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Oil Markets Face Serious Risk Of New Supply Crunch

Oil Markets Face Serious Risk Of New Supply Crunch

Slowing global economic growth has…

Delays In Mexico Cap Record U.S. Natural Gas Pipeline Exports

gas infra mexico

The United States is sending via pipelines record volumes of natural gas to Mexico, and although U.S. pipeline capacity to Mexico and production and exports have jumped in recent years, delays at some pipelines on Mexican territory have been slowing down the rise in U.S. piped natural gas exports.

According to Thomson Reuters data, U.S. exports to Mexico have been at 4.9 billion cubic feet per day (Bcf/d) so far in August as demand for the power sector in Mexico rises. One billion cubic feet of gas is enough to fuel about five million U.S. homes.

The volume of the U.S. natural gas exports to Mexico has tripled over the past ten years.

U.S. natural gas pipeline capacity into Mexico has also increased over the past few years, the EIA said earlier this year. The increase was driven by growth in demand for natural gas from Mexico’s power sector and cheaper prices compared to liquefied natural gas (LNG) shipments. As of March 2018, U.S.-Mexico natural gas pipeline capacity was 11.2 Bcf/d, with another 3.2 Bcf/d of capacity expected to be added this year alone. Pipeline exports to Mexico have grown along with pipeline capacity, more than doubling since 2014 and averaging 4.2 Bcf/d last year.

Yet, delays with pipelines in Mexico have been capping some of the rising U.S. natural gas exports. According to energy data provider Genscape, quoted by Reuters, natural gas pipelines on the Mexican side of the border are facing at least a year of delays.

Related: Who Profits From Iran’s Oil Major Exodus?

At present, there are nine major gas pipelines being built in Mexico, but they face an average delay of more than 400 days, mostly due to legal injunctions filed during construction, S&P Global Platts reported in June.

The Nueva Era gas pipeline, for example, was originally scheduled for in-service date in the second half of 2017, but the date has been pushed out to the third quarter of 2018.

More pipelines in Mexico will not only help the country to import cheaper gas than LNG, much of which it also buys from the United States, but will also help ease takeaway pipeline capacity constraints out of the Permian where natural gas production is surging together with crude oil output.

By Tsvetana Paraskova for Oilprice.com

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