Energy Transfer’s latest Texas-to-Mexico natural gas pipeline project—the 1.4-Bcf/d Trans-Pecos Pipeline—began service a little over a week ago (on March 31, 2017). It’s the third Tejas-to-Méjico gas transportation project to come online in the past six months, following the expansion of ONEOK’s Roadrunner Gas Transmission pipeline in October 2016 and the in-service of Energy Transfer’s Comanche Trail Pipeline in January 2017. The three projects have added a total of nearly 3.0 Bcf/d to pipeline export capacity since last October, all originating in the Permian Basin at the Waha gas trading hub in West Texas. A game-changer, right? Well, the reality is not so simple. These expansions on the U.S. side are largely reliant on takeaway capacity on the Mexico side of the border as well as the growth of power demand downstream to support flows, not all of which is coinciding with capacity additions on the U.S. side. Today we look at the latest export pipeline capacity additions and prospects for near-term export demand growth along the Texas-Mexico border.
As we‘ve discussed extensively in our It Takes Two and Coming Around Again blog series, Mexico’s thirst for natural gas has been growing, spurred on by an expanding fleet of natural gas-fired combined cycle power generation plants. With gas production in decline there, Mexico is expected to rely heavily on piped U.S. gas supply, especially from Texas, to feed this growing demand. To facilitate higher utilization of the gas-fired generation plants, the state-owned Comisión Federal de Electricidad (CFE) has big plans to expand its gas pipeline network: 800 miles of gas pipeline are under construction and another 2,500 miles are on the way, including seven projects totaling 8.0 Bcf/d of transport capacity that have been awarded contracts for construction, all with in-service dates in 2017 or 2018. Several of these originate at or near the Texas-Mexico border and extend south or west to connect with other projects and Mexico’s existing mainline systems.
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