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Texas-to-Mexico Nueva Era Natural Gas Pipeline Startup Delayed

Howard Energy Partners (HEP) cited a variety of reasons Wednesday for a delay in starting up the Nueva Era pipeline, which would transport natural gas produced in the Eagle Ford Shale to markets in northern Mexico.

Nueva Era Pipeline LLC, a joint venture between HEP and Mexico's Grupo Clisa, is developing the pipeline, which is to have 600 MMcf/d of transport capacity. The minimum 30-inch diameter, 190-mile pipeline is going to directly connect a natural gas hub in Webb County, TX, to power plants in the Monterrey, Mexico area. The system is anchored by a 504 MMcf/d contract with the Comision Federal de Electricidad, Mexico's state power company.

HEP spokeswoman Meredith Hargrove Howard told NGI that the project is about 80% complete, and should enter service in 3Q2018. Construction of the pipeline began in early 2016 and was originally scheduled to enter service in the second half of 2017.

"The updated in-service date reflects the needs of downstream off takers, adjustments required by a developing regulatory framework, and general force majeures related to some of last year's extreme weather," Howard said Wednesday.

In a note to clients on Tuesday, Mizuho Energy analyst Tim Rezvan said the news that Nueva Era would be delayed "underscores the near-term challenges we see for Mexico to increase gas pipeline imports from the U.S. This comes amid increasing uncertainty on stated in-service dates for announced projects, due to indigenous protests and uncertainty on timetable feasibility, especially in high-crime areas,” he wrote.

“We see recent developments as incremental negatives for U.S. natural gas prices and gassy exploration and production companies."

Last week, HEP’s Maria Mejia, director of business development for the Mexico division, also told attendees of the 3rd Mexico Infrastructure Projects Forum in Monterrey, Mexico, that Nueva Era is about 80% complete.

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