US natural gas exports to Mexico may continue to grow strongly in the medium term and average 2.0 Bcf/d in 2013 and 2.2 Bcf/d in 2014, stated London based Barclays in its recent market report.The pace of growth is likely to increase beyond 2014, as more cross-border and Mexican pipeline capacity is scheduled to come into operation.
Exports of US gas to Mexico have doubled in the past three years . Production in Mexico has declined 11% over the same period. Trends in output are diverging: associated gas production is on the rise, while non-associated gas is declining.
Mexico is endowed with substantial shale gas resources – the DOE estimates the country’s technically recoverable shale gas resources at 681 Tcf, exceeded only by China, the US and Argentina. But their development will likely be slow, unless the country enacts a legislative reform allowing broader access to developing its gas resources.
Meanwhile, the state-owned power generator, Comision Federal de Electricidad (CFE) sees the need for nearly 20 GW of gas-fired generation capacity to be developed between 2010 and 2024, and estimates that the plants will require approximately 3.8 Bcf/d of additional natural gas supply to operate.
Power generation is not the only sector that requires increasing amounts of gas: new industrial facilities are underpinning the build-out of several cross-border pipelines. This week, the country’s state owned oil and gas monopoly, PEMEX, is expected to release bidding rules for a part of the Los Ramones pipeline project. Two sections of the pipeline have already been assigned.
When completed, Los Ramones will be ready to bring about 3 Bcf/d of gas from southern Texas to the state of Guanajuato in central Mexico. The region is a hub for the country’s auto manufacturing industry.
Los Ramones is only one of several pipelines that are expected to come online in the next few years and underpin substantial growth of US gas flows to Mexico.
Source: Barclay's