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FERC Denies SoCal Air District Stay on North Baja Pipeline

FERC Thursday denied a request by the South Coast Air Quality Management District (SCAQMD) in California for a stay of the North Baja Pipeline expansion that the federal regulators authorized last October. The expansion provides the ability to flow gas in both directions on the pipeline linking Sempra Energy's Costa Azul liquefied natural gas (LNG) terminal to Mexico, California and Arizona markets.

SCAQMD last November filed an emergency motion for a stay -- pending rehearing and judicial review -- to stop North Baja from transporting LNG to local distribution companies in the four-county air basin it regulates (see Daily GPI, Nov. 30, 2007). The district alleged that nitrogen oxide (NOx) emissions resulting from the deliveries of regasified LNG on the expansion project "will lead to immediate public health injury by damaging the air inhaled by people and animals."

The action by the Federal Energy Regulatory Commission (FERC) reiterated that at this time there is no precise estimate on how much, if any, of the regasified LNG from North Baja will come to the Southern California air basin, and the California Public Utilities Commission (CPUC) holds "sole jurisdiction for setting standards" for the gas that can be consumed by electric generation plants and other consumers in the region.

Sempra's Costa Azul LNG terminal will not be commercially operational until June. It just received the first of several test cargoes April 18 as part of the plant's pre-startup commissioning process, a spokesperson told NGI Tuesday.

"In recognition that imported LNG can potentially increase emissions that can impact air quality because it generally has a higher Btu content and, thus, a higher Wobbe Index (WI), than domestic gas supplies, the CPUC took such considerations into account in its proceeding in which it set the WI limit for gas consumed in California, after addressing the arguments raised by the air district," FERC said.

In October FERC issued North Baja's certificate to expand and modify the U.S. leg of its U.S.-Mexico pipeline system to import 2.9 Bcf/d of gas from planned LNG facilities on the Baja California coast. The certificate allowed North Baja to modify its system to accommodate bidirectional gas flow, construct interconnecting facilities with Southern California Gas Co. (SoCalGas), build approximately 46 miles of lateral facilities to serve electric generation facilities and to loop its entire 80-mile system with a combination of 42-inch and 48-inch diameter pipeline (see Daily GPI, Oct. 4, 2007).

FERC concluded that "there is simply no need or basis for preventing the delivery of regasified LNG to SoCalGas -- either directly from North Baja or indirectly via El Paso Natural Gas." It noted that all of the arguments made by SCAQMD in its filing to the federal regulatory panel had been considered by the CPUC in establishing its gas quality standards for the imported gas, and the state regulators said they would further modify, if necessary, the standards if it is proven that imports of regasified LNG are measurably hurting the South Coast Basin's air quality.

"The CPUC obviously believes that if it determines that emissions are increasing and may eventually cause a material change in air quality that will result in adverse health impacts, there will be enough time for [state regulators] to address the potential problem," FERC said.

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