TransCanada Said It Found Regulatory and Environmental Factors in Mexico Suitable for Its Pipeline Business and Anticipated Higher Growth as Lower Costs and the Quicker Pace of the Projects Could Produce Favourable Results.
Back home, the company spends billions of dollars, faces hold ups and still doesn’t know when new pipelines can be installed in the ground.
The Calgary based energy company’s search for greener pastures has led it to Mexico where regulatory oversight and environmental opposition is a fraction of what it is in Canada and the United States.
[pullquote align=”normal” cite=”- TransCanada CEO Russ Girling”]“We foresee there will be more opportunities on the horizon in Mexico.”[/pullquote]
“We foresee there will be more opportunities on the horizon in Mexico.” TransCanada CEO Russ Girling said.
There are expected to be quicker and better results even as costs remain relatively lower. At a time when the pipeline company is attempting to build new projects elsewhere in North America and encountering setbacks, Mexico will prove to be a rewarding business decision, the company feels.
At TransCanada’s annual general meeting the chief executive spoke about the cost efficient and simpler processes involved in the approval of a pipeline in Mexico. He also added that once the bid made in Mexico was successful, the company would receive permits, begin work with landowners and construction would begin “right away”. This is definitely advantageous in a business that otherwise faces time delays due to governmental and regulatory decisions.
The Keystone XL oil pipeline proposal waited for seven whole years before a decision was made. It was shelved after the U.S. government denied a permit. The company later launched a lawsuit and a NAFTA (North American Free Trade Agreement) claim to recoup its losses.
The company spent US $2.5 billion on the Keystone XL oil pipeline project and also invested around $700 million in the Energy East project in Canada, which still remains uncertain as there is no assurance yet whether the national regulatory and federal government will grant a permit.
The company also stated that the risks involved in bidding for a pipeline in Mexico was significantly lesser.
“Clearly, what we have found is the risk that we need to take in Mexico to participate in a large-scale infrastructure investment is far less,” Russ Girling said.
However, it remains significant that the projects available in Mexico are much smaller than elsewhere in North America even though the regulatory and environmental clearance may be easier.
Four ongoing natural gas projects in Mexico have a total value of $2.5 billion, this is significantly lower compared to the Energy East oil pipeline in Canada which would cost $15.7 billion, and a pair of natural gas pipelines in British Columbia to serve new liquefied natural gas export facilities which are estimated at $9.8 billion.
However, the company will have good long term growth opportunities in Mexico as its expanding population, increasing energy consumption and ideal geographic location will make it attractive for TransCanada
The company now has a total of six projects in Mexico including two which are currently operating, three under construction and one under development.