(Platts, 30.Jun.2017) — Mexican state-run utility CFE has canceled its auction to bring natural gas into the Pacific state of Baja California Sur, the company said.
CFE said the gas project isn’t necessary as its new underwater transmission line project will fulfill the electricity needs of the state.
“By opting for this alternative to strengthen the reliability of the Baja California Sur electrical system, CFE will no longer continue with the auction for the provision of natural gas transportation to the entity,” it said in a statement Thursday.
The $600 million natural gas project would have provided up to 227 MMcf/d of fuel to transform CFE’s fuel oil generation fleet in Baja California Sur, according to CFE’s auction documents.
The $1 billion underwater transmission line will cross the Sea of Cortez, connecting Bahia de Kino, Sonora, and Infernito, Baja California Sur, according to Mexico’s Energy Secretariat (SENER) National Electric System Development Program (PRODESEN) 2017-2031.
The transmission line is expected to be operational by 2022, and it will connect the state with the rest of the country for the first time through a 105-km, 400 kV underwater direct transmission cable.
The underwater transmission line will connect the state with CFE’s growing combined-cycle natural gas plant fleet in the states of Sonora and Sinaloa, thus displacing expensive diesel- and fuel oil-generated power in Baja California Sur.
In Topolobampo, Sinaloa, CFE awarded Spain’s Iberdrola the construction of the 778-MW Topolobampo II and 777-MW Topolobampo III combined cycle plants. Both will be operational in 2019 and 2020.
CFE said the project would provide “highly competitive electricity prices” to Baja California Sur’s 40,000 users, which receive the most electricity subsidies in the country, while cutting emissions from fuel oil and diesel generation in the state.
PRODESEN showed that Baja California Sur has 976 MW of fuel oil- and diesel-fueled generation, of which 418 MW is internal combustion engines, by far the largest amount in any Mexican state.
Jose Luis Leyva, CFE’s communications director, told S&P Global Platts on Friday that Baja California Sur’s existing diesel and fuel oil capacity will still be used by CFE for backup and peak generation.
The construction of the underwater transmission line will help to increase the integration of more renewable capacity in Baja California Sur, CFE said in the statement.
According to PRODESEN, 423 MW of renewable energy capacity will be built in the state over the next 15 years, 312 MW of which will be 12 solar photovoltaic projects.
–Daniel Rodriguez, newsdesk@spglobal.com
–Edited by Annie Siebert, ann.siebert@spglobal.com
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