Tidelands Reports Status of Burgos Hub, Port Esperanza Projects
Burgos Hub Project
Negotiations continue with a significant Mexican energy firm to invest in the Burgos Hub Project through a joint venture with Terranova Energia, S. de R.L. de C.V. Negotiations also continue with an investment fund concentrated in the Latin America energy sector. Updated financial modeling and other advisory with respect to these negotiations continues to be provided by HSBC Securities, USA. Legal representation is led by Barry Machlin of Mayer, Brown, Rowe & Maw, LLP with Thomas Mueller of Ritch Mueller in Mexico City providing support.
Tidelands will amend its existing CRE pipeline permit by the end of the second quarter 2007 to provide for a gas transportation service to a central distribution point in Monterrey, Nuevo Leon. The amended permit is expected to be acted upon by the CRE during the fourth quarter of 2007. This filing is being done in response to commercial interest expressed by industrial customers in Monterrey. Terranova has received non-binding letters of intent for reservation of approximately 40% of the expected capacity on this pipeline and is continuing its efforts to provide a conduit for the transportation of gas reserves from Texas that are expected to be purchased by these industrial customers within 6-12 months. This project is expected to be a stand-alone project which can either integrate with or function independently with the Company's planned underground natural gas storage facility to be located in the Brasil field depleted gas reservoir approximately 17 miles south of Progreso, Texas. First operational cash flows may be achieved in the year 2010.
The FERC permitting process in the United States for the Company's U.S. pipeline segments of the Burgos Hub project continues to progress with FERC staff concerning various items in the filings. Sonora Pipeline LLC, a wholly owned subsidiary of Tidelands, has requested the issuance of a certificate of public convenience and necessity and the presidential permits for the Mission and Progreso International Pipelines by July 1, 2007. At this time, the Company expects this process to be completed and permits issued in the third quarter. More information on this phase of the Burgos Hub Project is at www.ferc.gov under Docket No. PF07-74.
Tidelands expects a decision regarding its storage permit application from the CRE in the fourth quarter of 2007. This project is expected to be developed later in time than the pipeline to Monterrey with a current estimated combined potential demand for storage of approximately 40 bcf for industrial and power generation customers.
This offshore Southern California LNG receiving facility has attracted the commercial interest of two potential gas purchasers, each with significant demand profiles. Negotiations are also underway with a potential co-venturer in the development of the project with both the experience and financial backing sufficient to contribute to the successful development of the project. An announcement concerning this partner is expected in the second or third quarter of 2007. The first phase of development of this project will be the preparation of the application for a permit to construct own and operate the facility under the Deep Water Port Act. It is currently anticipated that the filing for this permit could be made by year end 2007. Given the timeframe for permitting and construction and the availability of LNG supply in the Pacific Basin, we expect this project may be operational in the year 2012. More information is available at our website www.esperanza-energy.com.
Tidelands expects a corporate level financing to be completed within the second quarter of 2007. It has had outstanding recent performance from our Sonterra Energy Corporation unit, which has provided a meaningful contribution to its continuing operations. The company continue to streamline operations and conserve cash through various actions and expect to restructure the outstanding corporate debt as a feature of the corporate financing effort.
James B. Smith, President and CEO, said: "We believe the current volume and price activity in our common stock is being driven by the cash requirements of certain large shareholders. We continue to seek ways of restructuring and rationalizing our existing business operations and our development stage projects. We expect a re-designed website to be operational within a few weeks and look forward to further fulfillment of our business plans."
Tidelands Oil & Gas Corporation, San Antonio, Texas, focuses on development of mid-stream oil and gas projects including natural gas pipeline infrastructure, retail NGL sales, and natural gas receiving and storage facilities.