Pipeline venture plans to ship U.S. NGL to Mexico

Sept. 4, 1995
Three U.S. pipeline companies have agreed to form a joint venture (JV) to create a pipeline corridor for exporting natural gas liquids to markets in northern Mexico.(58464 bytes) The proposed NGL system aims to combine the strengths of prospective partners Amoco Pipeline Co., Mid-America Pipeline Co., and Navajo Pipeline Co. to provide "a safe, efficient" export path for U.S. supplies now crossing into Mexico by truck and rail.

Three U.S. pipeline companies have agreed to form a joint venture (JV) to create a pipeline corridor for exporting natural gas liquids to markets in northern Mexico.(58464 bytes)

The proposed NGL system aims to combine the strengths of prospective partners Amoco Pipeline Co., Mid-America Pipeline Co., and Navajo Pipeline Co. to provide "a safe, efficient" export path for U.S. supplies now crossing into Mexico by truck and rail.

The line would deliver NGL to PMI Trading Co. Ltd. and Pemex Gas y Petroquimica Basica (PGPB) at Mendez terminal, under construction at Ciudad Juarez. PMI and PGPB are units of Mexico's state owned Petroleos Mexicanos (Pemex).

Amoco, Mid-America, and Navajo in late August agreed to forge within 30 days a definitive agreement on the JV. That settled most of the commercial issues in the project and cleared all required reviews within the companies involved.

Officials expect no big surprises in the final agreement and the JV project will move quickly. As a result, the agreement likely will specify that the JV NGL pipeline system must start up 1 year after the signing date. That would place the start-up at about the end of third quarter 1996.

Pipeline system

The JV's pipeline system is to consist mostly of existing facilities, including some that must be converted to NGL use.

NGL shipments bound for northern Mexico first are to flow from Hobbs processing station in Gaines County, West Texas, across the state line from Hobbs, N.M., through an 8 in. Mid-America pipeline to a point near Odessa.

From Odessa, shipments are to move west to a point near El Paso through an 8 in. products pipeline Navajo will sell to the JV for conversion to NGL service.

Before the JV can gain access to the converted 8 in. Navajo line, Navajo must replace it by laying about 150 miles of 12 in. pipeline from an affiliated refinery at Artesia, N.M., to El Paso.

From El Paso, JV partners plan to lay about 10 miles of 8 in. line to a point near Clint, Tex., and across the U.S.-Mexico border to Pemex's Mendez terminal.

Volumes of NGL flowing through the JV export pipeline system mostly will come from West Texas and at first are to be supplied by Amoco. However, the JV NGL pipeline is to be a common carrier, so other NGL suppliers also could use the system to deliver NGLs to customers in northern Mexico.

Additional volumes could enter the export system from as far away as the liquids hub at Conway, Kan.

The volume of NGL entering Mexico through the pipeline is expected to increase slowly. Throughput could increase 2-4%/year during several years.

Amoco said the project could create significant benefits for some of its upstream and downstream units. But an official said Amoco agreed to take part in the JV solely because of the pipeline's economic outlook.

Mid-America is a subsidiary of the Mapco Natural Gas Liquids Inc. (Mapco NGL) unit of Mapco Inc., Tulsa.

Navajo Pipeline is a unit of Holly Corp., Dallas. Holly owns Navajo Refining Co., Artesia, an independent refiner and products marketer in Mexico, Arizona, New Mexico, and West Texas.

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