9:30 AM, March 2, 2024

The energy to power Mexico and beyond

| The European |

Fermaca was established over 50 years ago as a construction and engineering company, developing infrastructure in telecommunications, water, roads, utilities and energy. It was one of the first companies to transport natural gas in Mexico.

The company structure is composed of a large multidisciplinary group of industry professionals, specialising in the development of energy projects, through the engineering, financing, construction and operation stages.

Today, with the support of international partners, Fermaca has become the largest non-listed midstream developer, owner and operator of natural gas transportation in Mexico.

At the end of 2018, Fermaca will own and operate five large-diameter natural gas pipelines with a length over 2,100km in Mexico and the US, becoming one of the 12 largest such systems in the world and transporting highly cost-efficient gas.

Since the mid 1990s, the firm has achieved its success by capitalising on changing market conditions and expertly executing a strategy of partnerships and expansion.

Following Mexico’s reforms of the natural gas sector in 1995, the Calvillo family entered the market, which until then was under the stewardship of Mexico’s state oil company, Pemex. Fermaca was formed and the face of Mexico’s energy infrastructure was set to change.

By the end of 1990s, Fermaca had formed a joint venture with Occidental Petroleum and developed a 16-inch diameter, 127km pipeline – the Tejas Gas de Toluca (TGT) – with the capacity to transport, 96 million cubic feet per day (MMCFD), across the State of Mexico.

Later in 2011, Fermaca won its first major contract with the Comisión Federal de Electricidad (CFE), for the construction and operation of a 36-inch, 383km pipeline in the state of Chihuahua. With an investment of approximately $450m, the Tarahumara Pipeline (TP) carries natural gas from the US to CFE power plants in northern Mexico. The pipeline began commercial operations in July 2013 and has a capacity of 850 MMCFD, with the ability to increase to 1,100 MMCFD with compression.

More followed. Fermaca, in partnership with Enagas, was awarded a contract by CFE to provide natural gas compression services in the city of Soto La Marina, in the state of Tamaulipas. This compression station has a capacity of 30,000 hp.

The El Encino-La Laguna Pipeline, which was awarded to Fermaca by CFE on 16 December 2014, includes a 25-year ‘take or pay full’ contract and will transport up to 1.5 billion cubic feet per day (BCFD) from Chihuahua to La Laguna. It is expected to be fully operational in the last quarter of 2017.

In 2015, along with its partners, One Oak, Fermaca developed the Roadrunner Gas Transmission Pipeline to carry supply from Waha to the connection with the Tahara pipeline. The operation began in 2016.

In March 2016, Fermaca was awarded by CFE, La Laguna-Aguascalientes Pipeline. It is a 48-inch system that will transport natural gas to the center of the country
The Villa de Reyes-Guadalajara gas pipeline was also awarded in March of the same year, which will transport 886 MMCFD and will be completed in 2018.

Reforms and new opportunities

Due to increased demand for low-cost energy, Mexico’s natural gas infrastructure has been developing at a good pace. Combined with the country’s switch in energy policy – substituting coal or oil-burning plants for natural gas-powered plants – has also led to the construction of more and larger pipelines in the country.

Mexico’s energy reform of 2013 brought deeper changes to those enacted as a result of the 1995 natural gas sector reforms. This allowed private participation in the transportation of natural gas and its marketing activities. It also extended the opportunity of private participation in natural gas to liquid gas, involving transport by fuel pipeline and the whole logistics platform concerning fuels under a regulated regime. It permitted the commercialisation of natural gas and fuels according to specific regulations and allowed the opening of gasoline and importing of fuels into the market.

Given the new landscape, Fermaca initiated a multinational natural gas company, Santa Fe Gas, LLC (SFG). Based in Houston, Texas, Santa Fe gas offers an integrated range of energy services in the USA and Mexico.

Throughout its affiliate companies, which have obtained the required regulatory permits from both the US and Mexican Authorities, Santa Fe sells and purchases natural gas and hydrocarbons in US and Mexico.

SFG was formed by a group of experienced professionals with a wide range of expertise in the energy market, capable of delivering high quality services to clients located on both sides of the border. SFG has a long-term commitment to supply gas to the North American market, so it is planning to invest around $4.5bn over 25 years, through firm capacity purchases in the different pipeline networks located both in the US and Mexico. The goal is to have a share between 10 and 20% of the market.

SFG is financed by a group of investors who are betting on the development of the North American energy markets, offering the lowest prices, the highest product quality and a reliable energy supply.

SFG has exclusive access to the most relevant gas pipeline transportation networks on both US and Mexico, covering the most important and high demand regions.

Given Santa Fe’s infrastructure, it can offer to its customers bundled services, making Santa Fe a one-stop solution, materially different from other market participants. Services include gas purchases and sales delivered at the plant, or at pre-agreed locations. Santa Fe also offers other services such as nominations, load management, optimisation, asset management agreements, and hedging products.

Further information

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