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Tidelands' 1.2 Bcf/d Pipeline System Gets Green Light from Mexico's CRE

Tidelands Oil & Gas Corp.'s Mexican pipeline subsidiary, Terranova Energia, was awarded a permit by the Comision Reguladora de Energia de Mexico (CRE) to build the 1.2 Bcf/d Terranova Occidente and Oriente pipeline portions of its Burgos Hub Export/Import Project in northeastern Mexico.

The permit covers construction of about 294 miles of 30-inch and 36-inch diameter bidirectional pipeline that will transport gas across the U.S.-Mexico border to markets in both countries. Tidelands is still awaiting federal authorization to construct an offshore liquefied natural gas (LNG) import terminal and Mexico's first natural gas storage field.

The 50 Bcf Brasil gas storage project will be used to store supply entering Mexico from the U.S., from potential Mexican producing fields in the Burgos Basin and from the LNG import terminal. Tidelands also is awaiting authorization from the Federal Energy Regulatory Commission (FERC) to build the Texas portion of its integrated natural gas pipeline system (see NGI, April 4, 2005; April 25, 2005; Aug. 15, 2005; Nov. 22, 2004).

The project is designed to serve residential, industrial and commercial customers in northeastern Mexico and in Texas. Eventually it could facilitate cross-border natural gas transportation and trading.

The Occidente pipeline section will be a 30-inch diameter, 201-mile pipeline from the proposed storage field to Nuevo Progreso, Mexico, with a proposed international pipeline crossing into South Texas from Mexico at the Donna Station, which will provide the opportunity for interconnects into Texas with Texas Eastern, Tennessee Gas and Texas Gas Services. The pipeline also will include a section that will stretch from the Brasil storage field to Station 19 and up to Arguelles where another proposed international pipeline will cross into South Texas with interconnects with Houston PipeLine, Calpine and Kinder Morgan.

The Oriente Pipeline will be a 36-inch diameter, 93-mile system running from the proposed offshore LNG regasification terminal to Norte Puerto Mezquital and then to the Brasil storage field. Both Terranova pipelines are designed to flow natural gas bidirectionally between Texas and Mexico at a rate of 1.2 Bcf/d.

The company has hired CenterPoint Energy Pipeline Services to provide consulting services for construction of the integrated gas pipelines, storage facility and LNG regasification terminal. Netherland Sewell & Associates and Geostock Group will do the engineering work and geological services for the underground storage facility and related surface equipment. And HSBC Securities (USA) Inc. will arrange the financing for the US$1 billion project.

CEO Michael Ward called the permit a "significant milestone" that "facilitates several business arrangements we have been eager to expedite. Tidelands is working diligently, forging the way to break ground on our business ventures in South Texas and Northeast Mexico. We are well positioned to advance our business to the next level and foster the foundation and platform we have established."

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