ATCO expanding in Mexico with new power plant

Image: ATCO

Calgary-based ATCO’s Mexican division, which has announced a series of investments in the country since its power sector was deregulated four years ago, has announced a new power plant deal with a Mexican partner.

ATCO said on March 5 that it and Mexican-based RANMAN Energy will spend C$70 million to build a new 26-megawatt (MW) cogeneration plant on the site of an existing chemical plant operated by Chemours Company.

The plant, to be built in the state of Durango, is expected to be operational by mid 2019.

“Industrial customers in Mexico are increasingly looking to our global expertise to develop creative solutions that allow them to capitalize on the country’s energy market reforms,” ATCO’s Wayne Stensby said in a statement.

“Our latest project ensures Chemours has access to the reliable electricity and steam to run its operations, while also providing low carbon electricity back to the market.”

It is the second project announced in partnership with RANMAN — in February 2017 the companies announced they would develop an innovative power generation solution in the World Trade Centre Industrial Park, near the central industrial centre of San Luis Potosi.

The project will deliver on-site electricity to the 700-hectare park. The companies have initially expanded an existing four MW plant to 20 MW.

Recently ATCO, through its Canadian Utilities Limited subsidiary, announced it had entered into an agreement to purchase control of a 35 MW hydroelectric power station in the Gulf of Mexico state of Veracruz.

The company said it has entered into an agreement with Conduit Capital Partners LLC to acquire Electricidad del Golfo (EGO), which owns the hydro station.

Conduit is a private equity investment firm focused on the power and energy sectors in Latin America and the Caribbean.

The hydro station, which has been in operation since 2014, is backed up by long-term power purchase agreements.

The power station taps its hydro output from the Apatlahuaya River.

ATCO said the purchase price for the proposed transaction is about US$90 million (including the assumption of about US $26 million of net debt). The transaction is subject to close in this quarter.

In mid-December it announced it had signed a memorandum of understanding (MOU) with a Monterrey, Mexico-based company that will see both companies work together to develop midstream opportunities in the country.

ATCO and CYDSA S.A.B., a large mining and hydrocarbon storage company, said their initial focus will be on developing underground hydrocarbon storage in salt caverns and depleted reservoirs. In addition, they will pursue opportunities in gas gathering and processing, as well as natural gas liquids (NGL) extraction and fractionation. That MOU was signed on Dec. 15.

ATCO, which has 7,000 employees and US$21 billion in assets, is a diversified global corporation, which is involved in several parts of the midstream sector.

ATCO entered the Mexican market in 2014, when it won a contract with the country’s state-owned utility to build a US $50 million gas pipeline near the town of Tula in the state of Hidalgo.

It has since won a contract, along with Mexican-based companies, to build a gas-fired cogeneration plant at Pemex’s Miguel Hidalgo refinery, located in that same state. That project will have a capacity of 450 megawatts, expandable to 638 MW and will be able to produce 1,247 tonnes of steam an hour.