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Mexico's Electric Utility Expected to Seek Pipeline Bids

Mexico's state-owned electric utility plans to seek bids for five natural gas pipelines in the northern portion of the country. The projects are expected to cost a combined $2.25 billion, according to press reports.

Enrique Ochoa, director of the Comision Federal de Electricidad (CFE), said plans for the pipelines are to be unveiled in the coming days, according to a report in the Wall Street Journal.

The paper reported that the first of the five pipelines is expected to be 158 miles in the northern state of Chihuahua and have a capacity of 350 MMcf/d. The pipeline is expected to cost $400 million. The five pipelines combined are expected to have capacity of 1.78 Bcf/d. Three are to run from the United States: two from Waha, TX, and one from Ehrenberg, AZ.

Ochoa discussed the CFE's pipeline plans at an industry conference, according to Spanish language press reports.

Last month, the Federal Energy Regulatory Commission approved border-crossing facilities that are part of a plan by Energy Transfer Partners LP unit Houston Pipe Line Co. LP to ship gas between Texas and Mexico (see Daily GPI,March 20). Energy Transfer's is just one of multiple projects to ship more U.S. gas to Mexico.

"Natural gas is increasingly replacing oil as a feedstock in power generation," the U.S. Energy Information Administration (EIA) said in areport on the country. "However, Mexico is a net importer of natural gas, so higher levels of natural gas consumption will likely depend upon more imports from either the United States or via liquefied natural gas (LNG) from other countries."

U.S. gas exports to Mexico grew by 24% to 1.69 Bcf/d in 2012, the highest level since the data collection began in 1973, according to EIA. By far, the lion's share of U.S. gas bound for Mexico comes from Texas, followed by gas from California and then Arizona. Imports account for more than 30% of Mexico's gas supply, and the country's natural gas usage also has been charting new heights.

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