Mexico needs to prepare itself for increased demand for natural gas in the coming years, according to Asociacion Mexicana de Natural Gas president Angelica Fuentes. The country's natural gas demand could grow as much as 8% annually, which could lead to gas imports approaching 2 billion cubic feet per day. The country currently is a net importer of 20 billion cubic feet of gas annually, most of that from the U.S. At the expected demand growth rate, it would net-import in 10 days as much as it currently does in a year. Government policies and trends in Mexico have caused increased use of nonpolluting resources such as natural gas, further increasing demand and making it a more important fuel, or the "fuel for the 21st century," Fuentes told Independent Petroleum Association of America members at their recent annual meeting. The country has proven natural gas reserves of 30.1 trillion cubic feet, but it has fewer than 300 natural gas wells. "Developing exploration and production infrastructure is needed," Fuentes said. Mexico, which produced about 1.27 trillion cubic feet in 1998, is expected to produce 2.5 trillion cubic feet a year by 2006, with the help of more than $1 billion in investments in domestic natural-gas exploration and production the next few years. It also needs to invest in new storage facilities and "it is urgent that we implement a reserve for petroleum and natural gas in Mexico," Fuentes said. Also, cooperation with the U.S. is needed for the sharing of infrastructure and interconnected projects. To make this a viable option, storage capacity must be expanded, she added. <$iPemex >, the Mexican state oil company, plans to increase Mexico-U.S. border infrastructure and capacity, and to focus more on gas exploration activities, especially in the nonassociated Burgos and Macuspana basins, according to the U.S. Energy Information Administration. Pemex predicts that gas production will increase more than 50% from current levels by 2008. Will current plans be enough to increase Mexico's natural gas production? Chuck Watson, chairman and chief executive officer of Houston-based gas trading firm <$iDynegy Inc. >, told IPAA members, in a separate session, "I'll probably retire before we get more gas from Mexico."

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