TransCanada Awarded Contract to Build $1 Billion Natural Gas Pipeline in Mexico

TransCanada Corporation (TSX, NYSE: TRP) (TransCanada) today announced that its Mexican subsidiary, Transportadora de Gas Natural del Noroeste, has been awarded the contract to build, own and operate the El Encino-to-Topolobampo Pipeline (Topolobampo Pipeline) in Mexico by the Comisión Federal de Electricidad (CFE), Mexico's federal power company.

TransCanada expects to invest approximately US$1 billion in the Topolobampo Pipeline project, which is supported by a 25-year natural gas transportation service contract with the CFE. The 30-inch diameter pipeline will be approximately 530 kilometres (329 miles) long and have contracted capacity of 670 million cubic feet per day.  It is anticipated the project will be in-service in the third quarter of 2016.

"Mexico's government is engaged in a comprehensive plan to expand the nation's electrical grid and generating capacity, and much of that generation will be natural gas-fired," said Russ Girling, TransCanada's president and chief executive officer.  "This award is another example of TransCanada's commitment to help develop Mexico's energy infrastructure in a sustainable and cost-efficient manner."

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The Topolobampo Pipeline begins in El Encino, in the state of Chihuahua, and terminates in Topolobampo, in the state of Sinaloa, interconnecting with other pipelines that are expected to be built as a result of separate bid processes by the CFE.  

"This project is a response to a CFE invitation to bid. As Mexico makes the transition from fuel oil to cleaner-burning natural gas, there will be additional opportunities for TransCanada," Girling said. "These opportunities are consistent with our strategy to build long life infrastructure, underpinned with long-term contracts."

Girling said TransCanada has welcomed the opportunity to bid on a number of CFE pipeline proposals through a transparent, fair and comprehensive process. TransCanada has already built and is operating the Guadalajara and Tamazunchale pipelines and will soon break ground on a Tamazunchale Pipeline Extension.

By. Carin Hall