The U.S. energy industry is facing a massive test of its infrastructure as an intense winter storm roars up the Atlantic Coast, threatening power outages, refinery shutdowns and spikes in heating prices, reports Reuters.

The storm swept up the U.S. Southeast toward New England on Wednesday, bringing snow, freezing rain and strong winds to a record-shattering cold already affecting much of the eastern United States. Temperatures are expected to keep dropping throughout the weekend, according to AccuWeather forecasts.

Prices for heating oil and natural gas in the U.S. Northeast are at their highest levels in several years on the back of near-record heating demand.

The extreme cold has stoked fears that a significant disruption could lead to a heating oil shortage, as inventories of distillate products, including heating oil, in the New England and Mid-Atlantic regions are at their lowest levels for this time of year since 2015. A number of tankers carrying diesel and heating oil from Europe are bound for the United States to address supply worries.

The U.S. Coast Guard in the key ports of Boston, the New York Harbor and Philadelphia have deployed ice-breaking ships to help keep trade traffic moving, but delays are expected.

Gasoline and diesel futures have climbed above five-year highs for this time of year, boosting key refining margins CL321-1=R to a five-year high for this time of year.

“I think we’ll see a big bang and price response but I don’t expect the impact and price response to be as long lasting as what you saw during Hurricane Harvey. Markets tend to over react,” said John Auers, executive vice president at consultancy Turner, Mason & Co. in Dallas.

Refiners along the U.S. East Coast were bracing for difficulties in the next few days. So far, the five refineries along the East Coast are dealing with frozen pipes and other challenges, but have not experienced any significant outages, according to sources at the plants.

“We’ve had a lot of freeze up but haven’t lost any units. This weekend will be bad,” said a source at Monroe Energy’s 185,000 barrel-per-day refinery outside Philadelphia.

Monroe Energy did not immediately respond to a request for comment.

Although most refineries, particularly those in northern climates, are designed to operate throughout the winter, increasingly extreme weather conditions in recent years have tested their capabilities. In 2015, more than a third of the U.S. East Coast’s capacity was abruptly shut down due to glitches.

Philadelphia Energy Solutions delayed a planned shutdown of 50,000 bpd hydrotreater and a benzene unit at the Girard Point section of the Philadelphia refinery complex due to severe weather conditions, a source told Reuters Wednesday.

U.S. natural gas demand was expected to remain near record highs this week due to the frigid weather. Natural gas is the major fuel for residential and commercial heating in the U.S. Northeast and is also widely used by power plants.

Total gas consumption in the lower 48 U.S. states peaked at 141.9 billion cubic feet per day on Monday, New Year’s Day, and was expected to remain near that level all week, according to Thomson Reuters analysts.

One bcfd of gas is enough to fuel about five million U.S. homes.

Natural gas prices in New England NG-CG-BS-SNL last week jumped to $53.50 per million British thermal units, highest since January 2014. The average price for gas in New England in 2017 was $3.80/mmBtu.

Oil prices posted their strongest start to a year since 2014 on Tuesday, with crude rising to mid-2015 highs amid large anti-government rallies in Iran and ongoing supply cuts led by OPEC and Russia, reports Reuters.

U.S. West Texas Intermediate (WTI) crude futures CLc1 traded broadly flat at around $60.40 a barrel by 1425 GMT after hitting $60.74 earlier in the day, their highest since June 2015.

Brent crude futures LCOc1, the international benchmark, were also flat at around $66.80 a barrel after hitting a May 2015 high of $67.29 earlier in the day.

It was the first time since January 2014 that the two crude oil benchmarks opened the year above $60 per barrel.

“Growing unrest in Iran set the table for a bullish start to 2018,” the U.S.-based Schork Report said in a note to clients on Tuesday.

Iran’s Supreme Leader on Tuesday accused the country’s enemies of stirring unrest as the death toll from anti-government demonstrations that began last week rose to 21.

Iran is OPEC’s third largest crude producer. Iranian oil industry and shipping sources said protests have had no impact on oil production or exports so far.

“Geopolitical risks are clearly back on the crude oil agenda after having been absent almost entirely since the oil market ran into a surplus in the second half of 2014,” Bjarne Schieldrop, chief commodities analyst at SEB, said, also citing Kurdistan and Libya.

Even without the unrest in Iran, which is a major oil exporter, market sentiment was bullish.

“Falling inventories globally and strong economic growth offset the restart of the Forties pipeline and the resumption of production following a pipeline outage in Libya,” said Jeffrey Halley, senior market analyst at futures brokerage Oanda in Singapore.

The 450,000 barrel per day (bpd) capacity Forties pipeline system in the North Sea returned to full operations on Dec. 30 after an unplanned shutdown.

Oil markets have been supported by a year of production cuts led by the Middle East-dominated Organization of the Petroleum Exporting Countries and Russia. The cuts started in January 2017 and are scheduled to cover all of 2018.

U.S. commercial crude oil inventories have fallen by almost 20 percent from their historic highs last March, to 431.9 million barrels.

