Natural Gas’ Global Abundance, Price Trends and LNG Offer Opportunities For Central America

Natural Gas’ Global Abundance, Price Trends and LNG Offer Opportunities For Central America

Panama City – Almost 200 energy executives, government officials and policy makers from across Central America and the hemisphere convened in Panama City on September 27 for the Institute of the Americas’ conference “Prospects for LNG and Natural Gas in Central America.”

A convergence of global and regional issues has led Central America to seek to further understand and consider the role for natural gas in its energy matrix.

Panama’s Secretary of Energy, Vicente Prescott, AES’s Gardner Walkup, the World Bank’s Ariel Yepez, former Costa Rican energy minister Roberto Dobles, among others, underscored three fundamental elements driving the discussion: 1) an increasing abundance of natural gas in the Western Hemisphere; 2) low natural gas prices and similar long-term price trends; and, 3) Central America’s need for additional electric power generation fuel options and thus an anchor role for natural gas-fired electric plants.

Speakers throughout the day pointed to global energy trends and specifically the ascendancy of natural gas production in the Western Hemisphere.

A convergence of global and regional issues has led Central America to seek to further understand and consider the role for natural gas in its energy matrix. The importance of the unconventional resource revolution – the so-called shale gale – and boom in entrepreneurial investment and technology gains in unconventional resources across the world, but particularly in North America was frequently cited.

Natural gas’ increasing abundance led several speakers to emphasize a critical corollary point: record low prices in the United States.

For many, that natural gas prices have remained low for several years is important. But, especially relevant for Central America has been the price divergence from global markets and particularly oil prices.  Indeed, Henry Hub natural gas prices have been below $6/mmbtu since January 2009 and various forecasts presented at the conference indicate a band between $4 and $8 /mmbtu for the next 20 years.

The “shale gale” and “golden era for natural gas” arrive at a critical moment for Central America’s electric sector and economies. Over the last 20 years, the region has seen a huge spike in petroleum-based electric poweGardner Walkup, Senior Vice President for Strategy at AES Corporation, World Bank Senior Energy Specialist Ariel Yepez and Juan Carlos Posadas of the Institute of the Americas participate in a panel discussion focused on the opportunities natural gas presents for Central America’s electric sector during the Institute’s September 27 forum in Panama City.r generation, as well as increased transportation fuel consumption.

Gardner Walkup, Senior Vice President for Strategy at AES Corporation, World Bank Senior Energy Specialist Ariel Yepez and Juan Carlos Posadas of the Institute of the Americas participate in a panel discussion focused on the opportunities natural gas presents for Central America’s electric sector during the Institute’s September 27 forum in Panama City.

Changes in the region’s power generation sources occurred at the same time as a surge in global petroleum prices.  The region’s petroleum dependency has had a significant impact on the region’s imports bill, costing on average nearly $9.5 billion per year over the last 3 years, or approximately 6% of the region’s GDP.

Speakers asserted that, given the lack of significant natural gas reserves across the countries of the Isthmus, imports of liquefied natural gas (LNG) appears to be the most logical option to most effectively land natural gas for the region.

Raul Carral of Wärtsilä, Eduardo Lima of Pacific Rubiales, and Manuel Colcombet of GDF Suez discussed huge leaps in LNG technology that offer practical, scaled project options to pursue the demand opportunities for natural gas in Central America.

The environmental upside for Central America to transition to natural gas also figured throughout the day’s discussions. Oft-repeated was the notion of a “greener” footprint derived from natural gas-based power generation and the benefit of switching from diesel and heavy fuel oil generation to combined cycle gas fired power plants that emit much less carbon dioxide.

Consensus emerged on the need for Central America to seize the opportunity presented by natural gas, but in a procedural manner that involves all stakeholders and clearly defines regulatory and investment guidelines. Indeed, the importance of building blocks that place electric power generation at the core of the process to develop natural gas imports followed by a tiered approach that ultimately incentivizes other natural gas uses such as transportation fuels and industrial inputs emerged as paramount.

Successful examples of similar developments in Chile, Argentina, Brazil and particularly the Dominican Republic, where in ten years natural gas has gone from zero to 14% of that country’s energy matrix, were important reference points for participants and created a desire and goals for Central America to emulate.

San Diego, Tijuana Mayors Discuss Future of Border Region at Institute Meeting

San Diego, Tijuana Mayors Discuss Future of Border Region at Institute Meeting

TIJUANA — Mayor Carlos Bustamante said Thursday that he won’t give the go-ahead for construction of a terminal linking Otay Mesa with Tijuana’s A.L. Rodriguez International Airport until the private consortium that operates the airport pays property taxes to the city.

“In itself, it’s a good project,” Bustamante said during a forum on binational issues organized by the Institute of the Americas at the Tijuana Cultural Center. “But we have maintained the position that they have not paid property taxes.”

