<article><p class="lead">A win for US Democratic presidential candidate Joe Biden could eventually affect natural gas exports to Mexico if he pushes ahead with his platform to prohibit new drilling permits on federal land or moves to restrict hydraulic fracturing.</p><p>A win by incumbent US president Donald Trump meanwhile would instead likely extend the status quo, analysts say.</p><p>"The economic consequences of natural gas scarcity would be gigantic for Mexico," Rosanety Barrios, a former energy ministry official, told <i>Argus</i>. "There is no replacement for natural gas and so it would have a dramatic impact on the whole value chain."</p><p>Joe Biden has pledged to ban new oil and natural gas permitting on federal land and offshore, a situation that could reduce annual natural gas exports by 800 Bcf by 2030, industry group American Petroleum Institute said recently. That would take total US gas exports down to roughly 3.8 Tcf in 2030 instead of 4.6 Tcf last year, or about 2.2 Bcf/d less — representing about 43pc of what the US typically exports to Mexico.</p><p>The candidate has also been ambivalent about his support for hydraulic fracturing, despite a direct question on the matter in the first televised presidential debate held on 29 September. But Biden's running mate, vice presidential candidate Kamala Harris, has publicly expressed her opposition to the practice.</p><p>The Permian basin, the main supplier of pipeline exports to Mexico has seen explosive growth over the last decade as a result of fracking and much of the Permian's New Mexico shale activity is also carried out on federal land.</p><p>Mexico relies heavily on gas imports as domestic production has declined since 2010, with US pipeline imports increasing by more than four times between 2009 and this year.</p><p>Mexico imported 5.05 Bcf/d of pipeline gas from the US in July, down from 5.42 Bcf/d in July last year, a decline attributed to depressed demand amid the Covid-19 pandemic.</p><p>State-owned Pemex produced 4.83 Bcf/d in August, down from 4.85 Bcf/d in August a year ago.</p><p>"The energy issue is fundamental in this election as we will continue to be dependent on the US for the import of gas as long as we do not have the capacity to produce enough," Sergio Alcocer, former Mexican deputy foreign minister, said in a recent presentation.</p><p>Any reduction in natural gas supply would seriously impair Mexico's power industry — 37pc gas-fired in combined-cycle plants — as well as petrochemical and broader heavy industry sectors, he said.</p><p>Gas output from the Permian has already declined as associated gas wells were shut in amid the decline in crude prices sparked by the Covid-19 pandemic, but any further reduction in output could push prices higher.</p><p>EIA forecasts that Henry Hub gas spot prices — to which Mexican prices are pegged — will average $2.03/mmBtu in 2020 and $3.14/mmBtu in 2021.</p><p>If Biden were to win the presidency, his position on pipeline infrastructure could also affect natural gas prices. A flurry of new Permian Basin takeaway projects — that could ease downward pressure on pricing — are planned from next year onwards. It is unclear whether Biden's public opposition to the Keystone XL crude oil pipeline also extends to other new pipeline projects.</p><p>In contrast, Trump has favored industry deregulation in an effort to bolster US "energy dominance." In April, during the most volatile period for global crude prices, he pledged to "never let the great US oil and gas industry down."</p><p class="bylines">By Rebecca Conan</p></article>
