Driven by abundance north of the border and growing need to the south, U.S. exports of natural gas to Mexico hit their highest level since export data collection began in 1973, the Energy Information Administration (EIA) said. Meanwhile, cross-border pipeline export capacity from the United States is expected to grow significantly.
Gas exports to Mexico grew by 24% last year to 1.69 Bcf/d. Imports now account for more than 30% of Mexico's gas supply, and the country's gas usage is at its highest level ever, EIA said.
Between 2007 and 2011, natural gas consumption in Mexico rose 4% per year on average, while average annual natural gas production climbed only 1.2%, according to EIA. Growing demand in the industrial sector drove increases in gas consumption in Mexico to a record high in 2011, according to Mexico state-run Petroleos Mexicanos (Pemex).
Before 2006, almost all of Mexico's natural gas imports came from the United States. More recently, Mexico has been importing liquefied natural gas from Nigeria, Qatar, Indonesia, Peru and Yemen. Still, the vast majority of Mexico's gas comes from the United States.
Pipeline shipments from Texas to Mexico between 2009 and 2012 rose 34% on average per year to 1.3 Bcf/d, which was about 75% of the U.S. natural gas exports to Mexico in 2012, EIA said. Most of the U.S. exports to Mexico departed the country from Hidalgo County in southwest Texas, where the supplies were likely coming from the Eagle Ford Shale.
Mexico has it's own piece of the Eagle Ford Shale, but the country's exploitation of it has been slow to take place, Recently, analysts at Goldman Sachs wrote that it will likely be a while before Mexico takes advantage of its Eagle Ford. "...[W]e view meaningful Eagle Ford production in Mexico as being likely up to three years into the future. However, eventually domestic shale gas production could limit or even reverse the dependency on pipeline imports from the United States," Goldman analysts said in a note (see Daily GPI, Feb. 11).
Several U.S. pipeline projects that could support additional exports to Mexico have been announced (see Daily GPI, March 8). These projects are expected to be completed by the end of 2014 and, if they are all built, could add up to 3.5 Bcf/d of additional export capacity to Mexico, doubling existing capacity.
The new capacity would serve growing demand from Mexico's power generation sector. Mexico plans to add about 28 gigawatts of generating capacity by 2027, mostly in northern Mexico, according to Comision Federal de Electricidad (CFE), the country's state-run electricity provider. CFE estimates that this could raise natural gas needs for power generation by 5.1 Bcf/d, driving the need for increased imports of gas from the United States, EIA said.
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