US, Mexico energy trade in flux

Energy trade between the US and Mexico is in flux with rising crude production in the US, falling production in Mexico, and rising Mexican demand for gasoline, diesel, and other petroleum products. Mexico is the third-largest supplier of crude to the US, but last year shipments of Mexican crude to the US dropped to 972,000 b/d—the first time below 1 million b/d since 1994, the US Energy Information Administration reported.

Mexico’s share of total US crude imports fell to 11% last year from 16% in 2003. Mexico’s production reportedly peaked in 2004 at 3.83 million b/d.

While the US consumes Mexican crude, it exports petroleum products to Mexico, some 600,000 b/d in 2012. Mexican demand for products has jumped 20% in the last decade while production capacity remained essentially flat, so Mexico increasingly looks to the US for supply. Since 2004, US exports of products to Mexico have nearly tripled, EIA said.

Mexico exports its heavier crude and keeps its lighter crude, mostly from southern regions, for its own refineries. More than 90% of Mexico's heavy crude production is in its northeastern offshore region, which also accounts for 75% of Mexico’s production decline. Production trends in Mexico vary by grade and location. Its heavy crude production fell 46%, or 1.1 million b/d in 2004-12, officials said. However, production of light and extra light crude oil rose 200,000 b/d in that same period.

In recent years, US refineries have invested billions to upgrade facilities to process heavy, sour crude.

To recoup that investment, refiners likely will continue importing heavy oil from Mexico and Venezuela, although the export of heavy crude from Canadian tar sands is rapidly rising.

Mexico’s economy is export oriented with total value of its exports climbing to $32.9 billion in April from $31.9 billion in March. The US is its biggest market, receiving 78% of its exports. Canada is its next biggest export market at 3%. Oil accounts for 14% of Mexico’s exports, behind automobiles and related products at 24% of its total shipments.

In the last 23 years, Mexico’s exports have averaged $10.8 billion/month from a record low of $1.2 billion in February 1980, when the global oil boom began to bust and crude prices fell, to a record high of $33.9 billion last October.

Natural gas trade

Mexico is a growing market for US natural gas, importing a record 2.1 bcfd last year, up 21% from 2011. Across-the-border flows from US pipelines accounted for 80% of Mexico's total gas imports in 2012.

“Since 2006, imports of [LNG] have made up the remainder of Mexico’s imported natural gas needs,” EIA said. Mexico’s LNG imports averaged about 400 MMcfd last year, about 20% of its total gas imports.

Mexico began importing LNG in 2006, mostly from Nigeria, Qatar, and Peru. LNG amounted to 38% of Mexico's total gas imports in 2010, more than 500 MMcfd. “LNG’s share of Mexico’s imports has declined since then because of growing natural gas imports via pipelines from the US, which have been more economically attractive given the recent decline in US gas prices,” EIA reported.

The future role of LNG imports in satisfying Mexico’s need for reliable gas supply “depends mostly on the relative economics and constraints of importing natural gas from the US by pipeline vs. the price and availability of importing LNG; production trends in Mexico; and development of additional natural gas infrastructure in Mexico,” said EIA.

Altamira, Mexico’s first LNG regasification facility, has a capacity of 600 MMcfd and began commercial operations in 2006. In its first year, it imported an average 100 MMcfd of LNG from Trinidad and Tobago, Qatar, Egypt, and Nigeria.

The Energia Costa Azul LNG terminal in Ensenada, Baja California, began operation in 2008 with a capacity of 1 bcfd. However, it has been underused because LNG shipments were diverted to more lucrative Asian markets. Also potential demand for shipments of regasified LNG from Mexico to the western US has decreased because expansions of the Kern River and Ruby pipelines now carry US gas to that market.

Meanwhile, the 500 MMcfd Manzanillo LNG regasification terminal entered service last year. Construction of as many as five LNG regasification projects over the next several years could add more than 4 bcfd of incremental regasification capacity, EIA speculated.

(Online May 28, 2013; author's e-mail: samf@ogjonline.com)

Related Articles

Energy consumption to escalate

07/30/2013 World energy consumption will jump 56% in the next 30 years, driven by growing demand in developing countries, the US Energy Information Administra...

Foreign crude supply concentrated

04/29/2013 It’s no secret the jump in US oil production in recent years has dropped imports of foreign crude to the lowest It’s levels since 1997—down 1.3 mil...

Corn, ethanol prices squeeze profit

03/25/2013 Last summer, US prices for ethanol and corn reached such an imbalance that production costs exceeded revenue at relatively simple ethanol plants, t...

Working on the railroads

02/26/2013 The rapid increase of North American crude production has resulted in pipeline bottlenecks in some areas, forcing more reliance on rail transportat...

War, weather issues affect energy

01/28/2013 The fatal 4-day siege at the In Amenas gas production plant in eastern Algeria near the Libyan border that left 81 people dead “heightens concerns ...

2013 looks a lot like 2012

12/31/2012 New Year 2013 looks as though it will be much like the old one. There’s rioting in Egypt, confrontation with Iran, continued crisis in the Euro-zon...

Political crisis weighs on oil

11/26/2012 On Nov. 21, Egyptian officials announced a ceasefire agreement—which they helped broker—between Israel and Hamas leaders to end a week of fighting.

Storms, oil, and elections

10/29/2012 Hurricane Sandy was bearing down on the East Coast on Oct. 29, disrupting oil supplies, energy demand, and early voting in the last full week befor...

Oil prices roiled by data

09/24/2012 Oil prices fluctuated widely in mid-September as analysts and traders tried daily to interpret market indicators from a flood of economic data. The...

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

register:WEBCAST


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