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Ice Storm Trips Power, Paralyzes Key US Oil Hub

Reuters
Tuesday, 11 Dec 2007 | 1:19 PM ET

A deadly ice storm in the U.S. heartland triggered power outages that paralyzed parts of the most important U.S. oil hub, threatening supplies to the region's oil refineries.

Man clears downed branches from a road outside his home in Forest Park, Oklahoma.
Elise Amendola
Man clears downed branches from a road outside his home in Forest Park, Oklahoma.

The storm knocked out power to more than 800,000 in the U.S. Central plains and forced Enbridge to shut its 16.7 million barrel oil terminal at Cushing, Oklahoma, the delivery point of the New York Mercantile Exchange crude contract.

"Until we get power we cannot move the oil. There is some damage to our own distribution infrastructure, but right now it mainly depends on how quickly Oklahoma Gas and Electric can restore power to the area," said Enbridge spokesman Larry Springer.

Magellan , which shut its Osage pipeline and an Oklahoma fuel terminal due to the bad weather, said utility crews reported some power to Cushing could be restored later Tuesday.

TEPPCO Partners said it had closed its 4.5 million barrel Cushing storage terminal and cut throughput at the 350,000 barrels per day Seaway pipeline, which runs crude from the Gulf Coast to the NYMEX hub.

Enbridge also closed its Spearhead and Ozark crude pipelines into the hub. But refiners in the region continued to operate normally, company and trade sources said.

"We hear that Cushing is pretty well shut-down," said Tom Hunter, general manager for the National Cooperative Refinery Association, adding that an outage of a week or more from the Osage line would force them to cut rates at its McPherson, Kansas refinery.

U.S. oil rose $1.04 to $88.90 a barrel early Tuesday morning as the storm cut supplies to Cushing, where shifts in inventories weigh significantly on NYMEX prices.

Cash gasoline prices in the Group Three region of the Midwest firmed 1.25 cents to 7.25 cents under the New York Mercantile Exchange future contract.

The storm, which has contributed to the deaths of at least 14 people, entered Oklahoma early Sunday bringing freezing rain and ice that snapped tree branches and power lines before hitting Kansas, Missouri and Illinois.

In Oklahoma, the hardest-hit state, OGE Energy said the storm was the worst in the company's history and estimated it would take between seven and 10 days to restore power to more than 285,000 customers without power.

Companies operating facilities at the key hub are in the midst of expansions to ramp up storage capacity there by nearly 9 million barrels to 44 million barrels this year.

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