Exports of natural gas from the United States to Mexico have doubled in the past three years and are likely to continue to grow for at least the next few years, according to an analysis by Barclays Capital.

“We expect U.S. exports to Mexico to continue growing strongly in the medium term, and average 2.0 Bcf/d in 2013 and 2.2 Bcf/d in 2014,” wrote Barclays analyst Biliana Pehlivanova. “The pace of growth is likely to increase beyond 2014, as more cross-border and Mexican pipeline capacity is scheduled to come into operation.”

Over the same period that Mexico doubled its imports from the United States, the country’s own production declined 11%.

“Trends in output are diverging: associated gas production is on the rise, while non-associated gas is declining,” Pehlivanova said. “Mexico is endowed with substantial shale gas resources — the DOE (U.S. Department of Energy) estimates the country’s technically recoverable shale gas resources at 681 Tcf, exceeded only by China, the U.S. and Argentina. But their development will likely be slow, unless the country enacts a legislative reform allowing broader access to developing its gas resources.”

Mexico’s state-owned power generator, Comision Federal de Electricidad, estimates that 3.8 Bcf/d of additional natural gas supply will be needed to operate nearly 20 GW of gas-fired generation capacity needed in the country by 2024, according to Barclays. And new industrial facilities “are underpinning the build-out of several cross-border pipelines,” Pehlivanova said.

Driven by abundance north of the border and growing need to the south, U.S. exports of natural gas to Mexico in 2012 reached 1.69 Bcf/d, their highest level since export data collection began in 1973, according to the Energy Information Administration (EIA) (see Daily GPI, March 14). Before 2006, almost all of Mexico’s natural gas imports came from the United States. More recently, Mexico has been importing liquefied natural gas from Nigeria, Qatar, Indonesia, Peru and Yemen. Still, the vast majority of Mexico’s gas comes from the United States.

Pipeline shipments from Texas to Mexico between 2009 and 2012 rose 34% on average per year to 1.3 Bcf/d, which was about 75% of the U.S. natural gas exports to Mexico in 2012, EIA said. Most of the U.S. exports to Mexico departed the country from Hidalgo County in southwest Texas, where the supplies were likely coming from the Eagle Ford Shale.

Several U.S. pipeline projects that could support additional exports to Mexico have been announced (see Daily GPI, March 8). These projects are expected to be completed by the end of 2014 and, if they are all built, could add up to 3.5 Bcf/d of additional export capacity to Mexico, doubling existing capacity.

©Copyright 2013Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.