Five days after President Obama rejected its controversial Keystone XL oil pipeline, TransCanada Corp. scored a win south of another border, after Mexico's state-owned Comision Federal de Electricidad (CFE) selected one of its subsidiaries to build, own and operate the proposed Tuxpan-Tula natural gas pipeline in a 25-year deal valued at $297.1 million.
In a translated statement Tuesday, the CFE said the proposal it received from the subsidiary -- officially, Transportadora de Gas Natural de la Huasteca S. de RL de CV -- "was the best technical and financial offer in the tender." The regulatory agency added that the subsidiary's bid of $297.1 million was 33% below its estimate to complete the project of $445.6 million.
The 36-inch diameter Tuxpan-Tula pipeline would be 155 miles long with contracted capacity of 886 MMcf/d. The pipeline would originate in Tuxpan, in the state of Veracruz, and traverse the states of Puebla and Hidalgo, supplying natural gas to CFE combined-cycle power generating facilities and to regions in central and western Mexico. Power generation facilities in the region that are currently using fuel oil would be converted to natural gas.
Construction is expected to begin in 2016, with an in-service date in 4Q2017. Calgary-based TransCanada said it expects to invest about $500 million in the pipeline.
"The Tuxpan-Tula Pipeline demonstrates our continued commitment to developing Mexico's energy infrastructure to meet the need for increased natural gas supply," said TransCanada CEO Russ Girling.
CFE said it had received five proposals for the pipeline. The other four companies to submit a proposal were: Electric Carso SA de CV; Enagas International SLU-Elecnor SA; Pipeline Aguaprieta S. de RL de CV; and Sacyr Concesiones Mexico SA de CV-Invex Infrastructure IV SAPI de CV and Hydrocarbons Apollo, SA de CV.
TransCanada owns and operates the Tamazunchale and Guadalajara pipeline systems in Mexico and is completing construction of the Topolobampo and Mazatlan pipelines (see Daily GPI, June 24; Nov. 6, 2012; June 21, 2011; June 20, 2005). The company said that including the Tuxpan-Tula pipeline, it will have about $3 billion invested in Mexico by 2018.