Coronavirus Slowing Energy Infrastructure Permitting and Project Development in Mexico
The coronavirus pandemic has led to a slowdown in the progress of energy infrastructure projects in Mexico as nonessential businesses remain shuttered and permitting processes are delayed.
In line with this, Genscape Inc. analysts have pushed back the estimated in-service date for the Wahalajara system’s 0.9 Bcf/d Villa de Reyes–Aguascalientes–Guadalajara natural gas pipeline from May to July.
Originally set to come online at the end of March, analysts see a new liquified natural gas (LNG) supply tender launched by state utility Comision Federal de Electricidad (CFE) for mid-May delivery to the Manzanillo LNG terminal as a sign “that CFE is not expecting significant commercial flows from Wahalajara into the Manzanillo-Guadalajara area during next month.”
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In December, the 453-kilometer (281-mile), 1.3 Bcf/d La Laguna-Aguascalientes pipeline, the first part of the Wahalajara system, began commercial operation. When the system is fully functional, the system being developed by Mexican company Fermaca will move gas from Waha in West Texas to Mexico’s industrial heart of Guadalajara.
The risk of further delay “is high,” analysts said, due to the likely slowdown of paperwork and permitting processes because of the ongoing implementation of Phase 3 of the government response to coronavirus and “the coronavirus-induced destruction of Mexican demand.”
Since early April, immediately after Phase 1 of the coronavirus contingency plan began, Mexican natural gas imports from the United States have dropped to below the 4.7 Bcf/d mark, according to Genscape, compared to a year-to-date average as of late March, or right before stay-at-home measures were put in place, of slightly above 5.2 Bcf/d.
Meanwhile San Diego-based Sempra Energy executives remain confident that the Energía Costa Azul (ECA) LNG export project in Mexico’s Baja California will get an export permit and go ahead as planned, but recognized in a Monday earnings call that the pandemic will slow the timing of permitting.