With the advent of the West Coast’s first liquefied natural gas (LNG) terminal opening along the Pacific Coast of Baja California, Mexico, later in the second quarter, San Diego-based Sempra Energy confirmed Wednesday that the expansion of its North Baja natural gas pipeline has been completed. The pipeline now can carry supplies from the Costa Azul LNG terminal to markets in California and Arizona.

The $250 million expansion included a 45-mile, 42-inch-diameter spur pipeline, along with looping and compression upgrades on the existing 140-mile pipeline. The expansion is now expected to be in operation later in the second quarter.

North Baja is 100% contracted for the next 20 years and “you’ll start to see the positive financial impact” from this pipeline, said Sempra Pipeline and Storage CEO George Liparidis, speaking at an analysts’ conference last Thursday in New York City. “This is a good example of the advantage of being an incumbent player in a growing market.”

Liparidis said Sempra now can take advantage of another extension, called the Yuma Lateral, to provide gas from the Costa Azul LNG site to gas-fired power plants in the Yuma area operated by major Arizona utilities. Construction is now under way on the lateral, and service through that conduit is expected to start early next year.

In a recent summer outlook meeting between utilities and the Arizona Corporation Commission, Arizona Public Service officials said the Yuma lateral had encountered delays due to some unspecified regulatory issues with the Mexican government. They said the gas could not be counted on for this summer.

Liparidis said Sempra has the pipeline completed and is starting to phase-in operations on the new compression units for the expanded pipeline that now will have a maximum capacity of 2.6 Bcf/d.

Sempra originally developed the North Baja pipeline in conjunction with a unit of PG&E Corp. that is now part of TransCanada, the operator of the part of North Baja on the U.S. side of the border. Sempra operates the Mexican portion of the pipeline through a subsidiary unit. The 30-inch diameter pipeline has a 500 MMcf/d capacity, serving power plants and industrial customers strung along the U.S.-Mexico border.

Overall, Sempra’s pipeline storage business is continuing to expand, Liparidis said. He estimated that profits will be in the $100-110 million range this year; up to $125 million next year, and in the $150-170 million range in 2012. Between now and 2012, the unit expects to invest from $350 million to $500 million annually in new capital projects, he said.

©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.