Strong interest amounting to essentially double the proposedcapacity from a recently completed open season has units ofPG&E Corp. and Sempra Energy pushing for a FERC filing by theend of this month for their joint venture natural gas pipelinelateral from the Arizona-California border through northern Baja inMexico, PG&E’s CEO told financial analysts Tuesday.

PG&E and Sempra jointly have proposed building a $230million, 212-mile 30-inch-diameter transmission pipeline as alateral off existing east-to-west southwest interstate pipelines,including a 77-mile leg of the proposed line that would cut throughthe southeast corner of California before going into Mexico. Theproposed pipeline initially has been slated to carry up to 400MMcf/d.

The two U. S. pipeline proponents are considering increasing theline’s proposed capacity in the upcoming FERC filing based on thelevel of interest expressed, but the added volumes would be quitea bit less than doubling the capacity, said a PG&E spokespersonlast week.

“We are moving forward nicely with a successful open season forwhich we got expressions of interest more than double the capacityof the pipeline, and we’re in the process of converting these intofirm commitments and expect to file at FERC by the end of thismonth,” said Robert Glynn, PG&E’s CEO, in announcing improvedthird-quarter earnings results, but acknowledging that the company”certainly has challenges ahead of it in the California market.”

In announcing the joint venture in June, the partners said thepipeline is targeted on new and existing gas-fired electricgenerating plants and other energy-intensive industries in northernBaja and in the southern end of California. As expected, a lot ofthe initial interest comes from these sectors, along with adeveloping local distribution company in the border town ofMexicali, Mexico, the PG&E spokesperson said.

To date, there is no active competitors to this proposal.Several years ago, El Paso Natural Gas had a proposed pipeline intothe area, but it has been dormant. The Sempra-PG&E proposedpipeline would interconnect with one of El Paso’s pipelines servingCalifornia.

“As far as we know, we’re the only really active project forbringing new gas supplies into northern Mexico and the southern endof California,” the PG&E spokesperson said.

The deal includes participation by the Mexican firm, Proxima GasSA de CV, and it is a 50-50 partnership by the two U.S companiesfor their portion of the pipeline. PG&E’s National Energy Groupwill develop the 77-mile U.S. segment of the proposed pipeline,while Sempra Energy International and Proxima Gas will build the135-mile portion in Mexico in a geographical region in which Semprais already active in developing gas distribution and transmissionsystems for several growing Mexican cities along the border.

Richard Nemec, Los Angeles

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