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Analysis: US natural gas pipeline exports to Mexico hit record high

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Analysis: US natural gas pipeline exports to Mexico hit record high

Highlights

Total export volume reaches 5.8 Bcf/d: Platts Analytics

Sur de Texas-Tuxpan flows average 510 MMcf/d since startup

Maintenance, commissioning on other pipes stymied earlier rise

Denver — US natural gas pipeline exports to Mexico climbed to a record high Wednesday following the addition last week of new transmission capacity on the Sur de Texas-Tuxpan marine pipeline.

Wednesday's record 5.8 Bcf/d export figure, though, came - not from an increase in exports on Sur de Texas - but rather from a recovery in transmission volumes on other southbound pipelines.

In the week following the startup of commercial service on Sur de Texas, total US exports to Mexico had remained flatlined just below 5.4 Bcf/d, S&P Global Platts Analytics data shows.

With Sur de Texas volumes holding steady at roughly 510 MMcf/d during that period, the flatlined US export number had raised some questions about the possibility of volume displacement by end-users in Mexico.

According to Platts Analytics, though, recent declines in transmission volumes on other pipelines have actually been linked to short-term factors including maintenance and commissioning activity.

With those factors possibly coming to a resolution Wednesday, US exports to Mexico are likely to remain around 5.8 Bcf/d, with the potential to reach as high as 6 Bcf/d in the days and weeks ahead.

MAINTENANCE, COMMISSIONING

Flatlined US exports to Mexico in late September accompanied reported maintenance activity on NET Mexico and commissioning activity at a power plant served by the Nueva Era pipeline.

Over the past week, Mexico grid operator Cenagas has published some five critical alerts highlighting repair work on the Ramones-Escobedo segment of the national Sistrangas pipeline system. The maintenance cut US exports on NET Mexico by roughly 300 MMcf/d to around 1.7 Bcf/d.

Early Tuesday, though, Cenagas said the work was nearing completion, allowing for line packing of the pipeline to begin by later in the day. On Wednesday, flows on NET Mexico were up sharply on the day, estimated at nearly 1.9 Bcf/d.

On the Nueva Era pipeline, export volumes from the US have also witnessed a decline over the past week, falling to about 210 MMcf/d, down from recent highs near 300 MMcf/d.

Commissioning activity at the newly constructed Noreste El Carmen power plant saw gas deliveries there fall to zero from September 18 to September 24. On Wednesday, flows to the facility resumed, rising to 65 MMcf/d, which is equal to about half of the facility's recent record-high consumption at over 120 MMcf/d, Platts Analytics data shows.

US IMPACT

The recent startup of new export capacity on the 2.6 Bcf/d Sur de Texas-Tuxpan export pipeline has seen cash prices in the South Texas gas market rise considerably, just since mid-September.

In the week since the startup of commercial service, prices at Texas Eastern STX have averaged $2.50/MMBtu, or about 18 cents higher compared to the prior 30-day average.

Over the same period, prices at Tennessee Zone 0 have averaged nearly $2.33/MMBtu or about 14 cents higher compared to the prior-month average.

On Wednesday, prices at both South Texas hub locations were down about 3-4 cents, tracking similar declines across the South and East Texas gas markets, preliminary settlement data from S&P Global Platts showed.

-- J. Robinson, jrobinson@spglobal.com

-- John Hilfiker, jhilfiker@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com