Proman, Topolobampo update: Mexican environmental permits, US is now a natural gas exporter

The developers behind the proposed world-scale ammonia plant in Topolobampo, Mexico, are quietly moving forward again. The environmental concerns that led to construction being halted in 2015 don’t appear to have gone away but the regulator has authorized the project to resume anyway, and the investors have now signed a long-term feedstock supply contract.

Click to visit. EIA, New U.S. border-crossing pipelines bring shale gas to more regions in Mexico, 12/01/2016
This illustrates how hard it can be to challenge unwanted industrial development. (This isn’t unique to developing countries: the good people of Greeneville, Tennessee, have been feeling it keenly since US Nitrogen built beside the Nolichucky.)

This also illustrates the local impact of a national statistic. According to the US Energy Information Administration, the US became “a net exporter of natural gas on an annual basis in 2017 for the first time since 1957,” in part due to new pipelines to Mexico, which benefitted from industrial anchor customers creating a future market for that gas.

Thus, Topolobampo ammonia: vertical integration of the value chain, from natural gas extraction, to transportation, to upgrading, to marketing.

Click to visit. EIA, Natural gas prices, production, and exports increased from 2016 to 2017, 01/16/2018

Proman Group, a private Swiss company, began building the Topolobampo plant some years back, through its engineering subsidiary Proman EC. The 2,200 mtpd ammonia plant was to be built next door to the existing Pemex petrochemical plant and a power plant run by Comisión Federal de Electricidad (CFE), the state-owned electricity utility. As I understand it, CFE is the second most powerful company in Mexico, after Pemex.

However, in 2009, the three coastal lagoons around Topolobampo had been designated a Ramsar site, making it a “wetland of international importance,” a World Heritage Site, and a UNESCO Biosphere Reserve. Thus the outcry when Proman EC’s trucks leveled the site.

Click to enlarge. Topolobampo ammonia plant, 2015: site fill early works. Image source: Proman EC.
After the legal complaint and technical report were received by PROFEPA, the Mexican environmental regulator, in August 2015, “the infilling of the wetlands was halted” and, since then, “only minor works” have carried on.

In April 2017, however, the project regained the blessing of PROFEPA. And then, just last week, Proman’s subsidiaries announced a 15-year supply contract for the plant’s natural gas feedstock.

The three-way natural gas contract is between Proman’s Mexican subsidiary, Gas y Petroquimica de Occidente (GPO), Proman’s US subsidiary, G2X Energy (G2X), and the natural gas marketing arms of CFE, CFEnergia (CFEn). (Keen followers of the US ammonia industry will note that G2X was the entity that bought into OCI’s Natgasoline methanol project, after the merger with CF Industries fell through.)

G2X (Proman) is the upstream, owning 825 billion cubic feet of natural gas reserves in Colorado. CFEn is the Mexican government’s natural gas marketing arm, providing security of supply. And GPO (Proman) is the downstream, producing ammonia for Proman to market, presumably for export.

The 81,000 MMBtu/day contract with CFEn will allow GPO’s world-class ammonia plant to utilize clean natural gas that will be sourced domestically or from elsewhere in North America. GPO will be CFEn’s first petrochemical plant customer. The consummation of the natural gas supply contract marks a critical step in the development of the new ammonia plant … The Topolobampo ammonia plant will be the first ammonia plant on the Pacific coast.
G2X Energy press release, GPO, G2X And CFEn Announce Natural Gas Transportation Contract, 01/10/2018

This became possible when, in April 2017, PROFEPA announced that there was no problem with building and operating this 98-acre industrial site in a protected area:

The construction of the fertilizer plant has fulfilled all the environmental guidelines and provisions for the conservation of the wetland and its ecosystems.

  • Project does not face any suspension, since it complies with the provisions of environmental regulations …
  • Construction did not cause environmental damage or loss or deterioration or damage to the environment.

PROFEPA press release, THE FERTILIZER PLANT AT TOPOLOBAMPO, SINALOA, IS LOCATED OUTSIDE THE ANP ISLANDS OF THE GULF OF CALIFORNIA, 04/28/2017

According to a regional magazine:

This is the political and economic power with which local fishermen, residents, and environmental activists are faced. They hope the permits will be withdrawn that allow construction of one of the largest fertilizer plants in Latin America, and lead to the destruction of this natural wetland. They see investors as trying to take advantage of the natural gas supply and the proximity of the deep-sea port in Toplobampo, which translates into cheap energy and quick access to the foreign market.

Detractors point to corruption and influence peddling, the total absence of ethics and social responsibility, as well as a lack of respect for international agreements, treaties, and conventions signed by Mexico, which are allowing the multi-million dollar investment to take place within the ninth most important wetland in Mexico, also a protected Ramsar site.
Melóncoyote, Controversial large-scale industrial development affects mangroves, Vol 7 No 1 (Summer 2016)

For those who view the claims of environmental activists with skepticism, I admit that I find them to be deeply credible against a background of life and death. If such activists’ concerns really weren’t justified, it probably wouldn’t be worth murdering them so often; if the activists didn’t believe in their cause, they probably wouldn’t continue to risk their lives to protect their land.

At least 122 activists were murdered in Latin America in 2015 while trying to protect natural resources from environmentally destructive mega-projects such as dams, mines, tourist resorts and logging, according to research by the NGO Global Witness.
The Guardian, Second winner of environmental prize killed months after Berta Cáceres death, 01/18/2017

Melóncoyote, a regional magazine about environmental news, supported by the MacArthur Foundation, provides interesting detail on the Topolobampo plant’s Mexican sponsor, Francisco Labastida Ochoa. Given position and connections like these, one might reasonably assume that the permitting process could be bent to his will.

Francisco Labastida Ochoa, project leader, has a long history in politics: He is a former presidential candidate in 2000 for the PRI party, ex-secretary of the Ministry of the Interior, ex-governor of Sinaloa, ex-president of the senate’s energy commission, and current director of the business and development consulting company Consultores en Desarrollo, Economía y Finanzas.

According to a report published in the daily newpaper Noroeste, Labastida Ochoa’s political influence can be felt in every aspect of the public sphere. He has received the endorsement of the current energy secretary, Pedro Joaquín Coldwell; the backing of his friends Mario López Valdez, the state’s governor, and businessman José Eduvigildo Carranza; as well as the support of businessman and politician, Rubén Félix Hays, and his own son, Francisco Labastida Gómez de la Torre, current Secretary of Economic Development and Strategic Projects of the state of Sinaloa.

The project was not initially approved by the National Commission on Natural Protected Areas (Conanp), a branch of Semarnat. Later, however, after a meeting with impresarios and politicians, Juan José Guerra Abud, the head of Semarnat at the time, fast-tracked project authorization.

The project’s international interests are represented by the Grupo Proman company, personally invited by Labastida Ochoa to form part of the industrial conglomerate.
Melóncoyote, Controversial large-scale industrial development affects mangroves, Vol 7 No 1 (Summer 2016)

Leave a Reply

Your email address will not be published. Required fields are marked *