New Perspectives on Energy Policy for Natural Gas

Transcription

1 New Perspectives on Energy Policy for Natural Gas Platts 16th Annual Meeting Houston, Texas Francisco Barnés de Castro November 13, 2012

2 The long-term scenarios developed by major international agencies are coincident: The global scenario remains practically unchanged Fossil fuels will remain dominant for several decades Renewable energy will play an increasingly important role. The natural gas will play a fundamental role in the transition The accident at the Fukushima nuclear plant has severely affected nuclear generation programs The concept of energy efficiency is becoming more important every day. Mexico will follow similar trends. 2

3 Growth in electric power demand These scenarios assume a sharp increase in per capita electricity demand, which affects the natural gas consumption In the next 30 years GDP per capita will double in industrialized countries and will increase 4 times in the emerging economies High percentage of population will have access to modern energy sources Increased electrification of homes and businesses. A significant penetration of electric or rechargeable hybrid cars. 3

4 USD/MMBTU Relative price of fuels USD/MMBtu Fuel oil Natural gas Coal Combustóleo Gas Natural Carbón Diesel Fuente: Subdirección de Energéticos CFE 4

5 Growth of installed power capacity (new combined cycle capacity per region)

6 Growth of gas demand for power generation (pick demand per region)

7 NG prospective According to the baseline scenario recently presented by SENER, natural gas demand will exceed domestic supply throughout the prospective period MMPCD 14,000 12,000 10,000 8,000 6,000 4,000 2, OFERTA NACIONAL IMPORTACIONES DEMANDA Source: Prospectiva del Mercado de Gas Natural SENER 7

8 Underestimation of demand It is possible that the demand for natural gas for power generation is underestimated: The resumption of the nuclear program has been delayed again CFE s POISE includes MW based on clean technologies yet to be defined. Greater penetration of rechargeable hybrid and electric cars in private transportation and of compressed gas for public and cargo transportation is not considered. Neither is the expected revival of the nitrogen fertilizer industry. 8

9 Natural gas pipeline system (2012) PRIVATE PIPELINES Kinder Morgan Gasoductos de Chihuahua Igasamex Bajío Energía Mayakán Tejas Gas de Toluca FINSA Energéticos Gasoductos del Bajío Transportadora de Gas Natural de Baja California Gasoducto Rosarito Gasoductos de Tamaulipas Gasoductos del Río Agua Prieta Conceptos Energéticos Mexicanos Transportadora La Huasteca Energía Occidente de México PEMEX (9,753Km) Private pipelines (2,225 Km) 9

10 Existing infraestructure has serious limitations Limited capacity Lack of redundancy Several pipelines have reached their capacity PEMEX pipelines with available capacity PEMEX pipelines operating at its limit Private pipelines 10

11 Inertial planning Gas demand requirements for power generation is crucial for the planning of new transport infrastructure of natural gas. However, the planning scheme to develop the new infrastructure that followed by the Mexican government for many years was mainly inertial. With rare exceptions (Tamazunchale and Manzanillo), CFE new plants were located where gas transport infrastructure already existed. Pemex only planed expansions in order to supply the expected increase in demand. The main driving force for gas demand is power generation.

12 Power plants location In operation Under construction Planned

13 Policy and Regulatory Measures Recognizing the competitive advantages of natural gas, a National Gas Strategy was implemented in 2011 by the Federal Government, which incorporated the following elements: 1. Expansion of transport infrastructure Increase regional coverage Eliminate bottlenecks in existing systems Increase capacity of trans-border interconnections 2. New schemes for market development Compressed gas 3. Development of new distribution systems Accelerate the process to bid new distribution zones The decision was taken to relocate several CFE projects for new generation plants (NGCC IPP s) and to install dual burners in thermal plants operating with fuel oil. These changes allowed CFE to bid a series of pipelines to bring gas to the new locations. Where CFE couldn't anchor the capacity for new pipelines, PEMEX Gas took the responsibility. CRE established new regulations to incorporate the cost of the pipelines anchored by PEMEX Gas to the general tariffs of the National Pipeline System operated by PEMEX. 13

14 New CCGT IPPs CFE Private Pipelines PEMEX Pipelines CD.JUAREZ DURANGO GLORIA A DIOS CHIHUAHUA EST. CHAVEZ DELICIAS CAMARGO LAGUNA DEL REY MONCLOVA TORREON Propuestas Relocation of current and future CFE s power plants in the northern area Central Año Capacidad (MW) CT Francisco Villa CT Samalayuca I 450 CC Samalayuca II 506 TG El Encino* 131 CC Gómez Palacio CC Chihuahua II* 438 CC Norte ** CC Chihuahua III CC La Laguna II CC Norte II CC Norte III CC Norte IV CC Norte V * Presented as El Encino (Chihuahua II) con 619 MW ** Table: Proyectos de generación diferidos POISE 2009 vs 2010 New Pipelines Source: POISE

15 New pipelines in the northwestern area The new pipelines will supply the conventional thermal power plants of Puerto Libertad, Guaymas, Topolobampo and Mazatlan. that will be converted to use natural gas instead of fuel oil. It will also support the installation of sevral new plants: Guaymas II and III, II and III Topolobampo, Mazatlan, and North II, III, IV, V and VI, as well as El Encino. Pipeline San Isidro- Chihuahua Chihuahua- Jiménez Ruta 1 Jiménez- Topolobampo Ruta 2 Sásabe-Puerto Libertad Puerto Libertad- Guaymas Guaymas- Topolobampo Topolobampo- Mazatlán Length (KM) 15 Diam (in)

