Mexico LPG Storage Cavern to Start up in April 2017
03.24.2016 - NEWS

March 24, 2016 [OPIS] - OPIS ran a major story on this, the first LPG underground storage project in Latin America, on Dec. 16, 2014.

Now sources have steered us to regulatory filings with the Comision Reguladora de Energia (CRE) that allow us to update and revise some important data points in the earlier story.

Most important, the in-service date has been moved back from 1stQtr 2016 to a firm date of April 2017. The project has been moving forward without a hitch, but it is the first project of its kind ever to go before the CRE. A source well acquainted with CRE filings says that a new regulatory protocol was needed for LPG UGS, and now everything is in place to move forward with dispatch to the goal.

This is the cavern that will receive VLGC propane cargoes direct from the dock at the Pemex Pajaritos Refrigerated Terminal at Coatzacoalcos, at the southeastern end of Veracruz state. Lead partner in the project is Cydsa, a specialty chemical manufacturer based in Monterrey. Cydsa’s partner in running the business development and regulatory side of the project has been Saltec International based in Southport, Conn.

When the project was first announced, Cydsa said that it would require investment of $120 to $140 million. Cydsa has a salt mining business at Coatzacoalcos which has operated for around 50 years. Their plan was to develop a new cavern for LPG on one of the nearby salt domes.

Design capacity of the cavern is 1.8 million bbl of LPG, and it will be equipped with pump horsepower and related hardware to receive product from the dock at 5,000 bbl/hour or put product at the same rate into Mexico’s LPG mainline that crosses the country from Cactus to Guadalajara.

The breakthrough that led to the initial announcement of the project in December 2014 was the signing by the MexGas Trading arm of Pemex of a contract to lease the entire capacity of the UGS cavern for a specified period after startup. Use of the cavern will free MexGas Trading from exclusive reliance on the spot market. With storage capacity for roughly three VLGC cargoes, they will be able to make advance purchases at slack times in the market instead of having to corral immediate cargoes to supply peak winter demand.

The other project detail now in OPIS’ possession is the exact geographical location of the Cydsa cavern. The information we had in December 2014 located the cavern in the major salt-mining facility Cydsa operates right beside the Pajaritos Terminal. Now we learn that the new UGS will be seven miles straight south of Pajaritos on the north side of Ixhuatlan del Sureste.

The town of Ixhuatlan is in a strategic location. It is bordered by Highway 180-D, the tollway from Mexico’s southeast that connects to 150-D, the main highway to Mexico City. More important, the nation’s main LPG pipeline, the Pemex 20-inch mainline that originates at the Cactus plant near Villahermosa pretty much follows the route of 180-D once it gets over to the Coatzacoalcos vicinity.

That LPG mainline practically runs through the yard of the Cydsa-Saltec UGS facility. A spur line from the Pajaritos terminal connects to the LPG mainline right there at Cydsa-Saltec. The way it works, VLGC’s will discharge cargoes at Pajaritos and the product will flow to the LPG mainline connection. Now, there will be storage capacity to receive up to three VLGC cargoes sitting right next to the input point on the mainline.

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