Kinder Morgan Starts Texas-Monterrey Pipeline Operations

US-based midstream gas company Kinder Morgan (NYSE: KMP) started operations Friday of a US$85mn natural gas pipeline from Texas to Mexico's Nuevo Leon state capital Monterrey, almost a month ahead of schedule.

The pipeline will initially deliver 375 million cubic feet a day to Mexico's state oil company Pemex, with the capacity to transport up to 550 million cubic feet a day of compressed gas, Mexican construction company ARB Arendal director Jesus Garcia told BNamericas.

ARB Arendal built the 137km Mexican part of the pipeline, while ARB Arendal's parent company ARB Inc. built the 15km stretch on the US side. ARB Arendal's EPC contract was for US$70mn, Garcia said.

Kinder Morgan will ship the gas from the southern end of its MidCongas system in Zapata County, Texas, to Pemex, which has bought all capacity on the pipeline under a 15-year agreement. Pemex will in turn supply three combined cycle plants in Monterrey: Spanish company Iberdrola's 1,000MW plant, Swiss company ABB-Alstom's 450MW plant, and Mexico's state power company CFE's 200MW plant.

The pipeline started supplying gas to the CFE plant last Friday. It will connect to the ABB-Alstom plant by Tuesday, and the Iberdrola plant by this Friday, Garcia said. The pipeline could be extended to other plants south of Monterrey to meet additional demand growth, Garcia said, adding that the Nuevo Leon city of Saltillo is one possibility. With declining investment in Mexico's gas sector, and national gas demand rising at 7-8% a year, Mexico is looking to the US and elsewhere to supply its gas needs over the medium-term, Garcia said. "We have to look at various solutions to this problem, and importing gas from the US is one of our options, especially in Nuevo Leon," Garcia said.

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