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New LNG plant proposed for northern Mexico
Debra Beachy Petroleum News Contributing Writer
Houston-based DKRW Energy has announced plans to build an LNG terminal in Mexico’s northern state of Sonora.
In a May 25 press release, the company said it has signed an agreement with Sonora State to build the 1.3 billion cubic foot per day terminal at Puerto Libertad on the Gulf of California. Officials did not provide an estimate of how much the project would cost. Other LNG projects have been estimated to cost between $650 million and $1.7 billion.
“We have a great partner in the Sonora government and we think the Puerto Libertad site is the best in the western region of North America,” said Thomas E. White, a DKRW principal, and managing partner of its newly formed subsidiary, Sonora Pacific LNG.
White, a former vice chairman of Enron Energy Services, was the U.S. Secretary of the Army until he resigned from the post, amid controversy over his role at Enron, in April of 2003. According to published reports, White left Enron with a $1 million severance payment. Project would also serve Arizona, California markets The project would include construction of pipelines to distribute gas throughout the state of Sonora, and to an interconnection with the El Paso pipeline system east of Tucson to serve the Arizona and California markets.
Partners in the project include: Bechtel Corp. and CHI as project builders; Andrews Kurth LLP as legal counsel; and the El Paso Pipeline Co. for infrastructure and connects. Construction is scheduled to begin in 2005, with operation to begin in mid-2008, the company said.
The project will include a gas pipeline going through Sonora, and possibly the neighboring state of Sinaloa, as well as a 36-inch export pipeline through Nogales that will go to an interconnect with the El Paso Pipeline system east of Tucson. According to the company’s estimate, 500 million cubic feet of gas per day would be consumed in Sonora, mainly by gas-fired power generators, and another 800 million cubic feet a day would be exported to the United States. The terminal would be supplied with liquefied natural gas from the Middle East, the Pacific and southern Asia, officials said.
“With our strong partnership with the state of Sonora firmly established and a world-class team in place it is time to begin discussions with potential gas suppliers, downstream gas off takers and federal government permit issuing agencies,” White said. The projects are aimed at supplying the U.S. and Mexico’s growing demand for natural gas. LNG is natural gas that is cooled until it turns into liquid, and then reheated at a regasification terminal until it converts again into gas. Growing demand in Mexico Growing demand for natural gas in Mexico has been met by importing gas from the United States. Demand is expected to grow by 8 percent a year through 2010, analysts say. The construction by Mexico of gas-fired power plants is expected to push up demand for natural gas.
However, opposition parties have said the plants, which would end up forming a part of the U.S. energy system, would pose a security threat to Mexico and unleash environmental hazards. Leaders of Mexico’s two major opposition parties, the former ruling Institutional Revolutionary Party, or PRI, and the Party of the Democratic Revolution, or PRD, are focusing their opposition on ChevronTexaco’s plan for a floating LNG regasification terminal next to the Coronado Islands.
The opposition leaders contend that if the receiving terminals are intended to serve the U.S. energy market, they should be in the United States. Opposition has killed Baja California proposals Opposition by political and environmental groups has killed a number of proposed LNG terminals in Baja California, including ConocoPhillips-El Paso’s joint venture in Rosarito and most recently, Marathon Oil’s regional energy center in Tijuana. The ChevronTexaco LNG proposal for the Coronado Islands and the Sempra Energy-Shell Oil joint venture at Costa Azul, both in Baja California, are the only two still on track for the Baja California region.
In March, Repsol YPF announced plans to build an LNG terminal in the Pacific port of Lazaro Cardenas. But that project also could be in doubt if plans to import Bolivian gas to Mexico don’t go forward, Repsol officials have said.
On the Gulf Coast of Mexico, an LNG receiving terminal is planned for the port of Altamira. A Royal Dutch/Shell Group subsidiary has a contract to supply Mexico’s government-owned power utility with 500 million cubic feet a day of natural gas from the plant planned for Altamira. The LNG plant at Altamira would be able to supply gas through pipelines to power plants in the states of Tamauplias, Veracruz and San Luis Potosi.
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