Mexico’s still-rising demand for U.S.-sourced natural gas — and new pipelines to deliver it — has been driven by the buildout of new power plants and, more recently, by planned LNG exports. Today, we discuss more private-sector midstreamers and the new gas demand that may bring them new opportunities.
Mexico’s process for planning new gas pipelines is very top-down, with state-owned Cenagas and CFE playing key roles. But the buildout of pipelines there has been largely accomplished by private-sector companies that are now planning another round of projects that will spur more gas exports from the U.S.
In Mexico, state-owned players like Cenagas and CFE continue to play central roles in planning and underpinning the development of natural gas pipelines. At the same time, however, Mexico has leveraged the participation of a handful of private-sector companies that have built a significant share of the newer pipelines there.
Since the mid-2010s, Mexico’s Comisión Federal de Electricidad (CFE) has developed a massive fleet of natural-gas-fired combined-cycle plants and helped to underwrite the buildout of a far-reaching network of gas pipelines from South Texas and West Texas into and through much of Mexico. Now, there’s a big push to extend that network southeast through the Yucatán Peninsula to serve new power plants and industrial facilities there. The question is, with the vast majority of the pipeline capacity down Mexico’s East Coast already locked up, where will the Yucatán’s incremental gas come from? In today’s RBN blog, we discuss this potential disconnect between Mexico’s gas-related aspirations and reality.
With all the talk about U.S. LNG exports and plans for more LNG export capacity, it can be easy to forget that more than 6 Bcf/d of U.S. natural gas — mostly from the Permian and the Eagle Ford — is being piped to Mexico. That’s more than 3X the volumes that were being piped south of the border 10 years ago, a tripling made possible by the buildout of new pipelines from the Agua Dulce and Waha hubs to the Rio Grande and, from there, new pipes within Mexico. And where is all that gas headed? Mostly to new gas-fired power plants and industrial facilities — a handful of new LNG export terminals being planned on that side of the border will only add to the demand. In today’s RBN blog, we discuss the ever-increasing flows of gas to Mexico and the tens of billions of dollars of new infrastructure making it all possible.
The February 2021 polar vortex will be one for the natural gas record books in the U.S. and Canada — and the month isn’t even over yet! Though no stranger to frigid weather, Canada’s natural gas market has felt the impacts of this month’s extreme cold on both sides of the border. Its own prices, demand, and storage withdrawals have reached multi-year or all-time records as gas buyers have jockeyed for molecules from anywhere they can get them. Gas exports to the U.S. have reached highs not seen for more than a decade, adding emphasis to what has been an emerging turnaround story for Canadian gas into the U.S. market. To top things off, the latest gas market records might be a preview of what is to come in the next few years as Canada’s structural demand for natural gas continues to increase, regardless of how cold it is. Today, we describe all the latest Canadian gas market action and what might be in store for next winter.
As exports of crude oil, natural gas and NGLs have surged, U.S. markets for these energy commodities have undergone radical transformations. Exports now dominate the supply/demand equilibrium. These markets simply would not clear at today’s production levels, much less at the volumes coming on over the next few years, if not for access to global markets. Making sense of these energy market fundamentals is what RBN’s School of Energy is all about. Did you miss our conference a few weeks back? Not to worry! You’ve got a second chance! All the material from the conference — including 20 hours of video, slide decks and Excel models — are now online. Fair warning: Today’s blog is an unabashed advertorial for the latest RBN School of Energy + International Online.
For some time now, natural gas producers in the Permian and the Eagle Ford have been counting on rising pipeline exports to Mexico to help absorb a lot of the incremental production in their plays. Their hopes have been bolstered in the past couple of years by the build-out of a number of new pipelines from the Waha and Agua Dulce gas hubs to the U.S.-Mexico border. Gas pipeline development south of the border hasn’t kept pace, though, mostly due to regulatory and construction delays. Also, a recent dispute over tariffs on a newly completed large-diameter pipeline, extending from the southern tip of Texas to key points along Mexico’s Gulf Coast, had left the pipe sitting empty this summer. That tiff has since been resolved and gas is flowing on the new pipeline, allowing those piped southbound exports to hit a daily record high near 5.9 Bcf/d earlier this month and average above 5.5 Bcf/d this month to date. Plus, progress is being made on other planned Mexican pipes too. This all leads us to ask, is the long-promised surge in U.S. gas exports to Mexico just around the corner? Today, we look at the latest developments regarding Mexico’s natural gas pipeline infrastructure additions.
The Mexican market is critically important to Permian producers. Rising gas demand south of the border — along with expected gains in LNG exports from new liquefaction/export facilities along the Gulf Coast — are key to their plans to significantly increase production of crude oil, which brings with it large volumes of associated gas. All that gas needs a market, and nearby Mexico is a natural. For a number of years now, Mexico’s Comisión Federal de Electricidad has been working to implement a plan to add dozens of new gas-fired power plants and to support the development of new gas pipelines to transport gas to them from the U.S. The new pipelines have been coming online at a slower-than-planned pace. But what pipeline capacity has been added across the border from West Texas is already changing Mexico’s gas market. The El Encino Hub in Northwest Mexico is one such area where there are signs of a shifting supply-demand balance. Today, we continue a blog series on key gas pipeline developments down Mexico way and the implications for gas flows, this time delving into the dynamics at the El Encino Hub.
Mexico’s energy sector has been dealing with a fair amount of uncertainty of late. Newly installed Mexican President Andrés Manuel López Obrador has promised to undo elements of the country’s historic energy reform program, limit imports of hydrocarbons, and focus on domestic production and refining. How much will all this affect the export of natural gas from the U.S. to Mexico? It’s too soon to know what the long-term impact might be, but for now, gas exports remain near record highs and the pipeline buildout within Mexico is proceeding. That’s not to say, however, that the infrastructure work has gone without its own set of challenges — many of those were apparent well before the recent political changes. Today, we begin a series examining the opportunities and potential pitfalls ahead this year for Mexico’s natural gas pipeline infrastructure additions.
