TransCanada awarded US$500M Mexican natural gas pipeline contract

MEXICO CITY—With U.S. President Barack Obama’s rejection of TransCanada Corp.’s Keystone XL pipeline late last week, the company faces an uphill battle to build a major oil artery from Canada’s oilsands to the U.S. While the company reassesses its options in the U.S., it has announced a major contract win slightly farther south of the Canadian border.

TransCanada said it has been chosen to build, own and operate the Tuxpan-Tula Pipeline in Mexico, a pipeline supported by a 25-year natural gas transportation service contract with the Comisión Federal de Electricidad, Mexico’s state owned power company. TransCanada expects to invest approximately US$500 million in the 250-kilometre, 36-inch diameter pipeline. It anticipates the pipeline to enter service in the fourth quarter of 2017.

“The Tuxpan-Tula Pipeline demonstrates our continued commitment to developing Mexico’s energy infrastructure to meet the need for increased natural gas supply,” Russ Girling, TransCanada’s president and CEO, said.

The pipeline will originate in Tuxpan in the Mexican state of Veracruz and extend through the states of Puebla and Hidalgo, supplying natural gas to CFE combined-cycle power generating facilities in each of those jurisdictions as well as to the central and western regions of Mexico, the company said. It will have a contracted capacity of 886 million cubic feet of natural gas per day.

“The Tuxpan Tula Pipeline will complement TransCanada’s business in Mexico,” the company said. “Today, TransCanada also owns and operates the Tamazunchale and Guadalajara pipeline systems and is completing construction of the Topolobampo and Mazatlán pipelines.”

The company noted by 2018, it will have five major pipeline systems and approximately $3 billion invested in Mexico.