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Important for both our storage and isthmus projects. Any news about Mexico LNG projects advancing is good because storage will be needed if Mexico is selling gas to other countries. Weakening of the Panama Canal is good because Mexico's isthmus will be a competitor.
Drought Impacting Panama Canal LNG Transit as Mexico Liquefaction Projects Advance
BY JAMISON COCKLIN
July 18, 2023
More U.S. LNG cargoes are taking longer and costlier routes to reach consumers in Asia as a drought impacting levels at the Panama Canal has increased wait times to transit the waterway.
“The Panama Canal remains a primary route for U.S. LNG to access Asian markets, though an increased volume of trade is utilizing other routes, especially from the Cheniere-operated terminals,” said Kpler analyst Adam Bennett.
Cheniere Energy Inc. is the leading U.S. LNG exporter. Bennett told NGI that there’s been a “pronounced drop” in the usage of the canal among vessels leaving the company’s Sabine Pass and Corpus Christi terminals. Cheniere’s management has said it is shunning the waterway for now because it’s uneconomical to use it.
Without delays, the canal provides the fastest roundtrip voyage from the Gulf Coast to Japan at roughly 49 days. Over the last four weeks, roughly half of all U.S. LNG cargo volumes have passed through the canal, Bennett said, on par with the same time last year. But U.S. cargoes taking other routes, such as the Cape of Good Hope or Suez Canal, are on the rise too.
Developers such as Sempra and Mexico Pacific Limited LLC (MPL), meanwhile, plan to bypass the Panama Canal by exporting U.S. sourced gas from liquefaction terminals on Mexico’s Pacific Coast.
MPL’s Ana Procuna, director of gas transportation and marketing, said last month that re-exporting U.S. gas to Asia-Pacific markets via Mexico would save around 16 days of shipping time versus the canal route. She also noted that offtakers would have the option to index their contracts to pricing at the Waha hub in West Texas, which historically has traded at a discount to the U.S. benchmark Henry Hub.
Mexico’s state power utility Comisión Federal de Electricidad (CFE), which also is the country’s largest natural gas marketer, on Thursday (July 13) touted a strategic alliance with MPL that could see the firms jointly bring 400-600 MMcf/d of Permian Basin gas via pipeline to MPL’s proposed Saguaro Energía liquefaction project in Puerto Libertad, Sonora.
Meanwhile, world events — namely Russia’s invasion of Ukraine – shifted the LNG market’s attention to Europe last year.
“The rise in U.S. LNG exports to Europe has reduced the pressure on the Panama Canal with transits declining through 2022,” said Aman Sud, senior lead analyst at Drewry Shipping Consultants Ltd. Kpler data shows that trend has continued this year, with 65% of all U.S. LNG exports going to Europe so far.
However, Sud told NGI that shipments to Asia have increased in recent weeks as spot demand has accelerated amid a heat wave in the region. The spread between the Title Transfer Facility (TTF) and the Japan-Korea Marker (JKM) has widened as more Asian offtakers buy cargoes, demand falls in Europe and storage inventories on the continent are filling fast.
NGI data shows that netbacks from Asia to the Gulf Coast for September were $8.622/MMBtu on Monday, or nearly 70 cents higher than netbacks from Europe.
While the arbitrage has opened to Asia this summer, wait times to transit the Panama Canal have grown to 10 or more days for both southbound and northbound voyages.
[Mexico Making Moves: NGI sits down with Mexico’s CNH Commissioner Moreira to discuss rising natural gas production in the country coupled with promising new natural gas discoveries, which could help to offset steadily climbing demand from increased nearshoring. Currently importing more than half of their natural gas from the U.S., Moreira also underlines the importance of creating a natural gas price index in Mexico. Tune into the Hub & Flow podcast.]
Lower than average water levels have forced canal officials to impose draft restrictions on larger vessels like container ships. While LNG tankers haven’t been impacted by those measures, the canal has also limited the number of vessels transiting the route on a daily basis to conserve water.
The disruptions are boosting the cost of roundtrip voyages to move U.S. LNG to Asia, Sud said, particularly as the spread between TTF and JKM narrows through the remainder of the year and into winter. It takes 68 days for U.S. cargoes to reach Asia via the Suez Canal and 74 days around the Cape of Good Hope. Drewry estimates that taking the Suez Canal increases shipping costs by 24%, while taking the Cape of Good Hope increases costs by 36%.
But ongoing delays at the Panama Canal that have at times well exceeded 10 days and the increasing costs of transiting the waterway have made alternate routes more attractive.
Spark Commodities CEO Tim Mendelssohn said last week that congestion is adding about 80 cents for vessels passing through the canal without bookings to do so. That’s boosting the freight spot voyage from the Gulf Coast to Asia to $2.99/MMBtu. By comparison, a route via the Cape of Good Hope stands at $2.75.
In June, 50% of U.S. cargoes sailing to Asia went via the Cape of Good Hope, Fearnleys AS LNG analyst Ina Bjørkum Arneson told NGI. That’s up from around 20% most of this year.
The trend could prove to be a lasting one as more U.S. LNG projects are being constructed and offtakers will increasingly rely on the Panama Canal to move cargoes to Asia.
“As congestion grows at the Panama Canal, and costs rise, it’s clear that other options are also becoming more attractive,” Bennett said.
© 2023 Natural Gas Intelligence. All rights reserved.
https://www.naturalgasintel.com/drought-impacting-panama-canal-lng-transit-as-mexico-liquefaction-projects-advance/
I remember you being a moderator a couple years back. Welcome back, Juancy!
Exactly. Patience is a must if you do business in Mexico and, by extension, if you invest in companies that do business in Mexico. It will end soon enough imo
Yep, that’s just how Mexico does business. Here’s an article from a couple years ago about how Mexico was finally about to get natural gas storage. https://mexicobusiness.news/energy/news/mexicos-first-major-gas-storage-project-appears-be-feasible
That’s just how they roll. I really do believe they now intend to act on it soon, though, with the Russia-Ukraine war, nearshoring, and plans to sell gas to other countries.
Mexico Advancing Development of Natural Gas Storage at Two Depleted Fields
BY CHRISTOPHER LENTON
June 27, 2023
Mexico is on the cusp of finally moving ahead on building underground natural gas storage capacity after years of inactivity.
The country’s Centro Nacional de Control del Gas Natural (Cenagas), operator of the national Sistrangas pipeline network, has announced a tender would take place for the depleted Jaf dry gas field in Veracruz. Officials at Cenagas said in a first phase the field could hold a potential 11 Bcf of gas, or equivalent to a little over a day’s demand.
A Cenagas official told NGI’s Mexico GPI a tender would take place this year. Local press reported that the Jaf tender could occur as early as next month.
Additionally, Cenagas would assist in the development of the depleted Brasil oil and gas field in northeastern Tamaulipas. The government of Tamaulipas has said the project would be in conjunction with Comisión Federal de Electricidad (CFE) and a consortium of national and international companies.
The Brasil project would grow from 5 Bcf in an initial phase to 31.5 Bcf by its third year in operation. It would allow for 32 days of regional demand or three days of national demand. The project would take 24 months to develop, and help “control volatile natural gas prices,” according to a Tamaulipas state document.
Cenagas said it is also working to develop natural gas liquids storage projects in Mexico’s southeast.
Long Time Coming
In March 2018, energy ministry Sener published a gas storage policy calling for 45 Bcf of strategic inventories to be operational by 2026. At that time, a storage construction site was nominated for Jaf. But nothing advanced.
There was renewed talk of the need for storage after Winter Storm Uri in February 2021 knocked out natural gas supply to Mexico. Executives at CFE outlined a commercial strategy to prioritize developing storage to prevent future disruptions. But plans never materialized.
At a recent energy conference, attendees said permitting had improved as the government seemed to acknowledge the need to develop hydrocarbons storage projects.
[Mexico Making Moves: NGI sits down with Mexico’s CNH Commissioner Moreira to discuss rising natural gas production in the country coupled with promising new natural gas discoveries, which could help to offset steadily climbing demand from increased nearshoring. Currently importing more than half of their natural gas from the U.S., Moreira also underlines the importance of creating a natural gas price index in Mexico. Tune into the Hub & Flow podcast.]
Mexico energy analyst Gonzalo Monroy, managing director of the GMEC consultancy, told NGI’s Mexico GPI that it looked like this time around, the natural gas storage projects appeared to have some momentum.
“Cenagas is talking with the Tamaulipas state government for a public-private-partnership scheme, with CFE the operator and marketer,” he said.
