37 minute read
Natural Gas
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Natural Gas
Cheaper, cleaner and more future-proof than any petroleum-based fuel oil, natural gas still remains a crucial staple for Mexico´s energy transition. Combined cycle power generation, already an important ingredient in the Mexican energy mix, will be expanded further to accommodate the country’s energy baseload. Other than this type of firm energy, flexible solutions can run on natural gas as well. As a result, commercial and industrial users are looking toward the advantages natural gas can provide. In such an environment, Mexico stands to benefit from an expanded and reliable natural gas distribution network. After all, distribution of this imported gas throughout the country can be a great catalyst for national development. However, recent setbacks regarding natural gas imports and distribution have demonstrated the need for the national agenda to contemplate a storage strategy.
Issues regarding natural gas distribution and storage in Mexico, as well as the latest technological developments are examined in this chapter through the insights of key players in the industry who outline their assessment of the current issues, new developments and future opportunities.
2Natural Gas
26 Analysis
Expanding the Potential of Mexico’s Baseload Fuel
27 View From the Top
José García | President of AMGN
28 Conference Highlights
29 View From the Top
Michael Ward | CEO of Mirage Energy
30 View From the Top
Alberto Escofet | Country Manager of Enagás
31 View From the Top
Jan Frowijn | Vice President USA, Mexico and Central America at Rosen
32 View From the Top
Alejandro Peón | General Director of Naturgy Mexico
34 Analysis
Technology Could Make Natural Gas A Better Bet
35 View From the Top
Bulmaro Rojas | Vice President of Operations LATAM at Generac
36 View From the Top
Aldrich Richter | Managing Director of MAN Energy Solutions Mexico
37 Roundtable
Where are the Opportunities with Natural Gas?
38 View From the Top
Tania Ortiz | Director General of IEnova
40 Spotlight
Generating Energy for Mexico for Over Two Decades | IEnova
41 Content Links
Expanding the Potential of Mexico’s Baseload Fuel
Due to the inherent benefits of natural gas, demand from both CFE and private industry continues to rise. Imports reached a record high in 2020, climbing to 5.9 bcf/d on June 10, according S&P Global Platts. Amid the unabated growth in demand, challenges are emerging. In particular, infrastructure is at a tipping point, and therein lies the opportunity.
PRODESEN 2020-2034 shows that Mexico relies heavily on natural gas to fuel its power production, with gas-fueled combined cycle plants alone representing 38 percent of installed capacity. How this percentage will grow relative to other energy sources remains to be seen, yet the government’s inclusion of combined cycle power plants in its recent infrastructure packages and development plans guarantees that capacity will continue to expand. SENER also expects that domestic demand for natural gas will increase until at least 2031.
Growing demand among industrial consumers poses a further challenge to be met by Mexico’s distribution infrastructure. In the Mexican automotive sector, for instance, companies such as General Motors and Volkswagen use natural gas to provide power to their production facilities. Natural gas can be used as a lever toward development as well, says Tania Ortiz, Director General of infrastructure giant IEnova: “Mexico is an exporting and manufacturing economy. Providing an adequate energy supply is crucial to the country’s growth and hence, the creation of jobs for its citizens.”
Importing natural gas has also become easier in the past year, as several pipeline projects were completed successfully. The Wahalajara-system, for example, was finalized with the addition of the 0.89 bcf/d Villa de Reyes-Aguascalientes-Guadalajara (VAG) pipeline, connecting Texas’ Permian Basin production area with Guadalajara.
The US Energy Information Administration (EIA) projects that imports will increase further. The Sierrita pipeline expansion is another example of such an expansion, allowing for wider access to natural gas in Mexico’s northwest. In other areas, players like Mirage Energy are planning to expand the San Fernando-Cactus pipeline to the benefit of industrial parks in Puebla.
Nevertheless, much work remains to be done. “Mexico will need more physical pipelines to interconnect the main pipelines that already exist in the country,” said Alberto Escofet, Country Manager of Enagás, in an interview with MBN.
Whether Mexico should produce its own natural gas has also long been a discussion within the country’s energy sector, where the economic argument for cheaper importation has long prevailed.
Yet, several industry experts disagree with this approach. “Mexico should have been producing its own gas for a while now,” said Escofet.
José García
President of AMGN
Investment, Talks Lead to New President’s Agenda
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More about this person Q: What was your mission for AMGN after you became president in late 2020?
