Etam: Mexico is Leapfrogging Canada in the LNG Export Race

From the BOE Report

The U.S. border with Mexico has a sadly cliched aura hanging over it. U.S. citizens head south for shopping, dental work, and other bargains (mild-adventure-seeking tourist buddies have even wandered south from Tucson to Nogales to purchase nothing more than a haircut (and once was enough)). 

The other way’s cliches are the long string of desperate people looking for a better life north of the border, sneaking across at night or under dangerous conditions.

But times they are a changin’. I’m not sure what the Spanish phrase is for “What the…” but I’m sure it’s heard often these days as a significant number of Americans head south across the border in search of a better life, while at the same time Mexicans are getting used to a very loud hiss as billions of cubic feet of natural gas head also south into Mexico – far more, in fact, than the country actually needs. 

Weird change is in the air, and if it works out as it looks like it might, that hiss of flowing gas is going to create mountains of cash for Mexico, cash that will have nothing whatsoever to do with drugs (it’s cliche week!). It’s something better.

Gas flowing into Mexico is nothing new, but here’s what is – companies may soon be able to get Canadian natural gas onto an LNG carrier easier, quicker, and cheaper via Mexico than through Canada (if not the exact molecule, a very easily connected/traded one).

What’s up with that, you may ask, and that’s a most wise question. The whole idea seems either counterintuitive or just nuts – Mexico is not a gas powerhouse, nor even close to meeting its own needs. According to the best book ever, BP’s 2022 Statistical Review of World Energy, in 2021 Mexico produced 29 billion cubic metres (bcm) of natural gas,, and consumed 88 bcm – a shortfall of nearly 60 bcm (~6 bcf/d).

Mexico, as of last year, was quite keen on importing U.S. natural gas simply to feed domestic needs. A September 2021 article on the LNG Industry site noted that Mexico “has been preparing additional pipeline capacity for imported natural gas to ensure industrial demand is met.”

Apparently, the clever Mexicans were thinking far beyond that. As documented in this March 2022 article, Mexico currently has 12 LNG export projects in early stages, with five under construction. 

Hmm. In 2021, Canada produced 172 bcm, and consumed 119 bcm  – excess production of 53 bcm per year, which has to be exported. No surprise there – Canada has been a natural gas exporter for decades.

But…Mexico is going to be an LNG exporter sooner than Canada, and will have bigger export volumes within 5 years?

Yep.

Mexicans may have only experienced Canadians as great big white drunken blobs in swimming suits wandering from buffet to bar to pool in an ever-wobblier triangle until they fall over in a reddened heap, but perhaps that performance gave them the confidence to speed ahead of the hosers in developing an LNG export industry. They’ve looked north at relatively glutted markets, at Canada and U.S. obstinacy in building natural gas infrastructure (Canada has chased away about 15 proposed LNG facilities, and the U.S. famously has the world’s largest gas field (Appalachia) that is unable to get its vast production to a gas-starved U.S. east coast a scant hundred miles away – all due to pipeline blocking antics from anti-hydrocarbon governments and their ENGO Naginis (ask Harry Potter)). Mexico has looked at its coasts, both of them, and at the array of gas pipelines coming their way over the U.S. border, and said, “Hey, we could do that.”

The Mexican LNG projects utilize the web of gas pipelines bringing feedstock over the border from the U.S., in particular, the Permian and west – regions that Canadian gas can now access through the web of pipes stretching north into Canada.

The five Mexican projects under construction will export well over 2 billion cubic feet per day (bcf/d) and are slated to come on line between 2024 and 2027. As with dental work and drinks and haircuts, things are much cheaper in Mexico – the five projects under construction will cost a fraction of Canada’s plodding beasts. One Mexican LNG hub announced in Sept 2022, capable of exporting almost 1 bcf/d, will cost $4-5 billion.

TC Energy announced that a pipeline to connect two ports in the region to gas supplies further north will cost about $4.5 billion, so less than $10 billion for a terminal and a pipeline to feed several others.

Canada’s sole large project underway – LNG Canada, with the Coastal GasLink connecter – is slated to cost about $40 billion. (LNG Canada will come on in several stages with the first pegged at $18.5 billion, and Coastal GasLink’s recently upped the cost of the connector pipeline to $11.5 billion.)

Those kind of eye-watering costs are what happens in a regulatory quagmire that would sooner see Canadian hydrocarbons dead than heating the world, and/or when natural gas pipeline constructors have to spend night shifts dodging flying axes and dealing with the aftermath of Hollywood celebrities enlisted to muddy the waters in their adorably ignorant way.

Note also the timelines – Mexico is bringing forward an entirely new industry within a few years, and will be exporting significant LNG in the 2025-27 timeframe. 

Canada will be exporting less than Mexico by then, on projects that were first unveiled more than a dozen years ago (Coastal GasLink and LNG Canada).

