Harvey’s Wrath Lays Bare Mexico’s U.S. Natural Gas Addiction
World Oil reports: Hurricane Harvey’s crushing blow to the U.S. energy industry reveals just how dependent Mexico has become on natural gas from its northern neighbor. The storm’s wrath forced cross-border gas pipelines in Texas to shut and prevented tankers from loading cargoes of the fuel. Mexican consumers, who are burning record amounts of gas from America’s prolific shale basins, had no choice but to cut back as imports dropped 16% in a single day after Harvey hit before recovering. Before Harvey made landfall, Kinder Morgan Inc.’s Tennessee Gas line shut two compressor stations in south Texas as employees evacuated, cutting the amount of the fuel that would eventually make it to Mexico. Meanwhile, Cheniere Energy Inc.’s Sabine Pass terminal — the only plant shipping liquefied natural gas from the U.S. — was forced to halt exports as severe weather made it too dangerous for vessels to board. Because of these cuts, Petroleos Mexicanos, Mexico’s state-owned petroleum company, asked consumers to use about 10% less gas last weekend.
Natural gas Looks Hurricane-Proof, for Now
Bloomberg reports: U.S. energy markets have already begun pricing Hurricane Harvey’s effects. With refineries and pipelines out of service, gasoline futures have spiked. So far natural gas futures have hardly responded to Harvey, and it may be another week before they do. One thing is certain: The U.S. gas-production sector has changed drastically in the 12 years since Hurricane Katrina. But, factors other than a hurricane can also affect the U.S. gas market — lower-than-usual gas storage inventories or heat waves causing a spike in demand for power. A sustained impact on Gulf of Mexico offshore production would also influence prices, even though the Gulf is far less significant than it once was.