Mexico Aims to Triple Natural Gas Imports from U.S.

The Wall Street Journal, 5/16/2013

The construction of a natural gas pipeline from southern Texas to central Mexico will allow for a tripling of imports from the U.S. to meet increasing demand from industry, an official from Petroleos Mexicanos has said. Alejandro Martinez Sibaja, the director of the state-owned company’s gas division, said that Mexican industry is currently hampered by its reliance on more expensive fuels because of the lack of pipeline capacity for natural gas to come across the border.

“The lack of gas means that our industries are having to burn fuel oil,” which is currently about three times as expensive as natural gas, Mr. Martinez said in an interview on Wednesday. “A lot of investment is looking to come to Mexico, so we have to respond by providing natural gas as part of our offer to get these companies to come.” The gas supply problem is expected to be alleviated with the Los Ramones project, a pipeline that Mr. Martinez said will carry around 3 billion cubic feet of natural gas per day by 2015 from southern Texas to the central Mexican state of Guanajuato, which is a hub for the Mexican auto industry.

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Mexico debates opening its doors for shale development

FuelFix, 5/15/2013

Energy reform is likely to be one of the most important sweeping legislative changes that an incoming Mexican government will address, experts said Wednesday at a Houston conference on energy issues. The PRI government, which led the government for most of last century and who won the 2012 election, has indicated that it may consider expanding opportunities for private and international companies to help it expand needed infrastructure to develop its natural resources, including a wealth of natural gas.

One of the key issues is whether any reforms will focus on Mexico’s state-owned energy company, PEMEX, or will make more sweeping, fundamental changes. Either way will open up additional energy supply, said Duncan Wood, the director of the Mexico Institute at the Woodrow Wilson International Center “That is a crazy situation for a country that has the fourth largest share of natural gas in the world,” Duncan said. “PEMEX can’t do it alone. It doesn’t have the know-how and technological experience to work in deeper waters and on shale.”

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Mexico still far from tapping shale potential, minister says

Reuters, 5/8/2013

Despite having some of the world’s biggest shale gas reserves, Mexico imports about a third of its gas needs and, in the absence of major reform, risks further dependence on outside energy supplies, the country’s energy minister said Wednesday. “We need to enter into a new era of making the most of our non-conventional resources,” Pedro Joaquin Coldwell said at an energy conference in Mexico City. “We have prospective shale gas resources that rank us fourth globally, but we are far from taking advantage of this potential.”

Mexico has an estimated 681 trillion cubic feet of recoverable shale gas resources in deposits that may contain rich pockets of both natural gas and oil, according to the U.S. Energy Information Administration data. At the end of April, Mexico’s state oil and gas monopoly Pemex announced its first ever production of shale gas from a test well in the country’s northern Burgos basin, just across the border from Texas. The company said the Chucla 1 well produces 1.9 billion cubic feet per day of natural gas, as well as 24 barrels per day of crude oil and other condensates.

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Mexico-Japan: building pipelines

Financial Times, 4/9/13

Tuesday’s announcement that Mexico has signed an agreement with Japan’s Mitsui Corporation to construct a gas pipeline for $460m was accompanied by the idea that the deal would provide cheaper and more abundant energy for Latin America’s second-largest economy.

And so it probably will. The pipeline, which will connect Mexico to Arizona, will be able to carry about 770m cubic feet of gas every day – and cheaply – from the US to its southern neighbor. Considering that Mexico last year imported about 1.7bn cubic feet, the new infrastructure stands to add significant capacity to Mexico’s ability to import.

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Spain’s Gas Natural to build its first LatAm wind farm in Mexico

Global Post, 3/24/2013

For the latest Mexico Institute publications on energy and natural resources, click here.

Spanish energy giant Gas Natural Fenosa has started construction of a wind farm in the southern Mexican state of Oaxaca, the company’s first facility of this type in Latin America, executives told Efe. The wind farm, which will have 234 MW of installed generating capacity, is expected to be finished in 2014.

The facility will be the third-largest of the wind farms being constructed across the region. Gas Natural Fenosa’s wind farm will likely cost about $300 million euros (some $389 million), industry sources told Efe. The Barcelona-based energy giant currently has about 2,580 MW of generating capacity in Latin America.

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Mexico Moves on Energy in Economic Reset

The Wall Street Journal, 2/13/2013

For decades, Mexico’s energy policy has largely boiled down to exporting oil for cash to fund state spending. Now the new government is negotiating with rival political parties to curb that practice and instead use state monopoly Petróleos Mexicanos to a different end: cheaper energy, said Pemex CEO Emilio Lozoya. In an interview with The Wall Street Journal, the 38-year-old chief said the administration of President Enrique Peña Nieto was striving to overhaul tax and energy laws this year that Mr. Lozoya said would result in cheaper energy for consumers and companies that could drive a more competitive economy.

Now, the Mexican government relies on Pemex, one of the world’s biggest oil firms, for 35% of government spending, leaving the company with little left over to invest in areas like natural gas. Private companies, meanwhile, are largely barred from investing thanks to Mexico’s nationalistic energy laws. The result is an energy-rich country where companies often pay higher prices for energy than elsewhere. Mexico has large reserves of natural gas, for instance. But since Pemex doesn’t invest enough in gas, the country imports gas from the U.S.—raising costs to Mexican firms as they try to compete with global players like China.

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Mexico Pemex blast blamed on build-up of gas

BBC News, 2/5/2013

A deadly blast at the headquarters of the Mexican state oil company Pemex was caused by a build-up of gas, the attorney general has said. Jesus Murillo Karam said no traces of explosives were found at the site in Mexico City. He said experts believed an electrical fault had caused a spark that detonated the leaking gas last Thursday. The death toll from the blast has risen to 37. Several lower floors collapsed in the explosion. More than 100 people are being treated in hospital, many of them injured by falling masonry.

Mr Murillo Karam said the source of the gas was still being investigated, although it is believed methane gas may have leaked from ducts beneath the building or from the sewer system. “There are several possible sources,” he added. “This explosion… generated an effect on the structures of the floors of the building, first pushing them up and then causing them to fall, and that was the primary cause of deaths in the building,” he said.

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Mexico’s Pemex says minor gas incident has not hit operations

Reuters, 12/10/2012

Mexican state oil giant Pemex said its distribution system had not been hit by last month’s minor explosion at a gas facility, denying market talks that a major incident had led to a spike in liquefied petroleum gas prices.

“We have not had any serious events over the past 10 days,” Pemex spokesman Francisco Montano told Reuters. Late last month, an accident took place at a new gas plant in the Gulf state of Veracruz with a daily processing capacity of 200 million cubic feet. Local reports described it as an explosion.

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