August 2023, Vol. 250, No. 8


Mexico’s Ambitious LNG Export Goals Rely on US Pipeline Imports

P&GJ Staff Report 

(P&GJ) — If Mexico follows through with construction of all its proposed liquified natural gas export projects, it will become the fourth-largest LNG shipper in the world. Unlike the other countries in that Top 4 list, however, it would be the only one that imports most of the natural gas it ultimately ships.

In Mexico, there is always a threat of theft to exposed pipelines.

That’s welcome news for U.S. natural gas producers, who stand to gain greater access to global demand centers, as well as pipeline operators who deliver their gas to the border and planned export points on Mexico’s Atlantic and Pacific coasts. 

Among the more recent projects to reflect the trend, a division of Tulsa-based ONEOK filed an application with the U.S. Federal Energy Regulatory Commission (FERC) to construct the 155-mile Saquaro Connector Pipeline from the Permian Basin to Mexico.  

The 48-inch, 2.8 Bcf/d pipeline would originate at the Waha Hub in Pecos County, Texas, and connect at the border with a planned Mexican pipeline that would deliver natural gas to a new export facility on the Gulf of California coast. 

While the details of the Mexican pipeline haven’t been announced, its destination has: Saguaro LNG Phase II would add an additional 4.7 mtpa of capacity to the 9.4-mtpa Phase I facility in Puerto Libertad, Sonora, bringing total capacity to 14.1 mtpa.  

The first phase has a start date of 2025 and is deemed to have reached final investment decision (FID), according to Gulf Energy Information’s Global Energy Infrastructure (GEI). Saguaro LNG’s operator, Mexico Pacific, has not announced a start date for Phase II, which would also source natural gas from New Mexico’s San Juan Basin. 

While a potential boon for U.S. producers, the Mexican LNG terminals will compete with numerous U.S. LNG export facilities that are either planned, under construction or in various stages of expansion. But midstream, engineering and construction companies from the U.S. and Canada are poised to benefit, as well as U.S. LNG producers with potential stakes in the Mexico facilities or pipelines that supply them.

Ongoing construction on the 48-inch (1.2-meter), 275-mile (442-km) Laguna-Aguascalientes Gas Pipeline. (Photo SICIM)

Europe’s efforts to end its dependence on Russian energy in the wake of its Ukraine invasion was a consideration when FERC approved the export of U.S. natural gas from two LNG terminals in December, as was the Asia-Pacific region’s ongoing transition from coal to cleaner natural gas for heating and electricity production.  

“These export projects are expected to “These export projects are expected to support efforts across the Indo-Pacific region to diversify energy supplies while transitioning away from coal in power production,” U.S.-based LNG developer Sempra’s CEO, Justin Bird said, in a statement urging approval of the exports as critical to supporting the energy needs of America’s allies. 

“They are also expected to help strengthen U.S. trading relationships, as well as create new jobs and boost the U.S. and Mexico economies,” Bird said. 

In addition to the Saguaro – a project of the Mexico Pacific partnership of ConocoPhillips, Bechtel, Baker Hughes, Techint and Quantum Energy Partners – GEI is tracking at least five planned or proposed LNG liquefaction and export facilities in Mexico that would mostly rely on U.S. natural gas imports as feedstock.  

Three of those are planned for Mexico’s West Coast.

The Laguna-Aguascalientes Gas Pipeline construction site. (Photo SICIM)

Coatzacoalcos LNG 

In November of 2022, CFE, Mexico’s state-owned power company, called for expressions of interest in an onshore liquefaction plant in the port of Coatzacoalcos in Vera Cruz. The plant would have a capacity of 4.5 mtpa. In February 2023, the head of CFE international said that the project would be tendered soon and would replace the LNG project in Salinas Cruz. As of February, the project is expected to export gas to Europe. 

CFE said it would provide natural gas to the project via pipeline, a site for the development of the project, assistance with permits and assistance with necessary pipeline connections. CFE also said it may consider partial ownership in the project. 

Amigo LNG 

In 2020, LNG Alliance received FERC authorization to export American gas through Amigo LNG, a planned LNG liquefaction plant Guaymas, Sonora. FEED commenced on the project in 2020 as well. As of February, Amigo LNG planned to use two 3.6 mtpa-capacity trains for a total capacity of 7.2 mtpa. Gas for this project would be delivered via existing pipelines.  

Produced LNG from Amigo is expected to target Asian markets. In April of 2022, LNG Alliance said project costs were expected to be $2.1 billion. The project targets start-up in the first quarter of 2026. 

Vista Pacifico LNG 

Vista Pacifico LNG is a proposed 3-4 mtpa liquefaction project led by Sempra and expected to be placed next to existing Sempra refined products terminal in Topolobampo, Mexico. In December 2022, FERC authorized Vista Pacifico to re-export up to 200 Bcf/y of LNG from U.S.-sourced natural gas. Developers are targeting start-up in 2025. 

Project owner Sempra Energy is a partnership of Sempra LNG (50.2%), Mitsui Group (16.6%), TotalEnergies (16.6%), Mitsubishi Corporation (11.6%) and NYK Line (5.0%). 

There is also a drive toward expanded LNG export capacity on Mexico’s East Coast.

Mexico FLNG 

New Fortress Energy (NFE) and Mexico’s state-owned CFE are developing develop three floating LNG (FLNG) units off the Atlantic coast of Altamira. NFE is the operator, while CFE is providing the feedstock using existing pipelines. The NFE Fast LNG units are to have a capacity of 1.4 mtpa each.  

The first FLNG unit was scheduled for deployment to Altamira this summer, with production start-up planned for the third quarter this year. In May, NFE said it had signed a letter of intent (LOI) with CFE to install the second and third Fast LNG units onshore at the site of the existing Altamira LNG import terminal, converting it to an export terminal in the process. 

Natural gas for the units is being sourced via the Brownsville and Sur de Texas-Tuxpan pipelines. Fluor is leading engineering for the project, with construction by Kiewit. 

President Andres Manuel Lopez Obrador has been a strong advocate of Mexico’s push from zero commercial LNG exports to the world’s No. 4 producer, behind only the United States, Australia and Qatar. 

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