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Sur de Texas natural gas flows on pace for strongest monthly average

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Cempoala Compressor Phase II in-service to bring next increase

Additional capacity will likely lift South Texas prices

Denver — Gas flows on the Sur de Texas pipeline have averaged 667 MMcf/d in November and reached an all-time high of 819 MMcf/d on November 14, according to S&P Global Platts Analytics flow data, putting the Texas-to-Mexico gas conduit on track for its highest monthly average since entering service.

November's average would represent an 8% increase on the month. Driving the rise was greater access to downstream portions of Mexico's gas market, specifically at the Altamira V power plant complex. Increased deliveries from Sur de Texas were displacing previous deliveries to the plant, which were sourced from LNG from the Altamira LNG import facility.

Platts Analytics flow data from the Altamira LNG terminal shows that regasified LNG deliveries to the Altamira V plant were zero for most of November. While the CFE contract on Sur de Texas specifically labels the Altamira V power plant unit, it is likely that the LNG import facility will still be required for reliability, potentially even peak-shaving during the summer.

The next significant bump to exports along Sur de Texas will likely come once the Cempoala Compressor Phase II enters service, which is currently expected at the end of the first quarter in 2020.

The project, which is downstream of Sur de Texas, will allow for full compression to be available at the station, increasing south-bound capacity through the station to nearly 1.3 Bcf/d, and opening access to further downstream markets in central and southern Mexico.

The expected boost to South Texas exports generated from Phase II entering service will likely place upward pressure on South Texas prices. This expectation differs from what occurred when Sur de Texas originally entered service September 17, with South Texas prices not fluctuating much.

Sur de Texas originally came online at the same time as Gulf Coast Express (GCX), which likely muted any price reaction as the increased Mexico export demand was likely offset by the additional supply from GCX.

-- Jack Winters, jack.winters@spglobal.com

-- Edited by Shashwat Pradhan, newsdesk@spglobal.com