The North Baja Pipeline Project moved to within one step ofbecoming reality yesterday as Mexico’s Comision Reguladora deEnergia (CRE) issued a natural gas transportation permit to SempraEnergy International for the construction of the 135-mile Mexicansegment of the $230 million, 215-mile Arizona to Mexico pipeline.

“Today’s action by the CRE demonstrates the government ofMexico’s strong support for this vital energy project,” said DarcelL. Hulse, president of Sempra Energy International. “We have nowpassed the major regulatory hurdle in Mexico, clearing the way tobegin construction on the pipeline as soon as the U.S. FederalEnergy Regulatory Commission (FERC) issues its permit for the U.S.segment. We look forward to bringing this much-needed, reliablesource of natural gas supplies to the northern Mexico/SouthernCalifornia region.”

The project, which is being developed by Sempra EnergyInternational, PG&E Corp and Proxima Gas SA de CV, was originallyannounced in June (see Daily GPI, June13). The proposed line will travel from an interconnection with ElPaso Natural Gas, near Ehrenberg, AZ, across southeastern Californiaand northern Baja in Mexico, and terminate at an existing pipelinesystem in Mexico — Transportadora de Gas Natural. The 500,000 Dth/d,mostly 30-inch pipeline, is primarily being developed to serve thegrowing gas demand of large industrials and power generators innorthern Mexico.

PG&E National Energy Group (PG&E NEG), which is in chargeof the permitting and development of the 80-mile U.S. portion of thepipeline, submitted its application with FERC in late October (seeDaily GPI, Nov. 3).

“The northern Mexico and Southern California markets are at acritical point in the need for additional pipeline capacity,largely because of the increased use of natural gas to fuelelectric generation,” said Thomas B. King, president of the NEG’swestern region. “Construction of the North Baja Pipeline will helpensure that natural gas is available for those critically neededgeneration facilities, as well as for consumers who use gasdirectly in their homes or businesses. We hope our application fora FERC certificate to build the pipeline will be processedexpeditiously, so that work can begin on this important new energyproject.”

The companies have already entered into precedent agreements forover half of the proposed pipeline’s capacity, and are involved inongoing discussions with other potential customers. Construction onthe project is expected to begin in early 2002, with an in-servicedate in the third quarter of that year.

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