Kinder Morgan Energy Partners begins construction of Monterrey pipeline

By OGJ editors

HOUSTON, Nov. 13 -- Kinder Morgan Energy Partners LP and Pemex Gas y Petroquimica Basica (PGPB) have begun construction on Kinder Morgan's new $87 million, Mier-Monterrey natural gas pipeline from South Texas to Monterrey, Mexico—one of that country's fastest growing industrial areas.

The 95 mile pipeline, designed to transport up to 375 MMcfd of gas initially, will interconnect with the southern end of the Kinder Morgan Texas Pipeline system in Starr County, Tex. PGPB has subscribed for all of the capacity under a 15-year contract with Kinder Morgan.

The pipeline will connect to the PGPB gas transportation system and to a 1,000 Mw power plant complex owned by Iberdrola SA and Comision Federal de Electricidad, the national electric power entity. Pipeline construction is scheduled for completion during second quarter 2003.

When completed, the pipeline project will be accretive to cash for Kinder Morgan stockholders, said Richard D. Kinder, chairman and CEO. "The pipeline will position Kinder Morgan to help meet the rising demand for imported natural gas into Mexico, which is expected to increase significantly over the next 8 years." The new system, Kinder said, would enable the company to transport roughly half of Mexico's natural gas imports during 2003.

According to Raúl Monteforte, a commissioner for Mexico's Energy Regulatory Commission, ". . .Cross-border pipelines and LNG import plants may be required to handle up to 2 bcfd of natural gas imports into Mexico by 2010." In addition, "The (Mexican) national pipeline system will have to be reinforced with incremental compression, pipeline replacement, looping, and new pipelines in order to handle a total flow of at least 8 bcfd in 2010," he added (OGJ, Feb. 11, 2002, p. 70).

The increased supplies of natural gas through the Monterrey pipeline will reduce Mexico's dependence on heavy fuel oil, helping the country meet its air quality objectives, Kinder Morgan said. During the construction phase, about 90% of the labor will be employed locally, with the workforce distributed throughout the communities along the pipeline route.

Kinder Morgan said the pipeline can be expanded in the future to meet additional demand growth or the flow could be reversed to export gas to the US from the Burgos basin in northeastern Mexico, which since 1997 has been producing 1bcfd of natural gas (OGJ, Sept. 23, 2002, p. 34).