José Ramón Silva Arizabalo, the Tamaulipas state energy commissioner, told NGI Mexico’s GPI last month that his team was “in the process of signing memorandums of understanding with the companies involved” in the Brasil project.
“The geologic evaluation stage for this depleted field has been completed, and we have a very clear draft and blueprint of the wells that we need to drill to set up the injection headers and create all the necessary infrastructure for the project,” he added. “We are forecasting that the project will take around two years to construct and to prepare the field to begin to inject gas.”
Currently, Mexico only has a few days’ worth of natural gas supply through pipeline linepack and its liquefied natural gas import terminals in the event of an emergency. Some 80% of commercial gas is imported from the United States via pipeline and around 60% of the power sector runs on natural gas-fired generation plants.
© 2023 Natural Gas Intelligence. All rights reserved.
https://www.naturalgasintel.com/mexico-advancing-development-of-natural-gas-storage-at-two-depleted-fields/
Yes, Macod and I were just talking about this. Now that I look at it again, one possible interpretation of it is that it should be split up into two separate sentences as such:
"The natural gas that will supply this project will not be imported, but national, it would come from the southeast of the country."
"Mainly from the Burgos field in Tamaulipas and other fields, the supply will be guaranteed."
This lines up with this quote from an article Macod just posted - https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172085014
“Now with the increase in production in the southeast and with the demand, which is part of this exercise that we are doing, well, we have to start looking at other schemes, because it would no longer be enough to store in the pipeline, they will already be required, other support systems to be able to continue guaranteeing the gas supply”, he pointed out.
I think it's saying that the natural gas will be produced in the southeast, but the storage in Tamaulipas will guarantee the supply. "Storage systems are required, because in colloquial terms it is like having a road and not having parking." We would provide the "parking." (I love that quote as well.)
Pemex won! It will supply natural gas to industrial parks of the Trans-Isthmus Corridor
Cenegas announced that the natural gas that will be used in the Trans-Isthmus Corridor project will be national and not exported.
The poles that will demand more natural gas are those of Ciudad Ixtepec and Santa María Mixtequilla.
By Hector Usla
June 07, 2023 | 16:20 pm hrs
The welfare development poles, one of the last priority projects of President Andrés Manuel López Obrador, will require a demand of 11.31 million cubic feet per day (MMcfd) of natural gas, and its supplier will be PEMEX Industrial Transformation, Abraham David Alipi Mena, general director of the National Center for Natural Gas Control (CENAGAS), said in an interview.
"The natural gas that will supply this project will not be imported, but national, it would come from the southeast of the country, mainly from the Burgos field in Tamaulipas and other fields, the supply will be guaranteed," he said.
The development poles are made up of 10 industrial parks that will enjoy fiscal and non-fiscal incentives to install industries that generate value, so they intend to be one of the pillars to detonate the development of certain regions of the southeast of the country. This project is part of the Trans-Isthmus Corridor.
The spaces that will demand more natural gas are those of Ciudad Ixtepec and Santa María Mixtequilla, with 1.5 MMcfd, both located a few kilometers from the capital of Oaxaca.
The executive said that the companies that seek to settle in these 10 industrial parks have different vocations, such as electronics, semiconductors, automotive, auto parts, transportation equipment, medical devices, metals and petrochemicals, among others.
Aldo Silva Cortés, general coordinator of planning and design of strategies for the development of the Trans-Isthmus Corridor, explained that since June 5, the guidelines that companies interested in participating in these tenders must follow were published.
Companies that manage to win a tender could obtain discounts of between 50 and 100 percent of the VAT, as well as various tax benefits.
Initially, the concessions could be given for two years, with a possibility of extension of five years.
"They will think that it is a short time, but what we are looking for is that the participants establish an investment proposal for that period, and if they comply with it, the idea is that the property is sold to them at present value," he said.
The first public tender will be held at the end of June 2023, while the failure of the first tender and a second public tender will take place in October 2023. The ruling of the second public tender will be in February 2024.
The first tender will be integrated by the industrial parks Coatzacoalcos I and II, Texistepec, San Juan Evangelista, San Blas Atempa and Salina Cruz, while in the second tender will be the parks of Matías Romero, Asunción Ixtaltepec, Ciudad Ixtepec and Santa María Mixtequilla.
Regarding the Interoceanic Corridor of the Isthmus of Tehuantepec, it was reported that the 'backbone' of the railway project called 'Line Z', already presents an advance of 78 percent, and is expected to be completed in August 2023. This section consists of 227 km of roads, 82 bridges, 290 drainage works, which required an investment of 19 billion pesos.
The 'FA and K Line' developments are still pending, these are expected to be completed during the first quarter of 2024 and the fourth quarter of 2024, respectively.
They go for seven days of storage
On the other hand, the general director of CENAGAS said that they will seek that the storage of natural gas in the country reaches seven days, since currently, storage ranges from 2.5-3 days.
"Japan has 90 days of storage, but they are not gas producers like Mexico, so our storage needs are different, anyway, we follow the initiative of President López Obrador to have energy sovereignty," he explained.
He explained that seven days could be more than enough for a country like Mexico, since the last natural gas crises that the country suffered lasted, maximum, five days, as was the case of the Texas frosts in February 2021.
"We also cannot invest a lot of money in storage infrastructure, since it would be reflected in a higher tariff, we must do it gradually, otherwise, it would generate a problem," he said.
https://www.elfinanciero.com.mx/economia/2023/06/07/pemex-salio-ganon-abastecera-de-gas-natural-a-parques-industriales-de-corredor-transistmico/
Yes, it smells of ChatGPT! At first I was impressed, but the language is a little too flowery now that I look at it again.
I see this, along with any other mention of Mexico exporting natural gas (Seven export projects are currently planned), as huge. "Mexico in association with New Fortress will become an exporter of liquefied natural gas for the first time in history." Here is an NGI article discussing how risky this strategy is for Mexico (assuming they continue to not have any natural gas storage). It's a good explanation of how much getting storage goes hand-in-hand with the export strategy. The floating liquefaction plant in Altamira,Tamaulipas is the "sister" project to the Brasil storage field for sure.
Mexico LNG Buildout Poses Risks for Internal Natural Gas Market, Says Energy Policy Expert
BY ADAM WILLIAMS
May 26, 2023
Mexico’s decision to construct LNG plants to export natural gas may risk the country’s energy security and may be more costly than beneficial, a research associate at Columbia University’s Center on Global Energy Policy (CGEP) told NGI’s Mexico GPI.
“I think that there is a risk that these projects represent a burden for Mexico’s energy security, in which case, the costs may outweigh the benefits for local businesses, energy companies and the regular Mexican energy consumer,” Diego Rivera Rivota said of the country’s plans to re-export U.S. natural gas to foreign markets.
Of seven export projects now planned, “only two projects are actually under construction at the moment and, in my opinion, it will be very complicated that most of these projects actually move ahead.”
Rivera Rivota’s work at CGEP focuses on energy policy in Latin America, natural gas and liquefied natural gas markets in the developing world. He also researches critical minerals and the geopolitical implications of the energy transition.
Before joining CGEP, Diego was a visiting researcher in Japan at the Asia Pacific Energy Research Centre (APERC). In previous roles, Diego worked at Mexico’s Comisión Federal de Electricidad (CFE), the Permanent Mission of Mexico to the Organisation for Economic Co-operation and Development (OECD), and Mexico’s Office of the President.
Diego holds a bachelor’s degree in International Relations from the Instituto Tecnológico Autónomo de México (ITAM). He also has master’s degree in public policy with a specialization in Energy and the Former Soviet Union region from Sciences Po Paris.
Editor’s Note: The NGI Mexico Gas Price Index, a leading tracker of Mexico’s natural gas market reform, offers the following Q&A column as part of a series of periodic interviews with market experts of natural gas in Mexico. Rivera Rivota is the 103rd expert to participate in the series.
NGI: What are your thoughts on Mexico’s current plans to construct liquefaction plants to export U.S. natural gas to foreign markets?
Rivera Rivota: I think it is important to contextualize why a country like Mexico, which imported 70% of its natural gas supply in 2022, is so willing to export or, in this case, re-export natural gas. I think that some of these LNG projects may become a risk to natural gas supply in Mexico in the medium term for three key reasons.
First, absent a major policy shift, Mexico’s domestic production outlook may remain stagnant, accounting only for a minor share of natural gas demand. Natural gas domestic production has been stagnant since 2017. However, when the auto-consumption in the oil and gas sectors is excluded, domestic gas production accounts for less than 15% of available gas supply in Mexico for power generation, industry and other uses. This has to do with inefficiency in the oil and gas industry, including the fact that about 10% of total natural gas production in Mexico is either flared or vented.
