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Introduction

A vast, sparsely populated region covered by dunefields and gibber plains, the Great Victoria Desert receives little rain and experiences extreme temperatures. A highly desert-adapted fauna lives here and the area is known for its lizard diversity. Climate and isolation render pastoralism and agriculture inviable, so the region has suffered few direct effects of European settlement. The presence of a weapons testing range and nuclear weapons test sites has further isolated the region and means that this is one of the least populated areas of Australia.

Location and General Description

The vast Great Victoria Desert extends from the Eastern Goldfields area in Western Australia across the southern parts of central Australia to the Stuart and Gawler Ranges in South Australia. The climate is arid, with mean annual rainfall ranging from below 150 millimeters (mm) to over 250 mm. Rainfall is aseasonal, but shows great variability between years. Summers are very hot, with mean maxima during summer between 32 °C and 35 °C. Diurnal ranges are also large, and overnight minima commonly fall below 0 °C during winter. Much of the region is occupied by sand dunes, with areas of calcrete and silcrete. Dunes cover low-elevation areas, interspersed among low ranges, dissected tablelands, and plains.

Much of the Great Victoria Desert is vegetated by open woodlands, typically eucalypts (Eucalyptus gongylocarpa, E. pyriformis, and E. socialis) with a hummock grass understory (Triodia spp., largely T. basedownii), mulga (Acacia aneura) with other grasses (Aristida spp. and Plectrachne spp.), or belah (Casuarina cristata) with shrubs (Maireana sedifolia, Dodenaea attenuata). The ‘Giles Corridor’ is a narrow strip of Acacia vegetation and the only continuous shrubland to completely traverse the Great Victoria Desert. This corridor links the Pilbara region in Western Australia to the Central Ranges by going though the Lake Carnegie region in the Great Victoria Desert and the southern part of the Gibson Desert.

Gibber plains also occur in this ecoregion, consisting of areas in which the soil is covered by a closely-spaced layer of pebbles, and glazed with a thin wind-polished layer of iron oxides. Gibber plains are normally almost devoid of vegetation, but following rains may be densely covered with ephemeral species, especially Fabaceae, Compositae, and Amaranthaceae.

Biodiversity Features

One of the strategies that allows animals to persist in such extreme environments is to be highly mobile and follow favorable conditions across great distances. Consequently endemism is low, especially among birds and larger mammals. Nevertheless, the endangered chestnut-breasted whiteface (Aphelocephala pectoralis) has a relatively restricted range, spanning the eastern parts of this region and the western parts of the adjoining Tirari-Sturt stony desert region. The vulnerable malleefowl (Leipoa ocellata) occurs within the Unnamed Conservation, and, although not reported from the region in recent decades, it is conceivable that the enigmatic and critically endangered night parrot (Geopsittacus occidentalis) is still present.

The Great Victoria Desert also has an exceptionally high diversity of reptiles, including the vulnerable great desert skink (Egernia kintorei) which had been considered extinct in South Australia until its rediscovery by Aboriginal landholders in 1998. More than 100 species of reptile have been recorded, with Gekkonidae (e.g. Diplodactylus), Agamidae (e.g. Ctenophorus), Scincidae (e.g. Ctenotus, Egernia, Lerista and Morethia), and Elapidae (e.g. Simoselaps and Suta) being particularly diverse. Extensive lizard radiations and speciation occurred all over the arid interior of Australia, largely in response to climatic changes in the late Pleistocene and the associated shifting and isolation of vegetation pockets. An example of this isolation can be seen in the Great Victoria Desert, where a population of Ctentus brooksi is isolated from populations in the Simpson Desert by a narrow strip of scrub vegetation in south-central Northern Territory. Although the barrier is only several thousand years old, distinct subspecies have evolved, with C. b. brooksi found in the Great Victoria Desert. Diversification in habitat results in high lizard density: in a portion of the Great Victoria Desert in Western Australia up to 9 different species of geckos may overlap, with species utilizing a wide variety of food and habitats (sandridges, rocky breakaways, and salt lakes).

Several threatened mammals, the endangered sandhill dunnart (Sminthopsis psammophila), the endangered marsupial mole (Notoryctes typhlops), and the vulnerable mulgara (Dasycercus cristicauda) still occur within the region. Australia has experienced nearly half of the world’s mammal extinctions within the past 200 years, with most of the extinctions concentrated in drier interior regions of the continent. These extinctions include a number of species which once utilized the Great Victoria Desert: the pig-footed bandicoot (Chaeropus ecaudatus), short-tailed hopping mouse (Notomys amplus), long-tailed hopping mouse (N. longicaudatus), and lesser stick-nest rat (Leporillus apicalis). The greater stick-nest rat (L. conditor) has been extirpated from the region and survives only on offshore islands. There are no known extinction among the flora, and just one endangered species, the recently described Stemodia haegii.

