FERC Approves North Baja Pipeline

NGI's Daily Gas Price Index=20
published : May 17, 2001
FERC Approves North Baja Pipeline=20
The Federal Energy Regulatory Commission set its seal, pending environmenta=
l review, on another westward-bound pipeline project Wednesday. The North B=
aja Pipeline will carry up to 500 MMcf/d from a connection with El Paso Nat=
ural Gas near Ehrenberg, AZ to fuel power plants and gas distribution syste=
ms in Northern Mexico and Southern California.=20
FERC approved a preliminary determination for the U.S. portion of the 215-m=
ile pipeline, an 80-mile segment that connects at the international border =
between Yuma, AZ and Mexicali, Baja California, Mexico. The Mexican governm=
ent has already issued a transportation permit to Sempra Energy Internation=
al for the 135-mile Mexican segment, Gasoducto Bajanorte, which will connec=
t with the existing Transportadora de Gas Natural in Mexico. The U.S. porti=
on of the project is owned by PG&E Gas Transmission Holdings Corp., and is =
expected to cost about $146 million. Proxima Gas SA de CV also has an inter=
est in the pipeline.=20
The pipeline has precedent agreements with six shippers for the total capac=
ity. The largest share of the supplies, 283 MMcf/d will go to three power p=
lants, La Rosita/ InterGen plant in Mexicali, the Otay Mesa Plant in San Di=
ego and the Presidente Juarez/Rosarito plant in Tiajuna. The Mexicali plant=
will export a portion of its power production to California. The Comision =
Federal de Electricidad (CFE) has a call on 32 MMcf/d, increasing to 210 MM=
cf/d and Termoelectica De Mexicali, S. de R.L. de CV has signed on for 105 =
MMcf/d. North Baja maintains that additional demand is likely to develop in=
the near future, noting the CFE's preference for gas-fueled electric power=
. The CFE plans to convert 11 oil-fired electric generation plants to natur=
al gas within the next 10 years.=20
The pipeline also pointed to other electric generation plant customers on t=
he U.S. western grid and in Mexico, such as the certified 500 MW Blythe Ene=
rgy plant near Blythe, CA, the 500 MW Yucca plant in Yuma, AZ, the planned =
470 MW plant in San Luis Rio de Colorado, Mexico, a planned 250 MW Energia =
de Mexicali or AEP plant, and a future 500 MW plant listed as the Sempra En=
ergy Project in Mexicali.=20
The Commission noted "both the electric grid and natural gas system in Baja=
California are interconnected with the respective networks in California."=
Also, the only sources of natural gas currently feeding Baja California ar=
e San Diego Gas & Electric's pipeline which is interconnected with Mexico's=
Transportadora pipeline and SoCalGas' distribution line into Mexicali. Nor=
th Baja said both lines are constrained and cannot take on the additional p=
ower plant load.=20
FERC dismissed complaints by existing El Paso customers that approving the =
new pipeline would jeopardize their own capacity and upstream supplies. Exi=
sting customers on El Paso are protected by the right of first refusal to c=
ontinue their current contracts, the Commission said, and the North Baja sh=
ippers also have assumed the risk of acquiring their own upstream supplies.=
The new shippers can obtain released capacity or capacity from expiring co=
ntracts on El Paso, or service from marketers that have firm capacity on th=
e pipeline or from expansion proposals by El Paso. Some of the shippers alr=
eady have signed on for some of the 1.2 Bcf/d of capacity being released by=
El Paso Merchant Energy at the end of this month. El Paso also is planning=
a 230 MMcf/d expansion and is assessing further expansions. "The Commissio=
n believes that the North Baja shippers will have realistic opportunities t=
o complete any unfinished upstream arrangements without adversely impacting=
El Paso's existing customers."=20