Mexico's Sonora state governor has signed a nonbinding agreement with U.S. counterparts in Arizona and New Mexico to interconnect existing natural gas pipelines allowing shipments from New Mexico's San Juan Basin to flow to a proposed export terminal on the Gulf of California in Mexico.
Under the tentative agreement, the three border states would promote investment, research and innovation that could lead to liquefied natural gas (LNG) exports to Asian markets, something also contemplated by Texas gas producers. U.S. authorities in September paved the way for Mexico Pacific Ltd. LLC (MPL) to export up to 1.7 Bcf/d to Sonora's planned liquefaction facility.
The pact does not call for any funds to yet be committed, but Sonora Gov.’s Claudia Pavlovich, Arizona’s Doug Ducey and New Mexico’s Susana Martinez said they think Asia's growing demand for increased gas and abundant U.S. supplies are a perfect match.
MPL's Gulf of California facility, adjacent to Puerto Libertad, Mexico, could deliver LNG to other markets in Mexico not on the pipeline grid or re-export the gas to free trade agreement countries. MPL also has a pending request to export gas worldwide.
The project was facilitated in part by a policy statement issued by the U.S. Department of Energy (DOE) on Dec. 19 removing the requirement that exporters of U.S. natural gas, including LNG, report the country of end use. Exporters now need to report only the countries initially receiving their deliveries. While the policy statement encompassed project applications going forward, DOE also issued a blanket statement removing the requirement from existing export authorizations.
The Sonora project would be constructed in stages, with the initial phase expected to have about 2-4 million metric tons/year (mmty) of capacity. Each liquefaction unit would able to produce about 1 mmty. MPL expects to start construction by early 2020, with in-service targeted for 2023.
Historically, siting an LNG facility in Sonora has been pursued for more than a decade. DKRW Energy LLC and a unit of El Paso Corp. in 2006 received three environmental permits for their proposed joint venture terminal and 1 Bcf/d pipeline facilities in Sonora.
MPL said it could access U.S. gas from the Permian and San Juan basins, the Eagle Ford Shale in South Texas and the Barnett Shale in North Texas. It would be adjacent to the Infraestructura Energetica Nova (IEnova) Sonora Pipeline, and benefit from “multiple natural gas supply routes, allowing both Henry Hub and Waha gas to be efficiently supplied to the site,” according to the project’s website.
The Sonora facility is one of two LNG export terminals being pursued along the western coasts of Mexico, joining the IEnova project for transforming its import facility at Energia Costa Azul on the Pacific Coast of Baja California.