The US natural gas market is on the verge of a big swing, Forest writes, but it doesn't have to do with liquid natural gas. Instead, there's an interesting and unexpected source of demand for US natural gas.
Douglas Collier/The Shreveport Times/AP/File
The U.S. natural gas market may be on the verge of a big swing.
And it’s not about the talk of the town, Liquid Natural Gas (LNG).
It's about an unexpected source of natural gas demand:
Mexican imports of U.S. gas have skyrocketed 92% since 2008. And with export capacity projected to grow to over 7 billion cubic feet per day (Bcf/d), Mexico could start taking 10% of U.S. production—in a very short time frame, with very low capital costs compared to the LNG boom unfolding.
There is a lot less risk, and a lot less cost in getting huge natural gas exports to Mexico, compared to LNG—and the volumes may be enough to move margins in the North American market.
At least six new pipeline projects are now on the books, aimed at sending gas southward.
Today, I’ll explain what’s happening now, and what potential impact this extra demand could have on natural gas prices.
To find out, we take a look below at exactly what’s happening in Mexico, what’s getting built, and who’s positioned to take advantage.
The Not-So-Slow Death of a Gas Producer
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