Pipeline exports of U.S. gas to Mexico doubled from 2009 to 2013, and they're poised to double again from 2013 to 2018, driven by growing demand from Mexican industry and power generators and growing supply in the United States, according to the country's energy ministry.
According to Mexico's Secretaria de Energia (SENER), pipeline exports of gas to Mexico could reach 3.8 Bcf/d in 2018, more than double the 2013 level of 1.8 Bcf/d. Power sector demand in northern Mexico and the interior is driving the demand, but growth is occurring in the southeastern portion of the country as well.
And driving power generator demand for gas specifically are private and independently operated power plants, whose gas consumption is expected to rise at a 7.9% average annual rate, from 1.6 Bcf/d in 2012 to 4.9 Bcf/d in 2027, the U.S. Energy Information Administration (EIA) said in a report.
"By contrast, natural gas consumption from plants operated by national energy company CFE [Comision Federal de Electricidad] grows at just 0.4% per year, from 1.1 Bcf/d in 2012 to 1.2 Bcf/d in 2027," EIA said. "The growth comes largely from new combined-cycle plants, which benefit from greater operational efficiencies and lower emission levels compared to other generation sources. Growth sharply accelerates over the near term but continues through 2027, when power sector consumption reaches 58% of total gas consumption, compared to 47% in 2012."
CFE recently said it would be seeking bids for the construction of more than $2 billion worth of pipeline infrastructure to serve power generation plants (see Daily GPI, April 22).
Natural gas from the United States enters Mexico in the northeast and northwest of the country, some on privately owned pipelines and some on pipelines owned by Mexico's Petroleos Mexicanos (Pemex). Higher natural gas pipeline imports from the United States into northeastern Mexico meet both higher demand from consumers there and the increased pipeline flows from the Northeast to regions farther south, according to EIA.
Most of Mexico's own gas production is associated with oil production from Pemex activities offshore in the south-southeast. This production is expected to grow by only 0.4% per year through 2019, and increasingly, this production is consumed in the course of oil exploration, production and refining, according to EIA.
"With stagnant growth in the production of associated gas in the south-southeast and limited capacity for future growth in LNG [liquefied natural gas] imports, pipeline imports from the United States become the primary means for Mexico to satisfy national demand growth," EIA said.
SENER has talked about developing the Sabinas Basin's La Casita Shale gas play in northeastern Mexico as well as the country's portion of the Eagle Ford Shale play. "However, there are significant factors that could inhibit the development of shale gas and other basins in Mexico, including the geologic complexity and discontinuity of its shale gas areas, the availability of required technology and water resources, security concerns, and a focus on development of crude oil resources," EIA said. "Even if additional development did occur, Mexico's northern regions would likely still see high growth in pipeline imports from the United States, particularly in areas that lack pipeline connectivity to other parts of the country."