Sonora Pipeline Receives FERC Permits

Tidelands Oil & Gas subsidiary, Sonora Pipeline LLC has received from the Federal Energy Regulatory Commission (FERC) the following authorizations:

- A Presidential Permit and authorization to site, construct, operate and maintain two bi-directional border crossing natural gas facilities at the international boundary between the United States and Mexico, and

- A Certificate of public convenience and necessity to site, construct, operate and maintain the United States portion of a pipeline system consisting of approximately 29 miles of 30-inch diameter pipeline and appurtenant facilities that will extend into Mexico via two border crossings, all to be located in Hidalgo County, Texas.

These natural gas pipelines in the United States will interconnect with the pipeline system being developed by another wholly owned subsidiary of Tidelands Oil & Gas Corporation, Terranova Energia, S. de R.L. de C.V. (Terranova). Terranova previously received approval from the Comision Reguladora de Energia (CRE) for the interconnecting pipeline segments in Mexico on May 23, 2006.

The pipeline systems in the United States and Mexico are known as the Burgos Hub Export/Import Project, which is being developed to serve the demand for importation of natural gas into Mexico, which is expected to increase dramatically beginning in the year 2010. The pipelines will also be interconnected with a proposed underground natural gas storage facility being developed by Terranova to serve Mexican power generation and industrial customer needs for management of swings in demand and seasonal spread in natural gas prices. Terranova has previously applied for a permit to construct and operate the storage facility with the CRE and is expecting a decision on the application in the third quarter of 2007.

James B. Smith, President and CEO, said "We are pleased to report progress on this very important infrastructure project which will serve to further integrate and strengthen the cross-border energy security and economic development of Texas and the Mexican states of Tamaulipas and Nuevo Leon. We continue to work on the commercial components of the project as well and anticipate further announcements concerning this aspect of the project in the near future."