A: The natural gas industry has always been committed to Mexico. As president of AMGN, my objective is to contribute to the achievement of the country’s goals and to maintain a permanent dialog with the sector’s authorities, as well as to promote investment, bearing in mind that 2020 represented a challenge for all countries due to the COVID-19 pandemic. Economic reactivation in the short and midterm is key.
Q: How has AMGN approached social responsibility during the pandemic?
A: For our affiliated companies, the focus was to guarantee the safe and continuous gas supply to all Mexican citizens, as well as to ensure the safety and well-being of all our workers, especially under strict sanitary protocols. Since we are an essential activity, it was important that the work did not stop.
Similarly, it was a priority to guarantee transport, commercialization, distribution, storage, Vehicular Natural Gas (GNV) and the supply of materials that keep the industry’s infrastructure operating during the contingency for the benefit of homes, commercial and services companies, as well as public transport.
Q: How can AMGN help to prevent natural gas shortages in Mexico?
A: It is important to point out that the shortage that occurred in Mexico in early 2021 was an extraordinary event for North America. It was the first shortage in over 100 years. Natural gas has positioned itself in Mexico as a lever for development, for industries, small businesses and a growing number of homes. It is important to push storage policies to prevent situations like these from happening.
It is also necessary to have a reliable system of pipelines that allows us to bring natural gas into the entire country and generate economic development, investment and employment opportunities. We still have a great deal to do, working together the three levels government and the industry to bring natural gas to the entire country.
Q: What role will the private sector play in the development of Mexico’s natural gas market?
A: The companies in AMGN are committed to the country, they work together with the authorities to bring natural gas to more people, while boosting economic development across the country. Our priority is to contribute to the use of natural gas because it is a fuel that is eco-friendly, it is very safe and it stimulates competitiveness.
Q: What will AMGN’s direct priorities be for 2021?
A: We will work and invest in Mexico, mainly in projects that will allow us to deliver natural gas to the southeast of Mexico and boost the region’s economic development. In addition, we will continue supporting the areas that already have a natural gas supply.
Natural Gas to Boost Mexico’s Development
Diana Piñeda
Partner at González Calvillo
Areli Covarrubias
Commercial Director at IEnova
Hector Moreira
Commissioner at the National Hydrocarbons Commission
José Aparicio
CEO of Siemens Energy Mexico
Aldrich Richter
Managing Director of MAN Energy Solutions Mexico
Alma Flores
Expert in Regulation
Natural gas is a transitional resource that is allowing Mexico to go from fossil fuels to renewable energy. However, this transition does not need to move too fast and the country can take advantage of this resource to boost its development. This was one of the conclusions reached during the panel “From Source to
Consumer: Gas Distribution and Infrastructure.” Experts agreed that natural gas is and will be the most important resource for generating energy and that recent blackouts have demonstrated the importance of improving the country’s energy security.
The panel was moderated by Diana Piñeda, Partner at González Calvillo. It featured Areli Covarrubias, Commercial Director at IEnova; José Aparicio, CEO of Siemens Energy Mexico; Aldrich Richter, Managing Director of MAN Energy Solutions Mexico; and Alma Monserrat Flores Estrada, Expert in Regulation.
Covarrubias explained that in the last 15 years, Mexico has made an important effort to strengthen its infrastructure. “Ten years ago, we had very restricted systems and natural gas could only be used for specific industries and areas. Today, we have a completely different panorama.” Covarrubias said that to increase Mexico’s energy security, the country has to diversify its energy sources and improve the current natural gas infrastructure to meet national demand.
Aparicio, emphasized that natural gas remains the main resource for energy generation in Mexico. “If we add energy storage to our power plants, based on combined cycle technology, we can help prevent blackouts by ensuring stable energy around the clock,” he said.
Richter highlighted that natural gas is a transition resource from more polluting resources to renewable energy and explained that the Mexican transition could last a long time, which is the perfect opportunity for the country. Many countries have joined the natural gas trend, as renewables have the problem of intermittency. However, these problems can be solved by incorporating a sophisticated operator system that predicts these fluctuations or by having robust storage infrastructure.
Flores Estrada emphasized that natural gas is the most important resource for the development of the Mexican economy. There have been many efforts made by the government to improve the natural gas supply problem. “However, we need to increase them to meet the demand,” she said.
