Sinaloa state access to natural gas has room to grow in Mexico

Author: Claudia Espinosa

2021/11/24

HOUSTON (ICIS)--Bottlenecks in upstream pipelines and local delays have hindered the full development of natural gas access in the northwest state of Sinaloa, although industrial commitments could lift demand in time.

Waha gas from the US makes it to Sinaloa first at El Oro and Topolobampo before flowing south to Mazatlan. State-run utility CFE’s combined cycle power plants at Topolobampo take some of the gas, but Sinaloa state’s economic development council (CODESIN) has documented growing potential to meet demand downstream of that port city.

CODESIN said in a 20 November statement about natural gas development that four private companies in addition to state utility CFE have access to gas in Sinaloa, with potential for growth.

The state would also have access to US natural gas from Arizona once the embattled Guaymas pipeline in the Mexican state of Sonora is completed. It has been delayed for years, but a CFE official said in September that  the state company was considering building sections of the Guaymas-El Oro pipeline that remain incomplete, even if they have to be re-routed.

INITIAL ACCESS

The private sector in Sinaloa can seek access to natural gas either via direct connection to pipelines, through local distribution company (LDC) Gas Natural del Noroeste (GNN), which recently purchased the rights from Spain-based Naturgy, or via truck delivery.

CODESIN highlighted the case study of the company HARI MASA in Navolato, Sinaloa, which is directly connected to a gas pipeline. This permitted it to save 50% to 60% on fuels.

The council also highlighted that cleaner, less expensive natural gas is being used at CFE’s plants in Topolobampo and Mazatlan cities. The final power plant from the previous federal administration remaining to be inaugurated in Ahome, Sinaloa is the 766MW Topolobampo III plant. One power market source said the plant continues testing, with expectations that the tests will go on for a long time. Power market operator CENACE has said it does not comment on plants’ testing status and CFE did not respond to comment, so this was not immediately confirmed.

GNN distributes gas into the Sinaloan cities of Culiacan, Mazatlan and Ahome. CODESIN said Minsa and Grupo Ceres purchase pipeline gas in Ahome while Rastro FAPSA is currently the sole buyer in Culiacan. The council said pipelines delivering to Mazatlan were recently completed to be able to serve the private sector through the LDC. It said local companies Envases Universales, Pinsa and Cafe Marino were evaluating the new natural gas supply option.

CODESIN also said that in the city of Ahome, canned food and beverage company Herdez del Fuerte is considering supply through the local LDC while Smurfit, Prinsa and Maseca are analysing the possibility to access supply in Culiacan.

It also noted the LDC GNN is not expected to expand the local gas grid until private sector demand is consolidated and that it will seek to provide residential gas in a second phase at a later, unspecified date.

The expansion to the residential sector would start in the cities of Ahome, Culiacan and Mazatlan where thousands of requests for such service have already been registered, according to CODESIN, although timing would depend on GNN.

CODESIN said the state also has an ambition to promote natural gas for use in vehicles.

OUTLOOK

Sinaloa continues to have much room for demand growth with the pending full start of the Topolobampo III plant and possible industrial consumer commitments potentially fueling greater Waha gas imports in coming months and years.

Mexico’s slower-than-expected economic growth in the near term, however, may slow new commitments by industrials to new natural gas supply.

The arrival of additional gas from Arizona into Sinaloa is likely to remain hampered by the incomplete Guaymas-El Oro pipe as the federal administration has struggled to make headway on resolving the conflict between pipeline builder IEnova and the  local Yaqui tribe.