Go West, Part 3 - Mexico's Pacific Coast LNG Export Projects Gain Traction

After years of waiting on the so-called “second wave” of North American LNG, 2022 could finally be the year that sees multiple LNG export projects reach a final investment decision (FID). Global gas fundamentals have been bullish for about a year, and prices hit record highs throughout the summer and fall. Offtakers around the world are clamoring and competing for LNG cargoes, anticipating a volatile and undersupplied winter. But with Russian piped exports to Europe expected to increase dramatically as the controversial Nord Stream 2 pipeline finally comes online, likely early next year, North American LNG is looking for ways to be more attractive to Asian offtakers. One option on the table for North America is to go west and export from the Pacific Coast, which cuts the voyage time to Asia in half. Exporting from the Pacific Coast is not without its challenges, however, including where and how to source the feedgas required for liquefaction. In today’s RBN blog, we continue our series looking at Pacific Coast LNG export developments, this time focusing on feedgas and infrastructure for the LNG projects in Mexico.

So far in this series, we’ve discussed the logistical and economic advantages of exporting North American LNG from the Pacific Coast, as opposed to the Gulf Coast, namely shorter voyage times and lower costs for Asian offtakers. In Part 1, we used the RBN LNG Export Cost Model to break down and compare the various components of shipping costs associated with exporting from the region. Combining the costs, Asian offtakers can save more than $1.25/MMBtu by shipping from the Pacific Coast, so it’s no wonder offtakers are lining up for these projects. In Part 2 of our series, we highlighted the two Pacific Coast projects currently under construction — LNG Canada in British Columbia, and Sempra Energy’s Energía Costa Azul (ECA) LNG in Baja California, Mexico — as well as two projects likely to take FID in the next year: Woodfibre LNG in British Columbia and Mexico Pacific Limited (MPL) in Sonora State. There are three basic areas in which LNG projects need to advance before taking FID: commercial/financial, regulatory, and feedgas/infrastructure. In Part 2, we also dived deeper into the Mexico-based projects, including the specifics of the commercial and regulatory progress that led to ECA LNG achieving FID in 2020 as well as where MPL stands in the process. Today, we will focus on the feedgas supplies for these projects.

To access the remainder of Go West, Part 3 - Mexico's Pacific Coast LNG Export Projects Gain Traction you must be logged as a RBN Backstage Pass™ subscriber.

Full access to the RBN Energy blog archive which includes any posting more than 5 days old is available only to RBN Backstage Pass™ subscribers. In addition to blog archive access, RBN Backstage Pass™ resources include Drill-Down Reports, Spotlight Reports, Spotcheck Indicators, Market Fundamentals Webcasts, Get-Togethers and more. If you have already purchased a subscription, be sure you are logged in For additional help or information, contact us at info@rbnenergy.com or 888-613-8874.