Page 14 - GLNG Week 41

GLNG COMMENTARY GLNG

New liquefaction
capacity on Mexico’s
west coast may prove
to be an attractive
destination for Permian
gas.

Permian gas is relatively cheap, so the utility will of Mexico Pacific Ltd (MPL), said during Indus-
be able to turn a larger profit on sales to indus- try Exchange’s Sixth Mexico Gas Summit last
trial clients such as the local affiliates of Arcelor month that the volume of excess gas coming out
Mittal (India), which account for more than of the Permian might hit 20 bcf (566.4 mcm) per
$450mn per year of its revenues. At the same day, enough to support up to 100mn tonnes per
time, it will be able to reduce the cost of sup- year (tpy) of LNG production, by 2025. Since
plying gas to its TPPs, some of which have been US authorities are not likely to green-light the
reliant on imported LNG, by more than $180mn establishment of so much new capacity on the
per year. Gulf Coast, gas producers may find Mexico to
be a better option, she said.
“Far too anaemic” She emphasised the potential of Mexico’s
As noted above, it was previously expected that west coast, noting that the region was in a good
the expansion of pipeline capacity between Texas position to export LNG to either Asia or South
and Mexico would help alleviate the Permian gas America at a lower cost than US Gulf Coast
glut. Now, though, it looks like there will not be plants. “Mexico could not be in a better position
a glut for some time – even though flaring could from an economic fundamentals and supply
still be a problem in more remote areas with perspective to really feed into that opportunity,”
limited access to gas-gathering and processing she remarked.
capacity. Bairstow does have an interest in highlighting
RBN noted that more than 4 bcf (113 mcm) the possibilities of the region, as MPL is looking
per day of new outbound pipeline capacity from to build a 12mn tpy LNG plant in Puerto Lib- In the longer
the Permian to the Gulf Coast will be coming ertad, a city on the coast of Sonora State. The
online next year. However, the consultancy also proposed facility would receive Permian gas via term, the future
warned that production growth in the basin cross-border pipeline and liquefy it for export. of Permian gas
would be “far too anaemic” to fill this new Even so, MPL is not the only company to take
capacity. Indeed, the EIA is forecasting that total notice of Mexico’s west coast. Sempra Energy remains closely
US gas production will fall by almost 4 bcf per hopes to convert an existing LNG regasification
day next year compared with 2020. terminal in Baja California State into an LNG linked to oil price
In the longer term, the future of Permian production and export complex. The first phase
gas remains closely linked to oil price trends, of this facility, which will be known as Energía trends.
as well as questions over how quickly oil and Costa Azul (ECA), will be able to turn out
gas will fall out of favour as the energy transi- 2.4mn tpy of LNG, and its capacity may eventu-
tion unfolds. Nonetheless, exports to Mexico ally rise to 12mn tpy.
are only anticipated to grow over the coming Admittedly, this project is not progressing
months – and have the potential to do so for as quickly as Sempra might like, as Mexico’s
years to come. government has signalled that it may make
approval of the ECA project contingent on
Mexican LNG plans the construction of another LNG facility in
Some of that growth may take the form of Topolobampo in Sinaloa State. Nevertheless, it
cross-border pipeline deliveries of gas to LNG is worth noting that Sempra has already signed
plants on Mexico’s west coast. non-binding supply agreements for 100% of
Sarah Bairstow, the chief commercial officer ECA’s first-phase output.™

P14 www. NEWSBASE .com Week 41 16•October•2020