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Following Deadly Fire, Pemex Eyes More U.S. Gas Imports

Petroleos Mexicanos (Pemex), Mexico's state-owned oil company, plans to import more natural gas from the United States to avoid shortages and possible price spikes following a deadly fire last week at a natural gas compression station in Reynosa, which as of Friday had claimed 30 lives.

The fire started about 10:45 a.m. CDT last Tuesday and was brought under control within a few hours, according to Pemex. The gas distribution center is in the state of Tamaulipas, south of McAllen, TX. Scores of people were injured, and seven people were reportedly missing.

The station receives natural gas and condensates from Mexico's Burgos Basin production complex, and it also stores gas and serves as an entry point for U.S. gas imports. Gas is distributed from the Reynosa station to regional customers and piped to the industrial city of Monterrey, Mexico. The station, which is shuttered pending an an investigation, was able to process up to 800 MMcf/d; at the time of the incident, it was processing 700 MMcf/d, Pemex said.

The blaze at the Reynosa station damaged the measuring equipment, a pipeline and several control valves at the plant, which belongs to Pemex Exploration and Production. Initial reports by Pemex indicated the fire apparently was caused by an accidental leak. A "large flame" apparently was sparked during maintenance work at a part of the facility that wasn't in operation.

Mexican President Felipe Calderon credited a quick reaction by regional emergency workers to preventing "a real catastrophe" by controlling the fire before it reached massive tanks of a neighboring gas processing plant. Calderon promised a thorough investigation and said federal prosecutors would be scrutinizing the accident.

To compensate for the supply shortage, Mexico may import 250-300 MMcf/d from the United States via pipelines and 200 MMcf/d through the Mexican port city of Altamira on the Gulf of Mexico, said Pemex Director Juan Jose Suarez. An additional 200 MMcf/d could be supplied through the port of Manzanillo on the Pacific Coast, and 100 MMcf/d is available from the country's Campeche fields.

Sempra Energy and Pemex jointly run a 70-mile, 36-inch diameter San Fernando natural gas pipeline from the facility, but it was unaffected by the incident, according to a spokesperson. Their jointly owned TDP propane pipeline, however, has been shuttered to assess damage. The 12-inch diameter pipeline runs 114 miles and receives liquefied petroleum gas from the Burgos Basin for delivery near Monterrey.

In a radio interview, Pemex exploration chief Carlos Morales said "because the volume from Burgos is going to decrease, it would be feasible to use pipelines from the center [of Mexico] with a higher load of imported gas...We're doing everything possible to maintain...the same price levels so that industry does not suffer any shutdowns."

Morales dismissed speculation that the fire may have been related to drug cartel violence in the region. Maintenance work was ongoing in the minutes prior to the fire, and initial reports indicate that a build-up of gas may have set off an explosion, which triggered the blaze.

Suarez said the fire appeared to be "an unusual incident" with "no evidence that it was a deliberate incident or some kind of attack."

The high number of deaths and injuries was attributed in part to the way the plant is secured. To prevent break-ins, barbed wire is strung across the tops of the facility's exterior walls. Some of the people who managed to escape unharmed reportedly found openings in the walls not protected by the wire.

The industrial accident at the facility is one of the worst to hit Pemex in several years and is the third accident since mid August, officials said. Earlier this month, four Pemex employees were injured in a fire in Tamaulipas at the Madero oil refinery. Another fire at the refinery occurred in mid August.

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