Strong demand growth, especially from China, has also been supporting crude.

However, rising U.S. production, which is on the verge of breaking through 10 million bpd, is somewhat hampering the outlook into 2018.

“We think U.S. tight oil production growth warrants close monitoring as it could spoil OPEC’s market-balancing efforts, pushing the market into surplus in 2018,” Barclays bank said.

U.S. oil production C-OUT-T-EIA, driven largely by onshore tight shale oil fields, has risen by almost 16 percent since mid-2016, to 9.75 million bpd at the end of last year.

• Collaboration leads to discovery of a new material able to separate ethylene from ethane
• Targeting up to a 25 percent reduction in both process energy needs and carbon dioxide emissions
• Research published in nation’s leading peer-reviewed journal Science

Scientists from ExxonMobil and the Instituto de Tecnologia Quimica in Valencia, Spain have discovered a potentially revolutionary new material that could significantly reduce the amount of energy and emissions associated with the production of ethylene. Depending on the application, use of the new material, in conjunction with other novel separation processes, could result in up to a 25 percent reduction in both the energy needed for ethylene separation, as well as the associated carbon dioxide emissions. Results of the research have been published in the peer-reviewed journal Science .

ExxonMobil and ITQ researchers found that the new material, composed of a uniquely structured silica zeolite, can be used in gas separation processes, such as the recovery of ethylene from ethane, with an unprecedented degree of selectivity at ambient temperature. The new material could provide insights into the design of additional materials to be used as adsorbents or membranes in a variety of different gas separation applications associated with chemical manufacturing. Zeolites are porous materials frequently used as adsorbents and catalysts in chemical processes.

“Cryogenic distillation, the current commercial-scale process used for ethylene separation, is an energy-intensive process,” said Vijay Swarup, vice president of research and development at ExxonMobil Research and Engineering Company. “If advanced to commercial scale, use of this new material could significantly reduce the amount of energy and emissions associated with ethylene production. This is another great example of collaboration between industry and a university that is focused on driving solutions for improving energy efficiency and reducing carbon emissions from industrial processes.”

Ethylene is a critical component in producing chemicals and plastics. Finding alternative, low-energy technologies to separate ethylene from ethane has been a longstanding challenge due to their similar properties. While chemical manufacturers have evaluated a number of alternatives to cryogenic distillation, including new adsorbents and separation processes, many of these technologies are hindered by low selectivity and an inability to regenerate when exposed to contaminants.

The patented new material, ITQ-55, is able to selectively adsorb ethylene over ethane as a result of its unique flexible pore structure. Built from heart-shaped cages interconnected by flexible elongated pore openings, the material allows the diffusion of the flatter ethylene molecules as opposed to the more cylindrical-shaped ethane molecules. The new material acts as a flexible molecular sieve.

“ITQ-55 is a very interesting material whose unique combination of pore dimension, topology, flexibility and chemical composition results in a highly stable and inert material that is able to adsorb ethylene and filter out ethane,” said Professor Avelino Corma of the Instituto de Tecnologia Quimica and co-author of the research. “We are excited about this discovery and look forward to continuing our fruitful collaboration with ExxonMobil.”

Additional research must be conducted before the material can be considered for larger-scale demonstration and commercialization. Fundamental research will continue focusing on incorporating the material into a membrane and developing additional novel materials for gas separation.

“Our ultimate goal of actually replacing cryogenic distillation is a long-term challenge that will require many more years of research and testing, in and out of the lab,” said Gary Casty, section head for catalysis at ExxonMobil Research and Engineering Company. “Our next steps will focus on better understanding the full potential of this new zeolite material.”

Chemical plants account for about eight percent of global energy demand and about 15 percent of the projected growth in demand to 2040. As global populations and living standards continue to rise, demand for auto parts, housing materials, electronics and other products made from plastics and other petrochemicals will continue to grow. Improving industrial efficiency is part of ExxonMobil’s mission to meet the world’s growing need for energy while minimizing environmental impacts.

ExxonMobil works with about 80 universities around the world to explore next-generation energy technologies. In 2016, ExxonMobil and the Georgia Institute of Technology announced the development of a potential new material focusing on liquids separation that could also reduce the amount of energy and emissions associated with manufacturing plastics. The results of this joint research were published by Science, as well.

U.S. crude oil stockpiles fell more than expected last week as refineries hiked output, but gasoline and distillate inventories posted surprisingly large builds, reports Reuters.

Crude inventories fell 5.6 million barrels in the week to Dec. 1, compared with analysts’ expectations for an decrease of 3.4 million barrels. At 448.1 million barrels, crude stocks, not including the strategic petroleum reserve, were at their lowest since October 2015.

Oil prices initially rose on the data before pulling back, as traders also reacted to rising U.S. crude production and strong builds in gasoline and distillate stocks.

“Demand for gasoline is curiously weak. And these weeks towards the end of the shopping period normally rival the summertime. So the report overall was bearish,” said John Kilduff, partner at Again Capital in New York.

