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Kinder Morgan Energy Partners, L.P. has announced that El Paso Natural Gas Company (EPNG) has entered into a 21-year firm transportation agreement with Mexico鈥檚 Comisi贸n Federal de Electricidad (CFE) to initially provide approximately 163 000 Dth/d of firm transportation capacity by October 2014, 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. As previously announced, capital expenditures are estimated at approximately US$ 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 2014. 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 in September of this year.

鈥淭his firm transportation agreement will help CFE to realise 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 currently under development,鈥� 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鈥檚 South Mainline and also to California.

Transportation service will be provided by utilising existing capacity available on EPNG鈥檚 North Mainline, along with undertaking certain system upgrades to enhance deliverability to the South Mainline. In order 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. This project is included in KMP鈥檚 US$ 15.4 billion backlog, and the associated volume was included in the 4.8 billion ft³ of executed and pending firm transport commitments described in KMP鈥檚 Q2 earnings release.

Adapted from press release by

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