emerging from a deep freeze that hit Texas this week, wreaking havoc on the power grid and energy sector. Mewbourne, which has 2,100 wells, operates in Texas, Oklahoma and in New Mexico, which wasn’t as badly affected by the blizzard.

Texas Airlifts Bottled Water Amid Shortages (5:03 p.m.)

Texas emergency officials are airlifting pallets of bottled water to cities and towns where water supplies were knocked out or disrupted by this week’s widespread power failures.

The state is deploying airplanes because highways in many parts of the state are still choked with ice and snow, and low supplies of diesel are making it impossible to rely on trucks, emergency management officials said during a media briefing on Friday. About 1,000 of the state’s 7,000 local water utilities were offline or unable to ensure supplies were fit for human consumption as of Friday afternoon.

In addition, Governor Greg Abbott waived a ban on using off-road diesel on highway vehicles in an effort to expand fuel supplies amid refinery shutdowns triggered by harsh winter weather.

Cuomo Would Boost Utility Penalties for Weather-Event Failures (4:38 p.m.)

New York Governor Andrew Cuomo said he’s proposing legislation to strengthen enforcement measures to address utilities’ failure to prepare for and respond to extreme weather events.

Citing “unacceptable performance of several electric and telecom providers during Tropical Storm Isaias last year,” he said legislation would eliminate caps on penalties for Public Service Law violations, and instead establish a new penalty system that more accurately tailors the penalty to the violation.

It would allow the Public Service Commission to assess separate penalties for the benefit of consumers, including the authority to seek as much as $500 per household for consumer damages like spoiled food and lost medications due to extended outages.

Devon CEO Sees Oil Recovery Taking Days, Not Weeks After Freeze (3:49 p.m.)

Devon Energy Corp. CEO Rick Muncrief said Friday in an interview on Bloomberg TV that the “worst is behind us” from a production standpoint after output was shut due to historic winter weather. The company has begun restoring output.

As Texas Power Comes Back, New Websites Pop Up Seeking Victims (3:38 p.m.)

As electricity is restored in Texas, almost a dozen new websites have been created to help organize potential class-action lawsuits over the record cold spell that left almost 30 million people in the state freezing in the dark for days.

Among the domains registered since Feb. 15 were TexasPowerLawsuit.com, TexasPowerFailureLawsuit.org and ClassActionTexasPower.org, said Allan Liska, senior security architect at cybersecurity analytics firm Recorded Future Inc. Such sites could be used to compile lists of victims making damage claims.

Web platforms including GoDaddy and DomainsByProxy allow registrants to intentionally mask their identities, so it’s unknown exactly who claimed the rights to these pages.

Fracking Activity Tumbled to Record Low Amid U.S. Freeze (3:10 p.m.)

The number of fracking crews active in the U.S. shale patch plunged this week to a record low as frigid weather brought most of the Texas oil industry to a halt.

Three-quarters of the U.S. frack fleet was lost this week, leaving 41 crews working to blast water, sand and chemicals underground to release trapped oil and natural gas, Matt Johnson, chief executive officer at Primary Vision Inc., wrote Friday in an email. The company has tracked data on frack crews since 2013.

Texas Blackouts Lead to a Record Vaccination Drop (1:59 p.m.)

Winter weather and power outages had a chilling effect on Texas’s vaccination effort, one large enough to drag down inoculation trends nationwide.

On Thursday alone, the state administered 118,417 fewer doses than on the same day a week earlier, according to the Bloomberg Vaccine Tracker. The seven-day average plummeted 31% in the past week to 89,324, the sharpest drop of the pandemic, the data show. At its Feb. 12 peak, Texas was giving an average 134,688 doses a day.

Nationally, the seven-day average fell 2.6% on Thursday from a week earlier, to 1.58 million doses, the worst such decline.

Ercot’s $50 Billion in Sales Is Biggest Week Ever in U.S.: BNEF (1:48 p.m.)

The Ercot power region just set a record for the most expensive week in U.S. power market history, topping $50 billion in sales since Sunday, according to BloombergNEF analyst Brianna Lazerwitz.

