Rising U.S. natural gas exports to Mexico capped by pipe delays
(Reuters) - U.S. natural gas exports to Mexico hit all-time highs this month, but a slower-than-expected build out of pipelines inside Mexico has kept increases far below available capacity at the border.
The latest uptick in exports, driven by demand from Mexico's power sector, occurred after several Mexican pipelines began operation, allowing U.S. companies to send more fuel across the border, RBN Energy said in a report.
Over the last decade, U.S. gas exports to Mexico via pipeline have more than tripled, to 4.9 billion cubic feet per day (bcfd) in August, according to Thomson Reuters data. One billion cubic feet is enough gas to fuel about five million U.S. homes. Still, that is less than half the available U.S. gas pipeline capacity to Mexico, which will increase to 13.5 bcfd by year-end when Enbridge Inc's $1.6 billion Valley Crossing pipeline enters service.
"There are a lot of projects to get gas across the border, but a lot of these are dependent on important lines within Mexico," said Rick Margolin, a senior analyst at energy data provider Genscape.
The completion of those pipelines on the Mexican side of the border are facing at least a year's delay on average, according to Genscape. The U.S.-Mexico Nueva Era project, which includes the Impulsora pipeline in Texas, was originally expected to enter service in mid-2017 but did not become operational until mid-2018 due to construction delays on the
Mexico side of the border.
With gas pipelines constrained, Mexico has had to rely on more expensive liquefied natural gas (LNG) imports.
Mexico has been the biggest buyer of U.S. LNG, purchasing about 19 percent of all U.S. cargoes between February 2016 and May. Mexico is on track to import 188.9 billion cubic feet of U.S. LNG in 2018. That was up from 140.3 bcf in 2017, which was worth about $695 million, and 27.4 bcf in 2016.
As more pipelines enter service, analysts expect cheaper U.S. gas via pipeline will displace the more expensive LNG imports. Completion of more infrastructure in Mexico will also enable more U.S. gas to flow out of the pipeline-constrained Permian basin in west Texas and eastern New Mexico, which is producing record amounts of cheap gas as a byproduct of oil drilling. (Reporting by Andres Guerra Luz and Scott DiSavino in New YorkEditing by Susan Thomas)
READ MORE: Mexico’s continuing energy reform feeds pipeline, LNG aspirations
As discussed in the HPI Market Data 2019 report, published in November by Gas Processing & LNG’s sister publication, Hydrocarbon Processing, rising propane and ethane supplies in the US have been enabled by greater production of shale gas.
Industry Trends: Norway targets global LNG market
Norway aims to become a leading player in the global LNG market during the next several years through the establishment of new, large-scale LNG terminals.
Regional Focus: Challenges of scaling up Africa’s LNG production
Several gas projects are underway in Africa, but they continue to be constrained by inadequate infrastructure, slow finance mobilization, lack of security and uncertainty over hydrocarbon regulations that are casting doubt on the outcome of the continent’s drive to meet its anticipated 128% gas demand increase by 2040.
GasPro 2.0: A Webcast Symposium
The global LNG industry is becoming increasingly interconnected as grassroots export projects get off the ground. Another technology route for processing gas into fuels—GTL—is attracting renewed attention due to improving economics. Small-scale solutions for both LNG and GTL are at the forefront of new technological developments, while major projects using more conventional technologies continue to start up around the world.
During this webcast, we will focus on LNG, GTL, gas processing technology developments and deployments, operations, small-scale solutions, transportation, trading, distribution, safety, regulatory affairs, business analysis and more.
October 25, 2018 08:30 AM CDT