Stabilis Energy LLC sees Mexico’s small-scale liquefied natural gas (LNG) market growing in “double digits” in the coming years, CEO Jim Reddinger said Wednesday.
The opportunities were discussed during a webinar organized by LDC Gas Forums. Although pipeline buildout in Mexico and across the U.S. border has been swift since 2014, “a lot of the last-mile pipelines that you see in the U.S. are not there,” Reddinger said. Liquefied natural gas “is the last mile delivery source.”
Despite the coronavirus pandemic, natural gas pipeline exports from the United States have continued to rise this year in step with pipeline infrastructure coming online.
In 2019, the United States exported more gas by pipeline than it imported for the first time since at least 1985, thanks to rising demand from Mexico and increased pipeline capacity to both Mexico and Canada, according to the U.S. Energy Information Administration.
September pipeline natural gas flows from the United States to Mexico touched historic highs at around 6.2 Bcf/d, up from 5.5 Bcf/d in September 2019, according to Genscape inc.
However, shippers and buyers have complained that last-mile connections remain woefully short in Mexico.
From the 100,000 gallon/day liquefaction facility in George West, TX, in the heart of the Eagle Ford Shale, along with contracts with more than 26 LNG liquefaction facilities, Stabilis is able to “put LNG in trucks and ship it across the border and serve customers in that market,” the CEO said. “The company also provides onsite mobile and stationary storage and regas systems.
“It’s a great thriving, growing market, but some parts of it are short on natural gas resources,” Reddinger said. Small-scale LNG options make sense for Mexican industrials, miners and power producers, he said, because they are cost competitive, cleaner burning than other fossil fuels, and reliable.
As part of the effort to expand its Mexico footprint, Stabilis announced last year it acquired LNG marketer and distributor Diversenergy LLC. It also formed a joint venture with CryoMex Investment Group LLC to develop LNG and compressed natural gas asset opportunities throughout Mexico.
“You need a great partner or operating team in the Mexican market. You need to be local,” Reddinger said.
Stabilis recently completed what it said is the largest distributed LNG project in Mexican history, with 2.3 million total gallons delivered over the course of several months to a power generator from the United States south across the border.
There were 250 truck border crossings, and the project supported 35 MW of power generation primarily used for summer cooling needs. Ten days after the contract was signed, first gas flowed, Reddinger said.
Stabilis can serve customers as far south as Mexico City, he added. It also has an LNG transportation hub in Colombia, Nuevo León, Mexico, across the border from Laredo, TX.
Last year the company said the hub “will facilitate the delivery of up to 50,000 LNG gallons/day to our customers in northeastern Mexico,” with supply from the George West facility. The hub “will increase supply security to Stabilis customers by reducing border crossing and related logistics risks,” the firm said.
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