A new natural gas pipeline interconnect, linking Mexico's pipeline system with the US network of Tennessee Gas Pipeline Co., was inaugurated on Sept. 27 in Reynosa, Tamaulipas, along Mexico's border with Texas.
The 9.5-mile, 24-in., bidirectional pipeline has 220 MMcfd of capacity, of which Pemex has reserved 185 MMcfd for 10 years beginning Oct. 1, 1999 (OGJ, Oct. 4, 1999, p. 46). With Pemex's commitment in hand, Tennessee Pipe- line invested $10 million to build the interconnect, which took 5 months to complete and entailed the drilling of a 1,600-ft directional well under the Rio Grande into Mexico.
According to Bob Gibb, Tennessee Pipeline's director of transportation for the southern region, the agreement allows Pemex to export or import gas to or from anywhere within the company's Texas region, assuming capacity is available on the system at that time. If Pemex wants to trade with clients further afield on Tennessee's system, "They would have to either pay an extra amount or find a party in the northeast that already has existing transportation capacity," Gibb said.
While Pemex can use its capacity to import or export, Gibb said he understood that Pemex plans to use the capacity mainly to export gas initially.
"The expectation we have, based on what (Pemex) tells us, is that they will be exporting gas to the US for a period of about 2 years, and then at that point it will turn around and be an import source of gas," Gibb said.
The officials at Pemex Gas y Petroquímica Básica, who have earned a reputation as sophisticated market players in recent years, are entering a new era by committing to firm capacity.
"Pemex has never held firm transportation on our system in the past, so this is a new adventure for them, but I expect they will be using it like any other sophisticated customer that we have," Gibb said.
The remaining capacity in the interconnect not taken by Pemex, 35 MMcfd, is available to any of Tennessee's customers on an interruptible basis, Gibb said. He added that clients had already approached the company expressing interest both to export gas to Mexico and to buy additional supply from Pemex and import it to Texas.
The new interconnect is the seventh linking Mexico and the US and the third owned by El Paso Energy Corp., Tennessee Pipeline's parent company.
El Paso Energy has an agreement with Pemex to build a fourth interconnect in Wilcox, Ariz. This line is intended to supply a new gas-fired power plant in Hermosillo, Sonora.
Approval for the new interconnect is under revision by the US Federal Energy Regulatory Commission. El Paso Energy expects the new project to be up and running by late 2000 or early 2001.