Second, natural gas demand may still increase and is not projected to peak anytime soon. Over the past decade, gas demand has increased every year except for 2020, mostly driven by the power generation sector and to a lesser extent, the industrial sector. The outlook seems, however, rather uncertain, with a moderate upward trend through 2030, especially in the power and industrial sectors. For instance, state-owned utility CFE announced plans to build at least 4 GW of natural gas-fueled power plants, though it remains unclear if and when they will be built. In contrast, while solar and wind project construction has stalled during this administration, that may change under the next administration, as there is a huge potential that remains untapped at competitive prices to meet additional demand in the power sector.
Third, there are two key premises that support the construction of LNG export projects in Mexico. One is the abundance and almost unlimited supply of natural gas in Texas. And the second is the idea that Mexico has more gas than it needs and that there is a need to monetize this “excess natural gas.” Both premises, unfortunately, are inaccurate, lack a long-term perspective and may be a detriment to Mexico’s energy security in the medium term.
To simplify an ongoing and difficult conversation, it cannot be guaranteed that U.S. natural gas production will increase quickly enough to sustain rather resilient U.S. domestic demand. Add to this a robust increase in U.S. LNG exports, at least a moderate rise in U.S. piped exports to Mexico and on top of that, some extra re-export projects in Mexico. On the second premise, while it is true that not all the recently built pipelines that import gas from the U.S. operate at full capacity, the reasons vary from project to project and are complex. For instance, the Sur de Texas-Tuxpan offshore pipeline does not operate at full capacity, and that is partially due to an over five-year construction delay in the Tuxpan-Tula pipeline. Bottlenecks like this one will, hopefully, not be there in the next few years and this “excess natural gas” would then evaporate.
All of this, paired with extremely limited storage capacity in Mexico and heavy reliance on fuel for power generation, may mean a severe test for Mexico’s energy security only a few years down the road.
NGI: Do you think these LNG export plans will provide economic benefit to Mexico in the medium- to long-term?
Rivera Rivota: I think that those benefits may be limited and they will depend on how many and which of these projects actually materialize. About seven projects with a joint capacity of over 47 million tons/year have been proposed. Of those projects, only two projects are actually under construction at the moment and, in my opinion, it will be very complicated that most of these projects actually move ahead. As for the benefits for Mexico, I am afraid the bulk of it will be limited to the taxes and rights paid by these projects to the local, state and the federal government. I am not aware of any project that accounts for an extension or access to natural gas with associated infrastructure to local industry, for instance. However, there is an opportunity for that. Additionally, there may also be job creation and a few other regional spillovers.
That said, as I mentioned, I think that there is a risk that these projects represent a burden for Mexico’s energy security, in which case, the costs may outweigh the benefits for local businesses, energy companies and the regular Mexican energy consumer.
NGI: In your opinion, should Mexico develop a strategy to reduce its dependency on U.S. natural gas imports? Why or why not?
Rivera Rivota: I think history has shown us time and time again that energy security matters and hits low-income households harder, which we saw clearly in Europe last year. Also, a key component of any measure to mitigate risk consists in diversifying both energy sources and suppliers. At the same time, the world is transitioning quickly, albeit not orderly, to a low-carbon economy.
Natural gas is the single most used fuel in Mexico, covering more than 50% of total primary energy needs. Mexico also imports 70% of the natural gas it uses, essentially from a single state, Texas. This has been proven beneficial for Mexico, enjoying some of the lowest and most stable natural gas prices in the world, as well as a reliable and continued source of supply. While relying on energy imports is not a problem per se, having a high dependency on a single source does increase energy security risks. During the February 2021 polar vortex, where havoc and disruption in the natural gas and power supply affected large areas of Texas, the impacts extended beyond the southern border into northeastern Mexico.
Given that, I think a key task for the next administration in Mexico will be to create a strategy to mitigate the impacts of this dependency in the short term and to reduce it in the medium term. There are very clear mitigation actions such as reducing flaring and venting on domestic production, building gas storage capacity and increasing pipeline redundancy. On a second stage, there is more work to do on assessing how to increase domestic gas supply, including conventional sources, carbon capture and storage, biogas production and increasing the role of non-fossil sources in power generation.
NGI: Do you think that Mexico should consider holding new bid rounds, similar to those held in the previous administration, to increase domestic production of oil and natural gas?
Rivera Rivota: This is another area of homework for the next administration. I think whoever is in charge of leading Mexican energy policy should definitely do a thorough assessment of whether there are global conditions for Mexico and the oil and gas industry to do so. Mexico’s oil and gas upstream sector may not have changed much since 2018, but the world has. On the demand side, some conservative projections see global oil demand leveling off by around 2035. On the supply side, there are traditional producers including the Middle East, Former Soviet Union and the United States, but also newcomers like Guyana, which is not only very competitive in a cost-per barrel basis but also in carbon intensity. This may be a challenging environment which would require a lot of work for the Comisión Nacional de Hidrocarburos (CNH) to first assess if a fourth bidding round makes sense, and if so, how to conduct it.
NGI: What do you consider to be the biggest challenges today facing the Mexican energy sector?
Rivera Rivota: There are concerning issues all across the energy sector in Mexico from oil and gas production at the wellhead, to the prices paid to consumers, to the rising pollutant emissions. That said, I find three particularly urgent challenges.
The first one is the need to invest in the expansion of the power transmission grid. Many transmission corridors have been congested for years and as power demand will keep growing, the same infrastructure may not be able to cope with it in a few years. The congestion of transmission lines may produce interruptions of power supply, as well as make electricity more expensive and hinder the integration of additional and cleaner sources of power.
A second challenge has to do with long-term planning on the role that natural gas will play in Mexico through 2050. This must include a detailed assessment of the power sector for each of the demand sectors, and determine how each of them will choose a specific decarbonization pathway. On the supply side, this assessment must be used to guide investment about which infrastructure is to be developed.
Finally, a huge task is how to engage both state-owned companies on their own decarbonization strategies and the role they will have in the country’s energy transition. Any feasible pathway to the clean energy transition for Mexico must have both Petróleos Mexicanos (Pemex) and Comisión Federal de Electricidad (CFE) at the core of it.
NGI: What do you consider to be the biggest opportunities in the Mexican energy sector?
Rivera Rivota: I think a number of opportunities are open to Mexico both with the current geopolitical context and the resource endowment the country has. A huge opportunity lies on the largely untapped solar and wind resources the country has, given Mexico has one of the strongest levels of radiation in the planet and enormous coastal areas with potential for both onshore and offshore wind. These resources are only comparable with a handful of countries like Australia or Chile. I think that materializing this potential is an enormous opportunity for Mexico for a number of reasons including attracting investment, creating jobs and reducing emissions. Moreover, low-carbon electricity will be an enabler to further decarbonize demand sectors like industry, infrastructure and transportation.
However, as we know, not everything can be electrified. I think this opens a range of opportunities for most technologies and fuels to play a role, be it natural gas providing flexibility in the power sector, oil in the petrochemical sector, as well as key technologies with huge potential such as low-carbon hydrogen, and carbon capture and storage. In all of these areas, Mexico is in a prime position to capitalize on the effects of the over $3.6 billion of investment from the implementation of the Inflation Reduction Act, on the southern part of the Rio Grande. The extent to which this opportunity is taken advantage of, and the enormous potential that could materialize, is a decision of energy policy that will need to be made in Mexico City in the years to come.
https://www.naturalgasintel.com/mexico-lng-buildout-poses-risks-for-internal-natural-gas-market-says-energy-policy-expert/
You mean bullchit. C’mon Macod, get with the lingo.
Ward told me that we are fine and that they don’t have authority or legal rights to implement the project at the Brasil site. This came as a relief to me, and I’m sure it will for some others as well.
GO MRGE
Here is the article in question. So it's a bit weird. I would appreciate some help here. The main questions/concerns I have are:
1) Is it possible for a project to be developed at the Brasil field without Mirage being involved in some way?
2) How is it possible for the project to store "up to 4 to 5 Bcf of natural gas" and also "increase the natural gas storage capacity for the country by approximately three or four extra days?" Both of these things can't be true. According to this link from CEIC Data, Mexico's consumption was reported at 8.536 Cub ft/Day bn in Dec 2021. If Mexico uses around 9 Bcf per day, wouldn't the project have to be somewhere around 27 - 36 Bcf? I personally think it's possible that in the phone interview, Silva actually said "45" and not "4 to 5." Imagine the Spanish accent This number would also match up with the Mexican government's goal of having 45 Bcf of storage by 2026. Also, it mentions storage, national security, commercial uses - guaranteeing supply to industrial parks which would be able to use machinery of any type. This, along with the size of the field overall, makes it hard for me to believe the size of the project is only 5 Bcf.
