Fernando Calvillo
Chairman Of The Board At Fermaca
View from the Top

Compression And Cogeneration To Meet Rising Demand

Mon, 02/25/2019 - 15:59

Q: Why is Fermaca’s cogeneration business the best option for its clients?
A: Fermaca expanded its business to natural gas compression with a cumulated operational 170,000HP compression capacity at its Chihuahua and Soto la Marina compression stations. Additionally, it is developing close to 90,000HP of compression in La Laguna, Aguascalientes and San Luis Potosí. Our compression investments respond to our long-term vision and the anticipated increase in natural gas demand. Fermaca wants to continue providing high-quality, cost-competitive natural gas as established in its long-term supply contracts with companies such as CFE. Fermaca has 2,150km of pipelines with free capacity, including Roadrunner, Tarahumara, Palmillas-Toluca and El Encino-La Laguna. We are also developing La Laguna-Aguascalientes and Villa de Reyes-Guadalajara. Cogeneration is the next step. Combining our steam surplus and our available turbines with additional investments, we could provide an estimated power generation capacity of 100MW based on the assets set to be operational by April 2019. Upgrading our natural gas corridor to an energy corridor provides the opportunity to transform and adapt natural gas to several other applications such as petrochemical, fertilizing or kWh production.
Q: How is Fermaca preparing its transition from pipeline developer to operator?
A: The state of Texas operates close to 90,000km of pipelines. Mexico’s current natural gas pipeline infrastructure, including the projects the last administration developed, amounts to 20,000km of pipelines. Regardless of the results of the presidential elections, Mexico’s 130 million population will still require energy. Projecting a conservative scenario of 1.5 percent GDP growth over the next six years, the country will need an additional 55,000MW of energy. The only way to supply that additional amount to gas-fired facilities is natural gas. The drawbacks of the alternatives make natural gas the ideal candidate. On the consumption side, the US spends US$2.75 per 1 million BTU produced, while Mexico spends US$4. Connecting our pipeline system to the US system makes more sense than losing money in producing gas. In this context, building pipelines will remain a priority. CENAGAS’ national pipeline system, SISTRANGAS, is capped due to the lack of investment from PEMEX and CFE, creating the need for more open seasons. This places Fermaca in an ideal position to partner with CENAGAS.
Q: What are Fermaca’s ambitions in gas transportation from southern Texas to central-western and southeast Mexico?
A: Our asset business is looking to set a foothold in an increased number of interconnections within SISTRANGAS to extend our gas distribution capacity. We want to distribute gas further down in Mexico’s central belt and southern regions and connect our 1,164km-long operational system, with a transport capacity of 3,086MMcf/d, to our 127km long Palmillas-Toluca pipeline.
Q: What key features does Fermaca look for in potential partners?
A: Our international expansion in the US shows how Fermaca chooses its partners and closes successful business partnerships. To date, we have made investments in the US in the vicinity of US$600 million, through our joint venture with ONEOK. The rationale behind it was finding a reliable partner that understands the intricacies of building pipes, permitting procedures and reducing risks, which ONEOK provided. In Mexico, Fermaca’s parent company, BRYCSA-BCYSA, built a market presence that spans 50 years. This lengthy expertise enables us to negotiate rights of way within a strict budget and to provide procurement procedures. The results of CFE’s tenders demonstrate that Fermaca provides Mexico’s most competitive OPEX, CAPEX and NPVs. Efficiency and competitiveness are key parts of the game, which our full in-house capacity on the engineering and procurement side can provide. The EPC segment of our projects is outsourced to companies comfortable within that particular stage of the project.