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Michael Ward
CEO of Mirage Energy
Ready to Move on Crucial Natural Gas Infrastructure Projects
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More about this person Q: How is the company working to convince the government of the need for Mirage’s 786bcf storage project?
A: Storage is essential for the Mexican government, whether it prioritizes it or not. The fact is that if a natural gas interruption occurred regarding gas coming in from the US, it becomes a disaster. If such a disruption occurs, Mexico has around three to four days of linepack “stored” in its pipelines and LNG facilities. After this, everything stops. With our storage facility, we can provide up to six months of natural gas supply after it has been fully developed. This will take some time. However, we are not developing this only as a strategic reserve, but as a commercial operation of which industrial players can benefit.
Q: What will the company’s integral pipeline project look like?
A: Concerning pipelines, a 42-inch pipeline is to be built. The line goes from the Agua Dulce-Banquette Hub toward Progreso, then crosses the border 27 miles into Mexico. After this, the pipeline travels west to Station 19. We are building a parallel line from this station down to Los Ramonas. The line will also feed the storage facility. We will have a 50,000HP compression set there, as well as 25 injectors. With that, we can inject 0.5bcf of gas per day for storage purposes. Regarding the storage, we are working on a deal to rehabilitate the San Fernando-Cactus pipeline. This was originally built to bring gas from the Bay of Campeche up north and designed to travel into the US. Nevertheless, that piece was never built because the deal fell apart. It is a single-direction right now as there is no gas coming from Campeche. We will refurbish the pipeline, with new compression, new meter stations and instrumentation to make it bi-directional again. The line will travel to Nuevo PEMEX. We have an interconnection agreement here. All the gas will come inexpensively from the Permian basin.
Q: How is Mirage Energy preparing to sign deals with private players and state governments, such as Puebla’s Ministry of Energy?
A: We have signed a deal with the Ministry of Energy of Puebla. The goal is to develop a line to feed an industrial complex that they are building. The line will be fed with the gas coming from the San Fernando-Cactus line. It appears that we can use the right of way that had been established for the highway. We have spoken to numerous enthusiastic industrial consumers as well. In fact, in almost every city we pass with the pipelines on the eastern coast of Mexico, industrial players are anxious to see them built. We receive calls on a daily basis from interested potential customers. It will even attract new manufacturing, which would propel much needed employment.
Q: What would the timeline look like for Mirage Energy’s projects once they get the green light via permits?
A: From the time we get the permits for our pipelines and storage facility, we can be operational in 18 months. The Isthmus Corridor project will take us six to seven months to transport the first actual product across the corridor. This includes the rehabilitation of the docks, tankage, monobuoys and existing facilities. The rehabilitation of the San FernandoCactus pipeline should take 12 to 18 months.
Alberto Escofet
Country Manager of Enagás
Gas Infrastructure is Basis for Sustainable Future
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More about this person Q: How is Enagás planning to add more projects to its portfolio?
A: We have been closely following developments in Baja California. We have also been monitoring CENAGAS’ five-year plan. Enagás is reviewing where it can participate in this regard, especially in the southeastern region of Mexico. Furthermore, the company has given serious attention to the theme of virtual pipelines. The portfolio is a mix of virtual and physical infrastructure. Baja California, for instance, would benefit from a mix of these infrastructures.
We also look for opportunities around the border region with the US as many things are moving there.
Q: How would you assess the balance between physical and virtual pipelines?
A: Liquefied natural gas (LNG) has a leading role, and it can be transported over long distances. Most of the coming gasification efforts will be done on wheels, using virtual pipelines instead of physical pipelines. Mexico will need more physical pipelines to interconnect the main pipelines that already exist in the country. I think the gasification of new sites will be done using virtual pipelines. This has the advantage that almost nothing needs to be done.
LNG can be transported via trucks, so unlike pipelines, no special permissions or rights of way need to be established through contracts. You can use the existing highway.
However, the infrastructure to liquify natural gas will need to be built and interconnected with a pipeline close to an existing market. Using this method is the easiest and most cost-effective way to bring gas to regions that need to be more economically competitive. To lure industry, you need a reliable energy source. There is enough capability within the existing network of pipelines to supply demand in a very short period of time.
Q: How important is R&D in Enagás’ plans?
