Three LNG receiving terminal proposals for Baja California, Mexico, face an intensifying political and public relations competition, said George Baker, founding principal of the Houston-based energy consulting firm Baker & Associates.
The next "boxing round" regarding opportunities for LNG terminals in Mexico and the US West Coast will take place Feb. 10-12 in Long Beach, Calif., at an LNG seminar sponsored by Infocast Inc., Canoga Park, Calif.
In comments made last year during an LNG ministerial summit in Washington, DC, Mexican Sec. of Energy Felipe Calderon said that promoting LNG would encourage trade and give more flexibility to state-owned public utility Comisión Federal de Electricidad as well as Petróleos Mexicanos (OGJ, Jan. 19, 2004, p. 35).
Each of the Baja California LNG projects has its benefits and drawbacks, Baker observed, drawing on a recent LNG study compiled by his firm.
"Who wins the war on the ground in terms of public opinion in Baja California is about as politicized as in Santa Barbara, Calif. Nevertheless; that is what we are coming up against," Baker said.
Opposition comes from environmental activists as well as fishing and real estate interests to any LNG project in the Tijuana-Ensenada Corridor. It also comes from Baja California officials, he noted.
"In a state [where] most of whose citizens had never heard of [Mexico's Energy Regulatory Commission (CRE)], it was an unexpected sight to see marchers demonstrating with signs that criticized and ridiculed the CRE for its alleged illegal interventions in the affairs of Baja California," Baker said.
LNG terminal proposals
One proposal comes from Marathon Oil Corp. subsidiary GNBC Ventas S de RL de CV and its partners Grupo GGS SA de CV and Bermuda-based Golar LNG Ltd.
Marathon's Tijuana Regional Energy Center proposal includes a set of infrastructure enhancements (OGJ Online, May 12, 2003). Proposed enhancements include water desalination, wastewater treatment, and electric power, but the project faces opposition by residents and local officials, Baker said.
Another proposal, from a unit of ChevronTexaco Corp., involves an offshore site, which has the advantage of having no neighbors to oppose its location (OGJ Online, Aug. 6, 2003). But Mexico has yet to establish the standards and regulations for such a plant, he noted.
"We continue trying to understand the special tender published by the Secretaria de Comunicacions y Transportes on Dec. 29 that provides for a 3-year concession for [ChevronTexaco's] LNG facility in the federal waters near the Coronado Islands in Baja California. One hypothesis is that the Vicente Fox administration is tired of the perceived obstructionism in Baja California and intends to put the matter into federal jurisdiction," Baker said.
The third proposal is from Shell International Gas Ltd. and Sempra Energy LNG Corp.—the newest subsidiary of Sempra Energy Global Enterprises. The two companies formed a 50:50 joint venture to build, own, and operate an LNG receiving terminal in Costa Azul 14 miles north of Ensenada on Mexico's west coast (OGJ Online, Dec. 23, 2003).
The Sempra-Shell proposal seems to have the support of state authorities, but it faces opposition from local environmentalists and others, Baker said.
The outcome of the competition cannot yet be predicted, he said, except that, at the most, only one of these three proposed projects will be built. It's possible that none of the three proposals will be built, he said.
"An open question is whether—with one terminal in Baja California—a second or third receiving terminal be successful off California," Baker asked.
