Rio Grande TX Natural Gas Price

Pipeline natural gas exports from the United States to Mexico averaged 5.3 Bcf/d during the first quarter, up from 4.8 Bcf/d in the year-ago period, according to the U.S. Department of Energy’s (DOE) latest quarterly report on the gas trade balance.

Mexico accounted for 64.6% of total pipeline gas exports, with the other 35.4% going to Canada.

Exports by pipeline accounted for 50.7% of total gas exports, with the remaining 49.3% leaving in the form of liquefied natural gas (LNG).

Prices of U.S. pipeline exports to Mexico and Canada rose by 8.6% and 8.9%, respectively, versus the fourth quarter.

Overall, U.S. pipeline exports rose 4.6% y/y, while prices fell by 17.1%.

Although DOE listed 20 exit points for U.S. gas exports to Mexico, just two of those points — Rio Grande City, TX, and Brownsville, TX, — accounted for 46.2% of the total.

Brownsville is the starting point for TC Energy Corp. and Sempra Energy’s 2.6 Bcf/d Sur de Texas-Tuxpan subsea pipeline, which began flowing commercial volumes from Texas to Mexico last September.

Flows from West Texas to Mexico are expected to continue growing as well, following the recent completion of Fermaca’s Waha-to-Guadalajara pipeline system.

The average price for domestic gas at the Mexican border dropped by 14.6% to $2.63/MMBtu in 1Q2020 from the year-ago price of $3.08.

In a recent note to clients, Genscape Inc.’s Ricardo Falcon, Mexico natural gas analyst, said that U.S.-Mexico pipeline exports averaged 6.4 Bcf/d for the July 20-24 period, an all-time record for a five-day period.

Both sides lost ground in the natural gas trade between Canada and the United States as emergency responses to the Covid-19 pandemic eroded economies during the first quarter of this year, according to DOE.

Canada fared worst, based on the report compiled by DOE’s Division of Natural Gas Regulation. Canadian exports to the Lower 48 dropped by 7% to 721.7 Bcf, or 7.9 Bcf/d in 1Q2020 from 776.2 Bcf or 8.6 Bcf/d in 1Q2019.

The average price fetched at the border by Canadian deliveries to the United States fell year/year by 32.7% to $2.37/MMBtu from $3.52/MMBtu.

The Canadian setbacks were nearly twice as severe as the contraction endured by U.S. exporters on their northbound cross-border gas flows.

U.S. exports to Canada dipped from a year earlier by 3.8% to 261.7 Bcf, or 2.9 Bcf/d, from 272 Bcf or 3 Bcf/d. The 1Q2020 average prices fetched by U.S. deliveries to Canada dropped by 20.3% to $2.80 from $3.51 in the same period of 2019.

Meanwhile, growth by U.S. exports to Mexico and overseas shipments of liquefied natural gas (LNG) before the pandemic more than made up for the contraction in the trade with Canada.

Total U.S. gas exports jumped by 36.7% to 1.46 Tcf, or 16 Bcf/d in 1Q2020 from 1.068 Tcf or 11.9 Bcf/d for the same period of 2019.

Overseas LNG exports to 32 countries continued to be the U.S. gas industry’s growth star, with South Korea the top customer followed by the UK and Japan in third place.

U.S. LNG tanker shipments jumped year/year by 99.5% to 720 Bcf, or 7.9 Bcf/d, from 360.9 Bcf or 4 Bcf/d.

The U.S. tanker exports fetched a wide range of 1Q2020 prices, from $3.47/MMBtu in Belgium to $7.36/MMBtu in Panama.

From the top three volume buyers, exports fetched average prices of $4.86 in South Korea, $4.94 in the UK and $6.52 in Japan.

The highest 1Q2020 price paid for U.S. LNG, $10.00, went to the smallest cargos, carried as container loads on freighters instead of via dedicated tankers to Haiti, Bahama Islands, Barbados and Jamaica.

LNG shipments in the first three months of 2020 nearly caught up to pipeline flows as the top method of U.S. gas exports by accounting for 49.3% of deliveries, the DOE said.