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Sempra N. Baja LNG Facility on Track; Initial Peak Capacity 1.3Bcf

On the ground, ignoring a south-facing Pacific Ocean view that would make travel agents drool, 2,200 heavy construction workers and engineers scurry around a 200-acre site 60 miles south of the U.S.-Mexico border, preparing the new home for the first imports of liquefied natural gas (LNG) on the North American West Coast.

An NGI correspondent was provided a tour and briefing last Friday at the $1.2 billion deepwater coastal location that is being modified with a breakwater and landfill for the LNG ships' dock.

With 24/7 construction operations under a four-company global consortium involving U.S., Japanese, French and Mexican companies, engineers managing the construction assure that it will be ready to receive the first LNG shipments in early 2008.

The consortium referred to as "BMVT" consists of Kansas City-based Black & Veatch; Mitsubishi Heavy Industries of Tokyo; Vinci Construction Grands Projects of France; and Techint SA de CV of Mexico. The contractors also relies on a third-party, German-based and Mexican-approved construction verification firm that files monthly reports on the project and ultimately will have to certify the facility before the Mexican federal energy regulators will allow it to begin commercial operations next year.

Remotely located off the Baja tollway along the scenic, increasingly developed coast to the north, the Sempra site is invisible from the highway, which sits above it. A major coastal resort, Bajamar, may offer peeks of tops of the two massive concrete storage tanks from some of the tees at its 27-hole golf course, but otherwise the structures are somewhat hidden.

An on-site administrative/maintenance/warehousing building is partially completed. Eventually it will house the 82 permanent employees who will operate the massive facility, which is officially classified as a 1 Bcf/d terminal, but for backup/reliability purposes is being built with an extra regasification unit ("open-rack vaporizer") that will allow Costa Azul to process peak capacities of up to 1.3 Bcf/d, according to Jorge Uribe Villalobos, a health/safety/environmental and permitting manager at the site.

Two years into a three-year construction timetable, Villalobos likens the current stage of build-out (70% complete) to putting together a giant puzzle. "What we have done now is the perimeter; now we get to the fun part -- filling in the middle -- and that is the challenge we all have," he said.

Costa Azul's design of the land-based facilities pretty much mirrors other receiving terminals built elsewhere in the United States and around the world. Sempra's Cameron, LA, LNG facility is similar except in how the foundation and base of the tanks are treated. In North Baja California, earthquakes are a prime consideration, so there is a series of built-in shock absorbers to which the steel structure is attached, and in the below-sea level Gulf of Mexico coast everything is raised to be well off the flood plain, Villalobos said.

"From top to bottom, the tanks are the same here and at Cameron, but once you get under the metal floor plate on which the LNG sits, Cameron is sitting on piles; you could walk underneath the whole structure," he said. "That space will provide the equivalent of the heating system we are building in the base at Costa Azul."

Because of its remote location -- many employees (up to 850) are bused in from company-run housing in Ensenada -- during construction and when it opens commercially, the facility is being developed to be self-sufficient, including its own power and water supplies, food and medical care for workers. (There has been one fatality at the massive work site since the construction began two years ago, Villalobos said. An on-site infirmary is staffed around the clock with a doctor, two nurses and a paramedic.)

There will be a desalination plant for potable water and an on-site generator, substation and switch gear with no plans to produce any excess water or power for use beyond the site, according to Villalobos. Additions to the LNG plant, which are already being planned to eventually make it a 1.5 Bcf/d facility, would be centered on adding two similar holding tanks, which would be built as the initial plant is operating.

"What people in the company call maximum build-out would be the two additional tanks mirroring some of the related infrastructure, although most of that infrastructure has been pre-built to reduce the possible impacts on LNG facility operations while more construction is completed," said Villalobos, who began with Sempra as an engineer.

Work at the site is divided into three areas: (1) the two 80-meter diameter, 10-story-high storage tanks and related infrastructure with double wall, roof and floor construction containing insulation material throughout, including under the floor of the storage tank to prevent the super-cold contents from freezing the ground below and creating potential cracking of the infrastructure; (2) the marine facilities, including a landfill dock and trestle, and 650-meter breakwater; and (3) everything else.

The $170 million marine work is particularly large and complicated even though the site enjoys adjacent ocean depths that are much deeper than most coastal Pacific locations. This was a prime reason for the site's selection. Less dredging was required to prepare it for LNG tankers, but the loading area and coastal rock had to be protected against future erosion through a series of four-cubic-meter concrete interlocking pieces forming chains that are being embedded in the shoreline.

A series of 12 huge (50-meter) square caissons are being constructed for the breakwater in nearby Ensenada harbor and floated 12 miles north to a point offshore from the site. The first of the 12 is now in place, and the others will be moved and secured over the rest of this year.

LNG will be pumped ashore through the marine trestle system and piped in 36-inch diameter lines up the tank side to be offloaded at the top -- a system designed to minimize the risks of spills, the company said. "Something as simple as loading and emptying the tanks from the top reduces the risk of having liquid spill out onto the sides," Villalobos said. "If a side-connected system failed, the likelihood would be spills of LNG around the sides of the tank."

Once the LNG is regasified and before it is picked up in the Sempra-affiliated North Baja natural gas transmission pipeline system, Costa Azul will provide detailed gas analysis and modifications to make sure the gas meets various U.S. and Mexican market specifications for heating value. This is the so-called "hot gas" issue that still rages in California based on a recent ruling by state regulators that regional air quality regulators and environmentalists allege will hurt air pollution protections in the state.

"The gas might have to be treated with nitrogen to get it into compliance with pipeline quality standards in the various markets," said Villalobos, noting that the problem is manageable as far as Sempra and California regulators are concerned.

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