Marathon Oil Co. on Thursday proposed building a liquefied natural gas (LNG) regasification and power generation complex near Tijuana in Baja California with project partners Pertamina, Golar LNG Ltd. and Grupo GGS S.A. de C.V. The complex, which would be developed on the Pacific coast south of Tijuana, has a proposed start-up of 2005, with capacity to regasify up to 750 MMcf/d for regional use as well as export to Southern California. A 400 MW gas-fired power plant also would be constructed on the site.

“The Baja project embodies key elements of Marathon’s strategic vision, which is to create sustainable value growth through innovative energy solutions and unique partnerships,” said Marathon CEO Clarence P. Cazalot Jr. “This integrated natural gas project would apply proven LNG and power generation technology to safely and efficiently meet the growing need for clean energy in Baja California, Mexico and Southern California.”

The complex would consist of an LNG marine terminal designed to accommodate tankers transporting LNG from various sources around the world, an off-loading terminal, onshore LNG regasification facilities and pipeline infrastructure necessary to transport the gas to local and export markets. Electricity would be generated for both local use as well as export to Southern California. Marathon estimates the complex would create 500 jobs during peak construction and 70-100 permanent jobs.

“One of our key strategies is to seek out new gas market opportunities like the Baja Project, and work closely with strategic partners like Marathon in developing such promising ventures,” said Baihaki Hakim, Pertamina CEO.

The project partners said they would comply with regulations set by the Energy Regulatory Commission of Mexico (CRE), the Federal Energy Regulatory Commission, the U.S. Department of Energy and other permits required by federal, state and Mexican authorities.

“The LNG projects in Baja California will be developed in collaboration with local communities, businesses and units of the Mexican government,” said Ernesto Martens Rebolledo, Mexico’s secretary of energy. “The region has enormous growth potential and projects such as this one will pay a very important role in its ability to access the energy needed to cleanly and efficiently fuel this growth.” Eugenio Elorduy Walther, the governor of Baja, CA, noted that the project “would serve as a symbol to the global marketplace that Mexico is a good place to conduct business.”

LNG for the project would be supplied from various sources around the world with a significant portion coming from the Asia-Pacific region, and Pertamina, the state-owned oil company of Indonesia and the world’s largest exporter of LNG, is expected to be a key supplier. Golar LNG Ltd. is a Bermuda-based holding company that operates 10 LNG vessels, owning six of them. Golar also will take delivery of four new-built vessels between 2003-2004, and is considering investing in other parts of the LNG value chain, such as liquefaction or regasification projects. Grupo GGS is a Mexico-based company involved in the development of infrastructure projects including seaports, airports and power generation, and is currently involved in the development of oil and natural gas projects.

Marathon, which last year separated from USX Corp. (see NGI, April 30, 2001), said last week that it plans to rev up its business by playing the “game” differently. CEO Clarence Cazalot said, “we simply can’t do things everyone else does and do them better. We’ve got to find our niche.”

However, Marathon is not the only company pursuing LNG projects in North America. Although enthusiasm has ebbed as natural gas prices have fallen in recent months, still on the table are at least six projects to be located in North America by several U.S. companies, including El Paso Corp., Phillips Petroleum, Shell, Texaco and BG Group (see NGI, Aug. 27, 2001; May 21, 2001).

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