Mexico’s southeast natural gas project dates, Wahalajara signals mixed

• Developer says Cuxtal pipeline delayed
• Unclear if August deadline for Cempoala compression station realistic
• Leona Vicario hub construction may face delays due to deserted tenders
• Flow data, sources lead to mixed expectations for Fermaca pipes’ start

MEXICO CITY AND HOUSTON (ICIS)–Despite progress made on key natural gas projects for Mexico’s Yucatan peninsula, uncertainty remains around technical aspects and in-service dates, uncertainty that may delay increased south Texas gas flows to Mexico as Wahalajara provides mixed signals.

The 16km Cuxtal pipeline connecting the Sistrangas grid to French major ENGIE’s Mayakan pipe in the Yucatan was scheduled for August completion, but an ENGIE spokeswoman said on 14 July it would likely be delayed. She said their construction teams continue to work on the main Cuxtal line and started work on its metering station.

The project began construction 31 January and is expected to facilitate an increase in gas flows from south Texas to southeast Mexico.

“We are striving to regain time lost to [coronavirus] emergency measures, and we hope to be able to report successful completion of the project soon,” the spokeswoman said.

The reconfiguration of the Cempoala compression station upstream of Cuxtal would not be enough on its own to bring gas from Texas to the peninsula as the Mayakan line is disconnected from the Sistrangas.

CEMPOALA
It is unclear whether the upgrade to the Cempoala compression station, a project developed by TSO CENAGAS, would come online in August as stated in a 19 June session of the TSO’s most recent public consultation.

A government official consulted earlier this year had said the project would enter service in June. No information has been provided on why that date was pushed back. CENAGAS did not respond to comment.

While the first phase of the reconfiguration was completed in the first quarter of last year, the second phase, which entails the installation of turbo compressors to enable transport of smaller amounts of gas, is incomplete.
Completion of the second phase would enable more than 700 million cubic feet (mcf)/day to be sent south and more than 200mcf/day to Mexico’s central region, aided by flows from the Sur de Texas-Tuxpan pipe.

Works tendered to upgrade Cempoala’s sole power substation, which was described as faulty and about to reach the end of its useful life, were already awarded. The contract became effective 21 May and expires on 31 December. Sources previously said this project may help the reconfiguration but that the latter is likely not dependent on the substation upgrade.

LEONA VICARIO HUB
Developed by CENAGAS’ transportation unit, the Leona Vicario hub entails the construction of a 2km pipeline between the Cactus gas metering station, in Chiapas state, near the border with Tabasco state, and the Cuxtal interconnection. CENAGAS officials said in June the hub could enter service as early as this year. However, one development may mean slight project delays.

A tender to purchase and deliver materials for the pipeline was declared deserted on 11 June. It remains to be seen whether this tender will be relaunched or if CENAGAS will look for other options. Funds for the project still appear earmarked in the most recent version of the TSO’s 2020 acquisition programme.

A separate tender to provide steel pipes for the line was also declared void on 29 May. The contract is now set to be directly awarded to a provider whose name is still not publicly known.

In addition to being a key project for supplying gas to the Yucatan peninsula, the hub would also increase gas access in Tabasco and could eventually connect to the Dos Bocas refinery. The model to supply potential users will not be announced until the infrastructure is complete, a government official recently told ICIS.

It is still unclear whether the hub needs to be operational before the Cuxtal interconnection can operate.

WAHALAJARA
Fermaca made an upward adjustment to July flows on the company’s electronic bulletin board (EBB) for the Tarahumara pipeline.
Gas market sources were divided this week on expectations for the start of the next lines of Fermaca’s so-called Wahalajara system.

Tarahumara EBB posting comparisons show Fermaca revised all gas flow figures from 1 July up by about 63 million cubic feet (mcf)/day, which may be an indication of the potential for increased activity in downstream pipelines such as the El Encino-La Laguna pipeline. That line’s EBB recorded a short-lived resurgence in flows to CFE’s Lerdo power plant from 8 to 10 July.

No activity has yet been posted for the La Laguna-Aguascalientes line, which sources previously said they expected could be packed and tested by the end of July. Expectations were more mixed as the end of the month nears.

One source said Fermaca is supposed to start adding linepack to increase pressure on the lines in preparation for flows in the “near future” while another said they expected further delays with anchor customer state utility CFE holding out on accepting the project as completed by witholding commercial operation date (COD) paperwork. The source said they understood CFE and Fermaca have had an ongoing dispute preventing the full start of Wahalajara operations and called it ‘deja vu’ due to its similarity with the dispute seen between TC Energia and CFE ahead of the start of the Sur de Texas-Tuxpan submarine pipe.

Other sources have expressed similar ideas since the end of 2019, but no concrete evidence of the dispute has yet become available. Neither CFE or Fermaca responded to comment.  Angeles Rodriguez and Claudia Espinosa