ONEOK Partners works on gas pipeline expansion to serve Mexico power market

ONEOK Partners LP (NYSE: OKS) on July 30 announced plans to invest $70 million to $100 million to expand its ONEOK WesTex Transmission (ONEOK WesTex) intrastate natural gas pipeline system by increasing its throughput capacity by 260 million cubic feet per day (MMcf/d) of natural gas by the first quarter 2017.

“This expansion project is complementary to our recently announced Roadrunner Gas Transmission pipeline project. These integrated assets will provide markets in Mexico access to upstream supply basins in West Texas and the Mid-Continent, which adds location and price diversity to their supply mix,” said Terry K. Spencer, president and chief executive officer of ONEOK Partners.

The ONEOK WesTex expansion project, located in the Texas Panhandle and the Permian Basin in West Texas, includes the construction of two new compressor stations and upgrades or expansions to three existing compressor stations. Total added horsepower is expected to be approximately 38,800. ONEOK WesTex, which had qualifying open season bids in excess of 500 MMcf/d, will utilize 240 MMcf/d of existing capacity and create additional capacity by expanding its system by 260 MMcf/d. About 90% of this total available capacity was subscribed with firm take-or-pay agreements through an open season process that ran from Feb. 2, 2015, to Feb. 27, 2015.

The Comision Federal de Electricidad (CFE), Mexico’s national electric utility, has agreed to be the anchor shipper and has subscribed to firm capacity (take-or-pay) for a 25-year term. CFE generates, distributes and markets electric power for almost 35.3 million customers in Mexico. According to the CFE, this long-term transportation position supports CFE’s strategy to bring natural gas to Mexico, which is a cleaner and less expensive fuel alternative for power generation.

“Through the Roadrunner project, we are pleased to have developed a strategic relationship with the CFE. This expansion of ONEOK’s WesTex pipeline system will deepen this relationship while adding an additional source of fee-based earnings to ONEOK Partners,” continued Spencer.

The capacity is available in two phases:

  • The first phase of capacity is approximately 100 MMcf/d and will be available in the first quarter 2016.
  • The second phase of capacity is approximately 400 MMcf/d and will be available in the first quarter 2017.

ONEOK WesTex Transmission is an intrastate natural gas pipeline system operating within Texas, consisting of approximately 2,227 miles of pipeline. This project is subject to receipt of customary governmental approvals, ONEOK noted.

The Roadrunner Gas Transmission pipeline project is a 50-50 joint venture with a subsidiary of Fermaca Infrastructure B.V. (Fermaca), a Mexico City-based natural gas infrastructure company that will transport natural gas from the Permian Basin in West Texas to Mexico. It includes approximately 200 miles of new, 30-inch diameter pipeline currently designed to transport up to 640 million cubic feet per day (MMcf/d) of natural gas, with up to 570 MMcf/d to be transported to Mexico’s growing markets. The pipeline will extend from ONEOK WesTex’s natural gas pipeline system at Coyanosa, Texas, west to a new international border-crossing connection at the U.S. and Mexico border near San Elizario, Texas.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.