Barclays: US gas exports to Mexico will accelerate

As the US debates exporting more plentiful natural gas from new liquefaction along the East and Gulf coasts, gas exports to Mexico in the past 3 years have doubled, according to a recent research note from Barclays.

Over the same period, natural gas production in Mexico has declined 11% with associated gas production on the rise, while nonassociated gas is declining, Barclays analyst Biliana Pehlivanova said in the research note.

Barclays expects US exports to Mexico to continue growing robustly, averaging 2 bcfd in 2013 and 2.2 bcfd in 2014. Growth is likely to accelerate beyond 2014, as more cross-border and Mexican pipeline capacity comes into operation.

Growth of Mexican gas demand and pipeline capacity expansions promise to “siphon increasing amounts of gas from the US,” Pehlivanova noted.

Mexico holds large shale gas resources. The US Department of Energy, she notes, has estimated the country’s technically recoverable shale gas resources at 681 tcf. Only China, the US, and Argentina hold more. Development of Mexico’s shale gas, however, will be slow, says Pehlivanova, unless the country enacts legislative reform allowing broader access to resources.

Meanwhile, state-owned power generator Comision Federal de Electricidad (CFE) sees the need for nearly 20 Gw of gas-fired generation capacity to be developed during 2010-24, she says, and estimates that the plants will require about 3.8 bcfd of additional gas supply to operate.

Power generation is not the only sector that requires increasing amounts of gas, Pehlivanova states. New industrial facilities are “underpinning the buildout of several cross-border pipelines.” This week, Petroleos Mexicanos is to release bidding rules for a part of the 600-mile Los Ramones pipeline project. Two sections of the pipeline have already been assigned, she says.

RBN Energy LLC reported earlier this year that the 2.1-bcfd pipeline will start at the US-Mexico border and be complemented on the US side by a 125-mile pipeline from Agua Dulce, near Corpus Christi, to McAllen, Tex., on the border with Reynosa in northern Mexico.

The Mexican project cost is estimated at $3 billion and the US project $650-750 million, according to RBN Energy.

When completed, Los Ramones will move gas from southern Texas to the state of Guanajuato in central Mexico, a regional hub for the country’s auto industry. Los Ramones is only one of several pipelines expected to come online in the next few years and underpin substantial growth of US gas flows to Mexico.

Pehlivanova says the country has long known it will require more imported gas to meet domestic consumption, a task originally expected for LNG. With “global gas price relationships overhauled by North America’s shale gas revolution,” she says, the “tables have turned” and it is US pipeline gas that is now called upon to meet the shortfall.

Contact Warren R. True at warrent@ogjonline.com.

Related Articles

IAGC appoints new president

09/19/2014 The board of the International Association of Geophysical Contractors has reported that Ken Wells has been named as the organization’s president.

MARKET WATCH: Crude oil futures down more than $1 in New York, London

09/19/2014 The New York Mercantile Exchange October crude oil contract lost $1.35 to $93.07/bbl on Sept. 18. The November contract declined $1.22 to $91.98/bbl.

ExxonMobil ‘winding down’ Arctic well, complying with US, EU sanctions on Russia

09/19/2014 ExxonMobil Corp. released a statement that the company is complying with all US sanctions on Russia after news reports that the operator had halted...

ExxonMobil, Linn to make second asset exchange this year

09/19/2014 ExxonMobil Corp. has agreed to trade interest in 500 net acres from South Belridge field near Bakersfield, Calif., to Linn Energy LLC, Houston, in ...

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected