TC Energy Corp. will focus in the short-term on increasing utilization and connectivity across its Mexico natural gas pipelines, according to Francois Poirier, who oversees the firm’s Mexico business.

While utilization rates are at historic highs on TC’s Canada and U.S. pipes, Mexico is a different story, Poirier said Tuesday during TC’s annual investor day.

He said that TC’s two pipelines in northwest Mexico are currently being utilized at rates in “the mid 50s in one system and the mid 70s on the other.”

“And on our systems in central Mexico, we’re more in the 25-40% range, depending on the system, and obviously we’ll be looking to increase that,” said Poirier, adding that, “there’s plenty of room to add connectivity.”

Now that the 2.6 Bcf/d Sur de Texas-Tuxpan pipeline, of which TC is a 50% co-owner, has entered service, Poirier said, “I’m very optimistic that we’re going to be able to add load here.”

Poirier said that TC has received gas marketing permits from Mexico’s Comisión Reguladora de Energía (CRE).

“Low risk gas marketing opportunities are available to provide potential customers with bundled commodity and transportation services,” Poirier said. “This would promote utilization of our existing assets across the region and drive original, organic growth.”

Over the long-term, Mexico’s Pacific coast appears to be a logical choice for an LNG export terminal, Poirier said, “and our port area in Topolobampo is the shortest path to connect abundant Texas natural gas to Asian markets…On a very preliminary basis, we’re in conversations with many LNG project proponents to that effect.”

TC has five pipelines currently generating revenue in Mexico, all of which are backed by long-term, dollar-denominated contracts with Mexican state power utility Comisión Federal de Electricidad (CFE).

These pipelines comprise the Topolobampo and Mazatlán pipelines in the northeast, Tamazunchale and Guadalajara in the central region, and the Sur de Texas-Tuxpan offshore pipeline, which stretches from a point near Brownsville, TX, to the city of Tuxpan in Mexico’s Veracruz state.

TC expects the Tula-Villa de Reyes pipeline to enter service in 2020, while the Tuxpan-Tula pipe is expected to come online two years after energy ministry Sener has completed the requisite indigenous consultation process for the pipe’s 56-mile middle section.

“We are well positioned once this backbone infrastructure has been completed to connect U.S. natural gas supplies to growing power generation and industrial markets in central Mexico,” Poirier said.

TC is forecasting pipeline gas imports from the U.S. to reach 7.2 Bcf/d by 2030, up from 4.9 Bcf/d in 2019.

The company expects gas demand from Mexico’s power sector to grow to 5.8 Bcf/d from 4.4 Bcf/d currently, and sees demand from industrial and other segments rising to 4.7 Bcf/d from 3.6 Bcf/d currently.

“Our strategy in the medium term is going to be to fill the pipelines,” Poirier said. “We’ve built the backbone infrastructure, now we need to add customers.”

In other pipeline news related to Mexico, the Federal Energy Regulatory Commission (FERC) has approved El Paso Natural Gas Co. LLC’s (EPNG) application to construct and operate the South Mainline Expansion Project, which would increase capacity on the company’s Line Nos. 1100 and 1103 in Hudspeth and El Paso counties in Texas [CP18-332].

The $127.9 million project would involve about 17 miles of 30-inch loop line on the existing lines, a new 13,220 hp turbine-driven compressor station in Luna County, NM, and a new 13,220 hp turbine-driven compressor station in Cochise County, AZ.

It would increase contracted capacity by 321,000 Dth/d, allowing EPNG to meet demand for increased westbound capacity on its South Mainline system to serve markets in Texas, New Mexico, Arizona, California and Mexico.

In its application to the Federal Energy Regulatory Commission 18 months ago, EPNG said two anchor shippers — Mexico’s CFE and Salt River Project Agricultural Improvement and Power District (SRP) — had acquired capacity in separate open seasons in 2016 and 2017 that require EPNG to expand its South Mainline.

EPNG had struck a 21-year deal in 2014 to provide firm gas transportation capacity to CFE. Under terms of that deal, EPNG was to initially provide about 163,000 Dth/d of firm capacity, ramping up to 550,000 Dth/d by 2020.

However, in the wake of the 2014 announcement of comprehensive energy reforms in Mexico, CFE determined that it needed to modify its transportation contract portfolio to cover obligations in West Texas, Arizona and California, according to EPNG’s application at FERC.

Following a June 2016 open season, capacity was awarded to CFE and a new transportation service agreement (TSA) executed, which became effective April 1, 2017. The TSA extends through 2035, with a total contract demand that steps up from 261,747 Dth/d to 271,000 Dth/d in 2020. An amendment to the TSA added 50,000 Dth/d for points in New Mexico, Arizona and California, and, through another open season, SRP was awarded 50,000 Dth/d of capacity.

FERC’s order Thursday also grants El Paso’s request for a pre-determination of rolled-in rate treatment for the project’s cost.