A: It is crucial and Enagás is making great strides in this area. Efficiency and reducing environmental impact are important, but developing new technologies and uses for natural gas are important too. These include developing biomethane, biogas and hydrogen. You can use the current infrastructure to transport hydrogen, for instance. Green hydrogen has no emissions at all and is especially interesting because it is generated using renewable energy. This hydrogen can be used for energy generation, but also to power any type of transportation method.
Enagás is dedicating a great deal of resources to developments like these, on ways to fight climate change and reduce emissions, as well as introducing renewable aspects to the natural gas market. It is just a matter of time before these technologies take over the market.
There are companies, universities and associations in Mexico working on hydrogen developments, and they have been doing so for 20 years. The area simply does not receive the same amount of publicity. Enagás is open to making further alliances with these parties.
Jan Frowijn
Vice President USA, Mexico and Central America at Rosen
Preventing Failures, Keeping People Safe
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More about this person Q: How has ROSEN Group responded to the challenges of 2020?
A: At the end of 2019 and the beginning of 2020, we had big plans for 2020. This changed as 2020 was dominated by the uncertainty resulting from the COVID-19 pandemic. The ROSEN Group operates all over the world. There were all sorts of challenges comparing countries and regions. Worldwide and looking at our operations in Mexico and Central America, our main priority is first and foremost the health and well-being of our employees, their families and the community.
Our work consists of preparing tools and specialized equipment in the workshop, inspection activities in the field and the analysis and preparation of inspection reports and engineering assessments in the office. Most of our office personnel started, really without any significant interruptions, working from home in March of last year. Right from the start, we implemented strict protocols in the workshop and we continue to work together with our customers to prevent the spread of the coronavirus in the field.
Q: How is the company helping its clients to switch from reactive to preventative maintenance?
A: We employ a rigorous Integrity Management Process. We understand how assets deteriorate and we work together with our customers to prevent failures and keep people and the environment safe. Accurate inspection data is the key to integrity management. Our customers appreciate our innovative and reliable inspection technologies and decades of experience. We have inspected billions of square meters with ultrasound, eddy current, magnetic flux leakage, EMAT, optical and acoustic technologies. Each time an inspection or technical service takes place, an enormous amount of measurement and operational data is accumulated. Raw data must be interpreted and analyzed to transform data into information and information into knowledge, ultimately enabling smart integrity decisions for preventive maintenance or repairs. Nothing is better suited to achieve this than the increasingly available methods of artificial intelligence. The ROSEN Group’s data scientist and integrity engineering teams, one of the largest in the industry, work together with customers and partners to get the most out of the data to facilitate reliable and real-time decisions for the safe operation of assets.
Q: What does the company hope to achieve by the end of 2021?
A: The ROSEN Group in Mexico is seeking to continue to support the Mexican Energy sector – and the pipeline industry in particular. Our goal is that customers don’t just value us on how smart our technology is or even how innovative we are. It is results that matter. Our goal is to continue to build confidence in our solutions and the trust of our customers as the undisputed leading integrity partner in Mexico, in both the private and public sector. For both the critical oil and gas infrastructure and importantly also the transition toward a cleaner energy future. We need and want to do this together with our customers and seek to foster collaboration with industry stakeholders and our employees. We strive to be an exemplary employer that offers our employees growth opportunities and an environment where everyone can be their best.
Alejandro Peón
General Director of Naturgy Mexico
Gas a Natural Enabler for Mexico’s Development
Q: What was Naturgy’s experience in 2020 and what are its main objective for 2021?
A: Without a doubt, 2020 was a challenging year for people, companies and for all sectors of the economy. We are convinced that in extraordinary situations like that which we are living, having access to natural gas is essential for businesses, homes and industries alike, in terms of competitiveness, as well as comfort and safety. We have always guaranteed continuity in our service, which means the distribution of natural gas to our customers.
In 2020, we offered a free supply of natural gas to all public hospitals, which were connected to our distribution networks during the two most complicated months of the pandemic. Naturgy and its collaborators contributed with a donation to the Mexican Red Cross, destined for the purchase of medical supplies. We also offered one year of value-added services to clients who were among the frontline responders against the pandemic, such as doctors, nurses and the police.
For 2021, our main focus is to provide our customers a safe and modern service. For this reason, we have made significant investments in technology that allows our clients to use their cellphones to consult and pay their bills conveniently. We are also offering our service to potential users in areas where we already have a presence to provide them with access to safe, convenient and modern energy.
