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

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