Oneok Partners LP and a subsidiary of Fermacoa Infrastructure BV are partnering up to build a natural gas pipeline able to transport up to 640 MMcf/d from the Permian Basin of Texas to Mexico.

The 50-50 joint venture Roadrunner Gas Transmission pipeline project is designed to extend from the Oneok WesTex Transmission natural gas pipeline system at Coyanosa, TX, to a new international border crossing connection near San Elizario, TX. From there, it would connect with Fermacoa’s Tarahumara Gas Pipeline. The intrastate WesTex system now consists of about 2,227 miles of pipe.

The strategic venture with Fermacoa is an “opportunity to add to our extensive 36,000-mile integrated network of natural gas and natural gas liquids pipelines,” said Oneok Partners CEO Terry K. Spencer.

The project is to be constructed in three phases, including about 200 miles of 30-inch diameter pipeline that could carry up to 640 MMcf/d, with up to 570 MMcf/d transported to Mexico’s growing markets. Precedent agreements representing the initial design capacity already have been executed with Mexico’s Comision Federal de Electricidad (CFE), the national electric utility, and a subsidiary of Fermacoa. All transportation agreements would be firm contracts with 25-year terms.

Roadrunner was fully subscribed in its initial design through an open season process held in December. Additional capacity could become available through future expansions depending on the demands of the market.

“Oneok Partners’ strategically integrated assets position us well to provide this service to the CFE and the expanding natural gas markets in Mexico,” Spencer said. “We look forward to building a long-term, strategic relationship with the CFE and to this project meeting the ongoing demand needs of the large natural gas consumers in Mexico.”

The management team considers Roadrunner “a gateway asset that will connect Mexico’s rapidly growing natural gas markets with U.S. producers in the developing Permian Basin,” he said. “The pipeline will connect with Oneok Partners’ extensive existing natural gas pipeline and storage infrastructure in Texas and create a platform for future cross-border development opportunities. These integrated assets also will provide markets in Mexico access to upstream supply basins in West Texas and the Midcontinent, which adds location and price diversity to their supply mix and helps CFE replace fuel oil-based power plants with natural gas-fueled power plants, which are friendlier on the environment and less expensive.”

Depending on regulatory approvals, the first phase of the pipeline project for 170 MMcf/d of available capacity could be completed in early 2016. The second phase, which would increase available capacity to 570 MMcf/d, could be ramped up in early 2017. The third and final phase of the project now is set for completion in 2019, pushing available capacity to 640 MMcf/d.

Oneok Partners would manage construction and operate the pipeline. Estimated costs were put at $450-500 million.

Fermacoa, a gas infrastructure player in Mexico, develops, builds, owns and operates pipelines and other related energy assets in the country. The company’s gas transportation customers include Mexico’s largest energy companies. Its current operating pipelines are capable of transporting 1.2 Bcf/d, which constitutes about 20% of the country’s natural gas supply.

“The signing of this joint venture agreement with Oneok Partners is another key step in Fermacoa’s plans to extend its network of gas pipelines across Mexico and into the U.S.,” said COO Manuel Calvillo Alvarez. “A confluence of factors, including ambitious growth targets, a favorable regulatory and political framework, and an abundance of planned projects mean that it is a great time to be investing in the build-out of natural gas infrastructure in and around Mexico. In Oneok, we have found a partner that recognizes the Mexican opportunity, and we really look forward to working with them.”