Sierrita Lateral Project
Updated Feb. 8, 2013
In mid-November 2012, El Paso Natural Gas (EPNG), owned by Kinder Morgan Energy Partners, L.P. (NYSE: KMP) and Kinder Morgan, Inc. (NYSE: KMI), announced that it entered into a 25-year transportation precedent agreement in connection with plans to build a new lateral pipeline in Arizona to serve customers in Mexico with supplies of clean, efficient natural gas. This natural gas infrastructure project would not only benefit Arizona and the United States, but also help support cross-border energy development and a cleaner regional environment. The agreement supports the ongoing development of an approximately $200 million lateral pipeline, which would create new jobs in Arizona, and also provide a market for transporting abundant, low-priced U.S. gas production to Mexico. In addition, the project will help Mexico meet its environmental goals of converting existing fuel-oil-fired power generation plants to efficient, clean burning natural gas and also having natural gas supplies available for new power plants in the future.
Terms call for EPNG, acting through its affiliate Sierrita Gas Pipeline LLC (formerly Sasabe Pipeline Company), to provide approximately 200 million cubic feet per day of firm transportation capacity via a new, 36-inch diameter lateral pipeline that would extend approximately 60 miles from EPNG’s existing south mainlines, near Tucson, Ariz., to the U.S.-Mexico border, terminating at Sasabe, Ariz. The proposed Sierrita Lateral Pipeline would interconnect via a new international border crossing with a new 36-inch diameter natural gas pipeline to be built in Mexico. Subject to regulatory approvals, construction of Sierrita’s proposed lateral pipeline would begin in the first quarter of 2014, with anticipated in-service in September 2014.
Mexico’s Comisión Federal de Electricidad (CFE) awarded two contracts to Sempra International’s Mexican business unit to construct, own and operate an approximately 500-mile (820 kilometers), $1 billion pipeline network connecting the northwestern states of Sonora and Sinaloa. Sierrita’s proposed lateral pipeline would interconnect with this pipeline network. CFE specified that a new U.S. pipeline would be required to terminate at Sasabe and connect existing natural gas transmission infrastructure in the United States to the planned pipeline in Mexico.
When Sierrita initiated the pre-filing process, two potential routes were identified: an eastern route that runs through the Buenos Aires National Wildlife Refuge (BANWR), and a western route that would be routed to avoid the BANWR. The consideration of the eastern route on the BANWR was driven mainly by the fact that the route would be co-located along the existing State Highway 286 and parallel to an existing low voltage power line. However, recognizing the environmental sensitivities and permitting/siting restrictions associated with constructing a pipeline through a national wildlife refuge, Sierrita was committed to working with the BANWR management. After extensive work and consultation with both the local BANWR management, as well as regional and national management of the National Wildlife Refuge System, the BANWR has indicated that it will not find Sierrita’s project compatible with the mission of the refuge, which will effectively deny Sierrita the ability to permit the eastern route. Therefore, Sierrita has determined that the western route, which avoids the BANWR entirely, is the preferred route. Sierrita is committed to working with the landowners and other stakeholders affected by the western route.
Construction and operation of interstate pipelines and related facilities may proceed only after the FERC finds that a proposed project is in the public interest and necessity. The Sierrita lateral also requires a presidential permit, issued by the U.S. Department of State, for an interconnection/border crossing at the international boundary at Sasabe.
On Feb. 7, 2013, the project filed a full certificate application with the FERC and on Feb. 8 filed its presidential permit application.
Information regarding general project topics is also available by calling our toll-free number at 877-598-5263.
Sierrita Lateral Timeline
- April 2012 — Initiated NEPA pre-filing review with the FERC
- Second quarter 2012 — Began environmental surveys
- February 7-8 — Filed full FERC application and presidential permit application
- Fourth quarter 2013 — FERC approval/ State Dept. presidential permit approval anticipated
- First quarter 2014 — Construction begins (subject to regulatory approvals)
- September 2014 — Anticipated project in service
Kinder Morgan Energy Partners, L.P. (NYSE: KMP) is a leading pipeline transportation and energy storage company and one of the largest publicly traded pipeline limited partnerships in America. It owns an interest in or operates approximately 46,000 miles of pipelines and 180 terminals. The general partner of KMP is owned by Kinder Morgan, Inc. (NYSE: KMI). Kinder Morgan is the largest midstream and the third largest energy company in North America with a combined enterprise value of approximately $100 billion. It owns an interest in or operates approximately 75,000 miles of pipelines and 180 terminals. Its pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store petroleum products and chemicals and handle such products as ethanol, coal, petroleum coke and steel. KMI owns the general partner interest of KMP and El Paso Pipeline Partners, L.P. (NYSE: EPB), along with limited partner interests in KMP and EPB and shares in Kinder Morgan Management, LLC (NYSE: KMR). For more information please visit www.kindermorgan.com.