US Natural Gas Pipeli1ne Trade Trends between US Mexico Canada
Net imports of Natural Gas Pipeline Trade into the US for 2006 fell by 150 Bcf from 2005, for a 4.2% decline to the 3,462 Bcf level. The decline is believed to have been principally influenced by the 155-Bcf decrease in gross imports at that time – even US exports fell by 5 Bcf from the 2005 level to the 2006 level. The reduction in net imports is believed to be the initial decline within a three-year period, aside from being the third decline in the last two decades.
Canadian gross imports for 2006 fell by almost 3.0% (equal to 110 Bcf) in spite of the steady growth posted since 2004. There was also a reduction of 2.8% in net imports by the US from Canada (equal to almost 93 Bcf) attributed to a reduction of American exports to Canada. The slowdown in US consumption is believed to have caused less flow of trade between US Natural Gas Pipeline and Canadian US Natural Gas Pipeline players. The increase in oil and gas companies’ production costs plus reduced production by oil and gas companies’ wells have created economic difficulties for Canadian companies that generate production from the Western Canada Sedimentary Basin (or WCSB.)
Net exports made by the US into Mexico of Natural Gas Pipeline increased to the 309-Bcf level for 2006, deemed 4.6% higher than the 2005 volume. But US exports are still much less than the historical peak at 397 Bcf posted in 2004. Apparently, demand in Mexico for Natural Gas Pipeline Trade imports from the US was severely affected in the latter half of 2005, because of the soaring prices and restrictions on supplies from the US pipeline map after Hurricane Katrina and Hurricane Rita hit the area. Thus, Mexico imported much less from the US in 2005.
Exports into Mexico soared to nearly thrice year 2000 levels in year 2006 due to more
favorable prices. The power facilities and industries operating in the vicinity of the US-Mexico borders are dependent on imports supplied by the US pipeline map. The additional supply complements capacity is provided by Petroleos Mexicanos (or Pemex.)
In 2006, pricing for all imports from the US stood at an average of $6.72 per MMBtu (million British thermal units), which was equal $6.88 per Mcf (or thousand cubic feet.) This was over 15% less than the average price posted in 2005 of $7.92 per MMBtu (equal to $8.12 per Mcf.)
LNG import prices stood at an average of $6.81 per MMBtu (or $7.19 per Mcf) when pipeline map import prices were equal to an average of $6.70 or $6.83 per Mcf.
The fall in US domestic prices is believed to have somewhat mirrored the significant fall in import prices. Import pricing is most affected by gas-on-gas competition between domestic natural gas suppliers and foreign natural gas suppliers.
The US average pricing in 2006 for wellheads stood at $6.24 per MMBtu (equivalent to $6.42 per Mcf) which was lower by 12% from the all-time peak of $7.12 per MMBtu in 2005 (equivalent to $7.33 per Mcf.)
Imports of LNG fell by 7.6% starting 2005 up to 2006, down to just 584 Bcf (due to more supplies being sent to European and Asian markets, rather than the US.) The LNG imported into the US for 2006 were supplied by four countries, whereas in 2005 there were six source countries. The US facility based in Kenai, Alaska provided LNG exports to Japan, while US trucks originating from California and Arizona delivered minor volumes of LNG exports into Mexico.
Even though LNG imports fell temporarily by 2006, the LNG industry is still trying to build additional US infrastructure so that LNG can be supplied by different countries. There will be two offshore and four onshore facilities that will start up operations by years 2008 and 2009.
Others will also be constructed, since the MARAD (Maritime Administration) and the FERC (Federal Energy Regulatory Commission) have approved these construction projects. The MARAD and the FERC are also considering over twelve more applications in this regard.
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Energy Information Administration-Energy Information Administration-3/4/2008
