U.S. Natural Gas Exports to Mexico Through West Texas Border at Record Highs

Natural gas pipeline exports from West Texas to Mexico were documented to be at record levels at 1.6 billion cubic feet per day (bcf/d) during May 2022, according to an Aug. 18 report from the U.S. Energy Information Administration. The administration also reported U.S. gas pipeline exports to average 1.4 bcf/d for the period Jan-May 2022, up by 12 percent for the same period during 2021.

U.S. exports via pipeline from West Texas have increased gradually over the last few years, with export volumes doubling from 2019 to 2021 to reach 1.2 bcf/d as more interconnected pipelines in Central and Southwest Mexico have become operational over the past three years.

Mexican demand for U.S. gas has been driven by the electric power sector and to a lesser extent by demand from the industrial sector.  Moreover, the accessibility of relatively cheap gas from the U.S. has altered Mexico’s gas supply mix. The proportion of Mexico’s natural gas supplied by pipeline imports from the U.S. expanded from 61 percent in 2019 to 72 percent in 2021, however it has declined so far in 2022. Mexican gas imports are sensitive to prices in the U.S. spot market. As it stands, U.S. spot gas prices are at record highs, due to which, exports to Mexico fell to 69 percent during the first seven months of this year.

Another factor contributing to a decline in U.S. imports to Mexico so far this year, is increasing its domestic gas production. Production in Mexico during the January to July period of this year is 15 percent higher than for the same period in 2021, driven by elevated production at the Quesqui and Ixachi production fields. Moreover, enhancements in drilling rigs’ operating efficiency have also played a part in increasing production.