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Abbott's natural gas export ban causes energy crisis across the border in Mexico

Mexico relies on U.S. gas supply – mostly from Texas – to power some 60% of its power generation.
Credit: AP Photo/Tony Gutierrez
The Double Eagle Energy Oil Rig in Midland, Texas.

Texas Gov. Greg Abbott faces criticism, particularly from top Mexican government and business officials, for his order this week to restrict natural gas shipments outside Texas.

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 own power outage crisis with reportedly several million individuals in 26 states without power. 

Mexico relies on U.S. gas supply – mostly from Texas – to power some 60% of its power generation. Records show Texas had been exporting more than 4 billion cubic feet (BCF) per day of natural gas, particularly to Mexico, prior to the arrival of the frigid cold front. The number plummeted to less than 2 BCF per day when Abbott issued his order, according to Natural Gas Intelligence.

"Governor Abbott is the governor of Texas -- his job is to take care of Texans, and that's exactly what he's doing," press secretary Renae Eze said in a statement.

The decision to cut natural gas to Mexico at a time of desperate need 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 on Thursday. “This wouldn’t just affect Mexico — it would also affect other states in the Union.”

In the heavily industrialized sections of Northern Mexico, businesses reported $2.7 billion in losses from blackouts that extended from a second day of insufficient natural gas supplies from Texas, according to Reuters. 

For example, in Matamoros, across the border from Brownsville, Texas, some 90 businesses were unable to operate for more than several hours. In the state of Chihuahua, 22 companies were without power for at least a day, Reuters reported

In issuing the order Wednesday, Abbott said his decision to restrict natural gas exports was necessary because about 19,800 MW of gas-fired generation remained offline in Texas due to either mechanical issues or insufficient gas supply. 

Abbott’s office did not provide the actual number of generators offline due to insufficient natural gas. 

The order to restrict natural gas exports was to remain in effect until at least Sunday.

The Electric Reliability Council of Texas, known as ERCOT, that oversees most of the state’s electrical power grid, also did not have an actual number of power generation plants forced offline due to insufficient natural gas.  

When Abbott issued his order, Texas natural gas exports had fallen, from 4 BCF per day late last week, to about 1.5 BCF per day at the time of the governor's order, according to Natural Gas Intelligence.

Credit: Natural Gas Intelligence
A look at natural gas exported via Texas pipelines in February 2021.

Prof. Ed Hirs, an energy economics professor at the University of Houston, called Gov. Abbott’s order “problematic” when ordering gas supply companies to breach international contracts with foreign buyers. 

“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.”

“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 free enterprise. What the hell is going on here?”

Gas experts told WFAA the amount of natural gas exports to Mexico have been in billions of cubic feet (BCF) per day, though differed slightly on the actual amount due to their methodology.  

Records show natural gas exports to foreign countries via Texas pipelines last week ranged from about 5.8 billion cubic feet per day to 4 billion cubic feet per day. But several experts differed on how much Texas gas exports fell the week Gov. Abbott issued his order.

“Both the absolute volumes of gas sent to Mexico and the relative percentage of gas shipped to Mexico versus total deliveries from Texas pipelines have fallen in recent days,” Patrick Rau, Natural Gas Intelligence Director of Strategy & Research, said in a statement to WFAA. “Texas shippers are definitely doing more to keep domestic customers whole than they are consumers in Mexico.”

Ricardo Falcon, an analyst with Gemscape, said based on his estimates, U.S.-to-Mexico pipeline gas exports had averaged 4.6 BCF per day the past week, about 1.2 BCF below the average of the preceding 30 days.

“And in this case, this (natural gas) reduction is important because it speaks about all the sensitivity that Mexico has to the supply source of natural gas,” Falcon said from his Mexico City office. “But, 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 in order to compensate for the reduction.”

Falcon told WFAA that Mexico already has had a number of problems with electrical power generation and it is difficult to determine conclusively the extent of power outages caused by the Texas export ban. 

“I believe that this is a problem that goes beyond any government declaring any type of restriction on supply,” Falcon said. ”This is a structural, and that means that Mexico has been facing this problem even before Gov. Abbott's order or any other type of decision.”