North America' burgeoning natural gas supplies have advantages beyond price for exporting to the global liquefied natural gas (LNG) markets, according to a Houston-based consultant. And Mexico could end up being a key part of the puzzle.
Bob Nimocks, president of Zeus Development Corp., a 20-year-old consulting firm that specializes in LNG intelligence, told NGI that he sees fewer problems in proposed U.S. LNG exports due to "reduced geopolitical risk and a more abundant labor pool" along the Gulf Coast where there is deep experience in process industries.
However, if the United States is unable to ultimately approve LNG export plans, Mexico could become the "sleeper" with up to three potential export points to which U.S. supplies could flow. "Baja California and Manzanillo in Mexico have good shots, if pipelines can be built or reversed and the Mexican government wants to support it," Nimocks said. "Mexico is the sleeper. The country has 15 pipeline connections with the United States and U.S. imports have been escalating rapidly."
Nimocks thinks that with various pipeline work, Mexico could site three LNG liquefaction facilities at under-used import terminals (Energia Costa Azul and Manzanillo. This would get around the need for U.S. export authority since Mexico is a free trade agreement nation under the North American Free Trade Agreement. "U.S. gas and jobs unfortunately could flow freely south if the U.S. government tries to block export projects," he said.
Nimocks is unsure about how many LNG export terminals will be approved. Ultimately, he thinks there could be three to five facilities in the United States, one or two in Western Canada, and one or two in Mexico. Alaska and Western Canada are possibilities for LNG exports, but Nimocks said he is troubled by the fact it would take major pipelines to get to proposed liquefaction facilities. He also is doubtful about export proposals along the U.S. West Coast from Washington, Oregon or California because of "NIMBYism" (not in my backyard).
There are cost advantages to exporting dry gas because those supplies do not require the extensive processing time and cost as other associated, or wet gas does before entering the liquefaction process, he said.
"The condensates of wet gas are far more valuable sold separately than left in the LNG. America has hundreds of plants to remove [natural gas liquids] and hydrocarbons so liquefaction plants can depend on dry, clean gas. With about 100 world-scale process trains complete around the world -- from the Middle East to the swamps of the Niger Delta to Norway's Arctic Circle -- North America will be about the best environment there is" for further global LNG exports, said Nimocks.
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