Mexico Wants More Texas Natural Gas

by Jennifer Hiller

The export of U.S. natural gas is climbing — and much of it is coming from Texas shale fields and bound for power plants in Mexico.

As Mexico continues to overhaul and modernize its energy sector, its appetite for U.S. natural gas is swelling. Daily pipeline exports to Mexico rose 25 percent in August, compared with the year before, according to the U.S. Energy Information Administration. August exports were up 85 percent from the average amount of natural gas that had been exported daily between 2011 and 2015.

It’s a trend that shows no signs of slowing, even as Mexico moves to increase its own oil and gas production, according to Antonio Garza Jr., a former U.S. Ambassador to Mexico under President George W. Bush and a former chairman of the state’s oil and gas regulator, the Texas Railroad Commission.

“The amount of natural gas flowing from shale fields in the United States to Mexico has been rapidly increasingly over the last few years — doubling from mid-2014 through today and expected to double yet again in the coming years,” Garza said.

More than half of U.S. natural gas exports have gone to Mexico since April 2015. To move the gas, pipeline capacity from the U.S. to Mexico is on the rise, too. It’s currently at 7.3 billion cubic feet per day, mostly headed from Texas to the northeast and central parts of Mexico.

Four new U.S.-to-Mexico pipelines are expected to come on line next year, with two more expected to start moving gas in 2018. In the next three years, that U.S.-to-Mexico export capacity is projected to double, according to recent reports from the EIA.

Feds Reject Latest Protest Against Trans Pecos Pipeline

by Russell Kooistra and Jasmine C. Hites

On November 1, 2016, FERC rejected arguments raised by numerous intervenors (“Environmental Intervenors”) that FERC had too narrowly defined its jurisdiction over Trans-Pecos Pipeline, LLC’s (“Trans-Pecos”) Presidio Border Crossing Project (the “Project”) and interconnecting intrastate pipeline (the “Trans-Pecos Pipeline”), which resulted in an abbreviated environmental review that failed to comply with the National Environmental Policy Act of 1969 (“NEPA”). In doing so, FERC found that the Trans-Pecos Pipeline will be an intrastate pipeline receiving natural gas produced solely in Texas, and thus environmental review of the construction and operation of the pipeline is not subject to FERC’s Natural Gas Act (“NGA”) Section 7 jurisdiction.

On May 5, 2016, FERC granted Trans-Pecos a Presidential Permit and authorization under NGA Section 3 to site, construct, and operate the Project to export natural gas to Mexico (the “May 2016 Order”). According to FERC, the Project will consist of 1,093 feet of pipeline extending from Texas to the Mexican border in the middle of the Rio Grande River, where it will interconnect with a new stub pipeline of a Mexican affiliate. On the United States side of the border, Trans-Pecos also plans to construct the Trans-Pecos Pipeline, a 148-mile-long pipeline connecting the Project to natural gas supplies in Pecos County, Texas. As the May 2016 Order noted, the Commission issued an environmental assessment for the Project, which concluded that approval of the Project would not constitute a major federal action.

In response, Environmental Intervenors requested rehearing of the May 2016 Order, arguing that FERC should have found that the Trans-Pecos Pipeline was subject to the Commission’s jurisdiction under NGA Section 7. Specifically, Environmental Intervenors argued that because the Trans-Pecos Pipeline terminates near the Waha Hub – a hub in west Texas with interconnecting interstate pipelines – it will transport natural gas that has been commingled with other gas transported by interstate pipelines located near the hub. As a result, Environmental Intervenors contended that FERC truncated its environmental review of the Project by not including the Trans-Pecos Pipeline. In addition, Environmental Intervenors argued that FERC should consider the Trans-Pecos Pipeline jurisdictional because, according to Environmental Intervenors, the pipeline is likely to provide interstate service at or near the in-service date. As an alternative to finding the Trans-Pecos Pipeline jurisdictional under the NGA, Environmental Intervenors argued that FERC should “federalize” the pipeline for the purposes of NEPA and analyze it together with the Project. Finally, Environmental Intervenors argued that FERC failed to consider Comanche Trail Pipeline, LLC’s San Elizario Crossing Project – a border crossing facility approximately 250 miles from the Project – as a connected action in FERC’s environmental review of the Project.

Full Story at Jordan Sanders Energy Report

Drilling Under Rio Grande Has Begun for Trans Pecos Pipeline

by Cameron Dodd

Contractors working on the 143-mile Trans-Pecos Pipeline started drilling beneath the Rio Grande last week.

