A massive Tex-Mex natgas development: Valley Crossing Pipeline enters service

New Enbridge line connects reliable, plentiful Texas supply with growing Mexican demand

It’s a story of peaks and valleys.

Mexico’s appetite for natural gas continues to peak. And the Valley Crossing Pipeline will help that trend continue.

Last week, Enbridge’s Valley Crossing Pipeline—a 168-mile line running from Agua Dulce, Texas, to the Gulf of Mexico east of Brownsville—entered service, with the capacity to move up to 2.6 billion cubic feet a day (Bcf/d) of natural gas south of the border.

Valley Crossing will reinforce the Lone Star State’s status as a major provider of natural gas to Mexico, connecting its primary customer—the Comisión Federal de Electricidad (CFE), Mexico’s state-owned utility—to the Agua Dulce gas hub.

It will also help support Mexico’s growing electricity generation needs, as power companies like the CFE choose natural gas—a cleaner-burning fuel than fuel oil or diesel, and more economically viable via pipeline than imported LNG.

“Mexico imports much of its natural gas needs now—its total market is 8 Bcf a day, with about 5.5 Bcf a day coming from the U.S.—and a lot of that is from Texas,” notes Kurt Knight-Turcan, Enbridge’s business development lead for Valley Crossing.

Adds Bill Yardley, Enbridge Executive Vice President and President of the company’s Gas Transmission and Midstream unit: “Supply in Mexico continues to decline, but at the same time their demand continues to grow. And the U.S. has some of the most economical, plentiful and reliable natural gas supplies in the world.

“By building pipelines that directly connect to some of the main supply basins,” remarks Mr. Yardley, “the CFE is able to capitalize on that low-cost, reliable natural gas supply.”

Valley Crossing connects in the Gulf of Mexico with Sur de Texas-Tuxpan, a new 450-mile pipeline in Mexico, that has created the biggest gas pipe in existence between the two countries.

Valley Crossing is expected to account for about half of the CFE’s total import capacity. Its transport capacity is half the average daily production output of the entire Eagle Ford shale basin—in fact, it’s more than 10 percent of the average daily production for the entire state of Texas.

Valley Crossing has already delivered plenty of economic benefits north of the Rio Grande, as well, and is expected to do so well into the future. According to a University of Texas Rio Grande Valley impact study:

  • The construction phase created more than 3,300 jobs, andgenerated more than $452 million in labor income, with $137 million in value added, for a total economic impact of $275 million in South Texas;
  • The operations phase is expected to generate an estimated $183 million in property taxes for South Texas counties over 35 years;
  • The operations phase is also expected to generate an estimated 142 jobs, $10.9 million in labor income, and $10 million in value added, for an economic impact of $19 million in South Texas over the next 35 years.

“For the first time in many years, there’s currently more overall natural gas supply than demand in the U.S.,” says Knight-Turcan. “The U.S. needs export markets. Valley Crossing is helping to expand those markets.”