Natural gas exports to Mexico reach record levels

U.S. natural gas pipeline exports to Mexico have risen to 4.4 billion cubic feet per day through the first five months of 2018 as new cross-border pipeline capacity comes online, according to the U.S. Energy Information Administration. In July, the exports exceeded 5 billion cubic feet per day for the first time.

By the end of 2018, four more pipelines are expected to start transporting natural gas to Mexico. The new pipelines will transport the natural gas farther into the central and southern regions of Mexico and provide an outlet for Permian production in western Texas. U.S. natural gas exports are expected to meet rising demand from Mexico’s natural gas-fired power plants and industrial sectors as domestic production in Mexico declines.

About 75% of U.S. natural gas pipeline exports to Mexico flow from southern Texas. Exports from southern Texas rose to 3.3 billion cubic feet per day through the first five months on 2018. The natural gas primarily came from the Eagle Ford Basin in Texas and was used by the industrial and power sectors in northeastern Mexico.

In western Texas, exports to Mexico were 0.5 billion cubic feet per day through the first five months of 2018, and the exports have been limited from that part of the state because of connection delays from pipelines in Mexico to U.S. pipelines. The La Laguna-Aguascalientes, with a capacity of 1.2 billion cubic feet per day, and the Villa de Reyes-Aguascalientes-Guadalajara, with a capacity of 0.9 billion cubic feet per day, are expected to start operating in November after an interconnect at El Encino-La Laguna is completed in October. The pipelines will transport natural gas from western Texas into central and western Mexico through the Ojinaga-El Encino and Tarahumara pipelines. Also in November, the Samalayuca-Sásabe, with a capacity of 0.5 billion cubic feet per day, is set to begin operations, and will serve new natural gas-fired plants in western Mexico.

Later this year, a total of 3 billion cubic feet per day of export capacity from southern Texas is expected to starting operating. The U.S. Valley Crossing pipeline, with a capacity of 2.6 billion cubic feet per day, will connect to Mexico’s Sur de Texas-Tuxpan underwater pipeline. However, the Tuxpan-Tula pipeline, with a capacity of 0.9 billion cubic feet per day, is delayed and not expected to start operating until 2020. The pipeline connects the Sur de Texas-Tuxpan to central Mexico. Also, the Tula-Villa de Reyes pipeline near Mexico City has been delayed until 2019. Existing pipelines that transport natural gas from southern Texas will continue to serve the high-demand market near the city.