HOUSTON (Reuters) – Texas oil producers and refineries remained closed for a fifth day on Wednesday after days of freezing cold, and the governor ordered a ban on natural gas exports from the state to restore power. to try to speed up.
The cold snap, which killed at least 21 people and knocked out more than 4 million people in Texas, is expected to disappoint only this weekend.
Governor Greg Abbott ordered Texas natural gas suppliers to ship outside the state only Sunday and asked the state’s energy regulator to enforce its export ban.
“It will also increase the power produced and sent to homes here in Texas,” Abbott told a news conference on Wednesday.
The ban led to reaction from officials in Mexico, who depend on imports via pipeline from Texas. More than 40% of U.S. natural gas exports come from Texas.
Texas produces more natural gas and oil than any other U.S. state, and unlike in North Dakota or Alaska, operators are not used to dealing with cold temperatures.
The state is responsible for about a quarter of U.S. natural gas production, about 27.8 billion cubic feet per day, but it consumes only a portion of it, according to the U.S. Energy Information Administration, to other states or via pipeline to Mexico.
The energy sector in Texas has been hit hard by the cold, with approximately 4 million barrels per day (bpd) of daily refining capacity, and at least 1 million bpd of oil production has been excluded.
Natural gas production has also declined. At this point a week ago, Texas produced about 7.9 billion cubic feet per day, but according to preliminary data from Refinitiv Eikon, it dropped to 1.9 billion on Wednesday. Natural gas accounts for half of Texas power generation.
Christi Craddick, chairman of the Texas Railroad Commission, the state’s oil and gas regulator, said late Wednesday the agency had received the governor’s request and was reviewing it.
The request, according to a person familiar with a political football match, was drawn up between groups that do not have the authority to interfere with interstate trade.
U.S. gas pipeline exports to Mexico fell to 3.8 billion cubic feet (bcf) per day on Wednesday, below the average of 5.7 bcf over the past 30 days, according to data from Refinitiv, of which about three-quarters are from Texas.
Mexico’s Economy Minister Tatiana Clouthier said on Wednesday that she had contacted the U.S. government’s representative in Mexico to guarantee the supply of natural gas to Mexico during the cold moment.
“By not acting together, the results can be more complicated,” she said on Twitter.
One cargo of liquefied natural gas (LNG) loaded at Freeport LNG in Texas on Wednesday was given to sail to Mexico, according to Refinitiv Eikon. The tanker remained on the Texas coast. A Freeport LNG spokesman declined to comment.
Operations at Cheniere Energy’s Corpus Christi plant, the state’s largest LNG producer, were halted this week by weather disruptions. A spokesman declined to comment on the governor’s order.
According to preliminary data from Eikon, the daily production of natural gas in the US drops by about 19% from the end of last week to 71.9 vcf per day on Wednesday.
With more snow expected in key oil and gas production areas such as the Permian and northern Louisiana, production is expected to remain offline until Friday, said Anna Lenzmeier, energy analyst at BTU Analytics.
“The second half of this week is going to be just as turbulent as the long weekend, and natural gas prices could still reach the highest triple digits before the weekend,” she said.
Several Texas ports, including Houston, Galveston and the major LNG export sites at Freeport and Sabine Pass, were closed due to the weather, according to U.S. Coast Guard Jonathan Lally.
One bcf gas can supply about 5 million US homes a day.
Producers in the Permian Basin, the largest U.S. oil field, have said that power outages are the main problem, and that restarting frozen equipment will be a challenge until power is restored.
According to Wood Mackenzie analysts, about 1 million bpd of raw production has been halted, and it could take weeks before it is fully restored.
The supply disruptions have driven further rises in oil prices, pushing the session up more than 1.5%. U.S. natural gas climbed to a high of more than three months after rising more than 10% on Tuesday.
The freeze has also increased Canadian exports of natural gas to the United States to levels last seen in 2010, IHS analyst Ian Archer said.
Net Canadian exports have risen above 7.5 vcf per day over the last few days and Archer estimated that they were close to 8 vcf per day on Wednesday.
“We’re just seeing big withdrawals and exports to the US,” Archer said.
Graphic-American production of natural gas production drops
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; Edited by Matthew Lewis, Leslie Adler and Kim Coghill