U.S. natural gas exports to Mexico expected to climb

By Keefe Borden09 September 2021

Natural gas production in the U.S. and Canada is expected to grow by 12% from 2021 through 2025. Production in Mexico, meanwhile, should fall by as much as 28% in the same timeframe – even as demand for gas in Mexico is expected to grow, the energy analysis firm GlobalData reported.

The changing landscape for natural gas in North America should lead to more imports into Mexico from the U.S. to avoid supply shortages, GlobalData reported.

“Mexico has always relied on imported natural gas, but this reached a record high of 6.8 Bcf/d in June 2021 due to increased power demand, hot weather and greater industrial demand,” said Steven Ho, Oil & Gas Analyst at GlobalData. “Indeed, the country has been preparing additional pipeline capacity for imported natural gas to ensure industrial demand is met. Luckily, supply far outweighs demand in North America, largely thanks to the US and Canada.”

North America exports excess gas to other regions, primarily Asian countries such as China, Japan, and South Korea, which rely heavily on liquefied natural gas (LNG). Exports from the U.S. to other regions have grown 40% in 2021 compared to 2019.

“The US has become a bigger net natural gas exporter over the past few years, exporting up to 19.0 Bcf/d back in May,” Ho said. “Import volumes throughout the year have been relatively stable, averaging approximately 7.5 Bcf/d in the past five years.”

The US accounts for approximately 82% of North America’s natural gas production, followed by 15% from Canada and 3% from Mexico.

In Canada, growth in natural gas demand is relatively muted, used mainly in upstream, power generation, residential and industrial sectors, he said.

As a result, the majority of natural gas production growth is planned for liquefaction to increase Canada’s LNG export capacity. Canada’s planned and announced LNG liquefaction capacity will grow significantly in the coming decade, with an additional 1.8 Bcf/d planned in 2025 and as much as 9.6 Bcf/d by 2028, Ho said.

“In the US, it seems unlikely for the future growth rate in natural gas to return to pre-pandemic pace due to the increasing competition in power generation by renewable energy sources. Natural gas power generation accounts for up to 18% in 2021 but will shrink down to as low at 14% in 2025, while solar power will slowly take a bigger share in power generation capacity, growing from 9% up to 15% in 2025.”

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