Gov. Doug Ducey on Dec. 19 signed a pact that will enable New Mexico to move its excess natural gas through Arizona to Sonora for eventual sale to Asia.
The deal provides a new market for New Mexico where Gov. Susana Martinez said her state has more natural gas than it can use on its own. And 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 liquified 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,” the governor 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 the agreement to cooperate is just that. Actual details, including a timeline and even a path for the pipeline, are not yet on the horizon.
And the agreement itself is valid for four years.
Ducey said, though, it is an important first step.
The governor acknowledged that in prior decades there have been shortages of natural gas which also led to price spikes. There even 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. And Ducey said that, to have maximum flexibility, Arizona is “going to continue to have an all-of-the-above philosophy around energy, with a preference for renewables.”
And 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 ten states in proven reserves, with nearly 14.4 trillion cubic feet when measured at the end of 2016.
A lot of what the agreement is about is logistics.
Right now any natural gas New Mexico wants to sell to Asia — and Taiwan in particular — goes through Houston. That means transporting the gas to the Gulf of Mexico where it is liquified to be put into ships which have to go through the Panama Canal, a process that adds time and cost.
Sending the gas by pipeline to Guayamas 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 amid the ongoing rhetoric of the Trump administration decrying what the president has said have been unfair trade deals with our southern neighbors. Ducey said to ignore all that.
“I think there’s a difference between rhetoric and actions,” he said.
“The actions that I’ve seen are the recent signings of the USMCA,” the governor continued, 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, though she declined to speculate on what that would produce in actual dollars or pesos.