Mexico’s CFE Looking for Firm to Develop Natural Gas Pipeline in Baja California

Mexico’s state utility Comisión Federal de Electricidad (CFE) has launched a tender for natural gas transport infrastructure in Baja California state.

CFE is looking for the line to start at either the Sásabe-Guaymas pipeline in Caborca, Sonora or at the SoCal-Ehrenberg interconnection on the El Paso Natural Gas pipeline in Ehrenberg, Arizona. From there, the gas would be directed to gas-fired power plants throughout Baja California.

Gas would originate in the United States. The transport system would need a capacity of 600 MMcf/d and service would be under a levelized rate for 25 years. CFE is looking for at least 280 MMcf/d of the service to start in February 2024. The second phase requiring 320 MMcf/d of additional capacity would be for 2028.

CFE’s international marketing subsidiaries CFE Energía and/or CFE Internacional would serve as the anchor clients on the pipeline. They would look for the best transport rates along with the best technical and operational alternatives in picking a winner, CFE said.

The developers would be responsible for acquiring all the relevant governmental permits and rights of way for route usage.

The pipeline could also be an extension of Infraestructura Energetica Nova’s (IEnova) Rosalito pipeline which links directly with U.S. pipelines, according to Gadex energy consultant Eduardo Prud’homme. It could also serve to feed natural gas needs at the Energía Costa Azul (ECA) liquefaction plant in Ensenada, he said.

Sempra’s 3.25 million metric tons/year (mmty) ECA liquefied natural gas (LNG) Phase 1 terminal is expected online in 2024. A second-phase 12 mmty train could also be developed at the site. 

Baja California is an isolated state in Mexico and sees some of the highest energy rates in the country. In an attempt to bring in more natural gas, CFE started tendering for additional infrastructure.

New Fortress Energy Inc. (NFE) also developed an LNG import terminal in the Baja California Sur port of Pichilingue. NFE supplies 250,000-500,000 gallons (20,000-40,000 MMBtu)/d of LNG to CFE power plants.

Few New Projects

After a massive buildout of natural gas pipelines during the previous administration, there have been few new natural gas transport projects in Mexico in the last three years. But President Andrés Manuel López Obrador’s government has made it a goal to improve natural gas access in the isolated Baja California and Yucatán peninsulas.

In addition to the Baja California pipeline, CFE –along with TC Energy Corp.– have said they are working to develop a new offshore natural gas pipeline to supply the Yucatán Peninsula, which has faced chronic gas shortages due to stagnant domestic production. 

While the project has not yet been sanctioned, each firm has publicly expressed interest, and each has said that the required capital investment could exceed $4 billion if it goes forward.

Other projects include finishing pipelines that have yet to be completed due to community or other objections. These include TC Energy’s long-delayed Tula and Villa de Reyes pipelines, each with a capacity of 886 MMcf/d.

CFE has also previously said it would launch a tender for engineering, procurement and construction of a section of the Guaymas-El Oro natural gas pipeline that has been out of commission since 2017 due to conflict with a local faction of the Yaqui Indigenous tribe. Guaymas-El Oro is part of the 510 MMcf/d Sonora pipeline system owned by IEnova.

Information on how to apply for the Baja California project along with the necessary documents can be found by inquiring at these email addresses: concursos@cfenergia.com and proposals@cfeinternational.com. Electronic registration is open until May 8.