EIA: growth of U.S. natural gas exports to Mexico continues
Natural gas pipeline exports from the United States have doubled since 2009 and continue to grow in 2016, with Mexico being the largest contributor to this growth.
U.S. exports to Mexico have accounted for more than half of all natural gas exports since April 2015, Energy Information Administration said in its report on Tuesday.
In August, the United States exported 4.2 billion cubic feet per day of natural gas to Mexico via pipelines. U.S. daily pipeline exports to Mexico through August 2016 are at a yearly average of 3.6 Bcf/d, 25 percent above the year-ago level and 85 percent above the five-year (2011–15) average level, EIA said.
In 2015, Mexico’s energy ministry (SENER) unveiled a five-year plan to significantly expand the country’s natural gas pipeline network to accommodate higher levels of natural gas imports from the United States. These imports would help meet increasing power demand, offset declining domestic natural gas production, reduce reliance on LNG imports, and create new markets for natural gas in currently supply-constrained regions. The plan proposed 12 pipeline additions, increasing the existing network capacity and adding more than 3,200 miles of new pipeline through Mexico.
In it’s report in July, SENER said that contracts for seven of 12 pipeline projects have already been awarded.
EIA notes that the largest project is the Sur de Texas-Tuxpan pipeline, which aims to supply the Mexican states of Tamaulipas and Veracruz with natural gas from southern Texas via an underwater route through the Gulf of Mexico. The pipeline will extend nearly 500 miles and provide a total transport capacity of 2.6 Bcf/d.
Mexico’s electricity market has had a significant effect on the growth in natural gas usage with the development of new natural gas-fueled power plants as the country works to meet the growing demand for electricity.
U.S. natural gas exports to Mexico are expected to continue to grow in the short term, and SENER forecasts a widening gap between domestic production and demand through the end of the decade. Mexican imports of natural gas continue to outpace most projections. The 4.1 Bcf/d exported in August 2016 matched the level originally forecasted in 2013 to be reached in 2018, EIA said.
However, uncertainty in Mexican demand growth, particularly from the power generation sector as natural gas-fired capacity competes with renewables and nuclear generation, may slow the increase in Mexico’s natural gas imports, leading to lower pipeline capacity utilization, EIA said, adding that domestic natural gas production may also rebound and reduce the need for pipeline imports from the United States.