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Small gas line would support Spectra's big plans for Mexico

A developer applied to FERC for a permit to build a small natural gas pipeline that would give gas on Spectra Energy Corp's Texas Eastern Transmission LP system "a seamless path for transportation" to a Spectra border-crossing facility between Texas and Mexico.

Pomelo Connector LLC, a subsidiary of Canyon Midstream Partners II LLC, submitted an abbreviated application to build and operate the 14-mile, 30-inch-diameter pipeline in Nueces County, Texas. The line would run from the upcoming Petronila station on Texas Eastern to an interconnection near Agua Dulce, Texas, with Spectra Energy's proposed Valley Crossing Pipeline LLC intrastate project, which would link to the proposed Valley Crossing border facility. The application also asked FERC for authorization to abandon all capacity of the Pomelo pipeline to Texas Eastern on the in-service date. Pomelo asked for a FERC order by October 2017 so the developer could put the pipeline in service by Oct. 1, 2018.

Pomelo said Texas Eastern was supposed to file an amendment to an application for its related South Texas Expansion Project, or STEP, that would allow it to acquire the Pomelo capacity by lease. STEP would increase capacity on the Texas Eastern system by almost 400,000 Dth/d. The amendment did not appear in the FERC library as of the close of business Dec. 29. The Pomelo application was posted in the library after its listed date of Dec. 22.

"The capacity created by STEP and Texas Eastern's lease of the Pomelo Connector Pipeline capacity will ensure that Texas Eastern will be able to provide firm service to [Comisión Federal de Electricidad, or CFE] through a seamless path for transportation from existing receipt points on Texas Eastern to the terminus of the Pomelo Connector pipeline," Pomelo said in its application.

Canyon Midstream Partners II is owned by investment funds managed by Kayne Anderson Capital Advisors LP. According to the application, neither Canyon Midstream Partners II nor Pomelo is affiliated with Texas Eastern or CFE. Pomelo does not own any pipelines but would operate the Pomelo Connector pipeline if it is authorized and becomes a gas company as defined by the Natural Gas Act. (FERC docket CP17-26)

On Nov. 21, a Spectra affiliate applied for a Natural Gas Act certificate and a presidential permit for the 2.6-Bcf/d Valley Crossing gas transportation project between Texas and Mexico. The company asked FERC to issue the certificate by July 3, 2017. The gas going through the border pipeline would be used by CFE to fuel power plants owned by the state-owned electric utility. Valley Crossing also plans to build the Valley Crossing intrastate gas transmission system, which would include about 165 miles of 42-inch and 48-inch pipeline running to the border from the Agua Dulce Hub in Nueces County. (FERC docket CP17-19)

In May 2015, Texas Eastern asked FERC for a certificate for STEP. The estimated $129.8 million project would expand the southern end of the Texas Eastern system and provide service to CFE, the project's anchor customer. CFE plans to subscribe to incremental service on a path that starts near the Texas-Louisiana border and ends at a proposed pipeline system designed by CFE. At the time of the application, the projected in-service date for the STEP project was April 1, 2017.

Among other improvements, STEP would install the Petronila compressor station, add compression at the Blessing compressor station in Matagorda County, Texas, and modify the Mont Belvieu compressor station in Chambers County, Texas, to reduce emissions and allow for bidirectional compression. (FERC docket CP15-499)