San Diego-based Sempra Energy's aggressive natural gas pipeline and storage plays, particularly tied to the Gulf of Mexico, could take a hit of up to $55 million if current assessments of the cavern prove negative in its salt dome Liberty Storage project in Louisiana, Sempra CEO Donald Felsinger said in an earnings conference call last Tuesday. Definitive information should be available in the next two to three months, he said.
In a third quarter earnings call last November, Sempra divulged that the Liberty storage project might have to be shelved if it can't find an engineering solution to cavern development problems that have emerged. At that time Felsinger said Liberty in a worst-case scenario might have to be written off at about $65 million after taxes to cover Sempra's share of the project (see Daily GPI, Nov. 11, 2008).
"We have mentioned before that we are struggling with the integrity of one of our caverns," Felsinger said most recently (Feb. 24) in response to a financial analyst's question. "For the last few months we have been putting in place some low-cost solutions that we are currently testing.
"So I would expect that in the next several months we will have an answer on whether we can get the cavern to work. In the worst-case scenario, in the case in which we would have to abandon this facility, we would be looking at a write-off that would be something like $55 million after taxes."
The two-salt dome project is part of broader storage developments by Sempra in conjunction with a 35-mile takeaway transmission pipeline from its liquefied natural gas (LNG) terminal that is winding up construction this year at Cameron, LA, along the Gulf of Mexico. Last May Sempra reported delays in the storage project, but estimated that initial injections would begin in late summer at the facility (see Daily GPI, May 20, 2008).
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