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A liquefied natural gas import terminal in Baja California largely was missing in action during San Diego gas curtailments earlier this month. That’s despite a ratepayer funded pipeline interconnection that was supposed to provide the state with natural gas from the Mexican facility. Sempra LNG president Darcel Hulse promised in 2004 when the company was planning its $975 million Costa Azul project that the terminal would help ensure “reliable supplies” of natural gas for California. Based on that assumption, when Sempra LNG built the terminal, its regulated utility brethren, San Diego Gas & Electric and SoCal Gas, spent $14 million of ratepayer money to create an interconnection capability near the San Diego-Tijuana border to bring liquefied natural gas into their service territories. The California Public Utilities Commission approved the expenditure to enable the utilities to tap liquefied natural gas from the Mexican terminal (Current, April 14, 2006). Costa Azul opened in 2008. SDG&E spokesperson Art Larson said the interconnection did allow the utility to tap some gas to bolster supplies during the Feb. 3-4 curtailment of 88 industrial customers. The curtailment occurred when pipelines and gas facilities shut down due to extremely cold weather in Texas and New Mexico--areas that typically supply Southern California. Larson noted that the small amount of gas from Mexico did not specifically come from the LNG terminal. “Currently the plant is really only focused on serving Baja California due to LNG constraints,” explained Kathleen Teora, Sempra LNG spokesperson. BP was shipping liquefied natural gas to the terminal about every 12 days until late January, but then diverted gas to Asia where it can fetch a higher price than in North America, according to Teora. Even when shipments were occurring, she noted, almost all the gas was going to the Mexican utility CFE for its Rosarito Beach power plant and to two other generating facilities in Mexico near Mexicali. “It’s a supply issue,” explained David Maul, Maul Energy Advisors president. He said the bulge in production of shale gas in North America--coupled with the economic recession--depresses natural gas prices so much that liquefied natural gas producers around the world ship their limited supplies to other nations where gas is priced higher. The comparatively high cost of natural gas abroad has interested U.S. liquefied natural gas terminal operators, like Sempra, in converting their import facilities into export terminals, where domestic gas is liquefied and loaded onto liquefied natural gas tankers for export to Europe or Asia. Sempra has a pending application with the Department of Energy to convert its Cameron LNG terminal along the Gulf of Mexico into an export facility. Many other Gulf Coast operators are seeking to do the same, noted Bill Powers, an independent energy project engineer. Teora said that imports into Costa Azul should pick up this spring. Meanwhile, Larson said SDG&E can draw on gas storage facilities its sister utility, SoCal Gas, operates during shortages, which he characterized as rare.

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