El Paso Applies to Expand Export Capacity to Mexico

El Paso Natural Gas has filed an application at FERC to increase the existing maximum daily export capacity on the Samalayuca Lateral by about one-third to 308 MMcf/d to meet the growing natural gas demand in northern Mexico, which is being fueled in large part by power generation.

The pipeline is seeking to amend the Section 3 authorization and Presidential Permit granted by FERC, which limits the lateral's daily export capacity to 208 MMcf/d.

El Paso said the expanded capacity was needed to supply additional gas volumes to correspond with the "rapid development of the natural gas infrastructure in the northern Mexico state of Chihuahua and a preference to use natural gas as fuel in existing and proposed electric power plants."

Specifically, El Paso said it "understands that the Comision Federal de Electricidad (CFE) will require an additional 60 MMcf/d of natural gas for its new Chihuahua II power plant...near Chihuahua, Mexico in the city of El Encino." The CFE anticipates commercial operation to begin by October of this year, it noted.

"Further, CFE has advised El Paso that an additional 40 MMcf/d of natural gas will be required for fuel at a new turbine generator to be installed at the El Encino site in February 2002." Finally, the pipeline said it "understands that CFE has issued [and already awarded] a request for proposal (RFP) for the new Chihuahua III power plant to be located near the City of Juarez at the original Samalayuca plant site, which will require an additional 50 MMcf/d of transportation capacity by May 2003."

El Paso said it has entered into a long-term agreement for the entire proposed increase of 100 MMcf/d of export capacity with MGI Supply Ltd. The company has executed two transportation agreements for service on the Samalayuca Lateral, from the Hueco Compressor Station to the International Boundary in El Paso County, TX. From there, the gas will be transported over the Mexican leg of the lateral to its ultimate destination in Mexico.

El Paso noted it will provide the expanded export capacity by operating its 24-inch lateral at a higher pressure (up to 809 psig); installing an additional meter run at the existing meter station in the plant yard of the Hueco Compressor Station; and installing additional piping (about 325 feet of 24-inch pipe) within the plant yard of the Hueco Compressor Station that would permit El Paso to receive gas volumes into the Samalayuca Lateral from the discharge side of the compressor station.

This project "clearly benefits all classes of customers on El Paso's system" -- producers, marketers and shippers -- by providing "additional markets in Mexico as outlets for their natural gas production," El Paso said. Even "end-users served off the El Paso system will benefit as producers and shippers avail themselves of this growing market, thereby creating additional market diversity."

The 45-mile Samalayuca Lateral, which includes 22 miles of pipe in the United States and 23 miles of pipe in Mexico, is owned by a 50-50 partnership of El Paso affiliates and Pemex Gas Petroquimica Basica. It began operation in late 1997.

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