TransCanada Corporation, one of the major North American energy companies, has been awarded a $2.1b contract, along with a Mexican joint-venture partner, Sempra Energy, to build and operate an 800 km offshore pipeline that will deliver natural gas from South Texas to northeastern Mexico, reported The Wall Street Journal.
The line will run under the Gulf of Mexico and will have the capacity to transport 2.6bcf/d of natural gas. It will also be supplying the power plants of the Mexican state electric utility Comisión Federal de Electricidad (CFE), under a 25-year service contract.
Fortune wrote that TransCanada will invest $1.3b in the project, thus own 60% of its stake, and become its operator. Sempra’s unit IEnova will account for the remaining stake.
According to Financial Post, the project is set to be completed in 2018 and is estimated to double the Calgary-based midstream company’s natural gas capacity in Mexico, where it currently owns and operates five smaller pipelines. The project is also anticipated to play an important role in shifting Mexico’s electricity system away from fuel oil, that currently generates more than 30% of Mexico’s power.
TransCanada was one of the first private energy companies to invest in the Mexican market. In the mid-1990s, when transport and distribution of the fuel were opened to the private sector, it built its first natural gas pipelines in Mexico.