Daily GPI / NGI The Weekly Gas Market Report / Infrastructure / NGI All News Access

Eagle Ford Gatherer Planning Pipeline to Mexico

Colombia Pipeline LLC filed an application with FERC on Tuesday to construct a border-crossing pipeline from Texas to Mexico that would allow Eagle Ford Shale natural gas to supply power generation and other demand in Mexico.

Colombia is a unit of San Antonio-based Howard Midstream Energy Partners LLC, which has extensive gas gathering and processing infrastructure serving Eagle Ford producers. "Howard Energy's gathering pipelines are connected, either directly or indirectly, to significant supplies of gas produced in Texas," the company told the Federal Energy Regulatory Commission.

"...The border crossing facilities will...meet the needs of the expanding electric generation and industrial markets in Mexico. As such, the border crossing facilities will expand the market for domestically produced gas...will further national economic policy by stimulating the flow of goods and services between the United States and Mexico, in the process improving our international balance of payments."

Colombia cited Energy Information Administration projections for gas demand growth in Mexico that indicate demand will nearly double from 2012 levels by 2017, with the majority of the growth expected in the power generation sector. "As a result, Mexico's national energy ministry projects that U.S. pipeline exports to Mexico will reach 3.8 Bcf/d in 2018, or almost double U.S. pipeline exports to Mexico in 2013."

Analysts at Barclays Commodities Research have a similar take on growing gas demand in Mexico (see Daily GPI, Oct. 4, 2013).

Howard unit Texas Pipeline Webb County Lean System LLC (TP Lean), which owns Howard's Eagle Ford Gathering (EFG) system, would extend its system to connect with the proposed border-crossing pipeline. The company said in its filing that it expects the Commission to find that the EFG system extension is nonjurisdictional, as it has in similar circumstances.

"At the International Border, a 0.48-mile pipeline on the Mexico side will be constructed on behalf of Impulsora LT, S.A.P.I. de C.V., which will re-deliver natural gas supplies into the pipeline system owned by Con-Gas, S.A.P.I. de C.V. to a proposed power plant to be constructed near Colombia, Nuevo Leon, Mexico," Colombia told FERC.

The border-crossing facilities would be constructed and operated by Colombia and consist of 12- and 36-inch diameter pipelines, running parallel and totaling 6,500 feet of new pipeline. They would be installed by a horizontal directional drill under the Rio Grande River. The project on the U.S. side of the border would be almost entirely within a 1.6-acre area on the privately owned Needmore Ranch, which is 19.6 miles northwest of Laredo, TX. U.S. facilities would include metering and pigging equipment.

The 12-inch diameter pipeline is to have a design capacity of 120 MMcf/d, and the 36-inch diameter line is to have a design capacity of 1 Bcf/d. Colombia said having a dual-pipeline project "...provides an added measure of reliability to better assure service to the highest-priority customers."

Construction on the Mexican side of the border would be subject to the country’s regulation and undertaken on behalf of Impulsora. The proposed facilities do not include any liquefied natural gas (LNG) infrastructure, nor does the project contemplate attachment to any LNG facilities, Colombia said.

In the Eagle Ford, Howard directly or indirectly owns and operates more than 500 miles of mainly 12- and 20-inch diameter gathering pipelines. It has three distinct systems: EFG, the Cuervo Creek Gathering System (CCG) and the Maverick Dimmit & Zavala Gathering (MDZG) system. They gather production from the Eagle Ford, Escondido, Olmos and Pearsall formations, among others.

EFG consists of 133.5 miles of pipeline designed for lean gas service in Webb County, TX. The system includes more than 410 MMcf/d of transport capacity, as well as 145 MMcf/d of treating and dehydration capacity. It interconnects with Kinder Morgan Inc. and ConocoPhillips systems.

The CCG system consists of 85.5 miles of pipeline designed for rich gas transport, and is also located in Webb County. The CCG system has more than 410 MMcf/d of capacity and provides interconnects with Kinder Morgan, ConocoPhillips, and DCP Midstream lines. It serves as the primary gathering system in support of Howard Energy's recently completed Reveille Processing Plant, a 200 MMcf/d cryogenic processing plant in Webb County.

The MDZG system consists of 351.8 miles of pipeline designed for both rich and lean gas service in Maverick, Dimmit, Zavala and Frio counties. It interconnects with Enterprise Products Partners LP, Energy Transfer Partners LP, TexStar Midstream Services LP, and West Texas Gas lines.

Colombia said it plans to file with the U.S. Department of Energy (DOE) for a Natural Gas Act Section 3 short-term authorization to export gas to Mexico, which is a free-trade agreement partner of the United States. However, Colombia said customers of the border crossing project are expected to have or obtain DOE import/export authorization. "...[T]he export of natural gas for these customers utilizing the border crossing project facilities will rely on the customer's respective DOE authorization for such export.”

Numerous projects have been proposed or are in the works to meet growing gas demand in Mexico, which in recent years has been focusing its limited resources on growing oil production at the expense of gas (see Daily GPI, May 29).

In May Energy Transfer Partners LP subsidiaries struck 15-year agreements with Mexico's electric utility, Comision Federal de Electricidad, to provide transportation services for 930,000 MMBtu/d (see Daily GPI, May 7; March 20). Late last year FERC approved NET Mexico Pipeline Partners LLC's request to build border-crossing facilities to export U.S. gas to serve power generation demand (see Daily GPI, Nov. 11, 2013).

Recent Articles by Joe Fisher