In the week ending April 15, 2016, many data vendors reported Mexico’s Los Ramones Phase II came online, but Genscape disagrees with this assessment and doesn't expect that system to come into service until the end of May 2016 at the earliest.
Los Ramones Phase II will be a 1.4 Bcf/d system that runs from the southern terminus of Los Ramones Phase I near Monterrey, Nuevo Leon southward to Guanajuato. It will serve several industrial parks, smaller citygates, a power plant, and interconnects with the PEMEX system. The pipe will be supplied with gas from Los Ramones Phase I, which itself is fed by the NET Mexico pipeline out of southern Texas. The startup of Los Ramones Phase II is expected to generate an incremental increase in South Texas exports on the NET system.
However, the system is not yet operational. Genscape monitors flows across the border on the NET pipeline because that system is considered an intrastate and, thus, does not report timely flow information. Our proprietary estimates do not show an increase in NET cross-border flows.
In addition, participants in the Los Ramones II project have confirmed it is not in service. Two weeks ago Genscape alerted its clients that Mexico’s gas grid operator – CENEGAS – had publicly stated the system would not come into service until late May 2016 or early June 2016. Genscape received similar timelines from some of the project’s developers. Last week, Genscape was able to speak to some of the project’s consumers who also confirmed it is not online.
Gencape believes these recent reports that Los Ramones Phase II came online were erroneous because they relied only on interstate pipeline data. The most timely, reliable information on NET flows available beyond Genscape is from the EIA. However, EIA data is reported three months in arears. There are two interstate pipelines that deliver into NET. However, using those volumes as a proxy for total NET flows is not reliable because they are incomplete and do not correlate well with EIA. Interstate deliveries to NET represent only 30-35 percent of NET flows; the rest comes from a variety of Texas intrastate pipelines and processing plants. Disruptions from one system can be easily compensated from by another.
In addition, the correlation of the interstate nominations to EIA-reported NET flows is weaker than Genscape’s monitored estimates, which yield an r-square of 0.98. Genscape’s estimates average just three percent difference from EIA when EIA reports three months later.
While Genscape utilizes proprietary data to observe timely flows, it is not its sole source of information. Genscape confirms flow activity with infrared monitoring of compressor stations on NET and also utilizes market contacts.
A similar instance of speculation LRII came online occurred last December 2015. Upon an increase in interstate nominations to NET, market reports began stating Los Ramones II had come online, but Genscape disagreed. In this instance, our proprietary data did show an increase in flows. However, our conversations with project stakeholders indicated the increased flows were not due to the startup of the pipeline. Rather, Genscape was informed the increase was gas for linepack and should soon decline. Genscape notified its clients of this and, two weeks later, observed the decline expected. This demonstrates the fact that Genscape does not rely solely on flow data. In addition to maintaining relationships with market participants, Genscape also use infrared data on key system sites to confirm our flow estimates.
At this time, Genscape is still not expecting Los Ramones Phase II to come online until late May 2016 at the earliest. However, in addition to watching proprietary estimates, Genscape is maintaining frequent contact with project stakeholders for timely information. Genscape reports this information to clients as soon as we receive it.
Using a combination of proprietary and patented monitoring technologies, Genscape is successfully delivering flow data for the NET Mexico pipeline that is proven to reduce error for supply and demand models. Estimates on the NET Mexico pipeline are delivered with less than a five percent error rate, providing the industry’s only insight into the state of Mexican exports. Click here to learn more or request a free trial of Genscape's Daily Mexico Exports Monitor.