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 state power company Comision Federal de Electricidad (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.