Spectra Energy, TransCanada to build natural gas pipeline to Mexico

Spectra Energy Corp.  (NYSE: SE) and TransCanada Corp. (TSX:TRP) (NYSE:TRP) have been chosen to build, own, and operate natural gas infrastructure pipeline from Texas to Tuxpan, Veracruz, Mexico. The $3.6 billion project will be used to supply North American shale gas to power plants in Mexico.

Spectra Energy subsidiary Valley Crossing Pipeline LLC was awarded a 168-mile intrastate natural gas pipeline project by the Comisión Federal de Electricidad (CFE) – Mexico's state-owned utility – to provide natural gas transportation services beginning in 2018.

Valley Crossing will construct and operate a header system of more than 5 billion cubic feet per day (Bbf/d) near the Agua Dulce Hub in Nueces County, Texas, as well as a 2.6 bcf/d pipeline originating at that header and extending to Brownsville, Texas. There, the pipeline will connect with the Sur de Texas – Tuxpan pipeline, which will extend into Mexico.

TransCanada’s joint venture with IEnova, Infraestructura Marina del Golfo (IMG), has been chosen to build, own and operate the US$2.1 billion Sur de Texas-Tuxpan natural gas pipeline in Mexico. The project will be supported by a 25-year natural gas transportation service contract for 2.6 billion cubic feet a day with CFE.

The bid for the Sur de Texas-Tuxpan project was presented in partnership with IEnova, a subsidiary of Sempra Energy. TransCanada will develop, operate and own 60% of this project, with IEnova owning 40%.

TransCanada expects to invest approximately US$1.3 billion in the partnership to construct the 42-inch diameter, approximately 497-mile pipeline and anticipates an in-service date of late 2018. The pipeline will begin offshore in the Gulf of Mexico, at the border point near Brownsville, Texas and end in Tuxpan, in the state of Veracruz.

In addition to a connection with CENAGAS's 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.

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