Mexico gas pipeline flaw impedes imports from US

An apparent flaw in one of Mexico´s new natural gas pipelines is partially impeding imports from the US and buttressing the role of LNG in the Mexican market.

The 291km Los Ramones Phase 2 South gas pipeline, designed to supply central Mexico, is operating significantly below its nameplate capacity of 1.4bn ft3/d because of an apparent design defect, an industry official with technical expertise tells Argus.

The Los Ramones pipeline system transports gas from the Eagle Ford shale formation in Texas to the Tamazunchale pipeline, north of Mexico City.

The North and South segments of Phase 2 are currently operating at 400mn ft3/d as the unexpected presence of dust in the southern segment has clogged the pipeline filters, preventing operators from increasing gas flow to reach maximum capacity, the official said.

The northern segment was designed to receive gas containing dust, but the southern leg was not.

TAG Pipelines Sur, the pipeline owners, have carried out several pigging operations to dislodge loose sediment and scale buildup with some success, the official said, but a full capacity in-service date has yet to be announced. The parties won the $1bn project in an October 2013 tender issued by state-owned oil company Pemex.

It is not clear if the problem can be resolved through maintenance or if repairs are needed.

Mexican gas pipeline regulator Cenagas told Argus in December 2016 that the line was undergoing maintenance and would reach full capacity in January 2017.

TAG Pipelines Sur is a joint venture between France´s Engie, state-owned Pemex commercial arm PMI Holdings, and TAG Pipelines, owned by Pemex Gas affiliate Mexgas Supply and Mexgas Enterprises.

Engie declined to respond to multiple requests for comment. Pemex referred Argus to Cenagas.

Mexico currently imports around half of the country's gas needs, including growing pipeline supply from the US, and LNG from Peru, the US and other sources.

The Los Ramones Phase 2 South gas pipeline had been expected to replace most LNG imports through Mexico´s Manzanillo regasification terminal on the Pacific coast.

But because of unexpected technical issues on the pipeline, imports have only inched up since the line was commissioned at 488mn ft3/d in July 2016, compared to 508mn ft3/d the following September, according to Mexican energy ministry data.

US gas pipeline exports to Mexico in October 2016 were 4.1bn ft3/d, up from 3.2bn ft3/d in the same month a year earlier, according to the US Energy Information Administration.