Although the low level of threatened species may be an artifact of low collecting efforts, it is also indicative of the relatively low levels of disturbance since European settlement, which is also evidenced by the low incidence of exotic species. The plant associations identified by Davies as being inadequately conserved in the South Australian part of the region are now effectively conserved in the Pitjantjatjara Lands.

Located north of the dog fence, Australia’s largest mammalian predator, the dingo (Canis lupus dingo), occurs throughout the region. The other notable predators found here are the perentie (Varanus giganteus) and Gould’s goanna (Varanus gouldii) which can both exceed 1.6 meters (m) in length. Feral foxes (Vulpes vulpes) and cats (Felis catus) also occur, and have been implicated in the decline of a number of vertebrate species.

Current Status

As a consequence of the climate and the geographical isolation of the region, pastoralism and agriculture are not considered viable. Consequently, there has been little land clearance or grazing by domestic stock. A weapons testing range and nuclear weapons test sites are located in this region. Some areas have been disturbed by mineral exploration and mining, but these impacts are low when considered at the regional scale. Furthermore, extensive tracts of land are protected from exploitation. The Unnamed Conservation Park (21,289 square kilometers (km²)) on the South Australian – Western Territory border is the largest of South Australia’s conservation areas. A further 103,000 km² is effectively conserved in the adjacent Pitjantjatjara Lands, which were ceded to traditional landowners by the South Australian Parliament in 1981. In Western Australia, some 20 percent (5,000 km²) of the Great Victoria Desert Nature Reserve falls within the region.

Types and Severity of Threats

A series of nuclear weapon trials were conducted at Maralinga and Emu by the United Kingdom between 1953 and 1963, as a result of which a number of sites were contaminated with radionuclides. The presence of plutonium-239 is of special concern, due both to its long half-life and the risks posed by inhalation. Although a rehabilitation program was carried out between 1996 and 1999, there remains considerable controversy as to its effectiveness.

There has also been disturbance associated with the Woomera rocket and weapons testing range, primarily through road-building. The increasing popularity of 4-Wheel-Drive vehicles presents the potential threat of disturbance in the vicinity of any tracks in this region, although this is not a problem in the Woomera Range, Maralinga, and the Pitjantjatjara Lands where public access is strictly regulated. The main sources of widespread disturbances come from feral animals, especially rabbits (Oryctolagus cuniculus) which adversely affect native vegetation. House mice (Mus musculus) can be highly abundant after good rains, and may adversely affect smaller native mammals.

Justification of Ecoregion Delineation

The Great Victoria Desert ecoregion comprises the IBRA of the same name. This active sandridge desert is characterized by Eucalyptus gongylocarpa, mulga, and E. youngiana over hummock grassland dominated by Triodia basedownii.

Additional Information on this Ecoregion

• For a shorter summary of this entry, see the WWF WildWorld profile of this ecoregion.
• To see the species that live in this ecoregion, including images and threat levels, see the WWF Wildfinder description of this ecoregion.
• World Wildlife Fund Homepage

