LNG Re-Exporting From Mexico Gains Momentum

Oneok’s Saguaro Connector Pipeline subsidiary plans to build infrastructure to carry exports from the Permian Basin to Mexico. The company is currently seeking to get the US federal approval “to construct and operate facilities to export natural gas at a new international border-crossing at the US and Mexico border in Hudspeth County, Texas,” announced the company.

The pipeline is planned to extend for 155mi from the Waha Hub in Texas and is expected to have a 2.8Bcf/d capacity at full potential, which is expected to be reached by mid 2023. “The proposed border facilities would connect upstream with a potential intrastate natural gas pipeline, the Saguaro Connector Pipeline, which would be designed to transport natural gas from Oneok's existing WesTex intrastate natural gas pipeline system in the Permian Basin in West Texas to Mexico. Additionally, the proposed border facilities would connect at the International Boundary with a new pipeline under development in Mexico for delivery to an export facility on the West Coast of Mexico,” said Oneok. The company has not said which LNG facility in Mexico will be served by the infrastructure.

Oneok is a midstream service provider with presence in the US, connecting LNG supply in the Rocky Mountain, Mid-Continent and Permian regions with a network of natural gas gathering, processing, storage and transportation assets.

Similarly, Sempra Infrastructure announced last week that its Costa Azul and Vista Pacífico subsidiaries were authorized to re-export US sourced LNG from Mexico to non-USMCA countries. As reported by Natural Gas Intelligence (NGI), US gas exports to Mexico through West Texas have increased after the completion of pipeline infrastructure in Mexico.

The US exported gas to Mexico through 19 border exit points during 2Q22. According to Patrick Rau, Director of Strategy and Research, NGI, “growing demand from CFE and Mexico could help to narrow Waha basis differentials to Henry Hub over the coming years.”

Companies like Morgan Inc. have increased their projections for 2030 gas exports to Mexico from 7 Bcf/d to 9 Bcf/d, while current flows are about 6 Bcf/d. According to NGI, Sempra, along with developers such as Mexico Pacific Limited LLC and Amigo LNG and other developers, have hinted strong interest from Asia for the re-exporting projects in Mexico’s West Coast. Furthermore, “Asian buyers announced a trio of long-term LNG offtake agreements to start this week, reflecting the region’s thirst for the fuel amid a tightly supplied global market,” reported the source.