Another of our objectives is to continue promoting vehicular natural gas for state and municipal governments in Monterrey and Mexico City. These efforts will improve the competitiveness of public transportation and improve air quality. In addition, we will continue to promote the supply of energy solutions for companies to optimize their consumption and energy savings.
Q: How did Naturgy adapt its strategy to the unforeseen gas shortages Texas suffered due to extreme weather conditions?
A: We collaborated closely with the CENAGAS and with the suppliers of natural gas molecules to manage the situation caused by weather conditions in Texas. We also maintained close communication with the industry’s main consumers to reduce consumption as a preventive measure. This helped guarantee supply to strategic facilities and homes connected to our distribution networks.
Q: How will the company’s plan to use five-year bonds on the BMV benefit your future strategy in Mexico?
A: These bonds will improve our debt structure with better market conditions, extend its life average and develop distribution network expansion projects in areas where we already have a presence.
Q: How do natural gas projects like those Naturgy promotes impact Mexicans?
A: We are convinced that natural gas projects can provide a higher quality of life and this is done by reducing inequality through the development of businesses and industrial and
economic development. It has been shown that states with access to natural gas have a stronger development than states that do not have access to this fuel.
We are focusing on strengthening our presence in areas where we already have a distribution network. We believe that by connecting more users we will achieve a stronger regional development through the supply of natural gas.
Q: What differentiates the social focus of the company in Mexico from its competition?
A: Companies in the energy sector, especially natural gas distributors, are aware of the positive impact they can have on all sectors of society. In addition to the intrinsic potential of energy, we have developed action plans to benefit areas where we have distribution networks. These plans cover topics such as proximity to clients, creating opportunities for professionals, economic benefits for local suppliers, improving environmental impacts and identifying energy vulnerability.
As part of our Social Responsibility Policy, we help people who have been affected by this global pandemic. In this regard, we carry out actions to support medical personnel who are combatting COVID-19 on a daily basis. First, we donated MX$1 million (US$49,000) to the Red Cross for the purchase of medical equipment. One-third of that was contributed by our collaborators and two-thirds by the company. Second, for two months, we provided our natural gas service for free to more than 60 public hospitals that are connected to our distribution network. Third, we launched the “We take care of your energy” initiative. The initiative grants one free year of our service and maintenance for the frontline responders who happen to be our customers.
We are committed to Mexico. Therefore, we want to reach more people and introduce efficient, affordable, environmentally friendly and safe energy to families, shops and industries.
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More about this person
Technology Could Make Natural Gas A Better Bet
Read the complete article It is no secret that Mexico relies on natural gas and use of the cleanest burning fossil fuel has been growing steadily. Although the COVID-19 pandemic resulted in a slowdown in demand, the country’s energy needs will require a stable input for the foreseeable future. Its bet is on natural gas, and emerging technologies could make that bet a winning position.
According to PRODESEN, Mexico relies on combined cycle technology to turn natural gas into firm power. This type of power plant uses two turbines: one powered with natural gas and the other powered with the heat generated by the process. As of October 2020, combined cycle plants represents 59.6 percent of energy produced in the country. A further 4.4 percent comes from turbogas plants, which rely on natural gas as well.
Even though other thermal energy sources, such as the country’s internal combustion engines, cogeneration facilities and conventional thermal energy make use of Mexico’s more polluting fuel oil, these facilities could still be adapted by switching to natural gas.
Technology plays an important role when it comes to natural gas. For its transport, intelligent pipeline systems allow for continuous monitoring, making predictive maintenance a possibility.
Natural gas, while much cleaner than other fossil fuels, still has a notable carbon footprint, notes Yolanda Villegas, Head of Legal Affairs of EON Energy. “Regarding the Paris Agreement, the energy transition act excludes combustion generation, including natural gas, as a clean energy source for power production. If this production has a quantity of greenhouse gas emission greater than 100kg of CO2 per megawatt-hour, then it is not a clean energy. For Mexico’s combined cycle generation, the average is 400kg, meaning we are way past this line.” To counter this, SENER has said it intends to use carbon capture technology.
