EDUARDO ERHARD
Energy Division Director
Government of Nuevo Leon
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Insight

Constructing Mexico's Natural Gas Hub

Wed, 02/22/2017 - 12:31

As Nuevo Leon’s natural gas resources receive fresh private investment with the awarding of seven new fields in the Burgos Basin area, the state’s government looks forward to consolidating and promoting the industry by improving the energy security of its burgeoning industrial sector, according to Energy Division Director Eduardo Erhard.

Nuevo Leon’s proximity to the US, the world’s largest natural gas supplier, adds another layer to the northern state’s ambition to become Mexico’s natural gas market reference, Erhard says. “Nuevo Leon has the infrastructure, local production, access to the world’s largest natural gas market and growing energy demand. In other words, it has everything to become Mexico’s prime natural gas hub.”

In July 2016, around 250 million cubic feet was produced daily in Nuevo Leon’s natural gas fields, the third largest producer of non-associated natural gas in Mexico. The state’s production is expected to increase as the Burgos Basin holds the largest non-associated natural gas production in the country and has been opened to private investment.

Seven of the fields awarded in the third phase of the Round One bidding process (R1-L03) launched by Mexico to welcome private investment into its hydrocarbon’s industry are located in Nuevo Leon — Peña Blanca, Benavides Primavera, Mareografo, Carretas, Duna, San Bernardo and Calibrador — and all correspond to onshore developments in the Burgos Basin area. Operations in this region are expected to increase Nuevo Leon’s natural gas production considerably, as the fields have aggregated 3P reserves of 735 billion cubic feet of gas.

In the first quarter of 2017, the National Hidrocarbons Commission (CNH) will announce the results of the R2- L02 hydrocarbons bidding process, which includes nine additional fields in Nuevo Leon. “We have been working closely with the R1-L03 winning companies and supporting them in administrative aspects. We have great expectations about the R2-L02 in which the Burgos Basin will play an important role again and we are willing to collaborate with the winners,” Erhard says.

It is not surprising that the first private supplier operating in the wholesale electricity market is based in Monterrey. The state is the country’s third-largest power producer and the leader in internal electricity sales. An important part of Nuevo Leon’s power production comes from combinedcycle power plants fueled with natural gas and there are more to come, according to Erhard.

“We have several combined-cycle projects already under construction and more to be developed soon. Increasing local power generation would be beneficial for the state’s industrial sector because it would make electricity prices more competitive,” he says. There are also opportunities in storage to complement the already important distribution infrastructure in place, such as the Mier-Monterrey and Los Ramones pipelines. “Improving the state’s storage infrastructure is one of our greatest challenges,” Erhard says.

The government’s efforts to strengthen the local energy industry have echoed across the private sector, replicating a collaborative model that has long been a feature of Nuevo Leon. “The energy cluster was an initiative pushed by the private sector to build synergies and develop the human resources needed to face the Energy Reform’s challenges. It also works as a platform to promote the state’s electrical manufacturing industry, strengthening the local energy value chain,” says Erhard.

The end goal for the government is to transform Nuevo Leon into an energy self-sufficient state. “We want Nuevo Leon to be the most competitive state in Mexico and a global reference for industrial development,” Erhard says.