Natural gas prices will stay sufficiently high in the future to support the increased import of liquefied natural gas (LNG) in the United States, and San Diego-based Sempra Energy intends to be a leader in the emerging LNG trade, according to Sempra CEO Steve Baum, speaking to a Merrill Lynch energy financial forum in New York City.
“Our view of natural gas prices is that they are going to be at a level sustainably above a point that will support the entry of LNG to the United States — not only on the West Coast, but also in the Gulf of Mexico,” Baum said. “So we are very interested in how that business unfolds, and we will be a player in that business.”
Baum noted that Sempra now has completed the North Baja Pipeline from the Arizona-California border into Mexico and across to the power plants in North Baja directly south of Tijuana on the U.S. border. It has been engineered specifically so the gas can “flow both ways,” he said, adding that his company now owns a site (north of Encensada on the Pacific Coast of North Baja) for building a LNG receiving terminal. The terminal would have a pipeline leg linking it to the North Baja Pipeline.
“We had advanced discussions and completed an [memorandum of understanding] with the Pacific LNG Group for gas to be brought from Bolivia, and we are open to having gas brought from other locations,” Baum said. “We think that is going to be a very interesting business, and we’d be looking at assets that are currently going to be available and that will become better priced and more widely available as the year unfolds. These would be assets that fit into our strategy for developing a very strong West Coast and Mid-Continent gas position.”
Separately, a Sempra spokesperson would not speculate on whether Sempra is talking to the PG&E National Energy Group about buying some of its assets, but he did confirm that Sempra could buy out PG&E’s current U.S. interest and operations of the California portion of the North Baja Pipeline.
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