U.S. Natural-Gas Exports Fuel Mexican Manufacturing Boom

The growing glut of U.S. natural gas is helping to power a manufacturing boom in Mexico.

Natural-gas exports across the southern border have risen 11% so far this year, to two billion cubic feet a day, according to Bentek Energy, an analytics company based in Denver.

And that flow of gas could double in the next few years, analysts say. Companies have announced plans for at least seven new pipelines to take gas across the border from Texas and Arizona, including one expected to start transporting fuel at the end of the month.

The increasing flow of gas is easing a supply shortage in Mexico, where fuel is costly and industrial demand is booming in industries including electricity production, petrochemicals and auto manufacturing, which has roughly doubled since 2009.

The exports are also helping to reduce the overabundance of gas drillers that are pumping in areas such as the Eagle Ford Shale in South Texas, where gas is trading for less than the U.S. benchmark.

While Mexico has significant shale resources of its own, its energy companies have lacked the expertise and desire to tap them, analysts say. The country has been meeting its fuel needs in part by importing liquefied gas that can cost three times as much as piped-in gas from the U.S....

Mexico will be importing roughly two-thirds of its gas from the U.S. within the next two decades, according to projections from Ixchel Castro, an energy analyst for the consultancy Wood Mackenzie.

A large source of demand is the Mexican automotive industry, which produced nearly three million vehicles in 2013. Several auto makers have opened new plants in Mexico recently, or announced plans to do so...

Mexico's energy ministry projects rapid near-term growth of natural gas imports from U.S.
http://www.eia.gov/todayinenergy/detail.cfm?id=16471
MAY 29, 2014

A combination of higher natural gas demand from Mexico's industrial and electric power sectors and increased U.S. natural gas production has resulted in a doubling of U.S. pipeline exports of natural gas to Mexico between 2009 and 2013. Mexico's national energy ministry, SENER, projects that U.S. pipeline exports to Mexico will reach 3.8 billion cubic feet per day (Bcf/d) in 2018. This would be more than double U.S. pipeline exports to Mexico in 2013, which averaged 1.8 Bcf/d. This projected growth is driven mainly by higher demand from Mexico's electric power sector in both the north and interior of the country.

Nearly three-quarters of the projected growth in Mexico's natural gas consumption between 2012 and 2027 is projected to occur in the electric power sector (see graph). This growth is largely driven by private and independently operated power plants, whose natural gas consumption is expected to rise at a 7.9% average annual rate, from 1.6 Bcf/d in 2012 to 4.9 Bcf/d in 2027. By contrast, natural gas consumption from plants operated by national energy company CFE grows at just 0.4% per year, from 1.1 Bcf/d in 2012 to 1.2 Bcf/d in 2027. The growth comes largely from new combined-cycle plants, which benefit from greater operational efficiencies and lower emission levels compared to other generation sources. Growth sharply accelerates over the near term but continues through 2027, when power sector consumption reaches 58% of total gas consumption, compared to 47% in 2012.