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Mexico Pacific LNG: A New Export Era Anchored by Permian Gas
10/16/2023
Natural gas from the U.S. Permian Basin is set to be the primary source for Mexico's Pacific's Saguaro Energía LNG facility.
Located in Puerto Libertad, Sonora, the Saguaro Energía LNG export facility will feature three processing trains. The site is primed for potential expansion with plans for three additional trains of similar capacity. Its strategic Pacific Coast location offers a 55% shorter shipping route to Asia, providing significant savings and reduced carbon emissions.
- The facility will have three trains, each having a processing capacity of 5 million tonnes per annum (mtpa). Combined, they offer a nameplate capacity of 15 mtpa, equivalent to 2 Bcf/d.
- Plans are in place to add three more trains, each with a capacity of 5 mtpa.
- The facility will utilize low-cost gas from the Permian Basin, specifically from the Waha hub.
- Gas will be transported via a 253 km pipeline in the U.S. that connects to an 802 km pipeline in Mexico. Both pipelines can handle up to 2.8 Bcf/d of gas.
“The facility will connect the cheapest natural gas from the Permian Basin's Waha hub to the world's largest demand center, Asia,” Kruse said during a panel discussion at Hart Energy’s Energy Capital Conference.
Economic Implications
Tyler Kruse, Vice President of Corporate Finance at Mexico Pacific Ltd., emphasized the advantages of sourcing cheaper natural gas from the Permian Basin's Waha hub. Stifel Financial Corporation projects an 8% LNG growth by the decade's end, underscoring the project's potential.
The Mexican government is in favor of the development of the LNG infrastructure. While concerns about drug cartels have been addressed, they are not deemed a major threat.
Investment & Partnerships
A final investment decision on the Saguaro Energía LNG facility is forthcoming, with operations anticipated to commence by 2027. Major energy players, including Shell, Exxon Mobil, and ConocoPhillips, support the facility. Contracted clientele includes Guangzhou Gas and Zhejiang Energy from China.
About Mexico Pacific LNG Terminal:
Mexico Pacific's Saguaro Energía LNG facility aims to bridge the supply-demand gap in the global LNG market. Located strategically, it ensures efficient transportation, tapping into the vast reserves of the Permian Basin. Their commitment to sustainability is evident with the reduced carbon footprint they offer compared to their Gulf Coast counterparts. The involvement of energy giants like Shell and Exxon Mobil further underscores the facility's significance in reshaping the global energy landscape.
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Exxon Mobil and Pioneer Merge in $60 Billion Deal to Dominate Shale Market
Exxon Mobil (XOM.N) has reached an agreement to acquire its domestic competitor, Pioneer Natural Resources (PXD.N). This all-stock transaction, which places a valuation of $59.5 billion on the deal, promises to establish Exxon as the preeminent producer in the U.S.'s most extensive oilfield. At a valuation of $253 per share, this merger brings together the prowess of Exxon, America's largest oil entity, with Pioneer, a standout performer that has risen to prominence during the shale boom.
Occidental's Asset Cuts After CrownRock's $12 Billion Deal
Occidental Petroleum is expanding its reach in the Midland Basin and targeting deeper drilling in the Barnett area through its significant $12 billion purchase of CrownRock LP. CrownRock, a collaboration between CrownQuest Operating LLC and Lime Rock Partners, is recognized for its prime land holdings in the Permian Basin. This acquisition brings over 94,000 net acres and 1,700 undeveloped drilling spots in the Midland Basin to Occidental's portfolio.
EOG Resources is pushing boundaries in Ohio's Utica oil play and now drilling on the Sable pad, also located in Noble County. This site features the 3.7-mile lateral currently under construction. The company's first multi-well pads in the area Timberwolf and Xavier have each produced over 200,000 barrels of oil since their inception—Timberwolf in August and Xavier in October. A third site, the four-well White Rhino pad in Noble County, is also showing promising early results, according to Keith Trasko, EOG’s Senior Vice President of Exploration and Production, who noted the wells are performing as expected in their initial weeks.
Exxon Mobil recently completed its acquisition of Pioneer Natural Resources, a deal worth about $60 billion. This transaction, which is the biggest in shale oil history, significantly changes the competitive landscape in the Permian Basin, a major oil field. This marks Exxon Mobil's largest deal since its $84.4 billion merger with Mobil Corp. in 1999. With this acquisition, Exxon Mobil's production in the Permian Basin will double to 1.3 million barrels of oil equivalent per day.
OXY has been the leader in Permian Basin production for the past five years. Currently, the Houston-based oil and gas company is deepening its presence in the basin with a $12 billion acquisition of CrownRock, adding over 94,000 acres in the Midland Basin and increasing its oil output by about 170,000 barrels per day. Occidental announced an increase in its proved reserves to 4.0 billion barrels of oil equivalent by the end of December 2023, up from 3.8 billion the previous year. Activities in the Permian largely fueled this rise. Occidental added approximately 303 million barrels through infill development projects as well as new discoveries and the further development of existing fields brought in another 153 million barrels.