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No Keystone, No Problem: TransCanada Turns to Mexico Expansion

Days after the U.S. spurned TransCanada Corp.’s proposal to expand its Keystone pipeline network across North America, Mexico opened its arms.

TransCanada won the rights last week for its sixth pipeline in Mexico, one of the company’s key targets for growth. The Nov. 10 decision came four days after the U.S. denied TransCanada’s bid to build its Keystone XL oil sands project across the border into Nebraska where it would connect to existing pipes leading to Gulf Coast refineries.

Mexico’s need for foreign investment to help the nation improve its infrastructure is a welcome opportunity for TransCanada after losing its seven-year battle to complete Keystone XL. The Canadian company, which owns both pipelines and power plants, plans to invest more than $3 billion in the country by 2017, said Robert Jones, President of Mexico operations.

"We see a number of short and long-term opportunities,” Jones said in a Nov. 13 interview from his Mexico City office. Mexico is planning to hold as many as five pipeline auctions before the end of January, and TransCanada will “look at them all."

Tuxpan to Tula

The new 263-kilometer (163 mile) pipeline will carry natural gas from the coastal port town of Tuxpan to the central industrial hub of Tula, giving TransCanada what Jones called "a nice foothold" in a major natural gas market for the country.

With the contract, the company now holds rights to develop and operate 2,000 kilometers of pipelines in Mexico, Jones said. TransCanada...