On Friday, July 28, 2017, Genscape began providing intra-Mexico pipeline data to share an unprecedented level of insight into a previously opaque and recently liberalized market. These new datasets should be regarded as critical components for those seeking to participate in Mexican energy markets as well as U.S.-focused market participants seeking to derive the best estimate of U.S. exports to Mexico in their U.S. supply/demand balances.
In the immediate term, the recently released Mexican pipe data can be used to more accurately and quickly estimate daily U.S. gas exports to Mexico. Genscape currently provides data from 13 Mexican pipelines, eight of which capture cross-border flows on a daily basis, and reports it daily or weekly depending on the pipeline. Collectively, the currently reported cross-border flows capture 82 percent of daily U.S. gas exports to Mexico. This improves upon Genscape’s industry-leading Enhanced Sample: a combination of U.S. interstate pipeline nominations plus our proprietary estimate of NET Mexico pipeline flows. Using U.S. interstate pipeline data alone only captures 30 percent of flows compared to total EIA exports to Mexico.
In addition, use of Mexican pipe data reduces estimate errors created by using only U.S. interstate pipeline nominations as those correlate poorly to actual flows as reported by the EIA and can often provide false signals to Mexican market conditions. U.S. interstate pipeline exports show an r-square of just 0.44 to EIA since January 2015 (when the NET Mexico export pipeline came into service). This is due to the preponderance of gas originating from non-reporting, opaque intrastate systems, and the vast interconnectivity of pipes in Texas, the main exporting state.
For example, using NGPL and TGP deliveries to the NET Mexico pipeline to estimate that line’s exports to Mexico have often suggested behavior contrary to reality. In one instance, in April and July 2016, NGPL deliveries showed radical daily increases, which some interpreted as signs that a major Mexican pipeline had come online. However, Genscape proprietary monitored flows on NET showed no commensurate increases at the border. We subsequently learned that in both instances, major sources of intrastate gas deliveries to NET had been cutoff due to an explosion at the Southcross Woodsboro processing plant in April and Energy Transfer's King Ranch pipeline in July. Using Mexican pipeline import data substantially reduces these risks of false signals.
In addition to providing timely flows on privately owned and operated Mexican pipelines, Genscape is providing over two and a half years of daily flow history on the SISTRANGAS system, Mexico’s national pipeline network, which accounts for roughly 80 percent of the country’s gas flows. As soon as SISTRINGAS begins reporting daily flows, the Mexican pipe data can help determine Mexican supply and demand balances which over time, as Mexican energy market reforms take hold, can inform gas price movements.
The SISTRANGAS history is granular enough to develop a sample of daily production that accounts for roughly 43 percent of total production with an r-square to PEMEX’ monthly reported gas production of 0.95.
SISTRANGAS and private pipeline data can also be used to measure the country’s imports of LNG at its two main terminals, Altamira and Manzanillo. The country’s third import terminal, Costa Azul, is also connected to a private pipeline that is currently reporting, though does not import or send out significant volumes.
The SISTRANGAS history also accounts for 72 percent of daily demand, with their demand data composed of 115 reporting points including power plants, industrials, and citygates.
SISTRANGAS demand data can provide valuable insight into Mexico’s power sector, one of the main drivers of past and future growth of Mexican gas demand and U.S. exports to Mexico. SISTRANGAS data reports daily deliveries to 34 power plants operated by the national power generator, CFE (Comision Federal de Electricidad). CFE’s portfolio accounts for about 36 percent of the country’s gas-fired generation and demonstrates an r-square of 0.76 to total gas burn for power generation in Mexico. Gas units account for 52 percent of total Mexican generation, up from 48 percent in 2012. Gas demand for power generation has been one of the main drivers of Mexican gas demand growth over the past five years as the country has sought to displace fuel-oil from its generation portfolio. New gas-fired generation capacity has further been added to satisfy load growth from Mexico’s industrial sector.
At this time, SISTRANGAS is not providing daily data past April 30, 2017. However, the history-set has allowed Genscape to model historic daily balances for Mexico, which we will be ready to deploy on a daily basis as soon as SISTRANGAS begins reporting daily data. There is no formal target date for the SISTRANGAS data release, though we anticipate it will be available before year’s end. It is important to note, however, that our ability to deploy our Mexican supply and demand models is based on the SISTRANGAS-reported points matching those reported in history.
In addition to SISTRANGAS, there are a number of other intra-Mexican pipelines yet to begin reporting. As soon as these systems begin posting, Genscape will collect, integrate, and provide the data to clients.
Current subscribers to Genscape’s Mexico Natural Gas products will receive access to these datasets. Currently, Genscape’s U.S. and Canada pipeline data customers will have access to these datasets at no additional fee through the end of 2017. Effective on January 1, 2018 this data will only be accessible through a subscription to our Mexico Gas Service. To learn more, or to request a free trial of Genscape's Daily Mexico Exports Monitor, please click here.