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Sur de Texas-Tuxpan injections decline to nominal levels

Highlights

Injections average less than 1 MMcf/d Tuesday to Saturday

August-tendered LNG cargoes continue arriving at Altamira

Houston — Injections to the Sur de Texas-Tuxpan cross-border pipeline slowed last week to an average of less than 1 MMcf/d in the five days through Saturday, down from levels that averaged about 45 MMcf/d in the week prior, data posted Monday by TC Energy showed.

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Information available from the TC Energia electronic bulletin board provided no context around the recent slowdown, and an email requesting additional information from the company did not receive a reply Monday.

Stops and starts to gas injections are not atypical during pipeline commissioning processes.

Upon mechanical completion of the 2.6 Bcf/d marine pipeline in June, though, injections initially ramped up to an average 205 MMcf/d during the first five days of operation, briefly climbing as high as 275 MMcf/d.

In July, injections to the pipeline declined to zero when Mexico state-owned power generator CFE delivered a request for arbitration to pipeline developers TC Energy and IEnova over capacity payments that it said were unjustified.

On August 27, Mexico President Andres Manuel Lopez Obrador announced a resolution to contract disputes between the federal government and developers.

Less than one week later, injections to the pipeline jumped to more than 50 MMcf/d. No recent or historical deliveries from the pipeline have been recorded.

LNG IMPORTS

The recent slowdown in commissioning activity on the Sur de Texas pipeline comes as Mexico's Gulf Coast Altamira LNG import terminal continues to receive cargo deliveries this month.

In late August and prior to the announcement of a resolution to the pipeline contract dispute between CFE and private developers, the power generator announced a buy tender for three cargoes with delivery windows of September 7-8, September 16-17 and September 25-26, data compiled by S&P Global Platts shows.

The September-delivered LNG cargoes could be used to fulfill demand from regional power generators and industry that might otherwise be supplied by the Sur de Texas pipeline -- though likely at a higher price.

In late August when the cargoes were tendered, the Platts FOB Gulf Coast Marker was priced in the low-$3s/MMBtu. Including the cost of shipping, it is possible that the delivered cargoes were awarded in the low-$4s/MMBtu.

According to Platts Analytics, pipeline gas arriving at Altamira on Sur de Texas would likely price around 60 to 70 cents/MMBtu over the cash market at Houston Ship Channel. In September, prices at the East Texas hub have averaged just over $2.40/MMBtu, S&P Global Platts data shows.

-- J. Robinson, jrobinson@spglobal.com

-- Edited by Bill Montgomery, newsdesk@spglobal.com