Further Reading

• Blakers, M., S.J.J.F. Davies, and P.N. Reilly 1984. The Atlas of Australian birds. Melbourne University Press, Melbourne, Australia. ISBN: 0522842852
• Boomsma, C.D., and N.B. Lewis 1980. The native forest and woodland vegetation of South Australia. Woods and Forests Department, Adelaide, Australia.
• Briggs, J.D., and J.H. Leigh 1996. Rare or threatened Australian plants. CSIRO Publishing, Melbourne, Australia. ISBN: 0643057986
• Brouwer, J., and S. Garnett, editors. 1990. Threatened birds of Australia. Royal Australasian Ornithologists' Union, Moonee Ponds, Victoria, Australia.
• Cogger, H.G. 2000. Reptiles and amphibians of Australia. Reed New Holland, Sydney, Australia. ISBN: 0801427398
• Davies, R.J.P. 1982. The conservation of major plant associations in South Australia. Conservation Council of South Australia, Adelaide, Australia.
• Dept. P.I.E. 1990. Rehabilitation of former nuclear test sites in Australia. Department of Primary Industries and Energy, Canberra, Australia. ISBN: 0644126957
• Greenslade, P., L. Joseph, and R. Barley, editors. 1986. The Great Victoria Desert. Nature Conservation Society of South Australia, Adelaide, Australia.
• Hilton-Taylor, C. 2000. 2000 IUCN red list of threatened species. IUCN Publications Unit, Gland, Switzerland and Cambridge, United Kingdom. ISBN: 2831705657
• Laut, P., P.C. Heyligers, G. Keig, E. Loffler, C. Margules, R.M. Scott, and M.E. Sullivan. 1977a. Environments of South Australia Province 7 Western Pastoral. Commonwealth Scientific and Industrial Research Organization, Canberra, Australia.
• Laut, P., G. Keig, M. Lazarides, E. Loffler, C. Margules, R.M. Scott, and M.E. Sullivan. 1977b. Environments of South Australia Province 8 Northern Arid. Commonwealth Scientific and Industrial Research Organization, Canberra, Australia.
• Newby, K.R. 1984. The biological survey of the Eastern Goldfields of Western Australia Part 2 Widgiemooltha-Zanthus study area II Physical environment. Records of the Western Australian Museum supplement 18: 29-40.
• Pianka, E.R. 1984. Diversity and adaptive radiations of Australian desert lizards. Pages 371-376 in M. Archer, and G. Clayton, editors. Vertebrate zoogeography and evolution in Australasia. Hersperian Press, Perth, Australia.
• Short, J., and A. Smith. 1994. Mammal decline and recovery in Australia. Journal of Mammalogy 75(2): 288 – 297.
• Specht, R.L. 1972. The vegetation of South Australia (2nd Edition). Government Printer, Adelaide, Australia. ISBN: 0724318607
• Strahan, R., editor. 1995. The Mammals of Australia. Reed Books, Sydney, Australia.
• Thackway, R., and I.D. Cresswell, editors. 1995. An Interim Biogeographic Regionalisation for Australia: a framework for establishing the national system of reserves, Version 4.0. Australian Nature Conservation Agency, Canberra.
• Van Oosterzee, P. 1991. The Centre: the natural history of Australia’s desert regions. William Heinemann/Reed Books, Sydney, Australia.

Country Profile

Introduction

Mexico’s economy continued to experience strong growth in 2005, with gross domestic product (GDP) increasing by 3.0 percent in 2005, after growing by 4.4 percent in 2004. This growth is a sharp contrast to the earlier part of the decade, when Mexico’s GDP growth was very small or negative. A combination of high global oil prices and economic recovery in the United States has driven the economic recovery in Mexico.

The oil sector is a crucial component of Mexico’s economy. While its importance to the general Mexican economy has declined, the oil sector still generates over 10 percent of the country’s export earnings and one-third of government revenues. Another important part of the Mexican economy is the maquiladora sector, consisting of manufacturing plants located near the U.S. border. The maquiladora plants import raw materials from the United States, and then re-export the finished products duty free to the U.S. Other key economic sectors include the nonfuel mining sector and the manufacturing of automobiles and machine tools.

In July 2006, Felipe Calderon was elected as Mexico’s new president. The results of the election could have an important effect on the country’s energy sector, due to the strong state presence in the sector. According to press reports, Calderon has talked of allowing private companies to participate in new upstream energy projects, which could help stem Mexico’s declining crude oil production and lessen natural gas imports. In December 2006, Calderon appointed Jesus Reyes Heroles, a former energy minister and ambassador to the United States, as the new head of state oil monopoly Pemex, and Georgina Kessel as Energy Secretary.

Oil

According to the Oil and Gas Journal (OGJ), Mexico had 12.9 billion barrels of proven oil reserves as of January 1, 2006, the third-largest amount of conventional crude oil reserves in the Western Hemisphere. Most reserves consist of heavy crude oil varieties, with a specific gravity of less than 25° API. The largest concentration of remaining reserves occurs offshore in the southern part of the country, especially in the Campeche Basin.

Mexico is the fifth-largest producer of oil in the world. The country produced an average of 3.7 4 million barrels per day (bbl/d) of total oil liquids during 2006, a 1.2 percent decline from 2005 and a 2.5 percent decline from 2004. Of Mexico’s oil production, about 88 percent was crude oil and condensate, the rest consisting of natural gas liquids (NGL) and refinery gain. Many analysts believe that Mexican oil production has peaked, and that the country’s production will continue to decline in the coming years. EIA forecasts that Mexico will produce 3. 6 million bbl/d of oil in 2007, down from 3.8 million bbl/d in 2005 and 3.7 million bbl/d in 2006, mainly driven by declining production at its super-giant Cantarell field (please see below for a more detailed discussion of Cantarell).