This week’s events caused many to question Ercot’s energy-only market design, Lazerwitz said. The design is characterized by touchy prices known to jump toward the region’s $9,000 per megawatt-hour market cap when the buffer between supply and demand shrinks too much.

Ercot may need to double down on the construct or abandon it, according to Lazerwitz. The market cap assumes customers are unwilling to pay more than $9,000 per MWh for power, and would rather experience a blackout than face a high electricity bill.

U.S. Rig Count Was Static Just as Big Freeze Advanced (1:14 p.m.)

U.S. oil and gas drilling was unchanged just as frigid weather was starting to bring much of Texas’s oil industry to a standstill, according to the latest data collected by Baker Hughes Co.

The total number of active rigs in U.S. fields was 397, according to Baker Hughes data released Friday, the same as last week. In the Permian, the count rose by one -- a gas rig -- to 204.

The numbers were finalized days ahead of publication and don’t fully reflect this week’s chaos.

Texas Grid Exits Emergency Operations Stage (1:05 p.m.)

Grid manager Ercot said in a news briefing that it has left the emergency operations stage and has returned to normal. That means Ercot is no longer asking for “out-of-market” responses such as telling utilities to reduce their power load, and generators are able to produce enough power for current demand.

Transmission providers are still working to return power to all their customers and to restore storm damage, said Ercot chief executive officer Bill Magness.

Biden Says He Hopes to Visit Texas After Winter Storm (12:23 p.m.)

President Joe Biden said he’ll declare a major disaster in Texas and wants to visit the state soon as it recovers from widespread power outages and water shortages following an unusual winter storm.

“If in fact it’s concluded that I can go without creating a burden for the folks on the ground while they’re dealing with this crisis, I plan on going,” Biden told reporters Friday at the White House. “But we’ll know that, make that decision, probably next week.”

Biden spoke with Texas Governor Greg Abbott on Thursday, telling him that “the federal government will continue to work hand-in-hand with state and local authorities in Texas to bring relief and address the critical needs of the families affected” by a week of freezing temperatures, ice and snow that left millions without power and water.

Texas Restaurants Are Throwing Away Spoiled Food (11:54 a.m.)

Mass blackouts across Texas are forcing restaurants to give away or trash quickly expiring food, while supply lines remain all but blocked due to dangerous roads.

At Tarka Indian Kitchen, a chain with eight locations in the state, fresh veggies and meat are being discarded after the chain was shuttered for days. The same is true for Coolgreens, which sells salads and sandwiches, while Milkshake Concepts had to throw out inventory due to a burst pipe. Similar stories are piling up for restaurants as the region grapples with a historic cold spell that has snarled roads, limited access to fresh water and left many residents without power.

Gas Stations Still Dark as Texas Emerges From Big Freeze (11:38 .m.)

More than 1,700 gas stations are without electricity on Friday because of the Texas power disaster, threatening to push pump prices even higher with key refineries in the state still shut.

The total represents more 12% of the stations in Texas, according to Patrick DeHaan, head of petroleum analysis for retail fuel tracker GasBuddy. Among the largest cities, the most outages are concentrated in the Dallas-Fort Worth area.

More Than 14.4 Million People Affected by Water Outages (11:36 a.m.)

While power is being restored across the state, water outages continue to plague Texas. More than 14.4 million people, or about half the population, were affected by disruptions to public water supplies on Friday morning, according to the Texas Commission on Environmental Quality. There are 160 counties under water-boil notices to protect the public from contamination.

Houston to Stage ‘Mass Water Distribution’ (10:35 a.m.)

Houston is converting a high school football stadium used as a Covid-19 vaccine center into a water-distribution venue on Friday as the fourth-largest U.S. city contends with low pipeline pressure and purity problems.

The “mass water distribution event” will commence at 11:30 a.m. local time at Delmar Stadium on the city’s northwest side, City Controller Chris B. Brown said in a tweet. The city and many of its suburbs have been under a so-called boil order for days after blackouts hobbled public water utilities.

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