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US gas exports to Mexico limited by pipeline delays

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World Pipelines,


Reuters are reporting that US natural gas exports to Mexico hit all-time highs this month, but a slower-than-expected build out of pipelines inside Mexico has kept increases far below available capacity at the border.

The latest uptick in exports, driven by demand from Mexico’s power sector, occurred after several Mexican pipelines began operation, allowing US companies to send more fuel across the border, RBN Energy said in a report.

Over the last decade, US gas exports to Mexico via pipeline have more than tripled, to 4.9 billion ft3/d in August, according to Thomson Reuters data. One billion ft3 is enough gas to fuel about five million US homes.

Still, that is less than half the available US gas pipeline capacity to Mexico, which will increase to 13.5 billion ft3/d by year-end when Enbridge Inc.’s US$1.6 billion Valley Crossing pipeline enters service.

“There are a lot of projects to get gas across the border, but a lot of these are dependent on important lines within Mexico,” said Rick Margolin, a senior analyst at energy data provider Genscape.

The completion of those pipelines on the Mexican side of the border are facing at least a year’s delay on average, according to Genscape.

The US-Mexico Nueva Era project, which includes the Impulsora pipeline in Texas, was originally expected to enter service in mid 2017 but did not become operational until mid 2018 due to construction delays on the Mexico side of the border.

With gas pipelines constrained, Mexico has had to rely on more expensive liquefied natural gas (LNG) imports.

Mexico has been the biggest buyer of US LNG, purchasing approximately 19% of all US cargoes between February 2016 and May.

Mexico is on track to import 188.9 billion ft3 of US LNG in 2018. That was up from 140.3 billion ft3 in 2017, which was worth about US$695 million, and 27.4 billion ft3 in 2016.

As more pipelines enter service, analysts expect cheaper US gas via pipeline will displace the more expensive LNG imports.

Completion of more infrastructure in Mexico will also enable more US gas to flow out of the pipeline-constrained Permian basin in West Texas and eastern New Mexico, which is producing record amounts of cheap gas as a by-product of oil drilling.

Read the article online at: https://www.worldpipelines.com/business-news/13082018/us-gas-exports-to-mexico-limited-by-pipeline-delays/

 

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