Several new pipeline systems designed to move US natural gas supplies to
Mexican demand centers could add up to 4.8 Bcf/d of US export capacity into
Mexico by 2015, Goldman Sachs said in a report released Friday.
The increasing exports will continue to help reduce the oversupply of
natural gas in the United States going forward, the report said.
US exports into Mexico have been growing in recent years in response to
a boost in Mexican demand spurred by economic growth and increased gas-fired
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In terms of US/Mexico cross-border points, existing capacity is close to
3 Bcf/d for flows into Mexico, according to the Mexican government's
Secretaria de Energia, the report said.
Close to 1.6 Bcf/d of the capacity is in South Texas, another 800,000
Mcf/d is in southern California, with the rest split between Arizona at
400,000 Mcf/d and West Texas at 200,000 Mcf/d.
However, actual flows from the US into Mexico averaged just 1.7 Bcf/d in
2012, in part because of constraints on the Mexican side of the border,
Goldman Sachs said.
Three major pipeline projects south of the border approved by the
Mexican government will allow more gas to reach downstream demand centers.
"There are now several pipeline and compressor station projects
scheduled in Mexico to handle increased imports and pass the natural gas
along to end consumers," the report said.
One of the new systems -- the Northwest pipeline system -- includes
several projects including the Mazatlan Pipeline, which will begin at El Oro
and end in Mazatlan, in the state of Sinaloa. Calgary-based TransCanada was
awarded the contract to build and operate the Mazatlan pipeline, as well as
the Topolobampo Pipeline, which will stretch from El Encino in the state of
Chihuahua to Topolobampo in Sinaloa on the Pacific Coast.
Another part of the Northwest system was awarded to Sempra, which will
build a pipe from Sasabe, Arizona, to the Pacific Coast port of Guaymas in
The first phase of this system, to be built by Sempra, will come online
in late 2014 with a capacity of 770,000 Mcf/d. The second phase, also built
by Sempra, is slated for 2016 with a capacity of 510,000 Mcf/d. The third and
fourth phases, of which TransCanada is responsible for, are also set to go
into service in 2016. The capacities are 670,000 Mcf/d and 202,000 Mcf/d,
Another major new system is the Los Ramones pipeline, which stretches
through several Mexican states including Tamaulipas, Nuevo Leon, San Luis
Potosi, Guanajuato, Queretaro and Zacatecas. The first phase of this system
is slated to go into service in late 2014 with the second phase in 2015, for a
combined capacity of 2.1 Bcf/d.
The third new pipeline system in Mexico is the 850,000 Mcf/d Chihuahua
pipeline, which will move gas from Ciudad Juarez to El Encino, both of which
are in the state of Chihuahua. It has an estimated start-up date this summer.
In addition, several other pipeline project expansions on the US side
are underway to increase capacity to Mexico including several on Kinder
Morgan's El Paso pipeline system.
Mexican natural gas demand will likely continue to grow, underpinned by
solid real GDP growth of 3.6% and 3.8% year-on-year in 2013 and 2014, as per
Goldman Sachs estimates.
In the power generation sector, four more gas-fired power plants are
scheduled to start in 2013 according the Mexican state utility CFE, with a
combined capacity of 1.8 GW, roughly equivalent to 300,000 Mcf/d of gas
demand, Goldman Sachs said.
Despite the jump in demand, Mexican production of gas has been more or
less flat, as Mexican state oil and gas monopoly Pemex has focused on oil
As a result, imports from the United States have helped fill the gaps
and will continue to do so, the report said.
In addition, Goldman Sachs said some of the increased need for natural
gas in Mexico could potentially be met by liquefied natural gas imports into
Mexico's three terminals at Manzanillo, Altamira and Ensenada/Costa Azul.
However, oil-indexed LNG prices are around four times higher than US gas
prices, and spot LNG prices are even higher, the report said. "Mexico's
appetite for LNG was low in 2012 despite growing demand for natural gas, and
we expect this to remain the case in 2013-2014."
--Eunice Bridges, email@example.com
--Edited by Carla Bass, firstname.lastname@example.org