TransCanada awarded $400M Mexican pipeline contract
A pipeline worker walks the length of a pipe as work continues Thursday, Oct. 4, 2012, in Sumner, Texas. (AP / Tony Gutierrez)
Published Monday, November 5, 2012 7:38AM EST
Last Updated Monday, November 5, 2012 8:01AM EST
CALGARY -- Mexican authorities have awarded TransCanada Corp. (TSX:TRP) another natural gas pipeline contract.
The Calgary-based company said Monday that it will invest about US$400 million in a 413-kilometre pipeline between El Oro and Mazatlan, near Mexico's west coast.
The 61-centimetre-diameter pipeline has a contracted capacity of 202 million cubic feet a day and is expected to be in service in the fourth quarter of 2016, TransCanada said.
The Mazatlan pipeline will connect with the US$1-billion Topolobampo pipeline that TransCanada was awarded last week.
TransCanada will build, own and operate the two new pipelines through its Mexican subsidiary, Transportadora de Gas Natural del Noroeste.
Both projects are supported by 25-year natural gas transportation service contracts with the Comision Federal de Electricidad, or CFE,
Mexico's federal power company.
"We are pleased to be working with the government of Mexico on new natural gas infrastructure that will bring its cleaner-burning natural gas to businesses and residents," said TransCanada president and CEO Russ Girling.
"These new projects build on our experience developing safe and reliable pipelines in Mexico and across North America."
TransCanada already has one of North America's largest networks of gas and oil pipelines, including two natural gas lines already operating in central Mexico. The company built, owns and operates the Guadalajara and Tamazunchale natural gas pipelines in central Mexico and will soon break ground on a Tamazunchale pipeline extension.
Besides is network of some 68,500 kilometres of natural gas pipelines that tap into virtually all major gas supply basins in North America, TransCanada is also developing one of North America's largest oil delivery systems, including the controversial Keystone XL pipeline designed to transport Canadian crude to refineries on the Texas Gulf Coast.
The company began work this summer on a US$2.3-billion crude pipeline connecting an oil storage hub at Cushing Okla., to Texas refineries that is expected to start up in 2013. The Gulf Coast pipeline was initially part of TransCanada's $7.6-billion Keystone XL proposal but has been held up by political and environmental wrangling in the United States.
Meanwhile, TransCanada is also one of the continent's largest providers of gas storage and related services with approximately 380 billion cubic feet of storage capacity and has interests in more than 10,900 megawatts of power generation in Canada and the United States.