Energy Superpower: US Shale Gas Is Powering Mexico

  • Date: 02/12/16
  • The American Interest

North America is turning into one of the world’s biggest energy powerhouses of the 21st century.

American natural gas production has increased more than 50 percent over the past ten years, a welcome development that comes to us courtesy of the shale boom. Fracking has unleashed a flood of new supplies of hydrocarbons on the American natural gas market, and has kept prices in the bargain basement range for years now, as anyone currently heating their home with natural gas or propane will be able to tell you. But these benefits aren’t solely being enjoyed here in the U.S.—our southern neighbor is importing more American natural gas now than ever before. The EIA reports:

The expansion of the U.S. cross-border pipeline network into Mexico has been driven primarily by strong growth in Mexico’s natural gas demand in the power sector, declining domestic production, and the lower prices of U.S. pipeline gas compared with more expensive liquefied natural gas (LNG) imports…In the next three years, U.S. pipeline capacity into Mexico will nearly double. […]

The expansion of U.S. pipeline export capacity to Mexico has been matched by the expansion of Mexico’s domestic pipeline network, which includes 12 additional pipelines with a total capacity of 9.7 Bcf/d currently in development within Mexico…U.S. pipeline exports to Mexico have increased significantly over the past several years and are beginning to gradually displace Mexico’s LNG imports.

Thanks to the American shale boom, Mexico is suddenly capable of weaning itself off of expensive LNG imports, and it’s working closely with the U.S. to build out the necessary pipeline infrastructure to unleash this glut of shale gas south of the border.

We’ve long argued that the shale revolution was just one piece (though undoubtedly the most important) of a larger North American energy boom. Canada has plenty of crude left to plumb in the oil-rich province of Alberta; the United States is flush with tight oil, shale gas, and increasingly with wind and solar farms as well; and Mexico is working to privatize its own oil industry (through a series of sometimes painful reforms) in order to boost efficiencies and more fully develop its own prodigious domestic energy sources.

Further integration of the continent’s energy supply chains will only serve to strengthen North America’s position as one of the world’s biggest energy powerhouses in the 21st century.

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