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Eagle Ford shale to benefit from $3.6B pipeline projects

Eagle Ford shale producers are benefiting from Mexico’s need for more electricity. Mexico’s state-owned Federal Electricity Commission recently awarded $3.6 billion in pipeline projects to TransCanada, Spectra Energy and others.

The projects will transport shale gas from Texas to Mexico to help meet the country’s growing electricity needs. For decades, Mexico’s electric power infrastructure has been hampered by inefficiency and short supply.

TransCanada announced, along with a Mexican joint-venture partner, that it will construct and operate a $2.1 billion natural gas pipeline in Mexico. The Sur de Texas pipeline will ship natural gas into Mexico’s main gas transmission system from both U.S. shale plays and offshore sources. Its route will deliver natural gas from the border through the Gulf of Mexico and into Tuxpan.

The pipeline project will double TransCanada’s natural gas capacity in Mexico. The company currently owns and operates five other pipelines in the country.

“We are extremely pleased to further our growth plans in Mexico with one of the most important natural gas infrastructure projects for that country’s future,” TransCanada president and CEO Russ Girling said in a press release. “This new project brings our footprint of existing assets and projects in development in Mexico to more than $5 billion, all underpinned by 25-year agreements with Mexico’s state power company.”

Houston-based Spectra Energy was awarded a $1.5 billion contract to build a pipeline from Nueces County, Texas, to the Mexican border at Brownsville. The Texas portion of the pipeline is planned to be completed in 2018 and will transport up to 2.6 billion cubic feet of natural gas a day.

“Spectra Energy is pleased to have secured the bid to build and operate this critical infrastructure, which will provide clean-burning and reliable natural gas to support Mexico as its electric generators shift away from fuel oil and imported LNG,” Spectra President of U.S. Transmission and Storage Bill Yardley said.

Mexico’s strategy is to become more reliant on natural gas. The pipelines allow more natural gas from the United States – where there is a surplus – to flow into Mexico, where demand for the resource is growing.

Related: Mexico to offer farm-out on deep water field in Gulf.

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