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Final Puzzle Piece of Wahalajara Natural Gas System Online

By Cas Biekmann | Tue, 10/06/2020 - 15:51

CFE announced on Oct. 2 that Fermaca’s 886 MMcf/d Villa de Reyes-Aguascalientes-Guadalajara (VAG) pipeline system has entered full operation. VAG, constructed and operated by Mexico’s Fermaca, is considered the final puzzle piece of the system known as Wahalajara. The system transports gas from Texas’ Permian Basin in Waha to Guadalajara’s industrial center, allowing large parts of Mexico access to cheap natural gas. CFE hailed the project as a boon for energy sovereignty.

The main customer for the Wahalajara system is CFE, having signed a long-term, take-or-pay firm transport capacity agreement with Fermaca. The agreement was reported to have been renegotiated last year, which is part of the government’s efforts to revise contracts signed during the previous administration. CFE noted that the system will allow the region access to some of the cheapest natural gas available worldwide. The VAG pipeline, 388km in length and 36in in diameter, supplies gas to San Luis Potosi, Aguascalientes, Guadalajara and their respective surrounding areas. By making smart use of interconnections, such as the newly completed Zapotlanejo pipeline connected to the Integrated National Natural Gas Transportation and Storage System (Sistrangas) even further access has been created: areas such as Colima, Michoacan and central Mexico all stand to benefit as well. Zapotlanejo itself is 5km long and has a capacity of 535 MMcf/d, according to Energía a Debate.

Gas coming from the VAG pipeline will also serve to supply the private sector, including companies like steelmaker ArcelorMittal, representing US$456 million in revenue for CFE. Fisterra Energy’s Tierra Mojada power plant, which in turn sells its energy to CFE, is also supplied by the pipeline through Zapotlanejo.

Wahalajara will further save CFE money through its new supply to the utility’s Manzanillo complex. Displacing the previously expensive Liquefied Natural Gas imports at the complex will save CFE US$154 million per year. The Salamanca, Salamanca Cogeneración and Valle de México powerplants represent a further saving of US$28 million, reported NGI.

 “As a 100 percent Mexican company, we are committed to the well-being of Mexicans and the economic growth of our country. Our natural gas pipeline network allows us to bring development, energy for industry, opportunities for growth and better living conditions for Mexican families,” said Manuel Calvillo, CEO of Fermaca during the press conference.

In Waha, Texas, a cocktail of factors has led to increasing natural gas stock as demand shrank. The export outlet will therefore give the Permian Basin an outlet for its natural gas and stabilize its prices, which have been increasingly volatile during the pandemic. In general, Mexico has continued to increase its imports of US natural gas, despite months of pandemic-induced lower energy demand. In September, imports reached a record high of 6.2 Bcf/d, NGI reported.

The data used in this article was sourced from:  
CFE, NGI, Energía a Debate, Expansión
Cas Biekmann Cas Biekmann Journalist and Industry Analyst