Sempra Energy believes gas supplies from a new liquefied natural gas (LNG) terminal on the West Coast will “definitely” have an impact on Western gas prices, but how much may be offset by other developing factors, Sempra CFO Mark Snell told a session at the Lehman Brothers CEO Energy/Power Conference Thursday in New York City.

In response to some specific questions about the company’s 1 Bcf/d, $850 million Costa Azul LNG facility along the Pacific Coast in North Baja California, Snell said he definitely thinks the new injection of globally traded gas “will put downward pressure on prices.” But he cautioned that “a lot of things are happening in the West that will need to play out to see how the market reacts.”

The shear volume of 1 Bcf/d of additional gas in the region has to have some dampening effect, Snell said. “The West has benefited [in recent years] from the fact that Rockies gas really has had no other home other than the West, and [Sempra’s joint venture] Rockies Express Pipeline will help bring gas East and create another alternative.”

The two counteractive developments — more gas from LNG shipments, and less westerly heading gas from the Rockies — might offset one another in terms of their price impact, said Snell, who noted that Sempra is seeing declines in supplies of Canadian gas that Pacific Gas and Electric Co. (PG&E) has relied on historically.

“They’re [PG&E] facing declining production and also the fact that a lot more of that gas in Canada is being used in enhanced oil recovery [in Alberta], so the amount of gas available to California is going down quite a bit. We think now that actually the timing of our facility is terribly close to when all of these events come to be.

“Having said that, the LNG may not have as much of a downward pressure as we originally anticipated, but the hope was when we built this facility that we would put some downward pressure on pricing and preserve the option of clean-burning fuels for California.”

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