US gas pipeline exports increase with new pipelines in Mexico

These newly commissioned pipelines will transport US natural gas farther into Mexico’s central and southern regions and provide an additional outlet for constrained Permian production in western Texas. Natural gas exports from the US will help meet growing demand from Mexico’s natural gas-fired power generation and industrial sectors, offsetting declines in Mexico’s domestic production.

Source: U.S. Energy Information Administration, based on Mexico's Secretaría de Energía Status of Pipelines (in Spanish), IHS Markit, Genscape, and trade press

Currently, approximately three-quarters of US natural gas pipeline exports to Mexico flow from southern Texas. Exports from southern Texas averaged 3.2 billion ft³/d in 2017 and 3.3 billion ft3/d through the first five months of 2018. This natural gas is sourced primarily from the Eagle Ford Basin in Texas and transported on an existing pipeline network to serve industrial and power sector customers in northeastern Mexico.

Exports from western Texas, however, have been limited, despite a significant increase in cross-border pipeline capacity from 2015 to 2017. Exports from western Texas averaged only 0.4 billion ft3/d in 2017 and 0.5 billion ft³/d in January - May 2018. Significant delays in construction of the connecting pipelines on the Mexican side of the border have led to relatively low utilisation of cross-border pipeline capacity from western Texas. Some pipelines in Mexico have been delayed by more than a year from their original expected in-service dates, in part because of disputes contesting pipeline routes.

Several key pipelines in Mexico were placed in service earlier in 2018. La Laguna-Aguascalientes (1.2 billion ft³/d) and Villa de Reyes-Aguascalientes-Guadalajara (0.9 billion ft³/d) are scheduled to begin commercial operations in November 2018 after the interconnect at El Encino-La Laguna is completed in October. These pipelines will transport natural gas from western Texas into central and western Mexico through the Ojinaga-El Encino and Tarahumara pipelines.

Natural gas from these pipelines may displace some imports of liquefied natural gas (LNG) at Manzanillo LNG terminal and will serve markets in Guadalajara, Mexico’s second-largest city. Samalayuca-Sásabe (0.5 billion ft³/d capacity) is scheduled to begin commercial operation in November 2018 and will primarily serve new natural gas-fired power plants in western Mexico.

Additional export capacity from southern Texas totalling 3.0 billion ft³/d will begin commercial operations later this year. The US Valley Crossing (also called Nueces-Brownsville) pipeline (2.6 billion ft³/d capacity) will connect to Mexico’s Sur de Texas-Tuxpan underwater pipeline. Both pipelines are expected to be placed in service in October 2018.

However, pipelines at the other end of this underwater pipeline have been delayed. The Tuxpan-Tula pipeline (0.9 billion ft³/d capacity), which connects Sur de Texas-Tuxpan to markets in central Mexico, is delayed and is not expected to begin commercial operation until 2020. Another pipeline near Mexico City – Tula-Villa de Reyes (0.9 billion ft³/d) – has been delayed until 2019. Until these pipelines begin commercial operations, the high-demand market around Mexico City is expected to continue to be served by existing pipeline infrastructure transporting natural gas from southern Texas.

Read the article online at: https://www.worldpipelines.com/business-news/22082018/us-gas-pipeline-exports-increase-with-new-pipelines-in-mexico/