A subsidiary of Kinder Morgan, Inc. announced it has signed a joint venture (JV) letter of intent (LOI) with a subsidiary of the TrailStone Group to form a Mexican natural gas marketing company.

TrailStone NA Asset Holdings LLC, a member of the TrailStone Group of companies, owns a strategic equity interest in MP2 Energy LLC

The JV between KMI and TrailStone subsidiaries will combine North American gas supply and transportation to provide competitively priced gas supply to industrial markets and power generators in the Monterrey area and to other markets that can be accessed via the national system of gas pipelines to be owned and operated by CENAGAS, Kinder Morgan said.

The JV will be managed and operated by TrailStone and, subject to regulatory approvals, expects to be operational by the first quarter of 2016. The companies involved in the JV are actively pursuing and engaged in conversations with U.S. producers and end-users in Monterrey and customers connected to the Mexican national grid. The JV will provide these customers with a bundled natural gas supply package that can include Henry Hub or Houston Ship Channel-based pricing alternatives as well as swing and storage services.

“The marketing company will provide a convenient and efficient option for end-users in the Monterrey area and other regions of Mexico to benefit from low cost U.S. natural gas under the new open access regulations that will become effective in Mexico in 2016,” said Larry Bell, Kinder Morgan Natural Gas Midstream vice president of marketing and transportation. “Pending signed agreements, the JV will market capacity allocated to a TrailStone subsidiary on KMI’s Mier-Monterrey expansion. Our Texas Intrastate system will provide transportation, storage and gas supply services in the United States in support of the JV, and benefit from increased utilization of its existing assets.”

“This JV is a significant building block in the expansion of TrailStone’s physical commodity trading and logistics platform,” said TrailStone Chief Executive Officer David Silbert. “We are excited to further develop our strategic relationship with Kinder Morgan, which is one of the most prominent and proven energy companies in North America.”

Pending execution of the formal JV agreement and commitments to sell gas through the Mexican marketing company, Kinder Morgan will commence its Mier-Monterrey expansion which will consist of adding compression and/or looping KMI’s existing Mier-Monterrey pipeline system from the Mexico-United States border to Huinalá, Nuevo León, Mexico. The expansion can be completed by the fourth quarter of 2017 and will provide up to 200,000 Mcf/d of incremental capacity into the Monterrey area. Kinder Morgan can further expand the capacity of the system by up to an additional 500,000 Mcf/d, if sufficient demand exists. Customers subscribing to capacity on the additional expansion will have access to Texas pipeline hubs and out-of-region supply via firm transport on Kinder Morgan’s existing Texas intrastate system. Kinder Morgan will also expand its intrastate system to accommodate the desired capacity.

TrailStone Group is a global asset-backed commodities logistics and trading company who is funded by Riverstone Holdings LLC.

Tags:
TrailStone Group   Kinder Morgan   Mexico   Natural Gas  

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