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South Texas surfaces as heart of US gas exports to Mexico

SouthTexas is playing a leading role in supplying natural gas exports to Mexico,where production has continued to fall.

Speakingat the Platts Benposium East 2016 conference in New York, Anne Swedberg,industry analyst at S&P Global Platts' Bentek Energy, pointed tosignificant pipeline export capacity growth in Texas as a big driver of overallU.S. gas export activity.

Swedbergnoted a roughly 26% fall in Mexico's gas production since 2010 and she expectsthat trend to continue. However, gas imports from the U.S. make up about 44% ofMexico's overall supply and a lot of that gas is coming from South Texas, shesaid Sept. 28.

"Ifyou take flows from Texas, that's really where the growth is, specificallySouth Texas," she said, noting that infrastructure expansions will enableexports to continue to grow. "Combined, you have over 8 Bcf of capacity ontop of what is already there."

Sheforecast exports from South Texas to ramp up to as high as 4.5 Bcf/d by 2021,while exports from West Texas would build over the same time frame to 1 Bcf/d."There is enough supply to meet all of the growing demand. Capacity isn'tan issue in Mexico … the power generation facilities can feel comfortable usingnatural gas because they know there will be enough capacity to get into theirfacility," she said.

Swedbergsaid flows from South Texas to Mexico are up 26% year-to-date from the sameperiod in 2015. Much of the volume from the region is moving along 's NET Mexicopipeline. NET Mexico is a 120-mile, large diameter project running from theAgua Dulce Hub in Nueces County, Texas, to a point near Rio Grande City. Thepipeline, placed into service in December 2014, is moving about 1.5 Bcf/d,according to Platts data.

Swedbergbelieves that growing power demand in Mexico's Northwest region will bolsterthe market for U.S. gas pipelines extending south to the border. Much of thegas moved from the U.S. down south is expected to support gas-fired generationexpansions. She expects overall gas-fired capacity to expand by 64% by 2021,including a jump of 13.9 GW over the next three years.

S&P Global Platts andS&P Global Market Intelligence are owned by S&P Global Inc.