Shell Reports Stable Ops at Deer Park

As frigid temperatures and frozen precipitation continue to bring Southeast Texas to a standstill, area refineries are adjusting operations accordingly.

As Bloomberg has reported, Marathon Petroleum (NYSE: MPC), ExxonMobil (NYSE: XOM), Motiva Enterprises, and Total (NYSE: TOT) have shut down or scaled back operations at major facilities in the region. Shell (NYSE: RDS.A), which operates the 340,000-barrel-per-day Deer Park refinery east of Houston, stated that operations remain stable at the facility.

“We are closely monitoring the cold front moving into the area and taking the necessary precautions to ensure the safety of employees and manufacturing processes,” Shell spokesperson Curtis Smith told Rigzone shortly before 2 p.m. Central time on Monday. “All employees and contract partners working at site arrived Sunday afternoon and will remain at site for the duration of the freeze to reduce the number of vehicles on the roads and ensure their safety as well as that of our community and first responders.”

Smith added that Shell Deer Park continues to produce electrical power through its cogeneration facilities. Moreover, he pointed out the site is exporting power to the grid to support additional power draws as the cold front moves into the Houston region.

In addition to grappling with frigid weather, Texans are experiencing rotating power outages. The state’s grid operator, Electric Reliability Council of Texas (ERCOT), has ordered power companies – including CenterPoint Energy (NYSE: CNP), which serves Houston and the surrounding area – to force rolling blackouts to reduce customer electricity demand amid a shortage of generation capacity.

Sub-freezing conditions caused Texas to lose nearly 10,000 megawatts of power generation, or enough to power roughly 2 million homes, ERCOT noted in a written statement Monday.

“Every grid operator and every electric company is fighting to restore power right now,” remarked ERCOT President and CEO Bill Magness.

ERCOT stated that rolling blackouts could continue until the weather emergency ends. In a tweet, CenterPoint urged customer who do have power to conserve it as much as possible.

“This was not a question of if this would happen, but when,” Ed Hirs, an economist and energy fellow at the University of Houston (UH), said of the rolling blackouts underway in Texas.

Hirs contends that a “flawed” market design is the culprit, according to a UH written statement emailed to Rigzone. He asserts that deregulating the state’s power markets represents part of the solution.

“It is a problem of market design for ERCOT like it has been for CAISO (the California Independent System Operator) for 20-plus years,” said Hirs. “Keeping the average wholesale price less than the cost of building/maintaining generation assets contributed to the disaster.”

To contact the author, email mveazey@rigzone.com.