Texas May Lack Authority To Enforce Ban On Natural Gas Exports

The Texas Railroad Commission may not have the authority to enforce the Texas Governor’s mandate to ban natural gas exports out of the state as it would interfere with corporate contracts of exporters, one of the three elected Commissioners told Reuters in an interview.

Earlier this week, Texas Governor Greg Abbott banned the exports of natural gas until normal power supply in the state is restored. The export ban is in effect until Sunday, February 21, with Abbott noting, “That will also increase the power that’s going to be produced and sent to homes here in Texas.”

The Texas Railroad Commission issued on Wednesday a notice to operators, saying that “Operators should take notice that under this mandate, all “sourced natural gas” be made available for sale to local power generation opportunities before leaving the state of Texas, effective through February 21, 2021.”  

However, one of the Commissioners, Jim Wright, told Reuters that the Commission might lack the authority to prevent companies from exporting natural gas because they have contracts to honor.

Natural gas producers in Texas “are certainly focused on selling everything they can into Texas, but they’re obligated under contract,” Wright told Reuters.

“I’m not sure we have authority to mess with that, nor do I really want to,” Wright added.

Texas exports a lot of its natural gas output to other states and to Mexico via pipelines, while Freeport and Corpus Christi ship liquefied natural gas (LNG) out of Texas.

Pipeline operators, including Enterprise Product Partners, that have extra supply of natural gas are selling those supplies in Texas whenever possible, said Wright, who had spoken to operators. 

According to data and analytics firm Enverus, less natural gas is being exported out of Texas this week, but this was mostly because output had fallen with producers shutting-in wells due to power outages and frozen equipment.

“You can’t just stop a pipe at the border and turn it around,” Bernadette Johnson, vice president at Enverus, told Reuters. “The systems are not designed with these crazy orders in mind.”

By Charles Kennedy for Oilprice.com

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