Lack of supply pushes completion [ construction ] date to '08
By Craig D. Rose
UNION-TRIBUNE STAFF WRITER
signonsandiego.com
September 28, 2006
Sempra Energy, which is focusing heavily on natural gas investments, said yesterday it may delay the construction of a planned liquefied natural gas receiving terminal in Texas for one year.
The San Diego company said the delay would be caused by a lack of liquefied gas supply for the terminal, which is planned for Port Arthur, Texas.
Sempra said it now expects to begin construction of the terminal in 2008, with full operation planned for 2011. Earlier, the company anticipated startup of the terminal by 2010.
Darcel Hulse, chief executive of Sempra LNG, said the delay won't impact income projections for the company because Port Arthur wasn't yet included in those projections. He added that the recent decline in natural prices had not altered the company's belief that there is a significant shortage of natural gas in North America.
Despite that belief, the Department of Energy in its most recent report said natural gas storage levels were 13 percent above the five-year average.
“Nothing has changed in the fundamentals for gas other than a response to a very warm winter and the anticipation of another severe hurricane season (that never materialized),” Hulse said. “But the basic supply picture has not changed. We are not able to produce enough domestic gas to meet our needs.”
Gordon Pickering, an associate with Navigant Consulting, agreed.
“The short-term drop in prices is not apt to change the dynamics of the market,” said Pickering, who follows the natural gas industry.
But Bill Powers, chairman of the Border Power Plant Working Group and member of a coalition seeking to block LNG imports into California, said the high level of natural gas inventories and declining prices may soon give those who finance LNG projects second thoughts.
The local energy expert and consumer advocate believes North American gas supplies will be adequate, provided there are appropriate efficiency and conservation efforts.
Sempra is continuing construction of its LNG terminals in Baja California and in Cameron, La. Hulse said output from the Baja facility was fully contracted, while there are contracts for about 40 percent of Cameron's output.
“We don't build them and wait for people to sign up for capacity,” he said. “We sign people up for capacity and build them.”
But he noted the final agreements for all of Cameron's output remain under negotiation.
LNG terminals return liquefied fuel to a gaseous state for injection into pipelines. Liquefaction plants, on the other hand, supercool the gas to a liquid state so it can be shipped.
Sempra says the industry is experiencing a worldwide slowdown in the development of liquefaction plants, which diminishes the need for processing plants on the receiving end.
Hulse noted that liquefaction plants are far more expensive to build than the re-gasification terminals Sempra is building.
While it may postpone the Port Arthur project, Sempra said it may look to expand the capacity of its Cameron LNG plant in Louisiana if additional supplies are obtained. |
