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Sempra LNG Reports 'Strong' Interest in Costa Azul Open Season

May 22, 2006
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Sempra Energy's liquefied natural gas (LNG) unit reported that its nonbinding open season for a proposed expansion of the Costa Azul receiving terminal along the North Baja Pacific Coast in Mexico drew strong interest equivalent to 2.9 Bcf/d, more than double the scope of the proposed expansion. The open season that ran for four weeks closed May 12.

The open season was initiated April 17 to gauge interest in adding 1.5 Bcf/d of capacity at the receiving terminal now under construction about 60 miles south of the U.S.-Mexican border. The initial facility size is 1 Bcf/d, the majority of which is already under long-term contract.

"This successful open season demonstrates the strategic significance of our Energia Costa Azul receipt terminal," said Darcel Hulse, president of Sempra LNG, who called the terminal the first of its kind on the West Coast of North America. Hulse likes the interest and said the company is now looking forward to "finalizing commercial agreements."

"The ultimate size, scope and cost of Energia Costa Azul's expansion will depend upon the outcome of the negotiations for commercial agreements," he said. Construction is 30% completed on the initial 1 Bcf/d facility, and it is expected to be operational in early 2008. Pending regulatory approvals and the needed contracts, the expansion could be put in place some time in 2010.

Sempra LNG said the open season was conducted in accordance with Mexican laws and regulations governing open access terminals. Under its terms, shippers were required to submit their interest in participating in the expansion phase, and Sempra committed to beginning immediately after the process to "begin working with the shippers who submitted bids to develop binding terminal service agreements."

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