3) At first I was concerned by how it mentioned a Canadian company. But it's possible Mirage has multiple partners and that one of them is Canadian. There's a part about them being in the state of signing MOUs with the companies (plural) involved, so that still leaves room for Mirage.
Natural Gas Storage Project, Fertilizer Plant Planned for Tamaulipas, State Energy Commissioner Says
BY ADAM WILLIAMS
May 12, 2023
A natural gas storage project with capacity of up to 5 Bcf is under development in the northern Mexican state of Tamaulipas, José Ramón Silva Arizabalo, the state energy commissioner, told NGI Mexico’s GPI.
“This project will be developed in a depleted oil and gas field known as the Brasil field,” Silva told NGI Mexico’s GPI in a phone interview. “With this project, we will be able to store up to 4 to 5 Bcf of natural gas in the field, and we will be able to guarantee up to 30 days of storage for the state of Tamaulipas, as well as increase the natural gas storage capacity for the country by approximately three or four extra days.”
Silva, who has served as the state’s energy commissioner since 2022, has more than 18 years of experience in the Mexican energy industry. Prior to joining the state government he was the director of the Mexican oil development company NTS (Nuevas Tecnologías y Servicios) and served as an oil and gas consultant for the International Center for Excellence of the United Nations, known as ONU-SRM Mexico—Latinoamérica, where he oversaw sustainable resource management.
Silva was also a founding partner for the Instituto Tecnológico del Petróleo y Energía (ITPE) and was the general director of the company Geociencias. He has also worked state oil company Petróleos Mexicanos (Pemex) and the Mexican Petroleum Institute, IMP.
Silva holds an undergraduate degree in biology and a master’s degree in environmental engineering from the Universidad del Noreste in Tamaulipas.
Editor’s Note: NGI’s Mexico Gas Price Index, a leading tracker of Mexico’s natural gas market reform, offers the following Q&A column as part of a series of interviews with market experts of natural gas in Mexico. Silva is the 102nd expert to participate in the series.
NGI: In a conference in January, you mentioned that the state of Tamaulipas is in need of natural gas storage. Does natural gas storage continue to be a challenge — as well as a growth opportunity — in Tamaulipas?
Silva: The development of natural gas storage is one of our priority projects. As it is well known, in Mexico, in general there aren’t large scale natural gas storage projects. And, while the development of natural gas storage is something Mexico needs to create more growth in the industry, it’s also a subject of national security.
We’ve really been stressing this, particularly in the wake of what happened two years ago during the Uri winter storm. While most of Texas was without electricity and the supply of natural gas as a result of frozen pipelines, much of northern Mexico, and particularly the state of Tamaulipas, was also without a constant supply of power and gas. This led to terrible economic losses for us in the industrial sector, as well as for the Federal Electricity Commission (CFE).
So, as a result of situations of that nature, there were concerns within the government of Tamaulipas and for our governor, and we decided to take action and launch a first natural gas storage project. This first project will be developed in a depleted oil and gas field known as the Brasil field, which is located in the northern part of the state. At some point, this field produced gas and condensate, though currently it is completely out of operation in terms of a commercial sense for Pemex.
We are working on a plan that will include a public-private association between the CFE, a Canadian company that we can’t name at this time for compliance reasons, a Mexican group known as Grupo Fox, and the government of Tamaulipas.
NGI: So, will the government act as a partner in the development of the project?
Silva: Yes. In this format, the government will participate as a partner in the project. The reason for that is because the intention of this project — aside from the commercial development opportunity — is strategic at a state and federal level. With this project, we will be able to store up to 4 to 5 Bcf of natural gas in the field, and we will be able to guarantee up to 30 days of storage for the state of Tamaulipas, as well as increase the natural gas storage capacity for the country by approximately three or four extra days. This will add to the two days of natural gas storage that it is currently offered in the packing of the national pipeline system.
NGI: And when do you anticipate this project will be launched?
Silva: We had a first meeting with the CFE and with the CEO Manuel Bartlett, in which it was determined that the project was of national interest to the country and necessary in terms of energy strategy. We then had a second meeting with CFEnergía, which is the entity that will sign the collaboration agreement.
Currently, we are in the stages of confidentiality and in the process of signing memorandums of understanding, MOUs, with the companies involved, and, in the next few days, we will meet again with Bartlett to establish the official dates for the launch, as we’d like to get it started as soon as possible.
The geologic evaluation stage for this depleted field has been completed, and we have a very clear draft and blueprint of the wells that we need to drill to set up the injection headers and create all the necessary infrastructure for the project. We are forecasting that the project will take around two years to construct and to prepare the field to begin to inject gas.
And, in addition to the subject of storage and national energy security, it will serve us from a commercial standpoint. Why? Because we will be able to store natural gas that we are buying at very cheap rates. So, when the prices are higher, or in the event of an episode in which natural gas prices rise significantly, we will have access to that natural gas we purchased at a much lower price. We will also be able to sell the surplus gas when prices are higher, providing better margins.
Additionally, we will be able to guarantee supply to a series of industrial parks which are being developed in the state and that are being planned and designed around this natural gas supply project. This natural gas storage project is going to provide certainty to all the industrial developments in the region and will allow them to install machinery of any type, knowing that they will have an adequate supply of natural gas available.
NGI: What are some of the other energy projects being developed in Tamaulipas?
Silva: There are some other large-scale projects also being developed. One, as has been well-documented, is the development of the Trion deepwater oil field off the coast of Tamaulipas.
Another that is underway has to do with the development of a fertilizer plant. As has been discussed publicly, the route to energy sovereignty is tied to fertilizers, and taking advantage of the resources of natural gas that we have available in the state of Tamaulipas.
The idea for the project, which is now very advanced with Pemex, is to develop a fertilizer plant to produce ammonia and urea in the municipality of Reynosa.
We already have the land ready, and we’ve had a couple of meetings with Pemex and CEO Octavio Romero. We’ve also created a consortium of three national companies which are going to develop and finance the project, and we are going to start to construct this plant in Reynosa to produce at least 15% of the fertilizer needs of the country.
NGI: When do you think the construction of this fertilizer plant will begin in Tamaulipas?
Silva: By the end of this year. We are currently in the preparation stage for the consortium from a legal standpoint. Next month, we’re going to meet with Pemex to define a timeline for the start of the project. The project is very far advanced in terms of processes and paperwork, and there is a willingness to see it through to completion.
This project is being developed as a result of other projects that are underway in the state, particularly regarding natural gas. It is well known the investment that New Fortress Energy Inc. is making in Tamaulipas, which is a giant offshore project under development just in front of the Altamira port, in which all of the infrastructure for the liquefaction of natural gas for export to Europe will be installed. That project will launch in June and the platforms for the liquefaction infrastructure are 90% built, meaning we are very close to the commencement of the project.
Another strategic project that is underway is the relocation of a natural gas pipeline from Reynosa to the Río Bravo. It is the relocation of a branch of the pipeline by around 80 kilometers to free up the city, because currently the pipeline cuts across an urban stretch of the city and we need to relocate it for security purposes. And, around this new branch of the pipeline, we are going to create a new area for industrial parks, which will have access to immediate and inexpensive natural gas.
NGI: For our international readers interested in developing projects in Mexico or in Tamaulipas, what is the current process to develop an energy project in the state?
Silva: It’s important that it’s known and that it’s transmitted that our government, which is known as the Fourth Transformation (4T), has been poorly characterized by a lot of media outlets as being closed off to private investment and interests. That’s not the case and it is totally the contrary.
Private investment and interest is more than welcome. All of the projects that I’ve mentioned previously under development in the state are being carried out by private companies in which there is alignment and cooperation between private companies and government entities. Using that formula, there are significant projects occurring, particularly in the energy sector, and they are being developed for the benefit of Mexico.
So, the message we want to send is: Whatever company that is interested in coming to invest in Tamaulipas is welcome. What is the process that we use? We sign a collaboration agreement, which is very general, to give formality to the cooperation. And, once we have that in place, we begin to look at what should be the adequate strategy to assure that large-scale projects can be carried out.
