As 2008 looms near, Sempra Energy’s multi-billion-dollar bets on expanded liquefied natural gas (LNG), interstate pipeline and storage capacity are coming closer to their initial payoffs, and CEO Donald Felsinger assured financial analysts Thursday that all the critical projects are on track. Leading the way is the $800 million, 1 Bcf/d capacity Costa Azul LNG terminal along the Pacific Coast of North Baja, about 60 miles south of the U.S. border.
The expansion of the interconnected North Baja international natural gas pipeline similarly is on target to begin larger capacity operations when Costa Azul begins taking regular commercial shipments of LNG.
In response to an analyst’s question, Sempra confirmed it had made the needed upgrades for bringing some of the LNG supplies into the Southern California Gas Co. (SoCalGas) transmission backbone system, but the Sempra utilities have not as yet determined what other upgrades of its system will be needed to move gas through the SoCalGas system to other major transmission networks in northern California or other adjoining states.
The second phase of the Rockies Express pipeline into Missouri should be operational by this coming January, said Felsinger, noting Sempra and its partners, Kinder Morgan and ConocoPhillips, are very pleased at the progress of the $4.4 billion massive interstate project that will open up Rocky Mountain supplies to the East. The final phase of the pipeline into Ohio is expected to be completed by December 2008, with the overall project in place by the summer of 2009.
“Our permitting and construction remains on target,” said Felsinger, who noted that the pipeline partners are in discussions with current shippers about options to extend or expand Rockies Express. “Gas prices in the Rockies region continue to demonstrate a strong need for the Rockies Express pipeline. I think there is recognition in the market that we, along with our partners, are as well positioned as anyone to capture additional market opportunities as they arise.”
On other projects, Felsinger said the $200 million North Baja pipeline expansion is now “well more than 60% complete,” and the LNG terminals at Costa Azul and Cameron, LA, are 80% and 55% complete, respectively. “Operating dates for both terminals remain unchanged and on target,” said Felsinger, adding that Sempra has contracted for some test shipments before commercial operations begin at the North Baja facility early next year.
While Sempra already has approvals or has submitted applications to the Federal Energy Regulatory Commission (FERC) for LNG facility expansions, none are going forward yet, and the decisions on that will not be made until the current lull in added liquefaction development globally is resolved.
“As we have said before, there is a critical element upstream in terms of liquefaction supply, and as the market pulls itself out, we are having discussions with people about using the facility, but it’s all contingent about supply being available,” Felsinger said. “[Expansion] will happen when it happens.”
At this point, he said Sempra does not expect to be making an announcement on LNG terminal expansion the rest of this year or in 2008.
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