Sempra, TransCanada partner on $2.1bn gas pipeline project in Mexico

Sempra Energy (NYSE: SRE) announced June 13 that Infraestructura Marina del Golfo (IMG), a joint venture between its Mexican unit Infraestructura Energética Nova, S.A.B. de C.V. (IEnova) (BMV: IENOVA) and TransCanada Corp., has been awarded a transportation contract by the Comision Federal de Electricidad (CFE) to build, own and operate an approximately 497-mile, $2.1 billion natural gas pipeline in Mexico.

The 42-inch diameter South Texas-Tuxpan pipeline will have a capacity of 2.6 billion cubic feet per day and has an anticipated in-service date in late 2018. The pipeline will transport natural gas from a point near Brownsville, Texas, to Tuxpan, Veracruz, where it will provide natural gas to new and existing CFE power plants that currently use fuel oil. The project is contracted by CFE, owned by the Mexican government, under a 25-year capacity contract denominated in U.S. dollars.

IMG will be responsible for implementing the project, including permitting, acquiring land and rights of way, engineering, procurement, construction, financing, operation and maintenance. IEnova holds a 40% ownership of IMG’s joint venture.

“We are pleased with the results of the tender and look forward to continue to grow our presence in Mexico while helping the country meet its energy demand with new safe and reliable services,” said Mark Snell, president of Sempra Energy.

IEnova develops, builds and operates energy infrastructure in Mexico. As of 2015, the company had invested more than US$4 billion in operating assets and projects under construction in Mexico and is one of the largest private energy companies in the country. IEnova is the first energy infrastructure company to be listed on the Mexican Stock Exchange.

TransCanada Corp. (TSX, NYSE: TRP) said June 13 in its own announcement that the pipeline project will be supported by a 25-year natural gas transportation service contract for 2.6 billion cubic feet a day with CFE.

“We are extremely pleased to further our growth plans in Mexico with one of the most important natural gas infrastructure projects for that country’s future,” said Russ Girling, TransCanada’s president and chief executive officer. “This new project brings our footprint of existing assets and projects in development in Mexico to more than US$5 billion, all underpinned by 25-year agreements with Mexico’s state power company.”

The bid for the Sur de Texas–Tuxpan project was presented in partnership with IEnova. TransCanada will develop, operate and own 60% of this project, with IEnova owning 40 per cent of it. TransCanada expects to invest approximately US$1.3 billion in the partnership and anticipates an in-service date in late 2018.

The pipeline will begin offshore in the Gulf of Mexico, at the border point near Brownsville and end in Tuxpan, in the state of Veracruz. In addition to a connection with CENAGAS’s pipeline system in Altamira, the project will interconnect with TransCanada’s Tamazunchale and Tuxpan–Tula pipelines as well as with other transporters in the region.

The Sur de Texas–Tuxpan Pipeline is the most recent addition to TransCanada’s expanding portfolio in Mexico. In the last eight months, TransCanada was awarded the Tuxpan–Tula and the Tula–Villa de Reyes pipelines. Construction for these two pipelines is already in progress with the expectation of achieving in-service dates of 2018.

TransCanada operates a network of natural gas pipelines that extends more than 66,400 kilometers (41,300 miles), tapping into virtually all major gas supply basins in North America. TransCanada is one of the continent’s largest providers of gas storage and related services with 368 billion cubic feet of storage capacity.

Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2015 revenues of more than $10 billion.

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.