FERC Awards PD to North Baja Pipeline

The Federal Energy Regulatory Commission set its seal, pending environmental review, on another westward-bound pipeline project last Wednesday. The North Baja Pipeline will carry up to 500 MMcf/d from a connection with El Paso Natural Gas near Ehrenberg, AZ, to fuel power plants and gas distribution systems in Northern Mexico and Southern California.

FERC approved a preliminary determination for the U.S. portion of the 215-mile pipeline, an 80-mile segment that connects at the international border between Yuma, AZ, and Mexicali, Baja California, Mexico. The Mexican government has already issued a transportation permit to Sempra Energy International for the 135-mile Mexican segment, Gasoducto Bajanorte, which will connect with the existing Transportadora de Gas Natural in Mexico. The U.S. portion of the project is owned by PG&E Gas Transmission Holdings Corp. and is expected to cost about $146 million. Proxima Gas SA de CV also has an interest in the pipeline.

The pipeline has precedent agreements with six shippers for the total capacity. The largest share of the supplies, 283 MMcf/d, will go to three power plants: La Rosita/ InterGen plant in Mexicali, the Otay Mesa Plant in San Diego and the Presidente Juarez/Rosarito plant in Tiajuna. The Mexicali plant will export a portion of its power production to California. The Comision Federal de Electricidad (CFE) has a call on 32 MMcf/d, increasing to 210 MMcf/d and Termoelectica De Mexicali, S. de R.L. de CV has signed on for 105 MMcf/d. North Baja maintains that additional demand is likely to develop in the near future, noting the CFE's preference for gas-fueled electric power. The CFE plans to convert 11 oil-fired electric generation plants to natural gas within the next 10 years.

The pipeline also pointed to other electric generation plant customers on the U.S. western grid and in Mexico, such as the certified 500 MW Blythe Energy plant near Blythe, CA; the 500 MW Yucca plant in Yuma, AZ; the planned 470 MW plant in San Luis Rio de Colorado, Mexico; a planned 250 MW Energia de Mexicali or AEP plant; and a future 500 MW plant listed as the Sempra Energy Project in Mexicali.

The Commission noted "both the electric grid and natural gas system in Baja California are interconnected with the respective networks in California." Also, the only sources of natural gas currently feeding Baja California are San Diego Gas & Electric's pipeline which is interconnected with Mexico's Transportadora pipeline and SoCalGas' distribution line into Mexicali. North Baja said both lines are constrained and cannot take on the additional power plant load.

FERC dismissed complaints by existing El Paso customers that approving the new pipeline would jeopardize their own capacity and upstream supplies. Existing customers on El Paso are protected by the right of first refusal to continue their current contracts, the Commission said, and the North Baja shippers also have assumed the risk of acquiring their own upstream supplies. The new shippers can obtain released capacity or capacity from expiring contracts on El Paso, or service from marketers that have firm capacity on the pipeline or from expansion proposals by El Paso. Some of the shippers already have signed on for some of the 1.2 Bcf/d of capacity being released by El Paso Merchant Energy at the end of this month. El Paso also is planning a 230 MMcf/d expansion and is assessing further expansions. "The Commission believes that the North Baja shippers will have realistic opportunities to complete any unfinished upstream arrangements without adversely impacting El Paso's existing customers."

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