(Bloomberg) — Texas Governor Greg Abbott is banning sales of the state’s natural gas beyond its borders in the latest sign the crisis roiling energy markets and leaving millions in the dark is far from abating.
Top U.S. liquefied natural gas exporter Cheniere Energy Inc. said it’s temporarily cutting natural gas and electricity consumption to help the Texas power grid, and that its decision was made ahead of Abbott’s order.
While many households in the Lone Star state have been struggling to stay warm and get potable water, some natural gas and power providers are poised to make billions of dollars from skyrocketing energy prices.
Comstock Resources Inc., the gas producer owned by Dallas billionaire Jerry Jones, is among those cashing in big gains. Power sales this week could exceed $30 billion, according to BloombergNEF estimates. Meanwhile, a Canadian provider of wind and solar power in the Lone Start state estimates it may lose as much as $47 million because of the extreme weather.
Also See: Surging Texas Power Prices Promise Both Doom and Riches
While power has been returned for many, more than 1 million households in the state remain without electricity early Thursday.
Economic fallout is cascading. U.S. oil production has plunged by a record 40%, while fracking in the Permian shale plays has gone dark. The freeze snarled grain shipments and delayed coronavirus vaccine shipments. Amazon.com Inc. closed facilities from Illinois to Texas. Gasoline prices are rising because of refinery outages, while propane used for heating jumped to the highest since 2014.
Several companies in the oil industry have claimed force majeure, a warning to customers that they won’t be able to meet deliveries under contract. Repercussions are being felt in the global crude market.
Read More: How Extreme Cold Turned Into a U.S. Energy Crisis: QuickTake
All time stamps are EST.
Electricity Demand Starts to Rise as Blackouts Improve (6:20 a.m.)
Power demand on the Ercot grid is starting to pick up signaling that fewer blackouts are needed to keep the system stable. Demand rose above 50 gigawatts, for the frist time since Monday showing a marked improvement from the same time on Wednesday.
A large nuclear unit in South Texas has increased output to a level where it can feed electricity into the grid, providing extra supply, NRC data show.
Power capacity online showed signs of improvement as a nuclear reactor in South Texas ramped up production and
Power Plants Are Coming Back Online in Texas (2 a.m.)
The amount of available generating capacity in Texas’s main power grid has rebounded to the highest level since Monday, when rolling blackouts began in the state.
More than 53 gigawatts of capacity was available as of 2 a.m. New York time, according to data from the Electric Reliability Council of Texas. That’s an increase of nearly 10 gigawatts from Wednesday’s lowest level.
While Ercot earlier said the increase in generation was able to bring power back to about 1.6 million households, there still remain more than 1 million outages in the state, according to data from PowerOutage.us.
Texas LNG Sails to Mexico (11:34 p.m.)
A cargo of liquefied natural gas left Freeport LNG’s terminal in Texas on Wednesday en route to Altamira in Mexico, according to ship-tracking data compiled by Bloomberg.
Natural gas flows have all but stopped to Freeport after Texas Governor Greg Abbott asked the plant to dial back operations on Tuesday to limit gas and power consumption amid the state’s power crisis. The tanker Seri Belhaf had arrived at Freeport on Sunday.
The tanker is scheduled to arrive in Altamira on Thursday, as Mexico seeks to alleviate its own gas and power shortages. Flex Courageous, another LNG vessel carrying U.S. LNG, diverted its course from Asia toward Mexico’s Manzanillo terminal.
Mexico Buys Prompt LNG Cargoes Amid Gas Shortages (10:12 p.m.)
Mexico’s state-run utility Comision Federal de Electricidad purchased at least two liquefied natural gas cargoes for delivery between Thursday and Sunday amid fuel shortages that are causing rolling blackouts.
CFE purchased the cargoes from Royal Dutch Shell Plc for about $8 per million British thermal units. President Andres Manuel Lopez Obrador said in a press conference Wednesday that the country has already purchased three cargoes and will buy more.
About 89,000 Mexicans were without power as of Wednesday morning, he said, and rolling blackouts are continuing amid a natural gas shortage that’s also slammed neighboring Texas. Mexico has resorted to using fuel oil and coal plants to try to make up as much lost power from gas plants as it can.
Ercot Says Power Has Been Restored to 1.6 Million Households (8:13 p.m.)
The Electric Reliability Council of Texas, the state’s main grid operator, said in a press release it had been able to restore about 8 gigawatts of power as of 6 p.m. local time, enough for 1.6 million households. About 1.2 million households remain without power, a spokeswoman said by email.
About 43 gigawatts of generating capacity remained offline, the majority of which were gas- and coal-fired units. The gas shortage is so severe that Governor Greg Abbot on Wednesday restricted sales of the fuel to power producers outside of the state.
Grid officials said in a Wednesday press conference they expect rolling blackouts to continue into Thursday.
Largest U.S. LNG Exporter Cuts Gas Use to Help Frozen Power Grid (7:23 p.m.)
Cheniere Energy Inc., the largest U.S. exporter of liquefied natural gas, said it’s temporarily cutting natural gas and electricity consumption to help the Texas power grid.
The voluntary move is expected to allow billions of cubic feet of natural gas to flow to utility companies, pipelines and power providers, the company said in an emailed statement Wednesday.
Cheniere’s decision was made ahead of Texas Governor Greg Abbott issuing an order that bars gas from leaving the state through Feb. 21., a according to company spokesman Eben Burnham-Snyder.
Shale Driller Devon Says Permian Operations Hit by Blackouts (7:12 p.m.)
One of America’s largest shale explorers said it’s feeling the pain from electricity outages in Texas brought on by historic cold temperatures.
