With continued confidence that their proposed Gulf Coast-based liquefied natural gas (LNG) export project will begin construction next year, Sempra Energy senior executives last week said they are looking for other market growth opportunities from the shale-driven U.S. gas supply boom.

In the wake of the closing of the San Onofre Nuclear Generating Station (SONGS), in which Sempra held a minority interest, there will be opportunities for new utility gas-fired generation to supplement increased reliance on intermittent renewable sources of power, said CEO Debra Reed.

“To replace SONGS, it is going to take a combination of renewables and natural gas [generation], so we will be looking at what kinds of investments will be needed in the gas sector,” Reed said. In addition, Sempra is looking at midstream assets adjacent to its Cameron, LA, LNG site for storage and pipeline development.

Sempra President Mark Snell said longer-term there are possibilities for the Rockies Express (REX) gas pipeline to become bi-directional and over time become a “giant header system” for Midcontinent markets, such as Chicago. A year ago, Sempra took a significant write-down on its 25% interest in REX (see NGI, Aug. 13, 2012).

“Eventually it will take flows from both directions and flow into Chicago and other Midcon markets, but it will take some time,” said Snell, noting there are some thorny tariff issues with some of the current shippers (see NGI, July 22). Once a number of issues are resolved, Sempra could eventually turn its stake in REX into a master limited partnership, he said.

Snell said there are potential incremental projects off of REX that Sempra is already pursuing. “There is likely to be some near-term things coming out of REX showing additional revenue possibilities,” he said. Another boost for gas as a transport fuel could come from national low-carbon standards put in place to address climate change. “We think there are going to be some real benefits and growth opportunities around those kinds of regulations.” Sempra is looking at all opportunities.

“From a business perspective, we are looking at LNG and natural gas as a [transportation] fuel, and a lot of low-carbon standards, particularly in the shipping industry, we see as opportunities,” Snell said. “We see opportunities in the maritime and the rail industries to use natural gas.”

Regarding natural gas vehicles, Reed said a lot of work is ongoing at Sempra’s Southern California Gas Co. utility, including a new customer service tariff allowing the utility to serve compressed natural gas directly from its pipeline system. Sempra’s U.S. Gas & Power business unit is also trying to develop opportunities at the commercial level.

“The opportunities that have the most potential in the nearterm are on the commercial side,” said Snell.