HOUSTON (Reuters) – Texas oil producers and refiners remained closed for the fifth day on Wednesday after several days of intense cold, and the governor ordered a ban on the state’s natural gas exports to try to speed up energy restoration. .
The cold snap, which killed at least 21 people and turned off the power of more than 4 million people in Texas, is not expected to subside until this weekend.
Governor Greg Abbott ordered Texas natural gas suppliers not to ship out of the state until Sunday and asked the state energy regulator to enforce its export ban.
“This will also increase the energy that will be produced and sent to homes here in Texas,” Abbott said at a news conference on Wednesday.
The ban has sparked a response from Mexican officials, who rely on imports via the Texas gas pipeline. Over 40% of US natural gas exports come from Texas.
Texas produces more natural gas and oil than any other state in the United States and its operators, unlike those in North Dakota or Alaska, are not used to dealing with cold temperatures.
The state is responsible for about a quarter of US natural gas production, about 27.8 billion cubic feet a day, but consumes only part of it, sending the rest to other states or via a pipeline to Mexico, according to with the US Energy Information Administration.
Texas’ energy sector was hit hard by the cold, with about 4 million barrels a day (bpd) of closed daily refining capacity and at least 1 million bpd of oil production as well.
Natural gas production has also declined. At the time, a week ago, Texas was producing about 7.9 billion cubic feet a day, but fell to 1.9 billion on Wednesday, according to preliminary data from Refinitiv Eikon. Natural gas accounts for half of Texas’ power generation.
Christi Craddick, president of the Texas Railroad Commission, the state oil and gas regulator, said on Wednesday that the agency had received the governor’s request and was considering it.
The request set up a political football game, according to a person familiar with the matter, between groups that have no authority to interfere in interstate commerce.
US pipeline exports to Mexico fell to 3.8 billion cubic feet (bcf) per day on Wednesday, down from a 5.7-bcf average over the past 30 days, according to data from Refinitiv, about three quarters of which come from Texas.
Mexico’s Economy Minister Tatiana Clouthier said on Wednesday that she had contacted the United States government representative in Mexico, seeking to ensure the supply of natural gas to Mexico during the cold wave.
“Because we don’t act together, the results can be more complicated,” she said on Twitter.
A cargo of liquefied natural gas (LNG) loaded on Freeport LNG, Texas, on Wednesday, was scheduled to depart for Mexico, according to data from Refinitiv Eikon. The tanker remained on the Texas coast. A Freeport LNG spokeswoman declined to comment.
Operations at the Corpus Christi plant at Cheniere Energy, the state’s largest LNG producer, were interrupted by weather disturbances this week. A spokesman declined to comment on the governor’s order.
Overall, daily US natural gas production has fallen by about 19% since the end of last week, to 71.9 bcf per day on Wednesday, according to preliminary data from Eikon.
With more snow expected in major oil and gas production areas, such as the Permian and northern Louisiana, production is expected to go offline until Friday, said Anna Lenzmeier, energy analyst at BTU Analytics.
“The second half of this week appears to be as tumultuous as the long weekend, and natural gas prices may continue to exceed three digits before the weekend,” she said.
Several Texas ports, including Houston, Galveston and the main LNG export locations in Freeport and Sabine Pass have been closed due to the weather, according to US Coast Guard officer Jonathan Lally.
A bcf of gas can supply about 5 million homes in the U.S. per day.
Producers in the Permian Basin, the largest oil field in the United States, said electrical outages were the main problem and that, until power was restored, restarting any frozen equipment would be a challenge.
Approximately 1 million bpd of crude oil production has been halted, according to analysts at Wood Mackenzie, and it could take weeks before it is fully restored.
Supply interruptions drove further increases in oil prices, which ended the session with an increase of more than 1.5%. US natural gas rose to a three-month high after rising more than 10% on Tuesday.
The freeze also caused Canadian natural gas exports to the United States to rise to the levels last seen in 2010, said IHS analyst Markit Ian Archer.
Canadian net exports have jumped to more than 7.5 bcf a day in the past few days and Archer estimated they were close to 8 bcf a day on Wednesday.
“We are seeing absolutely huge withdrawals and exports to the United States,” said Archer.
Chart – drop in US natural gas production
Reporting by Devika Krishna Kumar in New York and Gary McWilliams in Houston; Additional reporting by Stephanie Kelly, Laila Kearney and Scott DiSavino in New York, Nia Williams in Calgary and Arpan Varghese and Diptendu Lahiri in Bengaluru; Editing by Matthew Lewis, Leslie Adler and Kim Coghill