Seeking deeper penetration into Mexico’s gas liquids market,Penn Octane Corp. entered into a multi-year, $40 million contractwith PG&E Natural Gas Liquids (NGL) Marketing L.P. to purchasesupplies of liquefied petroleum gas (LPG), the companies saidyesterday. The LPG will be supplied to Penn Octane’s pipelinenetwork in Texas from PG&E’s Shoup Fractionation Plant nearCorpus Christi, TX.

“This is just a natural fit because Penn Octane really wants toconcentrate on the Mexico market, and we have a concentration ofprocessing plants located conveniently for them in South Texas,”said Sandy Mcdonough, a spokeswoman for PG&E Gas Transmission,an affiliate of PG&E NGL Marketing L.P. Mcdonough added thatalthough this is the first multi-year NGL deal PG&E hasannounced this year, it is not uncommon for the company to enterinto similar agreements.

Overall, the company has nine processing plants in South Texasand three of them have fractionation facilities. They produce atotal of 91,000 b/d of liquids, which Mcdonough said rates thecompany as the seventh largest liquids producer in the country. Ofthat total, 50% of the liquids produced is ethane and 25% ispropane.

Penn Octane is a leading supplier of LPG to Mexico, andcurrently is building two separate LPG pipelines to Matamoras,Mexico. The Redwood City, CA-based company leases a 132-mile,six-inch pipeline, extending from Kleberg County, TX, to itsterminal in Brownsville, TX, which acts as a trans-shipment pointfor delivery to Mexico. The company’s network also includes 160miles of pipe that transports LPG to and from its storage facilityin Markham, TX.

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