Texas is restricting the flow of natural gas over state lines in an extraordinary move that some call a violation of the U.S. Constitution’s trade clause.
Texas Gov. Greg Abbott told a news conference Wednesday that he is banning gas from leaving the state until Feb. 21 to ensure generators in the country have enough supplies. But a copy of Abbott’s order seen by Bloomberg showed that he requires gas to be offered in Texas in the state before it is shipped elsewhere.
Under the so-called trade clause of the Constitution, state governments are prohibited from interfering in interstate trade. Abbott said a disaster statement he issued on Feb. 12 gave him room to impose such restrictions.
Abbott said he was forced to act as millions of Texans remain powerless for a third day amid icy temperatures, with no clear timeline for recovery. Harris County, which includes Houston, said the disappearance in the country’s third largest province could take another two days.
“I hereby mandate that all natural gas must be available for local power generation opportunities before leaving the state of Texas, with effect from February 21, 2021,” Abbott said in a letter to the Texas Railroad Commission, the state’s leading energy regulator. . . ‘I request that you take all reasonable and necessary steps immediately to ensure that this mandate is carried out.
‘Maximum withdrawal’
Abbott’s announcement found that some gas traders were flat-footed and sowing confusion in a market that was already dealing with major upheavals. One West Coast trader said he lost $ 1 million within minutes. Without being able to read the order, others hurriedly sought answers: can gas still be exported to Mexico? Is LNG affected?
“This is an abuse of the Texas Disaster Act,” said Jared Woodfill, a leading Republican attorney, who repeatedly challenged Abbott over coronavirus restrictions in 2020. “It’s surprising that Abbott has no limit on what his authority under Texas is. disaster is not. Deed. He will take just as much power as the courts and the legislature will allow him. ‘
Abbott’s office did not respond to a request for comment. The railway commission’s staff is reviewing the governor’s order, chairman Christi Craddick said on Wednesday night during an emergency meeting of the three-person panel. The commission agreed by a 3-0 vote to extend its own February 12 emergency order aimed at holding fuel supplies by four days until February 23rd.
The congestion of the state’s gas supply when Arctic temperatures took hold at the beginning of the week was one of the drivers for the cascade of interruptions. Abbott said 19,800 megawatts of gas generation had remained offline since Wednesday afternoon.
The disaster that is taking place in Texas is somewhat reminiscent of the power crisis in California from 2000-2001 when energy suppliers withheld and diverted electricity and gas from the state, even though it received shortages, causing lawsuits. And once again, even when Californians got lost in the midst of an extreme heat wave last year, energy suppliers exported power to neighboring states. The state’s network operator later blamed the flaws in the design of the market.
Dan Woodfin, a manager of the Ercot network company in Texas, said in an interview that a lack of gas supply is one of the reasons why it is difficult to get power stations online again.
Fossil fuels
One railroad commissioner used the panel’s emergency meeting as an opportunity to shut down windmills and solar plants that have become an increasing part of Texas’ energy mix.
“Taking away this storm should not be the future of fossil fuels, but rather the danger of subsidizing and mandating unreliable, diversified resources,” said Commissioner Wayne Christian.
The state’s gas supplies are undergoing ‘maximum withdrawal,’ Craddick told a news conference Wednesday with the governor and other government officials. She added that some gas plants in South and West Texas are being resumed amid a thaw.
Top state
BloombergNEF data shows that Texas produces more gas than any other state, with a production of about 23 billion cubic feet a day before the freezing point. This is about a quarter of the total production in the Lower 48 states. Its two liquefied natural gas export terminals consumed about 4 billion cubic feet per day before the polar explosion occurred.
Abbott asked the Freeport LNG export terminal earlier this week to call back its operations. Freeport said it is closing two LNG production units in response.
Texas also exports gas by pipeline to Mexico. Gas is according to one of the owners of the pipeline, it flowed again via the Nueva Era canal between the two countries after the extreme cold interrupted its operation earlier this week.
Abbott also said Wednesday he and other state governors have expressed concern about a conference with President Joe Biden on the serious rise in the price of natural gas in the midst of the crisis. Spot prices in neighboring Oklahoma rose to more than $ 1,000 per million British thermal units on Wednesday, up more than 100 times a week earlier.
– With the help of Mark Chediak, Christine Buurma, Sergio Chapa, Amy Stillman, Laurel Brubaker Calkins and Naureen S Malik
(Add $ 1 million trade loss in the fifth paragraph.)