A joint venture by TransCanada Corp. and Sempra Energy Mexico unit IEnova started in recent days the construction of a US$ 2.1 billion undersea natural gas pipeline to connect South Texas with Tuxpan, Veracruz, a city located in the Gulf of Mexico.
The joint venture named Infraestructura Marina del Golfo (IMG) sign the contract for the project last June and is expected to become operational by June 2018. Around 90% of the pipeline will be placed underwater.
The 42-inch diameter, 497-mile pipeline will begin offshore in the Gulf of Mexico, at the border point near Brownsville, Texas. It will have a capacity to transport 2.6 billion cubic feet a day, equivalent to about 40% of Mexico’s natural gas demand during 2016.
The project comes with a 25-year transportation service agreement with Mexico's Electricity Federal Commission (CFE). TransCanada will develop, operate and own 60% of the project, with IEnova owning 40%.
It will supply gas to power plants in the states of Tamaulipas and Veracruz and serve the eastern, central and western regions of Mexico. Capacity will be available to others under open access terms, the CFE said at the construction start ceremony.
In addition to a connection with the Cenagas pipeline system in Altamira, the project will interconnect with TransCanada's Tamazunchale and Tuxpan-Tula pipelines as well as with other transporters in the region.
CFE had estimated the pipeline’s cost at more than US$ 4.5 billion, but the IMG bid was about 52% below that estimate at just over US$ 2.16 billion, CFE said when the contract was awarded.
CFE has promoted the construction of 26 natural gas pipelines to serve various regions of the country, said Director General Jaime Hernández. Eight of these have been placed into operation, and another 16 are under construction, including Texas-Tuxpan.
The start of construction was attended by Mexico's energy minister Pedro Joaquín Coldwell, who said the pipeline will satisfy 32% of the entire country's natural gas demand, and the gas imported from Texas is up to 60% cheaper than in other parts of the world.
TransCanada’s subsidiary Transportadora de Gas Natural de la Huasteca is building the Tula-Villa de Reyes and Tuxpan-Tula pipelines. The latter will connect with the South Texas-Tuxpan line.
Another TransCanada subsidiary, Transportadora de Natural Gas del Noroeste, is building the El Encino-Topolobampo line.