Mexico LDC Forum Mexico s Natural Gas Market Outlook. Ross Wyeno, Senior Energy Analyst

Transcription

1 Mexico LDC Forum Mexico s Natural Gas Market Outlook Ross Wyeno, Senior Energy Analyst

2 Gas Market Liberalization Progressing Rapidly This year-to-date Feb 20 th : May 8 th : Jun 16 th : J/A 10 th : Mexico s national gas control center (CENAGAS), awarded 200 MMcf/d of capacity on NET Mexico to BP Energia Mexico Cenagas awarded 2.22 of pipeline capacity on Sistrangas to 24 companies. Pemex took 1.32 (59%) of capacity on offer. Mexico s Energy Regulatory Commission (CRE) eliminates maximum first hand sales price (VPM) for all participants Price controls eliminated ahead of schedule Mexico s state power company (CFE) failed to secure subscribers in international pipeline capacity auction s rescheduled for August 10 th All the ingredients for a liberalized gas market are falling into place Who will be the first mover? 2

3 Mexican Natural Gas Production Down 14%,YOY Declining production has been the primary driver of import growth this year Mexico Dry Gas Production Production Down 14% YOY Active Rigs Mexico Natural Gas Imports Imports Up 14% YOY Assocaited Non-Associated Mexico Rigs US Pipeline Imports LNG Imports Mexico Natural Gas Demand Demand Up 1% YOY YOY Change 10% 5% 0% Demand Growth Power Flat YOY US Pipeline Imports LNG Imports Power Demand Non-Power Demand Source: SENER, Platts Analytics 3

4 US Exports to Mexico Topped Out at ~4 Pipeline capacity constraints in Mexico continue to limit export growth US Exports to Mexico YOY Export Changes Southwest Texas Southwest Texas Non-NET NET Mexico Texas driving most of the export growth Export growth constrained at ~4 95% of export growth from NET Mexico New Pipelines Needed! Source: Platts Analytics 4

5 Natural Gas US to Mexico Gas Pipelines Facing Delays Mexico Pipeline Expansions Capacity Original In- Delay InMMcf/d Service Service US Border Crossing Pipelines Pipeline Name Comanche Trail Trans-pecos Pipelnie Nueva Era Pipeline Total Jan-17 Mar-17 Jun-17 On Time Apr-17 Sep-17 Mar-17 Mar-17 Jul-17 Nov-17 Jun-17? Dec-17 Mar-18 Mexican Pipelines Ojinaga - El Encino El Encino - La Laguna El Encino - Topolobampo Samalayuca-Sasabe Total New Pipelines Constrained at Border Average Mexican Delay ~ 100 Days Further Delays Possible for 2018 Pipes Source: Platts Analytics 5

6 Trans-Pecos Constrained Downstream Ojinaga El Encino online, but El Encino La Laguna delayed Trans-Pecos set to become the most important West Texas export pipeline, but IEnova s Ojinaga El Encino online El Encino La Laguna delayed Exports shut in at El Encino In 2018, export growth from West Texas will be dependent on the startup of: La Laguna Aguascalientes (ISD 1/2018) Villa de Reyes Aguascalientes Guadalajara (ISD 1/2018) Further delays possible in 2018 Source: Platts Analytics, IEnova 6

7 Nueva Era Pipeline Pushed to October Initial flows will be limited to the Huinala and Escobedo power plants Nueva Era border crossing delayed from June to October Interconnects with two power plants in Mexico: 667 MW Huinala Power Plant (in service) 889 MW Noreste Power Plant (ISD mid-2018) Does not interconnect with Sistrangas Total demand likely less than ~ MMcf/d Source: Platts Analytics, SENER, FERC 7

8 Kinder Morgan Shifting Flows Texas/Mier Pipes And adding 150 MMcf/d of capacity to KM Border pipeline in October Kinder Morgan Border at McAllen, TX McAllen KM Border Capacity (McAllen) MMcf/d Source: EIA Kinder Morgan Texas/Mier at Roma, TX Roma KM Texas/Mier Capacity (Roma) MMcf/d Source: EIA Source: EIA, Platts Analytics 8

