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FERC OKs construction on Valley Crossing project to deliver gas into Mexico

Washington — The US Federal Energy Regulatory Commission has authorized construction of Valley Crossing Pipeline's 2.6-Bcf/d Border Crossing project to set up natural gas deliveries to Mexico.

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The cross-border pipeline would comprise about 1,000 feet of 42-inch-diameter line in the Gulf of Mexico from a point near Cameron County, Texas, to the international boundary with the state of Tamaulipas in Mexico.

It would connect to the Valley Crossing Pipeline under construction in Texas and the 500-mile Sur de Texas-Tuxpan pipeline in Mexico to be built by Infraestructura Marina del Golfo, a joint venture between TransCanada and Sempra Energy's IEnova.

From the border, Sur de Texas will take an underwater route down the Mexican Gulf Coast for delivery into Altamira and Tuxpan to supply new and converting power generation plants owned by the Comision Federal de Electricidad in the states of Tamaulipas and Veracruz.

There could be delays in incremental exports to Mexico materializing via Valley Crossing once facilities are placed in-service, as construction of Sur de Texas is not expected to be completed until at least November 2018.

Mexican pipeline construction delays have not been unusual in the past year and common themes among the known delays have been land-rights conflicts and injunctions filed by indigenous groups.

S&P Global Platts Analytics forecasts Texas exports to Mexico will average 4.8 Bcf/d in 2019, or 0.8 Bcf/d above the expected 2018 average.

FERC, in its delegated order (CP17-19), also approved Valley Crossing's request to install a subsea tie-in instead of an above-water connection to reduce total environment footprint and reduce potential stress on the pipeline.

Valley Crossing, owned by Enbridge's Spectra Energy Partners unit, filed an application in November 2016 asking FERC for an order issuing a presidential permit and a certificate order for the project.

FERC staff then issued a favorable environmental assessment in June 2017, saying the project would not cause significant damage to the environment. The commission granted the request in October 2017.

--Edited by Kevin Saville,