Texas Governor Greg Abbott faced criticism from the top Mexican government and business officials for his order last week to restrict natural gas shipments outside Texas.
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Abbott: with criticism due to last week’s order
Last week, Texas Governor Greg Abbott faced skepticism from top Mexican government and business officials. This outrage came from the Governor’s order the ban natural gas exports out of Texas. For this reason, Mexico faced a power outage crisis with reportedly several million individuals in 26 states without power.
Abbott said he decided to order a ban on natural gas exports because there was insufficient natural gas to power electric generators while millions of Texans suffered in the frigid cold. However, Mexico has been going through its power outage crisis with,h reportedly several million individuals in 26 states without power.
In fact, Mexico currently relies on the US gas supply, mostly from Texas, to power some 60% of its power generation. For instance, records show Texas exported more than four billion cubic feet (BCF) per day of natural gas, particularly to Mexico; this, before the frigid cold front’s arrival.
Thus, according to Natural Gas Intelligence, the number plummeted to less than 2 BCF per day when Abbott issued his order.
“Governor Abbott is the governor of Texas, so his job is to take care of Texans, and that’s exactly what he’s doing,” press secretary Renae Eze said in a statement.
Criticism from Mexico
However, the decision to cut natural gas to Mexico drew criticism from top Mexican officials, including Mexican President Andres Manual Lopez Obrador.
“We are doing our diplomatic work so that this doesn’t happen,” Obrador said at a news conference last Thursday. “This wouldn’t just affect Mexico — it would also affect other states in the Union.”
Consequently, in the heavily industrialized Northern Mexico sections, businesses reported $2.7 billion in losses from blackouts. Indeed, these blackouts extended from the second day of insufficient natural gas supplies from Texas, according to Reuters.
In issuing the order Wednesday, Abbott said his decision to restrict natural gas exports was necessary. For instance, about 19,800 MW of gas-fired generation remained offline in Texas due to mechanical or insufficient gas supply.
The Electric Reliability Council of Texas, known as ERCOT, did not have an actual number of power generation plants forced offline due to insufficient natural gas.
Nevertheless, the order to restrict natural gas exports remained in effect until at least last Sunday.
Analysis from the Academia
Professor Ed Hirs, an energy economics professor at the University of Houston, called Gov. Abbott’s order “problematic.”
“This is interstate commerce,” Prof. Hirs told WFAA. “If any of the producers and midstream guys abide by the governor’s order, there’s going to be a huge amount of litigation coming out of this.”
Moreover, “here are folks in private commerce who’ve entered into contracts,” Hirs added. “And now the Governor feels it’s up to him to step in to abrogate these contracts and impose really a kind of a socialist construction across the free enterprise. What the hell is going on here?”
Gas experts told WFAA the number of natural gas exports to Mexico has been in billions of cubic feet (BCF) per day, though differed slightly on the actual amount due to their methodology.
Simultaneously, “both the absolute volumes of gas sent to Mexico and the relative percentage of gas shipped to Mexico fell in recent days,” Patrick Rau, Natural Gas Intelligence Director of Strategy & Research, said in a statement to WFAA. Therefore, “Texas shippers are definitely doing more to keep domestic customers whole than they are consumers in Mexico.”
Analysis of the current Mexican power sector
In this regard, Ricardo Falcon, an analyst with Gemscape, said US-to-Mexico pipeline gas exports averaged 4.6 BCF per day the past week; about 1.2 BCF below the average of the preceding 30 days.
So, “in this case, this reduction is important; mainly because it speaks about all the sensitivity that Mexico has to the supply source of natural gas;” Falcon said from his Mexico City office.
However, “of course, Mexico is trying to cope with the situation, and as I mentioned before; is trying to pull out or draw on the Liquid Natural Gas reserves to compensate for the reduction.”
Falcon told WFAA that Mexico already has several problems with electrical power generation. Thus, it is difficult to determine conclusively the extent of power outages caused by the Texas export ban.
