A fourth proposal for a liquefied natural gas (LNG) receiving terminal along a 60-mile stretch of Pacific Coast in North Baja California, Mexico, was formally announced by Royal Dutch/Shell Group. Shell outlined plans for a $500 million facility in Costa Azul, in the municipality of Ensenada, which is not far from the proposed site for another LNG terminal being planned by San Diego-based Sempra Energy. The Shell terminal will have a send-out capacity of up to 1.3 Bcf/d and is expected to come on stream in 2006.

Shell’s plans also call for a 55-mile transmission pipeline running northeasterly and inland to connect the LNG terminal to the proposed North Baja pipeline now being built by a partnership involving Sempra and PG&E Corp. Shell has contracted the supply of 7.5 million tonnes per year of LNG to be sourced from projects in the Asia-Pacific region.

“The development is significant in that it furnishes a supply of LNG to the new terminal, providing Mexico a new supply of gas to meet the growing energy demands of North West Mexico, while providing an outlet to market the surplus gas to the United States,” said Shell Gas & Power Director Jon Chadwick.

Existing and proposed new natural gas-fired electric generation plants in North Baja and the Southern California market are the main attractions for multiple LNG proposals in the area now totaling more than $2 billion and 3.5 Bcf/d collectively. It’s not clear where the transportation and the markets for the current four — and possibly a fifth — projects will develop. Conventional wisdom says 1 Bcf/d of added capacity — about one and a half projects — centered south of the U.S. border would likely be the maximum volume the market and pipeline infrastructure could handle (see NGI, March 11).

Besides Shell and Sempra, El Paso Corp. and Marathon Oil Corp. have proposed LNG projects in the Rosarito Beach area between the international border and Ensenada, which is about 60 miles south of the border. In addition, ChevronTexaco for more than a year has been scouting for a fifth LNG receiving site for substantial supplies it would bring from Australia.

Gabriel Avgerinos, general manager of LNG and gas consulting at Poten & Partners in New York, has predicted a massive expansion of LNG trade and imports will take place over the next decade as long as U.S. gas prices remain above $2.50/MMBtu (see Daily GPI, March 20). “Size is up; costs are down,” Avgerinos told a GasMart/Power 2002 audience in Reno.

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