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The Deal between TC Energy and Mexican Utility is Concluded to Build $4.5 Billion Gas Pipeline
08/30/2022
TC Energy Corp. had reached a deal with a Mexican state utility to build a $4.5 billion natural gas pipeline, according to a company release on Aug. 4.
The natural gas to Mexico's central and southeast regions will be furnished by the 1.3 bcfd offshore Southeast Gateway Pipeline, the Canadian pipeline operator said.
Due to the most serious trade spat with Mexico over the United States-Mexico-Canada Agreement, Canada and the United States made the deal with Comisión Federal de Electricidad (CFE).
TC Energy and CFE in conjunction with the alliance also took the final investment decision (FID) on the 715-km Southeast Gateway. The pipeline will serve southeast Mexico, starting onshore in Tuxpan, Veracruz, then proceeding offshore, making landfall at Coatzacoalcos, Veracruz, and Dos Bocas, Tabasco.
TC Energy noticed that sanctioning the pipeline would expand its secured capital program to $33 billion and could complete its 2021-2026 adjusted EBITDA uptick outlook.
Additionally, a senior foreign ministry official in Mexico Roberto Velasco claimed last month that TC Energy had approved to build a $5 billion gas pipeline in the Gulf Coast state of Veracruz.
Subject to regulatory approvals from Mexico’s economic competition commission and its Regulatory Energy Commission, CFE will have the opportunity to hold a 15% equity interest in TGNH. Regulatory approvals related to CFE’s equity participation are expected to take up to 24 months.
TC Energy and the CFE have agreed to combine previous transportation service agreements (TSA) executed between TC Energy’s Mexico-based subsidiary, Transportadora de Gas Natural de la Huasteca (TGNH), and CFE in connection with shared natural gas pipelines in central Mexico under a single, US dollar-denominated take-or-pay agreement extending through 2055. This new TSA will also govern related new infrastructure projects to be developed.
These two companies also agreed to mutually finish presently suspended international arbitration (OGJ Online, Nov. 8, 2021) between the two related to the 886-MMcfd Tula-Villa de Reyes and Tuxpan-Tula (TXTL) pipelines, with TC Energy earning a return on and of all previous capital invested. TC Energy and CFE have also decided to work together to complete TXTL’s central segment, subject to fourth-quarter 2022 FID.
TC Energy builds and operates safe and reliable energy infrastructure. This includes 93,300 km (57,900 miles) network of natural gas pipelines, which supplies more than 25 percent of the clean-burning natural gas consumed daily across North America to heat homes, fuel industries, and generate power.
Also, the existing oil & liquids pipeline infrastructure, approximately 4,900 km (3,045 m), connects Alberta crude oil supplies to U.S. refining markets in Illinois, Oklahoma, Texas, and the U.S. Gulf Coast. The Keystone Pipeline System, the largest liquids pipeline asset, moves approximately 20 percent of western Canadian crude oil export to key refining markets. The company has located storage terminals in Canada and the U.S., including Hardisty, AB.; Cushing OK; and Houston, TX.
Meanwhile, TC Energy’s portfolio of energy infrastructure assets includes investments in seven power generation facilities with a combined generating capacity of approximately 4,200 megawatts (MW) – enough to power more than 4 million homes, and moreover, approximately 75 percent of our power capacity is emission-less.
If you are further interested in learning about the deals in the US or about upstream/midstream M&As, energy companies, and their assets, please, contact our Houston sales office or SCHEDULE A DEMO to learn how Rextag can help you leverage energy data for your business. Tel. +1 713-203-3128 Email: treitmeier@hartenergy.com
Potential Deal for $5 Billion: Tug Hill and Quantum Energy Seek Sale
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Undisclosed industry sources said that THQ Appalachia I LLC (Tug Hill and Quantum Energy) is seeking a sale of the U.S. natural gas producer for more than $5 billion, including debt. Mainly operating in the Marshall and Wetzel counties in West Virginia, THQ Appalachia has net production of around 760 MMcf/d. Despite volatility in commodity markets which has made the valuation of energy producers tougher, THQ Appalachia is anticipating more than $5 billion due to the worth of its existing production and the possible value of its undeveloped acreage, the sources said on June 17. Additionally to purchasing THQ Appalachia, possible bidders in the sale process also have the opportunity to buy XcL Midstream, the pipeline firm that moves the company’s gas to market and has the same CEO as in Tug Hill. If the same buyer chooses to purchase XcL, the deal consideration will increase further. However, the anonymous sources admitted that the sale depends on the market conditions and is not guaranteed since Tug Hill and Quantum could ultimately decide to retain some or all of THQ Appalachia and XcL’s assets. Tug Hill and Quantum refused to comment on these statements and XcL did not respond to a comment request.
Shell's Midstream Assets in TX and LA (Gulf area)
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On October 19, Shell USA completed the almost $1.96 billion acquisition of the master limited partnership. The company paid $15.85 in cash for every common unit representing limited partner interests in SHLX not held by Shell USA or its affiliates. A subsidiary of Shell USA has 269,457,304 SHLX common units or roughly 68.5% of SHLX common units.
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Enbridge acquired Tres Palacios natural gas storage facility in Texas for $335 million, adding approximately 35 Bcf of natural gas storage to their portfolio. The facility uses salt caverns for storage and has a gas header pipeline system that spans 62 miles and links to 11 major gas pipelines. Crestwood Equity Partners LP intends to divest its interests in Tres Palacios by the second quarter.
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The U.S. natural gas pipeline network is a complex system of pipelines that transport natural gas from production areas to consumers across the country. The pipeline network consists of three main types of pipelines: gathering pipelines, transmission pipelines, and distribution pipelines. Gathering pipelines are small-diameter pipelines that transport natural gas from production wells to processing facilities or larger transmission pipelines. Transmission pipelines are large-diameter pipelines that transport natural gas over long distances, sometimes across multiple states. Distribution pipelines operate at low pressure and are located in or near urban areas. They are often referred to as "utility pipelines" because they are typically owned and operated by local gas utility companies.
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Diamondback Energy, an independent oil and gas company, has successfully completed the acquisition of Lario Permian, marking the closure of two major deals in the fourth quarter of 2022. The company purchased two private operators in the Midland Basin for approximately $3.3 billion.