The Mexican Energy Secretariat, Sener, expects to release a draft of its public policy for natural gas storage in early September, according to the head of the ministry’s industrial transformation unit.
“The country has underground reservoirs, so we would want to take advantage of that,” Rosanety Barrios said Tuesday at the LDC Gas Forum’s U.S.-Mexico Natural Gas Forum in San Antonio. “We are in the middle of a process to allow private investors access to these reservoirs.”
Once released, the draft must then pass through a regulatory review that includes a public consultation, during which the private sector may submit observations and clarifications.
Mexico does not have any existing underground storage facilities, although it does use its liquefied natural gas import terminals to balance supply and demand over the short-term. The development of storage capacity is seen as an important piece of the puzzle in Mexico’s nascent competitive gas market.
“The Comision Federal de Electricidad (CFE) and independent power producers would be the prime benefactors of storage since it would enable them to more efficiently serve during periods of peak demand,” said NGI’s Patrick Rau, director of strategy and research. “It’s our understanding that currently no Mexican company is holding storage capacity in the United States.”
Mexican authorities have identified five potential areas to construct underground storage facilities, according to Eduardo Prud’homme, head of the technical and planning unit at the national pipeline operator, Centro Nacional de Control de Gas Natural (Cenagas). The sites are located in depleted fields in the Veracruz, Burgos and southeastern basins.
Private sector companies looking to participate in storage projects likely would be able to do so via public tenders organized through Cenagas, Barrios told NGI on the sidelines of the conference. The tenders would be similar to the ones organized by CFE, which has awarded various contracts to build natural gas pipelines, combined-cycle plants and transmission lines.
“The CFE tenders have been very successful,” she said.
Sener is looking to create strategic gas reserves in Mexico in order to stimulate the development of the local storage market. To this end, Barrios said the ministry wants to create a storage obligation. However, the details regarding participants it applies to, volumes and prices are still being determined.
“We are assuming that the price of [storage] is free and that there is a cost of course, because developing these facilities requires important investments,” she said. “So we are trying to identify the best mechanism to increase the final price.”