Texas is restricting the flow of natural gas through state lines in an extraordinary move that some are considering a violation of the trade clause in the U.S. Constitution.
Texas Gov. Greg Abbott told a news conference Wednesday that he was banning gas from running until Feb. 21 to ensure state power generators had a wide supply. But a copy of Abbott’s order seen by Bloomberg showed it required Texas gas to be offered for sale in the state before being 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 Feb. 12 gave him room to impose such restrictions.
Abbott said he was forced to act as millions of jeans run out of energy for a third day amid refrigerated temperatures, with no clear timetable for restoring service. Harris County, which includes Houston, said blackouts in the country’s third-largest county could last two more days.
“I hereby mandate that all source natural gas be put up for sale for local power generation opportunities before leaving the state of Texas, with effect until February 21, 2021,” Abbott said in a letter to the Texas Railroad Commission, the state’s top energy regulator. . “I urge you to take all reasonable and necessary steps immediately to ensure that this mandate is met.
“Maximum Withdrawal”
Abbott’s announcement surprised some flat-footed gas traders and sowed confusion in a market that already had issues with a major upheaval. A West Coast trader said he lost $ 1 million in minutes. Unable to read the order, others quickly 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 prominent Republican lawyer who repeatedly challenged Abbott on coronavirus restrictions in 2020. “It’s surprising that Abbott has no limits to his authority under the disaster. of Texas Act He will take as much power as the courts and the legislature will allow him to have. ”
Abbott’s office did not respond to any requests for comment. Railway commission staff are reviewing the governor’s order, President Christi Craddick said during an emergency meeting of the three-person group on Wednesday night. The committee agreed by a 3-0 vote to extend its own February 12 emergency order intended to supply fuel supplies between four days and 23 February.
The collapse of the state’s gas supply as Arctic temperatures consolidated earlier in the week has been one of the driving forces behind the blackout cascade. Abbott said Wednesday afternoon 19,800 megawatts of gas generation were kept offline in Texas.
The calamity unfolding in Texas is somewhat reminiscent of the California energy crisis from 2000 to 2001, when energy suppliers withheld and redirected electricity and gas out of state, even when they were with deficits, provoking lawsuits. And again, even as Californians suffered blackouts amid an extreme heat wave last year, energy suppliers exported energy to neighboring states. Subsequently, the state network operator blamed market design defects.
Dan Woodfin, executive of Texas grid operator Ercot, said in an interview that the lack of gas supply is one of the reasons he has trouble reconnecting power plants.
Fossil fuels
A railroad commissioner took the panel’s emergency meeting as an opportunity to ravage windmills and solar arrays that have become a growing part of Texas ’energy mix.
“Eliminating this storm should not be the future of fossil fuels, but the danger of subsidizing and demanding unreliable intermittent resources,” said Commissioner Wayne Christian.
State gas reserves are experiencing a “maximum withdrawal,” Craddick said in a briefing Wednesday with the governor and other state officials. He added that some gas plants in south and west Texas are back in operation amid a thaw.
Superior state
Texas produces more gas than any other state, with a production of about 23 billion cubic feet a day before freezing, BloombergNEF data show. This accounts for about a quarter of the total output of the lower 48 states. Its two liquefied natural gas export terminals consumed about 4 billion cubic feet a day of gas before the polar explosion.
Abbott asked the Freeport LNG export terminal earlier in the week to reschedule its operations. Freeport said it would shut down two LNG production units in response.
Texas also exports gas by pipeline to Mexico. The gas is which was flowing again through the Nueva Era pipeline between the two nations after the extreme cold interrupted its operation earlier in the week, according to one of the pipeline owners.
Abbott also said Wednesday that he and other state governors had expressed concern at a conference call with President Joe Biden about sharp rises in natural gas prices amid the crisis. Prices in neighboring Oklahoma County soared to more than $ 1,000 per million British thermal units on Wednesday, rising more than 100 times a week earlier.
– With the assistance of Mark Chediak, Christine Buurma, Sergio Chapa, Amy Stillman, Laurel Brubaker Calkins and Naureen S Malik
(Adds $ 1 million in business losses to the fifth paragraph.)