We have to be very careful not to allow too much risk to pass on to the developers because that’s when it becomes much more difficult to finance a project.

Lorena PATTERSON President MEXICAN ASSOCIATION OF NATURAL GAS

Natural gas is advancing

October 12, 2017

Lorena Patterson, the president of the Mexican Association of Natural Gas (AMGN), talks to TOGY about the potential of natural gas as a vehicular fuel, the growth of natural gas infrastructure and the implementation of Mexico’s energy reform.

In addition to representing the interests of companies participating in the domestic natural gas industry, AMGN also promotes investment, development of better market regulations, adoption of new technologies and the creation of skilled jobs. The association works closely with other government and industry institutions such as the Secretariat of Energy and the Energy Regulatory Commission to evaluate energy policy and industry regulations.

• On natural gas as a fuel for vehicles: “Right now, we are in the stage where the market is just getting used to the idea of vehicular natural gas. As more service stations become available and the technology becomes more commonplace, you’ll see more and more users adopt the technology, particularly in urban centres where we need to cut down on pollution.”

• On LPG versus natural gas: “We have had market conditions up to now that have been somewhat skewed towards LPG. The infrastructure in residential areas has been developed around that fuel. However, the natural gas network is growing, and it’s becoming more and more available to people. As market prices become less regulated or subsidised and the two fuels start to compete on even terms, I think there will be much more demand for natural gas in residential areas.”

• On the ongoing energy reform: “The reforms have happened so quickly. The Mexican government has done an amazing job of getting the reforms in place and the required regulations sorted. It’s not perfect, but they have made tremendous advances in implementing the reforms to the benefit of the entire sector, not just the natural gas industry.”

Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find an abridged version of our interview with Lorena Patterson below.

Is Mexico open to adopting natural gas as a fuel for vehicles?
Whenever you introduce a new technology, you always have early adopters and you usually have another swell of people that start using it as it becomes more available. Right now, we are in the stage where the market is just getting used to the idea of vehicular natural gas. As more service stations become available and the technology becomes more commonplace, you’ll see more and more users adopt the technology, particularly in urban centres where we need to cut down on pollution.
There is a vehicular natural gas committee and they are working very closely with the municipal government in different areas to promote programmes that will facilitate the establishment of those kinds of retail service centres so that more people can have access to the technology.

 

How is the use of natural gas evolving in residential areas?
Our distributors are working very hard to expand the networks. Obviously, we have had market conditions up to now that have been somewhat skewed towards LPG. The infrastructure in residential areas has been developed around that fuel. However, the natural gas network is growing, and it’s becoming more and more available to people. As market prices become less regulated or subsidised and the two fuels start to compete on even terms, I think there will be much more demand for natural gas in residential areas.

What is the outlook for natural gas in mexico’s electricity sector?
The electricity sector is going through its first evolution since the energy reforms. There are certainly many opportunities there, not just for combined-cycle plants, but for the renewables side of power generation as well.
Natural gas is a very basic part of the power generation mix in Mexico and it will continue to be so. The CFE [Federal Electricity Commission] has done some great work in terms of renovating its plants and converting them to burn natural gas, which is obviously a cleaner-burning fuel. It will continue to be an important part of the mix for most of the years to come.

How are AMGN, the government and regulatory agencies trying to mitigate risks associated with developing large midstream projects?
For banks and for financial institutions that are funding these kinds of projects, it is important to understand the risks. We work very closely with the regulators to help them understand some of the risks that we see as the market develops. To the degree that the Mexican government can help keep the risks low, investment will continue to come into Mexico for the sector.
We have to be very careful not to allow too much risk to pass on to the developers because that’s when it becomes much more difficult to finance a project. The federal government is working closely to get those messages across to the state governments, because having their support, particularly with local communities, is crucial to being able to execute these projects.

What is AMGN’s role in pursuing a more integrated North American energy market?
We are going to have our first North American summit with companies that are members of the Canadian Gas Association, American Gas Association and AMGN ahead of our annual general meeting in the fall, on November 8, 2017. We are looking at having much more communication with our sister associations across North America.
We believe that the competitiveness of North America is due in large part to our integration. We are fully supportive of integrating standards and flows of energy across borders, and we favour open borders as well. Thus, we are working much more closely with those associations. There are many issues that all of us face across North America – community issues, standardisations and regulations. Making sure that we have equal standards across the continent is to everyone’s benefit.

How has the energy reform process been going?
The reforms have happened so quickly. The Mexican government has done an amazing job of getting the reforms in place and the required regulations sorted. It’s not perfect, but they have made tremendous advances in implementing the reforms to the benefit of the entire sector, not just the natural gas industry.
Right now, there are 10 pipelines that are under development in the country. We are still seeing a lot of growth, more than you see in Canada or the US at the moment. I commend the government on its commitment to our sector and industry.

For more information on the Mexican market and the ongoing energy reform, see our business intelligence platform, TOGYiN.
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