Cheap Permian Natural Gas Delivers On Both Sides Of The Rio Grande

Daniel Bustos, CEO of Mexico-based Esentia Energy Systems.

Exemption

Mexico has emerged as the primary beneficiary of the industrial nearshoring trend, as U.S.-based manufacturers look to insulate themselves from global supply chain shocks and the Trump administration strives to free those supply chains from Chinese dominance. Strong manufacturing growth in Mexico is creating a sustained demand for the reliable, affordable energy infrastructure that powers industrial operations. Fortunately for everyone, Permian Basin natural gas has emerged as a key tool to energize this trend.

How Natural Gas Drives Mexico’s Industrial Expansion

Mexico’s industrial expansion – particularly from private data center development– requires a dependable and affordable energy supply. With Mexico’s domestic natural gas production declining in recent years, industrial hubs and other demand centers in central and western Mexico are increasingly dependent on U.S. imports transported via pipelines. This dynamic makes Mexico based Esentia Energy Systems an important driver of Mexico’s economic development.

Esentia operates the only pipeline system bringing Permian-produced natural gas from the Waha interconnection hub and delivering it across the central western Mexico region. It is thus a critical asset enabling Mexico’s industrial expansion, positioning the company as infrastructure critical to the country’s economic growth potential rather than merely commercial pipeline assets.

“You have a country that is growing need of competitive energy. Not only Pemex production, but other local resources are dwindling,” Esentia CEO Daniel Bustos told me in a recent interview. “So, Mexico becomes this critical counterparty and it’s a relationship that has flourished.”

Esentia’s natural gas delivery system supplies much of central and western Mexico.

Esentia Energy Systems

Analysis by CBRE shows industrial real estate supply in the Bajio region of central Mexico growing steadily – with new supply in Q2 2025 increasing 6% compared to the previous year – and describes the region as a “pole of development with high growth potential.”

As is the case in the U.S., data centers are also driving rising demand in Mexico. Natural gas demand is particularly strong in states like Querétarowhich is home to 65% of Mexico’s installed data center capacity. Querétaro is encouraging data centers to contract directly with natural gas providers to pursue behind-the-meter generation, a niche Esentia is perfectly positioned to fill.

Mexico uses about 80% of its natural gas volumes for power generation, but Bustos points to rising industrial use, too. “The government expects natural gas to be one of the stars in growing the power production for the country. But we are seeing new industrial users, like fertilizers, for example,” he notes. “Mexico imports two and a half million tons of urea per year, just to give you an idea about the potential. It’s enormous potential.”

Mexico’s Largest Natural Gas Delivery System

Esentia’s system is the largest privately held interconnected gas system in Mexico, delivering low-cost gas from the Permian Basin directly into Central Mexico’s industrial high-demand areas that contribute approximately 32% of the country’s GDP. The company owns and operates a system of five pipelines, with an aggregated permitted capacity of 5.8 Bcf/d and a combined average throughput of 1.3 Bcf/d. As industrial expansion in Central Mexico grows, the company already has the infrastructure in place to meet demand, with plans for further expansion

Esentia controls the entire pipeline corridor from West Texas’ Waha hub to Mexico’s industrial centers, meaning competitors cannot sell Waha gas in Mexico without using Esentia’s infrastructure. Alternative delivery routes from other U.S. hubs are less desirable for off takers because their gas is traded at a higher premium.

The pricing advantage of bringing the gas in from the Waha hub – where gas consistently trades at a discount to index prices due to takeaway capacity constraints and persistent oversupply from North America’s most prolific basin – has been a key selling point for Bustos. “The way we see the Waha prices today is just a great marketing tool,” he says, “Because it focuses the attention of the decision makers in Mexico. They say, I don’t know how the future is going to look, but I need to get that.”

Expanding The Natural Gas Delivery System

Unlike international competitors who are limited to expanding through government contracts and partnerships, Esentia is positioned to grow via high-margin private customers, including data centers, mining operations, and industrial parks which are either already in operation or planned within the company’s service region.

The company’s current focus is on maximizing volume through diversified drivers of demand growth, fueling Esentia’s targeted expansion plans in Mexico’s heartland and industrial hubs. Longer term, the company is planning a large-scale expansion and targeting delivery to behind-the-meter power generation – for which developers will pay a premium – and untapped markets such as LNG export facilities and fertilizer production.

“Our expansion plan makes very good use of our existing system,” Bustos points out. “We built the system as five different independent pipelines. When you start operating that in an integrated way, there’s so many opportunities to debottleneck, and that’s exactly what we’re doing. We’ve already started the expansion – we’re already in construction.”

A Win-Win For The U.S. And Mexico

Esentia’s expansion will directly increase drilling and development activity for U.S. energy producers and exporters, both through increased demand from Mexican industrial customers as well as potentially unlocking an alternative export route to Pacific markets that avoids Panama Canal constraints.

Bustos also expects the expansion to boost U.S.-Mexico trade by $10 billion over the next 20 years. It’s a reality which he believes eases any concerns about this year’s pending renegotiation of the US/Mexico/Canada (USMCA) Trade Agreement.

WASHINGTON, DC – DECEMBER 05: Mark Carney, Prime Minister of Canada, Claudia Sheinbaum, President of Mexico, and U.S. President Donald Trump chat during the FIFA World Cup 2026 Official Draw at John F. Kennedy Center for the Performing Arts on December 05, 2025 in Washington, DC. The three national leaders will lead a renegotiation of the U.S./Mexico/Canada trade agreement later this year. (Photo by Patrick Smith/Getty Images)

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“We’re very excited about that renegotiation, because we can see it from both sides,” Bustos says. “Mexico is lucky that the Sheinbaum administration (led by President Claudia Sheinbaum) is really one of the most skillful at negotiating not only the visuals, but the meat of the bilateral relationship. This is not by luck. Her team is second to none. She has professionals with a lot of common sense, and we can see that on the other side, the Trump Administration is exactly the same.”

It all adds up to a unique situation, one in which Esentia’s pipeline network directly addresses priorities for both U.S. and Mexican leadership, customers, and energy security needs. The system supports U.S. energy export growth and global energy leadership – key pieces of the Trump Energy Dominance agenda – while simultaneously enabling Mexico’s manufacturing expansion and economic development. It’s a win-win for everyone, with abundant, affordable Permian Basin natural gas as the hub around which everything else revolves.