In 2020, the federal government catalogued 18 LNG export facilities proposed for Canada. By 2027, Canada will have two or three online, if all goes well, and Mexico looks to have double that, with more than double the volume.

In a further and sizeable irony, those Mexican export terminals could actually be shipping Canadian gas, as the interconnectivity between Canada and Mexico will be there, in fact, much will be owned/operated by a Canadian company (TC Energy).

Canadian producers are actively looking to ship gas to the southern U.S. in hopes of getting it on an LNG ship of any sort. It would be ironic if the gas can get to sea quicker via Mexico, but the joke is entirely on Canada – it is the fleet-footed Mexicans that will reap the benefits of massive global LNG prices (for a shocking estimation of what Canadian governments are leaving on the table – as a governmental haul alone, some $2.8 billion per month, see here).

It would be off base to think of this diatribe as channeling support solely for the LNG industry, although that is a considerable component – the world is desperate for LNG, and many will die without it. But in addition, the tale is worth thinking about in the context of Canada being able to build anything

How long would a new mine take, when we are pledging to the world that we’ll be cranking out valuable transition minerals? How long would it take to build major new power transmission infrastructure, or, heaven forbid, a new pipeline of some sort?

How many layers of regulation exist, including the byzantine new layers of “environmental” (not) regulations whereby governments can shoot down anything if it goes against their “climate ambitions”, which are arbitrary numbers pulled out of thin air for press conferences? (The U.S. suffers a similar problem, and Europe did as well, until reality bulldozed all the nonsense into a giant coal-fired boiler).

But let’s put aside the relatively petty rivalry of whoever is getting gas to market first. Let’s look at the bigger picture, where the challenge can be summarized concisely as: The world is short of energy, leading to dangerously rising prices (oil, natural gas, and coal) and rampant inflation. The problem can be rectified in two ways: one, prices rise high enough to bring down demand, which will be a global catastrophe – factories will close, output of critical materials will suffer, jobs will be lost, and inflation will drive up the price of every staple of human existence.

The other way the problem can be rectified is to provide more energy to the world – build out pipelines, stop trying to kill the hydrocarbon industry, bring stable regulations that support both environmental progress and stability of supply.

Germany came begging Canada for LNG, and when we refused to get them any, the Germans headed to Mexico and found a more constructive audience. Many countries want LNG as badly (or worse) than Germany, but don’t have the wherewithal to finance the infrastructure or to even bid competitively for the gas itself. We don’t even want to think about what physical shortages, never mind outrageous prices, of natural gas will mean to developing countries.

As the general audience, we have a choice also: Pander to climate catastrophists, worried about 30 years down the road instead of next year, and agree that hydrocarbons need to go, or stand up for the developing world that will perish if that process is allowed to gain traction. 

A great gift to put under the tree, or under the Thanksgiving turkey, American friends. Pick up “The End of Fossil Fuel Insanity” at Amazon.caIndigo.ca, or Amazon.com.  Thanks for the support. If you don’t buy the book, send some money to the good people of Ukraine and Iran who really need it. But one us for sure. Or both. Up to you. No pressure.

Read more insightful analysis from Terry Etam here, or email Terry here.

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Tom Halla
November 13, 2022 2:22 pm

I wonder how much the anti pipeline/anti fracking activists were funded by Russia and Gazprom?

pillageidiot
Reply to  Tom Halla
November 13, 2022 2:36 pm

A lot.

But probably still less than wealthy western Europeans.

Regardless, any reduction in U.S., Canadian, or European gas production aids both the hard currency revenues and power of Russia.

Therefore, Leftists across the world AND Russians are working hard to help Russia!

alexei
Reply to  pillageidiot
November 13, 2022 5:59 pm

“But probably still less than wealthy western Europeans.”

Aren’t you forgetting those rich American heiresses, such as Aileen Getty, Rebecca Rockefeller and others?

pillageidiot
Reply to  alexei
November 13, 2022 7:58 pm

You are correct.

I should have just said wealthy Westerners.

Thomas
Reply to  Tom Halla
November 13, 2022 4:11 pm

This is a very good point.The anti-fossil-fuel movement is treasonous. It aids our enemies and hurts us and our allies.

Tom Halla
Reply to  Thomas
November 13, 2022 4:15 pm

Some of the suicidal puppies have no idea of where their funding is coming from, and do not care.

MarkW
November 13, 2022 2:32 pm

I’ve read that the number of people moving to Mexico, or at a minimum buying vacation property down there, has grown so large that in some cities home prices are starting to rise notably.
Shades of “gentrification” here in the US.
After the Democrats take control of the House of Representatives, I predict that the number of Americans heading to Mexico will start increasing.

