US Commission Approves Pipeline Expansion

California State Lands Commission has approved the expansion of a pipeline system that will begin transporting natural gas to California from US energy company Sempra's (NYSE: SRE)Energía Costa Azul LNG terminal in Mexican state Baja Californiain early 2008 , according to the voting record posted on the commission's website.

The current pipeline system is made up of the US North Baja segment owned by Calgary-based pipeline and energy company TransCanada. The pipeline runs 80 miles (129km) from Ehrenberg, Arizona, through southeastern California to the Mexican border. The Sempra-owned Mexican segment, Bajanorte, stretches 140 miles westward across Baja California.

The proposed expansion of the North Baja system entails expanding the existing pipeline by laying a new line across California's Imperial Valley.

The California commission's decision was significant because it approved an environmental impact report that can be used by Riverside and Imperial county officials, who must also sign off on the project, Reuters quoted TransCanada general manager Henry Morse as saying.

Morse also said TransCanada hopes to get approval for its expansion from the US's Federal Energy Regulatory Commission later this month, Reuters reported.

The combined 220-mile TransCanada/Sempra natural gas transportation system provides gas to Baja California, Mexico, with a 500Mf3/d (14Mm3/d) gas transport capacity, though flow will be reversed to bring gas to California from the Costa Azul LNG terminal once operations begin, according to Sempra's website.

The western end of the Bajanorte pipeline connects with the 23-mile Transportadora de Gas Natural (TGN) pipeline, also owned by Sempra, which has a capacity of 300Mf3/d, according to TGN's website.

TGN can transport gas north to the interconnection with the San Diego Gas & Electric system at the international border, or southwest to the 320MW Presidente Juarez thermoelectric plant in Rosarito owned by Mexican state power company CFE.

Likewise, Sempra is expanding its Mexican pipelines with a 45-mile line to connect the Costa Azul terminal with the Bajanorte pipeline. The expansion will begin operations in 2008, according to Sempra's website.

Together, the expansions will allow for import into the US of up to 2.7Bf3/d of re-gasified LNG supplied from terminals in Baja California, Mexico, according to Transcanada's website.


Construction of the Costa Azul LNG terminal is 80% complete; Reuters quoted a company spokesperson as saying.

One quarter of the LNG to be shipped to Costa Azul is already contracted to state power company CFE's plant in Rosarito.

Some of the LNG is expected to fuel two plants near Mexicali in Baja California - Sempra's 600MW Termoelectrica plant and the 1.1GW Rosita plant owned by US power company InterGen - although the definitive offtake is yet to be determined, according to Reuters.

Once operational, the Costa Azul terminal will have 1Bf3/d capacity.

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