HOUSTON (Reuters) – Oil producers and refineries in Texas remained closed for the fifth day on Wednesday after several days of blistering cold, and the governor ordered a ban on the state’s exports of natural gas to speed up the power’s recovery.
The cold snap, which has claimed the lives of at least 21 people and cut power to more than 4 million people in Texas, is not expected to stop until this weekend.
Governor Greg Abbott ordered Texas natural gas suppliers not to ship out of state until Sunday and asked the state’s energy regulator to enforce his export ban.
“That will also increase the power that will be produced and sent to homes here in Texas,” Abbott said at a news conference Wednesday.
The ban sparked a response from officials in Mexico, which relies on pipeline imports from Texas. More than 40% of natural gas exports in the US come from Texas.
Texas produces more natural gas and oil than any other US state and, unlike those in North Dakota or Alaska, its operators are not used to dealing with frigid temperatures.
The state accounts 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 that and ships the rest to other states or pipeline to Mexico, according to the U.S. Energy Information Administration. .
The Texas energy sector has been badly hit by the cold, with about 4 million barrels per day (bpd) of daily refining capacity shut down and at least 1 million bpd of oil production as well.
Natural gas production also declined. A week ago, Texas was producing about 7.9 billion cubic feet per day, but that dropped to 1.9 billion on Wednesday, according to preliminary data from Refinitiv Eikon. Natural gas accounts for half of Texas’ electricity generation.
Christi Craddick, chairman of the Texas Railroad Commission, the state’s oil and gas regulator, said late on Wednesday that the agency had received the governor’s request and was reviewing it.
According to a person familiar with the case, the request was made to set up a political football match between groups that do not have the authority to disrupt inter-state trade.
U.S. gas pipeline exports to Mexico fell to 3.8 billion cubic feet (bcf) per day on Wednesday, down from the past 30-day average of 5.7 bcf, according to data from Refinitiv, of which about three-quarters from Texas coming.
Mexican Economy Minister Tatiana Clouthier said on Wednesday that she had contacted the US government representative in Mexico to guarantee the supply of natural gas to Mexico during the cold snap.
“Not working together can make the results more complicated,” she said on Twitter.
According to data from Refinitiv Eikon, a cargo of liquefied natural gas (LNG) loaded at Freeport LNG in Texas on Wednesday would sail to Mexico. The tanker stayed off the coast of Texas. A Freeport LNG spokeswoman declined to comment.
Activities at the Corpus Christi plant of Cheniere Energy, the state’s largest LNG producer, were shut down this week due to weather. A spokesman declined to comment on the governor’s order.
Overall, daily natural gas production in the US is down about 19% from late last week to 71.9 bcf per day on Wednesday, according to preliminary data from Eikon.
As more snow is expected in key oil and gas production areas such as the Permian and Northern Louisiana, production is expected to remain offline through Friday, said Anna Lenzmeier, energy analyst at BTU Analytics.
“The second half of this week promises to be as tumultuous as the long weekend, and natural gas prices could stay above three figures for the weekend,” she said.
US Coast Guard Petty Officer Jonathan Lally said several ports in Texas, including Houston, Galveston, and major LNG export locations in Freeport and Sabine Pass, were closed due to weather.
A bcf of gas can supply about 5 million American households per day.
Producers in the Perm Basin, the largest oil field in the US, said power outages were the main problem, and restarting frozen equipment would be a challenge until power was restored.
According to Wood Mackenzie analysts, roughly 1 million barrels per day of crude oil production has been halted and it could take weeks to fully recover.
The disruptions in supply drove further oil price increases, pushing the session up more than 1.5%. Natural gas from the US climbed to a high in more than three months after a rise of more than 10% on Tuesday.
The freeze has also pushed Canadian natural gas exports to the United States to levels last seen in 2010, IHS Markit analyst Ian Archer said.
Canadian net exports have risen above 7.5 BC in recent days. By Day and Archer estimated that she was nearly 8 B.C. Were per day.
“We’re just seeing absolutely massive withdrawals and exports to the US,” Archer said.
Natural gas production in the graphic United States is declining
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