TC Energy Corp. expects to complete construction of the 886 MMcf/d Tula-Villa de Reyes pipeline in Mexico during 2021.

tula pipeline

The construction timetable is subject to the “timely reopening of government agencies,” executives said last Thursday during a fourth quarter earnings call. Executives cited the coronavirus as impacting the project.

Upon completion, TC plans to phase-in service. The 261-mile line would connect to TC’s operating Tamazunchale pipeline, and to the Tuxpan-Tula pipeline, whose construction has been held up by a pending indigenous consultation process by Mexican Energy Ministry Sener.

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.

TC has five pipelines now generating revenue in Mexico, including the 2.6 Bcf/d marine pipeline from South Texas to Tuxpan, all of which are anchored by long-term contracts with state utility Comision Federal de Electricidad (CFE). The five pipelines moved about 1.8 Bcf/d during 2020.

The Calgary-based pipeline giant in December also completed a project to allow bi-directional flows on the company’s Guadalajara pipeline.

“It’s a good example of our ongoing collaboration with the CFE on a project that provides access to either liquefied natural gas imports from the Manzanillo terminus or access to low-cost continental natural gas supply at the Guadalajara terminus for delivery to regional markets,” CEO Francois Poirier said.

Executives on the call briefly discussed the polar vortex and prolonged freezing temperatures that impacted not only the southern United States last week but also knocked out power infrastructure and decreased natural gas flows in Mexico.

Poirier said the company met unprecedented gas demand on its pipelines. TC also “set a record for coincidental three-day peak deliveries of over 101 Bcf from Feb. 14 to 16, testing our prior mark set in January of 2019 by about 2.5 Bcf/d.”

Executive Vice President Stanley Chapman said the event “just shows the really valuable role that we play in providing energy to millions of individuals and businesses when it’s needed most.”

Mexico’s Centro Nacional de Control del Gas Natural (Cenagas), operator of the Sistrangas national pipeline grid, declared a systemwide state of critical alert on Feb. 16, citing scarce gas supplies from Texas because of the inclement weather. Privately owned systems also issued alerts, including TC’s marine pipeline.

TC reported net income of C$1.1 billion ($874 million), or C$1.20/share (95 cents/share), for the fourth quarter, compared with C$1.1 billion, or C$1.15/share (91 cents/share), for the same period in 2019.

[For the third year, NGI is surveying active players in the Mexico natural gas market to track the evolution of the industry as it continues to open. If you buy or sell natural gas in Mexico or on the border, please contribute your perspective. It takes two minutes to complete the survey linked here, but the transparency it provides empowers a nation.]

Operating assets have mostly not been impacted by Covid-19, executives said.

“Across our extensive North American operations, flows and utilization levels generally remain in line with historical and seasonal norms, underscoring the importance of our assets to the North American economy,” management said. “Given the regulated and/or long-term contracted nature of our portfolio, we continue to be largely insulated from volatility associated with volume throughput and commodity prices.”