Houston Firm Signs Pact to Build LNG Plant in Mexico

Sonora Pacific Liquefied Natural Gas, a unit of Houston-based DKRW Energy LLC, announced Tuesday it has signed an agreement with the government of Sonora, Mexico, to build a 1.3 Bcf/d LNG regasification terminal at Puerto Libertad on the Gulf of California and associated gas pipeline facilities to serve markets in Mexico, Arizona and California.

The agreement includes an option for Sonora Pacific LNG to purchase the land for the regasification terminal from the state government. In addition to the regasification facility, the project would include two storage tanks at Puerto Libertad, each with capacity to hold 160,000 cubic meters of LNG, an intrastate pipeline infrastructure in Sonora, possibly including Sinaloa (Mexico), and a 36-inch diameter export pipeline to interconnect with El Paso Natural Gas east of Tucson, AZ.

Initial projections call for 500 MMcf/d to be consumed in Sonora, primarily by the power generation sector, while 800 MMcf/d would be shipped to the United States, said DKRW Energy, an energy firm with interests in LNG, coal-to-liquids and wind power. Construction of the project is scheduled to begin in mid-2005, with start-up targeted for mid-2008, it noted.

"Our strategic location provides direct access to the rapidly expanding gas market in Sonora, could be extended south to Sinaloa and is a short distance from Arizona and California markets," said Tom White, of DKRW Energy and managing partner of Sonora Pacific LNG. The LNG would be provided by Pacific Basin and Middle East suppliers who are seeking access to western gas markets, the company said.

Project builders will be Bechtel Corporation and CBI. El Paso Natural Gas will be involved in the development of the pipeline infrastructure and interconnects, according to DKRW Energy.

With this project, DKRW takes it place among several dozen LNG regasification terminal projects that are in various stages of planning and development in North America. By 2010, projects could be located in the Gulf of Mexico, Bahamas (with pipelines to Florida), offshore U.S. West Coast, Mexico's West Coast (with supply into the Southwest and/or California), and the U.S. and Canadian East Coasts, according to the Energy Information Administration (EIA).

LNG, which accounted for only 5% of overall U.S. gas imports in 2002, is expected to make up as much as 40% of imports in 2010, the Department of Energy (DOE) said. It sees annual LNG imports hitting 5 Tcf or more by 2025.

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