Mexico’s First Major Gas Storage Project Appears to Be Feasible

Mexico’s government is progressing steadily in its talks with a developer to build a natural gas storage project in a Veracruz salt cavern, revealed Co-Partner of consultancy Cadex, Eduardo Prud’homme in a talk during the US-Mexico LDC Forum. If the project develops, it will be considered Mexico’s first genuine natural gas storage effort, which could begin solving the dangerous missing link in Mexico’s energy self-sufficiency.

Prud’Homme called the development of a 6bcf/d salt dome storage facility “probable”. If greenlighted, the project could be ready as early as 2023, requiring between US$318 and US$481 million in investment. With the added capacity, pipeline system operator CENAGAS would be able to access as much as an extra day’s worth of natural gas imports from the US, just below the amount needed to ensure an optimal volume of gas flowing through the pipelines.

According to SENER, the project’s aim is to supply the central and southern regions of Mexico.

Long time ago, gas storage had been identified as a pain point in Mexico’s energy storage capacity. The country’s national gas production dropped off in recent decades in favor of cheap and convenient imports from the US. Nevertheless, reliance on outside energy sources has clear drawbacks, especially as gas-fueled power plants grow increasingly dominant in Mexico’s energy matrix. The issue was never clearer than in February of this year, when extreme weather conditions in Texas led to a series of events causing to a temporary stop in US natural gas exports. “The construction of gas storage infrastructure has become a national security issue, especially after February’s events and taking new combined cycle power plant tenders into account. The government, with its focus on energy security, supports this in its planning by aiming to develop natural gas storage and optimize the utilization of the regasification plants like TLA in Altamira,” said Alberto Escofet, Country Manager Mexico, Enagás to MBN in a 2021 interview.

Mexico’s government knows energy storage is a crucial piece of the puzzle in its mission to become self-sufficient in energy matters. Nevertheless, developing such projects has proven to be difficult.

Physical storage is not the only way Mexico can tackle storage capacity. Storing gas at regasification plants, compression stations and liquefaction facilities can also prove beneficial. “Owing to the availability of storage infrastructure in Manzanillo and Altamira, CFE was able to guarantee the stability and security of supply to the SISTRANGAS network, as well as for CFE’s power production. The event highlighted the importance of LNG infrastructure and the flexibility that it can add to the energy mix,” added Escofet.