Despite low oil prices, Mexico will move forward on pipeline initiatives that will impact the Eagle Ford in Texas.
Jumping on the opportunities afforded by the new energy reform measures, the state power company (CFE) has initiated an aggressive construction campaign that includes $3.3 billion to be spent on 12 natural gas and electricity projects.
Even though oil prices have tanked, the state power company (CFE) plans to move forward on a couple of these projects including the $450 million Colombia-Escobedo pipeline. This project, set to begin in June 2017, will include the development and construction of 155 miles of pipe to run from the town of Colombia in the US border to Escobedo in Mexico's Nuevo León state. The pipeline will have a capacity of 500Mf3/d and will transport natural gas from Webb County, Texas to Nuevo León state where it will be connected to the country's pipeline network.
Related: Eagle Ford Gas Headed to Mexico
The oil industry has historically been a key factor in Mexico’s economy, accounting for 13% of the nations export revenue in 2013. But production has fallen over the last 10 years and in an effort to open the Mexican energy sector to competition and fuel increased investment in infrastructure, the country has initiated historic energy reform measures.
Crucial to these reforms is insuring Mexico's access to abundant, low-cost US natural gas through expanded pipelines on both sides of the border.
“Mexico has suffered a deficit of natural gas and could not import enough gas to satisfy national demand,” Wood said at the Gulf Coast Power Association meeting in Houston yesterday. “Pipeline projects to carry low-cost US natural gas into Mexico will help solve the supply question, Wood said. “That may be the single biggest factor that is changing Mexico’s electric sector.”