Then there is hydrogen. While considered an expensive fuel for energy generation worldwide, confidence in the resource is increasing rapidly. In the EU, hydrogen is championed as a key energy resource for post-COVID-19 economic reactivation plans. It is positioned to become an integral part of the trillion-dollar US plans toward decarbonization as well.
To generate hydrogen, companies facilitate water electrolysis. Electric currents are used to split water into hydrogen and oxygen. Less cleaner forms of hydrogen, called blue and grey hydrogen, feature fossil fuels in the process, meaning they are not 100 percent renewable.
Green hydrogen, however, uses renewable energy for electrolysis. For a country increasingly focused on natural gas, such as Mexico, hydrogen can prove to be advantageous. “You can use the current infrastructure to transport hydrogen,” says Escofet.
Bulmaro Rojas
Vice President of Operations LATAM at Generac
Generating Energy Stability Where Mexico Needs it Most
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More about this person Q: How has your company evolved in Mexico and what services does it provide?
A: Generac acquired Ottomotores in Mexico in late 2012, followed by Selmec in June 2018. The key to our success was the purchase of these two companies that focus on the manufacturing of energy generators. Generac, the leader in the US in this segment, has over 60 years of experience. In total, we boast over 200 years of experience. Generac provides the technical and financial support, which has resulted in the ideal company mix.
We focus mostly on the following sectors: residential, commercial and industrial, data centers, and the telecommunications and health sectors. The latter three have grown especially in the past year. We manufacture energy generators, ranging from 10KW up to 3.2MW in a single motor. Furthermore, we commercialize and distribute various products running on gas in Mexico and Latin America.
Q: How has demand for the company’s products evolved during the pandemic?
A: Various Mexican hospitals have been equipped to deal with the pandemic. We are supplying many of them with power generators, as we are a direct supplier of the Ministry of Defense who is in charge of this project. We provide solutions to Mexico’s new Welfare Banks as well.
Q: Which products in the company’s portfolio are experiencing the highest demand and how do you expect this to evolve?
A: We are experiencing an uptake in demand. Solutions that range between 5KW and 200KW are in greatest demand. Diesel beats gas narrowly in terms of the fuel they run on. The products that run on gas are growing in demand. This is thanks to our national natural gas infrastructure, which is growing steadily.
With data centers, capacity is being reduced. Before, the trend was to have large data centers, powered by 2.5MW generators. Now, we are seeing micro data centers, which will need smaller equipment of around 0.5MW to 1.5MW, running on either diesel or gas.
Q: How has the company’s natural gas business developed in Mexico?
A: Generac leads the worldwide segment of natural gas-based generators in terms of quantities manufactured and sold. We have three major development centers, where we develop new equipment and motors. These are very efficient and cleaner, and have a lower environmental impact. They are tied to the development of Mexico’s and Latin America’s infrastructure as well. We already have solutions in place, but depend on these project developments to deliver our solutions.
Unfortunately, gas is still seen as a liability in Latin America. Because we live in an area prone to earthquakes, people think a gas pipeline poses risks. However, infrastructural safety is up to a very high standard and able to deal with such natural disasters.
Aldrich Richter
Managing Director of MAN Energy Solutions Mexico
Small LNG plants, Virtual Pipelines Can Meet High Gas Demand
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More about this person Q: How has demand for MAN Energy Solutions evolved in the past year?
A: It has been a rather challenging 2020. However, demand for our products and services have not decreased, especially in a country like Mexico, where industrial customers in the petrochemical and steel industry still produce for local and foreign markets, container and tanker ships move products around and there is a need for a lower cost and higher quality energy supply. Our Power business offers customers firm power supply generated via large gas engines that produce electricity around the clock plus the possibility to increase overall efficiency via a heat recovery steam generator and integrate renewable energies for a perfect combination. We have invested heavily in solutions for decarbonization, allowing the world to secure the energy we need while lowering the environmental impact.
Q: How does MAN Energy Solutions help bring natural gas benefits to users?
A: In our solutions portfolio, we also have technology that can bring gas closer to users. This can be done most economically for regions in Mexico, that have no access to the pipeline network through compressed natural gas. We have invested in a CNG solution, that enables us and our partners to compress natural gas efficiently and cost-effectively, and then transport it via a virtual containerized pipeline. Combined with our gas engine generation sets either in a power house or a containerized configuration, we can help our customers in Mexico to use CNG in their manufacturing process and the possibility to generate their own power anywhere in the country. Larger scale LNG projects in Mexico, such as the Costa Azul or Salina Cruz facilities, are all focused on export: they liquefy natural gas on a large scale and aim for the international markets. With our CNG solution MAN ES offers a different type of project, suitable for many locations in Mexico where there is no access to a gas pipeline and power from the grid.
