Sempra and CMS To Develop LNG Terminal in Mexico

CMS Energy Corporation and Sempra Energy announced an agreement to jointly develop a major new liquefied natural gas (LNG) receiving terminal to bring much-needed natural gas supplies into northwestern Mexico and Southern California.

The joint venture will develop, finance, build and own the LNG facility and related port infrastructure, located on the Pacific Coast north of Ensenada, Baja California, Mexico. The plant will have a send-out capacity of approximately 1 billion cubic feet per day of natural gas. The natural gas will flow north into Baja California and the southwestern United States via a new 40-mile pipeline between the terminal and existing pipelines in the region. This infrastructure will particularly benefit Baja California by making greater supplies of natural gas available to fuel economic growth and serve new and existing power plants and industries in the area. The two companies have secured an optimal site for the terminal – more than 300 acres of industrial-zoned land far removed from any residential areas.

"LNG is going to be an increasingly important part of the energy supply mix for northwestern Mexico and California in the future. CMS Energy and Sempra Energy will lead the way in bringing more natural gas to this important new market," said William J. Haener, executive vice president of CMS Energy's gas group. "CMS' experience as the largest LNG terminal operator in the U.S. perfectly complements Sempra Energy's experience as a pioneer in integrating the natural gas and electricity markets in the U.S. and Mexico."

"This new LNG terminal will provide customers in the Baja California/Southern California region with an alternative, long-term source of natural gas and give them greater choice and flexibility," said Donald E. Felsinger, group president of Sempra Energy. "This regional market has been an 'end-of-the-pipe victim,' which means customers here often have paid higher costs for natural gas than other areas. This project will put the region at the 'front' of the pipe, creating more competition in natural gas supplies."

Commercial operation of the LNG terminal is scheduled to begin in late 2005. CMS Energy, which has more than 20 years of experience safely and reliably operating America's largest LNG receiving terminal, at Lake Charles, La., will operate the Baja California facility under contract with the joint venture.