US natural gas exports to Mexico are set to increase in the second half of 2020 with the completion of a new pipeline extension, the US Energy Information Administration (EIA) said in a statement on Monday.
The Wahalajara delivery network, a group of pipelines, saw the completion of its latest southern-most extension named Villa de Reyes-Aguascalientes-Guadalajara (VAG) pipeline in June.
The pipeline network connects the Waha hub in western Texas, a major supply hub for the oil and gas resource-rich Permian Basin, to Guadalajara and other regions in west-central Mexico.
The latest VAG extension will increase natural gas sent from the US to Mexico by 0.89 billion cubic feet (25.2 million cubic meters) per day.
"Exports of natural gas to Mexico by pipeline are the largest component of US natural gas trade, accounting for 40% of all US gross natural gas exports in 2019," the EIA said in the statement.
Since the Sur de Texas-Tuxpan pipeline was completed in September 2019, which runs from southern Texas to eastern Mexico, US natural gas exports to Mexico reached a record 5.5 billion cubic feet (155.76 million cubic meters) per day in October 2019, it added.
However, the Trans-Pecos pipeline, the US segment of the Wahalajara system, did not transport significant volumes of natural gas until October 2018, the EIA said, noting it is currently only operating at 10% to 15% of its total capacity since most of the demand centers in southern Mexico are waiting to be connected to the VAG pipeline.
"Given the decreased demand for natural gas in Mexico in response to the economic impact of COVID-19 mitigation efforts, growth is likely to be slower than expected," the statement read.
"Beyond these volumes, additional export volumes will be limited by how quickly customers in Mexico can be connected to the pipeline system," it added.
By Ovunc Kutlu