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    New Pipe to Push US Gas Exports to Mexico Higher


Exports from Waha hub could support Permian Basin gas prices

by: Dale Lunan

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New Pipe to Push US Gas Exports to Mexico Higher

The US Energy Information Administration (EIA), in its July 6 Today in Energy report, said the completion of the southernmost section of the Wahalajara system in Mexico will allow increased exports of US gas – primarily from the Permian Basin – to Mexican power and industrial customers.

The segment, the Villa de Reyes-Aguascalientes-Guadalajara pipeline, began operations in June, and completes the Wahalajara system, a grouping of pipelines connecting the Waha hub in western Texas to Guadalajara and other population centres in west-central Mexico. With the 890mn ft3/day segment now in service, the EIA expects utilisation of the entire Wahalajara system to quickly ramp up, resulting in increased US gas exports to Mexico and additional takeaway capacity out of the Permian, potentially underpinning continued strengthening of prices at the Waha hub.

Since Covid-19 mitigation initiatives were put in place in Mexico, natural gas demand there has declined, and growth in exports is likely to be slower than expected. Much will depend on how quickly new customers can be connected to the Wahalajara system, the EIA said.

“These connections include new natural gas-fired combined-cycle generators and the scheduled 2020 completion of the 890mn ft3/day Tula-Villa de Reyes pipeline, which will deliver natural gas to central Mexico,” it said. “Deliveries from the Wahalajara network are likely to partially displace higher-cost liquefied natural gas (LNG) imports into Mexico’s Manzanillo terminal, which serves markets in Guadalajara and Mexico City.”