North American natural gas prices continued to search for and not find momentum this week. Despite sizzling temperatures and soaring power demand, U.S. natural gas production of around 102 Bcf/d was more than enough to keep prices subdued.
On Thursday afternoon, New York Mercantile Exchange futures prices for August were sinking to the $2.000/MMBtu level amid ample supplies.
The U.S. production picture will come into clearer focus as companies report their second quarter results. Management for Appalachian Basin producer CNX Resources Corp. on Wednesday said the company wasn’t curtailing any additional production, but it was still unsure on next year.
Oilfield services company Liberty Energy Inc. CEO Chris Wright said during the earnings call that the outlook “is pretty positive for U.S. natural gas demand from” liquefied natural gas and “electricity demand. I think we're going to see some more reshoring of manufacturing in the U.S., and I think we're going to see, over the next several years, more of that in Mexico as well. And so I think that connection of U.S. gas going to Mexico is going to be increasingly important as well. So the macro is positive.”
Mexico imports this summer are rising slightly. For the past 10 days, Mexico imported 6.95 Bcf/d from the United States via pipeline, according to NGI calculations. That is an increase of 0.14 Bcf/d from the previous 10-day period.
The electronic bulletin board for Mexico’s Sistrangas system came back online and backfilled its data, which increased July's figures, according to NGI markets analyst Josiah Clinedinst. The Nueva Era pipeline was still not reporting flows, however, so cross-border flows could be higher.
“Despite the issues that have been plaguing the South Texas reported flows to export to Mexico, there has been an observable drop of demand from West Texas flows,” Clinedinst said. Flows from West Texas into Mexico were down by about 130 MMcf/d for the last 10 days compared to the previous 10-day period.
In Mexico, meanwhile, the start of its LNG export industry continues to be delayed.
New Fortress Energy Inc. (NFE) said its Fast LNG (FLNG) terminal offshore Altamira, Mexico would ship its first cargo in August. The Energos Princess LNG tanker docked at the facility last week and some thought it would load Mexico’s first ever LNG cargo.
After anchoring near the FLNG unit, the tanker set sail and was likely empty, according to Kpler ship tracking data. The tanker was passing south of Cuba on Wednesday and was reported as being in ballast and open for orders.
NFE management appeared undeterred. NFE this week said it would move forward with a second FLNG unit at Altamira, having closed a $700 million loan. The project would be developed in partnership with Comisión Federal de Electricidad (CFE) using in-place terminal infrastructure onshore in Altamira. Management expects construction to be complete in the first half of 2026.
Reynosa Pipeline
In the Mexican state of Tamaulipas, a 24-inch diameter pipeline project began construction. Once operational, it was expected to ease bottlenecks and improve supply in the area.
Gov. Américo Villarreal Anaya said at the ribbon cutting that the Libramiento Reynosa natural gas pipeline was a “mega project” and a “benchmark for the energy sector in Mexico.”
The pipeline would begin near the Texas border, where the Texas Eastern Transmission Pipeline LP (Tetco) and Tennessee Gas Pipeline Co. LLC meet. It would then bypass the Reynosa area and continue to the Sistrangas. It would replace an older pipeline that runs through the city center.
Cenagas head Abraham David Alipi Mena at the opening ceremony said, "We are facing another historic moment that strengthens the energy and productive capacity of Reynosa and our northern border.”
Construction is slated to last one year.
Cenagas also announced plans to strengthen the natural gas system amid increasing demand. Speaking in May at the Mexico Gas Summit in San Antonio, TX, Cenagas chief Alipi underlined the importance of natural gas to Mexico’s economy.
Alipi highlighted that the industrial segment accounted for more than 30% of Mexico’s gross domestic product, and more than 60% of the industry used natural gas in productive processes. Around 64% (5.126 Bcf/d) of Mexico’s natural gas flows are through the Cenagas system.
Cenagas, Alipi said, had 10 projects underway or in development to bolster the country’s infrastructure.
Mexico Prices
In Mexico on Wednesday, natural gas cash prices at Los Ramones fell by 9.5 cents day/day to $2.132, according to NGI data. Monterrey via the Mier-Monterrey system was down 9.2 cents to $1.901. Tuxpan in Veracruz via Cenagas saw the spot price fall 10.2 cents to $2.688.
Out West, the Guadalajara natural gas price fell by 8.8 cents to $2.411 on Wednesday. Farther north in El Encino, prices via Tarahumara were $1.155, 5.8 cents lower than the previous day.
On the Yucatán Peninsula, the cash price at Mérida was $3.763 on Wednesday, down 9.4 cents.
U.S. Storage
On Thursday, the U.S. Energy Information Administration (EIA) reported a 22 Bcf injection into storage for the week ended July 19. The figure sent natural gas prices higher.
The South Central region, close to Mexico pipelines, again reported a withdrawal. The region saw a draw of 6 Bcf that included a 5 Bcf decrease in salt stocks and a loss of 1 Bcf in nonsalts.
For the week ended July 19, total working gas in the U.S. South Central region stood at 1,167 Bcf, up from 1,142 Bcf for the same time one year ago. The figure was 137 Bcf higher than the five-year average of 1,030 Bcf.
