Cross-border flows approach record 7 Bcf / d in April
Modeled energy use in Mexico hits record 4.6 Bcf / d
U.S. gas exports to Mexico could reach record levels over the next two weeks, fueled by rising temperatures south of the border and recent capacity additions on cross-border and downstream pipelines.
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Earlier this month, exports to the southern neighbor of the United States hit record levels of just under 7 Bcf / d, according to data compiled by S&P Global Platts Analytics. The record volumes were accompanied by population-weighted temperatures in the 70s Fahrenheit higher, about 5 degrees above normal, and by a spike in demand for electric cooling.
As temperatures move toward more summery averages, pipeline deliveries to gas-fired power plants in Mexico are up sharply from levels seen during comparable weather conditions in April 2020 and April 2019. Earlier this month, as temperatures in Mexico reached their highest level. at an average temperature of 76.5 degrees, modeled energy use reached approximately 4.6 Bcf / d.
During similar weather conditions last year, modeled energy burns in Mexico were about 1 Bcf / d lower, largely due to lower demand during the height of the coronavirus pandemic. In April 2019, comparable temperatures were associated with burns approximately 500 MMcf / d lower than this year.
Record power plant deliveries this spring were fueled by a surge in gas imports – two related trends that were made possible by recent additions in cross-border and downstream pipeline capacity.
In April, Texas – Tuxpan’s 2.6 Bcf / d Sur pipeline, which began commercial operation in September 2019, saw flows soar above 1 Bcf / d in 11 days – a high score for the system. Downstream flows went to TC Energia’s Tamazunchale pipeline and Cenagas at the Montegrande 500 MMcf / d interconnector, both providing an additional benefit to electricity consumption in central Mexico.
Cenagas plans to expand the Montegrande interconnection by an additional 1 Bcf / d in 2021, although additional infrastructure may be required to allow the expansion to function, according to Platts Analytics.
The 1.3 Bcf / d compressor station at Cempoala has also been the subject of a reversal project for several years and will allow the US gas supply to finally pass through southern Mexico.
Cenagas’ annual PO list shows multiple entries for Cempoala related activities and materials due June 2021. The agency’s five-year plan also shows two compressor stations, Lerdo and Tecolutla, which will be expanded and canceled by 1 , 6 Bcf / d to allow flows to the south – potentially key projects to work alongside Cempoala and Montegrande.
Over the next two weeks, increased pipeline capacity in Mexico could allow the United States to deliver record or near record volumes to its neighbor to the south. A forecast updated on April 26 shows the electricity sector’s gas demand rebounded above 4 Bcf / d later this week, after similar levels in the first week of May.
A seasonal forecast from Platts Analytics shows that U.S. pipeline exports to Mexico could average 6.5 Bcf / d through July, August and September. While the recent pop is likely weather-related, further improvement is possible in the longer term if electrical charges recover quickly amid reduced social distancing. Mexico’s load typically increases in July before seasonal temperatures begin to drop in September. To date, in April, the load has averaged 36.7 aGW, or 3.4 aGW, or 10.3%, more than in April 2020.
As cross-border flows are on the rise for this summer, the June 6 midterm election in Congress could also allow President Lopez Obrador to finalize a proposal that prioritizes CFE-generating assets over private assets. . According to estimates from Platts Analytics, shifting the marginal allocation curve away from the merit-based economy could displace up to 500 MMcf / d of gas energy use.