Mexico’s proven reserves have declined in recent years. According to state-owned Pemex, Mexico’s reserves/production ratio (based on previous-year production levels) fell from 20 years in 2002 to 10 years in 2006. Analysts believe that Pemex does not have sufficient funds available for exploration and investment to reverse the decline, owing to high financial burdens placed upon the company by the Mexican government.

Sector Organization

The Mexican constitution provides that the Mexican nation owns all hydrocarbon resources in the country. In 1938, Mexico nationalized its oil sector, creating Petroleos Mexicanos Pemex) as the sole oil operator in the country. In 1992, Pemex divided into four operating subsidiaries: Exploration and Production, Gas and Basic Petrochemicals, Petrochemicals, and Refining. Pemex is the largest company in Mexico and one of the largest oil and natural gas companies in the world.

Pemex faces a variety of challenges in increasing its oil exploration and production (E&P) activities. First, Pemex has a complicated relationship with Mexico’s federal government. Pemex has been a steady source of funds for the government, sending an estimated 60 percent of its revenues to the federal government in 2005. In addition, Mexico’s Congress must approve Pemex’s budget each year. This has the effect of constraining Pemex’s ability to fund additional E&P investments. In the years that Pemex generated above-average revenues, the federal government took a larger stake of these earnings through taxes. Conversely, in years that Pemex generated below-average revenues, Congress cut Pemex’s E&P budget to make up for government deficits. Another source of revenue for Pemex is the Proyectos de Impacto Diferido en el Registro del Gasto (PIDIREGAS) scheme, whereby Pemex can finance new infrastructure projects through partnerships with private contractors.

These fiscal imbalances have led to Pemex carrying a high debt load. According to its 2005 financial statements, Pemex held $46 billion in long-term debt and an additional $34 billion in liabilities it faces for employee pensions. The mounting debt load could hinder Pemex’s access to international capital markets and prohibit increased spending on exploration and production.

Exploration and Production

Most of Mexico’s oil production occurs in the Gulf of Campeche, located off the south-eastern coast of the country in the Gulf of Mexico. In 2005, this area accounted for 73 percent of Mexico’s total crude oil production. There are other important production centers in onshore basins in the northern and southern parts of the country.

The Cantarell oil field, located in the Gulf of Campeche, is one of the largest oil fields in the world. In 2005, Cantarell produced 2.0 million bbl/d of crude oil, or 60 percent of the national total. The field consists of four major subfields: Akal, Nohoch, Chac, and Kutz. Production at Cantarell began in 1979, but production began to decline due to falling reservoir pressure. In 1997, Pemex developed a plan to reserve the field’s decline by injecting nitrogen into the reservoir to maintain pressure. The plan was a great success, with production at Cantarell in 2004 double the level seen in 1995. Other expansion plans at the field should continue to add incremental production increases: Pemex is currently developing the untapped Sihil field, located beneath Cantarell, which contains an estimated 400 million barrels of recoverable reserves.

However, Pemex has warned that Cantarell production has now entered a stage of long-term decline. According to Pemex, Cantarell produced 2.14 million bbl/d of crude oil during Jan-Sept 2004, versus 2.06 million bbl/d in 2005 and 1.85 million bbl/d in 2006 during the same period. Cantarell production will likely continue to decline by an estimated 14 percent per year going forward, despite any incremental gains by incorporating additional satellite fields.

The two other major oil production centers in the Gulf of Campeche are Ku-Maloob-Zaap (KMZ) and Abkatun-Pol-Chuc. Located adjacent to Cantarell, the KMZ complex produced 321,700 bbl/d of crude oil in 2005. Production at the field has risen by 50 percent over the past decade, and Pemex hopes that continued development of the field will replace some of the decline in Cantarell production. Off the coast of Tabasco state, the Abkatun-Pol-Chuch facility produced 299,800 bbl/d of crude oil in 2005. Production there has declined steadily, down over 50 percent from 1996.

Important onshore production centers in the southern part of the country include Bellota-Jujo and Samaria-Luna. There is less crude oil production in the northern part of the country, which produced only 8 3,5 00 bbl/d of crude oil production in 2005; the largest field in the North is Poza Rica.

