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El Paso Inks Mexican Pipe Agreement

Kinder Morgan's El Paso Natural Gas last Wednesday inked a 25-year transportation agreement related to plans to expand gas service to northern Mexico. The company is not divulging who the party or parties are on the other end of the agreement, a Houston-based Kinder Morgan Inc. (KMI) spokesperson told NGI. El Paso is owned 50-50 by KMI and its affiliate, Kinder Morgan Energy Partners (KMP).

Affiliate Sasabe Pipeline Co.'s deal calls for undisclosed parties to receive to 200 MMcf/d of firm transportation capacity on a proposed 60-mile, 36-inch-diameter lateral from El Paso's southern interstate pipeline system in Arizona to a point south of Tucson near the international border at Sasabe, AZ. A binding open season recently was held on the project (see NGI, Oct. 22). Construction could begin in early 2014 with service later that year.

The $200 million lateral project is one of several pipeline projects throughout Mexico in response to its plans for stepped-up conversions and new generation plant construction of gas-fired plants that use low-priced U.S. gas. Units of Sempra Energy and TransCanada Corp. recently were awarded contracts for major gas pipelines (see NGI, Nov. 5).

The El Paso agreement is an outgrowth of the action last May by Mexico's Comision Federal de Electricidad (CFE), which offered private-sector companies the right to bid on building a gas pipeline from the U.S.-Mexico border near Sasabe. Sasabe Pipeline ultimately requires approval from the Federal Energy Regulatory Commission.

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