• 4 minutes Pompeo: Aramco Attacks Are An "Act Of War" By Iran
  • 7 minutes Who Really Benefits From The "Iran Attacked Saudi Arabia" Narrative?
  • 11 minutes Trump Will Win In 2020
  • 15 minutes Experts review Saudi damage photos. Say Said is need to do a lot of explaining.
  • 4 hours Ethanol is the SAVIOR of the Oil Industry, Convenience Store Industry, Automotive Supply Chain Industry and Much More!
  • 13 mins Ethanol, the Perfect Home Remedy for A Saudi Oil Fever
  • 8 mins Let's shut down dissent like The Conversation in Australia
  • 4 hours Instagram Now Banning Photos Of People At Gun Ranges, Claiming They Promote "Violence"
  • 10 hours Famous Manufacturer of Anti-Ethanol Additives Proves Ethanol's Safety and Benefits
  • 16 hours Collateral Damage: Saudi Disruption Leaves Canada's Biggest Refinery Vulnerable
  • 22 hours Hong Kong protesters appeal to Trump for support.
  • 22 hours Saudi State-of-Art Defense System looking the wrong way. MBS must fire Defense Minister. Oh, MBS is Defense Minister. Forget about it.
  • 12 hours One of the fire satellite pictures showed what look like the fire hit outside the main oil complex. Like it hit storage or pipeline facility. Not big deal.
  • 7 hours US and China are already in a full economic war and this battle for global hegemony is a little bit frightening
  • 12 hours Trump Accidentally Discusses Technology Used In The Border Wall
  • 15 hours Iran in the world market
Alt Text

What The Market Is Overlooking In The Occidental Deal

Occidental Petroleum has caught a…

Alt Text

How To Play A Recovery In Oil Prices?

A realistic correction in the…

Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

More Info

Premium Content

Mexico Builds Half of a Great Natgas Project

There are a couple of bright hopes for U.S. natural gas producers these days.

LNG exports are getting a lot of press. But another solution to low gas prices may be even closer at hand: Mexico.

While U.S. gas production surges, so is Mexican demand. Driven by ambitious plans to replace the bulk of oil-fired power generation in the country with cheaper gas-powered capacity.

Plans for several billion cubic feet per day of new pipeline exports to Mexico are on the books. And those efforts got a boost last week, when federal regulators tentatively approved a new Arizona export line.

Related article: North Dakota in Spotlight after Oil Spill

The project's developers are seeking to build 60 miles of new pipeline to connect gas supply near Tucson to the Mexican border for export. After reviewing the proposal, the Federal Energy Regulatory Commission (FERC) said Friday that environmental impacts from the project could be brought to "less-than-significant levels". Giving a tacit go-ahead.

This is potentially good news for gas sellers with access to the new pipeline. The project could be completed by September 2014, giving suppliers the chance to sell into higher-value Mexican markets.

But not all sailing has been this smooth for south-of-the-border export plans.

Two weeks ago, Mexico's natgas ambitions hit a snag when a tender failed for a natgas pipeline key to import infrastructure from the U.S.

The Las Ramones phase two project is supposed to bring U.S. gas to key markets in north-central Mexico. The 460 mile pipeline is planned to interconnect with the phase one line that runs 750 miles into northern Mexico from Agua Dulce, Texas.

The phase one portion of this mainline has already been contracted to major midstream operator Sempra. But a tender for the phase two project drew only one bid. Raising speculation that state oil firm Pemex may be forced to build the phase two line on its own.

The interesting question is: why so little interest in the project? If U.S. exports to high-value Mexican markets are such a no-brainer, shouldn't developers be lining up at the opportunity to profit?

Related article: Keystone XL: An X-Ray into Obama’s Presidency

It could be that potential partners are simply uncomfortable with the scale of the investment. The price tag for the phase two project alone is pegged at $3.3 billion.

But the lack of interest could equally be a sign of deeper concerns over the viability of U.S. exports. Indeed, many of the "end use" gas-fired power plants on the Mexican side are only in the planning stages. Pipeline developers might simply want greater assurances that this demand will actually materialize.

It will be especially interesting to see how this saga plays out if U.S. gas prices start to rise. Ambitious Mexican plans for natgas power could fizzle if the economic incentives behind the fuel begin to evaporate.

Here's to looking before you leap,

By. Dave Forest




Download The Free Oilprice App Today

Back to homepage



Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play