The terminal’s status was one in a range of subjects affecting the cross-border region that arose during the discussion between Bustamante and San Diego Mayor Jerry Sanders. Moderated by Charles Shapiro, the institute’s president, it followed a similar May event featuring the two mayors that was held at the institute’s offices on the University of California San Diego campus.

The terminal, proposed by a consortium of Mexican and U.S. investors, involves building a crossing to be used exclusively by ticketed airline passengers arriving at or departing from Tijuana’s airport. Plans call for a 45,000-square-foot terminal on the U.S. side linked by a 525-foot walkway to the Tijuana airport.

San Diego Mayor Jerry Sanders, right, makes a point during a bi-national forum in Tijuana on Sept. 13. At his side is Charles S. Shapiro, president of the Institute of the Americas, center, and Tijuana Mayor Carlos Bustamante. Photo courtesy of the Tijuana mayor’s office.

A U.S. presidential permit was granted in 2010. In January, the proposal received local land-use entitlement approvals from the city of San Diego. The project is spearheaded by a for-profit venture headed by Otay-Tijuana Ventures LLC, whose investors include billionaire Sam Zell’s Equity Group Investments, as well a group of Mexican investors who operate the Tijuana airport, the Grupo Aeroportuario del Pacifico

At Thursday’s forum, Bustamante said Tijuana has been fighting in court for its right to collect property taxes from Grupo Aeroportuario del Pacifico, which holds a 50-year concession from Mexico’s federal government to operate the Tijuana airport.

The consortium has maintained that it’s not subject to local property taxes because the airport is federal property. It has also argued that the licensing authority for construction permits involving the airport is Mexico’s federal communications and transportation secretariat.

This story appeared in the Sept. 14, 2012, edition of U-T San Diego and was reprinted with the permission of the newspaper.

Actor Diego Luna Keynotes Panel, Documentary Series at Institute of the Americas

Actor Diego Luna Keynotes Panel, Documentary Series at Institute of the Americas

LA JOLLA- Freedom of Expression. Child Migration. Arms Trafficking and Gun Control Policy.  Three of the most relevant issues affecting the bilateral relations between Mexico and its Central American and North American neighbors were the subjects of a unique border series organized by Ambulante A.C., a non-profit organization founded in 2005 by actors Gael García Bernal, Diego Luna and Pablo Cruz.

On three consecutive evenings, the Institute of the Americas, in cooperation with Ambulante A.C., the U.S. Embassy in Mexico City, the U.S. Consulate in Tijuana, the Centro Cultural Tijuana (CECUT), Delegacion de Playas de Tijuana, Centro Cultural La Raza, the Trans-Border Institute of San Diego, El Grafógrafo and Pasaje Rodríguez, screened documentaries and hosted panel discussions.

Diego Luna was a keynote speaker during a Sept. 7 panel discussion titled, “Arms Trafficking and Gun Control Policy Mexico-USA.” Luna was joined on the panel by Joy Olson, executive director of the Washington Office on Latin America (WOLA); Raul Benitez, professor of political science at the National Autonomous University of Mexico (UNAM); Jose Manuel Valenzuela, professor at the Colegio de la Frontera Norte; and Simone Lucatello, researcher at the Dr. Jose Maria Luis Mora Institute in Mexico City. Before the panel discussion began, the audience of almost 100 people viewed the documentary, “Tiroteo/Gun Fight,” directed by Barbara Kopple.

“Freedom of Expression and Persecution of Journalists” was the subject of a Sept. 8 panel discussion moderated by MariClaire Acosta, director of Freedom House-Mexico and former deputy secretary for human rights and democracy in Mexico. Also on the panel were Sergio Haro, reporter at the Tijuana weekly Zeta; Carlos Dada, founder of El Faro, an on-line investigative newspaper in El Salvador; S. Lynne Walker, vice president of the Institute of the Americas and former Mexico City bureau chief for Copley News Service; and Bernardo Ruiz, director of the documentary “Reportero/Reporter,” which was screened prior to the discussion.

A panel discussed, “Child Migration and Detention Centers,” following a Sept. 9 screening of the documentary, “Which Way Home?” Participating on the panel were Michelle Brane, director of the detention and asylum program at the Women’s Refugee Commission and Gisele Bonnici, director of the regional Americas office of the International Detention Coalition.  Kevin Keenan, executive director of the ACLU of San Diego and Imperial counties, moderated the panel.

The Ambulate Border Series was organized during a critical period following the presidential elections in Mexico and preceding the elections in the U.S. to encourage public discussion on these issues. According to government sources, eight of every 10 weapons seized from organized crime in Mexico come from the United States.  The number of attacks on journalists in Mexico and Central America have increased and become more violent, with few measures being taken to guarantee their security and freedom to exercise their profession. Child migration is also on the rise and the conditions in detention centers are deteriorating.

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