November 2024 Vol. 79 No. 11
Features
Mexico plans to accelerate development of underground infrastructure
By Eugene Gerden, Contributing Editor
Mexico plans to accelerate the development of its underground energy infrastructure, thanks to the ever-growing trend of nearshoring, which requires more quality infrastructure to guarantee a reliable energy supply for companies interested in expansion to the country.
Mexico has the potential to be one of the main beneficiaries of the relocation of global value chains, known as nearshoring. However, to take advantage of this opportunity, the country requires more competitive energy infrastructure.
The recent election of Claudia Sheinbaum, a well-known Mexican politician as a new president (and the first woman to hold the office), according to some local analysts, should contribute to more active implementation of some large-scale investment projects in the country. These involve the building of underground energy infrastructure.
One of the high-priority goals involves building several new power transmission lines that will ensure stable energy supply in different parts of the country. The project will be implemented by the Federal Electricity Commission (CFE), the state-owned electric utility, the country's dominant electric company and the country's second most-powerful state-owned company, after Pemex.
So far, CFE has begun to develop and define a series of transmission line projects that have already been included in the Program for the Development of the National Electric System of Mexico (Prodesen) and are mandated by the Ministry of Energy (Sener).
The list of selected projects consists of Las Mesas-Jilotepec Power line, Las Mesas-Huejutla II and Culiacan West-Mazatlan Two Line. In general, CFE plans to invest about 1.8 billion pesos (US$100 million) in the building of six transmission lines in different parts of the country within the next several years.
An official spokesman of CFE commented that "the development of these projects will allow Mexico to fulfill the objectives and goals of the National Transmission Network Expansion and Modernization Program, which involves increasing the installed capacity of transmission lines and substations within the territory of Mexico.”
In addition, according to CFE, in recent years a large number of electricity generation projects have been commissioned, including Combined Cycle Power Plants and other technologies that use the country's available renewable resources, thereby diversifying the sources of generation, with photovoltaic generation predominating in northern Mexico.
Water/wastewater
In the meantime, there are plans for the development of water and wastewater infrastructure, as in recent years the country has faced a serious water crisis. In 2022, Nuevo León, a state in northeastern Mexico, faced its worst water shortage in 25 years. During the period of 2023-2024, similar problems were observed in other large cities and states of the country including Mexico City, Tijuana and Acapulco. The problem is not only related to a shortage of rain, but also to the over-exploitation of local water infrastructure, the lack of infrastructure for water storage, and treatment.
According to recent estimates of Luis Méndez Jaled, president of the Mexican Chamber of the Construction Industry (CMIC), Mexico needs a substantial investment annually to resolve the water crisis. As he also added, the required sum is almost three times higher than has been allocated to modernize water infrastructure in the country, in the last six years.
According to official data of CMIC, while 58 percent of the country's population has water in its homes every day, approximately 6 million people lack drinking water, and 11 million citizens lack access to wastewater infrastructure.
It is expected that a significant part of allocated funds will be invested in the modernization of water infrastructure in Mexico City, were the current technical condition remains poor. This has been recently confirmed by José Alfredo Galindo Sosa, head of the Mexico City Water System (Sacmex), during the National Water Forum 2024, organized by the College of Mexican Civil Engineers (CICM).
Sosa said, “One of the biggest challenges in Mexico City is the age of its water distribution network, which causes losses of up to 30 percent of drinking water, although there is no exact estimate. The current water network is not sustainable, while leaks represent a huge waste and damage, so it is a priority to work on modernizing the infrastructure.”
In accordance with the plan, which was approved by Mexico City authorities, serious investments will be allocated in modernization of the city’s water and wastewater infrastructure, with the goal of reducing leaks and optimizing the efficiency of the entire system. As part of these plans, special monitoring systems are to be installed to detect leaks more quickly and improve the response in emergency situations.
In general, while the northern, central and northwestern regions are home to the majority of the population and economic activity in Mexico, the conditions of local water infrastructure and water reserves in these regions are significantly poorer those in the southeastern region.
Gas pipelines
Finally, plans of the Mexican government include expanding its gas pipeline infrastructure, which should help the country to better capitalize on nearshoring.
The current gas pipeline network of the country is insufficient to transport natural gas to all its regions, despite the fact that the length of the country’s gas pipeline network increased by more than 50 percent between 2011 and 2023.
The current supply of natural gas in Mexico is higher than 8 Bcf/d, of which 2,203 billion come from production fields in Mexico, either by Petróleos Mexicanos (Pemex) or private oil companies.
As a result, almost 6 billion cubic feet of gas is imported daily, meaning that Mexico is dependent on gas supplies from abroad, mainly from the United States; and there are currently 32 gas import points on the northern border and in the east of the country. As a rule, 48.1 percent of the demand for natural gas in Mexico is concentrated in border entities in the north of the country, such as Baja California, Chihuahua, Coahuila, Nuevo León, Sonora and Tamaulipas.
An earlier report of the Mexican Institute for Competitiveness (IMCO) stated that amid the conditions of nearshoring, Mexico needs to expand its gas pipeline infrastructure, especially in regions such as the south-southeast (which suffers from industrial deficit and low competitiveness), and accelerate the energy transition.
In addition, the country also has big plans in the field of LNG (to become the fourth-largest LNG exporter), planning to develop its pipelines’ network to better serve the needs of LNG.
For this purpose, building of Sierra Madre Pipeline is ongoing. The proposed 497-mile (800-km), 48-inch-diameter pipe will be the primary natural gas supply path for the transportation of up to 2.8 Bcf/d natural gas from the U.S./Mexico border in the municipality of Guadalupe, Chihuahua.
The pipeline will extend 155 miles (250 km) from the Waha Basin in Texas to the border at Chihuahua, then 497 miles (800 km) to Puerto Libertad in Sonora. Another important project is the Samalayuca-Sasabe pipeline, which is built by Carso Energy, part of Carlos Slim’s Carso Group. The pipeline will extend for approximately 400 miles (640 km) and significantly improve the gas transportation infrastructure in the northern regions of Baja California and Sonora.
Finally, the Canadian transnational company TC Energy continues building its underwater and ground 445-mile (715 km) Sureste gas pipeline, an ambitious project meant to expand the market of natural gas exported to Mexico from Canada and the United States. This natural gas will supply the industrial parks being built as part of the Maya Train and Interoceanic Corridor megaprojects. According to earlier statements of François Poirier, CEO of the company, “the objective is to accelerate the construction of the project so that it is in operation by the middle of 2025.”
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