Natural gas exports to Mexico on the rise

U.S. pipeline exports of natural gas have risen this year and have doubled since 2009, according to U.S. Energy Information Administration. Nearly all the growth can be attributed to rising exports to Mexico, which accounts for more than half of all U.S. natural gas exports since April 2015.

In August, 4.2 billion cubic feet per day of natural gas was delivered to Mexico via pipeline. On average, 3.6 billion cubic feet per day has been exported to the country so far this year. This represents a 25% increase from last year and is 85% more than the five-year average level between 2011 and 2015.

In 2015, the Mexico energy ministry (SENER) developed 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,” according to EIA. “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 included adding 12 pipelines, increasing capacity and installing 3,200 miles of new pipe throughout Mexico. As of July, work contracts had been signed for seven of the 12 pipeline projects. The largest and most expensive project is the Sur de Texas-Tuxpan pipeline and will supply the Mexican states of Tamaulipas and Veracruz. The 500-mile pipeline will run underwater from southern Texas through the Gulf of Mexico and have a capacity of 2.6 billion cubic feet per day.

Natural gas usage has risen in the country as a result of growth in its electricity market. Mexico has been opening natural gas-fired plants and using U.S. natural gas to meet the electricity demand.

U.S. natural gas exports are expected to increase in the short term, while SENER foresees a widening gap between Mexico’s natural gas production and demand until 2020.

Meanwhile, natural gas exports to Mexico continue to beat forecasted expectations. The amount that was exported in August wasn’t projected to reached until 2018.

But demand remains uncertain “as natural gas-fired capacity competes with renewables and nuclear generation,” according to the EIA. This “may slow the increase in Mexico’s natural gas imports. Domestic natural gas production may also rebound and reduce the need for pipeline imports from the United States.”