Sempra Is Cleared to Build LNG Project Near Ensenada
Sempra Energy said Friday that it had won a high-stakes race for approval to construct North America’s first West Coast liquefied natural gas terminal.
San Diego-based Sempra, parent of Southern California Gas Co. and San Diego Gas & Electric Co., said it would begin building the project early next year at a seaside location north of Ensenada.
Half a dozen companies -- including ChevronTexaco Corp., Mitsubishi Corp., BHP Billiton and Marathon Oil Corp. -- are pushing proposals to bring LNG to energy-starved California and other Western states aboard special container ships docking at Pacific coast terminals. The goal is to tap into California’s soaring demand for natural gas -- and gain hefty profits from prices that have more than tripled since 2000.
But those projects have bogged down in jurisdictional and environmental challenges. Sempra got an early jump on approvals and was helped by its experience in previous Mexican power projects.
Sempra executives promised that the company’s $1-billion terminal and pipelines would begin delivering 1 billion cubic feet of gas to the western United States and northern Mexico in 2008. That would represent 15% of California’s current daily 6.5 billion cubic feet of natural gas consumption.
The Sempra terminal will be on the receiving end of super-cooled liquefied natural gas supplied by BP and Royal Dutch/Shell Group from Russia’s Sakhalin Island and Indonesia. The Baja plant will re-gasify the LNG and deliver it to the U.S. and Mexico by pipeline.
“We won the race. It’s been a long process, but all the pieces are in place,” Sempra Chairman Stephen Baum said Friday. The final hurdle, a construction permit from the city of Ensenada, was overcome this week.
Ensenada Mayor Jorge Antonio Catalan said the project would boost jobs and “sustainable development” in his city.
“We have to be careful in this age of globalization not to fall by the wayside,” Catalan said.
But environmentalists and homeowners who oppose the project say they haven’t given up. Leading the charge is an association of 400 homeowners at Bajamar, a resort and housing development two miles north of the proposed terminal site and about 40 miles south of the U.S.-Mexico border.
The homeowners, most of whom are U.S. citizens with second homes at Bajamar, fear that the project will lower property values and pose a safety hazard if gas storage tanks explode. They say they have filed lawsuits in Mexico City to reverse government permits and are requesting hearings by the California Public Utilities Commission.
“This project is going up in a corridor that has been earmarked for tourist activities,” said Roberto Valdes, a Bajamar developer. “This is not the only place they could put one of these things.”
Rory Cox of San Francisco-based Pacific Environment said his group opposed the project because Sakhalin gas production threatened the breeding grounds of Western Pacific gray whales, now numbering only 100.
Sempra denied that there was a risk of gas storage tanks exploding and said the state PUC had no regulatory authority over the project.
ChevronTexaco spokeswoman Nicole Hodgson said the San Ramon, Calif.-based company was pursuing its plan to build an LNG terminal on the Coronado Islands opposite Ensenada. The project still lacks a key Mexican government permit.
“There is room in the West Coast market for two LNG terminals, and ChevronTexaco is moving forth to meet Mexico’s and California’s energy needs,” Hodgson said.