A good example would be in regards to wind energy projects. Tamaulipas has the largest potential for wind energy resources in the country, and we’ve only taken advantage of 7% of our potential in wind energy. We have 13 wind energy parks installed and more than 500 turbines actively working. However, we have a surplus of energy generated in the state and we need to develop more transmission lines so that, when a new wind or solar energy project has interest in establishing itself in the state, we have the proper conditions in place to benefit both the private company and Tamaulipas.
So, that’s really what we’re working to establish in the state currently, which is to be able to guarantee to prospective investors that they will be guaranteed a successful and profitable operation should they choose to invest here, and that their project benefits the company, as well as our state and the country.
NGI: Regarding security in Tamaulipas: For companies that are interested in investing in the state, what is the local government doing to ensure the security of their operations?
Silva: This is very important to discuss, particularly because unfortunately there have been certain events that have occurred in recent days that have generated a lot of talk about security in Tamaulipas. However, just last week, I was in Reynosa precisely to review one of the sustainable projects that is underway to convert the old refinery in Reynosa into an ecological park, in an effort to utilize that land. In the state, we are having a daily security strategy meeting to discuss and plan for potential issues and risks, and, in those talks our governor is present, similar to the morning press conferences held by President López Obrador.
The purpose of these meetings is to prepare to attend to and attempt to control any security situation that occurs in Tamaulipas — and particularly the northern part of the state — in an immediate fashion.
There is immediate coordination between the state government and the federal government and, as a result, the recent security issues have been able to be controlled on the same day they began in the cities such as Matamoros, Reynosa and Ciudad Victoria. Obviously, the perception about the level of insecurity is not positive, and there is a fear around doing business in Tamaulipas, but there are daily security meetings occurring here in the state and the intent is to attend, in a very punctual way, to any event that occurs that could interrupt life for our citizens and businesses. We’re doing all we can to improve the issues and to guarantee security in the state and on our state highways.
https://www.naturalgasintel.com/natural-gas-storage-project-fertilizer-plant-planned-for-tamaulipas-state-energy-commissioner-says/
I always feel good when you feel good! As for what is meant by "in a few days an official announcement of the flag will be made" - it comes down to the term "el banderazo." I did some Google-translate-fu and a better translation for it might be "starting signal" as opposed to "flag."
banderazo
1. Signal made with a flag, especially the one made by a judge in a sports competition.
"Waiting for the initial signal to open the last round of the world championship next Sunday, the rider wants to rest and prepare thoroughly"
2. Act that signals the beginning of a process.
"The starting signal for the electoral campaign has already been given"
It’s coming imo. Why get current after all this time if nothing is coming?
Thank you for the well wishes, good sir.
Very good and very tough question. Someone’s gut reaction might be to simply break even once the price gets to their average cost per share. However, I think that would be short-sighted. I honestly think this has the potential to run higher than 0.30 or so, even if just on hype. Some were mentioning 0.60 - 0.70. I’d want to come out of this ordeal better off than I was before it. So I personally wouldn’t sell at 0.28, at least not the majority of my shares. I actually plan on buying more shares once I am able to.
Already answered lol. Look at my previous post.
Wow, mine is .28! Also 120k down. Very similar messes we've gotten ourselves into. I have hope that we'll come out of this on top though, my brother. The recent filings, resumption of trading, and mention of the Brasil field in recent articles all give me hope. Fingers crossed.
I put it in a similar amount. What is your average cost per share?
Lol, I'm genuinely amused that people are doubting Mirage's connection to the Brasil field. This has been documented so many times over the years. Here are a few links for starters.
https://www.mirageenergycorp.com/
https://www.sec.gov/Archives/edgar/data/1623360/000164033420000379/mrge_10k.htm
https://www.naturalgasintel.com/mirage-energy-seeks-to-address-mexico-pipeline-capacity-storage-constraints/
https://www.argusmedia.com/en/news/1886216-qa-texas-mirage-bets-on-mexico-natgas-storage
https://www.usmexiconaturalgasforum.com/wp-content/uploads/2017/02/ICIS.pdf
.
When we get a deal imo
Yes, definitely. Obviously things haven't looked da best for a while, which is what some have been saying and justifiably so. But that's only upon first glance in my honest opinion. We will see.
Great to have you back, Live.
Tamaulipas Energy Commissioner promotes infrastructure and criticizes the PAN government
José Silva told LPO that past governments "looted the entity." They are already working to be a benchmark in energy and other areas.
By Javier Ramírez (Monterrey)
04/04/2023
The State of Tamaulipas is nationally recognized for its wealth of energy resources and the entity's Energy Commissioner, José Silva Arizabalo, assured that they will take advantage of this to be a benchmark at the national level.
In conversation with LPO, the official shared some of the energy projects that have been proposed in the current administration of Governor Américo Villarreal.
"We bring a very specific strategy with specific projects to further potentiate these resources. One of the projects is a Fertilizer Plant in the North of the State, probably in Reynosa. Another of the most important projects is the construction of all the infrastructure of the Port of Matamoros," said the commissioner.
"Another is the Brasil field, where we intend to carry out a natural gas storage project... it represents a project of national importance referring to 'energy sovereignty'. We will also have private investment projects that allow us to export gas to Europe," he added.
Touching on the issue of private investment, he recalled that Tamaulipas has grown in energy matters due to the local Private Industry, since the previous administration limited itself to handling administrative issues.
"They dedicated themselves to looting the State, the misuse of resources in all dependencies is impressive. How they left the startup of this administration indebted and without resources. The energy issue has been growing but only because of the private issue, but outside of They didn't execute that. They were very administrative, not technical," added Silva.
He reiterated the commitment of the current administration to prioritize the environmental agenda with the use of renewable energies, to conclude projects that were abandoned years ago and stressed that all the work is due to the guidelines of the different levels of government to work.
"Tamaulipas lacks the reactivation of the famous Burgos basin, it is something that we must push for it to be reactivated again... with resources from the Federal Government, Pemex and all to have an 'energy sovereignty,'" Silva Arizabalo commented.
"It has been unconditional support from the President, he made several commitments to clean up the State and create value and strategic and efficient projects. It will be an excellent year... I believe that working hard, Tamaulipas will be a benchmark at the national level," he concluded.
https://www.lapoliticaonline.com/mexico/en-foco-mx/comisionado-de-energia-en-tamaulipas-presume-nuevos-proyectos-para-el-estado-y-arremete-contra-administraciones-pasadas/
"Nothing in your post shows that there was a Shell Risk annunciator flag on MRGE before 06 December 2022"
https://twitter.com/StockWonk/status/1275118473467707392
How do you explain the second graphic in this tweet? Do you think the poster accidentally took a picture of the page for another stock?
You are correct. Look at this tweet I found.
https://twitter.com/stockwonk/status/1275118473467707392?s=48&t=syEBrbI_AtyTETo0YGimbw
It clearly shows that MRGE had the "shell risk" label as of 06/22/2020.
I think much of the confusion stems from the "shell risk added" tweet from @stockscan01.
Note that on 12/06/2022 "dark defunct added" was also tweeted. But this doesn't make sense, as the "dark defunct" label was already on MRGE.
Surely, the "dark defunct" label could not have been added on 10/28/2022 and then again on 12/06/2022! I also noticed that MRGE was also "transfer agent verified" before 12/06/2022. I believe all three tweets on 12/06/2022 were made in error.
This view is backed by further research. I also checked the Telegram for https://twitter.com/OtcUpdates - https://t.co/hPycO07nUZ
I noticed that pretty much everything lined up with what was tweeted by @stockscan01, except that nothing was updated on 12/06/2022. Check it out for yourself.
As for what the shell risk removal itself means, I will leave this piece from https://www.otcmarkets.com/glossary#shell-risk - "The Shell Risk designation indicates that a company displays characteristics common to Shell Companies. This designation is made at OTC Markets’ sole and absolute discretion based on an analysis of the company’s annual financial data and may differ from issuers’ self-reported shell classifications in their own public filings. Our analysis evaluates asset composition, operational expenditures, and income related metrics. No action is required by a company to perform the evaluation other than publishing current annual financial information.
In limited circumstances, OTC Markets will consider removal of a company’s shell risk designation upon written request by a company. Please be advised that such requests will only be considered when there has been a material change in financial condition since the most recent fiscal year-end that is reflected in publicly available interim financial statements. Examples include a material increase in asset composition or operating revenues with related financial disclosure as a result of an acquisition or change in control transaction."
Wanted to point out how long it took Engie to reach an agreement with the CFE to expand the Mayakan pipeline.
Look at these revisions on the Global Energy Monitor Wiki:
Revision as of 15:48, 10 September 2019 (Acess it here.)
