It Takes Two - Supplying Mexico's Growing Natural Gas Demand

There is a natural gas renaissance of sorts happening south of the U.S.-Mexico border. The state-owned Comisión Federal de Electricidad (CFE) is investing heavily in expanding and modernizing its power generation fleet with thousands of megawatts of new, natural gas-fired power plants, and the energy secretary also last October put forth an aggressive five-year plan to build out a pipeline system to supply growing gas-fired generation demand. Mexico’s power generation demand is increasingly a target for U.S. gas producers and pipeline projects. At the same time, as we discuss in Part 2 of RBN’s Miles and Miles of Texas Drill-Down Report published last week, a good portion of this new demand is relying on — and in large part has been driven by — availability of low-priced gas from the U.S. via Texas and the U.S. Southwest states. But there is a lot that needs to happen on both sides of the border over the next few years to facilitate this mutually beneficial relationship. Already since October, Mexico’s newly appointed independent pipeline operator, Centro Nacional de Control del Gas Natural (CENAGAS), has pulled back on the pipeline buildout. Today, we begin a two-part series on how plans to facilitate this new demand are progressing, starting on the Mexico side of things.

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