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Mexico Seeking Bids for $3B Natural Gas Pipeline Project

Mexico's state-owned electric utility, Comision Federal de Electricidad (CFE), is reportedly seeking bids from private companies to build about 1,460 miles of natural gas pipeline in the northern part of the country.

According to Bloomberg, CFE CEO Antonio Vivanco said the utility would "pay around $3 billion to expand its natural gas network in four contracts for the states of Sonora, Sinaloa and Chihuahua."

Bloomberg also reported that CFE said pipeline operators already operating in the country, including Calgary-based TransCanada Corp. and France's GDF Suez SA, were among potential bidders for the project's 25-year contract. The utility said the bidding process would end in the fall, with the winning bidders announced in October.

Mexico plans to expand its 6,000-mile pipeline system by 40% to take advantage of lower natural gas prices, while CFE plans to invest $7 billion to improve the efficiency of its power plants, the news service also reported.

"CFE is expanding the capacity of the northwest region by more than 8,000 MW," Vivanco said. "We're updating four plants and setting up 10 power terminals in the area to replace the use of fuel oil with natural gas."

Last fall, Mexico's energy secretary said the country's natural gas reserves could multiply six fold after the discovery of significant shale reserves in Chihuahua and Tamaulipas states along the U.S.-Mexico border, in the northern state of San Luis Potosi and the southeastern state of Veracruz (see Shale Daily, Oct. 28, 2011).

Another state-owned company, Petroleos Mexicanos, drilled its first shale gas test well into Mexico's portion of the Eagle Ford Shale play in the northern state of Coahuila earlier last year (see Shale Daily, March 25, 2011).

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