24-11-05 Mexico's energy ministry has approved the plans of US firm Arizona Clean Fuels Yuma (AFCY) to build, operate and maintain a $ 650 mm, 300 km oil pipeline that would supply Mexican crude to a new refinery to be built in Yuma, Arizona state, AFCY said.
"This gives us permission to go ahead and develop the project," AFCY VP David Treanor was quoted as saying. "It is a legal confirmation for us to go ahead."

The pipeline would stretch across the Sonoran desert to the coast, connecting to a point in either Baja California or Sonora state. Terms of the deal allow AFCY and its partner, WesPac Pipelines, to use the line to ship crude oil from Mexico's state oil company Pemex or other foreign sources such as Canada, The Arizona Republic reported.
ACFY has partnered with WesPac to finance, construct and operate and maintain a crude oil supply system, which will consist of a marine offloading facility, terminal and pipeline to supply the refinery.

WesPac is in the initial stages of permitting the crude oil transportation system in both Mexico and Arizona and is currently in discussions with construction firm Techint Mexico regarding an EPC contract for the pipeline project, the statement said. The pipeline is expected to start construction in 2006 and operations in 2009-2010.
AFCY is in talks with both Baja California and Sonora state authorities to decide the connection point for the pipeline, Treanor said.

The pipeline could supply up to 150,000 bpd of crude from Punta Colonet near Ensenada in Mexico's Baja California state to Yuma, but Puerto Libertad in Sonora state is also being considered.
Treanor plans to meet with state oil firm Pemex's general director Luis Ramirez and officials from the national energy regulator CRE to discuss details of the agreement. The pipeline deal negotiated with Mexico does not restrict the source of oil, which will allow ACFY to negotiate for the best possible deal, Treanor said, adding Pemex will likely end up supplying most of the refinery's 150,000 bpd capacity.

Earlier this year AFCY obtained an air-quality permit from the Arizona department of environmental quality that allows construction of a 150,000 bpd refinery in Yuma. AFCY is seeking investors to help fund the $ 2.5 bn project that would convert crude oil into gasoline, diesel and jet fuel for Arizona, other south-western states and even Mexico.
As part of the agreement with Mexico's energy ministry, ACFY will supply 50,000 bpd of fuel to Mexico including 35,000 bpd of gasoline, 10,000 bpd of diesel and 5,000 bpd of turbo fuel.

The refinery would be the first to be built in the US in 30 years and the first one in Arizona.
The US has grown increasingly dependent on imports of gasoline and other fuels because of a lack of refining capacity. Federal energy statistics show the nation consumes more than 20 mm bpd, but the nation's refineries only process about 17 mm bpd, The Arizona Republic reported.