Mexico’s demand for Texan natural gas is set to rise as new infrastructure projects come to fruition.

Along with plans in Mexico to build up to 5 Bcf/d of liquefied natural gas export capacity, state utility Comisión Federal de Electricidad (CFE) also is developing over 7 GW of natural gas-fired power generation by 2025.

These power plants would require an additional 1.1 Bcf/d of natural gas, the CEO of CFE’s natural gas marketing affiliates CFE International LLC and CFEnergía, Miguel Reyes, said during the Mexico Infrastructure Projects Forum in Monterrey, Mexico, last week.

Recently, CFE head Manuel Bartlett called Texan gas “the cheapest gas in the world” and said his company was doing all it could to maximize its usage.

Among other projects, he highlighted the $4.5 billion Southeast Gateway offshore pipeline that CFE is jointly developing with TC Energy Corp. Southeast Gateway is set to be an extension of the existing 2.6 Bcf/d Sur de Texas-Tuxpan pipeline. It would bring gas to the cities of Coatzacoalcos and Paraíso, Tabasco, which is the site of the Olmeca oil refinery.

TC Energia Vice President (VP) Leonardo Robles, who oversees commercial and business development, said during the Monterrey event that the underwater pipe would start operating in 2025.

Executives at the conference also cited access to Texan natural gas as helping to fuel nearshoring opportunities.

About 90% of gas imported from the United States originates in Texas, according to NGI data. Almost two-thirds of gas exported from the United States is transported through four cities: Rio Grande City and Brownsville in South Texas, and Presidio and San Elizario in West Texas.

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While the majority of volumes are transported through South Texas, exports of U.S. gas to Mexico via West Texas also have been on the rise following the completion of pipelines in western and central Mexico.

The leading exporter of natural gas from the United States into Mexico is CFE International. CEO Reyes said during the event last week that the company was planning on releasing capacity on its pipelines on both sides of the border to facilitate the creation of a secondary market.

Texas Production Rising

Meanwhile, natural gas production in Texas is showing no signs of slowing down.

Texas produced 11.2 Tcf of natural gas last year, a new record, or almost 31 Bcf/d, according to the Texas Independent Producers and Royalty Owners Association (TIPRO). That would be the equivalent of about 10 times the total production of Mexico. Pennsylvania at 7.6 Tcf was the second-highest producer in the United States in 2022, followed by Alaska (3.6 Tcf), Louisiana (3.6 Tcf) and Oklahoma (2.7 Tcf).

Texas also had the highest rig count in the United States in 2022, with an average of 380 active rigs. This was more than half the total average rig count in the United States. The number of rigs in Texas increased from 332 in January 2022 to 410 in December 2022.

TIPRO expects further growth this year. The report cited projections by the Energy Information Administration for increased natural gas production of 2% in 2023 for total production of over 100 Bcf/d. The major driver of natural gas production growth would be drilling activity in the Haynesville region, which covers East Texas and northwest Louisiana, and the Permian Basin, which covers West Texas and Southeast New Mexico.

One potential stumbling block is a lack of pipelines and takeaway capacity, in particular in West Texas, where natural gas prices have sometimes gone into negative territory. But midstream companies are scrambling to fill the void. One company, Oneok Inc,. is seeking a federal permit that would facilitate exports of Permian natural gas to Mexico.

The roughly 2.8 Bcf/d Saguaro Connector, if sanctioned and completed, would originate at the Waha Hub in Pecos County, TX. The idea would be to export Permian gas from Oneok’s existing WestTex intrastate pipeline system to Mexico.