Q: Where do you see MAN Energy Solutions in 2021?
A: First, our largest business in Mexico is related to turbomachinery. We are suppliers of large-scale compressors and complex turbomachinery trains for the refining, petrochemical, steel and air separation industries. Second, MAN Energy Solutions offers services for the power and marine industry. Most of PEMEX’s tankers that transport refined products along Mexico’s coasts, container ships and cruise ships use our engines for their main propulsion systems. Smaller sized vessels that guard our costs also use MAN ES engines. This is also an important business for us.
The power projects are also extremely important for our future success in Mexico. We feel very comfortable in participating in the range from 10 to 250 MW. However, we also offer small gensets below 0.5 MW for distributed power. Mexico has a great demand for these types of projects. We are also focused on new solutions, such as Power-to-X, where the x can represent hydrogen or other alternative fuels with less of an impact on the environment. Factory LNG is another important focus. We offer a diverse mix of products and services for the market and we are aligned for success in Mexico.
Where are the Opportunities with Natural Gas?
Yolanda Villegas
Head of Legal Affairs at Eon Energy
The role that natural gas plays in Mexico’s energy mix continues to grow. Close to 65 percent of the country’s power-producing capacity already relies on the fuel, which is mostly imported from the US. Due to this dynamic, there are still many untapped opportunities regarding natural gas. Mexico Energy Review asked industry experts where the areas of opportunity can be found.
In Mexico, the concept of sovereignty is often discussed. The fact that we import so much gas undermines this. The US only exports dry gas, without ethanol and other beneficial liquids associated with gas production. Mexico’s main focus is on the petrochemical business, where these byproducts generate much added value, whereas dry gas does not. The US also could ban fracking. If this happens, Mexico might face uncertainty concerning our energy because we are not exploring our own resources. Eventually, Mexico might be forced to produce its own gas. Studies conclude that the country has promising potential for gas production in the northern part of the country. If an affiliate of PEMEX or CFE decided to start natural gas production, it would be a great boon for Mexico.
Alberto Escofet
Country Manager of Enagás
Mexico should have been producing its own gas for a while now. I do not know the exact production figures at the moment. Mexico has a lot of reserves, but more than just necessary CAPEX spending, it is also a political issue. The question is if Mexico needs to move quickly or if it can wait. I think it should start with some investments and exploration, but for this to happen a strong E&P company needs to take the helm. PEMEX can no longer take on these projects, so the private sector needs to be invited. There are many things that need to be done before Mexico can think of starting its natural gas production. It depends on Mexico’s will to do it because the technology involved is not rocket science. In the meantime, the country will have to depend on imports.
The opportunity to develop a natural gas liquefaction project in Mexico for export to Asia arises mainly from the cost reduction that can be obtained by having a port of departure for the gas in the Pacific coast instead of one in the gulf coast that requires a route longer and therefore represents higher costs. In Addition to this, there is the existing pipeline capacity that in principle would allow to import cheap gas from the US and to transport it to the Pacific coast in Mexico. Nevertheless, the success of the project depends on the capacity to liquify the gas at low cost so that it can be sold to areas where gas is more expensive.
Tania Ortiz
Director General of IEnova
Enabling Mexico’s Economic Development Through Energy
Q: What is IEnova’s background in Mexico’s energy infrastructure market?
A: In a nutshell, IEnova is a leading Mexican energy infrastructure company. Our main focus is to develop critical infrastructure that enables a more reliable and sustainable supply of energy in Mexico. All our assets are contracted long term through takeor-pay contracts, the main basis of our economic viability and cash flow. We have sustained our growth by branching out into different areas of the energy sector. IEnova also has a robust sustainability strategy at the core of all its activities.
Today, our key initiatives are part of three separate business segments. We are present in natural gas, where we operate pipelines, gas storage and distribution facilities. Our other two segments are energy generation and energy storage. Finally, our most important initiative is our Energía Costa Azul liquefaction facility in Ensenada. This is a natural gas facility that was developed originally to bring gas into North America. Now, because of the global market dynamic, we are looking at investing into the facility to allow us to liquify natural gas there. Later, we would distribute this gas to isolated markets in Mexico and abroad.
