Marathon?s Baja LNG Mixed-Energy Project Bites the Dust

Marathon Oil?s proposed $1.5 billion liquefied natural gas complex outside Tijuana, Mexico, was dealt a final blow after the land slated for the project was expropriated by the state government February 28. Marathon?s project, which involved an LNG import terminal, a 1,200 MW power plant, and wastewater treatment and desalination plants, had been stalled for months because of local and regional opposition. Marathon held options to buy the land. The state appropriation was ?clearly a signal they don?t support the project,? said Paul Weeditz, Marathon spokesperson. The governor of Baja California said he seized the 825-hectare parcel to protect urban development and orderly growth in Tijuana. The governor?s move could clash with the federal government?s finding that 220 hectares of the site should house a multiuse industrial energy center. ?I don?t know whether the state has the authority to do this,? said George Baker, publisher of Mexican Energy Intelligence . Marathon?s LNG plant would have processed 750 MMcf/d beginning in late 2007 and was one of several gasification terminals being proposed along the West Coast. Marathon considered Mexico its primary market but also planned to sell natural gas to California. The Houston-based company received a permit from Mexico?s federal energy commission but had not yet applied for land use and environmental permits. An offshore project was not considered. Weeditz acknowledged the risk of LNG facilities, saying, ?Hydrocarbon projects must be treated with respect and must use the best technology to ensure the facilities are safe.? Weeditz declined to state how much money the company invested in the Tijuana project but said dropping the plan ?will not result in a charge to earnings.? Marathon has an LNG terminal in Kenai, Alaska, and has shipped fuel to Japan for 20 years. Other projects include one in New Guinea and another on Elba Island in Georgia.

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Marathon?s Baja LNG Mixed-Energy Project Bites the Dust

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