Mexico’s Sistrangas pipeline operator Cenagas declared restrictions on the network because of inadequate operating conditions, citing reduced flows at the northern Ramones injection point.
The restrictions went into place earlier this week and will continue until further notice. Users have been asked to stick to their programmed nominations.
Gadex consultant Eduardo Prud’homme told NGI’s Mexico GPI that the problems could stem from higher output from Petróleos Mexicanos (Pemex) processing centers, rerouted flows from the Sur de Texas pipeline, and unforeseen operational conditions at the Cempoala compressor station.
Meanwhile, New York Mercantile Exchange natural gas prices for November seem to have settled into a pocket of between $6.00 and $7.00/MMBtu. U.S. production of more than 100 Bcf/d has supported the bears, but bulls are buoyed by strong demand and storage levels that remain 221 Bcf below the five year-average.
“What’s also influenced U.S. prices at times are updates to the ongoing Russian invasion of Ukraine and the major consequences it’s had on global energy supplies and prices,” NatGasWeather said in a note on Thursday. “Where prices go next is difficult to predict, but we continue to watch $6.60 on November contracts for when prices finally break sharply away from it.”
Colder Months Ahead
The U.S. Energy Information Administration (EIA) in its latest Winter Fuels Outlook included in its updated Short-Term Energy Outlook (STEO) Wednesday, predicted a 28% year/year increase in winter expenditures for homes that heat with natural gas.
While temperatures rarely drop significantly in Mexico, the price of natural gas paid by users tracks closely to those north of the border.
Household expenditures for natural gas in the United States could climb to 51% above year-earlier levels for October through March in a scenario where temperatures are 10% colder than baseline expectations, the agency said. Projected cost increases for natural gas are the largest among the household heating sources looked at in EIA’s modeling.
EIA said forecasting from the National Oceanic and Atmospheric Administration pointed to slightly colder temperatures compared with last winter, which would drive higher consumption levels “across all fuels and regions.”
Despite price volatility that has continued to impact the market, a natural gas distributor in Mexico City told NGI’s Mexico GPI that demand remained normal and in fact a bit higher than usual.
On Thursday, Mexico imported 5.052 Bcf from the United States via pipeline, according to NGI calculations. Most of the gas (4.345 Bcf) came from South Texas. The data does not include intra-state trades within Texas.
Demand on Mexico’s Sistrangas on Tuesday (Oct. 11) was 4.411 Bcf, up from 4.375 Bcf a day earlier. Mexico gas production fed into the system was 1.290 Bcf. Southeast production dominated the total, with 722 MMcf from the region injected into the pipeline system.
The power sector was the biggest user of natural gas on the Sistrangas on Tuesday, at 1.348 Bcf. This was followed by the distribution segment (1.055 Bcf) and Pemex (1.081 Bcf). Industrial end users accounted for 915 Bcf of demand.
According to calculations from consultancy Gadex, natural gas pipeline imports from the United States into the Sistrangas were 3.121 Bcf as of Tuesday. The Sur de Texas pipeline injected 544 MMcf into the system. Liquefied natural gas imports into the Sistrangas were 20 MMcf.
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Mexico Cash Prices
Tuxpan in Veracruz via Cenagas saw the spot price rise 16.1 cents to $6.710.
In the West, the Guadalajara price rose 41.4 cents to $6.155. Farther north in El Encino, prices via Tarahumara were $4.987, 67.0 cents higher than the previous day. On the Yucatán Peninsula, the cash price at Mérida was $7.421 on Wednesday, up 15.9 cents.
U.S. Gas Storage
On Thursday, the EIA reported a 125 Bcf injection into natural gas storage inventories for the week ending Oct. 7. This was the fourth consecutive triple-digit injection.
The South Central region saw a 55 Bcf increase in inventories, highest among all regions. This included a 26 Bcf injection into nonsalt facilities and a 28 Bcf increase into salts, according to EIA. Until Mexico develops storage capability, this is the storage system most readily available to the country.
The South Central region keeps closing the gap with historical averages. For the week ended Oct. 7, total working gas in the South Central region stood at 1,058 Bcf, down from 1,075 Bcf for the same time one year ago. The figure was 38 Bcf lower than the average 1,096 Bcf in storage for the same day between 2018-2022, EIA said.
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