TransCanada pipeline in Mexico seen displacing fuel oil with U.S. gas

• TransCanada (NYSE:TRP) says its 670M cf/day Topolobampo Pipeline has started commercial service, part of an effort to move more U.S. natural gas to northwest Mexico to serve power generation demand.
• TRP expects the $1.2B, 348-mile pipeline project, which provides the upstream interconnection with the company's Mazatlan Pipeline, to reduce fuel oil consumption in the power markets in Mexico's Sinaloa and Sonora states.
• While near-term utilizations are expected to come in well below capacity, Platt's says Topolobampo will provide a much needed outlet for Permian Basin associated gas production, which is itself nearing takeaway capacity constraints.