Regardless of who wins the race to site the West’s first liquefied natural gas (LNG) receiving terminal, the new supplies will have to flow through San Diego-based Sempra Energy’s pipelines — whether or not they go to the California market.

This long-standing reality became clearer Thursday at an industry conference in Long Beach, CA, in which competing on- and offshore LNG proponents outlined their plans for bringing in new supplies beginning in 2007.

Sempra’s two utilities — Southern California Gas Co. and San Diego Gas and Electric Co. — would have to be the conduits for supplies from LNG projects now proposed for North Baja in Mexico and along the Southern California coast. And if some Baja-based supplies are sent elsewhere in the Southwest, they will have to flow through the new Sempra-controlled transmission pipeline running east-west across the northern end of Baja.

Proponents for both the proposed Long Beach Harbor onshore facility and an offshore Ventura County terminal site already are in discussions with Sempra’s SoCalGas utility regarding pipeline interconnections to flow supplies to a variety of still-to-be-signed large industrial and power generation customers. The offshore project potentially has the need for added onshore storage in SoCal’s underground storage system.

For the Mitsubishi Corp.-backed Sound Energy Solutions (SES) proposal to build a receiving terminal to bring in up to 1 Bcf/d equivalent of LNG in Long Beach, the need for a two-mile pipeline connected to the SoCalGas backbone pipeline system is an essential part of getting the supplies to market. While SES has no customers yet, said Tom Giles, SES’s COO, eventually the gas supply terminal will be seeking deals with the City of Long Beach municipal gas utility, large power plants, refineries and other industrial operators in and around the Long Beach-Los Angeles Harbor, the nation’s busiest, in addition to inking a deal with SoCalGas.

With LNG, safety is always an issue — even without the recent Algerian LNG liquefaction terminal accident killing more than 20 people — and in the West, Sempra, which has its own non-utility plans to build a LNG receiving terminal in North Baja in a partnership with Shell, is trying to stay ahead of the public debate; terminal proponents for California sites are hitting the issue head on. They have no choice as regulators and community activists will not allow it to be any other way.

A variety of environmental and engineering/operating professionals attending the two-day “Pacific Coast LNG Development” conference in Long Beach last week indicated privately that onshore sites — even in Mexico — are long shots. The consensus was that an offshore site in Southern California, or the proposed Humboldt Bay deep-water harbor site on an abandoned U. S. Air Force Base, are the most likely to get sited because they are most removed from the population centers, and various environmental and safety issues.

Houston-based Crystal Energy’s proposed re-gasification site about 11 miles offshore Ventura County on an idle oil rig (Project Grace) is heavily dependent on enhancements to the SoCalGas system to make its project work.

However, both it and Long Beach would require considerably less capital investment, according to the utility, than the Otay Mesa proposed new gas receipt site just north of the Mexican border directly south of San Diego. SoCal estimates the upgrade costs at more than $200 million at Otay, compared to ones in the $40-60 million range for SES’s terminal at Long Beach or the Crystal Energy offshore facility.

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