UPDATE 3-Icy weather threatens oil output from Texas to Canada

Mon Jan 6, 2014 4:05pm EST

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Jan 6 (Reuters) - The severe cold weather sweeping across the central United States is threatening to curtail some oil production, if only briefly, as it disrupts traffic, strands wells and interrupts drilling and fracking operations.

Weather stations recorded some of the coldest temperatures in two decades in the Midwest, threatening lives, closing businesses and schools and causing thousands of flights to be canceled.

Arctic cold air was also spreading across Texas on Monday with temperatures in the oil country near Midland approaching a record low that was set more than 40 years ago.

But forecasts from weather site AccuWeather say temperatures will swing back to normal levels in Texas and North Dakota by Wednesday, limiting the cold front's impact on oil and gas production.

"We're going to see a turnaround and temperatures will recover across the upper and lower plains, by January standards," said Paul Pastelok, senior meteorologist at AccuWeather.

So far, major U.S. oil producers have only reported minor effects on their operations.

Continental Resources, among the largest oil producers in North Dakota's Bakken oil patch, said it temporarily halted well completion operations in North Dakota, which include fracking, a process that pumps a slurry of water, sand and chemicals into wells.

Those operations are now resuming, according to Rick Muncrief, Continental's senior vice president of operations.

Hess Corp, another major player in the Bakken, said it does not foresee a "significant impact" on production although oil trucking services have slowed because of icy road conditions.

Analysts were bracing for worse-than-usual cuts in North American oil production as the Arctic cold bore down on the continent.

In Canada, temperatures in northern Alberta, home to nation's vast oil sands, dropped as low as minus 36.4 degrees Fahrenheit (minus 38 degrees Celsius) last week, pushing Canadian heavy crude prices to five-month highs.

Oil sands projects are designed to run in weather as cold as minus 50 degrees Celsius but temperature swings have fanned concerns about production outages, according to traders and analysts.

"It will warm up and then go zooming back down, and that plays havoc with the way the unit is run," said Martin King, analyst at FirstEnergy Capital.

South of the border, winters are especially brutal in North Dakota. Although temperatures average about 13 F (minus 11 C) between December and February, winter storms can send that number well below 0 F (minus 18 C). Oil wells and feeder roads are usually shut as storms deposit snow.

In December, a drop to minus 40 F (minus 40 C) in North Dakota slowed some production, officials said. A year ago, a winter storm dubbed "Gandolph" cut that month's oil production by 4.2 percent, according to the North Dakota Industrial Commission.

The National Weather Service has issued warnings for life-threatening wind chills in western and central North Dakota, the heartland of the oil boom, on Monday, with temperatures as low as minus 40F (minus 40C) expected.

In Texas, the power grid operator has issued an emergency alert as consumers cranked up their heaters to escape the cold weather. In west Texas in early December, Pioneer Natural Resources and other companies reported cuts in their oil and gas output because of freezing temperatures.

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