Pemex and Mexican government officials are expecting liquefied natural gas (LNG) imports to ease an unrelenting, growing gas-supply deficit in the country. Mexico's gas demand is 5 billion cubic feet (Bcf) per day-far smaller than the 62.4 Bcf that U.S. consumers use daily. In contrast, Americans may burn 5 Bcf in their morning showers. And, Mexico's gas reserves are huge-estimated at 63.9 trillion cubic feet of proved, probable and possible. But since the late 1990s, the country has been a net importer of gas from the U.S., particularly South Texas. The daily deficit currently totals approximately 1 Bcf-or just less than Devon Energy Corp.'s daily net production from the Barnett Shale in northeast Texas. A growing economy and Mexico's participation in the Kyoto protocol to reduce greenhouse gas emissions have contributed to the gas-supply deficit, and are expected to deepen the hole. "We have a gap, and this is caused not because we don't have the resources," Pemex director of planning and evaluation Vinicio Suro-Perez said at the Cambridge Energy Research Associates conference in Houston last month. Mexico's energy secretary, Fernando Canales Clariond, said the country has underexploited potential. "The U.S. has the gold medal in the drilling olympics; Canada, the silver; and Mexico, the bronze." The obstacle to increasing its gas output is a national prohibition of non-national ownership of oil and gas reserves. The country develops its resources via Pemex, the national oil company. Pemex, busy with keeping up its oil output and challenged by federal taps into its profits, has held development of non-associated gas reserves on the sidelines. Outside firms were recently invited to develop these reserves, particularly in the Burgos Basin in northeastern Mexico that is part of the South Texas gas trend, via "multiple service contracts" (MSCs), in which E&P and service companies produce the gas for a fee but don't own the reserves. The results have been unassuring to future Mexican gas supply so far, with most of the prospective participants declining a contract. "I anticipate much stronger investment in these," Suro-Perez said. Some 200 million cubic feet per day of new gas supply has already resulted from the MSCs, he added. Mexico's gas demand by 2015 is expected to total 9 Bcf a day. The greatest boost in supply will come from new LNG terminals-at Altimira on Mexico's Gulf Coast that should be online by year-end, at Costa Azul in Baja California that is progressing, and at Manzanillo on the Pacific Coast, which is planned. "LNG is winning," CERA associate director Veronica Vazquez Hurtado said. Changes in how Mexico handles its energy resources may be on the horizon, however. Mexico will hold a presidential election later this year-incumbent Vicente Fox has met a term limit-and energy has been on Mexican voters' minds, according to Suro-Perez.
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