On November 8, 2013, the US Federal Energy Regulatory Commission (FERC) issued a Presidential Permit and Granting Authorization* (under Section 3 of the Natural Gas Act) allowing NET Mexico Pipeline Partners, LLC (NET Mexico), a subsidiary of Houston-based NET Midstream, to build a natural gas export facility with 2.1 billion cubic feet per day (Bcf/d) capacity at the US-Mexico border.

According to the FERC order, the export facility will be linked to a 120-mile, 42-inch diameter intrastate pipeline that NET Mexico is planning to build from the Agua Dulce Hub in Nueces County, Texas, to the export facility. The export facility would then deliver gas to Mexico's Los Ramones Pipeline, which has yet to be built.

The FERC order adds that the export facility was "necessary to meet the expanding fuel demand for power generation and industrial activity in Mexico" and to promote North American trade.

Mexico is a net importer of natural gas, mostly via pipeline from the United States. Its natural gas demand is rising due to greater use of the fuel for power generation. According to the US Energy Information Administration (EIA), US natural gas exports to Mexico grew by 24 percent to 1.69 Bcf/d in 2012, the highest level recorded (see graph below). Natural gas flows from US pipelines accounted for about 80 percent of Mexico's overall natural gas imports in 2012.

Source: US Energy Information Administration (March 13, 2013). See: “U.S. natural gas exports to Mexico reach record high in 2012

*See November 8, 2013 FERC order: http://www.ferc.gov/CalendarFiles/20131108125728-CP13-482-000.pdf

For more information on the topics raised in this Legal Update, please contact Dallas Parker, Jose L. Valera, Pablo C. Ferrante or Gabriel J. Salinas.

Learn more about Mexico Energy Reform and Mayer Brown's Energy practice.