U.S. piped gas displacing Mexican LNG imports

Natural gas. Photo: Max Pixel

Aug. 23 (UPI) — Cross-border natural gas pipelines from the United States to Mexico could be displacing Mexican imports of liquefied natural gas, a government report found.

A briefing from the U.S. Energy Information Administration found that expansions to U.S. natural gas pipelines to Mexico have led to an overall increase in exports. Last year, the United States averaged about 4.2 billion cubic feet per day in gas exports to Mexico. In the first five months of this year, that average is closer to 4.4 billion cubic feet per day.

“By the end of 2018, an additional four of six major pipelines identified as strategic in Mexico’s five-year natural gas infrastructure expansion plan are scheduled to begin commercial operations,” the EIA’s report read.

Mexico, meanwhile, could be making strides on its own in natural gas development. In March, Petróleos Mexicanos, known also as Pemex, signed an exploration and extraction contract with the Mexican subsidiary of Lewis Energy to invest $617 million in developing the Olmos field in the Mexican state of Coahuila.

Lewis has drilled more the 500 wells in the Texas section of the Eagle Ford shale, setting itself up as the third-largest producer in the state. Pemex estimated it could produce as much as 117 million cubic feet of natural gas per day from its section of the Eagle Ford by 2021.

Meanwhile, EIA said U.S. natural gas is displacing imports of LNG into the Mexican economy. The super-cooled form of natural gas has more deliverability options than piped gas because it’s less exposed to geopolitical risk.

Apart from piped gas, the U.S. leaders are looking to increase their leverage in foreign markets by exporting more LNG sourced from shale basins like Eagle Ford. A bipartisan group of Senate leaders said in a letter to the head of the Federal Regulatory Commission the agency needed to approve pending LNG export applications “in a timely manner.”

European Commission President Jean-Claude Juncker has said the United States need to do away with “red tape restrictions” if it’s to be a major LNG player.

Piped gas from the United States has its own complications. U.S. tariffs on imported steel creates problems for the domestic energy sector because of the increase in costs to build new infrastructure.


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