Gas exports to Mexico projected to continue rapid increase

New pipelines will facilitate the flow of natural gas from U.S. producers to Mexican consumers.

Although the debate rages on regarding the construction of new facilities that will export liquefied natural gas (LNG) from ports on the East and Gulf Coasts, the amount of gas being shipped across America's southern border has quietly doubled over the course of the past three years, according to a report from Barclays. 

The bank's analysts have projected that U.S. exports to Mexico will continue increasing in the coming years, averaging 2 billion cubic feet per day in 2013 and rising by as much as 10 percent during the following year. After 2014, growth is expected to be even greater as new pipelines come into use.

For example, Oil and Gas Journal notes that when the Los Ramones pipeline is finished, it is expected to carry more than 2 billion cubic feet of gas per day from southern Texas to the Mexican state of Guanajuato, where energy demand is particularly strong due to the area's status as a hub for the Mexican auto industry.

The news source also highlighted the fact that Mexico itself possesses significant gas deposits. Estimates developed by the U.S. Department of Energy place the volume of Mexico's technically recoverable shale gas resources at 681 trillion cubic feet.

However, media reports have long asserted that inefficiency and lack of investment within the domestic oil and gas industry, which is managed by the federal government, prevent Mexico from capitalizing on its energy potential. According to the Barclays report, Mexico's natural gas production has actually declined by 11 percent in the past three years.

This contrasts sharply with the situation in the U.S., where gas production has risen rapidly through the use of innovative drilling and production equipment. New technologies have allowed U.S. producers to complete drill stem testing and start extracting resources more rapidly than ever before, providing the surplus of gas that is now helping Mexico make up for a shortfall in domestic production.