It’s an open question as to which government is more corrupt, but at least the Mexican economy is moving in the right direction, whereas the Biden administration is determined to destroy the American economy.

greggylad
November 13, 2022 3:45 pm

Laughing through my tears. Our inscrutable leader insisted there was ” no business case” for LNG exports to Germany from Canada. Blind idealism reigns!

Pat from Kerbob
Reply to  greggylad
November 13, 2022 4:14 pm

“Inscrutable”?
He is the definition of scrutable.
A moron so far out of his depth he needs a map to find his butt

DMacKenzie
Reply to  greggylad
November 13, 2022 4:36 pm

He, meaning Turdeau, specifically said “no business case” for the East Coast LNG, knowing full well that the East Coast has to import its gas from the West first, and the business case for the West Coast is excellent, but his Federal “oil tanker ban” due to whale pods, no pipelines through the “Great Bear Rain Forest”, indeterminate CO2 emissions penalties, and no approval of large projects without Federal Cabinet approval, plus allowing aboriginal land claims on the pipeline routes where there are no people…plus paying for the legal bills and taking years to “resolve” the land claims …. have mostly destroyed any advancement in the western Canada natural gas sector since his election in 2015 by “The Woke”.
It isn’t a case of random confluence of negative factors. You actually have to try hard to screw up such a big diverse country.

Last edited 2 months ago by DMacKenzie
Duker
Reply to  greggylad
November 13, 2022 10:30 pm

The facts dont agree with you

“The projects under construction are the Golden Pass, Plaquemines and Corpus Christi Stage III terminals. Altogether, they would add 5.7 bcf/d by 2025, according to the EIA.

One puny terminal in Mexico is 1 bcf/day. and for the rest
‘The five Mexican projects under construction will export well over 2 billion cubic feet per day’

These 3 alone ( 5x that of mexico new one ) will increase US export capacity to 17 bill cu ft /day in a few years
https://www.energytech.com/energy-efficiency/article/21250127/new-lng-project-strengthen-us-position-as-worlds-largest-exporter

Dont forget
On June 8, 2022, a fire and explosion occurred as a result of a pipeline rupture, taking the LNG terminal fully offline. As of June 2022, limited operations were expected to resume in September, with full service restored by the end of 2022. Because the terminal accounted for about 20% of US LNG exports, and with European countries looking for LNG imports as an alternative to Russian gas since the 2022 Russian invasion of Ukraine, the disruption had a major impact on international gas prices.
Freeport TX

Last edited 2 months ago by Duker
Pat from Kerbob
November 13, 2022 4:11 pm

Thanks Terry, I always feel like chugging the draino after reading your stuff

Yes, Canada, the only place on the planet where there is no business case for LNG.
Galacticly stupid politicians.
Elected by morons.

Old Mike
November 13, 2022 4:31 pm

As for Canada, this is what happens when you appoint an ex “Greenpiss” executive as your minister for the environment, Stephen Guilbeault is simply a crook, his boss Turdeau is worse, I can’t write what I really think about that idiot, it would get me banned.

With luck both will end up on the scrap heap after the next election. Pierre Poilievre, the new leader of the Conservative party makes Turdeau look like a teenager in the throes of puberty, all emotion and zero logic.

People talk about treason, but sedition might be an easier case to prove, and it carries similar penalties.

Last edited 2 months ago by Old Mike
amirlach
November 13, 2022 4:58 pm

I worked on the Kitimat LNG site for months. There really is a business case for LNG. Once Kitimat can export LNG the price will rise to world prices. Currently we are forced to sell Gas at huge discounts. If more gas flows through the US and Mexico at higher prices it will help the west. If the East wants to keep cutting off it’s nose to spite it’s face I’m fine with that.

davidmhoffer
Reply to  amirlach
November 13, 2022 7:29 pm

The problem is that the East wants to cut off the West’s nose as well.

lynn
November 13, 2022 8:41 pm

I had no idea. But, Mexico does not have a good track record on running high energy and high precision projects.

ringworldrefugee
November 14, 2022 9:31 am

Trudeau may be a 90 IQ imbecile but he makes up for it with world class corruption.

angech
Reply to  ringworldrefugee
November 14, 2022 7:03 pm

seem to be registered?

BCBill
November 14, 2022 11:41 pm

Canada has become a quagmire of hypocrisy. Our greentard Primeminister and Greentard Saint Suzuki jet around the world preaching energy reform while practising ostentatious consumption. Greentards dressed in fossil fuel based clothing and with fossil fuel based electronics supplied by Kleptogreen funding have full control of the Schwabian Cult media. Meanwhile indigenous history revisionists and their hereditary rulers are paid exorbitant fees to endlessly attend meetings whose sole purpose is to keep the Federal participation funds flowing and any and all development in perpetual limbo. Canada is sick and dying from a National ennui that is only made bearable by massive overconsumption of cannabis and video games. If you want to see the Schwabian dream in practise, come to Canada where our motto is “Nothing can be done.”.

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