TC Energy Says Mexican Gas Pipeline to Start in May

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--The Southeast Gateway natural gas pipeline in Mexico, designed for peak capacity of 1.3 billion cubic feet per day, will be in service by May 1, TC Energy Corporation (NYSE:TRP) (Calgary, Alberta) announced.

The Canadian energy company said the 444-mile network will interconnect with existing midstream arteries to bolster the natural gas supply in the Yucatan Peninsula.

"Reaching mechanical completion 13 percent under budget on the Southeast Gateway pipeline project is a monumental milestone for the company and for Mexico, and a testament to our unwavering focus on project execution," Francois Poirier, the company's president and chief executive officer, said Friday.

The pipeline originates off the coast of Veracruz, and then makes landfall near Dos Bocas in Tabasco state.

The Southeast Gateway had an estimated project cost of US$4.5 billion. It came out of a strategic alliance formed in 2022 between TC Energy and Mexico's Comision Federal de Electricidad (CFD), or Federal Electricity Commission, that consolidated several assets in Mexico under a dollar-dominated, take-or-pay agreement that runs through 2055. Subscribers to Industrial Info's Global Market Intelligence (GMI) Pipelines Project Database can click here for full detailed reports on the project.

Issuing the statement alongside fourth-quarter results, TC Energy said flows through existing midstream natural gas networks in Mexico averaged 2.7 billion cubic feet per day (Bcf/d). And while that's only about 10% of the flows from its networks in the United States, the company said it set a single-day record on its Sur de Texas pipeline with just over 1.7 Bcf/d on November 20, "highlighting its importance as a key import route for U.S. natural gas production into Mexico."

TC Energy said it expects natural gas demand in Mexico to surge 50% from 2020 levels to reach 12 Bcf/d by the end of the decade. The government of Mexican President Claudia Sheinbaum is working to build up gas-powered networks, plants and other infrastructure to wean itself off imports from the United States.

As evidenced by the 2022 agreement between TC Energy and CFD, those efforts preceded the tariff threat from U.S. Donald Trump on Mexico. Revising the North American Free Trade Agreement during his first stint in office, Trump is now using threats of steep tariffs to pressure countries from Mexico to China. A one-month pause on 25% tariffs on Mexico, however, was announced by Trump earlier this month.

Mexico claims about 12.3 trillion cubic feet in natural gas reserves, though it relies heavily on its northern neighbor for natural gas. Data from IIR Energy show the United States exported about 6.5 Bcf/d to Mexico last week, a level that's comparable to year-ago levels. It produces about 4.7 Bcf/d on its own.

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