California okays pipeline link to Mexico LNG port
LOS ANGELES, July 16 (Reuters) - A California state commission has approved expansion of a pipeline system to bring natural gas by early 2008 into California from a liquefied natural gas terminal off northern Mexico's Pacific coast.
The North Baja Pipeline is owned by TransCanada Corp. (TRP.TO) on the U.S. side of the border, and connects with a pipeline system in Mexico owned by San Diego-based Sempra Energy (SRE.N).
It will be part of a system that by early 2008 is to bring natural gas from Sempra's Energia Costa Azul LNG terminal near Ensenada in Baja California in Mexico to power plants primarily in northern Mexico, California and Arizona.
The move by the California State Lands Commission late on Friday was important because it approved an environmental impact report that can be used by Riverside and Imperial county officials in California, who must also give approval, Henry Morse, general manager of the TransCanada-owned pipeline, said on Monday.
Morse said TransCanada hopes to get approval for its part of the pipeline system from the U.S. Federal Energy Regulatory Commission later this month.
Once the Costa Azul LNG terminal opens, the North Baja Pipeline flow will be reversed to bring gas into California.
North Baja begins in Ehrenberg, Arizona, and terminates about 80 miles south in Ogilby, California, near the border. It opened in 2002 and currently ships about 500 million cubic feet per day of natural gas into Mexico where it connects to the eastern end of the Sempra-owned Gasoducto Bajanorte.
The 1 billion-cubic-feet-per-day (28 million-cubic-meter) Costa Azul LNG terminal is 80 percent built and on target to open in the first quarter of 2008, Sempra spokesman Doug Kline said.
Kline said a quarter of the LNG brought into Costa Azul is contracted to a natural-gas-fired power plant in Rosarito, Baja California, owned by the federal utility Comision Federal de Electricidad.
The rest would be sold on the open market by Sempra Commodities, he said. While yet to be determined, some is expected to fuel two plants near Mexicali in Baja California -- Sempra's Termoelectrica and InterGen-owned plant La Rosita.
Sempra is constructing a 42-inch, 45-mile north-south spur pipeline that will connect with its existing east-west Gasoducto Bajanorte that runs almost the full stretch of Baja California's northern border from the Pacific to Arizona.
Natural gas becomes LNG by being chilled to minus-260 degrees Fahrenheit, shrinking to 1/600th of its gaseous state. Once delivered to the terminal in Mexico, it will be converted back to gas and sent in pipelines to power plants.