Expansion Background:
A proposed expansion of the pipeline would extend it by 99 miles (62 km) from Valladolid into the province of Quintana Roo. It is scheduled to be completed in 2020.[2]
There have been no development updates since 2017 and the project is presumed to be shelved.
Revision as of 19:56, 9 July 2021 (Access it here.)
Expansion Background:
The proposed US$300 million Phase I expansion, also known as Cuxtal-Mayakan Phase II[5][7], would extend the pipeline by 99 miles (159 km) from Valladolid into the province of Quintana Roo.[6] The expansion would increase the transport capacity of the Energía Mayakan pipeline and the adjacent Cuxtal Gas Pipeline to 350 mmcf/d by 2020.[5]
An additional expansion phase, known as Mayakan expansion Phase II or Cuxtal-Mayakan Phase III[7], would increase capacity of both pipelines to 550 mmcf/d by 2022.[5]
Energía Mayakan still refers to these expansion plans on its company website.[4] However, there have been no development updates since 2017 and the expansion project is presumed to be shelved.
But then things started to look a tiny bit more hopeful.
Revision as of 01:46, 15 July 2022 (Access it here.)
Expansion Background:
The proposed US$300 million Phase I expansion, also known as Cuxtal-Mayakan Phase II[5][8], would extend the pipeline by 99 miles (159 km) from Valladolid into the province of Quintana Roo.[6] The Phase I expansion, originally scheduled for completion by 2020, would increase the transport capacity of the Energía Mayakan pipeline and the adjacent Cuxtal Gas Pipeline to 350 mmcf/d.[5]
An additional expansion phase, known as Mayakan expansion Phase II or Cuxtal-Mayakan Phase III[8], would increase capacity of both pipelines to 550 mmcf/d. the Phase II expansion was originally scheduled for completion by 2022.[5]
As of July 2022, there had been no further development of either expansion plan. However, in May 2022 Engie's COO Ana Laura Ludlow confirmed that her company remained committed to expanding the Mayakan pipeline pending approval from Mexico's CFE (Mexico's federal electricity commission).[9]
Then on November 29, 2022 we saw this article on naturalgasintel talking about how Engie and CFE had reached an agreement. https://www.naturalgasintel.com/cfe-engie-expanding-mayakan-natural-gas-pipeline-in-mexicos-southeast/
Just goes to show, you absolutely HAVE to have patience, and plenty of it when doing business with Mexico. Does any of this sound familiar? There had been no updates for years. People counted them out and thought the projects were dead. Many wondered why the projects were still mentioned on the company website. Then it came out that they were awaiting approval from the CFE. Then a half year after that, boom they reached an agreement when few were expecting it. Who's to say this couldn't happen with us?
Interesting conference paper from the 27th World Gas Conference in June 2018 in Washington, D.C.
The title is "PAST, PRESENT AND PERSPECTIVES FOR THE DEVELOPMENT OF UNDERGROUND
NATURAL GAS STORAGE IN LATIN AMERICA." It discusses several different Latin American countries.
I like how it mentions some pre-existing infrastructure that exists in the Brasil field such as "58 production wells that could be converted into injection / withdrawal wells." It highlights how we really do seem to be far ahead of anyone else regarding storage.
Mexico
Mexico has one of the largest pipelines infrastructures of Latin America. In May, 2017, the country had 13,733 km of operational natural gas pipelines and 6,694 km of gas pipelines were under construction. In 2016, Mexico consumed 89.50 billion m³ (bcm) of gas and produced 47.20 bcm.
The country is becoming more dependent on gas imports as production fields deplete. The
participation of natural gas in the total energy primary consumption reached 43.22% in 2016, highlighting the importance of improving the security of the gas supply system (BP, 2017). In addition, the use of natural gas is increasing specially due to the electricity demand, a relatively seasonal sector in Mexico, as shown in Figure 8, where gas is used for cooling during the summer (BP, 2017; Platts and Bentek, 2015; SENER, 2017).
Mexico does not count on underground natural gas storages yet, but The Natural Gas
Transportation and Storage Expansion Plan for the 2015-2019 period, issued by the Mexican Energy Secretary (Secretaría de Energía – SENER) is considering potential underground natural gas storage sites for the gas system. According to SENER (2017), the National Center for Gas Control (CENAGAS) will assess potential underground natural gas storage sites while SENER will be responsible for issuing the national public policy for UGS storage. Depending on its results, which were expected to be available by the end of 2017, projects may be proposed for the next revision of the Expansion Plan in 2018.
Actually, an UGS project in Mexico is already under consideration, and it is involving many public entities: the Brasil field (Campo Brasil) UGS project, to be developed in a depleted oil/gas field located in the State of Tamaulipas, close to the border with the USA. From 1949 to 2006, the state-owned company Petróleos Mexicanos (PEMEX) extracted hydrocarbons from the field, which still has 58 production wells that could be converted into injection / withdrawal wells. According to the 1st Extraordinary Meeting of the Subcommittee of Normativity (regarding the policy for the use of depleted fields for geological storage), held on August 10, 2017, the suitability of Campo Brasil for natural gas storage has been confirmed by the Mexican National Hydrocarbon Commission (Comisión Nacional de Hidrocarburos – CNH).
For the planning of the development of Campo Brasil for UGS activity, first the Institute of
Administration and Evaluation of National Assets (Instituto de Administración y Avalúos de Bienes Nacionales – INDAABIN) analyzed and established criteria for more efficient use of the Campo Brasil, which is considered a national asset. Then, SENER demanded from CNH the abovementioned assessment on the suitability of the site for UGS storage, and for 2018, instructed by SENER, CENAGAS is expected to conduct an open season and a bidding processes for the UGS service (SENER, 2017a).
This is not the first time Campo Brasil UGS viability is subject to studies and assessment. In 2005, CRE published an extract for public consulting regarding the intention of Terranova Energia to receive a permission for developing the UGS facility. By that time, the maximum storage capacity of Campo Brasil was expected to be about 1 billion m³, while injection and withdrawal rates would be around 9.90 and 14.15 million m³ /day.
In addition to Campo Brasil UGS project, other researchers had already debated about the need of storage for the Mexican gas industry in 2000, such as Azpeitia (2000). By that time, imports dependence and strategic storage facilities were taken into consideration for stating the importance of UGS for the country, and the north of Mexico was also the region where the activity was considered more likely to be developed.
The Mexican Hydrocarbon Act (Ley de Hidrocarburos de Mexico), published in the Official
Gazette on August 11, 2014, included the storage of natural gas among the activities covered by the Law (article 2). It established that gas storage sites and pipelines may be part of an integrated system, being each system operated by managers or transportation companies authorized by the Energy Regulatory Commission (Comisión Reguladora de Energía). The Hydrocarbon Act also predicted a National Integrated Gas System called SISTRANGAS, operated and managed by CENAGAS, a company created in 2014 (article 65 of the Ley de Hidrocarburos de Mexico). According to the Hydrocarbon Act (article 65), the SISTRANGAS may be constituted by gas pipelines, storage facilities, compression stations, regasification units and other facilities. Among them, CRE is the responsible authority for determining whether a public infrastructure will be part of the SISTRANGAS, while private transportation and storage infrastructures may voluntarily be part of the Mexican national system. For the time being, the following pipelines belong to the SISTRANGAS: Gasoducto de Tamaulipas, Gasoducto Zacatecas, Gasoducto de Bajío, Ramones I, Ramones II y Ramones Sur pipelines.
The Hydrocarbon Act also included unbundling dispositions (articles 62 to 64), establishing that transportation and storage systems managers must be functionally separated from the ones who produce, distribute or commercialize natural gas, oil products and petrochemicals. The unbundling rules are set by the CRE. Finally, the gas systems must assure open and nondiscriminatory access (Mexico, 2014).
It is important to mention that different laws applies to other types of UGS projects in Mexico: if developed in an aquifer, the National Waters Act (Ley de Aguas Nacionales) must be observed and if developed in salt domes, provisions are given by the National Mining Act (Ley Minera). Although Mexico has never had any operational UGS site, the country has a project to store Liquefied Petroleum Gas (LPG) in salt caves in Ixhuatlán, Veracruz, which received a specific permit from CRE in 2015 and whose surface facilities were under construction in 2016. The operation of the facilities was expected to start by the end of 2017 (Cydsa, 2017).
