Sempra to determine interest in Costa Azul LNG expansion

Monday, March 13, 2006

US firm Sempra LNG, a subsidiary of Sempra Energy (NYSE: SRE), will launch a non-binding open season to solicit shipper interest for a proposed expansion of its Costa Azul liquefied natural gas (LNG) receiving terminal in Mexico's Baja California state on April 17, Sempra said in a statement.

Proposals will be received through May 12, 2006.

The project would expand the terminal's storage and send-out capacity to 2.5 billion cubic feet a day (Bf3/d) of natural gas from 1Bf3/d.

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Applications for expansion-related permits have been filed with Mexico's national energy regulatory agency CRE and Mexico's environmental protection agency Semarnat, the statement said.

The specific size, scope and cost of the expansion depend on the responses received as a result of the open season, the statement said.

"The proposed expansion and open-season process are a response to the significant interest we have received from a number of potential natural gas producers and marketers for more capacity at the Costa Azul reception terminal," Sempra LNG president Darcel Hulse said in the statement.

Sempra's US$800mn Costa Azul project, 25km north of Ensenada, is the first of its kind on North America's Pacific coast.

Construction is about 30% complete and expected to be finished in 2008 for the start of operations in 2010, the statement said.

Sempra has committed 40% of its stake in future gas production from Costa Azul to supply Baja California state including its Mexicali thermoelectric generation plant, according to a previous BNamericas report.

Sempra has a 50% stake in the project's estimated 1Bf3/d initial output, while its partner Anglo-Dutch oil firm Shell (NYSE: RDS-B) has the other 50%, according to a 20-year agreement signed by both companies in 2004.

Sempra spokespeople were not available to provide more details on the expansion project when contacted by BNamericas on Monday.