Mexico’s Comisión Federal de Electricidad (CFE) will build alternate natural gas pipeline branches in an effort to get stalled projects in the country moving.

guayamas

Speaking at a press conference earlier this month, CFE Internacional and CFEnergía head Miguel Reyes said new routes would be developed for the Guaymas-El Oro pipeline and the Tuxpan-Tula line.

The 510 MMcf/d Guaymas-El Oro pipeline, the downstream segment of Infraestructura Energética Nova’s (IEnova) Sonora pipeline in western Mexico, has been stuck since 2017 because of conflicts with Yaqui indigenous communities. The Sonora pipeline receives gas imports from Sierrita Pipeline at Sasabe in Arizona.

Reyes said the situation would be resolved by avoiding the disputed territories with a new pipeline spanning around 50 miles.

On the other side of the country, TC Energy Corp.’s stalled 886 MMcf/d Tuxpan-Tula pipeline would also be able to proceed with a pipeline stretching about 75 miles around disputed zones. The pipeline would allow gas from the 2.6 Bcf/d Sur de Texas-Tuxpan offshore pipeline to reach central Mexico via the Tula-Villa de Reyes pipeline, which has also faced lengthy delays.

Construction of Villa de Reyes “is ongoing but has been delayed due to Covid-19 contingency measures which have impeded our ability to obtain work authorizations as a result of administrative closures,” TC management said in its 2Q2021 letter to shareholders. “We expect to reach partial in-service by the end of 2021, with the remainder of the construction of Villa de Reyes completed in the first half of 2022.”

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Mexican President Andrés Manuel López Obrador has said in the past he would ask TC to seek an alternative route for the 56-mile middle section of Tuxpan-Tula because of local objections. Last month, CFE said it agreed “to take a more active role” in resolving social conflicts and shepherding the country’s stalled pipelines into operation.

Reyes said the pipeline developers are “actively collaborating and they aren’t charging for the gas that hasn’t been delivered yet, nor are there penalizations due to force majeure.”

The news comes amid a flurry of proposed activity by CFE in the natural gas market. CFE is planning an underwater pipeline to connect Tuxpan with the Yucatán peninsula. In addition, it wants to build a cross-isthmus pipeline that would connect the two coasts and include a series of industrial parks. It also has a liquefied natural gas (LNG) export project planned in Salina Cruz. There also are the Mérida, Valladolid, Tuxpan, Baja California Sur, San Luis Río Colorado and González Ortega combined-cycle plants. And there are plans to develop the residential natural gas market so the fuel can reach Mexican homes.

Reyes touted the fact that the renegotiation of natural gas contracts has provided the company with extra financial muscle. “Thanks to the renegotiation of nine contracts, the revision of abnormal operating terms and recovered income, the current administration has saved $6.17 billion,” he said.

He said that a total of 27 contracts have been identified as “disadvantageous” for the CFE subsidiaries.

Mexico’s CFE Internacional is the fuel importing arm of CFE and is a major marketer of natural gas in the United States. In NGI’s latest Top North American Natural Gas Marketers rankings for 1Q2021, the company ranked 15th at 3.31 Bcf/d. CFE was ranked 12th at 3.32 Bcf/d in 4Q2020.

CFE Energía handles the domestic marketing of natural gas in Mexico.