Eagle Ford Gas Headed to Mexico

March 30, 2015 Elizabeth Alford

Petróleos Mexicanos announced Friday that is has acquired the funding to complete the construction of the pipeline Los Ramones II for an estimated $900 million.

The deal was a collaboration between Blackrock and First Reserve will be one of the first projects for Mexico’s historic energy reform that will enable a low-cost energy supply and create jobs. The first part of this project, the Ramones I, ranges from Eagle Ford in Texas to Los Ramones, Nuevo León and phase II will reach Guanajuato to supply the central and western parts of the country.

“Participation of the private sector in infrastructure will be very important in Mexico, and around the world. Given the recent reforms, growth in Mexico and economic stability, investment opportunities in Mexican infrastructure have definitely drawn our attention and we hope to explore other opportunities in the near future.”

— Jim Barry, CEO of the Infrastructure Investment Group of BlackRock

The terms of the deal commit BlackRock to $4.6 billion and First Reserve to $30 million over 25 years and gives them a combined 45 percent control of the project.

Mexico’s rising demand for natural gas has created a lucrative export industry for Eagle Ford producers in recent years. The country hopes to lessen its dependence on other sources by tapping into its own shale oil and natural gas within the next five to 10 years.

Net Midstream Plans Eagle Ford Pipeline To Mexico from Nueces County

February 25, 2013 R.T. Dukes

Net Midstream announced plans for a 42-inch, 124 mile pipeline from Nueces County to Starr County in South Texas. The pipeline is backed by a 2.1 Bcfd transportation contract with MGI Supply ltd (PEMEX Subsidiary). If the pipeline runs at capacity, it will more than double current exports to Mexico.

The natural gas will be transported from the Agua Dulce hub in Nueces County to a point near Rio Grande City in Starr County.

“If the Net Mexico Pipeline moves 2.1 Bcfd, it will more than double current natural gas exports to Mexico. ”

In the past two years, US natural gas flows into Mexico have increased to approximately 2 Bcf/d. That's up from less than 1 Bcf/d at the beginning of 2010. Demand for natural gas in Mexico is rising as natural gas production is falling. Compare US natural gas prices to LNG prices and you begin to see why Mexico is after US natural gas. It's cheap! An $8 billion pipeline expansion of Mexican infrastructure is already planned. More than $3 billion will be spent expanding pipelines in Northern Mexico where the Net Mexico Pipeline will connect.

“NET Mexico Pipeline will be an important source of supply to meet Mexico’s growing demand for natural gas” said Joe Gutierrez, Co-President of NET. “Welook forward to this exciting new partnership with MGI and PEMEX Gas. NET Mexico is a natural next step in our pipeline system, as we connect abundant gas supply from the Eagle Ford Shale to expanding power generation and industrial markets in Mexico."

Net Midstream already operates a 30-inch, 150 mile pipeline that originates at the Brasada Processing Plant (operated by Western Gas) in La Salle County Texas. That is one Eagle Ford source and I bet we'll see others as gas production grows. Natural gas prices in Mexico are more favorable (higher), so producers will enjoy a transportation route that avoids Henry Hub.

Net Midstream also operates a pipeline that delivers gas to a 200 MW power plant in La Salle County and a 30-mile pipeline that serves the City of Corpus Christi.

Read the full press release here.

The Oil Boom Stops at the Mexico Border

November 19, 2012 R.T. Dukes

Jose Alcala is intrigued by what could be just across the border in Mexico, where friends and relatives live and too often struggle finding jobs.

“You know, the oil doesn’t stop at the border,” he said. “It just goes on and on into Mexico.”

But the boom in oil and gas development does stop at the border, for the most part, a victim of the insecurity generated by warring drug cartels and by a Mexican energy sector that has been stunted by bureaucracy and lack of innovation, observers say.

Read the rest of the story at DallasNews.com

PEMEX Shale Play Spending to Grow to $200 Million

September 13, 2012 R.T. Dukes

PEMEX is preparing to spend $200 million researching and testing shale plays in Mexico. The national oil company plans to test two shale plays, with a focus in the Eagle Ford and one other play.

Commissioner Guillermo Dominguez said seismic studies to be carried out are designed to determine whether the rich petroleum deposits found in shale rock formations in the U.S. extend into Mexico. He said one of the two "large blocks" to be studied is an extension of the Eagle Ford shale rock formation that runs from Texas into Mexico. The other site is just down the Gulf of Mexico near Tampico.

Even if PEMEX is successful, don't expect a drilling boom any time soon. Company representatives expect they are 5-8 years away from true shale gas development. To be honest, there's no need to push it. The country is positioned well to import U.S. natural gas, which is very cheap in in the worldwide market. Read more about the company's plans in our article Eagle Ford Gas is Headed to Mexico.

You can read an article with additional quotes at rigzone.com