Mexico looks to increase natural gas storage

Increased gas storage capacity would allow domestic production to compete more easily with LNG imports, boosting supply security

Mexico plans to launch a series of tenders for natural gas storage capacity this year, a draft policy published last month by the energy ministry says.

Gas pipeline and storage administrator Cenagas will be required to keep at least 45bn ft³ (1.26bn m³) of gas in storage by 2025, representing five days of domestic consumption, under the proposals. Preference will be given to new storage capacity located underground in deposits deemed unprofitable to develop, although other storage options will be considered if underground capacity is unavailable.

Cenagas has identified potential storage sites at 15 fields with original estimated reserves of 2.13 trillion ft³. The list includes an abandoned oil well known as Brasil, which will be offered for storage in a tender scheduled for early this year. Other depleted fields under consideration are in the Burgos, Veracruz and Macuspana–Muspac producing regions.

Data including geological information will be available to companies interested in participating in the tenders that Cenagas plans to hold this year.

The draft policy states that all permit holders will have to file regular reports on volumes produced, transported, stored and distributed, from 1 September. The energy ministry will then publish supply and demand assessments, and gas storage volumes, the policy says. A response plan establishing guidelines on how Cenagas' strategic inventories might be deployed in an emergency should be published by June. Market participants have until 28 January to comment on the proposals.

A rise in storage capacity would allow domestically produced gas to better compete with LNG imports, strengthening Mexico's energy security, the government says. State-owned Pemex produced 4.8bn ft³/d of gas in November, 13pc down on the same period in 2016. Production fell by almost a quarter compared with November 2015.

Mexico gas output