The Tequila Valley Pipeline is soon to begin operations, allowing natural gas to reach tequila producers in Mexico’s Jalisco state, Rolando Martinez D’Meza Violante, Business Development Manager in Corporación CH4, told NGI’s Mexico GPI.
“The fact that we were able to construct a natural gas pipeline is going to allow us to enter the big leagues,” he said, adding that Corporación CH4 has “a mission to install 1,000 kilometers of natural gas pipelines in the country in the next 10 years.”
Martinez D’Meza Violante is the Business Development Manager at Corporación CH4, a Guadalajara-based natural gas supply company servicing industrial, commercial and residential clients. Corporación CH4 distributes and supplies pipeline sourced natural gas and compressed natural gas, and will soon provide vehicular natural gas and liquefied natural gas.
Martinez D´Meza has worked with Corporación CH4 since 2019 and has more than 22 years of experience in the Mexican energy sector, where he has specialized in natural gas project development. From 2002-2016, he worked at Comisión Federal de Electricidad (CFE), where he served as the deputy manager of transportation and projects and was responsible for contracting transport capacity on natural gas pipelines in both Mexico and the U.S. From 2016-2019, he worked as a Commercial Manager for TC Energy in Mexico.
Martinez D´Meza holds a bachelor’s degree in business law from the Universidad Iberoamericana in Mexico City, as well as a master’s degree in administration and business leadership from the Universidad Autónoma de Coahuila.
Editor’s Note: NGI’s Mexico Gas Price Index, a leading tracker of Mexico’s natural gas market reform, offers the following Q&A column as part of a series of periodic interviews with market experts of natural gas in Mexico. Martinez D´Meza is the 122nd expert to participate in the series.
NGI: Can you tell us some about the natural gas pipeline that Corporación CH4 has constructed in Jalisco, known as the Tequila Valley Pipeline?
Martinez D´Meza: It is a pipeline with a capacity for 11 MMcf/d for distribution. It is a low pressure pipeline. It is the first pipeline that connects to another pipeline that is not part of our company, and the Tequila Valley Pipeline connects with an Engie pipeline. So we are connected with Engie and our pipeline connects with another distribution system.
The Tequila Valley Pipeline is 63 kilometers (40 miles) long, so it’s not a small pipeline, and above all its primary function is distribution. It is a pipeline that ranges from 10 inches in diameter to four inches and, and has the potential to be expanded to as much as 15 MMcf/d.
As has been well documented, where there is a natural gas pipeline, there are new opportunities for economic and industrial development, as well as jobs and expansion projects. We’re certain that, as soon as the pipeline begins operations, it will spark economic development throughout the Tequila Valley region. Additionally, in the region and particularly in the area around Tala, there are a lot of industrial plants and companies that are seeking to set up operations in industrial parks. So, there is demand for natural gas in the region that will likely increase in the short term.
NGI: Could you tell us some about Corporación CH4 and about the company’s work in Guadalajara?
Martinez D´Meza: We are part of a group in Jalisco — a very important one here called Grupo Enersí — which has several companies in the energy sector. One of the main companies they have is one of the most important distributors of liquid petroleum gas in the country, which is called Global Gas. Grupo Enersí also has business in gasoline and service stations, they have carburization plants, hydroelectric plants, storage, etc. They hadn’t, however, developed a natural gas business until eight or nine years ago, which is when they created Corporación CH4.
The business began with a compressed natural gas plant in El Salto, which is close to the Guadalajara airport. And that plant has a capacity to produce 4 million cubic meters of gas/month. This plant has been providing the supply of compressed natural gas via vehicular transport and at some point they saw the opportunity to diversify their natural gas services.
One of the opportunities that I worked to develop with Corporación CH4 was the last mile of natural gas pipelines. While the natural gas pipelines are great, the last mile — which includes distribution — creates an opportunity that is often done by third parties. My thinking was that there is an opportunity to provide these last mile services ourselves, and that is what we are doing in Corporación CH4.
NGI: And what do those last mile services consist of?
Martinez D´Meza: We began to develop new business opportunities, and those include alternatives to natural gas supply beyond just compressed natural gas. We sought to develop natural gas pipeline projects for distribution or transport, as well as vehicular natural gas and service stations. We are also about to begin construction on an LNG project, which will be a plant with a capacity for 200,000 cubic meters of gas.
And, among these projects is also our first natural gas pipeline. It is a distribution system that runs from the area known as La Venta del Astillero near Zapopan and it has two distinct branches — one that runs northwest towards the city of Tequila and passes through three municipalities in the Jalisco state, and the other that runs southwest towards the zone known as Tala. That stretch of the pipeline runs alongside the highway to Puerto Vallarta.