Increasing Investment in Exploration and Production

In order to offset declining production at Cantarell, Pemex hopes to expand production at the KMZ field complex. By pursuing a nitrogen re-injection program similar to the one used at Cantarell, Pemex hopes to increase production at KMZ to 800,000 bbl/d by 2010. There is some evidence that these expansion plans are already beginning to show returns: according to Pemex, production at KMZ during Jan-Sept 2006 was almost 30 percent higher than production during the same period a year ago, though some of this increase could be attributed to lower-than-average production in 2005 due to heightened hurricane activity in the Gulf of Mexico. Another source of new crude oil production is Pemex’s Crudeo Ligero Marino project, which aims to increase offshore production of lighter crude varieties by 250,000 bbl/d by 2010.

Regarding new production assets, Pemex has started development of the onshore Chicontepec project, located northeast of Mexico City. Chincotepec contains an estimated 6.5 billion barrels of provable reserves. As of the end of 2004, Pemex reported that it had drilled 93 exploratory and 1,004 development wells in the area. However, the Chincotepec project is still in the very early stages of development, and there are no solid estimates available as to its full production potential.

Crude Varieties

Most of Mexico’s crude oil production consists of heavy crude varieties. During 2005, 72 percent of the country’s crude oil production was of Maya, which averages 22° API and 3.5-4.0 percent sulfur content. The country also produces two lighter crude streams, Isthmus (34° API) and Olmeca (39° API). In general, Mexico retains most of the lighter crude streams for domestic consumption and exports the bulk of its Maya production to the U.S. Gulf Coast, which has the sophisticated refining capacity necessary to process these heavy crudes.

Oil Exports

In 2005, Mexico exported 1.82 million bbl/d of crude oil. Of this amount, 90 percent went to the United States. Mexico is consistently one of the top three exporters of crude oil to the United States, along with Canada, Saudi Arabia, and Venezuela.

Pipelines

Pemex operates an extensive pipeline network in Mexico that connects major production centers with domestic refineries and export terminals. This network consists of over 453 pipelines spanning 2,900 miles, with the largest concentration occurring in the southern part of the country.

Downstream

According to the Oil and Gas Journal (OGJ), Mexico has six refineries, all operated by Pemex, with a total refining capacity of 1.68 million bbl/d. The largest facility in the country is the 330,000-bbl/d Salina Cruz facility. Pemex also controls 50 percent of the 334,000-bbl/d Deer Park refinery in Texas.

Despite its status as one of the world’s largest crude oil exporters, Mexico is a net importer of refined petroleum products. In 2005, Mexico imported 333,7000 bbl/d of refined petroleum products, while exporting 187,100 bbl/d. Of these imports, gasoline represented 51 percent. A resumption of brisk economic growth is one cause for the increase in refined product imports. Pemex has stated that it needs to spend at least $19 billion over the next eight years in order to make up for domestic shortfalls in gasoline production. The company has recently completed a series of refinery upgrades, and additional capacity should become available by 2008.

Natural Gas

According to the Oil and Gas Journal (OGJ), Mexico had 16.0 trillion cubic feet (Tcf) of proven natural gas reserves as of January 2006. According to Pemex, the Southern Region of the country contains the largest share of proven reserves. However, the Northern Region will likely be the center of future reserves growth, as it contains almost ten times as many probable and possible natural gas reserves as the Southern Region. According to EIA, Mexico produced 1.46 Tcf of natural gas in 2004, up from 1.40 in 2003. In addition, the country consumed 1.78 Tcf of natural gas in 2004. Preliminary data from Pemex indicate that Mexico produced 1.62 Tcf of natural gas in 2005.

Mexico’s natural gas production has grown in recent years, following steady declines during the late 1990s. During that time, natural gas consumption has grown steadily, driven mostly by the electricity sector, whose share of total natural gas consumption increased from 16 percent in 1994 to 33 percent in 2004. On the other hand, Pemex itself is the single largest consumer of natural gas, representing 43 percent of domestic consumption in 2004. As a result of the domestic shortfall in natural gas production, Mexico imported 766 million cubic feet per day (MMcf/d) of natural gas in 2004 and 480 MMcf/d in 2005.