Currently, three LNG Terminals provide the gas storage capacity of Mexico: Altamira, Ensenada and Manzanillo. The natural gas infrastructure of Mexico is shown in Figure 9, as well as the location of the Campo Brasil UGS project, detailed in Figure 10. It is undeniable the importance of the storage activity (geological or cryogenic) for Mexico, where gas demand, and hence gas infrastructure, has been growing faster during the last years.
https://www.researchgate.net/publication/352863112_Past_Present_and_Perspectives_for_the_Development_of_Underground_Natural_Gas_Storage_in_Latin_America
I'm glad that someone else sees how this is related to our storage project
Very good sign that all these articles are coming out about how Mexico urgently needs natural gas storage. Seems like one every couple of weeks, maybe even more frequently than that. I also like how many of them mention Tamaulipas.
Please explain how the article stating that CFE is looking for strategic natural gas storage "on the border of Mexico with the United States," and that "in Tamaulipas, and above all in the municipalities of Matamoros, we have fields that have the capacity and all of the geological structures required to store gas" has nothing to do with Mirage. The Brasil field is located in the Mexican state of Tamaulipas and is near the border. It even mentions the Brasil field by name, as one of the fields that could possibly be utilized.
Salt Caverns, Abandoned Oilfields Said Key to Solving Mexico’s Natural Gas Storage Woes
February 8, 2023
Mexico’s lack of available natural gas storage, which puts the country’s electricity supply at risk in the event of aberrational climate and geopolitical events, could be strengthened with government and private investment in underground cavern development, industry members said recently.
Speaking at the 8th Mexico Infrastructure Projects Forum in Monterrey in late January, Raul Puente, General Director of Underground Storage from Grupo Cydsa, explained that the United States and Europe began developing underground storage for hydrocarbons in the 1950s. Puente said that most of the 31 members of the International Energy Agency (IEA), which Mexico joined in 2018, use abandoned oilfields that have been previously explored for underground storage, as well as empty salt mines, aquifers or large tanks that have been embedded into the subsoil.
These techniques safeguard the electricity supply of these countries, such as the United States, Canada, Japan and several European nations, from unforeseen events that disrupt supply. Examples include the ongoing Ukraine conflict, Hurricane Harvey and Winter Storm Uri.
Puente explained that the United States has between 2,000-4,000 Bcf of storage available, enough to supply the country’s natural gas needs for 30 to 45 days, while Japan, a country that relies entirely on LNG, has enough reserves to meet its power needs for 90 days.
The case in Mexico, however, is quite different, as the country currently has only about two days’ worth of natural gas storage available and, in the event of a disruption, relies heavily on U.S. gas to supply its needs. The previous government published a policy stating that the country should have 45 Bcf of natural gas storage capacity by 2026, an amount which would increase available supply to more than five days. The goal could be achieved through investment in underground cavern development, according to experts.
“There are abandoned fields that were explored in the past, such as the Brasil, Jaf, Saramako and Acuyo fields, as well as other alternatives that could be utilized,” Puente said.
“As a country, we have been talking about this topic for 20 years,” he added. “Subterranean storage projects require big investments that, including in developed countries, are anchored by the federal government. I think here in Mexico…there is interest in the private sector. I don’t think the government can do it alone and what is required is a union of the efforts — by the government and private sector.”
Grupo Cydsa, which is the producer of a salt known as Sal La Fina, signed a contract in 2014 with state oil company Petroleos Mexicanos (Pemex) to process and store hydrocarbons, including up to 1.8 million barrels of liquefied petroleum gas, at a subterranean salt cavern in the state of Veracruz. Puente said Cydsa, as well as other members of the private industry, are interested in developing more large-scale storage options for hydrocarbons with Pemex and state power company Comisión Federal de Electricidad (CFE).
CFE Storage Plans
Miguel Reyes, the CEO of CFE International and CFEnergía, speaking on the same panel, also acknowledged Mexico’s needs to develop further natural gas storage options, and mentioned some of the state company’s considerations for future projects.
“CFE is looking for strategic storage in South Texas or on the border of Mexico with the United States to be available in the event of an unforeseen climatic event to be able to guarantee supply,” he said. “What we would do is work with our trading desk on how to get the most potential out of that storage.”
Reyes reiterated that CFE’s primary objective is to guarantee Mexico’s energy security, and that the company must assure profitability in investment opportunities in the event it seeks to develop more storage options. He added that the state company “is not obligated to guarantee the storage for the country; we are obligated to guarantee energy security,” and that further regulation must be prepared by the Energy Regulatory Commission, CRE.
Reyes said the CFE is considering adding a clause into supply contracts that would provide better protection for Mexico in the event of future disruptions.
“The CFE is considering adding a clause in supply contracts that would require companies to develop storage to assure supply in the case of an extraordinary event,” he said.
Throughout the two-day event, members of the energy industry repeated the country’s need to continue to improve natural gas and hydrocarbon storage, as its scarcity continues to make Mexico’s electricity supply vulnerable.
“We have a problem at a national stage that represents a national security issue, which is that we don’t have storage,” said Tamaulipas State Energy Commission member José Ramón Silva Arizabalo. “In Tamaulipas, and above all in the municipalities of Matamoros, we have fields that have the capacity and all of the geological structures required to store gas. This would create an infrastructure that would be focused solely on gas storage, which could guarantee energy sovereignty and improve national security, which has been a repeated goal of the current administration.”
https://www.naturalgasintel.com/salt-caverns-abandoned-oilfields-said-key-to-solving-mexicos-natural-gas-storage-woes/
Take advantage of the gas, not burn it
Petróleos Mexicanos (Pemex) burned hydrocarbons valued at more than 342 million dollars in the Ixachi and Quesqui fields, located in Tabasco, in the three years that elapsed until August 2022, according to documents from the National Hydrocarbons Commission (CNH), The Reuters agency reported a few days ago.
As it will be recalled, in that same month the president commissioner of the CNH, Rogelio Hernández Cázares, resigned, being replaced by Agustín Díaz Lastra, former director of Administration of Pemex. The oil company has been fined by the Commission for failing to comply with its commitments for the development of said deposits by burning excess gas, with the consequent environmental damage.
Mexico is the eighth country in the world that burns the most gas, while, according to the 2022 Climate Transparency report, until 2021, 62% of the electricity in Mexico was generated by natural gas and, with data from the International Energy Agency (IEA), our country is the fifth that uses more natural gas for its economy.
In other words, one of the worst scenarios, in which the fuel that is most needed for national development is wasted and contaminated, given that there is a great availability of gas.
One of the places where there are reserves of the molecule is in the Burgos Basin, in northeastern Mexico. In addition to this, it has a gas complex installed and that the government of Tamaulipas seeks to reactivate, including a project to adapt a place for the storage of natural gas in the entity, in order to have consumption reserves for a minimum of 20 days.
It is undoubtedly necessary to take measures to reduce gas flaring, for which the Federal Electricity Commission (CFE) and Pemex have announced and are working on projects for the medium and long term. In the short, there is the opportunity to take advantage of the complex that is underutilized in the Burgos Basin.
https://mundoejecutivo-com-mx.translate.goog/actualidad/aprovechar-el-gas-no-quemarlo/?_x_tr_sl=es&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=wapp
Methane Mike, take a few minutes to listen to the other Mike on the board:
1) The Whistler line is being expanded.
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=168977476
https://www.bicmagazine.com/projects-expansions/midstream/whistler-pipeline-expansion-reaches-final-investment-decision/
Final investment decision was reached in August, and the expansion is expected to be in service in September 2023.
2) I don't think this is as big of a deal as you are making it out to be. In September this article was posted. https://www-milenio-com.translate.goog/negocios/sener-identifico-9-campos-viables-almacenamiento-gas?_x_tr_sl=es&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=wapp
It mentions the Brasil field specifically and says that it could "easily" be used for storage. I brought this up to you a few months ago, and you said you didn't believe anything from the Mexican press.
Well, check out this legitimate research document from July 2022.
https://www.researchgate.net/publication/361670266_CMP2022_182_Almacenamiento_Estrategico_de_gas_Natural_en_yacimientos_petroleros
On page 7 of the document:
"In the present work, an analysis of the inventory found in the national database of oil fields, consisting of 760 fields registered with the CNH, was carried out.
{snip}
The methodology was carried out through four selection stages where specific criteria that the fields should have were considered considering the properties of the fields such as geological parameters, volumetric parameters, original volume of hydrocarbons, number of wells, type of hydrocarbons produced and production characteristics, as well as the social, physical-natural aspects and the installed or future infrastructure to operate in the short term.
