North Baja Pipeline sponsors, Sempra and PG&E Gas Transmission, announced an open season to test market interest in building a 130-mile extension from the existing pipeline near Yuma, AZ, to markets in Phoenix, AZ. The new pipeline extension would be used to transport regasified LNG to Arizona from terminals near Tijuana, and pipeline sponsors also will test the market for interest in other potential expansion projects to transport regasified LNG.

Three western LNG terminals have received Mexican regulatory permits, and a recent open season by North Baja Pipeline tabulated preliminary expressions of market interest in an additional 5.5 Bcf/d of pipeline capacity to transport the regasified LNG. In a speech earlier this month at a Wall Street energy conference, Sempra CEO Steve Baum said the North Baja Pipeline easily could be doubled in capacity to 1 Bcf/d through added compression.

The current 220-mile pipeline system, which went into service in 2002, carries up to 500 MMcf/d of mainly Rocky Mountain gas production from connections with El Paso Natural Gas in Ehrenberg, AZ, to an interconnection with a pipeline owned by Sempra subsidiary Transportadora de Gas Natural de Baja California near Tijuana. However, pipeline sponsors expect gas flow to reverse direction once the LNG terminals come online in 2007.

The recent open season for regasified LNG transportation capacity yielded four expressions of interest in gas deliveries to Yuma and then to Phoenix, according to PG&E Gas Transmission spokeswoman Megan Doern. The pipeline also is considering delivering the regasified LNG to other locations, including Sonora, Mexico and Topock, AZ. The new open season will seek non-binding expressions of interest in several potential pipeline expansions.

Doern said it was too early to determine how much gas the Arizona extension might carry. The targeted in-service date for an expansion is August 2006, which is timed to coincide with earliest projected completion of an LNG terminal.

High energy demand growth on both sides of the border, combined with plans to develop LNG facilities in Baja California, means there is potential for a strong market response for expansion, said Donald E. Felsinger, group president of Sempra Energy Global Enterprises.

The pipeline system was developed jointly by Sempra Energy International, which owns Gasoducto Bajanorte Pipeline, the 140-mile Mexican leg of the pipeline, and PG&E Gas Transmission Northwest, which owns North Baja Pipeline LLC, the 80-mile U.S. segment.

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