ONEOK Partners and Fermaca to build Export Natural Gas Pipeline from West Texas to Mexico

ONEOK Partners LP has recently announced that it has entered into a 50-50 joint venture with a subsidiary of Fermaca, a Mexico City-based natural gas infrastructure company, to construct a pipeline that would transport natural gas from the Permian Basin in West Texas to Mexico.

The Roadrunner Gas Transmission pipeline project extends from ONEOK Partners' ONEOK WesTex Transmission natural gas pipeline system at Coyanosa, Texas, west to a new international border-crossing connection at the USA and Mexico border near San Elizario, Texas, where it will connect with Fermaca's Tarahumara Gas Pipeline. 

The project, to be constructed in phases, includes approximately 200 miles of new, 30-inch diameter pipeline currently designed to transport up to 640 million cubic feet per day (MMcf/d) of natural gas, with up to 570 MMcf/d to be transported to Mexico's growing markets.

Precedent agreements representing the initial design capacity have been executed with the Comisión Federal de Electricidad (CFE), Mexico's national electric utility, and a subsidiary of Fermaca. All transportation agreements will be firm (take-or-pay) and have a term of 25 years.

The first phase of the pipeline project for 170 MMcf/d of available capacity is expected to be completed by the first quarter 2016. The second phase, which will increase the pipeline's available capacity to 570 MMcf/d, is expected to be completed in the first quarter 2017. The third and final phase of the project is expected to be completed in 2019 and will increase available capacity on the pipeline to 640 MMcf/d.

ONEOK Partners will manage the construction of the project and will be the operator of the pipeline upon its completion. The estimated cost of the project is approximately US$450 million to US$500 million.

Since Partners Group, investor in Fermaca, raised more than US$500 million in 2015 in additional equity to support the expansion of the company, Fermaca has been awarded for the development of several gas projects by the Mexico's Comisión Federal de Electricidad (CFE), such as Villa de Reyes-Aguascalientes-Guadalajara gas pipeline and La Laguna-Aguascalientes gas pipeline projects.

Terry K. Spencer, president and chief executive officer of ONEOK Partners, said:

"We are pleased to partner with Fermaca on this strategic pipeline project and about the opportunity to add to our extensive 36,000-mile integrated network of natural gas and natural gas liquids pipelines. ONEOK Partners' strategically integrated assets position us well to provide this service to the CFE and the expanding natural gas markets in Mexico. We look forward to building a long-term, strategic relationship with the CFE and to this project meeting the ongoing demand needs of the large natural gas consumers in Mexico."

Manuel Calvillo Alvarez, chief operating officer and executive vice president of Fermaca, added:

"The signing of this joint venture agreement with ONEOK Partners is another key step in Fermaca's plans to extend its network of gas pipelines across Mexico and into the USA. A confluence of factors, including ambitious growth targets, a favorable regulatory and political framework, and an abundance of planned projects mean that it is a great time to be investing in the build-out of natural gas infrastructure in and around Mexico. In ONEOK, we have found a partner that recognizes the Mexican opportunity, and we really look forward to working with them."