(Editor’s Note: This story is one in a series providing expert forecasts for the global natural gas and oil markets in 2022. Look for NGI’s extensive coverage of what happened in 2021 and what can be expected in 2022 and beyond in terms of prices, the LNG export markets, ESG, Mexico’s production and project prospects, North American midstream infrastructure plans and exploration and production strategies.)

TC Energy

Although investment in Mexico’s energy sector has slowed, the country’s demand for U.S. natural gas continues to rise, and its gas infrastructure continues to grow, albeit in fits and starts. NGI’s Mexico GPI has compiled a list of five pending projects to watch in 2022:

Tula, Villa de Reyes

TC Energy Corp.’s long-delayed Tula and Villa de Reyes pipelines, each with a capacity of 886 MMcf/d, will allow increased volumes to flow on the 2.6 Bcf/d Sur de Texas-Tuxpan marine pipeline, which entered commercial service in late 2019.

TC’s Stanley Chapman III, president for U.S, and Mexico pipelines, said this month that TC had reached “a breakthrough” in arbitration discussions with anchor shipper Comisión Federal de Electricidad (CFE) related to Villa de Reyes and Tula.

TC and CFE signed a memorandum of understanding to advance the arbitration proceedings, complete the stalled projects and consolidate their underlying natural gas transport contracts under a single rate agreement with a levelized toll.

TC is aiming to have the Villa de Reyes pipeline fully in-service by mid-2022, “provided we can continue to make progress in procuring access to the final sections of land,” Chapman told shareholders on Dec. 1 during the firm’s annual investor day. As for Tula, TC and CFE are continuing to work on the outstanding arbitration proceedings and are assessing reroute alternatives to complete the project.

The 171-mile Tula pipeline will connect with the 2.6 Bcf/d Sur de Texas-Tuxpan offshore pipeline, allowing U.S. gas imports to reach the 261-mile Villa de Reyes pipeline.

Villa de Reyes, in turn, will connect with Tula as well as the already operating Tamazunchale pipeline to supply gas to power generation and industrial facilities in central Mexico. 

New Offshore Pipeline?

TC Energy Corp. and Mexican state power utility Comisión Federal de Electricidad (CFE) have confirmed they are in talks to jointly develop a new offshore natural gas pipeline to supply the Yucatán Peninsula, which has faced chronic gas shortages due to stagnant domestic production. 

While the project has not yet been sanctioned, each firm has publicly expressed interest, and each has said that the required capital investment could exceed $4 billion if it goes forward.

The project “will allow CFE to transport natural gas from the basins of the southern United States to the Yucatán Peninsula, supplying existing and new power plants in Mérida and Valladolid as well as the new Trans-Isthmus pipeline, and providing redundancy and operational flexibility to the Dos Bocas refinery in Tabasco,” CFE said last month.

ECA LNG Phase 1

Sempra’s 3.25 million metric tons/year (mmty) Energia Costa Azul (ECA) liquefied natural gas (LNG) Phase 1 terminal was the only LNG export project to reach final investment decision during 2021.

Sempra Infrastructure’s Justin Bird, CEO, told analysts during Sempra’s third-quarter conference call that, “engineering, equipment, fabrication and site preparation are well underway” at the ECA Phase 1 project.

San Diego-based Sempra is targeting first LNG from the project in the port of Ensenada, Baja California state by the end of 2024. 

A 12 mmty second phase also is under discussion, along with the 3-4 mmty Vista Pacifico export terminal envisaged for Topolobampo, Sinaloa state.

MPL

Sempra is not alone in pursuing LNG exports from Mexico’s Pacific Coast. Mexico Pacific Limited LLC (MPL) CEO Doug Shanda told NGI’s Mexico GPI recently that the company was negotiating 22 mmty in binding offtake agreements from Asian buyers for MPL’s LNG regasification terminal planned for Puerto Libertad in Sonora state. Shanda said MPL is aiming to close binding offtake agreements for the first two trains of the project by year-end, and to reach a final investment decision in early 2022.

The first two trains would have a combined capacity of 9.4 mmty.

Guaymas-El Oro

Sempra remains at an impasse with regard to the Guaymas-El Oro section of its Sonora pipeline system in northwestern Mexico. The pipeline entered service in 2015 but has been out of commission since it was damaged in 2017. 

Anchor shipper CFE also sought to nullify contract terms requiring it to make fixed capacity payments under the force majeure declared by Sempra subsidiary Infraestructura Energética Nova (IEnova).

“Subsequently, IEnova and…CFE agreed to extend the service start date multiple times, most recently to March 14, 2022,” IEnova said in its third-quarter 2021 10-Q filing to the Securities and Exchange Commission.