The Road To Mexico -- September 4, 2018

A very convoluted story but the gist of this story, the nuances, and the tea leaves suggest:

• Mexico's new socialist president will manage the country's oil and gas sector with laser-like focus
• business in Mexico's oil and gas sector effectively comes to a standstill for the next three years
• the country will rely on ever more natural gas imports
• gasoline is going to get very, very expensive 

Story over at ArgusMedia:

Mexico's first natural gas storage tender scheduled for this month may be delayed ahead of the country´s political transition, gas pipeline administrator Cenagas. [sic]

"The tender is ready…the only thing missing is whether the new administration wants to continue with the project," [according to a spokesperson]. "We have to show [the new government] that the project aligns with the country's energy security needs."

Comment: when one reads the background to this story, it's obvious that the project aligns very closely with the country's energy security needs. It's clear that AMLO is looking at the list of winners and losers.

Under Mexico's gas storage policy published in March, Cenagas must keep at least 45 Bcf (1.26 Bcm) of gas in storage by 2026, and secure access to operational capacity through reservation agreements with LNG storage terminals.

The much-anticipated tender will cover storage in the Jaf field that has been deemed economically unviable.

Background:

• Cenagas: Mexico's national gas control authority
• Jaf natural gas field: off-shore, located in Veracruz state; depleted; but makes a great site for storing natural gas 
• Site selected last week: that's how recent this news is; this would have been Mexico's first natural gas underground storage facility, August 28, 2018:

Mexico said it plans to tender its first strategic storage project at a depleted natural gas reservoir in Veracruz state.

The Centro Nacional de Control del Gas Natural (Cenagas) this week published the preliminary bid documents for the tender, expected to launch later this year. The auction is to award a service contract to build and operate a 10 Bcf storage facility at Jaf, a depleted dry gas field in central Mexico. 

The Jaf field had an original volume of 21 Bcf, according to a fact sheet published by Cenagas. The field was in operation from July 2009 to December 2014, producing a total of 11 Bcf.

Jaf is located on a block operated by state oil company Petroleos Mexicanos (Pemex), which drilled five wells in the field. Last year Mexican authorities determined that the field was no longer economically viable for exploitation as an oil and gas project.

The eventual developer of the storage site at Jaf would also be responsible for interconnecting the facility with the Sistrangas, Mexico’s main gas transmission system. The nearest pipelines on the system are 3.6 miles from the reservoir site, including a section of pipes that connects with the Cempoala compressor station.

Mexico’s natural gas storage policy, published earlier this year, mandates that Cenagas develop 45 Bcf of strategic inventories on the Sistrangas.

The Jaf tender is the first of these strategic projects, which would be reserved for supply emergencies. The full 45 Bcf must be in operation by 2026 at the latest.

Mexico currently lacks underground gas storage facilities, relying instead on tankers at liquefied natural gas (LNG) terminals for short-term balancing. The storage policy mandates that Cenagas hold operational inventories at LNG terminals at least until the underground facilities come online.

Much more at the link.