Trading Jenga: New International Trading Points and Trans-Pecos
Dallas energy tycoon Kelcy Warren and Mexico industrial leader Carlos Slim are building a future international trading point with Trans-Pecos Pipeline. The project includes two natural gas pipelines from storage near Fort Stockton into Mexico. The pipeline will cross many private ranches using eminent domain. Its’ initial large energy consumer is CFE, the state-owned electricity company for Mexico. Trans-Pecos will become a new international trading hub unless the entire pipeline capacity is contracted on a long-term basis by a single customer.
US Energy export projections into Mexico appear to be in the range of 1.3 BCF/day to 4 Bcf /day by 2020 and 6.3 BCF/day to 7 Bcf/day by 2040. These are the impressive dynamics driving energy, electricity and international politics for the southern USA border. Pipeline capacity expansions add 2.7 Bcf /day of for a total volume of 8.5 BCF/d. Energy Transfer Partners, Sempra Energy, Kinder Morgan, and Pemex are the investors in this arena.
Mexican President Enrique Peña Nieto is an amazing international powerhouse behind the transformation and expansion of a new force to create lasting structural and supply energy integrity for the industrial manufacturing relocated to Mexico by USA Fortune 600 companies. Mexico’s leadership supports energy business expansion.
International energy trading requires the study of underlying key supply and logistics data. Some energy trading firms will back test data in their in-house models, while other trading firms rely on Goldman Sachs or Vitol for their trading suggestions. New pipelines and trading hubs always change the outcome. The Marcellus Shale is a recent example of the impact of large changes and their impact on trading portfolios.
The Trans-Pecos Pipeline project is 143 miles of pipeline between Fort Stockton and Presidio near Big Bend National Park. Endangered Species Act and environmental issues may slow construction. Major pipeline construction issues are addressed by working with the WWF or NRDC to relocate endangered species into safe wildlife habitat of Big Bend National Park or nearby areas. Zoo employees and other workers can utilize similar techniques for optimal animal protection. This type of relocation effort usually adds time to construction and does not cost much in the big scheme of E&C budgets.
The companies involved are impressive and strong with the needed gas supply access for early success. International joint ventures often create added value while lowering physical and political security risks. There are several key energy trading points which are international for the southern USA border with Mexico. Expect movement in the basis differentials for these trading areas.
International Trading Delivery Points:
Agua Dulce Hub
WAHA Trading Point near the New Mexico interconnects with El Paso Natural Gas Company, Transwestern Pipeline Company, Natural Gas Pipeline Company of America, the Northern Natural Gas Company, Delhi Pipeline, Oasis Pipeline, EPGT Texas and Lone Star Pipeline.
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