After two years in suspended animation, the U.S.-Mexico-Canada Agreement (USMCA) will be signed on the dotted line Jan. 29. The deal appears a bellwether for cross-border energy trade and investments in critical oil and gas infrastructure between the U.S. and Mexico, no doubt accelerating midstream projects to bring more crude and natural gas to our southern neighbor.
Demand growth for natural gas in Mexico isn’t just on an adolescent spurt—it’s on sterioids—and projected to rise 27% by 2031. More than 65% of the country’s consumption depends on U.S. supply, making Mexico our largest customer with 3.4 Tcf of flows in the first half of last year alone and 90% of that gas pipelined. According to the EIA, natural gas and LNG exports to Mexico more than doubled in 2019 and are expected to double again by 2021.
No fewer than 10 natural gas pipelines are currently under construction in Mexico with two proposed LNG export facilities, including Sempra’s Costa Azul liquefaction project, itching to leave the drawing board. Kinder Morgan’s expansion of its 61-mile Sierrita Pipeline is expected to go online in April with an initial capacity of 523 MMCFD.
USMCA and energy reform in Mexico via the transition to gas-fired power plants; to address increased tourism; supply underserved areas; or climb aboard the LNG Export Express, offers the U.S. a tremendous opportunity to build more oil and gas border connections and provide a steady stream of energy for the long term.
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