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DKRW Secures Land to Build Sonoran LNG Facility

DKRW Secures Land to Build Sonoran LNG Facility

Following through on a plan to build a 1.3 Bcf/d liquefied natural gas (LNG) regasification terminal to serve U.S. markets, Houston-based DKRW Energy LLC has purchased 1,500 acres of property at Puerto Libertad on the Gulf of California from the state of Sonora, Mexico. DKRW subsidiary Sonora Pacific LNG signed an agreement with Mexican officials in May to build the terminal and associated gas pipeline facilities to serve U.S. western regional markets (see Daily GPI, May 26).

The proposed project would include two storage tanks at Puerto Libertad, each with capacity to hold 160,000 cubic meters of LNG, an intrastate pipeline infrastructure in Sonora, possibly including Sinaloa (Mexico), and a 36-inch diameter export pipeline to interconnect with El Paso Natural Gas east of Tucson, AZ.

Initial projections call for 500 MMcf/d to be consumed in Sonora, primarily by the power generation sector, while 800 MMcf/d would be shipped to the United States. Construction of the project is scheduled to begin in mid-2005, with start-up targeted for mid-2008. Critical tasks still to be accomplished in the next few months include marketing throughput capacity and equity in the terminal and pipeline to Pacific Rim gas suppliers and other investors, as well as securing all necessary federal, state and municipal permits.

"We are very pleased to have secured the best site in North America to import gas into Mexico and United States western region markets," said Tom White, DKRW managing partner for the project. "Located on the Gulf of California, Puerto Libertad is strategically located to meet existing and future power and industrial sector gas demand in Sonora, as well as Sinaloa, and is roughly 200 miles from the very large Tucson/Phoenix gas market."

White, a former Enron Corp. executive and secretary of the Army from 2000-2002, said DKRW had assembled "a world-class team," which included Bechtel and CB&I for engineering and construction, Andrews & Kurth LLP for legal support and El Paso Corp. for all pipeline infrastructure. "With this team in place and the site purchased, we intend to get on rapidly with the project."

White said the DKRW now would be working to secure federal LNG permits, "and the state of Sonora is committed, through our Cooperation Agreement, to assisting with state and municipal permits. I expect the process to move quickly."

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