A subsidiary of Kinder Morgan, Inc. (KMI) has signed a joint venture (JV) letter of intent (LOI) with a subsidiary of the TrailStone Group to form a Mexican natural gas marketing company. The JV between KMI and TrailStone subsidiaries will combine North American gas supply and transportation to provide competitively priced gas supply to industrial markets and power generators in the Monterrey area and to other markets that can be accessed via the national system of gas pipelines to be owned and operated by CENAGAS. The JV will be managed and operated by TrailStone and, subject to regulatory approvals, is expected to be operational by 1Q16. The companies involved are actively pursuing and engaging in conversations with US producers and end users in Monterrey, and customers connected to the Mexican national grid. The JV will provide these customers with a natural gas supply package that can include Henry Hub or Houston Ship Channel-based pricing alternatives alongside swing and storage services.
“The marketing company will provide a convenient and efficient option for end users in the Monterrey area and other regions of Mexico to benefit from low cost US natural gas under the new open access regulations that will become effective in Mexico in 2016,” said Larry Bell, Kinder Morgan Natural Gas Midstream Vice President of Marketing and Transportation. “Pending signed agreements, the JV will market capacity allocated to a TrailStone subsidiary on KMI’s Mier-Monterrey expansion. Our Texas intrastate system will provide transportation, storage and gas supply services in the US in support of the JV, and benefit from increased utilisation of its existing assets.”
“This JV is a significant building block in the expansion of TrailStone’s physical commodity trading and logistics platform,” said TrailStone Chief Executive Officer David Silbert. “We are excited to further develop our strategic relationship with Kinder Morgan, which is one of the most prominent and proven energy companies in North America.”
Pending execution of the formal JV agreement and commitments to sell gas through the Mexican marketing company, Kinder Morgan will commence its Mier-Monterrey expansion, which will consist of adding compression and/or looping KMI’s existing Mier-Monterrey pipeline system from the Mexico-US border to Huinalá, Nuevo León, Mexico. The expansion could be completed by 4Q17 and will provide up to 200 million ft3/d of incremental capacity into the Monterrey area. Kinder Morgan can further expand the capacity of the system by up to an additional 500 million ft3/d, if the demand exists. Customers subscribing to capacity on the additional expansion will have access to Texas pipeline hubs and out of region supply, via firm transport on Kinder Morgan’s existing Texas intrastate system. Kinder Morgan will also expand its intrastate system to accommodate the desired capacity.
“We received interest in our binding open season from numerous industrial and power generation consumers and plan to move forward with the project as commitments are obtained,” said Kinder Morgan Natural Gas Midstream President Duane Kokinda. “Potential customers will have options to subscribe for transport capacity on the expansion and source US gas supply on their own, or contract with the JV to have natural gas delivered to their facility in Mexico. The proposed project utilises existing rights of way and will expand upon our existing assets to provide a low risk and low cost option for additional capacity to transport natural gas produced in the US to the growing industrial and power generating markets in and around Monterrey, Nuevo Leon, and into Mexico’s national grid.”
Kinder Morgan, Inc. subsidiary Kinder Morgan Gas Natural de México S. de R.L. de C.V. owns and operates the 85 mile Mier-Monterrey pipeline, which began service in 2003 and rests between the international border between the US and Mexico in Starr County, Texas, to Monterrey, Mexico. The pipeline connects to a 1000 MW powerplant complex and to the national grid.
Adapted from press release by Francesca Brindle
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/11112015/kinder-morgan-trailstone-form-new-company-1716/