Construction of the Presidio Crossing Project, the roughly 1000-feet of pipeline tunneling beneath the Rio Grande about 12 miles northwest of Presidio, commenced after the pipeline was granted approval by the Federal Energy Regulatory Commission (FERC) to drill from the U.S. side of the river.

Contractors drilled a six-inch pilot hole from the United States to Mexico under the river and international boundary. Fiber optic cables were run through the six-inch hole, according to the construction status update TPP filed with the Federal Energy Regulatory Commission (FERC).

The pipeline will be buried 69 feet beneath the Rio Grande, according to TPP plans submitted to FERC. Contractors are using a method called horizontal directional drilling, technology developed for drilling oil and natural gas wells. It is the same process that TPP is using to lay pipe beneath parts of highways 90 and 67.

TPP’s contractors drafted a directional drilling contingency plan that detail procedures for reporting and remediating any leaks of drilling fluid into the river itself. An environmental assessment conducted by FERC concluded the drilling would not significantly impact the river or other biological resources in the area.

The Federal Energy Regulatory Commission (FERC) approved Friday, Oct. 28 a request for a variance from the Trans-Pecos Pipeline (TPP). This was the second such variance TPP requested from the federal regulator.

FERC has regulatory jurisdiction over what is called the “Presidio Crossing Project,” the roughly 1,000 feet that the pipeline crosses under the Rio Grande. In the original plan for the Presidio Crossing, the pipeline company proposed to use horizontal directional drilling to burrow the pipeline under the river, beginning from the United States side.

Full Story at Big Bend Sentinel

Is Another Energy Boom Coming to the Trans Pecos?

Apache Corp. said it has discovered the equivalent of at least two billion barrels of oil in a new West Texas field that has the promise to become one of the biggest energy finds of the past decade.

The discovery, which Apache is calling “Alpine High,” is in an area near the Davis Mountains that had been overlooked by geologists and engineers, who believed it would be a poor fit for hydraulic fracturing. It could be worth $8 billion by conservative estimates, or even 10 times more, according to the company. Shares rose by as much as 13% after U.S. markets opened Wednesday.

Apache started acquiring mineral rights in the area two years ago and subsequently discovered its potential. The company then quietly went about locking up more land in the field, believed to be up to 450,000 acres overall. Its position now exceeds 300,000 acres, or roughly two-thirds of the field, and is about 20 times the size of Manhattan.

The company has begun drilling in the area and says the early wells, which produce more natural gas than oil, are capable of providing at least a 30% profit margin at today’s prices, including all costs associated with drilling.

Some are so prolific that they can break even at a price of 10 cents per million British thermal units, according to the company. Natural gas futures closed Tuesday at $2.72.

Full Story at Wall Street Journal

Pipeline Construction Begins in Big Bend

ALPINE — On the outskirts of town, motorists encounter large orange signs reading “pipeline construction ahead.” By the roadside, crews using heavy equipment move enormous sections of pale green pipe on freshly cleared rights of way.

This would be an unremarkable scene elsewhere in a state with 440,000 miles of oil and gas pipelines. But in the remote and unspoiled Big Bend, many residents find the activity offensive.

“It’s sad. It’s a constant reminder every time we drive by. We feel like we’ve been invaded,” said Chris Sweeney, 60, of Sunny Glen, just west of Alpine and a supporter of Defend Big Bend, formed last year to oppose the Trans-Pecos Pipeline.

The 148-mile pipeline will carry natural gas from the Permian Basin to Presidio, where it will cross the Rio Grande. If all goes well, the $767 million project will deliver 1.4 billion cubic feet of gas a day to Mexico by March.

Because the huge 42-inch pipeline crosses under the only road to Sunny Glen, Sweeney and other residents fear being trapped if an explosion ignites a brush fire during the dry season.

Others, however, see pure economic opportunity in the project.

Brad Obbink, 56, who is rushing to expand his small mobile home park south of Alpine, says demand by pipeliners for RV slots is high.

“It’s the greatest thing in the world. They just ask if you have a slot. We don’t advertise, but I could rent out 100 tomorrow if I had them,” he said.

Construction of the line comes after 15 months of dogged protest, organized resistance, hundreds of letters sent to a federal agency and litigation. But Texas law gives energy companies the right to condemn private land for such projects, which made the pipeline almost unstoppable.

When the Federal Energy Regulatory Commission this spring declined to assert jurisdiction over the entire 148-mile line — instead of just the short border crossing portion — the battle was essentially lost.

