Exports of U.S. natural gas into Mexico are expected to average 1.3 Bcf/d, a 450 MMcf/d increase from 2010, and the tightening of Mexican supply/demand balances should lead to further U.S. export growth in 2012, Barclays Capital reported last week.
Exports to Mexico grew sharply in the beginning of the past decade before stabilizing in the 850 MMcf/d range from 5001-2010; however, first quarter 2011 exports averaged the highest in the past 10 years.
U.S. gas exports to Mexico represent a relatively small part of U.S. gas balance, or one percent in 2010, and have not attracted much attention, but the exported BTUs are starting to add up, and more important, several factors suggest this trend could continue in the next few years. Barclays expects U.S. flows to Mexico to increase by another 200 MMcf/d in 2012, to an average of 1.5 Bcf/d.
While gas is primarily used for refining and petrochemicals production and reinjection for oil production, power generation has been driving gas demand growth, and plans for generation capacity additions suggest that Mexico's gas consumption should grow rapidly in the next few years.
Domestic production also is in decline, showing a growing need for imports. more than 60 percent of Mexico's gas output comes in association with oil production. While associated gas is growing slightly, non-associated production is steeply declining, with PEMEX reporting a decline of non-associated gas output of 13 percent year/year for the first four months of 2011. "While LNG imports could meet some of the incremental demand, they are disadvantaged in favor of cheaper U.S.- sourced gas," Barclays said in a June 21 report.
Shale gas development in Mexico is one bright spot for Mexican non-associated gas output. Earlier this year, PEMEX reported production of its first shale gas at an exploratory well in the Eagle Ford shale formation in the northeastern state of Coahuila. PEMEX plans to drill 10 additional wells, including in the La Pena and Glenrose formations, targeting gas and condensates.
"While the potential for Mexico shale gas production could be significant, its development is at an early stage, and there is considerable uncertainty about the scale and time-frame for shale production growth," Barclays said.
Mexico has technically recoverable shale gas resources of 681 Tcf, according to the U.S. Energy Information Administration's April report, World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States. Mexico has five basins, including the Burgos, Sabinas, Tampico, Tuxpan and Veracruz, and eight gas shale formations.
Thick, organic-rich and thermally mature source rock shales of Jurassic and Cretaceous-age occur in northeast and east-central Mexico, along the country's onshore portion of the Gulf of Mexico Basin. These shales are time-correlative with gas productive shales in the U.S., including the Eagle Ford, Haynesville, Bossier and Pearsall shales.
However, compared with the shale belts of Texas and Louisiana, Mexico's coastal shale zone is narrower, less continuous and structurally much more complex.
Advanced Resources International estimates that the five Mexico onshore basins assessed in the EIA study contain approximately 2,366 Tcf of geologically risked shale gas-in-place. Structural complexity (faulting and folding), excessive depth of over 5,000 meters, and locally thin or absent shale on paleo highs constrain the resource assessment.
WHAT DO YOU THINK?
Click on the button below to add a comment.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Most Popular Articles
From the Career Center
Jobs that may interest you