PHOENIX — Gov. Doug Ducey inked his approval Wednesday to a pact that will enable New Mexico to move its excess natural gas through Arizona to Sonora for eventual sale to Asian nations.
The deal provides a new market for New Mexico, where Gov. Susana Martinez said her state has more natural gas than it can use.
Sonora Gov. Claudia Pavlovich said her state benefits from the jobs that will be created building and operating a plant that will compress the gas into liquefied form for transport on ships.
And what does Arizona get, other than a pipeline and other facilities to transport the gas? In essence, Ducey said, it’s goodwill.
“This is just a way for us to work with our neighbors and promote binational trade,” Ducey said, pointing out that Sonora already is Arizona’s largest trading partner. “This is just another way for us to bring that to life and be cooperative in economic development.”
At this point it’s just an agreement to cooperate. Details, including a timeline and route for the pipeline, are not yet on the horizon. The agreement is valid for four years.
Ducey said it is an important first step.
He acknowledged that in prior decades there have been shortages of natural gas, which led to price spikes. There was a moratorium for a time on installing natural gas in new homes. But Ducey said he’s not worried that shipping excess natural gas to Asia will result in less for this country when needed.
“Right now we’re in a positive position on energy,” he said.
To have maximum flexibility, Arizona is “going to continue to have an all-of-the-above philosophy around energy, with a preference for renewables.”
Martinez, for her part, said there is no basis for such a worry.
“I don’t think anybody understands the abundance of natural gas that exists just in one state, much less the rest of the country,” she said. “I don’t have any concerns that because we find a market that we are not going to be able to have that continuing discovery and production of natural gas.”
According to the agreement, New Mexico is currently producing 3.7 billion cubic feet of natural gas daily and is on track to reach 4.0 billion by 2022. It also says New Mexico is among the top 10 states in proven reserves, with nearly 14.4 trillion cubic feet when measured at the end of 2016.
The agreement is largely about logistics.
Right now any natural gas New Mexico wants to sell to Asia — Taiwan in particular — goes through Houston. That requires transporting the gas to the Gulf of Mexico where it is liquefied to be put onto ships that must go through the Panama Canal, a process that adds time and cost.
Sending the gas by pipeline to Guaymas, Sonora, on the Sea of Cortez — what is called the Gulf of California in the United States —expedites the process.
The latest version of cross-border cooperation comes as President Trump continues to decry what he’s called unfair trade deals with our southern neighbors. Ducey said to ignore the rhetoric and look instead at actions.
“The actions that I’ve seen are the recent signings of the USMCA,” short for the United States-Mexico-Canada agreement, “which is basically a new and improved NAFTA,” the now defunct North American Free Trade Agreement.
“I’m hopeful for more of those types of actions,” Ducey continued. “Those are going to be what I’m going to be advocating for out of the governor’s office.”
And if nothing else, he said, Arizona will continue its own separate relationship with Mexico regardless of what is coming out of Washington.
The major beneficiary of the deal could be Sonora, which will have to construct a plant to convert the natural gas into liquid form.
“It’s going to be jobs for everyone right there,” Pavlovich said. She declined to speculate on a potential peso or dollar figure.
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