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Mexico’s Second Capacity Auction on CFE NatGas Import Pipelines Falls Flat

A second auction to release capacity on Mexican power utility CFE’s cross-border natural gas pipelines in West Texas once again drew no bids on Thursday.

This time, two companies registered as participants, but in the end neither presented any bids for the 2.2 Bcf/d of capacity available along pipelines that transport gas from the Waha region across the border to Chihuahua state, according to Mexican national pipeline system operator Cenagas. The operator organized the auction on behalf of the utility’s subsidiary CFE Internacional.

The open season was a repeat of an auction held on July 10, which also failed to draw any bids. At the time, Cenagas said companies had shown interest in the auction but none registered to participate.

“There’ve been a lot of things that have changed in a very short period of time, and often the markets take time to react,” Mexico Evalua’s Fernanda Ballesteros told NGI on Thursday, before the auction concluded. She coordinates the competition and regulations program at the public policy think-tank.

Cenagas officials earlier in the week had said they expected shippers to participate in Thursday’s auction, which offered contracts with one-year terms beginning Sept. 1 to the end of August 2018.

On Twitter, the operator said the next auction would offer capacity on daily terms. The auction -- scheduled for Aug. 12 for flow on Aug. 14 -- would offer 40 MMBtu/d released by CFE on the NET Mexico pipeline, which carries gas from the Agua Dulce hub in South Texas near Corpus Christi to the Texas border town Rio Grande City.

Cenagas also said a third annual auction for CFE’s import pipelines would be held on Sept. 10.

The capacity offered on Thursday included 1.2 Bcf/d (at an exit rate of 14 cents/MMBtu) on the Trans-Pecos pipeline, which crosses the border at Presidio, TX; 700 MMcf/d (19 cents/MMbtu) on Comanche Trail Pipeline LLC’s San Elizario Crossing project in El Paso County, TX; and 293 MMcf/d (47 cents/MMbtu) on the Roadrunner pipeline, also near San Elizario.

Energy Transfer Partners LP sponsors the Trans-Pecos and Comanche Trail pipelines, both of which went into service earlier this year. The two projects interconnect in Mexico, respectively, with the 1.35 Bcf/d Ojinaga-El Encino and 1.22 Bcf/d San Isidro-Samalayuca pipelines. Oneok Inc., in a joint venture with Mexico City-based Fermaca, built the Roadrunner project, which connects to latter’s Chihuahua Corridor (Tarahumara) pipeline in Mexico.

Cenagas has signed agreements with CFE Internacional and Mex Gas Supply (MGS), a subsidiary of national oil company Petroleos Mexicanos (Pemex), to administer their excess import capacity.

“The biggest pressure right now is on the available infrastructure in the country, and that could be the main barrier for new players,” Ballesteros said. “They’re now allowed to use that excess pipeline capacity of the state companies CFE and Pemex, but we are seeing some of the challenges of putting what’s on paper into practice.

The operator held its first open season for capacity on Pemex’s cross-border pipelines in February, assigning 29% of the 735 MMcf/d offered to one supplier, BP plc’s Mexico subsidiary, and two large industrial end-users, Industria del Alcali, and Fabrica de Envases de Vidrio del Potosi. The winners each paid the base rate of 31 cents/MMBtu.

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