Gasoline stocks rose 6.8 million barrels, much more than with analysts’ expectations in a Reuters poll for a 1.7 million-barrel gain.

Crude production continued to inch up to hit another weekly record, rising 25,000 barrels per day (bpd) to 9.71 million bpd, though that figure is still shy of monthly figures that show the United States produced more than 10 million bpd in the early 1970s.

U.S. crude futures were down 1.5 percent, or 88 cents, at $56.74 a barrel as of 10:46 a.m. EST (1546 GMT), while Brent dropped 80 cents, or 1.3 percent, to $62.06 a barrel.

Crude stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures fell 2.8 million barrels, the EIA said. Those figures have been affected by the shutdown of the Keystone pipeline after a 5,000-barrel leak in South Dakota in mid-November. That line reopened on Nov. 28, so this report captures a period where the line was still largely closed.

Distillate stockpiles, which include diesel and heating oil, rose 1.7 million barrels, versus expectations for a 1 million-barrel increase, the EIA data showed.

Refinery crude runs rose 192,000 bpd, EIA data showed. Refinery utilization rates rose by 1.2 percentage points to 93.8 of total capacity.

U.S. crude imports fell last week by 73,000 bpd.

EQT Corporation announced the Company’s 2018 capital expenditure (CAPEX) forecast of $2.4 billion, which includes $2.2 billion for well development and $150 million for acreage fill-ins and bolt-on leasing. Based on current pricing and synergy capture, the 2018 drilling program is expected to be fully funded through adjusted operating cash flow attributable to EQT.

“We have already begun to realize synergies associated with completion of the Rice Energy acquisition, which include an estimated $100 million reduction in our projected corporate G&A expenses,” stated Steve Schlotterbeck, EQT’s president and chief executive officer. “Initial development plans for our consolidated acreage target a 50% increase in average lateral lengths, which is exceeded with 12,600 foot laterals projected in Pennsylvania, resulting in a 40% reduction in per unit LOE and production SG&A expenses. These cost structure and capital efficiency improvements support a more compelling investment proposition, as we shift from maximizing volume growth to focusing on capital returns and returning cash to shareholders.”

EQT forecasts 2018 production sales volume of 1,520 – 1,560 Bcfe. The 2018 drilling program anticipates a 15% increase in production sales volume in 2019. It is anticipated that the 2019 development plan will be funded entirely by the cash flow provided by EQT Production.

EQT’s 2018 CAPEX forecast excludes CAPEX for its retained midstream assets, as well as for EQT Midstream Partners, LP and Rice Midstream Partners LP, master limited partnerships controlled by EQT Corporation and consolidated in EQT’s financial statements. EQM and RMP announced their 2018 CAPEX forecasts today in a separate news release, which can be found at www.eqtmidstreampartners.com and www.ricemidstream.com, respectively.

MARCELLUS DEVELOPMENT

In 2018, the Company plans to drill 139 Marcellus wells with an average lateral length of 11,800 feet – all of which will be on multi-well pads to maximize operational efficiency and well economics. The program will focus on the Company’s core Marcellus acreage, which is targeting 111 wells in Pennsylvania and 28 wells in West Virginia. During the year, the Company plans to turn-in-line (TIL) 160 –170 Marcellus wells.

OHIO UTICA DEVELOPMENT

The Company plans to drill 38 gross (25 net) Ohio Utica wells with an average lateral length of 11,300 feet. The Company plans to TIL 40 – 50 gross wells during the year.

UPPER DEVONIAN DEVELOPMENT

The Company plans to drill 19 Upper Devonian wells with an average lateral length of 15,600 feet. These wells will be limited to co-development on Marcellus pads in Pennsylvania. The Company plans to TIL 20 – 25 wells during the year.

RICE DEBT REPLACEMENT SAVINGS

As a result of the replacement of $1.3 billion of Rice senior notes with lower coupon investment grade debt, EQT expects to realize annual interest savings of approximately $45 million.

HAYWOOD H18 WELL

Earlier this week, the company turned in line the longest lateral completed to date by any operator in the Marcellus. The Haywood H18 well in Washington County, PA has a completed lateral length of 17,400 feet and will develop 42 Bcfe of reserves. Laterals of this length are projected to have development costs of $0.36 / Mcfe and will generate an IRR greater than 70% at $3.00 NYMEX. The company plans to drill 27 Marcellus wells at 17,000 feet or longer in 2018.

2018 GUIDANCE

Based on current NYMEX natural gas prices, adjusted operating cash flow attributable to EQT is projected to be $2,350 – $2,450 million for 2018, which includes $325 – $375 million from EQT’s interests in EQT GP Holdings, LP (NYSE:EQGP) and RMP. See the Non-GAAP Disclosures section for important information regarding the non-GAAP financial measures included in this news release, including reasons why EQT is unable to provide a projection of its 2018 net cash provided by operating activities, the most comparable financial measure to adjusted operating cash flow attributable to EQT and to EQT Production, calculated in accordance with GAAP.