Capable Sourcing of Natural Gas will Remain Key for MexicoBy Cas Biekmann | Fri, 05/21/2021 - 10:48
Q: How does Tenaska Marketing Ventures’ experience factor into its position as a Top 5 natural gas marketer in the US?
A: Tenaska is headquartered in Omaha, Nebraska, and is one of the leading independent energy companies in the US. It has a well-earned reputation regarding ethical standards and expertise in natural gas and electric power marketing, energy management, development and acquisition of energy assets and operation of generating facilities. Tenaska Marketing Ventures (TMV) is the company’s natural gas trading arm. Over 30 years, TMV has continued to grow its network of contracted pipeline and storage assets in the US and Canada. Our experts respond quickly to disruptions and to client demands, providing a reliable service.
TMV has been a Top 5 marketer since 2013. We have also ranked first as a trader in terms of pipeline capacity release for the past 12 years and also top MASTIO’s customer value and loyalty ranking.
Q: How would TMV characterize the importance of Mexico’s gas market?
A: TMV views Mexico as part of the North American gas network along with the US and Canada. Over the last decade, the combination of increased demand for natural gas and a decrease in PEMEX’s supply as well as the doubling of the cross-border pipeline structure has made Mexico a pivotal component of the southwestern market, rivaled only by liquefied natural gas (LNG) development along the Gulf of Mexico.
As far as our communication strategy is concerned, we approach our customers in Mexico in the exact same way we would approach customers in the US and Canada. We focus on producers and consumers, although in the case of Mexico, it is only consumers. We help them conduct their operations economically and without interruption. We typically do this by integrating the customer’s assets into our portfolio. Once we have their assets, we utilize them on the customer’s behalf when needed and for third parties to generate incremental value, which we then pass back to the customer.
Q: Who are TMV’s main customers in the Mexican market?
A: It should come as no surprise that our largest customers are Mexico’s state productive enterprises, CFE and PEMEX. They represent such a large percentage of the total volume that we interact with them on a regular basis. We also have power producers as customers in Mexico, as well as some other private companies. These types of enterprises are right in our wheelhouse in terms of how we do business and add value. After all, we look for customers that have assets that could be integrated into our portfolio, including firm pipeline transportation capacity, storage, consumption, and supply.
Q: How do you assess Mexico’s policy-driven storage development incentives?
A: Mexico’s natural gas market does not really have the price signals necessary to properly incentivize private development of natural gas storage. One issue is the absence of seasonality of demand, which exists in Europe and the US where there is high demand in winter and considerably lower demand in summer. This creates a natural imbalance in which storage plays an obvious role.
The Mexican government’s policy regarding storage has changed quite a bit from previous administrations. It is still not fully clear what the strategy is, although the government does believe it should include storage for its national energy security. The US strategic petroleum reserve is a great example for Mexico. The reserve is located right across the border and has functioned well for a long time.
Q: Where do you see Mexico’s main challenges in regard to expanding the country’s gas pipeline infrastructure?
A: Today, 14 Bcf/d of cross-border infrastructure capacity exists, with the vast majority in Texas. At this point, I do not know if there is a need for incremental cross-border infrastructure. The challenges at this point are entirely within Mexico, related to interconnectivity between pipelines. This includes large interstate pipelines or last-mile pipelines that connect with local distribution companies or individual projects. Land-owner rights and ejidos have played a large role in the completion of pipeline projects within the country as well.
Q: What is Tenaska’s main strategic focus for 2021?
A: If you combine Tenaska’s business model with the state of the Mexican market, the result is a situation where Tenaska will be interacting with Mexico at the border. However, sometimes necessity will force operations to enter Mexico, such as when one party does not have the required import authorization or commercialization permits. To this end, we have our Mexican team, Tenaska Gas de México, and are planning to continue to import and deliver gas to Mexico. Lately, there have been many changes in the legal and regulatory structure. Just in the last few months, there have been proposed changes to the Electricity Law and the Hydrocarbons Law, as well as a proposal to eliminate asymmetrical regulation on PEMEX. All these developments are concerning, so our approach is to try and be consistent with what the market will allow us to do and what the current regulatory direction is. This means we must listen to what the intention of the Mexican government is and fit into whatever role is appropriate for this market structure.
14 Bcf/d of pipeline interconnectivity is operational between the US and Mexico, with a supply and demand imbalance in which Mexico imports 70 to 80 percent for natural gas not used by PEMEX. This situation is unlikely to change due to the nature of exploration and production cycles in hydrocarbons. Having said this, Tenaska will sell natural gas to clients either in the US or Mexico. This gas will eventually end up in the Mexican market, so the who and the where of these transactions will simply adjust to fit the market model and move across the border however circumstances warrant.
Tenaska Marketing Ventures is a Top 5 marketer of natural gas focused on the North American market. It has offices in Omaha, Boston, Dallas, Denver, Calgary, Vancouver, and Houston.