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Highlights

Imports hit single-day record June 25 at over 6.1 Bcf/d

Pipeline imbalances likely fueling incremental demand

Summer heat, new infrastructure lift baseline imports

New York — Mexico's gas imports from the US are poised to hit record highs in the weeks ahead, propelled by rising summer temperatures and potentially by an imminent opening in new downstream demand.

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In late June, exports twice surged to new record highs at over 6 Bcf/d.

While record regional demand from northern Mexico last month coupled with hotter weather to lift Mexico's baseline demand for US gas, the new single-day records appear to have been driven by increasingly frequent negative pipeline imbalances, data from S&P Global Platts Analytics shows.

On June 25, US exports reached over 6.1 Bcf/d with no corresponding increase in Mexico's sampled gas demand or national electric power load. Supply data also show no offsetting declines that day in domestic production or sendout volume from the country's LNG import terminals.

On June 25, however, the national pipeline grid operated by Cenagas had one of its lowest minimum operating pressures of the year. According to Platts Analytics, the data points definitively to a pipeline imbalance as the incremental factor behind that day's record gas import number.

Imbalances on Mexico's national Sistrangas grid have become more commonplace recently as domestic production continues to decline amid rising industrial and power demand and poor regional pipeline interconnectivity. In June, Cenagas reported negative pipeline imbalances on 19 days during the month.

A potential startup on new downstream infrastructure inside Mexico could help to resolve those imbalances by later this summer, according to Platts Analtyics. The same infrastructure additions could also lift Mexico's gas imports to new record highs at well over 6.1 Bcf/d.

Summer import records

In June, gas imports to northern Mexico edged up to their highest monthly average on record at over 700 MMcf/d. Strong imports during the month were fueled partly hotter weather and a 200 aMW increase in the northern region's electric power load compared to June 2019.

Last month, total supply on Fermaca's now mechanically complete Wahalajara system also averaged nearly 185 MMcf/d, or its highest since January, possibly fueled by hydrostatic testing on the recently completed pipeline system. The Wahalajara corridor – stretching from West Texas through northern Mexico and into the central-west – has faced delays to its full system startup as Fermaca and Cenagas remain locked in negotiations over operational control of the pipeline after it enters commercial service.

According to Platts Analytics, Wahalajara could enter full service any time over the next several weeks and into August, potentially boosting gas imports to Mexico's northern region by as much as 400 MMcf/d.

The Cempoala Phase II compressor station reversal is another downstream infrastructure project that's poised to enter service in the weeks ahead. The project has the potential to help resolve pipeline imbalances on the national grid and simultaneously lift gas imports into Mexico's northeast region.

Flow reversal at the Cempoala compressor would allow more gas to reach southern and peninsular Mexico, bringing more grid supply to a region that has long depended on falling domestic production. The project would likely help reduce the incidence of pipeline imbalances by improving regional interconnectivity and enabling gas to flow where it's needed.

The Cempoala compressor reversal is also likely to lift US pipeline exports to Mexico. According to Platts Analytics, volumes on both the Sur de Texas pipeline and NET Mexico should rise sharply following its startup – potentially any time over the next several weeks and into August.