California Examines Regional Energy Options for U.S, Mexico

Liquefied natural gas (LNG) and U.S. company-backed electric generation plants were only part of the discussions Wednesday at a day-long workshop exploring "California-Mexico Border Energy Issues" in San Diego. The workshop was sponsored by a regional association of governments and the California Energy Commission (CEC). Demographics, economic development, and environmental protection held equal time with various energy supply/demand assessments.

The CEC is using the workshop as part of a series of meetings around the state this year to gather data for the updated 2005 Integrated Energy Policy Report, which is due to the governor and state legislature before the end of the year. The push for more binational energy planning between the southern end of California and Baja California was intensified during the discussions.

A backdrop to the meeting at the San Diego Association of Governments (SANDAG) headquarters was a report issued a day earlier from Mexico Energy Minster Fernando Elizondo hinting that the Mexican federal government is thinking about restricting the amounts of LNG that can pass into the United States from terminals south of the border, such as the one Sempra Energy is building at Costa Azul, about 60 miles south of the U.S border.

Elizondo was quoted in a MarketWatch report as saying Mexico doesn't "want to be just a port of entry and transit" for LNG if it leaves the nation with all of what he called "the disadvantages and none of the advantages."

Despite its own vast natural gas reserves, Mexico's state-owned oil and gas company, Pemex, has not been able to produce much of it, and thus, the nation imports about 1.1 Bcf/d from the United States.

The Mexican government is current considering whether to set a minimum volume of LNG imports that will be required to go for local use. Sempra has an initial contract to supply some of its expected 1 Bcf/d of LNG imports in Baja California Norte to the existing and planned new electric generation plants in the Rosarito Beach area south of Tijuana.

At Wednesday's CEC workshop one theme repeated by a variety of speakers was that individual gas and electric projects can be helpful in expanding the market, but unless they are integrated into region-wide transmission and/or demand-reduction strategies through a total resource plan involving both Sempra Energy's two utilities and Southern California Edison Co., both sides of the border are going to miss economic development and environmental mitigation opportunities.

"The key to all of the questions being raised is going to be transmission," said a consultant with Princeton Development Corp. who said the U.S. and North Baja have two separate grids that should be "much more integrated" than they presently are. "This is all about the combined grids larger ability to integrate wind-generated power into its resource mix," the consultant said. "There are places in the world, such as Germany where wind provides as much as 40% of the energy consumed with not reliability problems."

The panelists agreed that Mexico's traditional fossil fuel resources are "world class," but they said the nation south of the U.S. border also has "world class renewable resources, including wind."

A challenge that will remain is the reality of an international border that to some extent defies today's global economy and the growing interdependency of the new industrialization in northern Mexico and the burgeoning engineering, design and high-tech sectors on the U.S. side of the border. Nevertheless, more sophisticated planning and energy applications will be needed on both sides, and the CEC intends to try to reflect that more in its updated integrated resource plan, according to the energy commissioners and staff holding Wednesday's meeting. (Copyright 2005 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.


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