U.S. Natural-Gas Exports Fuel Mexican Manufacturing Boom

The growing glut of U.S. natural gas is helping to power a manufacturing boom in Mexico.Natural-gas exports across the southern border have risen 11% so far this year, to two billion cubic feet a day, according to Bentek Energy, an analytics company based in Denver.And that flow of gas could double in the next few years, analysts say. Companies have announced plans for at least seven new pipelines to take gas across the border from Texas and Arizona, including one expected to start transporting fuel at the end of the month.The increasing flow of gas is easing a supply shortage in Mexico, where fuel is costly and industrial demand is booming in industries including electricity production, petrochemicals and auto manufacturing, which has roughly doubled since 2009.The exports are also helping to reduce the overabundance of gas drillers that are pumping in areas such as the Eagle Ford Shale in South Texas, where gas is trading for less than the U.S. benchmark.While Mexico has significant shale resources of its own, its energy companies have lacked the expertise and desire to tap them, analysts say. The country has been meeting its fuel needs in part by importing liquefied gas that can cost three times as much as piped-in gas from the U.S.”The Mexicans have an incentive to import U.S. gas because it’s basically dirt cheap for them compared to other sources of energy,” said Sandy Fielden, an analyst at RBN Energy LLC in Houston.Eventually Mexico is expected to start producing its own gas as its energy industry—long run by national monopolies—is opened to competition over the next several years. But in the meantime, importing a flood of cheap natural gas from the U.S. should help ease public skepticism about the benefits of Mexico’s new, more free-market energy policy.

via U.S. Natural-Gas Exports Fuel Mexican Manufacturing Boom – WSJ.

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