Canadian energy company TC Energy Corp completed the $2.5 billion Sur de Texas pipeline from Texas to Mexico.
The project is part of the biggest gas pipe between Mexico and the United States and will increase Mexico’s capacity to import cheap U.S. gas by about 40 percent, TC Energy said on Tuesday.
Along with liquefied natural gas (LNG) exports, pipeline exports to Mexico are expected to be the primary sources of growth for U.S. gas demand over the next decade.
Sur de Texas will help Mexico’s power and industrial sectors meet their growing demand for gas and will also supply commercial and residential consumers.
The 770-kilometer pipeline, which mostly runs underwater in the Gulf of Mexico, is the Mexican half of a project designed to deliver 2.6 billion cubic feet per day (bcfd).
One billion cubic feet is enough gas for about 5 million U.S. homes for a day.
Sur de Texas connects with Canadian energy company Enbridge Inc’s $1.6 billion Valley Crossing pipe from Texas in the Gulf of Mexico. Enbridge said it completed the 2.6 bcfd, 165-mile pipe in October 2018.
When TC Energy landed the contract with Mexico’s Comision Federal de Electricidad (CFE) to build the $2.1 billion Sur de Texas, it expected to complete the project in late 2018.
Delays, however, boosted the project’s cost to around $2.5 billion. TC Energy said in February it expected its 60 percent share of the project would cost about $1.5 billion.
TC Energy built Sur de Texas with California energy company Sempra Energy’s IEnova subsidiary.
At the end of 2018, there were 20 pipelines in service between the United States and Mexico with capacity to transport up to 11.1 bcfd of gas south.
The amount of gas actually flowing from the United States to Mexico, however, peaked at 5.5 bcfd in January, according to data provider Refinitiv.
Analysts said delays in building infrastructure on the Mexican side of the border have so far prevented U.S. exports from rising further.
With Sur de Texas now in service , the amount of gas flowing through the Petronilla compressor in Nueces County in South Texas increased to 0.275 bcfd on Wednesday from an average of 0.091 bcfd over the past month, Refinitiv said. Petronilla is one of the points that show increased flows in South Texas.
(Reporting by Scott DiSavino Editing by Marguerita Choy)