Canada’s TC Energy Corp. is planning additional natural gas capacity at the U.S.-Mexico border to increase deliveries to a liquefied natural gas (LNG) project on Mexico’s Pacific Coast.
In a filing with the U.S. Federal Energy Regulatory Commission earlier this month, TC requested a series of upgrades and modifications to compressor stations and metering points on its North Baja Pipeline to add 495,000 Dth/d of firm delivery at the border.
North Baja moves gas in Arizona from Ehrenberg to Yuma, and then south to North Baja, Mexico, where it connects to the Gasoducto Rosarito pipe run by San Diego-based Sempra Energy’s Mexico unit Infraestructura Energética Nova (IEnova).
“The growing worldwide demand for LNG, with increasing natural gas production growth, is occurring in two of North America’s most prolific supply basins, the Permian and San Juan basins,” TC said.
TC wants to create capacity to provide transportation of feed gas from the two basins for the proposed Energia Costa Azul (ECA) LNG export plant under development by Sempra subsidiaries Sempra LNG and IEnova in Ensenada, in northern Baja California, Mexico. The additional capacity would also provide gas supply to meet “growing market demand in the area,” it said.
In November, Sempra President Joe Householder said the first phase of the ECA LNG export project should reach a final investment decision (FID) in 1Q2020. The project adds to the start of operations at Sempra’s Cameron LNG facility in Hackberry, LA, earlier this year, and expected FID at the Port Arthur, TX, LNG export terminal in 2Q2020.
Householder said Sempra's marketing efforts for LNG globally have picked up momentum with "significant participation" at the highest levels of the involved organizations. "We're focused on bringing all of our LNG projects to fruition and securing binding offtake agreements to satisfy global demand and deliver value to shareholders," he said.
Sempra export projects on the Gulf Coast and the west coast of Mexico are going to "unlock North America's energy potential." The company wants to take the extra time to "get it right," and partners in the projects "have to get comfortable" with their projected returns.
Sempra is signing memorandums of understanding for supply “and the customers are quite excited about the projects," Householder said. “Mexico continues to be an attractive market for us.”
Earlier this year Sempra secured two approvals from the U.S. Department of Energy (DOE) for global LNG exports via the ECA. The authorizations would allow the company to export U.S. produced gas to Mexico and re-export LNG to countries that do not have free trade agreements with the United States from the Baja California facilities.
Mexico should also see FID on a second LNG export project next year. In August, Mexico’s energy regulator Comisión Reguladora de Energía authorized construction of an LNG project on the Gulf of California in Sonora state.
Developer Mexico Pacific Ltd. LLC (MPL) has received DOE permission to export the gas from Arizona to Mexico and from there to re-export LNG globally. MPL is targeting buyers in Japan, South Korea and China given the project’s strategic geographic position.
The facility at Puerto Libertad has the green light to export up to 12 million metric tons/year (mmty) for 20 years, with the gas shipped south from the United States via existing cross-border transmission lines, including Kinder Morgan Inc.’s Sierrita Gas Pipeline LLC, which extends from the border near Sasabe, AZ. The project foresees initial construction of up to 4 mmty using modular LNG technology.
Meanwhile, U.S. LNG exports set records in October and November, as more than 100 cargoes departed and daily sendout surpassed 6 Bcf, according to the Energy Information Administration. EIA said LNG exports averaged 5.8 Bcf/d in October, when 52 cargoes made way for foreign markets. In November, they inched upward to 6.3 Bcf/d with 55 exported cargoes.
From January through November, U.S. LNG exports averaged 4.8 Bcf/d, or 61% more than in 2018, when they averaged 3 Bcf/d. LNG volumes in the United States are expected to continue rising next year to an average of 6.4 Bcf/d.
Now the third largest LNG exporter in the world behind Qatar and Australia, the United States is forecast in some estimates to become the globe’s largest in the coming years. More than 20 announced projects totaling roughly 35 Bcf/d are looking to catch the country’s second wave of gas exports in another round of development.