Sempra Stealing a March by Boosting LNG/Gas Production 150% at Costa Azul

---

Researched by Industrial Info Resources (Sugar Land, Texas). It looks as though 2010 could be the year when the current competition to build the largest LNG regasification on Mexico’s Pacific coast is decided. Sempra Energy has announced a proposal to more than double the capacity at its Costa Azul terminal, which is under construction in Mexico’s northern Pacific Coast state of Baja California. Also looking to lay claim to the distinction of being the biggest terminal on the coast is the Manzanillio terminal in the southern Pacific state of Colima, which is going out on tender by the state’s CFE and Pemex. For related news item see March 14, 2006 – Mexico Moves on 200 Petrochem Projects and a $430 Million Manzanillo LNG Terminal.

Sempra has asked the Mexican authorities for permission to up production from 1 billion cubic feet of gas per day to 2.5 billion cubic feet per day (cfd). President of Sempra’s LNG unit, Darcel Hulse has said that the expansion plans are in response to significant interest received from a number of potential gas producers and marketers.

The plant at Ensenada, 80 kilometers south of San Diego, is scheduled to start operations in 2008. If the necessary permitting is cleared, the expanded production could be in operation by 2010.

Negotiations are taking place with potential long-term customers in Mexico, California and other western U.S. states. Some market observers feel that Sempra has stolen a march over rivals in the Pacific Coast LNG re-gasification terminal sector by making a pre-emptive move to boost production at a terminal already under construction and scheduled to operate in 2008. LNG will be imported from Sakhalin, Russia and Tangguh, Indonesia. Sempra already has some supply agreements in place with the Mexican government.

California’s coast has proved to be a difficult region in which to get permits through when faced with powerful groups in the U.S. opposed to environmental risks and coastal degradation. The LNG sourced gas is going to have to come from somewhere as California’s current consumption of natural gas is about 6 billion cfd and rising. Less than 20% of the state’s gas is sourced from within the state.

Mexico sees gas as a feed source for its energy and industrial development hunger, and the imported LNG will hopefully help to balance the price margins of its own domestic oil and gas production, which is moving into an investment and expansion phase.

The $500 million E+P+C (engineering, procurement and construction) contracts for the Costa Azul project were awarded in early 2005 to a consortium made up of Techint Mexico, Black& Veatch (Kansas City, state), Mitsubishi Heavy Industries (Tokyo, Japan) and Vinci Construction Grands Projects (Paris, France). The $170 million contract for the terminal breakwater was awarded to a joint venture between Costain Group (London, UK) and China Harbour (Beijing, China).

View Project Report - 65000308

Industrial Info Resources (IIR) is a Marketing Information Service company that has been doing business for over 23 years. IIR is respected as the leader in providing comprehensive market intelligence pertaining to the industrial processing, heavy manufacturing, and energy-related industries throughout the world.