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Supply Chain Overview
June 22, 2016
Agenda
Why Natural Gas?
Supply Chain Overview
Mexican Context and Opportunities
2
Why Natural Gas?
Competitive economy, end‐customer’s welfare,
and clean environment
3
The Shale Gas Revolution Created a Significant Cost‐
Competitive Natural Gas Resource Base Accessible to Mexico
# of years of production 26 45
Mexico 55 TCF of 3P (15 TCF proven, 15 TCF probable and 24 TCF possible),. SENER 2015 4
Natural Gas is Cost Effective When Compared to
Refined Products
Source: EIA
5
The Environmental Footprint of Natural Gas is Favorable
When Compared to Other Fossil‐based Fuels
Source: EIA
6
The Gas Supply Chain Changes Dependent
Upon Diverse Factors
Pipeline
LNG
Distance, mi
Other factors that influence supply chain choices include geopolitics,
environmental footprint, and depth of downstream infrastructure
Illustrative, Not to Scale
7
The Supply Chain of Natural Gas Delivered by Pipeline
Upstream Midstream Downstream
Gas Transmission,
E&P Gas Processing
Compression & Distribution
Industrial
Applica‐
tions
Household
use
Underground
Storage
Transpor‐
tation
Compression or liquefaction
8
The Supply Chain of LNG
Upstream Midstream
LNG Storage & Gas Transmission,
E&P Liquefaction Shipping
Regasification Compression &
Distribution
Downstream
Underground
Storage
9
Mexican Policy Reforms and Natural Gas
Gas
E&P Liquefaction Transmission Distribution
& Storage
Pre‐first Few
PEMEX only N/A PEMEX only
Opening participants
First
Opening PEMEX only N/A
1995s
2013‐14
Energy
Reform
10
Key Benefits of the Reform of 1995 (driven also by market needs)
11
Natural Gas Balances in Mexico
High domestic
production scenario
mmcfd
yields imports of
~3.9 bcf by 2029
Low domestic
production scenario
mmcfd
yields imports of
~6.6 bcf by 2029
12
Anticipated Benefits of the 2013‐14 Reform in Natural Gas
Gas Transmission Commercialization,
E&P
& Storage Distribution, & LNG
13
Massive Investment in Pipeline Infrastructure
Current Mexican Mexican Infrastructure
Infrastructure 2019+
Source: SENER Outlook
14
Expected increase in import capabilities
CalexI‐
co
Otay Ogilby
Noga‐ El Paso
les
Agua San Elizario
Prieta
Sierrita
South Texas
Presidio
Colombia
Import Capacity in‐Place (~6.2 bcfd)
Brownsville Export Capacity Tendered/Under
Construction (~7.5)
Total ≈ 13.7bcfd Source: EIA, SENER, CRE, PEMEX, CFE
15
ECA Liquefaction Project
• Inter‐connects Mexico with LNG global
markets
• Does not affect Mexico’s net gas balances
• Strengthens supply chain into Baja
• $7bn of investment with significant local
economic and social benefits
• Positive to US E&P industry
16