U.S. pipeline exports of natural gas continued to grow in 2016, having doubled since 2009, the Energy Information Administration reports.
Most of the growth is attributable to increasing exports to Mexico, which have accounted for more than half of all U.S. natural gas exports since April 2015, Kallanish Energy learns.
In August, the U.S. exported 4.2 billion cubic feet per day (Bcf/d) of natural gas to Mexico via pipelines. U.S. daily pipeline exports to Mexico through August 2016 are at a yearly average of 3.6 Bcf/d — 25% above the year-ago level and 85% above the five-year (2011–15) average level.
In 2015, Mexico’s energy ministry (SENER) announced a five-year plan to significantly expand the country’s natural gas pipeline network to accommodate higher levels of natural gas imports from its northern neighbor.
“These imports would help meet increasing power demand, offset declining domestic natural gas production, reduce reliance on LNG imports, and create new markets for natural gas in currently supply-constrained regions,” according to EIA.
The plan proposed 12 pipeline additions, increasing the existing network capacity and adding more than 3,200 miles of new pipeline throughout Mexico.
According to SENER’s July 2016 update, contracts have been awarded for seven of the 12 pipeline projects.
Growth in Mexico’s domestic electricity market has largely driven the country’s increasing natural gas usage. Because of the availability and affordability of U.S. pipeline natural gas, Mexico is meeting its growing electricity demand with generation from new natural gas-fired plants.
U.S. natural gas exports to Mexico are expected to continue to grow short-term, and SENER forecasts a widening gap between domestic production and demand through the end of the decade.
Mexican imports of natural gas continue to outpace most projections. The 4.1 Bcf/d exported in August 2016 matched the level originally forecast in 2013 to be reached in 2018.
However, uncertainty in Mexican demand growth, particularly from the power generation sector as natural gas-fired capacity competes with renewables and nuclear generation, may slow the increase in Mexico’s natural gas imports, leading to lower pipeline capacity utilization.
