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FERC Denies North Baja Pipe's Plea for Project Extension

FERC on Tuesday rejected North Baja Pipeline LLC's request for a two-year extension of its certificate authority to construct and place into service proposed Phase II facilities to transport regasified liquefied natural gas (LNG) from Sempra Energy's Energia Costa Azul terminal in Baja, Mexico, to California and Arizona.

The Phase II facilities, which were approved in October 2007 (see Daily GPI, Oct. 4, 2007), were intended to accommodate an expansion of the Energia Costa terminal that was to be placed in service in January 2010. However, the terminal expansion was never undertaken by Sempra. Nevertheless, North Baja insisted that infrastructure changes in northwestern Mexico justified the expansion project moving forward.

"North Baja alleges that in recent months, the Mexican government has announced its intention to move forward with natural gas infrastructure improvements in the northwestern areas of Mexico, which could provide new opportunities for and interest in the utilization of the Phase II facilities," according to the Federal Energy Regulatory Commission letter order, which was issued Tuesday [CP06-61, CP01-23].

Because of the upcoming presidential election in Mexico, North Baja said it was unlikely that any "substantive discussions" with the incoming government about the Phase II facilities would take place until later this year or in 2013. "Thus North Baja requests a two-year extension of the Phase II certificate authority, until April 24, 2014, to allow time for this transitional period."

In denying North Baja's request for the extension, FERC said that "North Baja has not provided any specific or definitive basis or evidence that the Phase II facilities will be needed or constructed in the time frame requested. The [LNG expansion] facility, which was originally expected to provide a source of gas for the project, was never constructed.

"North Baja now merely speculates that, as the Mexican government pursues the improvement of the natural gas infrastructure in northwestern Mexico, the facilities may provide opportunities for North Baja to construct and utilize the Phase II facilities. This speculation is not enough to justify the requested extension of time.

"It has been over four years since the issuance of the October 2007 order in this proceeding and North Baja has had ample opportunity to find other uses for the Phase II facilities," the Commission said.

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