Texas Governor Bans Natural Gas Exports

Texas Governor Greg Abbott has banned the exports of natural gas until normal power supply is restored, Reuters reports, citing a statement by the governor.

The export ban is in effect until Sunday, with Abbott noting, “That will also increase the power that’s going to be produced and sent to homes here in Texas.”

What social media users are calling the Texas freeze wreaked havoc on the Texas grid and its energy industry as wellheads and production pads have not been insulated against freezing temperatures. As a result, natural gas production has slumped, which led to price spikes topping the ceiling of $9,000 per MWh imposed by the energy regulator of the state.

The Lone Star state produces around 25 percent of the U.S. total. In December, the state’s share was between 22 and 27.8 billion cu ft daily. Now, this has fallen to between 8 and 10 billion cu ft, according to different estimates.

According to industry insiders cited by Natural Gas Intelligence, at least 7 billion cu ft of production capacity had been shut-off by the frigid weather, which caused wellhead freezing, gas processing plant shut-ins, and pipeline outages.

According to Refinitiv data from Reuters, the production rate this week fell from 7.9 billion cu ft before the freeze to 1.9 billion cu ft now.

Texas exports a lot of its natural gas output to other states and Mexico: as much as 40 percent of Mexico’s U.S. gas imports come from Texas. These exports fell, too, this week, from 5.7 billion cu ft to 3.8 billion cu ft.

Because of its reliance on U.S. imports, Mexico, in its northern part, was also hit by the Texas gas production outage this week. Media reports said that on Monday, as many as 4.77 million people in northern Mexico were without power due to the events in Texas.

By Charles Kennedy for Oilprice.com

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