CMS Energy Corp. and Sempra Energy announced Friday that they are teaming up to build the first liquefied natural gas (LNG) terminal in Mexico to bring much-needed natural gas supplies into the northern part of the country and southern California.

The 50-50 joint venture already has “secured” a 300-acre-plus site for the LNG terminal about 60 miles south of the U.S.-Mexico border in Mexico and about 12 miles north of Ensenada in Baja, CA, according to CMS spokesman Kelly Farr. The $400-$500 million LNG complex would have a sendout capacity of 1 Bcf/d, and would include docking facilities, storage tanks and regasification facilities. CMS, which would operate the LNG terminal, and Sempra estimate that it will be in commercial operation by late 2005.

The regasified gas would flow north into Baja, CA, and the southwestern U.S. via a new proposed pipeline that would connect the terminal to existing interstate pipelines in the region, said Farr. The companies plan to file an application with Mexican regulatory officials later this year, Farr said.

“LNG is going to be an increasingly important part of the energy supply mix for northwestern Mexico and California in the future. CMS Energy and Sempra Energy will lead the way in bringing more natural gas to this important new market,” said William J. Haener, executive vice president of CMS Energy’s gas group.

“This new LNG terminal will provide customers in the Baja California/Southern California region with an alternative, long-term source of natural gas and give them greater choice and flexibility,” said Donald E. Felsinger, group president of Sempra Energy. “This regional market has been an ‘end-of-the-pipe victim.’ which means customers here often have paid high costs for natural gas than other areas. This project will put the region at the ‘front’ of the pipe, creating more competition in natural gas supplies.”

Sempra and CMS complement each other well, Farr said. CMS has a “long history” of operating its LNG terminal in Lake Charles, LA, which he said is the largest in the United States. Sempra, on the other hand, has the “market presence in southern California, the Baja region and in Mexico,” he noted. In northwestern Mexico, Sempra owns and operates three natural gas distribution systems and one gas transmission pipeline, and also is building a 135-mile gas pipeline and a 600 MW power plant in the region.

“There is a definite need for new gas infrastructure in that region. We feel confident that this is a great project,.” Farr told NGI.

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