Kinder Morgan Energy Partners, L.P. announced that El Paso Natural Gas Company has entered into a 21-year firm transportation agreement with Mexico’s Comisión Federal de Electricidad (CFE) to initially provide 163,000 Dth/d of firm transportation capacity by October, ramping up to 200,000 Dth/d by October 2017 and 550,000 Dth/d by October 2020.
The phased capacity increases will be accomplished using existing and expansion capacity on the EPNG system. Capital expenditures are estimated at $529 million.
Engineering and procurement activities have begun on the first phase of work which involves system improvements to deliver volumes to the Sierrita Pipeline near Tucson by October. The second phase will result in incremental deliveries of natural gas to the Sierrita Pipeline and to California, and is expected to be completed by October 2020. The Sierrita Pipeline is expected to be in service shortly.
“This firm transportation agreement will help CFE to realize its goal of converting numerous fuel oil-powered generation plants throughout Mexico to natural gas, as well as provide transportation for a number of new gas-fired plants under development,” said West Region Gas Pipeline President Mark Kissel.
The agreement provides for deliveries primarily to a new point of interconnection with the Sierrita Pipeline project along EPNG’s South Mainline and also to California.
Transportation service will be provided by using existing capacity available on EPNG’s North Mainline along with undertaking certain system upgrades to enhance deliverability to the South Mainline. To facilitate the full 550,000 Dth/d of service by October 2020, EPNG is planning an expansion that would consist of looping its Havasu Crossover line and installing new compression as well as undertaking modifications at several existing compressor stations to facilitate west-to-east flow along the South Mainline.