The country’s first auction, held in July 2015 and primarily consisting of shallow-water fields, was snubbed by su- permajors. Major oil-producing compa- nies like ExxonMobil, Chevron and To- tal are opting for deepwater fields with substantial proven oil reserves. The auc- tions for these fields began in late 2015.
Should a production boom occur in Mexico—which, according to recent es- timates, also has the world’s fourth-big- gest shale gas reserves—further down- stream development could occur by the start of the 2020s. Local producer Mex- ichem has already said it is targeting nu- merous ventures and acquisitions with foreign companies, although weaker oil prices may slow those developments as companies reevaluate the market. Refining. Pemex owns and operates six refineries in Mexico with a combined installed capacity of approximately 1.7 MMbpd. These facilities process light and extra-light crudes produced do- mestically. Heavier domestic crudes are exported, mainly to the US Gulf Coast (USGC) for processing. Domestic out- put is sufficient to meet consumption, but the country lacks adequate refining capacity to satisfy demand for transpor- tation fuels. As a result, Mexico is forced to import refined petroleum products. Imports of gasoline averaged nearly 400 Mbpd in the first half of 2015. Illegal taps on gasoline pipelines forced Mexico to boost gasoline imports by an additional 75 Mbpd in mid-2015.
The country had announced major refining capacity expansion investments;
however, due to the drop in oil prices, those plans have been delayed. Low oil prices forced Pemex to slash $4 B from its 2015 budget, including a much-need- ed program to expand and upgrade the country’s refining network.
However, in late 2015, Pemex rein- stated its domestic refining moderniza- tion program. The company plans to invest as much as $23 B to upgrade its refinery system to produce more clean fuels and to expand processing capacity. Upgrades at Pemex’s Tula refinery are al- ready underway, with additional plans to upgrade the Salamanca and Salina Cruz refineries. Additional investments will be made to more than double the output of ultra-low-sulfur gasoline and diesel, as well as in cogeneration projects to boost electricity generation.
The modernization program will rely on Pemex’s goal of seeking out private investors to fund refinery upgrades in ex- change for a share of profits. Pemex end- ed 2015 with a total debt that exceeded $100 B. The company will need to rely on outside funding for these projects to move forward.
Petrochemicals. Mexico has construct- ed its first major private-sector petro- chemical project in 20 years (FIG. 1).
Etileno (Ethylene) XXI is a $5.2-B greenfield petrochemical complex be- ing built in Nanchital near Coatzacoal- cos, Veracruz. The project consists of a 1-MMtpy ethylene cracker; two high- density polyethylene (HDPE) plants, one with a capacity of 400 Mtpy and the other with 350 Mtpy of capacity, that
will also produce a full range of mono- modal and bimodal high-density and medium-density polyethylene resins; one low-density polyethylene (LDPE) plant that will produce 300 Mtpy; and storage, waste treatment and utility fa- cilities. The project also includes a 150- MW combined-cycle power (CCP) and steam cogeneration plant; a multimodal logistics platform for the shipment of 1 MMtpy of polyethylene via bulk train or truck; and administrative, maintenance, control room and ancillary buildings.
The JV company, Braskem Idesa has built, developed and will operate the pro- duction facility. Brazil-based Braskem is the largest producer of thermoplastic res- ins in the Americas, and Idesa is a leading Mexican petrochemical company. The project is intended to increase Mexico’s domestic petrochemical production to satisfy demand and reduce imports of petrochemical products.
A glaring gap exists between Mexico’s investment potential for polyethylene production and its inability to meet surg- ing demand. At present, 65% of polyethyl- ene demand is satisfied through imports, and the gap continues to grow each year. The Etileno XXI project is forecast to re- place $2 B of polyethylene imports used as feedstock for the agricultural, automotive, construction and consumer industries. The facility is the largest project finance transaction in the history of the petro- chemical industry in Central America, as well as the biggest foreign investment in Mexico by a private Brazilian company.
Etileno XXI is expected to begin operations by the end of 1Q 2016. Ad- ditional petrochemical projects include Pemex’s plan to restart the country’s fer- tilizer industry, which was nearly wiped out due to high natural gas prices. Pe- mex’s petrochemical division, Pemex Gas y Petroquímica Básica (PGPB), is looking to partner with fertilizer produc- ers to increase the country’s production of ammonia and urea. PGPB is investing more than $230 MM in upgrades at Fer- quimex’s 132-Mtpy Camargo ammonia plant in Chihuahua and in Cobra Insta- laciones Mexico’s 1.5-Mtpd urea plant in Coatzacoalcos. Both projects are ex- pected to be completed in early 2016. These two projects are a step in the right direction, but much more time and in- vestment will be needed to restart the country’s fertilizer industry.