Sector Organization

State-owned Pemex holds a monopoly on natural gas exploration and production in Mexico. However, there is some private participation in ancillary services that support Pemex operations. The Mexican government opened the downstream natural gas sector to private operators in 1995, though no single company may participate in more than one industry function (transportation, storage, or distribution). It also created the Energy Regulatory Commission (CRE) to monitor the sector. CRE has awarded permits for natural gas distribution to Gas Natural, Tractebel, Gaz de France, Sempra Energy, Kinder Morgan, TXUEnergy, Grupo Diavaz, and Grupo Imperial.

Participation by Private Operators in the Upstream Sector

Mexico’s constitution restricts private operators in the upstream natural gas sector. However, Pemex introduced multiple service contracts (MSC) in an attempt to increase non-associated natural gas production. Under an MSC, Pemex can hire a private contractor (including both foreign and domestic firms) to conduct production activities in proven reserve areas, for which Pemex pays cash for these services. At no time do these private operators gain ownership rights over the natural gas they produce, a provision to ensure compatibility of the MSC with Mexico’s constitution.

Despite the misgivings of some Mexican politicians who questioned the legality of MSCs, Pemex launched the first MSC bidding round in July 2003. The company awarded five blocks in the Burgos Basin to international and domestic operators: Repsol-YPF (Spain) received the Reynosa-Monterrey block; Petrobras (Brazil), Teikoku Oil (Japan), and Grupo Diavaz (Mexico) received the Cuervito and Fronterizo blocks; Tecpetrol (Argentina), Industrial Perforadora de Campeche (Mexico) received the Mision block; and Lewis Energy (U.S.) received the Olmos block. Pemex hoped that the five deals would bring $4.5 billion in new investment to the Burgos Basin.

Pemex held a second MSC bidding round in July 2004. The round included acreage in the Burgos Basin that did not receive bids in the first round (Padera-Anahuac and Ricos blocks) and newly available areas of the Sabinas Basin (Pirineo and Monclova blocks). Results from the round were mixed. Pemex awarded the Padera-Anahuac block to consortium of two Mexican oil services companies in November 2004 and the Pirineo block to a consortium of seven Latin American firms in February 2005. However, the Ricos block received no bids, while Pemex later canceled a successful bid on the Monclova block by a consortium of two U.S. and three Mexican companies.

The MSCs seem to be a step towards the gradual opening of Mexico’s upstream natural gas sector. Pemex hopes that private investment in the MSC blocks will eventually increase the country’s natural gas production by 600 million cubic feet per day (MMcf/d). However, this increased production will not fully mitigate increasing natural gas consumption, meaning that Mexico will depend upon increased production by Pemex or imports for the foreseeable future.

Exploration and Production

Mexico’s natural gas production is relatively spread throughout the country. Onshore fields in the northern part of the country represented 38 percent of Mexico’s natural gas production in 2005, with onshore fields in the south contributing 29 percent, and offshore fields in the Gulf of Campeche represented the remainder. The single largest field is Cantarell, in the Gulf of Campeche, which produced 720 million cubic feet per day (MMcf/d) in 2005. Other major fields include Caan (206 MMcf/d), Culebra (172 MMcf/d), and Muspac (115 MMcf/d).

Pipelines and Storage

Pemex operates over 5,700 miles of natural gas pipelines in Mexico. The company has eleven natural gas processing centers, which produced 436,000 bbl/d of natural gas liquids (NGLs, including condensates) and 215,000 bbl/d of liquefied petroleum gas (LPG) in 2005. Pemex also operates most of the country’s natural gas distribution network, which supplies processed natural gas to consumption centers. The natural gas pipeline network includes twelve active connections with the United States.

TransCanada won a contract in June 2005 from Mexico’s Comision Federal de Electricidad (CFE) to build, own, and operate the 80-mile Tamazunchale Pipeline. The system will extend from the Pemex natural gas processing facility in Naranjos to a gas-fired power plant near Tamazunchale. The pipeline will have an initial capacity of 170 million cubic feet per day (MMcf/d), but the contract has an option to increase capacity to 430 MMcf/d, if CFE constructs additional gas-fired power plants in the area. TransCanada planned to bring the project online by the end of December 2006. In July 2006, CRE awarded a permit to U.S.-based Tidelands for the construction of the 1-Bcf/d Terranova Oriente bi-direction pipeline, which would connect a proposed storage facility to the U.S. and Mexican grids.

Liquefied Natural Gas (LNG)

There is a single operating liquefied natural gas (LNG) terminal in Mexico, and one other currently under construction. In addition, there are several more plants in various stages of the planning process. Many of the facilities are near the U.S.-Mexico border in Baja California, with the intention to supply markets in both countries.

