Just What I Needed—A Second Wave of Tex-Mex Refined Products Infrastructure

Mexico’s need to import increasing amounts of transportation and cooking fuels--mostly gasoline, diesel, and liquefied petroleum gas (LPG)—from the U.S. is spurring an infrastructure development boom on both sides of the Rio Grande. Over the past few years this has been a frequently reoccurring pattern:   A fast growing market for hydrocarbons emerges, and the need to efficiently move increasing volumes of product from points A and B to points C, D and E quickly becomes urgent. All hands are called on-deck: trucks, railroads, barges, pipelines—plus storage facilities and distribution terminals. Today, we consider the latest initiatives to deliver gasoline, diesel, jet-kero and LPG from Texas to its southern neighbor.

We’ve discussed the U.S.-Mexican hydrocarbon trade many times in the RBN blogosphere, first focusing on the boom in U.S. natural gas deliveries South of the Border (The Gas All Went to Mexico and As We Send Gas Through the Streets of Laredo), then on LPG exports to Mexico (the Enciende Mi Fuego/Light My Fire series), and—in a bigger-picture look at things—our Drill Down report (With a Little Help From My Friends). Most recently, in the first episode of Just What I Needed, we zeroed in on Mexico’s need to import increasing volumes of transportation fuels (gasoline, diesel and jet-kero), mostly because 1) many of the refineries owned by state-owned Petróleos Mexicanos (Pemex) need upgrading, and 2) there are major disconnects between the mostly heavy crude oil Pemex produces, the capabilities of its refineries, and Mexico’s domestic needs for gasoline, diesel and jet-kero. In that blog, we described three recent initiatives aimed at fixing things: a $1 billion plan to boost production of clean diesel at Pemex’s Madero refinery; Howard Energy’s $500 million Dos Águilas refined-products pipeline and terminals plan; and the NuStar Energy project to develop $125 million of new refined product/LPG pipeline infrastructure in northern Mexico. We also noted that the Howard and NuStar projects wouldn’t be the first pipelines that help move gasoline, diesel and jet-kero from the U.S. to Mexico. Transmontaigne Partners--recently acquired by ArcLight Capital Partners--already operates the 18-mile U.S. portion of a Pemex-owned, bi-directional, 174-mile pipeline that moves refined products to and from Transmontaigne and Pemex’s jointly owned Frontera terminal in Brownsville, TX and (in northeastern Mexico) Pemex’s terminal in Reynosa and refinery in Cadereyta.

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