LA JOLLA – Energy reform in Mexico, the energy boom in the United States, the role of natural gas, and Latin America’s unconventional resource potential dominated the discussions over the two days of the XXIII annual La Jolla Conference on May 21-22.

Almost two hundred participants from across the Western Hemisphere participated in this year’s conference that featured addresses by senior officials from Pemex, the Panama Canal Authority, Mexico’s national hydrocarbons agency CNH, Argentina’s YPF, Mexico’s ministry of energy and Perupetro, as well as discussion panels with thought leaders from across industry, academia and the energy consulting world.

The optimism and hope for a new energy future in Mexico were evident throughout the course of the discussions, as was the interest in the continued march of the U.S.’s oil and natural gas production boom. Less clear was if and how Latin America would be able to replicate the U.S.’s model for its energy renaissance.

The sheer magnitude of the U.S. energy revolution began the conference discussions and set the stage for much of the following discourse. Panelists’ proffered figures that underscored today’s energy panorama: total growth in production has been equivalent to growth in all OPEC countries combined. Pennsylvania’s natural gas production alone was 1.5 times the size of Qatar’s, and may soon surpass that of Russia.

Latin America’s unconventional resource potential was not disputed, but among many optimistic outlooks several panelists cautioned that the regulatory environment, development costs, access to capital, local infrastructure and overall efficiency of shale projects must be improved. Indeed, the caveats all seemed to focus on the elements above ground facing the region’s incipient shale wave.

Though it might take longer than expected – many anticipate the revolution to take about a decade to spread across Latin America – there was near consensus that the resources would be developed and serve as important domestic sources of energy as well as boost economies from Mexico to Colombia to Argentina.

An important tangential discussion to the shale and U.S. energy boom was the revitalized interest and potential for natural gas and particularly the role for liquefied natural gas (LNG) in the hemisphere. Indeed, many panelists argued that the U.S. could become the largest LNG supplier in the world, with the US Gulf of Mexico an ideal place for a new hub. Some also foresaw an eventual convergence of global LNG prices as soon as 2018.

Institute of the Americas energy policy associate Alexis Arthur moderates a discussion of natural gas and LNG issues in the hemisphere with panelists Manuel Benitez of the Panama Canal Authority, Ricardo Iglesias of GDF Suez, and Jed Bailey of Energy Narrative

The Panama Canal’s long awaited expansion will play a vital role in making LNG exports competitive, and the Canal may be instrumental in making the region a new LNG hub.

The expanded waterway will reduce LNG transit time from Trinidad & Tobago to Chile by over 6 days and cut over 8 days off the time required to move LNG from Peru’s Camisea project to Spain.

Across Latin America demand for natural gas and LNG has boomed; growth in demand has outpaced GDP growth. Latin America’s appetite for gas will continue to grow because of economic expansion, increased power generation, and fuel switching.

But it was perhaps Mexico’s monumental energy reforms that truly animated many of the discussions. Updates on the reform process, with secondary legislation set for debate soon after the conference, were shared by representatives from all facets of the government and industry.

Presentations of Pemex’s evolution and the role of the revamped national hydrocarbons agency engendered a series of debates. When asked how the revamped national oil company would partner and develop projects, the head of the firm’s E&P company outlined the transition to a productive state enterprise and argued that partnerships could be announced by the end of the year.

Representatives from a wide range of international companies were eager to hear from and meet with Pemex officials on the sideline of the conference.

Similarly, the state power company CFE set forth plans to further evolve into a natural gas player, highlighting several midstream projects being developed that would also include new collaboration and partnering opportunities for private firms from across Mexico and the world.

Stay connected with The Institute!

Join our mailing list to receive the latest news and updates from the IOA team.

You have Successfully Subscribed!

Pin It on Pinterest

Share This