Full Story at San Antonio Express-News

RRC Says Trans Pecos Pipeline Offers Tactical Opportunities for Texas

by Trevor Hawes

Construction of the Trans-Pecos pipeline, which will transport natural gas from the Waha Hub in Fort Stockton to Mexico through the Big Bend region, has drawn many comments and concerns by residents and non-residents alike.

Railroad Commissioner Ryan Sitton shared his perspective about the 42-inch pipeline project and the opportunities it will bring to Texas. He also shared what he considers to be the coolest part about being on the Railroad Commission.

This is the third and final part of the Reporter-Telegram’s interview with Sitton. In the first part, the commissioner discussed DUCs, the gasoline glut and why it seems the Railroad Commission is always up for sunset review. In the second part, Sitton gave his insights into who he really thinks OPEC is competing with. Both interviews can be read at

MRT: Do you have any comments about the ongoing construction of the Trans-Pecos pipeline?

Sitton: The pipeline is slated to move 1.4 million cubic feet of natural gas per day. When you look at national natural gas production, that pipeline is going to move about 2 percent of all the natural gas produced in the country. It’s really noteworthy that our natural gas production is really growing.

Take, for example, the connectivity in North America. Mexico is very interested in buying natural gas specifically from the state of Texas to power new power generation facilities. We have talked before about what opportunities that presents, but it’s also a practical example of the ability we have to move that gas in the state of Texas across the state to customers outside the state. It’s really good for our state.

I certainly understand why landowners are cautious. Heck, if a pipeline is coming across my property, I’m not excited about it, either. But this is one of those tactical things that really represents the opportunities that we’re talking about to move these products into those markets and not just compete economically, but succeed.

MRT: Do you get a sense that the Trans-Pecos pipeline will encourage the construction of more natural gas infrastructure in the Permian Basin?

Sitton: The short answer is yes, as will all of the natural gas demand. We know that natural gas demand is slowly but surely growing with exports and long-haul vehicles that are converting. All of that demand is going up. When you talk about this 42-inch pipeline, what we need now are the gathering systems to get it from the wellhead to the big pipeline. All of it together is going to drive that infrastructure.

Full Story at Midland Reporter-Telegram


Pipeline Company Gets Federal Approval to Build Presidio Border Crossing

by Joe Fisher

FERC on Friday granted Trans-Pecos Pipeline LLC’s request to begin construction of the Presidio Border Crossing Project, which would allow transport of natural gas from Texas to Mexico via the planned Trans-Pecos Pipeline.

In May the Federal Energy Regulatory Commission issued a presidential permit for the border-crossing facilities near the city of Presidio in Presidio County, TX, and the Mexican city of Manuel Ojinaga in the state of Chihuahua [CP15-500] (see Daily GPIMay 9). Trans-Pecos is a project of Energy Transfer Partners LP and Mexico-based Carso to export up to 1.3 Bcf/d of U.S. natural gas at the International Boundary between the United States and Mexico.

Environmentalists — led by the Sierra Club with support from landowners and residents in Texas along the pipeline route — have challenged the non-jurisdictional status of the Trans-Pecos pipeline. While the border crossing is governed by FERC, the pipeline is considered an intrastate and not subject to FERC jurisdiction (see Daily GPIJune 7).

The pipeline has garnered opposition from landowners and environmentalists concerned about the Big Bend National Park (see Daily GPIMay 21, 2015). Parties filing comments in the border crossing proceeding focused mostly on the larger pipeline project.

More Nat Gas Stories at NGI

Natural Gas Demand in Mexico Spurs Pipelines and Controversy in Texas

More than 700 miles of new pipelines in Texas are being built to ship more of the state’s natural gas to Mexico, raising concerns from U.S. environmentalists who want to see low-carbon renewable energy grow instead.

Exports of gas to Mexico are expected to grow dramatically by the end of the decade. While the U.S. has a long history of pipeline exports to Mexico, the explosion of new pipeline construction is raising environmental concerns about wild landscapes, an expected expansion of hydraulic fracturing, and greater use of natural gas instead of other sources of energy such as solar and wind.

But Texas, with bountiful supplies as a result of the shale boom, sees opportunity for exports south of the border.

“Having an opportunity like the Mexican market does help Texas producers and the industry, especially in a time when prices are lower here and demand is lower,” said Brian Kalinec, an independent geophysicist in Houston. “You are basically filling in demand if an opportunity exists and I think that any Texas producer close to the border would consider these possibilities.”

