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PG&E, Sempra Seek Approval of Baja Project

PG&E, Sempra Seek Approval of Baja Project

PG&E National Energy Group, an affiliate of PG&E Corp., last week formally filed an application at FERC seeking the green light to build the U.S. leg of a 215-mile natural gas pipeline that would extend from the Arizona-California border through northern Baja in Mexico.

In joint partnership with Sempra Energy International, PG&E National Energy proposes to build a 500,000 Dth/d, mostly 30-inch pipeline to serve the growing gas demand of large industrials and power generators in northern Mexico. The deal also includes participation by the Mexican firm, Proxima Gas SA de CV.

The pipeline is expected to bring some relief to the strained natural gas pipeline infrastructure in the southern end of California as well. The companies hope to begin construction of the $230 million line in early 2002, and have it in operation by the third quarter of that year.

"Support for the project remains very strong," said Thomas B. King, president and COO of PG&E National Energy Group, West Region. So much so that PG&E and Sempra Energy increased the initial capacity of the proposed pipeline by 100,000 Dth/d in the FERC application, and expanded the diameter of the first 12-mile link in the U.S. to 36 inches.

A PG&E spokeswoman estimated the companies already have signed four precedent agreements for 300,000 Dth/d with Energia Azteca, a subsidiary of InterGen, as well as subsidiaries of PG&E National Energy Group and Sempra Energy International. The companies said they currently are negotiating with other potential customers.

The agreements include some "limited conditions," such as PG&E and Sempra Energy getting full FERC certification, the spokeswoman said, noting that the companies feel they have "clear support from the market."

"We looked at the gas supply options for our generating plants in Mexicali, including the option of building our own pipeline, and concluded that the North Baja project presents the most cost-effective means for reliably meeting our requirements," said Phillip Cantner, InterGen's vice president of development for Latin America.

The proposed pipeline would begin at an interconnection with El Paso Natural Gas, near Ehrenberg, AZ, cross southeastern California and northern Baja in Mexico, and terminate at an existing pipeline system in Mexico - Transportadora de Gas Natural.

PG&E National Energy Group will be in charge of the permitting and development of the 80-mile U.S. portion of the pipeline, while Sempra Energy will direct the permitting and development of the 135-mile Mexican leg, according to the companies.

Richard Nemec, Los Angeles; Susan Parker

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