Genscape monitors are detecting the first sign of the next ramp up of U.S. natural gas exports to Mexico. These exports are continuing to expand, due in part to new export capacity out of Texas. However, gauging the timeliness of flows will be challenging without Genscape proprietary data.
In November 2016, we notified clients of our U.S. Natural Gas Exports to Mexico product suite that Genscape monitors detected the first signs of activity on the second phase of OneOk’s Roadrunner export project. Roadrunner Phase II added 400 MMcf/d of capacity to the existing 170 MMcf/d from Phase I, which began service in March 2016. The line exports West Texas gas to Chihuahua, Mexico, where it gets onto an existing pipeline and will interconnect with another one coming online this quarter. However, the Roadrunner system is classified as a Texas intrastate, and therefore, will not report volumes. Genscape is hopeful that our monitored observations of Roadrunner will enable us to generate daily flow estimates. In order to do this we like to have at least three months of EIA data to regress against, meaning that March 2017 would be the earliest we could potentially provide daily estimates.
Comanche Trail and TransPecos are two new pipelines that are coming into service. Genscape already has monitors in place here because like Roadrunner, neither will be obligated to provide timely, publicly available flow data.
On January 13, 2017, we notified clients that our monitors detected the first signs of activity at the compressor station at the head of Comanche Trail. Over the course of subsequent days we kept clients informed of the variations in activity that provided the earliest indications that the project was nearing in-service. Two weeks later, on January 27, FERC granted Energy Transfer Partners (ETP) authorization to the San Elizario Crossing into service. Since then we have seen individual compressors turn on and off, suggesting that the line is not yet fully operational. For the first time on February 7, 2017, we saw an individual compressor remain operational for a sustained period of time.
Comanche Trail is a 42-inch diameter pipeline with the capacity to move 1,135 MMcf/d of Waha-sourced gas into Chihuahua, Mexico. Once inside Mexico, the gas will be able to serve gas-fired power generators as well as a variety of pipelines (both existing and under construction) that are capable of moving the gas deeper into Mexico.
In addition to Comanche Trail, ETP is in the process of building the TransPecos pipeline. TransPecos will also be a 42-inch line with the capacity to move 1,356 MMcf/d. It originates at the same compressor station near the Waha Hub, so our monitors are capable of seeing its activity as well. TransPecos is expected to have an in-service sometime this quarter, though the project has become the focus of heavy protests due to its proximity to Big Bend National Park, as well as from Dakota Access protestors moving south to oppose ETP projects. When TransPecos comes online it will move gas to northeastern Chihuahua State, where it will deliver to a new pipeline being built by Sempra subsidiary, IENova. This pipeline will also serve gas-fired generation and have the capacity to deliver to a variety of pipelines, which would move the gas into central and western Mexico.
Genscape’s proprietary data significantly enhances our ability to estimate daily exports to Mexico, as well as providing critical insight to intra-Mexican market dynamics.
In June 2015, we began incorporating our proprietary estimates of exports on the NET Mexico pipeline into our estimate of Total U.S. Exports to Mexico. Since then, the average absolute error of our estimate has been just three percent of EIA, and is continuously improving.
In addition, due to the increased volumes moving on non-reporting intrastates, using interstate-only data to estimate exports has become increasingly unreliable. The correlation of Genscape’s sample (a selection of interstate nomination points plus our proprietary estimates) has increased to an r-square of 0.95, whereas the r-square on publicly available data to EIA has degraded to just 0.58.
Furthermore, the interstate-only data has been prone to provide false indicators of activity within Mexico. In April 2016, for example, other market analysts read an increase in NGPL deliveries to NET as an indication that Mexico’s Los Ramones II project had come online. This finding was counter to our NET monitored readings, which showed exports to be flat, and to information we gathered from our contacts among Mexican market participants. We learned the following day that the spike in NGPL deliveries to NET were to offset volumes NET lost due to an explosion on Texas’ Southcross Energy pipeline.
A similar occurrence took place in July 2016 when an explosion on Energy Transfer’s King Ranch pipeline system caused a cut in intrastate supply to NET, forcing interstates to increase deliveries. But those events were interpreted by the market as a sign Los Ramones II came online, while our monitors and intel indicated otherwise. We anticipate our monitored data on Roadrunner, Comanche Trail, and TransPecos will provide similar capabilities.
Genscape's Natural Gas Daily Mexico Exports Monitor shares proprietary, real-time U.S. to Mexico export estimates to provide a complete picture of U.S. exports. These estimates are crucial as more than ten billion dollars have been invested in planned or complete pipeline projects to export gas to Mexico since major reforms opened up the market. To learn more about Genscape's Gas Daily Mexico Exports Monitor, or to request a trial, please click here.