{snip}
Starting from the initial universe of 760 Fields, the initial joint proposal was made, according to the following criteria:
1. SENER proposed 12 Fields based on the behavior of production and the geological characteristics of the storage rock;
2. CNH presented a proposal for 36 Fields, based on the current recovery with respect to the original volume, the geological characteristics of the petroleum system, the behavior of the inverse of the cost and its derivative, the depth and proximity to gas supply points.
3. Pemex proposed 11 deposits based on their production behavior, the geological characteristics of the storage rock and the level of recovery associated with the reserves."
In this way, a total of 46 fields were compiled. Through a risk value methodology, the 9 most suitable were classified. This was after a series of cuts - from 46 to 35, then to 19, and then to 9.
Look at this chart from page 17:
Note that the Brasil field is classified as lowest on the "risk" factor. If there were an insurmountable problem with the Brasil field, I don't believe it would have survived the multiple cuts that were made, much less be classified as the least risky of the final 9.
3) I believe this has already been taken care of. Of course, this is contingent on whether you believe Andy. https://investorshub.advfn.com/boards/read_msg.aspx?message_id=166921472 "About a year ago I had called the US dept of Energy asking about Mirage’s Export permit… the only info they would tell me was that 1) The border crossing will require a Presidential Permit 2) the process takes a couple of months and 3) Mirage has already started the process."
4-6) All these details will work themselves out. You yourself agree that Mexico now seems to be serious about getting natural gas storage. If they want to become an LNG export hub, they will need lots of it. I don't think Mexico wants to or is even capable of carrying out such a project with no private sector involvement. What I stated in my pinned post about no tender or call for interest having been put out is still true to this day. You may not agree with what has been said about Mirage being very far ahead of anyone else regarding large natural gas storage projects, but that is my belief.
Lack of Natural Gas, Hydrocarbons Storage Said Hampering Mexico Energy Industry
BY ADAM WILLIAMS
January 26, 2023
The lack of available storage options for natural gas and fuels continues to challenge the Mexican energy industry, leaving the country vulnerable in the event of supply interruptions, such as aberrational weather or unforeseen outages, executives said this week.
Speaking at the 8th Mexico Infrastructure Projects Forum in Monterrey, stakeholders in Mexico’s government and private sector voiced the need to further develop natural gas and hydrocarbon storage infrastructure. Storage capacity is seen as a safeguard to assure the country doesn’t suffer from shortages that could stall industrial production and leave citizens without electricity or gasoline and diesel.
Despite existing investor appetite to develop infrastructure in various regions of the country, the Mexican government has continued to prioritize other projects. Priorities have included oil exploration and production, as well as constructing the Dos Bocas oil refinery, over investing in needed storage projects, according to experts at the two-day forum.
“We have a problem at a national stage that represents a national security issue, which is that we don’t have storage,” said Tamaulipas State Energy Commission member José Ramón Silva Arizabalo.
Tamaulipas borders the southernmost border of Texas, from Laredo to Brownsville. Numerous Mexican natural gas pipelines, such as Los Ramones, cross the state.
“In Tamaulipas, and above all in the municipalities of Matamoros, we have fields that have the capacity and all of the geological structures required to store gas,” Silva said. “This would create an infrastructure that would be focused solely on gas storage, which could guarantee energy sovereignty and improve national security, which has been a repeated goal of the current administration.”
Winter Storm Uri A Warning?
In his call for improved natural gas storage, Silva spoke about the impact of Winter Storm Uri in 2021, which he referred to as a “terrible blow to northern Mexico and the U.S.”
“The development of storage infrastructure, which would allow Tamaulipas to better take advantage of and profit from the natural gas import contracts, as well as the development of the Burgos basin, are the priorities for our current governor and the Tamaulipas State Energy Commission,” he said.
Mexico’s storage vulnerabilities were exposed during Uri as residents in the northern states suffered electricity outages and interruptions for several days. Given Mexico’s reliance on natural gas sourced from Texas, and the country’s limited available storage capacity to compensate for the absence of U.S. supply, Mexico was unable to meet national demand. That in turn halted industrial production in many northern states, resulting in substantial economic losses.
Without government initiatives to develop storage infrastructure, Mexico’s energy industry and consumers continue to be vulnerable in the event of any future supply interruptions, President César Cadena of the Nuevo León state Energy Cluster, said at the conference.
“In Mexico, we don’t have more than one-and-a-half to two days in storage capacity, Cadena said. “We have very limited supply capacity available in natural gas as well as gasoline and diesel. This issue of supply continues to be one of vital importance in the market.”
The lack of hydrocarbon storage has been a long-standing issue in the Mexican energy industry. However, the current administration has recently demonstrated interest in improving existing infrastructure, which some in the industry consider a hopeful sign for future development.
“We are starting to see a willingness by the authorities specifically regarding the necessity to develop storage infrastructure,” Bulkmatic Mexico President Alejandro Doria said. “It is understood that there is a necessity to develop storage infrastructure in the country and we are seeing some efforts to get permit approvals and move projects forward at storage terminals.
“At some point in recent years, these projects were paralyzed, and now recently we’ve seen some positive developments that indicate a renewed effort to improve storage options.”
While a sense of uncertainty remains regarding future natural gas and fuel storage projects in Mexico, the recent willingness by the government to advance some projects and welcome private investment is encouraging, said Doria.
The sentiment was echoed by other members of the sector at the conference. Attendees also opined that the speed of execution would be pivotal to bolster Mexico’s limited supply infrastructure to prevent future emergencies or interruptions that cause economic damage for the country.
José María Lujambio, who heads the Mexico energy practice at Cacheaux Cavazos & Newton, spoke for many.
“The topic of storage,” he said, “continues to be a matter of significant importance across the entire country.”
https://www.naturalgasintel.com/lack-of-natural-gas-hydrocarbons-storage-said-hampering-mexico-energy-industry/
Agreed. Ironically, us not trading might be what ends up saving a lot of us. No way in hell people would hold until the deals otherwise.
You can say that again Scotty
How recent is it? I looked him up on Linkedin and see that he appears to have only been on the board from Feb 2016 to May 2019.
Don’t know if it pertains to us but still thought I’d post. Weird that Mexico is looking for storage in the US isn’t it?
Mexico in talks with U.S. storage providers to set up gas reserve
By Marianna Parraga
November 17, 2022 1:55 PM CST
Tanks holding fuel of state-owned company Petroleos Mexicanos (PEMEX) are seen at a storage facility, in Ciudad Juarez, Mexico October 4, 2017. Picture taken October 4, 2017. REUTERS/Jose Luis Gonzalez/File Photo
SAN ANTONIO, Nov 17 (Reuters) - Mexico is in talks with U.S. storage providers to create a strategic gas reserve that could be used in emergencies, an official with the country's state power utility said, after a 2021 cold snap left businesses in northern Mexico without gas.
Mexico relies on the United States to meet about 80% of domestic gas demand, and experts and companies have warned President Andres Manuel Lopez Obrador's government about the need to increase storage before the winter.
Lack of infrastructure limits Mexico's ability to maintain enough inventories that could be used for saving surplus gas and draining stocks.
"We're aware that a low-temperature event is possible," Aniel Altamirano, deputy chief executive officer of CFE International, a unit of power utility Comision Federal de Electriciad (CFE), said on the sidelines of the U.S.-Mexico Natural Gas Forum in San Antonio late on Wednesday.
"What we're evaluating right now are storage options in the United States to reinforce our strategy," he said.
Mexico has two terminals capable of jointly storing the equivalent of four cargoes of liquefied natural gas (LNG), but that is a tiny fraction of the 6 billion cubic feet of gas the country imports every day.
Around the middle of this year, CFE imported a LNG cargo and stored the gas at the Altamira regasification terminal on Mexico's Gulf Coast.
A second cargo is expected to arrive soon in the Manzanillo LNG terminal on Mexico's Pacific Coast to complete an initial stock for this winter, Altamirano said.
"In February 2021, CFE was able to continue generating (power) because besides having coal-fueled plants, we also bought LNG cargoes during those weeks," he added.
The emergency cargoes last year were supplied by trading firms including Trafigura, helping overcome a crisis in Mexico triggered by frozen pipelines, rocketing gas prices and an order by the Texas government to suspend U.S. gas exports during the freeze.
The next step for securing a gas reserve big enough for Mexico to manage a similar weather event would be to hire storage in the United States in caverns or a site protected from the cold by insulated tanks and pipelines, Altamirano said.
"Storage would work not only from the security perspective but also from the operational point of view for handling CFE's daily oscillations (in power generation)," he added.
https://www.reuters.com/business/energy/mexico-talks-with-us-storage-providers-set-up-gas-reserve-2022-11-17/