The truth is that this has been a very interesting project because, of all of the complications that a natural gas pipeline project can have, we had them. There were technical, social, political and health complications, given that we were conducting a lot of the planning and preparation when the pandemic was at its peak.
And, despite all of these issues, I’m happy to say we accomplished our objective and constructed a natural gas pipeline. I think by doing so, we confirmed and demonstrated that when you do a project right and closely follow regulations, despite multiple challenges, it can be done. And, as a result, this project has created more appetite within Grupo Enersí to seek and search for new natural gas alternatives.
NGI: You mentioned some of the challenges in the process of constructing the pipeline. Can you tell us about some of the obstacles the company faced?
Martinez D´Meza: We had to make sure to comply with all of the regulations and demands of the the Agencia de Seguridad, Energía y Ambiente (ASEA), the Energy Ministry (Sener) and the Comisión Reguladora de Energía (CRE), as well as with their timelines stipulated by the law. As you might recall, there were many issues with complying with CRE guidelines before allotted time periods expired.
And, once we complied with all of the requirements and regulations, we had to have a lot of patience. We knew how to comply with what was required and honestly I think what we accomplished is an important milestone, particularly during a difficult time for the country and energy sector. I’m not entirely sure, but I’m almost certain that we were one of the only — if not the only — company that was able to construct a pipeline in Mexico during these last five years. Many other companies have tried to do so but haven’t been able to.
NGI: It’s interesting to see that, at a time when large international natural gas companies are developing large projects in Mexico, that Corporación CH4 is one of the few national companies that has successfully constructed a pipeline during the last five years.
Martinez D´Meza: Right. We are a company that is 100% Mexican and, as we say here, it’s a 100% Jalisco operation. Much of our team is from Jalisco and have worked here their entire lives. So, the company is 100% backed by Mexican capital, which I think makes it all the more important. The fact that we were able to construct a natural gas pipeline is going to allow us — which is what I tell my bosses — to enter the big leagues. We’re obviously small in comparison to the big natural gas transport companies, such as Gas Natural del Noroeste (GNN) or Engie, though we have big ambitions. I have a mission to install 1,000 kilometers of natural gas pipelines in the country in the next 10 years. That is the mission that I have been instructed to accomplish.
Corporación CH4 has been growing. We’re still a small company and I’m currently working with a project development team with myself and four people. One thing that’s been confirmed to me during this process is that: Mexico is a country where you can still successfully invest. I’m not just saying that because it sounds good, I’m saying that because I’ve witnessed it during the process to construct this pipeline. And we plan to continue to invest in other projects.
NGI: What are some of the other projects that Corporación CH4 is developing currently?
Martinez D´Meza: We are continuing to provide the service of compressed natural gas supply. We are very advanced and have completed almost all of the engineering required for our LNG plant and have the feed required. We are also close to starting construction of our second natural gas pipeline in Jalisco. We’ve already sent our environmental impact assessment, for example, as well as a permit request to the CRE.
So, we’re serious about expansion and we are already working on three other projects across the country. And, I reiterate, the conditions for investment in Mexico exist when a project is done right and as it should be done, which includes complying with the regulatory guidelines at a federal, state and local level, and doing so in an orderly fashion. In some instances, you can’t attempt to rush a project or pipeline, and what is required is adequate understanding and knowledge of the conditions and adapting to them.
NGI: Going back to the Tequila Valley Pipeline, who are the offtakers and clients that the pipeline will service?
Martinez D´Meza: Principally the pipeline will service the tequila industry. The heart of the tequila industry is located in this region, such as the municipalities of Arenal and Amatitán, for example. The biggest tequila companies in the world are located in this region, such as José Cuervo, Herradura, Orendain, Leyros and many others. So, the supply of natural gas was a need here to support the development of the industry. There was also a need to continue to substitute contaminating fossil fuel generation with cleaner sources. It also makes more sense economically to use natural gas to supply, and to have efficient and uninterrupted service 24 hours per day.
NGI: One last question. In regards to the 1,000 kilometers of natural gas pipelines that you mentioned over the next 10 years, where is Corporación CH4 looking to expand?
Martinez D´Meza: Principally, we are developing here in the state of Jalisco state. At the same time, I have the freedom to seek to develop projects where we consider that there is an opportunity and a lack of supply. In Mexico, we know that there are large natural pipelines, such as those that form the network of pipelines that the CFE has, for example, but there are industrial users, business users and residential users that don’t have access to the gas on those pipelines.
So, our objective is to create the pipelines necessary to allow gas to flow to clients in need, and we have people within the company that are analyzing all the regions in the country where we consider that there might be opportunities to develop infrastructure. Currently, we are looking to develop in the center of the country, as well as the north and northwest. The conditions are there, and we’re willing to bet on the development of projects in those regions. Often, given the lack of available natural gas supply in those regions, they receive you with open arms and are more than willing to work together to develop new projects.
