Howard Midstream Energy Partners LLC has received enough support to build a joint venture pipeline from southern Texas across the border to Mexico. The company announced Aug. 12 that a successful open season will allow construction will move forward on the Nueva Era Pipeline, a 50-50 joint venture between Howard Energy and Mexico-based energy and services firm Grupo Clisa.
The Nueva Era Pipeline will connect Howard Energy’s existing Webb County Hub directly to Escobedo, Nuevo León, Mexico, and to the Mexican National Pipeline System (Sistema de Transporte Nacional Integrado) in Monterrey, Mexico. Mexico’s Federal Electricity Commission (CFE) will be the foundation shipper on the approximately 200-mile, 30-in. pipeline and will transport 504 million cubic feet per day (MMcf/d) of natural gas on the system for a 25-year term to help fuel combined-cycle power plants in Escobedo, near Monterrey.
To accommodate the additional interest received in the initial open season, Howard Energy will conduct a new open season for expansion capacity on the Nueva Era Pipeline, which began Aug. 12 and will run until Sept. 15. The company already has received a presidential permit from the Federal Energy Regulatory Commission (FERC) that allows for the expansion of the pipeline up to 1.12 billion cubic feet per day (Bcf/d) of capacity.
“This agreement with the CFE marks an important step not only for Howard Energy Partners, but for the energy and midstream industry as a whole, as cross-border relationships and business between the U.S. and Mexico continue to grow,” said Mike Howard, chairman and CEO of Howard Energy Partners. “By developing a new pipeline that will directly connect Monterrey’s industrial demand center with South Texas natural gas production, we not only help the CFE significantly reduce energy costs to its customers, we create a whole new market for our customers. It is a win-win situation.”
The project has been in development for several years, Howard added, crediting its success to the company’s relationship with Grupo Clisa, whose experience and guidance he said has been “instrumental” for the cross-border pipeline.
“With this project we commit ourselves to the development of a cleaner and more economical energy source to meet the needs of Mexican consumers,” said Carlos Martínez Longoria, director of strategic planning of Grupo Clisa. “At Grupo Clisa, we look to create strategic partnerships and alliances with important companies such as Howard Midstream Energy Partners that promote cooperation and regional economic competitiveness.”
In a statement made on Aug. 6, the CFE, Mexico’s government-owned electric power generation company, expressed that the Nueva Era Pipeline “provided the best economic conditions” for moving natural gas directly to the industrial demand center in Mexico. By connecting directly to Howard Energy’s strategically located assets in Webb County, the Nueva Era Pipeline will connect the wellhead directly to the consumer, providing a new, more direct route for South Texas natural gas to enter Mexico compared to the more traditional routes by which the natural gas must move farther south before crossing the border. According to the Railroad Commission of Texas, Webb County is the state’s largest producer of natural gas.
Subject to meeting all regulatory requirements and finalizing definitive agreements, construction on the Nueva Era Pipeline is expected to begin in early 2016, with an in-service date of June 2017. The potential expansion will not affect the project schedule. Howard Energy will manage all project construction and operations upon completion.