East Coast

Altamira, a joint venture of Royal Dutch Shell (50 percent), Total (25 percent), and Mitsui (25 percent) received its first LNG cargo in August 2006. The plant, located in Tamaulipas state, has an initial capacity of 500 million cubic feet per day (MMcf/d), with plans to increase the project to a peak capacity of 1.3 billion cubic feet per day (Bcf/d). CFE has signed a 15-year contract to purchase the entire output of the terminal for 15 years. Shell plans to supply the Altamira terminal with LNG from Nigeria.

West Coast

The Costa Azul project, near Ensenada, is currently under construction. Project leader Sempra Energy plans to begin operations in late 2008, with a peak capacity of 1 billion cubic feet per day (Bcf/d). Royal Dutch Shell had originally obtained a permit to build its own LNG receiving terminal in the area, but later decided to buy into a 50 percent share of Sempra’s project instead. During the first several years of operations, Shell plans to source its LNG supply from its Sakhalin-II project, then later from Chevron’s Gorgon LNG project in Australia. For its part, Sempra Energy has signed a supply deal with BP’s Tangguh project in Indonesia. Most of the natural gas will supply domestic customers in northwest Mexico, but some natural gas could also be exported to California or Arizona.

Chevron plans to build an offshore LNG receiving terminal near the Coronado Islands. The plant will have an initial capacity of 700 MMcf/d, later growing to 1.4 Bcf/d. Mexico’s federal government has approved the project, but Chevron must still obtain permission from local regulators. There has been some opposition to the project from local residents and environmental activists from both Mexico and the United States. Chevron could supply the project from its Gorgon LNG export terminal in Australia.

In February 2004, Repsol-YPF won a concession to build an LNG receiving terminal in Lazaro Cardenas, Michoacan state. According to Repsol-YPF, the plant should come online in 2007 with an initial capacity of 390 million cubic feet per day (MMcf/d), eventually ramping up to 1.0 Bcf/d. Tractebel LNG, a subsidiary of Suez, also has plans to build an LNG terminal at Lazaro Cardenas. The company has begun the preliminary development of the project, with startup slated for 2009. In 2003, Tractebel LNG signed a memorandum of understanding (MOU) with Peru LNG to supply the terminal.

In May 2004, DKRW signed an agreement with the state government of Sonora to build a 1.3-Bcf/d LNG receiving terminal at Puerto Libertad, on the Gulf of California. DKRW purchased land for the project in August 2004, and the plant could begin operations by 2009. The company has signed an agreement with El Paso to develop a pipeline system to distribute the natural gas within Sonora and to the United States.

In June 2006, CFE released the first public tenders for the construction of an LNG receiving terminal at the port of Manzanillo. The tender calls for the terminal to supply 500 MMcf/d of natural gas for 15 years, possibly expanding to 1.5 Bcf/d. CFE has targeted 2011 for the commencement of the plant’s operations.

Coal

Mexico had 1.3 billion short tons (Bst) of recoverable coal reserves in 2004. The majority of the coal reserves are in the state of Coahuila, in the northeastern part of the country. Mexico produced 12.5 million short tons (MMst) in 2004, while consuming 17.5 MMst. Imports come from the United States, Canada, Colombia, and Australia. Most coal consumption is for electricity generation, followed by steel-making. According to the Mexican government, the contribution of coal-fired power plants to the country’s electricity generation was 23 percent in 2005.

Electricity

Mexico had 49.6 gigawatts of installed generating capacity in 2004. The country generated 242.4 billion kilowatt-hours (Bkwh) of electric power in 2004. Of the total generated, 82 percent came from conventional thermal sources, 10 percent came from hydroelectricity, 4 percent came from nuclear power, and 4 percent came from other renewables. Mexico’s Energy Secretariat (Sener) forecasted that Mexico will need to spend $51 billion over the next decade to meet growing demand for electricity, entailing the construction of 28 gigawatts of additional generating capacity.

Mexico consumed 224.6 Bkwh of electric power in 2004. Demand for electric power has increased steadily over the last decade, and Sener forecasts that demand will grow by 6 percent per year for the next ten years. The regions that will see the largest increase are the Northeast, Baja California, and the Yucatan Peninsula, mainly due to growth in manufacturing and tourism.

Sector Organization

State-owned Comision Federal de Electricidad (CFE) is the dominant player in the generation sector, controlling about two-thirds of installed generating capacity. CFE also holds a monopoly on electricity transmission and distribution outside of Mexico City and some other municipalities; within those areas, state-owned Luz y Fuerza Centro (LFC) holds a monopoly on distribution activities. The Comision Reguladora de Energia (CRE) has principle regulatory oversight of the electricity sector.

