Mirage Energy Corp. has secured a memorandum of understanding (MOU) to fund all of its planned 250-mile Concho-Progreso cross-border natural gas pipeline system and storage project.

The 1.2 Bcf/d Concho-Progreso pipeline is designed to connect the Agua Dulce hub and Banquete header in South Texas with Mexico’s Sistrangas national pipeline grid at the Estación 19 (Station 19) and Los Ramones interconnection points in northeastern Mexico.

The project also entails development of an underground natural gas storage project at the depleted Brasil gas reservoir, with initial working gas storage of 25 Bcf, growing eventually to 52 Bcf.The Brasil field is located within 14 miles of the pipeline’s planned route.

Under the preliminary contract announced last week, San Antonio, TX-based Mirage would sell 100% of its participation interest in the project to France’s Organisation Mondiale de Developpement (OMD) in exchange for OMD’s promise to fund the project’s estimated $1.2 billion cost.

If the MOU is converted into a contract, OMD would offer Mirage a 5% carried equity participation interest, which would be characterized as a put option interest in the project.

Mexico, which does not yet have underground storage capacity, relies on imported liquefied natural gas (LNG) for system balancing. In March 2018, energy ministry Sener published a natural gas storage policy calling for 45 Bcf of strategic inventories to be operational by 2026.

Mirage expected to begin final development last Monday (April 1), with a view toward receiving required U.S. and Mexico permits and authorizations in 3Q2019. The company has completed the necessary engineering and design for the pipeline and gas storage field.

The firm said alignment for the pipeline has been “substantially completed,” and the company is in the process of securing the necessary rights of way.

Last November TrailStone NA Asset Holdings LLC entered into an MOU with Mirage to purchase 146,340 MMcf/d of reserved capacity on the Concho-Progreso system for 10 years at a fixed price.

On the U.S. side of the border, the project would offer shippers connectivity to the Eagle Ford and Permian Basins via existing infrastructure, Mirage said in a recent presentation. The 2 Bcf/d GCX is set to begin operations later this year.

The Mirage project comprises three pipeline sections in Texas; an international Texas-Mexico crossing known as the Progreso Crossing beneath the Rio Grande River near Progreso, TX, and two pipeline sections in Mexico.

The U.S. sections entail the 7.1-mile Concho Connector, which would link the Banquete header and Agua Dulce hub; the 39.1-mile Concho Extension, which would connect the Concho Connector with the Concho Line; and the 93.9-mile Concho Line, which would connect the Progreso border crossing with the Transcontinental Gas Pipe Line Co. (Transco) mainline near Falfurrias, TX.

South of the border, the 36-mile Progreso Line would connect the border crossing with Estación 19 on the Sistrangas, while the 67-mile Progreso Extension would connect the Progreso Line with the Los Ramones interconnect.