Liquefied natural gas (LNG) imports will be a reality on the U.S. West Coast within five years with North Baja in Mexico as its base, and San Diego-based Sempra Energy intends to be a “significant player” in the developing business, according to Sempra’s CEO Steve Baum, speaking Thursday during the company’s second quarter earnings conference call.

Baum indicated that Sempra already has been in discussions with all of the major upstream participants, such as major global oil companies and energy firms that have expressed an interest in LNG on the West Coast. Sempra’s proposed new joint venture natural gas transmission pipeline in northern Baja California is set up to be a major part of the downstream infrastructure for LNG, which he sees eventually “stabilizing the western electricity markets and eliminating the basis discrepancies for southwestern natural gas at the California-Arizona border.”

Declining reserves in the U.S. and projected natural gas prices both should allow a viable market for LNG, and Baum said Sempra’s joint venture natural gas pipeline from the California-Arizona border through northern Baja is designed to be a part of any LNG projects sited in Mexico.

Sempra already has purchased land along Baja’s Pacific Coast south of existing power plants at Rosarito Beach, Baum said. Sempra plans to be a “downstream” player in the LNG market, and the company’s trading operations already are gaining experience in the LNG sector that should help in the years ahead.

“We believe LNG will land on the West Coast of North America,” Baum said. “The natural gas market conditions in the United States, availability of supply and the price forecasts are such that in our view LNG will come in, and will be competitive with gas delivered on the West Coast. We intend to participate in that market.

“Our trading company has gained some valuable experience in moving LNG cargoes, some to the United States. And it has some extensive Asian experience.”

Many large companies in the upstream parts of the business are already actively involved in trying to develop LNG facilities and a field to back them up, said Baum, noting Sempra intends to be a major downstream player.

“We have a division in Mexico for our pipeline that makes us a necessary player for anyone who comes into that business (in Mexico), so we have had discussions with just about everybody among the companies that are interested.

“I think one of the most in interesting proposals is the development of the Margarita Field in Bolivia, and the movement of gas from the coast of Peru up to California, and the earlier use may include some Alaskan deliveries, too.

“Our pipeline is designed to backhaul that gas, we did that deliberately, and we have already acquired land for a site on the coast of Baja south of the Rosarito power plant. So I predict that in five years you will see LNG coming into the market and it will stabilize the price of electricity in the West and de-bottleneck the basis problems (between the east-of-California production fields and California-Arizona border), and Sempra will be a major player in that business.”

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