Right now, IEnova is very connected to the North American region. We are among the leaders in terms of cross-border energy infrastructure for both gas and power. This is one of our most exciting initiatives, because it opens a position for us as a global player.
Q: How can natural gas be a catalyst for Mexico’s development and what is the company doing to support this?
A: Mexico has the unique opportunity to take advantage of North America’s low gas prices. Although the country is a net importer of gas, the general dynamic and location next to the US, which is an exporter, allows us to turn this into an opportunity. We need to ensure that Mexico has the appropriate infrastructure to import gas from the US and deliver it to end consumers and the industry alike. The latter is especially important because Mexico is an exporting and manufacturing economy. Providing an adequate energy supply is crucial to the country’s growth and hence, the creation of jobs for its citizens.
We are also active in the gas transportation segment throughout the border area. We own pipelines in every border state, from the west coast to the Gulf coast. Through a joint venture with TC Energy (formerly TransCanada), we own a marine pipeline in the Gulf of Mexico. Through this cross-border pipeline network, we are enabling the supply of US gas into Mexico.
We also have three gas distribution companies in northern Mexico. Our responsibility is to deliver gas to each household and business. We serve to more than 132,000 consumers. To combat COVID-19, for several months we supplied natural gas services to hospitals for free.
Q: Where and how is the company identifying opportunities regarding critical storage infrastructure?
experience a disruption in the gas load due to bad weather or major maintenance, it would result in severe disruptions. Storage can mitigate these disruptions. One particular policy requires Mexico to possess a certain amount of storage. The administration has yet to take further steps and decide how they wish to implement this policy.
Regardless, we are very interested in participating on the ground to define what the ideal location would be. Some options include depleted oil reservoirs or salt caverns. We have done quite a bit of field work already but there are some decisions that need to be made before we can move forward on this front.
Q: What are the key components of IEnova’s community approach?
A: To begin, one has to understand the community’s needs and concerns. You need to make sure that you communicate clearly. At times, misinformation is par for the course. Therefore, it is necessary that the community understands exactly what you as a company are going to do and what benefits you intend to provide them. For example, we have a wind farm located on the border with California, in La Rumorosa, Baja California.
When we started this project, we were concerned about how the community would react. But when we approached them, they told us that the land we wanted to lease was not suitable for agriculture or cattle. This area is known to have security issues, such as trafficking of illegal goods or even people. The community considered our investment as a means to address their concerns. First of all, they received a portion of the project’s revenue. Secondly, we built illuminated roads and arranged security details. All the illegal trafficking has moved elsewhere as a result.
In another example, we built a community center with a library in a very isolated community. We also bring doctors who provide medical checkups. As a result, we receive calls from community members whenever one of our wind turbines stops rotating. They want to see it fixed because they are part of the project and want to see it fare well.
We also built a solar project in that same area. During its inauguration, neighboring ejido owners approached us to ask if we could build solar panels on their land as well.
If you align your interests, it pays off. This is not simple: you need to invest time and money and listen well.
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Generating Energy for Mexico for Over Two Decades
For more than two decades, IEnova has committed itself to Mexico’s sustainable growth through the development of energy infrastructure that has allowed it to generate social, environmental and economic value in every community it serves.
Through its three business segments — electricity, storage and gas — the company contributes to the country’s energy security. In the gas segment especially, it works in transportation, distribution and storage for the benefit of Mexican households, shops and industries.
Through its Ecogas subsidiary, IEnova distributes natural gas in seven cities in four states thanks to an extensive network that allows us to meet the needs of more than 136,000 commercial, residential and industrial customers in strict adherence to the highest standards of quality and safety. These standards have allowed the company to win important recognitions from local and federal authorities for being a Family Friendly Company, Environmental Excellence and Clean Industry.
Natural gas is considered a vital fuel in the growth and development of Mexico. Today, it is used in more than half of the electricity generation in the country and is one of the main inputs for the manufacturing industry. In addition, natural gas has proven to be the safest, most reliable and environmentally friendly fuel. Considering these characteristics, it has been shown that the cities that make use of this service see a significant impact on their GDP, the generation of jobs, the development of opportunities and therefore, the social welfare of their residents.
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