FERC approves 2.1 Bcf/d gas pipeline to Mexico

The Federal Energy Regulatory Commission has given final approval to NET Mexico’s plan to build a cross-border gas pipeline to serve fast-growing industri-al and power generation demand in Mexico. The FERC order made public Tues-day allows the subsidiary of NET Midstream to construct a 1,400 foot, 48 inch diameter pipeline with 2.1 Bcf/d of capacity from Starr County, Texas, under the Rio Grande River, to the Mexican border. The $2.7 million facility, with a De-cember 2014 in-service target, will be linked to a planned 120 mile, 42 inch diameter intrastate pipeline the company is building to transport gas from the Agua Dulce Hub in Nueces County, Texas, to the export facility, according to the order. The intrastate pipeline includes interconnections with six other Texas intrastate pipelines and four Texas processing plants, with eventual plans for two additional interstate pipeline links. FERC said the export facility was "necessary to meet the expanding fuel demand for power generation and industrial activity in Mexico: and promote trade between the two North American Free Trade Agreement countries.

Nearly 62 Bcf of US gas was exported to Mexico by pipeline in August, a 3.7% increase from August 2012 and an 85.9% jump from August 2010, when just over 33,300 Bcf was shipped across the border, according to the Energy Infor-mation Administration. Platts unit Bentek Energy has forecast that gas exports to Mexico will more than double in the next five years as big cross-border pipelines open and 17 related projects are built inside Mexico. This summer, Mexican President Enrique Pena Nieto called for opening Mexico to private energy in-vestment. NET Mexico’s project is anchored by a long-term firm gas transporta-tion agreement for up to 2.1 Bcf/d with MGI Supply, a subsidiary of Mexico’s state-owned Pemex Gas. The gas will be delivered into Mexico’s Los Ramones Pipeline, a joint venture of Pemex and Sempra International, which has yet to be built. In a statement Tuesday, Joe Gutierrez, NET Midstream’s co-president, called the FERC approval of a presidential permit "an important regulatory mile-stone for NET Mexico. "Development and financing of the pipeline is on sched-ule, with mainline construction beginning in the first quarter of 2014, and me-chanical completion in October," Gutierrez said.

Source: Platts Gas Daily