Mexico considers offshore sites for LNG projects

Jan 16, 2003 01:00 AM

Mexico is considering letting energy companies develop LNG projects in the ocean off the Baja California coast, the head of the country's Energy Regulatory Commission said. Dionisio Perez-Jacome, president of the CRE, as the agency is known, said that Mexican officials are exploring whether to issue rules for building and operating offshore LNG receiving terminals.
The idea has been suggested by some Baja residents who oppose onshore receiving terminals that several companies plan to build along the coast between Tijuana and Ensenada. But even if the offshore plan does move forward, Perez-Jacome said it will lag months, if not years, behind the process under way for the onshore terminals.
He said permanent regulations, or norms, for the onshore terminals will be in place within six months. "If the decision is that offshore is feasible, we would have to come up with a revised version of the norms," he said. "That could be one to two years."

Perez-Jacome spoke at the Institute of Americas'"LNG in the Californias" roundtable at the Del Mar Hilton. The event, which brought together about 100 US, Mexican and California energy officials and energy industry executives, was not open to the media. But the CRE president agreed to an interview with The San Diego Union-Tribune.
With opposition growing among Baja California and California residents to onshore LNG terminals, offshore facilities are increasingly being suggested as an alternative. "It has to be offshore," said Eduardo Orozco, a Rosarito Beach resident who is organizing a coalition of Tijuana, Rosarito Beach and Ensenada opponents. "The sites where companies are asking for permits are not viable for the people, the flora, the fauna, the whales," he said. "Plus there's the safety issue." There are few, if any, offshore regasification terminals operating worldwide.

But several are being developed, and others proposed. El Paso, which has partnered with Phillips/Conoco to build a proposed LNG terminal in Rosarito Beach, is developing an "energy-bridge" technology that would regasify LNG on tankers and pump the fuel to shore through an underwater pipeline. ChevronTexaco has said it is considering developing an ocean-based LNG facility off the northern Baja California coast.
Santana Gonzalez Jr, the company's manager of public and government affairs, said he isn't discouraged by Mexico's lack of progress on approving offshore terminals. "Given the fact the community dynamics are what they are, we're going to continue to encourage (Mexican officials) to look at other types of projects," he said.

Shell's director of Mexican operations, Cornelis Van der Bom, said his company remains committed to an onshore site at Costa Azul north of Ensenada. "If you look at the possibilities in Baja California, you soon come to the conclusion that offshore terminals are likely to have more problems than onshore," Van der Bom said.
Whale migration patterns and engineering difficulties present the greatest challenges to building terminals in the ocean,he said. With energy experts saying only one or two LNG regasification plants are needed to supply customers in California and Baja California, companies are fiercely competing to be the first to realize their projects.

Mexico's focus on rules for onshore facilities could put firms proposing offshore terminals at a disadvantage. Sempra Energy International recently became the second company to have its LNG project application accepted by the Energy Regulatory Commission. "It's just one part of the process," said Darcel Hulse, president of the subsidiary of San Diego's Sempra Energy.
Perez-Jacome, the CRE president, said companies can apply now under emergency regulations issued in August. Marathon Oil was the first to have its application accepted. Perez-Jacome said if there are no problems in evaluating the application, the company might be issued a permit at the end of February.

Marathon wants to build a regional energy centre south of Tijuana. Besides an LNG regasification plant, it would includean electricity power plant, a wastewater treatment facility and a desalination plant. Chevron/Texaco and Shell have submitted applications for LNG terminals, but they have not yet been accepted, Perez-Jacome said. Shell's probably will be approved soon.
Chevron submitted an application for an onshore facility, Gonzalez said, because that is the only option open at this time. The partnership of El Paso and Conoco/Phillips, the first venture to be announced for Baja California, has not submitted an application, he said.
CRE's permit is for developing and operating the facilities. An environmental permit granted by Mexico's federal environmental agency and land-use permits granted by local governments are the other key elements needed for companies to proceed with their projects.

Source: The San Diego Union-Tribune
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