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Mexico, Unlike U.S., Eager for Gas Terminals

June 17, 2005|Chris Kraul | Times Staff Writer

MEXICO CITY — For two years, Long Beach has debated a proposed $450-million energy terminal, weighing environmental and safety concerns against the demand for new jobs and much-needed natural gas.

When the City Council voted June 8 to await further environmental reviews for a plant that would import liquefied natural gas, the project's developers were guaranteed only one thing: several more months in limbo.

Even as Americans fret over such projects, Mexico is embracing them.

The same week of the Long Beach vote, Mexico's energy ministry disclosed that Spanish energy giant Repsol YPF had proposed building a natural-gas terminal in the port city of Lazaro Cardenas -- one of half a dozen such projects moving forward along Mexico's Pacific and Gulf coasts.

"Assuring a sufficient supply of energy with international standards of quality and competitive prices is the first strategic objective of the Mexican government's energy sector," said Carlos Garza Ibarra, Mexico's energy undersecretary.

Coastal natural-gas terminals, he said, are a key to the country's efforts to guarantee future supply "without pressuring the North American market, which is already at a deficit."

The public opposition that has stopped several California projects is present to some degree in Mexico, with many Baja Californians having raised concerns that echo those being heard in Long Beach.

But such protests have generally been trumped by a judicial system deferential to federal authorities, who are pushing imports of natural gas in liquefied form as an answer to the country's pressing need for the fuel.

The gas is supercooled to turn it into a liquid, reducing its volume and easing its transport aboard huge oceangoing tanker vessels.

Upon arrival at the receiving port, the liquid is "re-gasified" and delivered by pipelines to customers.

With worldwide consumption and prices of natural gas on the rise, advocates see the liquefied form as an increasingly attractive means of matching remote supplies with energy-starved markets.

The Repsol YPF project would deliver gas from the Camisea field in the Peruvian Amazon to Mexico.

For Mexican officials, current and projected demand justifies the new projects.

Garza said that natural gas consumption in Mexico could grow as much as 50% in the next eight years. The bulk of new supplies, he said, would have to come from imports, as the country's efforts to develop domestic natural gas reserves have lagged.

Liquefied gas is the most cost-effective means of managing those import costs, he said.

Mexico at present imports about 19% of the 5.3 billion cubic feet of gas it consumes daily, Garza said. By 2013, imports may represent 40% of the 9.3 billion cubic feet consumed daily, according to the energy ministry's internal projections.

Word of the newest project comes in the aftermath of the Long Beach City Council's decision to continue studying a proposal by Mitsubishi Corp. of Japan and U.S. partner ConocoPhillips to build a re-gasification plant in the city's harbor. Citizens oppose it on safety grounds, citing the risk of explosions and even terrorism, while business interests tout the project's 1,000 construction jobs and energy benefits.

The Long Beach project is the lone remaining onshore gas terminal in California being considered after public opposition killed other projects. Three offshore projects -- one off Camp Pendleton and in Ventura County -- are still alive.

In Mexico, the Repsol YPF plant would be built in the Pacific port city of Lazaro Cardenas in the state of Michoacan and would supply gas via pipeline to Mexico City, the energy-hungry capital almost 200 miles away.

Other re-gasification terminals are under construction just north of Ensenada in Baja California -- the first ever on North America's Pacific Coast -- and in Altamira in Tamaulipas state on the Gulf of Mexico.

Three additional proposed terminals, including a second plant at Ensenada and others at Pacific ports Manzanillo and Rosarito, are in various stages of the approval process.

The first Ensenada plant is being developed by Sempra Energy of San Diego, parent of Southern California Gas Co. and San Diego Gas & Electric Co. The company plans to sell more than half the gas in the United States.

Construction began this year; the plant is scheduled to begin re-gasifying fuel shipped from Indonesia in late 2007. Sempra also is attempting to secure permits and supply agreements to build terminals in Port Arthur, Texas, and Lake Charles, La.

The Altamira plant, which is being constructed by Royal Dutch/Shell Group, will sell all its gas in Mexico.

Earlier this month, Repsol YPF and Hunt Oil Co. of Texas agreed with SK Corp. of South Korea to build the necessary Peruvian pipeline and a liquefaction plant on that country's coastline.

At the time, Repsol YPF said the gas was destined for Mexico but did not offer more specifics.

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