The federal government has given the green light to a proposal to build 234 miles of pipeline to transport natural gas liquids from one corner of New Mexico to the other and ultimately to markets in South Texas.
The Bureau of Land Management’s approval of the Western Expansion Pipeline III project comes just a week after President Barack Obama unveiled his plan for combating climate change, part of which included boosting the role of natural gas in energy production.
News of the pipeline’s approval encouraged oil and gas developers in New Mexico, which is home to portions of both the Permian and San Juan basins.
“These projects aren’t just built for the conditions at the moment. They’re long-term investments,” said Wally Drangmeister, a spokesman for the New Mexico Oil and Gas Association. “I think it’s a good sign that some investment is going in that will support the state.”
The $320 million project will transport natural gas liquid products from northwestern New Mexico to a hub in Hobbs in the southeastern corner of the state and ultimately to Texas to help meet existing and future demand.
With production increasing in the San Juan Basin and in the Rocky Mountains, Mid-America Pipeline Co.’s existing system is nearing capacity. Currently, the system can transport about 275,000 barrels per day, but more wells are going into production in New Mexico, Wyoming, Utah and Colorado.
With the new pipeline through New Mexico, Mid-America said its capacity would be boosted to about 350,000 barrels per day.
The BLM said this week’s decision comes after a review of public comments and potential environment effects.
The new pipeline will follow an existing corridor across a dozen counties and connect to adjacent and parallel pipelines through a network of valves.
Mid-America Pipeline said work on the project could start as early as this summer. Construction could take up to nine months to complete.