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Tidelands Seeks Permits for Mexico's First Gas Storage Field

Tidelands Oil & Gas Corp. said a subsidiary, Terranova Energia, filed a permit application on Friday with Mexico's Comision Reguladora De Energia (CRE) for construction of a proposed 50 Bcf underground natural gas storage facility in the Brasil Field of the Burgos Basin near Reynosa, Tamaulipas. The facility will be Mexico's first gas storage field and is expected to be part of Tidelands' integrated cross-border gas pipeline, storage and LNG import project.

"The permitting process represents a significant milestone in Tidelands' continuing efforts to establish itself as a prominent contributor to Mexico's oil and gas infrastructure," said Tidelands CEO Michael Ward. "We are confident that our preparatory efforts and meticulous scrutiny regarding the details of our projects will expedite the permitting process, and as always, remain focused on growing our company and building shareholder value."

In an interview with NGI, Ward said Tidelands' next steps will be to file for permits for its proposed offshore LNG regasification terminal and pipeline and for a pipeline extending to Monterrey. "As soon as we get all of our permits, we will start construction. We're going to build the whole enchilada all at one time," said Ward. "It's a sparsely populated area," so construction should move rapidly.

However, Ward noted that the regulatory process for storage fields is untried. "This is the first storage field that's every been done down there so [a permit for] that could take a while," he admitted. "They don't have to develop regulations, but there are some constitutional issues that clearly will be a [significant regulatory] step. I'm not really uncertain about it. I'm pretty confident."

The storage field will be a porous sandstone reservoir bounded by impermeable rock layers. Ward said the field will be able to hold 50 Bcf of working gas and will have about 500 MMcf/d of peak deliverability. The storage facility will help satisfy gas demand in northeastern Mexico, including industrial demand in Monterrey.

The storage field will play a key role in Tidelands' broader project, which includes development of a market hub on a 160-mile bidirectional border crossing pipeline system. The Terranova Oriente pipeline system will be capable of transporting 1 Bcf/d of gas from Texas into Mexico or vice versa. Additional plans include the 1.4 Bcf/d offshore regasification terminal to be built in the Gulf of Mexico using technology from Remora Energy.

The project also will include another major 750 MMcf/d pipeline from Compressor Station 19 on the Terranova Oriente backbone pipeline to power generation and other markets in Monterrey.

Tidelands hopes to begin construction next summer with the entire project, including pipelines, storage and LNG terminal, operational in early 2008.

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