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Can CFE’s Mexico Natural Gas Pipelines Handle Bevy of New Projects?
Multiple challenges must be overcome on Mexico’s natural gas pipeline network to accommodate the recent projects announced by state power company Comisión Federal de Electricidad (CFE) and private industry, according to a former top executive.
Guillermo Turrent, the former CEO of gas marketing subsidiaries CFE International LLC and CFEnergía, addressed the outlook on Tuesday at LDC Forums’ annual US-Mexico Natural Gas Forum in San Antonio, TX.
CFE, in partnership with TC Energy Corp., recently finalized plans for the 1.3 Bcf/d Southeast Gateway offshore pipeline, an extension of the existing 2.6 Bcf/d Sur de Texas-Tuxpan (STT) pipeline.
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A separate deal with New Fortress Energy Inc. (NFE) would see the deployment of two “Fast LNG” offshore liquefaction units with capacity of about 250 MMcf/d each off the coast of Altamira, Tamaulipas, with feed gas supplied via STT.
These projects, along with the pending completion of TC Energy Corp.’s Tula and Villa de Reyes pipelines, could cause demand to exceed available capacity on STT, according to Turrent.
He explained that CFE’s demand on STT since it entered service in 2019 has averaged about 1.1 Bcf/d. The completion of Tula and Villa de Reyes would add about 500 MMcf/d in total, as would the NFE units, bringing total gas demand on STT to 2.1 Bcf/d.
Southeast Gateway, meanwhile, would add up to 1.3 Bcf/d, potentially bringing demand on the 2.6 Bcf/d STT system to some 3.3 Bcf/d.
For CFE’s Gulf Coast partnerships, “it is apparent that some major changes need to be made to accommodate all of this natural gas demand,” according to Turrent.
Northwestern Mexico could see even tighter constraints if all of the announced liquefied natural gas and power projects in the region enter service as scheduled.
These include Sempra’s ECA LNG Phase 1 liquefaction terminal, with expected demand of about 500 MMcf/d; the Mexico Pacific Ltd. LLC project which would pull about 1.25 Bcf/d for its first two liquefaction trains; and CFE’s San Luis Rio Colorado and Gonzalez Ortega power plants in Baja California that would require 216 MMcf/d combined.
“For the Pacific Northwest of Mexico, there are critical pipeline capacity shortages to be resolved to be able to supply some of the partnerships announced,” Turrent said.
CFE has 3.2 GW of natural gas-fired power plants under construction in total, with another 3.3 GW in the works, Turrent said.
Despite the challenges, Turrent said, “The actions seen over the last few months are great news for the market…We should all be excited to participate in the supply of physical natural gas to CFE and its strategic partners when open for tender.”
He cited that CFE is Mexico’s largest gas consumer, having increased its average consumption from about 2.3 Bcf/d in 2012 to roughly 4 Bcf/d today.
Equally important, Turrent said, has been the evolution of CFE’s gas sources. In 2012, state oil company Petróleos Mexicanos (Pemex) supplied about 1 Bcf/d of CFE demand, with LNG (800 MMcf/d) and U.S. pipeline (500 MMcf/d) imports accounting for the remainder.
These days, CFE sources practically all of its gas via pipeline from the United States, save for the occasional emergency cargo of LNG.
CFE also has been diversifying its gas supply within the United States. Prior to 2019, Mexico’s gas imports from the Waha hub in West Texas were marginal, maxing out at about 300 MMcf/d while the bulk of imports came via South Texas, Turrent said. Now, following pipeline capacity expansions on both sides of the U.S.-Mexico border, Mexico’s West Texas gas imports have quadrupled to average about 1.2 Bcf/d.
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