June 12, 2007 / 4:52 AM / 13 years ago

Sempra Baja LNG terminal seeking expansion permit

KUALA LUMPUR, June 12 (Reuters) - Sempra Energy’s (SRE.N) liquefied natural gas (LNG) unit is seeking permission to more than double the capacity of its Baja import terminal, but has yet to make a decision on when or whether to proceed with the project, a senior executive said on Tuesday.

Sempra’s LNG Vice President for Commercials Octavio Simoes told Reuters Chevron’s (CVX.N) decision in March to drop plans for a rival import terminal off the Baja California coast of Mexico, near the U.S. border, “adds value” to Sempra’s project.

Sempra’s $800 million, 1 billion cubic feet per day (bcfd) Energia Costa Azul LNG terminal is on track to open in the first quarter of next year. But the company has no timetable for deciding on whether to proceed with a 1.65 bcfd expansion project, Simoes told the Asia Oil and Gas Conference.

He said Sempra was seeking permits from relevant authorities for the project, and that it would not need to increase any pipeline infrastructure in order to deliver natural gas to market if it expanded the terminal.

Despite weakened U.S. West Coast natural gas prices, the project has benefited from the failure of competitors to receive permits to build competing regassification terminals along the coast amid stiff environmental opposition.

Despite a number of proposals by Pacific basin producers from Russia to Australia eager to tap into the growing and liquid West Coast pipeline gas market, no projects have been approved so far for offshore or onshore California.

Chevron said three months ago that it canceled three permits with Mexican officials to build the $650 million, 1.4 bcfd terminal off the Coronado Islands because the project no longer fits Chevron’s business needs.

A year ago Sempra LNG said it received nonbinding bids totaling 2.9 bcfd for the additional capacity after holding an open bid round to gauge demand.

At the time, it said the second phase of the construction could open as early as 2010, and would bring the total capacity to 2.3 bcfd-2.5 bcfd.

LNG is natural gas that is cooled to extreme temperatures and then shipped via tankers. It is vapourized back to a natural gas state at receiving terminals.

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