“It has been impactful for sure,” Rick Muncrief, chief executive officer at Devon Energy Corp., said Wednesday in a phone interview. “We’re viewed as commercial, not residential or critical services such as hospitals, things like that, so we did get a cut, and it’s been challenging.”
Muncrief declined to offer specifics on how much drilling and fracking work has stopped or how much output is curtailed since “we’re still right in the middle of it, so it’s probably not fair for me to give you much of an impact activity.”
Texas May Lose 60% of Grapefruit Crop in Deep Freeze (6:30 p.m.)
Texas, which had been forecast to surpass Florida as the biggest U.S. grapefruit grower this season, probably had as much as 60% of its crop wiped out during the brutal cold blast that is still wreaking havoc on state.
“Those are likely completely lost,” said Dale Murden, a farmer and president of Texas Citrus Mutual, a trade group based in Mission, Texas. Almost all of Texas’ late-season Valencia oranges likely were destroyed as well, he said.
Known for its ruby reds, Texas was expected to produce 200,000 tons of grapefruit this season, followed closely by Florida with 196,000 tons, according to the latest U.S. Department of Agriculture forecasts. The next estimate for Texas is scheduled for April.
Most of U.S. Midwest Explorer Pipeline Shut Due to Cold Blast (5:24 p.m.)
Most of Explorer Pipeline Co.’s refined-products pipeline system linking U.S. Gulf Coast refineries to the Chicago area is shut due to the cold blast.
The system is expected to restart Thursday, Dolin Argo, Explorer’s vice president of operations, said by email. Explorer has 1,830 miles of pipe in its system that connects the refining hub at Port Arthur, Texas, to Hammond, Indiana.
Texas Bans Natural Gas Companies From Taking Fuel Out of State (5:23 p.m.)
Texas Governor Greg Abbott said during a media briefing Wednesday that he issued an order forbidding Texas gas producers from selling to power producers outside of its borders through Feb. 21.
Dan Woodfin, senior director of system operations at Texas grid operator Ercot, said earlier in an interview that a lack of gas supply is one of the reasons why it’s having trouble getting power plants back online.
Abbott said he and other state governors had expressed concern on a conference call with President Joe Biden about the severe spikes in natural gas prices amid the crisis. Spot prices in neighboring Oklahoma rocketed to over $1,000 per million British thermal units Wednesday, increasing more than 100-fold from a week earlier.
Gasoline Prices Are Starting to Soar as Cold Blasts Supply Chains (3:31 p.m.)
Hiccups in the U.S. fuel-supply system are driving up gasoline prices as refineries in the nation’s oil-processing hub attempt to climb out of a disastrous deep freeze.
Texas officials warned late Wednesday of shortages in the western part of the state along a 400-mile (645-kilometer) stretch of Interstate 10. Dozens of truck stops across Texas and nearby states closed this week because of power outages.
Gasoline prices already were on the rise before the winter deluge amid optimism about Covid-19 vaccine rollouts and the annual transition to summer-grade fuel. From New Year’s Day through Wednesday, the national average price rose 28 cents to $2.54 a gallon — an extra penny every two days.
Communications Outages in Texas and Oklahoma (3:25 p.m.)
Telecommunications providers reported 140 outages in Texas affecting almost 280,000 wireless users at mid-morning Wednesday, the Federal Communications Commission said in an update posted on its website.
Power outages were forcing communications service providers to rely on backup power. However, icy roads were affecting their ability to refuel generators, the agency said.
It tallied seven outages in Oklahoma affecting more than 23,000 wireless users.
How Do You Restart an Oil Well That’s Frozen Solid? (3:24 p.m.)
Restarting oil and gas wells closed by the extreme cold sweeping much of the U.S. isn’t going to be quick or easy, even once the ice thaws and power is restored.
Oil production nationwide has been cut by at least a third and in the Permian Basin of Texas, the heart of America’s shale industry, output has plummeted by as much as 65%. But bringing flows back is likely to take much longer than it took for them to slump.
Most wells produce a mixture of oil, gas and water and it is the last of these that causes the problems. Although it may leave the well at boiling point, the water immediately comes into contact with steel pipes more than a hundred degrees colder. That can cause it to freeze, choking off the flow from the well, according to Richard Spears, vice president of Spears & Associates Inc., an industry consultant.
Force Majeures Rise With Freeze Disrupting U.S. Energy Industry (2:54 p.m.)
A growing number of energy companies are issuing force majeures, advising customers of cuts to crude and refined product deliveries across Texas as the extreme cold weather disrupts power supply and plant operations. Plains All American Pipeline LP warned shippers using more than a dozen of its pipelines of impact to their operations because of the deep freeze. Others companies that issued similar warnings include Oryx Midstream Services LLC, Occidental Petroleum Corp. and Citgo Petroleum Corp.
Austin Power Crews Get Hostile Receptions (2:48 p.m.)
Municipal utility workers in the Texas capital of Austin have encountered threats and in some cases had things thrown at them as they worked to restore damaged power infrastructure.
“Our crews have been working 24/7 and in these elements,” Austin Energy said in a tweet. “Some of our crews are reporting incidents of harassment, threatening them and even throwing things at them. I know people are extremely frustrated. But please, I beg of you, do not approach AE crews.”
Dallas Cowboys Owner’s Gas Driller Hits ‘Jackpot’ on Price Surge (2:22 p.m.)
The natural gas producer owned by Dallas billionaire Jerry Jones is cashing in on a surge in prices for the fuel as a brutal freeze grips the central U.S., leaving millions without power.
Comstock Resources Inc. has been able to sell gas from its Haynesville Shale wells in East Texas and northern Louisiana at premium prices since Thursday. As demand jumps amid the cold, gas at some regional hubs has soared past $1,000 per million British thermal units.
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