Regional Report
47 Mexico consumes 4 MMtpy of fertil-
izers. The country was self-sufficient in its production of fertilizers until the end of the 1990s; however, with increasing natural gas prices and the closing of nu- merous fertilizer-producing plants, Mex- ico was forced to become a net importer.
Ninety percent of the country’s 1.5 MMtpy of urea consumption—a major component in the production of fertil- izers—is imported. Taking into account that Mexico has 54.9 MM hectares of agricultural land under production, the country is targeting the expansion of its ammonia and urea markets.
In 2013, Pemex hoped to increase the value-added price of natural gas with its purchase of fertilizer manufacturer Agro- Nitroginados. In August 2015, the ad- ministrative council of Pemex approved the activation of its subsidiary, Pemex Fertilizers. This made the construction of the Cosoleacaque petrochemical com- plex the main component of company’s fertilizer industry.
The main objective of the Cosole- acaque plant has always been to expand and revitalize the fertilizers production industry in Mexico, so the upgrade proj- ect consists of rehabilitating the Urea production trains, the auxiliary services and the area of compression.
The $220-MM plant modernization project began in September 2014, and it is estimated to be completed in March. Once completed, the facility will be able to produce 1 MMtpy of urea. The Co- soleacaque complex consists of the fol- lowing components: ammonia plants 4, 5, 6 and 7, with production capacities of 1,440 tpd each. When the refurbishment project is completed this year, the com- plex’s ammonia production capacity will increase from 1.4 MMtpy to 1.9 MMtpy.
The hydrogen (H2) recovery unit is
fed with the purge gas from the ammonia plants. Ammonia is recovered and sent, in turn, to the storage tanks, and H2 and
fuel gas are consumed again in the pro- duction units, while the absorption tower keeps ammonia from the relay processing plants to prevent emissions to the envi- ronment. Two storage tanks with a raw water capacity of 200 Mbbl and a 200- Mbbl clarified water tank are part of the compound. For pretreatment, three units produce 130,824 cmd of clarified water for the cooling towers. The demineralizer units are also utilized as service water.
Four cooling towers have a total of 32 cells: 15 cells for ammonia plants 4 and 5, and 17 cells for plants 6 and 7. Two de- mineralizer units are capable of produc- ing 15,262 cmd of steam for the ammonia plants. Two electrical turbogenerators provide 29.8 MW of power each.
The complex’s 6.6-Mt storage system consists of six spherical tanks, four with a working storage capacity of 1.2 Mt and two with a 900-t storage capacity. The
facility has the ability to send ammonia by pipeline to the refrigerated terminals at Pajaritos and Salina Cruz, thereby en- abling ammonia output to either the Gulf of Mexico or the Pacific Ocean. The pet- rochemical complex also has two filling stations for either ammonia tank trucks or tank cars (rail).
Urea production for the petrochemi- cal complex comprises the following components: urea trains 1 and 2, which
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Regional Report
each feature a production capacity of 1.5 Mtpd and transport to storage; a nitric acid plant that can produce 625 tpd; an
ammonium nitrate plant with a capacity of 818 tpd; and a plant for nitrogenated solutions, such as urea ammonium ni- trate. These three plants are not included in this rehabilitation project, although their assets have been acquired.
Many more plants will need to be re- furbished and rebuilt if Mexico hopes to completely bring its fertilizer industry back to life. If the investments are made, then rebuilding this industry could take 5–10 years.
Gas processing/LNG. Mexico relies on natural gas imports from the US to satisfy domestic demand, mainly for power generation. According to the US Energy Information Administration (EIA), US gas exports to Mexico via pipeline have tripled in the past decade, hitting over 700 Bcf in 2014 (FIG. 2).
Mexico suffered years of gas shortages as US pipeline capacity failed to keep up with its growing industrial demand for gas, and as Pemex focused on more prof- itable oil production.
To satisfy increasing gas requirements, Mexico is investing more than $10 B to
expand its 5,500-mi natural gas pipeline system, focusing on central and north- ern industrial cities. The majority of this
network will be filled by natural gas pro- duction from US shale plays, primarily in southern Texas and in the Eagle Ford shale play. The country’s pipeline expan- sion projects have prompted Mexico to abandon plans to build nuclear power stations and to instead construct new CCP stations. These plans will provide additional power generation to meet the country’s increasing demand for electric- ity. With additional natural gas supplies pouring into the country, Mexico has an- nounced plans to possibly export excess natural gas as LNG. Mexico now oper- ates three LNG import terminals located at Altamira, Costa Azul and Manzanillo. Total domestic LNG regasification ca- pacity is just over 15 MMtpy.
