Alberto Escofet
Country Manager
View from the Top

Gas Infrastructure is Basis for Sustainable Future

By Cas Biekmann | Tue, 07/21/2020 - 14:47

Q: How has COVID-19 affected the company and its strategy moving forward?

A: We have not experienced a severe impact in Mexico. Our assets and infrastructure have been operating under normal conditions because they are a strategic part of the country’s gas network. We have noticed a decrease in demand of natural gas, but it has not been severe. Our Altamira regasification plant was already operating at lower capacity six months ago, when the marine pipeline entered into operation. CFE was being supplied by that particular pipeline, instead of via the regasification plant. Our other asset, the compression station in Soto la Marina, has retained 80 percent of its compression volumes.

The pandemic has changed the way we operate, however, because we have been very careful with regard to the safety of our staff. We have enforced additional safety measures to avoid any contagion while maintaining our standard quality.


Q: How is Enagás planning to add more projects to its portfolio?

A: Enagás always keeps its eyes open for new infrastructure projects. We have been closely following developments in Baja California, where CFE launched bidding processes a few months ago. We have also been closely following CENAGAS’ five-year plan, which has been published and is under review. Enagás is reviewing where it can participate in this regard, especially in the southeastern region of Mexico. Furthermore, the company has given serious attention to the theme of virtual pipelines, which can speed up gasification in several areas because it takes much less time to deliver natural gas on wheels than building a physical and investment-heavy pipeline. The portfolio is a mix of virtual and physical infrastructure. Baja California, for instance, would benefit from a mix of these infrastructures. We also look for opportunities around the border region with the US as many things are moving there. Nothing has happened yet, but it will in the near future.


Q: How would you assess the balance between physical and virtual pipelines?

A: Liquefied natural gas (LNG) has a leading role, and it can be transported over long distances. Most of the coming gasification efforts will be done on wheels, using virtual pipelines instead of physical pipelines. Mexico will need more physical pipelines to interconnect the main pipelines that already exist in the country. I think the gasification of new sites will be done using virtual pipelines. This has the advantage that almost nothing needs to be done. LNG can be transported via trucks, just like diesel or LP gas. Unlike pipelines, no special permissions or rights of way need to be established through contracts because you can use the existing highway.

However, the infrastructure to liquify natural gas will need to be built and interconnected with a pipeline close to an existing market. Using this method is the easiest and most economical way to bring gas to regions that need to be more economically competitive. To lure industry, you need a reliable energy source. There is enough capability within the existing network of pipelines to supply demand in a very short period of time.


Q: What role does natural gas have in the government’s energy mix?

A: What the government is planning is hard to guess. We think that natural gas is one of the best alternatives to achieve a sustainable future. It is low-cost and has minimal environmental impact, which makes it the preferred fuel. It is the main fuel that CFE uses for electric generation. The industry’s use of natural gas is lower in quantity, but equally important. The petrochemical industry uses natural gas as well, but as a raw material. Natural gas also will be used for newer applications, such as with gas-based hydrogen. Gas remains a no-brainer in terms of fuel.


Q: How does the company assess Mexico’s need for storage?

A: That is a topic of heavy debate and sooner or later it will have to be addressed. We need both strategic and operational storage in Mexico. The policy regarding this storage issue has already been established, so it is only a matter of time until CENAGAS or SENER makes a decision. Enagás can play a significant role in meeting the necessary targets.


Q: How does the company assess the possibility for Mexico to produce its own gas?

A: Mexico should have been producing our own gas for a while now. I do not know the exact production figures at the moment.  Mexico has a lot of reserve, but more than just necessary CAPEX spending, it is also a political issue. The question is if Mexico needs to move quickly or if it can wait until later. I think it should start with some investments and exploration, but for this to happen a strong E&P company needs to take the helm. PEMEX can no longer take on these projects, so the private sector needs to be invited. There are many things that need to be done before Mexico can think of starting our own natural gas production. It depends on Mexico’s will to do it because the technology involved is not rocket science. In the meantime, the country will have to depend on imports. Enagás works on transport and store gas, and in some renewable gases production pilot projects.


Q: How important is R&D in Enagás’ plans?

A: It is crucial and Enagás is making great strides in this area. Efficiency and reducing environmental impact are important, but developing new technologies and uses for natural gas are important as well. These include developing biomethane, biogas and hydrogen. You can use the current infrastructure to transport hydrogen, for instance. So-called “green hydrogen,” which has no emissions at all, is especially interesting because it is generated using renewable energy that is 100 percent clean. This hydrogen can be used for energy generation, but also to power any type of transportation method. Enagás is dedicating a great deal of resources to developments like these, on ways to fight climate change and reduce emissions, as well as introducing renewable aspects to the natural gas market. It is just a matter of time before these technologies take over the market. There are companies, universities and associations in Mexico working on hydrogen developments, and they have been doing so for 20 years. The area simply does not receive the same amount of publicity. Enagás is open to making further alliances with these parties.


Q: What are your main goals for 2020?

A: Our short-term goal is to get out of the COVID-19 crisis without any losses in personnel. We hope we can make use of our experience with the pandemic and learn to be more efficient and productive in our work. We want to maintain all of our assets in excellent operational condition while avoiding any incidents. We will continue to cater to our clients, offering them the excellent service they expect from us. Enagás aims to remain a company of reference when it comes to natural gas infrastructure and the fight against climate change.

Enagás has been present in the Mexican energy market since 2011. It has a 40 percent share in the Altamira regasification plant, 50 percent in the Morelos gas pipeline and 50 percent in the Soto la Marina compression station.

Cas Biekmann Cas Biekmann Journalist and Industry Analyst