The Growing Business of Gas Delivery

The expansion of the National Natural Gas Pipeline System is the most evident change the natural gas industry is experiencing in the post-reform landscape but companies in this sector can now capture other opportunities as well.

“All the existing pipelines in the country will have open access, allowing us to expand our presence to other locations where the natural gas infrastructure is already present,” says Luis Montgomery, President and CEO of ACCESGAS.

Montgomery says that in Mexico ducts were classified in two categories, consisting of the distribution network, which is used by gas distributors like Fenosa to deliver natural gas to urban locations, and the open-access pipelines, which were PEMEX’s assets that have been transferred to CENAGAS. The company plans to take advantage of the natural gas infrastructure that will be developed as a result of the new regulatory framework.

ACCESGAS is dedicated to the construction of pipelines but it also distributes natural gas by compressing the fuel, shipping it by truck and decompressing it once it reaches clients’ facilities. “Our company gears its services toward industrial users, which are usually located in places where natural gas infrastructure is available. In these industrial settings we offer companies turnkey projects for natural gas transportation and delivery,” says Montgomery.

Using pipelines is an efficient and cost-effective solution when a company is located near an open-access pipeline and has high consumption rates. But virtual pipelines are an attractive alternative when building physical transportation infrastructure does not make sense from a financial perspective. In fact, Montgomery believes delivering gas by vehicle is a better option for facilities located over 300km away from the main system.

Clients have safety concerns regarding natural gas transportation but Montgomery points out that the vehicles used for transporting CNG have high safety standards and are specially designed to withstand the high pressures required to transport this fuel. “All the vehicles we use have undergone several safety tests for leakage, heat or destruction. Our fleet is made of vehicles with steel fiber tanks whose resistance has been tested under several extreme conditions.” ACCESGAS routinely examines its vehicles to guarantee they are in optimal condition.

The company’s business model consists of delivering turnkey projects in which ACCESGAS provides all the financing and technical skills required except for internal connection pipelines, which have to be constructed by the client. This model allows ACCESGAS to maintain ownership of the pipeline, charging the company for the amount of natural gas used and a capacity usage fee. The company’s CNG area follows a similar model in which ACCESGAS finances the infrastructure required to deliver natural gas by vehicle, including the compression stations.

Montgomery highlights that clients also experience economic savings from fuel cost reductions by replacing LPG or propane with natural gas, which is cheaper and has a smaller environmental impact.

ACCESGAS has a nationwide presence. The company recently inaugurated its first compression station in the Bajio region and it has three more compression stations in the works to be located in the southern, western and Bajio regions.

As for pipelines, Montgomery says his company already has projects for Veracruz, Jalisco, Sonora, Sinaloa and the Mexico City outskirts. “All our projects consist of medium to small-sized ducts that connect different industries with the National Natural Gas Pipeline System, amounting to 65km. In addition, we are compressing 100,000m3 per day in our virtual pipelines and CNG transportation division, although we expect this figure to reach 600,000m3 over the next six months, which will require a US$45 million investment.”