CALGARY-based TransCanada Pipelines Ltd is to invest $1.32 billion to build, own, and operate a 36-in., 125-km gas pipeline from Pemex Gas’ facilities near Naranjos, Veracruz, in east-central Mexico to a power plant near Tamazunchale, San Luis Potosi, following the award of a 26-year gas transportation contract to TransCanada and partner Consorcio Transportadora de Gas Natural de la Huasteca by Mexican state-owned public utility ComisiÌ_n Federal de Electricidad (CFE). TransCanada expects to put the pipeline in service by the end of 2006.
The initial pipeline capacity will be 170 million cuft/d, but under the contract, the capacity will be increased to 430 million cuft/d to meet needs of two planned power plants near Tamazunchale; this expansion is to begin in 2009. The pipeline will connect with the gas network of state oil company Pemex, and will carry gas supplied from an LNG terminal being built in Altamira by the Royal Dutch/ Shell group. The terminal is expected to be up and running in the second half of 2006, with an initial capacity of 650 million cuft/d. Mexico has based most of its long-term electricity-generation plans on gas, of which the country has abundant reserves. Pemex, however, doesn’t produce enough gas to meet current and projected domestic demand, so Mexico is searching for foreign LNG suppliers in an effort to reduce its dependence on costly gas imports from the US.