NetworkNewsWire Editorial Coverage: Despite their huge reserves of natural gas, three of South America’s largest economies — Argentina, Brazil, and Venezuela — are net importers of the precious commodity and are likely to remain so for quite some time. Natural gas consumption on in South America is rising, particularly because of its usefulness for generating electricity. In 2015, regional demand was 145 billion cubic meters (BCM). By 2030, that demand is expected to climb by over 30 percent to 191 BCM, according to the Institute of Energy Studies at Oxford University (http://nnw.fm/fdR9G). A lot of the demand is presently being satisfied by imports of liquefied natural gas (LNG), which started in 2008. However, for decades before that, local stakeholders were attempting to increase production and integrate distribution and supply. Those efforts are likely to get a boost as the global market for gas expands and companies with natural gas interests, such as Mirage Energy Corp. (OTC: MRGE) (MRGE profile), NextEra Energy, Inc. (NYSE: NEE), TransCanada Corp. (NYSE: TRP), Kinder Morgan, Inc. (NYSE: KMI), and Energy Transfer Partners LP (NYSE: ETP), sign new supply contracts. Mexico may end up playing a significant role in linking South America to world markets; Mexico already imports large quantities of natural gas from the United States. Now, with new pipelines and storage facilities set for construction by Mirage Energy Corp. (OTC: MRGE), the federal republic is in a position to develop a gas-trading platform that may one day rival Henry Hub.
The market for natural gas is undergoing a sea change. Historically, it consisted of bilateral agreements between parties who sought out trading partners. Geography mattered; transportation costs could increase prices substantially for far-flung customers. That resulted in a market that is substantially a collection of regionally linked entities. However, the geographical flexibility of LNG shipments offers the possibility of making the market a truly global one. LNG also encourages the development of regional markets by complementing land-based pipeline distribution networks. This could, in turn, lead to the creation of hubs, which are platforms or places where natural gas can be bought and sold. Hubs provide natural pricing benchmarks and the ability to compare prices from competitive sellers. The transparent market they offer not only increases liquidity but reduces price volatility and, consequently, risk, which is perhaps why projects now in their genesis being undertaken by Mirage Energy are being viewed with such interest.
Mirage Energy Corp. is an international natural gas storage and transportation company based in Texas. It is planning to build an integrated pipeline system traversing Mexico and connecting the United States to a gas storage facility in Mexico. The company and its wholly owned subsidiaries are in the process of securing the necessary permits from the associated regulatory agencies to run the transmission pipelines from various border locations in Texas to the company’s storage facility in Mexico. No underground LNG storage facilities exist currently in Mexico, but the country’s Energy Ministry is prepping a depleted former energy field for gas storage in the northwestern state of Tamaulipas near the border with Texas, according to industry publication Natural Gas Intelligence (http://nnw.fm/zRV2s). Further geological study is surveying additional potential sites for underground storage facilities, according to the article.
The pipeline network will be made up of two Mexican conduits linked to two U.S. ones. In July 2017, MRGE announced the completion of the engineering designs for its 36-inch natural gas Progreso Pipeline (http://nnw.fm/951tU). The Progreso pipe will connect to the company’s international crossing at Progreso, Texas, and continue south through the Mexican state of Tamaulipas to the company’s planned storage field in Mexico, making several interconnects with off-takers along the way. Shortly after the announcement, the company also heralded the completion of the engineering designs for its 36-inch natural gas Arguelles Pipeline, which will connect to the company’s storage field in Mexico and travel west, making interconnects to the major trunk lines in Mexico (http://nnw.fm/5LZmW). Mirage is working hand-in-hand with Cenagas, the government agency that controls the national pipeline system of Mexico, to pinpoint exact locations for its pipeline tie-in points on the national system. Both 36-inch pipelines will be bidirectional, allowing gas to be injected into and extracted from the underground storage facility that Mirage is developing.
The Progreso and Arguelles pipelines, each with a planned capacity of 500 million cubic feet (MCF) will connect suppliers and end-users. They will link to two bidirectional pipelines in the United States: the 95-mile Concho pipeline and the 68-mile Cochise pipeline. The 36-inch Concho pipeline will connect at the company’s international Progreso crossing (http://nnw.fm/Lg6RO) and will be bidirectional, initially exporting gas from the United States into Mexico with the ability to later import natural gas to the United States. Presently, the flow is all south to Mexico. Cochise, of similar capacity, will supplement its sister pipeline.
However, the centerpiece of the Mirage project is the proposed natural gas storage facility. The ability to store large amounts of gas will allow less dependence on the supply chain. Mirage’s storage facility is expected to have the capacity to hold 786 billion cubic feet (BCF) of natural gas at the depleted reservoir. When fully developed, the facility will give the country a secure natural gas supply for one year in the event that all gas production or shipments were shut down for any reason. In addition, Mexico will now be in a position to establish a natural gas hub that is likely to increase the country’s influence in the industry while reducing price volatility.
It’s possible that some of the gas crossing the Rio Grande may come from production facilities in which NextEra Energy, Inc. (NYSE: NEE) has an interest. The utility company, based in Florida, has been investing in shale gas production since 2008. Today, according to information on its website, it has “more than $2.7 billion deployed in several shales around the country” (http://nnw.fm/dEhx6).
Increased U.S. gas production also spells good tidings for TransCanada Corp. (NYSE: TRP). The company operates a pipeline network stretching for approximately 46,564 miles (68,500 km) that connects with virtually all major gas supply basins in North America. And naturally, the same applies to Kinder Morgan, Inc. (NYSE: KMI), America’s largest infrastructure company. About one-third of U.S. natural gas supplies moves through the Kinder Morgan system, according to Fortune (http://nnw.fm/YcES6). But perhaps better known than TransCanada or Kinder Morgan, Energy Transfer Partners LP (NYSE: ETP) is the company responsible for developing the controversial Dakota Access Pipeline. The group to which it belongs owns approximately 71,000 miles of natural gas, natural gas liquids, refined products, and crude pipelines.
As the natural gas industry continues to develop, LNG is breaking down barriers between regional markets. In the long term, this may ultimately lead to an integrated global market. In the shorter term, it is expected to gain geographical reach through the development of a natural gas hub like the one now anticipated by Mirage in its planned storage facility and pipeline project under way in Texas and Mexico.
For more information on Mirage Energy Corp. visit Mirage Energy Corp. (OTC: MRGE)
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