Mexican state power utility Comisión Federal de Electricidad (CFE) and Sempra Infrastructure have signed a nonbinding memorandum of understanding (MOU) to develop two liquefied natural gas (LNG) projects and complete the Guaymas-El Oro natural gas pipeline.

The LNG projects comprise the Vista Pacífico liquefaction terminal envisaged for Topolobampo, Sinaloa, and a regasification project in La Paz, Baja California Sur, said the subsidiary of San Diego, CA-based Sempra.

Guaymas-El Oro, part of Sempra’s Sonora pipeline system in northwestern Mexico, has been out of commission since 2017 amid a dispute with a local faction of the Yaqui Indigenous community.

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“The development of these projects would allow CFE to optimize excess natural gas and pipeline capacity from Texas to Topolobampo,” Sempra management said. The projects are designed to increase CFE’s “natural gas supply to its power plants in Baja California Sur, to advance President Andrés Manuel López Obrador’s commitment to supply the state with low-cost electricity and lower-emission fuels, and to promote economic growth and development of the region, with a view toward strengthening CFE’s position in global LNG markets.”

The companies are aiming to return Guaymas-El Oro to service “through a proposed re-routing based on mutual understanding between the Yaqui community and CFE through continued respectful dialogue,” Sempra management said. “Through this new route, CFE would be able to supply natural gas to industrial, commercial and residential markets in the Pacific Coast of Mexico, Baja California Sur, as well as the Vista Pacífico LNG facility.

“Through these combined actions, CFE contributes to strengthening the country’s energy security and reaffirms its commitment with the Mexican people, while Sempra Infrastructure agrees to continue to work to develop critical new energy infrastructure in Mexico.”

CFE signed a similar agreement with TC Energy Corp. in late July. That MOU outlined a path to resolve pending arbitration proceedings over natural gas transport contracts, as well as develop an offshore natural gas pipeline from Veracruz to the Yucatán Peninsula.

The Sempra MOU follows a January announcement by CFE executives of plans to launch multiple tenders for natural gas infrastructure, and to make available excess pipeline capacity on the U.S.-Mexico border.

CFE over the last decade has commissioned a massive buildout of pipelines to import natural gas from the United States for its power plants amid declining production by state oil company Petróleos Mexicanos, aka Pemex.

Bring On The Cold

In related news, CFE said Monday it has contingency plans in place to ensure electricity supply across the country from Friday (Feb. 4) through Feb. 10, when a cold front is forecast to hit Texas, the country’s primary gas source.

The cold front comes almost one year after Winter Storm Uri wreaked havoc on electricity and gas markets in the south-central United States and in Mexico.

“Although a repeat of the February 2021 climatic event is improbable, CFE has taken necessary measures to guarantee the continuity of electricity service without affecting its finances,” the state-owned company said. 

CFE and energy ministry Sener “have implemented a group of early alerts” in the event of a shortage of pipeline gas from the United States due to frozen pipelines, CFE said. The company expects to have natural gas demand forecasts with six days’ anticipation, and it stands ready to maximize power generation from “alternative fuels” if gas supplies are scarce. 

Plans are also in place to optimize operations on the national transmission and distribution network, CFE said, and to hedge against any financial impacts of the cold weather system.

Winter Storm Uri caused natural gas production in the south-central United States to plunge by 20%. Pipeline gas deliveries from Texas to Mexico fell by more than 1 Bcf/d at the peak of the event.