Esentia Energy Systems is planning to offer capacity on its network of natural gas pipelines that stretch from Waha in West Texas to the industrial hub of Guadalajara in central Mexico.
“We are going to run an open season for capacity on our pipes for natural gas out of Waha,” Esentia commercial vice president Jorge Vera said last week during the Mexico Infrastructure Summit in Monterrey, Mexico.
Esentia, formerly known as Fermaca, operates the Waha-to-Guadalajara or “Wahalajara” system, which transports natural gas from the Permian Basin to Guadalajara. Stretching more than 1,200 miles, Wahalajara is the largest private interconnected gas system in Mexico. Comisión Federal de Electricidad (CFE) marketing subsidiary CFEnergía is the primary holder of firm transport capacity on Wahalajara.
The news comes on the heels of a successful open season recently conducted by Mexico’s national pipeline operator, Cenagas. Panelists at the conference celebrated the Cenagas open season as an ongoing sophistication of the Mexico natural gas market.
The state-run operator granted 272,483 GJ/d of capacity to 19 end-users, distributors and shippers on the pipeline system, with almost all bidders receiving their requested amounts of uninterruptible capacity.
This was the second major open season held by Cenagas since its creation in 2014. A smaller process for 22.1 MMcf/d took place last year.
Cenagas forecast and process director Paola Vázquez said during the conference that she hoped the open season would be the catalyst for a secondary market. “If you don’t use the capacity, someone else should,” she said.
She added that Mexico needed to work to continually update its long-term five-year planning processes, and “we need to promote interconnectivity between systems.”
BP plc. originator Jorge Ocampo agreed that a secondary market was the logical next step. “Now that we have the capacity, we need a secondary market,” Ocampo said. He said that the open season provided the natural gas market “more options and certainty.”
Ocampo added that real time measurement was still lacking in Mexico and would assist market development.
Multinational conglomerate Alfa SAB de CV CEO for Gas & Power Roberto Blanco said the natural gas market was “evolving for the better.” He added, “the more competition, the better.”
Nearshoring Challenge Not Gas, But Permitting
The major theme of the conference was an emerging economic boom in Mexico brought on by industrial activity, or nearshoring investments. This added economic activity comes with energy and logistical challenges, they added.
Frisa Steel’s supply director Norma Rodriguez said the great challenge for her company and other industrial end users in Mexico was not access to natural gas, but instead a convoluted and delayed permitting process.
“Mexico needs more natural gas and energy,” Rodriguez said. “Access to natural gas and natural gas transport is not an issue. Permitting is.” She cited the experience of industrial firms that had to wait months to gain access to energy supplies. “We can’t sit around waiting,” she said.
Frisa’s steel business is expanding, she said, including a new plant being built in García, Nuevo León.
Nuevo León’s secretary of the economy Iván Rivas said during the conference that state capital Monterrey alone had 240 industrial parks, with 40 more in construction. “The China-U.S. conflict means companies are coming to Mexico,” Rivas said.
Rodriguez said the private sector, along with local and state governments and regulators needed to work together to solve the issue and take advantage of the nearshoring opportunity.
The general director of distributor Compañia Mexicana de Gas SAPI de CV, Luis Nuñez, agreed. “Natural gas is not a problem in nearshoring.” He cited permitting issues, in particular in gaining access to water and electricity, as stumbling blocks for industry in Mexico.
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