TransMexico? Keystone XL Owner TransCanada Wins Bid For Underwater Gas Pipeline Across Gulf of Mexico

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TransCanada, owner of the proposed Keystone XL pipeline currently being contested in federal court and in front of a North American Free Trade Agreement (NAFTA) legal panel, has won a $2.1 billionย joint ventureย bid with Sempra Energy for a pipeline to shuttle gasย obtained from hydraulic fracturing (โ€œfrackingโ€) in Texas’ Eagle Ford Shale basin across the Gulf of Mexico and intoย Mexico.

The 500-mile long Sur de Texas-Tuxpan pipeline, as reported on previously by DeSmog, is part of an extensive pipeline empire TransCanada is building from the U.S. to Mexico. The pipeline network is longer than the currently operating southern leg of the Keystone pipeline (now dubbed the Gulf Coast Pipeline). ย Unlike Keystone XL, though, these piecemeal pipeline section bid wins have garnered little media attention or scrutiny beyond the business and financialย press.ย 

The Sur de Texas-Tuxpan proposed pipeline route avoids the drug cartel violence-laden border city ofย Matamoros by halting at Brownsville and then going underwater across the U.S.-Mexico border toย Tuxpan.

After it navigates the 500-mile long journey, Sur de Texas-Tuxpan will flood Mexico’s energy grid with gas under a 25-year service contract. That energy grid, thanks to the efforts of the U.S. State Department under then-Secretary of State and current Democratic Party presumptive presidential nominee Hillary Clinton, has been privatized underย constitutional amendments passed inย 2013.

TransCanada and Sempra were the only bidders. TransCanada owns the joint venture with Sempra โ€” coined theย Infraestructura Marina del Golfo, Spanish for โ€œmarine infrastructure of the Gulfโ€ย โ€” on a 60-percentย basis.ย 

โ€œWe are extremely pleased to further our growth plans in Mexico with one of the most important natural gas infrastructure projects for that country’s future,โ€ย Russ Girling, TransCanada’s president and CEO, said in a press release announcing the bid win. โ€œThis new project brings our footprint of existing assets and projects in development in Mexico to more than US$5 billion, all underpinned by 25-year agreements with Mexico’s state powerย company.โ€

State Department Role,ย FERC and Presidential Permits for Sur de Texas-Tuxpanย 

David Leiter, a campaign finance bundler for Hillary Clinton’s presidential campaign and former chief-of-staff for then-U.S. Senator and current Secretary of State John Kerry,ย lobbied the White House and the U.S. State Departmentย in 2013 and 2014 on behalf of Sempra Energy on gas exports-relatedย issues.

Sempra has a proposed liquefied natural gas (LNG) export terminal on the northwest, Baja California coast of Mexico called Energรญa Costa Azul (โ€œBlue Coast Energyโ€) LNG.ย Leiter’s wife, Tamara Luzzatto, formerly served as chief-of-staff to then-U.S. Sen. Hillaryย Clinton.ย 

Because the pipeline is set to carry natural gas, as opposed to oil, it does not need a U.S. State Department permit (though tacit and non-permitted unofficial approval could still prove important). Instead, it seemingly technically requires U.S. Federal Energy Regulatory Commission (FERC) approval, as well as a presidentialย permit.

It is unclear if Sur de Texas-Tuxpan will require a presidential permit, though, given the precedent set in the Wild Earth Nation, Et Al v. U.S. Department of State and Enbridge Energy case.

Inย that case, the Judge allowed Enbridge to break up its tar sands diluted bitumen (โ€œdilbitโ€)-carrying Alberta Clipper (Line 67) pipeline into multiple piecesย โ€” helped along with off-the-books and therefore unofficial State Department authorization โ€” avoiding the more onerous presidential and National Environmental Policy Act (NEPA) permit review processย altogether.

Due to the legal precedent set in another related case, Delaware Riverkeeper v. FERC, oil and gas industry law firm Baker Botts explicitly recommendedย againstย utilizing the โ€œsegmentationโ€ approach in a January 2015 memoย that came outย before the Enbridge caseย ruling.

โ€œProject proponents should be careful to avoid potential ‘segmentation’ of a project into smaller parts simply to try to avoid a more thorough NEPA review,โ€ wrote Baker Botts attorney Carlos Romo. โ€œSegmentation occurs when closely related and interdependent projects are not adequately considered together in the NEPAย process.โ€

The presidential candidatesย Clinton andย Donald Trump have yet to comment on this pipeline or the topic of U.S.-Mexico cross-border pipelines on the campaign trail. But Financial Times, in an Aprilย article, pointed out that even Trumpย โ€” who has pledged he will build a wall between the U.S. and Mexicoย โ€” has little to say and will likely do little to halt cross-border lines likeย Sur deย Texas-Tuxpan.

โ€œAs long as the wall doesnโ€™t go below ground,โ€ Mark Florian, head of the infrastructure fund at First Reserve and a former Goldman Sachs executive, told FT. โ€œI think weโ€™ll be OK.โ€

Though still fairly early on in the process, Florian’s words have proven true soย far.

Photo Credit: Flickr | Greenpeace USA

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Steve Horn is the owner of the consultancy Horn Communications & Research Services, which provides public relations, content writing, and investigative research work products to a wide range of nonprofit and for-profit clients across the world. He is an investigative reporter on the climate beat for over a decade and former Research Fellow for DeSmog.

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