Gato Negro seeks US stamp of approval for vicennial LNG export via ship from Pacific coast

Mexico-based developers, Gato Negro Permitium Uno and Gato Negro Permitium Dos, have requested a 20-year permit from the U.S. Department of Energy Office of Fossil Energy and Carbon Management (DOE-FECM) to export natural gas to Mexico via pipeline, turn it into a liquified natural gas (LNG), and send it to countries not only with U.S. free trade agreements (FTAs) in place but also non-FTA markets through LNG shipments from the Pacific coast of Mexico.

As Gato Negro Permitium Uno started the Mexican permitting process in June 2022 to get a hold of over one hundred permits, licenses, and authorizations required by the country, including archaeological, construction, water, commercial and transportation, and environmental, the company anticipates receipt no later than the third quarter of this year of all permits from Mexican authorities that are necessary for construction.

On May 10, 2024, the company applied for expeditious long-term authorization in the U.S. to export natural gas to Mexico from the United States and re-export LNG, upon liquefaction, to other FTA countries. Recently the firm underlined that the authorization requested would be effective on the date of first exportation and terminated on December 31, 2050. At the time, Gato also asked DOE/FECM to issue the requested authorization on or before September 1, 2024.

While confirming the receipt of the application, the Office of Fossil Energy and Carbon Management explains Gato is requesting a long-term authorization to export domestically produced natural gas via pipeline to Mexico in a volume up to approximately 236 billion cubic feet (bcf) per year (bcf/yr) (0.647 bcf per day), and to re-export approximately 203 bcf/yr (0.556 bcf per day) of this natural gas as LNG to FTA countries. The same requirements are also used to request a permit to be issued no later than February 21, 2025, for export to non-FTA countries by Gato Negro Permitium Dos.

Moreover, Gato plans to re-export this LNG by vessel from its proposed liquefaction and export terminal project, the Gato Negro Manzanillo LNG plant, to be located in the State of Colima, Manzanillo, Mexico. The company’s affiliates are developing a liquefication complex in Manzanillo to provide LNG to markets accessible through shipping in the Pacific Ocean.

While half of Gato’s outstanding shares are owned by Carlos Camacho, the other half is in the hands of Emilio Fuentes, who also own, in the same proportions, the outstanding voting securities of affiliates Gato Negro Permitium Duo and Gato Negro Manzanillo, the latter of which is directly involved in developing the Manzanillo plant.

The major components that will be constructed as part of the LNG project cover up to four liquefaction trains capable of producing up to approximately 4 mtpa of LNG and a gas pretreatment unit for the removal of Mercury, acid gas, water, and natural gas liquids; a marine jetty; emergency vapor management equipment; piping and other facilities to permit the interconnection of the project to existing pipeline infrastructure; and associated utilities interconnections.

While feed gas for the project will be supplied through the TC Energy Guadalajara Manzanillo pipeline, new or modified utilities, and offsite facilities will be provided for the project, which will use a modular structure, employing a refrigerant technology process. The exported volumes may be liquefied to be re-exported from the Manzanillo plant to other nations with whom the U.S. has entered into a FTA, or transported for consumption in Mexico.

The LNG will be loaded for ocean-going transport and the Manzanillo plant will include a truck rack in case some of the natural gas volumes would be resold and consumed in Mexico. The Manzanillo plant’s location is expected to benefit FTA signatories with the U.S., including not only Mexico but Columbia, the Republic of Korea, Singapore, Chile, and Costa Rica because the LNG from Manzanillo will not need to transit the potential bottleneck of the Panama Canal that other LNG supplies from the U.S. Gulf Coast may experience when headed into the Pacific.

Furthermore, the Manzanillo location is anticipated to reduce maritime fuel consumption for ships transporting LNG to countries in the Pacific Ocean relative to those cargoes that might serve the same markets that are transported from the U.S. Gulf Coast. The 20-year export to FTA and non-FTA countries is expected to be secured by negotiating and entering into one or more supply agreements of different durations with natural gas producers and marketers in the Permian Basin and potentially other production areas in Texas.

Gato Negro will look for transportation service on one or more connecting pipelines, starting with capacity on one or more U.S. pipelines transporting volumes to border crossings with Mexico such as the ONEOK-operated Roadrunner Pipeline, the Comanche Trail Pipeline operated by Energy Transfer, Trans-Peco Pipeline.

The pipeline capacity will transport the volumes to two points on the U.S.-Mexico border, including the San Elizario Border Crossing to Mexico, located along the international border between the United States about 40 miles from El Paso, Texas, and Mexico in the vicinity of Colombia, State of Nuevo León will be accessed by Roadrunner and Comanche Trail.

According to Gato, the volumes will be tendered to the Tarahumara Gas Pipeline, owned by Esentia Energy, formerly Fermaca de Mexico. In addition, the Presidio/Ojinaga border crossing in the State of Chihuahua will be accessed by TPP, with supplies being transported in the Gasoducto Ojinaga-El Encino system, operated by Sempra and owned by Comisión Federal de Electricidad, for 220 kilometers before connecting to the Wahalajara system.