Changes to Mexican law in 1992 opened the generation sector to private participation. Any company seeking to establish private electricity generating capacity or begin importing/exporting electric power must attain a permit from CRE; according to CRE, independent power producers (IPPs) control 9.3 gigawatts of generating capacity in the country. CFE also operates Mexico’s national transmission grid, which consists of 27,000 miles of high voltage lines, 28,000 miles of medium-voltage lines, and 370,000 miles of low-voltage distribution lines.

Conventional Thermal

In the national electricity system (excluding private generators), fuel oil is the dominant feedstock for conventional thermal electricity generation, followed by coal: in 2004, Sener reported that fuel oil represented 44 percent of the thermal feedstock for the country’s conventional thermal generation capacity, while natural gas represented 33 percent and coal represented 12 percent. However, nearly all private generators operate capacity fired by natural gas. As a result, the general trend in overall feedstock consumption has seen a decline in petroleum-based fuels and a growth in natural gas and coal.

Mexico will need to bring additional generating capacity online over the next several years in order to meet projected increases in demand. Natural gas-fired turbines will likely supply most of this capacity. In 2003, Union Fenosa, Sempra Energy, Transalta, and InterGen all commissioned new power plants, representing over 3,000 megawatts (MW) of generating capacity. In 2004, Iberdrola completed its gas-fired Altimira III and IV plants, with combined capacity of 1,040 MW; the company also completed Altamira V (1,200 MW) in October 2006. According to CRE, companies in Mexico plan to bring 1,600 MW of new generating capacity online in 2007, which includes independent power producers (Iberdrola’s 1,100-MW Tamazunchale), autoproducers (440 MW), and cogeneration (85 MW). In 2008, Generadora del Desierto plans to complete construction of a 600-MW, combined-cycle, gas-fired plant that will export power to the United States.

Other Sources

Mexico has a single nuclear power plant, the 1,400-MW Laguna Verde nuclear reactor in Veracruz, operated by CFE. In January 2007, CFE planned to issue a $300 million tender to increase the generating capacity of Laguna Verde by 20 percent. In November 2006, Mexico’s Energy Ministry recommended that the country build a second nuclear power plant in the country, which could help diversify the country’s electricity mix away from oil and natural gas.

Hydroelectricity supplied 10 percent of Mexico’s electricity generation in 2004. The largest plant in the country is the 2,400-MW Manuel Moreno Torres in Chiapas. Mexican engineering firm ICA is nearing completion of the 750-MW El Cajon hydroelectric dam in Nayarit; CFE began initial testing of the facility in November 2006.

CFE operates two wind power facilities, La Venta and Guerrero Negro, with combined capacity of 3 MW. In August 2005, CFE awarded a contract to a Spanish consortium of Iberdrola and Gamesa Eolica to increase the capacity of the La Venta facility by 80 MW. Mexico also has 960 MW of geothermal capacity spread amongst seven plants. The Cerro Prieto complex consists of four plants, with a combined capacity of 720 MW.

International Trade

Mexico has an active electricity trade with the United States. Mexico exported 1,600 megawatt-hours (MWh) of electricity to the United States in 2005, while importing 470 MWh. Many companies have built power plants near the U.S.-Mexico border with the aim of exporting all generation to the United States. CRE has issued permits for private companies to build up to 2,200 MW of generation capacity dedicated to export to the U.S. market, the largest of which is Sempra Energy’s 700 MW plant near Mexicali.

There are plans to connect Mexico with Guatemala and Belize as part of the Sistema de Interconexion Electrica para America Central (SIEPAC). The plan is part of a larger effort, the Plan Puebla-Panama, to create an integrated electric power market in Central America.

Environment

The Mexican Health Secretariat says that more than a third of Mexico's disease burden is the result of environmental factors, the most serious of which is air pollution. Though especially pressing in the country's largest cities (e.g. Mexico City, Guadalajara, and Ciudad Juarez), air pollution also has intensified along the border with the United States, because of the growing number of factories located there and increased truck traffic. Mexico City has the worst air pollution in the country and ranks among the most polluted cities in the world.

Further Reading

• Comisión Federal de Electricidad (CFE)
• EIA: Country Information on Mexico
• Iberdrola
• Sempra Energy LNG Corporation
• Union Fenosa