US sees record drop in oil production

Total US oil production has plunged by one-third as an unprecedented cold blast freezes well operations across the central US, according to traders and industry executives with direct knowledge of the operations, Report informs, citing Bloomberg.

“Crude output has now fallen by about 3.5 million barrels a day or more nationwide”, they said, asking not to be identified because the information isn’t public.

Before the cold snap, the US was pumping about 11 million barrels a day, according to last government data.

Production in Texas’s Permian Basin alone - America’s biggest oil field - has plummeted by as much as 65%.

Amrita Sen, a chief oil analyst at consultant Energy Aspects Ltd., said the production losses were “much higher than initial estimates” and warned that Permian output might not return to pre-freeze levels until Feb. 22.

Operations in Texas have stumbled because temperatures are low enough to freeze oil and gas liquids at the wellhead and in pipelines that are laid on the ground, as opposed to under the surface as practiced in more northerly oil regions. The big question now is how quickly temperatures return to normal.

The massive scale of the disruption has helped oil prices to rise to their highest so far this year. It’s also threatening to starve oil refineries.

Among the companies hit by outages is Occidental Petroleum Corp., the second-largest producer of oil in the Permian, which has issued a force majeure notice to suppliers, and Chevron Corp., which has shut in compression and production at wells in Culberson County in West Texas due to cold weather.