9 South Texas Production Also Limiting Exports Tennessee Gas Pipeline exports to Mexico have fallen with lower sample production Tennessee Gas Pipeline Jan-15 Jan-16 Jan-17 Exports to Mexico Eagle Ford/TX Gulf Coast Production Receipts Tennessee Gas Pipeline Net Supply vs. Exports South Texas Net Receipts, Deliveries, and Backhaul Exports to Mexico Tennessee Gas Pipeline exporting nearly all of South Texas volumes to Mexico Source: Platts Analytics 9

10 Natural Gas Production Imbalances and Inflows Pipeline scrapes have increased visibility in Mexico Start South Texas Northeast Mexico Northeast Mexico North-to-South Pipeline Capacity Delivery Pipeline Northeast Mexico Various Border Crossings Southern Mexico Gasoductos de Tamaulipas Central Mexico Tag Norte (Los Ramones II North) Capacity ~ ~1 ~ STX Imports Southbound Flows Northeast to South/Central Jul 18-Jul Tag Norte (LR II North) 19-Jul 20-Jul 21-Jul 22-Jul Gasoductos de Tamaulipas (SNG) Source: SENER, Platts Analytics 10

11 Exports to Mexico Capacity Constrained La Laguna Aguascalientes / Villa de Reyes Guadalajara start date important Jan-17 Comanche Trail Feb-17 San Isidro Mar-17 Pipeline Capacity Additions vs. December 2016 Apr-17 Trans-Pecos May-17 Jun-17 Los Ramones II South Jul-17 Aug-17 Sep-17 KM Border Nueva Era Oct-17 El Encino/ La Laguna Nov-17 Dec-17 Nueva Era Jan-18 Feb-18 Mar-18 Apr-18 Sur de Texas Villa de Reyes - Guadalajara May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Sur de Texas - Tuxpan Nov-18 Dec-18 Export Growth vs. Dec-16 Border Capacity Estimated Sum Constraints Source: Platts Analytics 11

12 US Exports Rise Rapidly in 2018 Reach 5 by 2018, a 0.9 (22%) year-on-year build 8 US Exports to Mexico 5.0 West Texas Export Capacity YOY 0.0 West Texas Exports Border Capacity Base Forecast Downstream Access South Texas Export Capacity History Forecast South Texas Exports Base Forecast Border Capacity Downstream Access Source: Platts Analytics 12

13 South Texas Supply and Demand Balance Growing production plus 4.8 of pipeline capacity will limit basis pressure South Texas Production vs. Exports $- $(0.05) $(0.10) $(0.15) 0 $(0.20) Cash Basis Production vs. Export Balance STX Avg Basis 10 0 South Texas Production vs. Exports Eagle Ford/Gulf Coast Production South Texas Exports (LNG & MX) Production vs. Export Balance Proposed South Texas Pipelines Pipeline Source Capacity MMcf/d ISD NGPL Gulf Coast Southbound IL/AR/OK 460 4Q 2018 TETCO STEP TX/LA Border 400 4Q 2018 Transco Gulf Connector LA/MS Border 400 2H 2019 KM Gulf Coast Express Waha 1,700 2H 2019 Pecos Trail Waha 1, Enterprise Permian Delaware Basin TBD TBD Total 4810 Source: Platts Analytics 13

14 Key Takeaways Gas markets are quickly liberalizing though market participation has been slow to develop US exports to Mexico have been constrained below ~4.2 since mid-2016, due to a combination of Mexican pipeline delays and limited South Texas production Los Ramones II South now flowing at ~70% capacity total southbound flows now at ~2 - reducing supply constraint in Central Mexico Export growth in 2018 is expected to be robust, assuming the timely startup of the pipelines downstream of Trans-Pecos West Texas exports will displace South Texas flows in 2019 as Trans- Pecos fills South Texas production growth and pipeline expansions will put bearish pressure on South Texas basis 14

15 Thank You For Your Time! Platts Analytics Mexico Service Monthly Report Facilities Databank Spotlight Ross Wyeno Senior Analyst 15