(Bloomberg) -- The crisis that has knocked out power to millions of homes and businesses in Texas and the central U.S. is poised to enter a fourth day, with millions still in the dark.
While Texas’s grid operator was able to restore power to 1.8 million homes Wednesday, 1.2 million remain without electricity, according to a spokesperson. That’s about 3.6 million people based on the size of the average household. Around 43 gigawatts of generation was still offline as of 6 p.m. local time -- enough to power 8.6 million homes.
In the meantime, economic fallout is cascading. U.S. oil production has plunged by nearly 40%. Fracking in the top U.S. shale plays has gone dark. Wheat futures surged as the freeze snarled grain shipments. Coronavirus vaccine shipments are delayed. And Amazon.com Inc. closed facilities from Illinois to Texas.
“The current energy crisis is much bigger than most people realize. This is a global crisis,” Paul Sankey, an oil analyst at Sankey Research, wrote in a note. “The largest energy outage in U.S. history.”
The outages and cold are wreaking havoc on oil and gas. Crude output has plunged by 4 million barrels a day -- the most ever -- according to traders and industry executives with direct knowledge of the operations. Gas production has plummeted to the lowest level since 2017. Citgo Petroleum Corp., Occidental Petroleum Corp. and Plains All American pipeline were among companies that declared force majeure.
In Taylor, Texas, where the state’s grid operator is based, the trouble began around 11 p.m. local time on Sunday, when plants began unexpectedly tripping offline, causing monitors in the operations room to flash orange and red alert signals. “It happened pretty fast,” Bill Magness, chief executive officer of grid manager Electric Reliability Council of Texas, said in an interview. “There were several that came off in a row.”
Soon after that, the flow of power on Texas’s grid -- called frequency -- dipped from 60 hertz to 59.3. Frequency is typically only allowed to deviate by 0.02 hertz to maintain grid stability.
“That’s a danger zone,” Magness said. “It got to a point where we were seeing rapid frequency deviation and that’s when you have to shed load or you could slide into a potential catastrophic blackout.”
The operator initiated the rolling blackouts at around 1:25 a.m. local time, rapidly shutting off power to customers in an effort to keep demand below supply, which continued to plunge. “They took action at exactly right time,” said Dan Woodfin, Ercot’s director of system operations.
Now the question is when the lights can come back on. The grid manager expects the blackouts to last until at least Thursday.
“We’re at a point in the restoration where we’re going to keep energizing circuits as fast as we safely can until we run out of available generation,” Dan Woodfin, director of system operations at the grid operators, said in a statement. “We hope to make significant progress overnight.”
Generation capacity on the grid reached 52 gigawatts Wednesday evening, the highest level since Monday morning. Electricity load climbed to 49 gigawatts, indicating that power had been restored to some customers.
But about 43 gigawatts of the state’s generation capacity remained offline, with 185 units forced to shut since Sunday, according to the operator. Of that, 26.5 gigawatts was thermal generation such as gas and coal that shut due to frozen instruments, limited gas supplies and low gas pressure. Frozen turbines and icy solar panels have shut nearly 17 gigawatts of renewable energy.
The gas shortage is so severe that Governor Greg Abbot on Wednesday banned sales of the fuel to power producers outside of the state.
With the outages expanding beyond Texas to neighboring power systems, as many as 2.5 million customers across three states are now without electricity, according to PowerOutage.US, which tracks utility outages.
Meanwhile, energy prices kept surging. Wholesale power prices in Texas traded at the $9,000-per-megawatt-hour price cap for a fourth day, while natural gas spot prices breached the $1,000 mark, more than 100 times their level just a week earlier.
The cold blast that triggered the energy crisis is slowly abating but across eastern Texas, parts of Arkansas and through the South to Alabama, as much as a quarter-inch of ice could form on trees and power lines, causing even more outages, said Lara Pagano, a forecaster with the U.S. Weather Prediction Center. By next week, temperatures across Texas could rise above freezing and reach the 40s and 50s Fahrenheit.
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