CFE: 3 gas pipeline tenders planned thru 1H08

Monday, October 8, 2007

Mexican state power company CFE expects three tenders to be launched for new gas pipelines through the first half of 2008, CFE deputy director of financed investment project development Alberto Ramos Elorduy told reporters.

It has not yet been decided which state entity will launch the tenders.

One of the pipelines would run from the prospective Manzanillo regasification terminal to Guadalajara. A second would go from Tamazunchale to either Palmillas or Tulas. A third, the so-called Chihuahua corridor, would run through Chihuahua and Durango states.

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The bidding rules for the first pipeline are "practically finished" and the project could be tendered this year with a 2008 launch date at the latest, Ramos said at the 2nd Global LNG Infrastructure Summit in Mexico City.

The pipeline would have a 290km extension as currently planned by CFE, although a detour to service other areas could extend that by 40km.

CFE has already awarded supply of LNG to the prospective terminal. The tender for the terminal's construction is ongoing, with contract signing due in February 2008, Ramos said.

Gas from Manzanillo would feed the new 3GW capacity CFE intends to install in the region, 2GW of which would be located in Manzanillo and 1GW in Guadalajara.

Further, the pipeline would help guarantee supply to Mexico's Bajío region, whose cities suffered gas cuts as a result of an attack by leftist guerrilla group EPR on the Mexico-Guadalajara pipeline in July.

The group has attacked various pipelines belonging to state oil company Pemex on three separate occasions since July, further underscoring the need for greater transport flexibility in the system.


Likewise, the roughly 150km pipeline running from the city of Tamazunchale, the location of Spanish power company Iberdrola's power plant bearing the same name, to either Palmillas or Tulas would complete a gas transport loop. This would provide greater supply reliability.

The most recent EPR attack hit the 48-inch diameter Cactus-San Fernando natural gas pipeline that extends along the Gulf coast. The pipeline connects to the Tamazunchale plant through a 120km, 36-inch diameter pipeline from Naranjos, south of the Altamira terminal. Natural gas transport would not have been suspended had the pipeline from Tamazunchale to Palmillas or Tulas existed.

"If something happens with production in the southeast, it will be possible to bring gas from the northeast - including the Altamira regasification terminal, the Burgos basin, or imported gas - to feed the center of the country so the region could avoid gas cuts as happened after the attacks," managing director of the Altamira terminal Carlos Barajas told BNamericas.

"For this reason, we look are in favor of the government implementing the gas pipeline. Hopefully, they will," Barajas said.


Finally, the Chihuahua corridor would serve the prospective 2.5GW of gas-fired power plants in the region CFE plans to install as well as existing plants.

"In 2009, we would need to define how to supply gas and guarantee supply for the region in the long term. At the moment, we are thinking of bringing together our national energy companies to tender the purchase of gas supplied to our plants," Ramos said.

There are numerous possibilities for supply, Ramos said.

"There could be some nice combinations. It could be supply from the US, supply of LNG from the Costa Azul terminal [in Baja California state] or possibly the Puerto Libertad terminal [in Sonora state] by taking advantage of El Paso's infrastructure. There is another possibility of an LNG terminal in Topolobampo [in Sinaloa state]."


CFE is in talks with Pemex, energy ministry Sener and energy regulator CRE to coordinate plans. Pemex, Sener and CRE are planning a new regulatory model for gas transport as well as other gas pipeline projects.

New projects on Pemex's drawing board for the national gas pipeline system (SGN) include: the 500km, 30-inch diameter Tamazunchale-San Luis de la Paz-Aguascalientes pipeline; the 220km, 36-inch Poza Rica-Santa Ana pipeline; the 680km, 30-inch Torreón-Durango-Zacatecas-Aguascalientes pipeline; the 570km, 36-inch Los Ramones- San Luis Potosi pipeline; the 550km, 36-inch Manzanillo-Guadalajara-Aguascalientes pipeline; the 350km, 24-inch Ciudad Juarez-Chihuahua pipeline; and natural gas storage projects, deputy director of Pemex gas subsidiary (PGPB) Salvador Ortiz said in a presentation.