Enbridge Starts Valley Crossing Natgas Pipe Work at Tex-Mex Border

Canadian energy company Enbridge Inc said it started construction of the offshore border crossing section of its $1.6 billion Valley Crossing natural gas pipeline between Texas and Mexico, according to a federal filing made available on Wednesday.

The 168-mile (270-kilometer) Valley Crossing project is designed to carry up to 2.6 billion cubic feet per day (bcfd) of gas from Texas to help Mexico meet its growing power needs as generators there shift away from fuel oil and imported liquefied natural gas.

One billion cubic feet is enough to fuel about five million U.S. homes for a day.

The Valley Crossing project has been under construction since April 2017, according to the Enbridge website. In May, Enbridge said it had "substantially completed" the onshore part of the pipe and was working on the offshore part to meet a fourth quarter 2018 in service date.

Valley Crossing will connect in the Gulf of Mexico to the Sur de Texas-Tuxpan pipeline under construction by a joint venture between units of TransCanada Corp and Sempra Energy (SRE). Once complete, it will be the biggest gas pipe between the two countries.

There are already about 20 pipelines that can move gas from the United States to Mexico with a total capacity of around 10.9 bcfd, according to U.S. energy data.

That includes Howard Energy's 0.6-bcfd Impulsora pipeline, which is expected to enter service this month.

Analysts have said, however, that constraints on the Mexican side of the border have so far limited a big increase in U.S. pipeline exports.

Since the start of the year U.S. exports to Mexico have averaged 4.0 bcfd, up just a bit from the 3.9-bcfd average during the same period in 2017, according to Thomson Reuters data.

While the pipeline constraints remain, Mexican energy companies have been buying more U.S. liquefied natural gas (LNG) than any other country since February 2016 when the first U.S. LNG export terminal opened in the lower 48 states at Cheniere Energy Inc's Sabine Pass in Louisiana.

Mexico bought 50 cargoes of LNG totaling 167.8 billion cubic feet of gas from the United States, 18.8 percent of total U.S. LNG exports between February 2016 through the end of 2017.

Reporting by Scott DiSavino