Pemex is conducting feasibility stud- ies on two projects that could turn Mexico into an LNG exporter. The first export terminal would be located near Salina Cruz on the Pacific coastline of Oaxaca. Feasibility studies on the pro- posed $6-B terminal began at the end of 2014, and the total liquefaction capacity is expected to be announced once the studies are completed. If built, the ter-
minal could begin operations before the end of the decade. The second proposed project is to add liquefaction capabili-
ties at Mexico’s existing Costa Azul LNG facility. Pemex has signed a memorandum of un- derstanding (MoU) to develop the project with Sempra Energy units IEnova and Sempra LNG. Feasibility studies are taking place to examine the potential addition of more than 3 MMtpy of liquefaction capacity to the existing terminal.
TRINIDAD AND TOBAGO
The island nation is the largest oil and natural gas producer in the Caribbean, and nearly half of the country’s GDP is tied to the energy sector. The country’s largest oil producer is state-owned Pe- troleum Co. of Trinidad and Tobago Ltd. (Petrotrin). Petrotrin also operates the country’s only refinery, the 168-Mbpd Pointe-à-Pierre facility, which is located on the west coast of Trinidad, approxi- mately 56 km north of San Fernando. It produces liquefied petroleum gas (LPG), jet fuel, gasoline, diesel and fuel oil. Clean fuels projects. Construction was recently completed on a new ultra-low- sulfur diesel (ULSD) unit at the refinery. The ULSD plant is part of Petrotrin’s clean fuels upgrade program to improve the profitability of the Pointe-à-Pierre re- finery, as well as to meet new diesel qual- ity specifications.
Additional projects of the clean fu- els program included a liquid fuel pipe- line project and a gasoline optimization program. On the petrochemical side, Trinidad and Tobago is the world’s larg- est exporter of ammonia and the second- largest exporter of methanol. The coun- try has 11 ammonia plants and seven methanol plants.
Petrochemical output. According to Trinidad and Tobago’s Ministry of Energy, overall production and export for ammo- nia, methanol and urea totaled over 420 Mtpy in 2013. The country is investing $1 B in the construction of a new methanol and dimethyl ether (DME) production complex. The project is being developed by state-owned National Gas Co. of Trini- dad and Tobago, Massy Holdings and a consortium consisting of Mitsubishi Gas 1980 US na tur al gas pipeline e xports t o Me xic o, MMcf 0 250,000 500,000 750,000 1,000,000 1990 2000 2010
FIG. 2. US natural gas pipeline exports to Mexico have tripled in the past decade. Source: US EIA.
The drop in oil prices has left little capital to fund
capacity expansions in Central America and Mexico.
To satisfy demand growth, the region has relied
heavily on refined fuel imports from the US.
49
Regional Report
Chemical, Mitsubishi Corp. and Mitsubi- shi Heavy Industries. The complex will be owned by Caribbean Gas Chemical, a JV of the aforementioned companies. The facility will be located in La Brea and have a total capacity of 1 MMtpy of methanol and 20 Mtpy of DME. The plant is ex- pected to begin operations in 4Q 2018. Natural gas exports. Since the early 1990s, Trinidad and Tobago’s hydro- carbon sector has shifted from an oil- dominated sector to mostly natural gas. The country boasts one of the largest natural gas processing facilities in the Western Hemisphere. The Phoenix Park Gas Processors Ltd. natural gas liquids (NGL) complex has a processing capac- ity of nearly 2 Bcfd and an output capac- ity of 70 Mbpd of NGL. The products are transferred to various power plants for electricity production and to petro- chemical plants for feedstock.
Natural gas is utilized in many sectors of the country, including the production of LNG, feedstock for petrochemical man- ufacturing and metals refining, and the production of nearly all of the country’s electricity generation. The country also converts natural gas into LNG for export. At present, Trinidad and Tobago is the sixth-largest LNG exporter in the world. The nation exports more than 14 MMtpy of LNG from Atlantic LNG’s Point Fortin terminal. The plant consists of four lique- faction trains with a total installed lique- faction capacity of nearly 15 MMtpy. The trains vary in size from 3 MMtpy to more than 5 MMtpy. LNG exports are sent to South America, Asia and Europe.
PUERTO RICO
With no oil or gas production, the country is dependent on petroleum products and natural gas imports to sat- isfy demand. To decrease fuel costs and reduce emissions, Puerto Rico is shifting from costly fuel oil and diesel to the use of cleaner-burning natural gas for power generation. To accomplish this strategy, Excelerate Energy will build, own and operate the Aguirre Offshore GasPort project, which will be located approxi- mately 4 mi offshore the southern coast of Puerto Rico. The terminal will consist of a floating storage and gasification unit (FSRU), a fixed jetty and a subsea pipe- line to deliver imported natural gas to the Puerto Rico Electric Power Authority’s