16 New pipelines in the northwestern area 16

17 CD.JUAREZ Relocation of CFE s power plants in the central and central-west areas Central Año Capacidad (MW) New CCGT IPP s Salamanca - Fase I Valle de México II CFE Jorge Luque Fase I PEMEX pipelines Private Pipelines New pipelines REYNOSA Occidental I Occidental II Salamanca Fase II Nuevos Ductos Valle de México III SAN LUIS POTOSI Jorge Luque Fase II* AGUASCALIENTES HUIMILPAN TAMAZUN. NARANJOS. Valle de México IV* GUADALAJARA SALAMANCA PUNTA DE PIEDRA Occidental III QRO. Central I (Tula) ,160 MANZANILLO NVA. ITALIA URUAPAN TOLUCA TLAX. CD. MENDOZA PUEBLA T. BLANCA MINATITLAN NVO. Central II (Tula) Source: POISE ,160 LÁZARO CÁRDENAS TEAPA 17

20 Natural Gas Infrastructure Outlook in CFE PEMEX Planned pipelines 1. Tamazunchale - El Sauz 2. Morelos 3. Aguascalientes -Zacatecas 4. San Isidro - El Encino 5. Sasabe - Puerto Libertad Guaymas 6. Guaymas Topolobampo 7. Topolobampo -Mazatlán 8. Chihuahua-Topolobampo 9. Cactus - Cd.Pemex 10. Frontera - Los Ramones - San Luis de la Paz -Aguascalientes 11. Nuevo Pemex-Salina Cruz Existing PEMEX pipelines C B 1 2 A A Compression stations A. EC Omealca B. EC Golfo C. EC San Rafael 9 10 Existing private pipelines 20

21 Chalenges for the next administration Increase natural gas production Establish the bases for the efficient development of trading companies Guaranty effective open access conditions in the National Transport System operated by PEMEX Implement regulation for capacity reservation in the National Transport System Accelerate the development of new infrastructure for transport, storage and distribution of natural gas 21

22 Strategies to increment gas production Gas flare reduction: In the last 2 years, there was an average reduction of 225 MMPCD per year. Coal gas: It is possible to produce up to 580 MMCFD per year. Shale gas: PEMEX plans to produce 3,300 MMCFD in Fuente: SENER; Nuevo Marco Institucional para el Gas Natural ; Acapulco, Gro. 25 Mayo

23 Shale gas production in Mexico To achieve the previously stated goal, it will be necessary for PEMEX to undertake an intensive exploratory effort and to be able to allocate 3,000 million dollars of investment in the next four years. For a program of such magnitude it is indispensable yo modify present conditions in order to: Update the existing legal framework to incorporate shale gas. Modify the fiscal regime. Accelerate the acquisition of exploratory information to validate assumptions and reduce the level of uncertainty. Insure an adequate level of funding for drilling the large number of exploratory and production wells that will be necessary to attain the desired level of production. Potentiate PEMEX own capabilities by incorporating new schemes for private participation. 23

24 Natural gas trading The activity of trading natural gas is not reserved to the State or regulated by CRE. This activity has not been developed in Mexico due to several factors: PEMEX exercises a monopolistic power as the sole supplier of domestic NG. An almost monopolistic position to purchase gas in the United States has been established by MGI, a trading subsidiary of PEMEX. PEMEX has a clear advantage acting as a trader, thanks to its vertical integration with the National Transportation System The monopsonic power of CFE, which acquires its gas through PEMEX or through long-term contracts for It is imperative to define the role of PEMEX and CFE in the commercialization of natural gas so that the development of gas traders other than PEMEX is no longer inhibited. 24

25 Open Access In a competitive market, open access to the infrastructure of transportation, storage and distribution must be ensured to end users and trading companies It is essential to have a sharp and clear legal, operational and accounting separation between regulated transportation companies and traders. For these reasons, it is imperative to achieve a clear and transparent separation between hand sales of natural gas produced by PEMEX as a State monopoly, the administration of PEMEX pipeline network, and PEMEX participation as a natural gas trader. 25

26 Efficient use of network The efficient use of the National Gas System network operated by PEMEX requires the promptly implementation of the regulatory regime that requires users to reserve capacity. This is essential to properly program the efficient use of the existing network and to generate the right incentives for future expansions. More efficient use of the network will imply lower rates. 26

27 Network Expansion It is necessary to relaunch as soon as possible the bid for the Frontera - Los Ramones San Luis de la Paz pipeline to eliminate the existing bottlenecks and to be able to satisfy the expected growth in demand in the Central and Occidental Regions. It is important to develop an underground storage capability on the Gulf Coast in order to have flexibility to cope with unexpected situations and to minimize the risk of critical alerts. It is essential to develop a new strategic plan to install on time the infrastructure that will be required to satisfy future demand and to provide service to those regions that cannot be attended today. 27

28 Conclusions An efficient and timely satisfaction of natural gas demand is an essential condition for the economic development of Mexico The intelligent and articulated development of a robust transport infrastructure for natural gas will allow a smoother and orderly energy transition towards sustainable development, at a lower cost It will have additional benefits in terms of attaining a more balanced regional development 28

29 Thank you 29