By the OGJ Online Staff
HOUSTON, Oct. 5 -- LNG terminal operator CMS Energy Corp. and utility holding company Sempra Energy Friday reported an agreement to jointly develop a LNG receiving terminal on the Pacific Coast north of Ensenada, Baja California, Mexico.
The proposed plant will have a send-out capacity of 1 bcfd of natural gas, the companies said. The gas will flow north into Baja California and the southwestern US via a new 40-mile pipeline between the terminal and existing pipelines in the region.
Dearborn, Mich.-based CMS and San Diego-based Sempra said they have secured a 300-acre site for the terminal in an industrial zone.
Donald E. Felsinger, group president of Sempra Energy, said the project will bring gas competition to a market that has long been at the "end of the pipe," which meant customers often had to pay higher prices for gas than in other markets. "This project will put the region at the front of the pipe, creating more competition in natural gas supplies," he said.
The joint venture will develop, finance, build, and own the LNG facility and related port infrastructure, which are expected to be completed in late 2005, the companies said.
Sempra Energy is the parent of San Diego Gas & Electric Co. and Southern California Gas Co.
Gas prices skyrocketed in the territory served by Southern California Gas Co. last year, though the cause is disputed. With a strong presence in northwestern Mexico, Sempra owns and operates three natural gas distribution systems and one gas transmission pipeline. It also is building a 135-mile natural gas pipeline and a 600 Mw power plant in the region.
CMS Energy, which operates an LNG receiving terminal at Lake Charles, La., will operate the Baja California facility under contract with the joint venture.
In June, Shell Gas & Power, a group of companies owned by Royal Dutch/Shell Group, and El Paso Global LNG, a subsidiary of El Paso Corp., said they would jointly develop a $300 million liquefied natural gas regasification terminal at Altamira, Tamaulipas state, on Mexico's east coast.
At the time Shell and El Paso did not reveal initial capacity of the terminal, saying only that it will be sufficient to meet demand in Altamira's immediate area. They said it would be expandable to 1.3 bcfd.
The companies said their 50:50 joint venture has acquired rights to land at the Altamira port and has begun design studies. The regasification terminal is planned to begin LNG imports in the first half of 2004. The Shell-El Paso project will market gas directly to Petroleos Mexicanos (the Mexican state energy company), industrial users, and power producers.