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Gas Natural del Noroeste Prevails in CFE Tender for Topolobampo Branch Pipeline

Gas Natural del Noroeste SA de CV (GNN) won a project tender for a branch pipeline to supply fuel to natural gas-fired power plants in northwestern Mexico.

Mexico’s state power company, the Comision Federal de Electricidad (CFE), awarded the pipeline on Friday. GNN and two other bidders had submitted technical and economic proposals at the beginning of October.

Under the tender rules, GNN has until Wednesday to present the legal documentation required prior to the contract signing, which is scheduled for Oct. 30.

The project entails building a 32-kilometer (20-mile), 24-inch lateral pipeline that connects with two combined-cycle power plants (CCGT) near Los Mochis, on the Gulf of California coast in Sinaloa state.

The pipeline is anchored by 27-year, 280 MMcf/d transportation agreement with CFE.

GNN, part of the local conglomerate Grupo SIMSA, won the tender with a US$21.1 million bid. It narrowly beat out the Mexican unit of Sempra Energy, Infraestructura Energetica Nova (IEnova), which bid $21.9 million. Infraestructura Energetica Monarca, a subsidiary of TransCanada Corp., came in third with a $30.4 million offer.

Like in previous pipeline tenders organized by CFE, all of the bids were well below the state company’s initial $55 million price tag estimate for the project, which is expected to go into service next July.

The two generators on the pipeline, Topolobampo II (890 MW) and Topolobampo III (766 MW), are scheduled to start commercial operations in 2019 and 2020, respectively. Spain’s Iberdrola SA is building both plants, which would operate as independent power producers for CFE.

The Topolobampo II plant is to reserve 145 MMcf/d of firm capacity on the pipeline, while the other CCGT is to take 135 MMcf/d, according to bidding documents.

The branch line would transport gas from TransCanada’s 560-kilometer El Encino-Topolobampo pipeline, which went into partial service earlier this year. The TransCanada line, in turn, interconnects with IEnova’s 1.35 Bcf/d Ojinaga-El Encino system, which ships in U.S. natural gas from the 1.4 Bcf/d Trans-Pecos pipeline in Presidio, TX.

The private pipelines under construction in the northwest are part of a ongoing expansion of Mexico’s natural gas transport system. The country’s main network, the Sistrangas system, currently does not serve the country’s northwestern states.

CFE is anchoring most of the new pipeline projects with long-term transport contracts to supply power plants. In the northwest, the company has sponsored two other CCGTs, both in Empalme, Sonora state, about 190 miles to the northwest of the Topolobampo plants.

IEnova won a tender to build the branch pipeline for the two Empalme CCGTs in May 2016, and placed the lateral into service during the second quarter of this year.

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