Sempra Energy LNG Receiving Terminals, USA/Mexico

Sempra Energy is constructing some of largest LNG associated capital projects in North America. Liquefied Natural Gas (LNG) is set to be one of the major fuels of the future worldwide, particularly in the energy hungry North American continent.

Sempra Energy are putting in place the facilities and infrastructure necessary to exploit the new demands for LNG which will be seen in the coming years. Sempra LNG announced the award of engineering, procurement and construction (EPC) contracts worth in excess of $1.2 billion in January 2005. These are for two new LNG receiving terminals: the Energia Costa Azul receiving terminal, 14 miles north of Ensenada, Baja California, Mexico; and the Cameron receiving terminal, 15 miles south of Lake Charles on the Gulf coast in Louisiana.

MEXICO - ENERGIA COSTA AZUL RECEIVING TERMINAL

A consortium comprised of Techint SA de CV of Mexico, Black & Veatch of Kansas City, Mitsubishi Heavy Industries of Tokyo and Vinci Construction Grands Projects of France (BMVT) was awarded the $500 million EPC contract for the Energia Costa Azul receiving terminal. A joint venture involving the Costain Group PLC of London, UK, and China Harbour of China won the construction contract for the project's $170 million breakwater.

The Mexico project, which is almost finished, is scheduled to be completed by spring 2008 and will have the capacity to process one billion ft³ of natural gas per day. Work on the access road to the project site is complete and construction on the terminal started in April 2005. At the peak of construction, in 2007, Energia Costa Azul had as many as 1,500 workers on site. More construction workers were required to work on the breakwater project.

USA - CAMERON RECEIVING TERMINAL

The EPC contracts for the Cameron LNG receiving terminal (previously known as the Hackberry LNG terminal, but the site was purchased from Dynergy Inc in February 2003 for $20 million) were also awarded. The project here is worth an estimated $500 million.

The contract was awarded to a consortium consisting of Aker Kvaerner of Norway and Tokyo-based Ishikawajima-Harima Heavy Industries (AK/IHI). Aker Kvaerner has a great deal of expertise in the engineering and construction of LNG receiving terminals, while Ishikawajima-Harima Heavy Industries is a leader in the design and manufacturing of LNG storage and processing systems.

The engineering and design work for the project has been undertaken from the companies' Houston offices. Construction started in mid-2005, following the completion of Sempra LNG's supply arrangements for the facility.

The Cameron LNG terminal will commence operations by late 2008 and be capable of processing 1.5 billion ft³ per day of natural gas. Cameron is the first new LNG facility in the US to receive a permit from the Federal Energy Regulatory Commission in more than 20 years. Cameron LNG's construction workforce reached a peak at 800 in 2007. The terminal is 70% complete.

NEW LNG RECEIVING TERMINALS

When on-stream, Sempra Energy's Cameron and Energia Costa Azul LNG terminals will serve two key North American energy gateways: the US Gulf Coast region and the west coast of Baja California, Mexico. Combined, the two projects will be able to process up to 2.5 billion ft³ of natural gas per day.

A further proposed Sempra LNG receipt terminal project in Port Arthur, Texas, is coming to the end of the permit process. Construction on the Port Arthur LNG project was expected to begin in 2006 with operations commencing in 2009 but this was delayed for two years because of environmental and permit issues. The Port Arthur terminal is expected to cost $600 million and will be able to process 1.5 billion ft³ of natural gas per day with an option to expand its processing capabilities to three billion ft³. The plans show two docking stations and three gas storage tanks. The site for the LNG terminal is on around 2,900 acres of land in the area that are owned by Sempra. Reports in early 2008 indicate that the LNG terminal is still in the company’s plans but there are also plans for a marine petroleum and storage facility on the site which would require around 120 acres and require the construction of several storage tanks and also multi-ship berthing facilities for the import and export of crude oil, liquid petroleum gas and other products. The terminal would have an initial throughput of up to 500,000 bpd and would serve refineries, pipelines and storage facilities in the Gulf Coast region.

SUPPLY CONTRACTS

Sempra LNG was awarded a 15-year natural gas supply contract by Mexico's state-owned electric utility, Commission Federal de Electricidad (CFE). The contract is estimated at $1.4 billion over its life and supports the CFE's future energy requirements in northern Baja California, including the Presidente Juarez power plant in Rosarito. The gas will be supplied via the Energia Costa Azul LNG terminal.

The contract will begin in 2008 and continue through 2022, the agreement provides CFE with an average of about 130 million ft³/d of natural gas. The CFE contract will consume more than one quarter of the 500 million ft³/d Sempra LNG is procuring from Indonesia. Sempra LNG set up an LNG supply agreement in October 2004 with BP and its Tanguh LNG partners for the supply of 3.7 million tonnes of LNG per year (500 million ft³/d) from Indonesia to Energia Costa Azul.

Sempra LNG also signed in October 2004 a 20-year agreement to provide Shell International Gas Ltd with half of the Energia Costa Azul facility's processing capacity (500 million ft³/d); as the plant expands Shell's share of the processing capacity will increase in proportion. The LNG for the Shell processing at Energia Costa Azul will come from the Sakhalin II project in Eastern Russia (Shell is a major shareholder).

PIPELINES AND STORAGE FACILITIES

Sempra Pipelines & Storage, a unit of Sempra Energy, has constructed and will operate the Liberty Gas Storage LLC natural gas storage facility in Calcasieu Parish, Louisiana. The company received final authorisation from the Federal Energy Regulatory Commission (FERC) to operate the facility under Section 7(c) of the Natural Gas Act in August 2005.

Liberty Gas Storage is located near the town of Sulphur, Louisiana, and provides firm storage and related services to customers transporting natural gas on various interstate pipelines in the region. The facility provides 17 billion ft³ of working gas capacity for storage (salt caverns) and came into service in the second quarter of 2006.

The project also includes surface facilities to allow for a maximum injection of 500 million ft³/d and maximum withdrawals of 1 billion ft³/d. Liberty Gas Storage will be located near the Cameron and Port Arthur Pipelines, which are under development or consideration by Sempra Pipelines & Storage connecting the LNG re-gasification terminals to the interstate gas transmission system (six pipelines). The project includes 24,000 HP of compression (Ragley compressor station and the Brimstone compressor station) to assist in the injection and withdrawal of gas and a bidirectional 30-inch pipeline.

Sempra Pipelines & Storage acquired the rights to develop the gas storage facility from HNG Storage in June 2004. Liberty Gas Storage will be a 17 billion ft³ high-deliverability salt-cavern natural gas storage facility. The project will have access to over eight billion ft³/d of interstate pipeline capacity linked to multiple markets and is also adjacent to significant industrial loads that have been under increasing pressure to stabilise their natural gas costs.