Source: NGI, February 19, 2021
Despite a Wednesday evening order from Texas Gov. Abbott to prioritize in-state consumption, natural gas continued to flow from Texas to Mexico Thursday, albeit at reduced levels.
Scheduled deliveries of piped gas to Mexico from Texas hit 1.6 Bcf/d Thursday, up from 1.3 Bcf/d on Wednesday and 1.1 Bcf/d on Tuesday. Typical export volumes from the state generally exceed 2 Bcf/d.
As a percentage of total pipeline deliveries, natural gas exports to Mexico were 16.3% on Thursday, compared to an average of around 25% for the first week of February.
“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. Texas shippers are definitely doing more to keep domestic customers whole than they are consumers in Mexico,” said NGI’s Director of Strategy and Research Patrick Rau.
Matthew Lewis, senior director of research at East Daley Capital Advisors said that based on pipeline nominations Thursday “there are still significant gas flows into Mexico. There also appears to be gas flowing West on El Paso leaving the state of Texas.”
He added that despite the governor’s order, the language may leave room for certain types of customers to still transport gas out of the state.
“Whether or not the governor has the authority to allow producers to not fulfill existing contracts is still unclear,” Wood Mackenzie analysts said. The order is effective through Sunday.
But improving weather conditions in Texas and power being turned back on in homes on Thursday may also have eased the potential strain.
Line pack on Mexico’s Sistrangas national pipeline system was at 5.913 Bcf/d on Thursday morning, 159 MMcf/d better than on Wednesday at the start of the day.
The ideal line pack for Sistrangas is 7-7.5 Bcf/d to guarantee sufficient pressure in the pipeline system, with levels below 6 Bcf/d “undesirable,” according to Gadex energy consultant Eduardo Prud’homme.
Mexico pipeline operator Cenagas kept a critical alert in place with scheduled injections below normal.
Meanwhile liquified natural gas (LNG) imports totaling 230 MMcf/d at Altamira and 326 MMcf/d at Manzanillo helped make up for the import shortfall.
Power grid operator Centro Nacional de Control de Energía (CENACE) announced no new power cuts in the country Thursday, after power had been restored to 99.79% of affected users on Wednesday. On Monday, over 4 million customers were impacted by power outages due to natural-gas fired power plants in Mexico being forced offline.
CENACE and Mexican state utility Comision Federal de Electricidad (CFE) blame limited natural gas imports and surging natural gas prices for the outages. Mexico imports 70-80% of its natural gas from the United States and 60% of the nation’s power plants run on the fuel.
During a press conference Thursday morning, executives at CFE said 30,000 MW of power was available to be injected into the system even in the event of natural gas not being able to be imported. They said this would get close to covering a potential demand peak of 38,000 MW.
Mexico President Andrés Manuel López Obrador said Abbott’s order banning gas sales out of Texas had not been “approved” and that Mexico was using diplomatic channels to resolve the issue.
The Electric Reliability Council of Texas (ERCOT) said Thursday it had “made significant progress overnight restoring customer power,” but that some outages remained throughout the state.
The independent system operator said that the grid remained under emergency conditions as ERCOT and transmission owners worked to restore electricity to customers, many of whom had been without power for days amid dangerously cold temperatures.
Due to extremely rare and bitingly cold weather, some 28,000 MW of thermal generation was forced off the grid earlier in the week. Another 18,000 MW of wind and solar was also sidelined.
More than 400,000 customers in Texas remained without power as of Thursday afternoon as an Arctic air mass continued to grip the state, roiling the electricity and natural gas markets.
Gulf Coast LNG export operations were again near a standstill on Thursday as plants were working to comply with Gov. Abbott’s order and handling issues related to the Arctic blast gripping the region.
Just one LNG vessel has been loaded on the Gulf Coast this week. The Seri Balhaf departed Freeport LNG on Quintana Island, TX, Wednesday and headed for Mexico.