Can Mexican reform boost the price of natural gas?

Work continues at a pad site north of Alpine, Texas, Tuesday, Dec. 8, 2015. The pad will be used for the construction of Trans-Pecos Pipeline Project. The project plans on transporting natural gas from a collection facility west of Fort Stockton into Mexico, 12 miles upriver from Presidio.
Work continues at a pad site north of Alpine, Texas, Tuesday, Dec. 8, 2015. The pad will be used for the construction of Trans-Pecos Pipeline Project. The project plans on transporting natural gas from a collection facility west of Fort Stockton into Mexico, 12 miles upriver from Presidio.

Sidley Austin partner Ken Irvin has been spending so much time in a downtown Houston conference room with the Mexican electric utility, Comisión Federal de Electricidad, that he’s calling the room his office these days.

The commission is trying to buy gas in bulk, then build the pipelines through Texas to get it to Mexico, and Irvin’s been cutting the deals.

Two pipelines are already on their way: Dallas-based Energy Transfer Partners is building a 42-inch diameter pipeline that stretches 148 miles from West Texas’ Permian Basin to the Rio Grande, and should pipe 1.4 billion cubic feet of gas per day to Mexico.

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And Houston’s Spectra Energy is part of a joint venture to build a $3.6 billion pipeline system from Corpus Christi to the border at Brownsville, and underwater in the Gulf of Mexico through to the Mexican port city of Tuxpan. It is expected to transport up to 2.6 billion cubic feet of natural gas a day.

The goal is to build enough pipe to send 8 to 10 billion cubic feet per day, Irvin said.

Mexico has historically used fuel oil to make electricity. Natural gas is cheaper, cleaner and more reliable, Irvin said. “Mexico is very interested in doing business,” Irvin said. And such demand may help boost the price of natural gas.

Despite the campaign threats, Irvin just can’t imagine President-elect Donald Trump would willingly disrupt that relationship.

“There are far too many positives associated with this for the new administration to interfere with it,” Irvin said.

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