"This speaks to how extensive the energy cooperation is between these countries," said Yuen. "It's almost as if the borders aren't really there. If you look at Canada and the U.S., they are part of the same cross-border electricity reliability councils for some regions. … It's not just natural gas, it's power lines, hydroelectricity and those are long-standing agreements and trade."
The U.S. energy boom has also been Mexico's gain, and Mexico, in turn, has changed the dynamic for the U.S. gas market. "Without exports to Mexico, the U.S. market would not be where we are right now. It would be way lower. Producers may not be drilling as many wells. Without Mexico, it would be tough," said Yuen.
According to Citigroup, new cross-border pipeline capacity of 7 billion cubic feet per day is expected to come on line by 2020, adding to the current capacity of 6 to 7 billion cubic feet per day. Energy Transfer Partners, seeking to build the controversial Dakota Access pipeline in North Dakota, has approval from the Obama administration to build two pipelines to take gas from Texas to Mexico.
Trump's pick for energy secretary, Perry, sits on the board of Energy Transfer Partners.
Citigroup said the added pipeline capacity will come as Mexico undergoes a dramatic build out of power generation capacity and transmission lines.Mexico's energy secretary, speaking at an industry conference in Houston last spring, said there is a 75 percent savings from U.S. natural gas.
"Mexico had a pretty high cost of power in the past, because the country used oil as a power-generation fuel, and natural gas there is more expensive because of pipeline bottlenecks," said Yuen. "We would not be surprised if exports to Mexico by 2020 by pipeline would still be larger than U.S. LNG exports." Liquefied natural gas is currently being shipped from just one terminal in the United States, but the capacity is expected to expand.
According to the U.S. Department of Energy, the U.S. exported 4.2 billion cubic feet per day of natural gas to Mexico, through pipelines in August. The average daily exports through August were running at a yearly average of 3.6 billion cubic feet per day, 25 percent above last year and 85 percent above the five-year average. The U.S. produces 90 billion cubic feet per day of natural gas and consumes about 70 billion cubic feet, according to the Energy Information Administration.
Mexican demand can also help offset weather-related declines in U.S. demand, and for that reason it has helped support the price of gas.
"Mexico can serve as a balance," said Michael Cohen, head of commodities energy research at Barclays. "It's important regionally because right now you have a whole bunch of growth in production in the Northeast, and now you have constraints on that production getting out. The fact you have Mexican demand increases can balance out where the supply might come from in the medium term."
Mexico, in fact, now imports almost as much natural gas from the U.S. as it produces, and the U.S. in recent months has become a net exporter of natural gas for the first time in a sustainable way.