PUC Chief Pushes Baja Gas Project : Utilities: Mexico is urged to ignore ‘disinformation’ from competing firms and consider SoCal Gas-SDG&E; pipeline plan for Rosarito Beach plant.

State Public Utilities Commission Chairman Daniel Fessler on Friday urged top Mexican energy officials to give serious consideration to a proposed pipeline that Southern California Gas Co. and San Diego Gas & Electric would build to carry natural gas to an electrical generating plant near Rosarito Beach.

Fessler, who spent the past three days in Mexico City, urged Mexican energy officials to ignore “disinformation and myth” being spread by out-of-state energy companies that are competing with the two Southern California utilities for the potentially lucrative pipeline contract.

During a telephone interview Friday, Fessler said he visited with key Mexican officials to debunk allegations from competing energy companies that California is a “hostile” place to do business.

Fessler, who reserved judgment on the proposed pipeline project’s merits until after the PUC conducts a complete review, met with top Mexican energy officials after learning that competing energy companies had alleged that California’s utility regulations made the pipeline proposal economically unattractive.

Mexican officials have yet to determine how much natural gas the proposed pipeline would carry, but natural gas industry officials estimated that a 20-mile-long pipeline from the U.S. border to Rosarito would cost about $20 million.

Mexico sparked a flurry of responses from U.S. energy companies last year when energy officials indicated a willingness to let a U.S. firm build a natural gas pipeline that would serve the generating plant near Rosarito Beach, situated about 20 miles south of the Mexican border with the United States.

The request was unusual because, although a handful of U.S.-based energy companies deliver gas to Mexican pipelines across the border from Texas, Baja California has no natural gas pipeline distribution system.

U.S. energy companies are competing fiercely for right to build the proposed pipeline because Baja California seems poised for dramatic economic growth.

Initially, the proposed pipeline would provide natural gas for the electric power plant that now burns expensive fuel oil that is brought into Mexico by ocean-going freighters.

But U.S. energy companies anticipate that the peninsula’s estimated 2 million residents, who now use relatively expensive propane gas, are another potential market. Natural gas is not available in Baja California because Mexico’s existing natural gas pipelines end hundreds of miles to the south on the country’s mainland.

Baja California’s growing energy appetite coincides with a glut of natural gas pipeline capacity in the Western United States. That capacity appeared earlier this year when two new interstate pipelines linked California to gas-rich regions elsewhere in the Western United States and Canada.

With the two new pipelines, capacity leading into California grew by 50% to 2,500 million cubic feet per day, said Mike Florio, a spokesman for San Francisco-based TURN, a consumer group. “A surplus looks for a place to go, and Tijuana and Baja California is a natural extension for the pipelines and utilities,” Florio said.

While the pipeline’s costs initially would be borne by customers and shareholders of the energy company that wins the contract, “the hope is that the costs are going to be less than the revenue to be made (through gas sales) in the future,” Florio said.

Earlier this month, El Paso Natural Gas said it would build a $200-million, 240-mile pipeline from Yuma, Ariz. to Rosarito if it wins the contract. Houston-based Tenneco Corp., which has excess natural gas pipeline capacity in California, “sees exciting opportunities” in Mexico, according to a spokeswoman.