Gas Exports to Mexico Growing

Exports from Texas to Mexico are expected to increase from an average of 2.1 billion cubic feet a day to 3.4 billion cubic feet a day by the end of 2020, the Texas Railroad Commission said in a report last year.

The increase in pipeline projects is driven by Mexico’s desire to replace fuel oil for power production as well as the country’s demand for a low-cost fuel for industrial use.

While there are shale plays in Mexico, it will be some time before the infrastructure is built up to where the country can significantly increase domestic production, Jose Valera, a partner at Mayer Brown, told Bloomberg BNA. In the meantime Mexico is focusing on connecting itself to the U.S. supply.

Full Story at Bloomberg

Land Owner in Presidio Sues Pipeline Company


PRESIDIO COUNTY — As numerous landowners in Brewster and Presidio counties still face condemnation hearings, one Far West Texas rancher is taking legal action against the Trans-Pecos Pipeline.

Presidio County landowner John Boerschig is suing the Trans-Pecos Pipeline (TPP) company on the grounds that its use of eminent domain to take private land is unconstitutional. Boerschig faces a condemnation hearing on 13 acres of his nearly 11,000-acre South Shurley Ranch and is also seeking a preliminary injunction against the controversial natural gas pipeline.

Boerschig’s case was filed with the U.S. District Court in Pecos on Friday, July 1. It has implications for broader Texas law: the case asserts that Texas laws granting eminent domain to public utilities violate the clause in the 14th amendment to the U.S. constitution prohibiting government from making or enforcing law that deprives Americans of property without due process.

Texas state law grants eminent domain power to companies seeking to condemn land for public utility projects. Boerschig’s case asserts that without a procedure for Texas landowners to challenge a company claiming to be a public utility, such as TPP, the law denies due process rights guaranteed by the 14th amendment to the U.S. constitution.

Additionally, the State of Texas does not set any standards regulating the use of eminent domain powers, according to the case citation.

“It’s a no-strings-attached, standardless delegation of government power to a private entity,” Attorney Renae Hicks said. “There’s no accountability, they do not have to report to anyone.” Hicks, an Austin-based attorney, is representing Boerschig in the case.

Texas law, he said, lacks a process to challenge a private company claiming the power of eminent domain for use in the public interest.

As it stands, the law allows TPP control of condemned land after either settling on compensation privately with landowners or after a special commission awards damages to landowners in a public hearing. Either way, all that is to be determined is the value of damages to the remainder of the landowner’s property caused by the pipeline.

TPP’s status as a public utility with eminent domain power can only be legally questioned when the special commission’s award decision is challenged in court.

Full Story at Big Bend Sentinel

Sierra Club Seeks Legal Rehearing on Trans Pecos Pipeline

The Sierra Club is seeking rehearing of FERC’s permitting of the Trans-Pecos Pipeline LLC border crossing in Texas and Mexico, arguing that the entire project, and not just the border crossing, is an interstate pipeline and subject to Commission Natural Gas Act jurisdiction.

In May the Federal Energy Regulatory Commission issued a presidential permit for border-crossing facilities near the city of Presidio in Presidio County, TX, and the Mexican city of Manuel Ojinaga in the state of Chihuahua (see Daily GPIMay 9). Trans-Pecos is a project of Energy Transfer Partners LP and Mexico-based Carso to export up to 1.3 Bcf/d of U.S. natural gas at the International Boundary between the United States and Mexico.

In its filing Monday, Sierra Club said FERC was wrong to conclude that the 148-mile Trans-Pecos is a non-jurisdictional intrastate. “The Trans-Pecos pipeline is likely to transport some interstate gas when it initiates service, rendering the pipeline an interstate pipeline subject to FERC’s Natural Gas Act jurisdiction,” Sierra Club said [CP15-500].

“…[E]even if the Trans-Pecos pipeline does not immediately transport interstate gas, the facts that Trans-Pecos is building the pipeline with the explicit expectation that it will be used for interstate transport, that Trans-Pecos is a new entity not currently engaged in any existing pipeline service (intrastate or otherwise), and that the Trans-Pecos Pipeline will connect an interstate hub with an export facility, without meaningfully connecting to existing intrastate facilities, demonstrate that the Trans-Pecos Pipeline is being constructed for the purposes of interstate transport within the meaning of Natural Gas Act section 1 and 7, and therefore subject to FERC jurisdiction.”

Full Story at Natural Gas Intel