El Paso Merchant Energy Co. made its first foray into providingfuel to Mexico when it signed a 25-year gas supply contract withFuerza y Energia De Hermosillo SA, a subsidiary of Spain’s UnionFenosa Group, to serve Mexico’s Hermosillo power plant. El Pasowill supply up to 43 MMcf/d to the 225 MW combined cycle powerplant. The plant is expected to begin testing in early 2001 andbegin commercial operation summer 2001.

El Paso Merchant Energy plans to move gas through El PasoNatural Gas Co.’s proposed Willcox lateral and has signed for firmtransportation on the lateral. A FERC application for the lateralhas been filed, and construction is to begin following regulatoryapproval. The Willcox lateral will interconnect with the Pemex Gasy Petroquimica Basica pipeline near Naco, AZ.

“This is El Paso’s first fuels venture in Mexico, and we arepleased to partner with Union Fenosa on this important project,”said Greg Jenkins, El Paso Merchant Energy president. “Mexico has anumber of additional power plants planned, and we are wellpositioned with this transaction to pursue additional fuel supplyopportunities in the future.”

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