Shale Daily / NGI All News Access

Mexican Shale Discovery Prompts $10.4B Pipeline Plan

Prompted in large part by the recent discovery of significant shale gas deposits in the country's north and east, Mexico will invest $10.4 billion to build more than 2,800 miles of natural gas pipelines and local distribution networks by 2018, a nearly 40% increase compared with the country's current pipeline network, President Felipe Calderon said.

Using a public-private investment scheme, the country plans to build eight pipelines to carry natural gas to the central Mexican states of Zacatecas, Colima, Morelos and Sinaloa for the first time, Calderon said in Guaymnas, Sonoro on Tuesday. The pipelines will be built in Manzanillo, Morelos, Tamazunchale-El Sauz, Chihuahua, Monterrey, Sonora, Sinaloa, Zacatecas and Yucatán.

In announcing his "Strategy for Structural Change in the Natural Gas Market in Mexico," Calderon said Mexico must take advantage of low natural gas prices. The strategy involves reinforcing the legal framework and increasing infrastructure investment for natural gas transport and distribution throughout virtually the entire country, he said.

Jordy Herrera, Mexico's energy secretary, last month said recent shale discoveries could grow the country's domestic natural gas reserves as much as sixfold (see Shale Daily, Oct. 28). Significant reserves have been found in Chihuahua and Tamaulipas states along the U.S.-Mexico border, in the northern state of San Luis Potosi and the southeastern state of Veracruz, Herrera said.

According to the U.S. Energy Information Administration (EIA), the United States exported 46.9 Bcf of natural gas via pipeline to Mexico in July. Mexico also imported 12 MMcfe of liquefied natural gas (LNG) from the United States that month. The EIA said Mexico paid $4.52/Mcf ($212 million total) for the natural gas and $9.45/Mcf ($113,400 total) for the LNG.

Calderon also outlined plans to strengthen natural gas regulation to "provide clearer definitions of the roles of every participant in the industry, create greater legal certainty and foster the development of a competitive market that will offer more and better choices of supply."

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