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.
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