We Don't Want it, So Foist It OFF on Mexico, eh?
U.S. natural-gas companies pick international sites for terminals
Chris Hawley
The Arizona Republic
Oct. 22, 2007 12:00 AM
PUERTO LIBERTAD, Sonora - As a port of call, Puerto Libertad doesn't offer much. There's no public dock, no cargo cranes - not much at all, in fact, besides sand and shrubs and the unbroken horizon of the Gulf of California.
But for the huge tankers that carry natural gas around the world, this Mexican village is perfect: close enough to the United States to pump their volatile cargo over the border, but remote enough that a leak, explosion or terrorist attack wouldn't destroy an entire city.
As the United States runs out of natural-gas reserves, some energy companies are looking to Mexico, Canada and even the Bahamas for remote sites, like Puerto Libertad, where they can receive the mammoth boats carrying liquefied natural gas, or LNG. They can then sell it in the foreign country and pipe it across the border to U.S. homes and businesses.
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The foreign sites are also a way of bypassing opponents in American cities who are jittery about the prospect of gas tanker ships on their shores.
"Everyone is concerned that LNG is a combustible material, and they don't want it anywhere near them," said Alex Steis, managing editor of Natural Gas Intelligence, a trade publication. "It's the same stigma, or nearly the same stigma, as a nuclear facility, whether that (fear) is founded or not."
The gas companies claim their decision to go over the border has nothing to do with safety, and that the foreign sites are simply a way to sell to two countries at once.
So next year, construction crews will descend on the sand dunes outside Puerto Libertad, 130 miles south of Lukeville, to begin construction of the Sonora Pacific LNG Terminal, a $1 billion joint venture between El Paso Corp. and DKRW Energy LLC of Houston. About 60 percent of its gas will be piped over the border near Sasabe to be sold throughout the American Southwest.
"It's going to be a very big deal," said Fernando Garcia de León, a spokesman for the project, as he looked out at the water lapping at the Sonoran desert. "Both Mexico and the United States will benefit."
Gassing up
Gas terminals are increasingly important as companies struggle to meet the country's energy demands. Much of the United States' remaining gas reserves are off-limits to drillers because they are in protected areas off the Florida coast, in Alaska or the Rocky Mountains. As a result, U.S. imports of natural gas rose 42 percent from 1996 to 2006, to nearly 4.2 trillion cubic feet.
To bring gas from fields around the globe, energy companies chill it to a liquid form and put it on ships. The gas is transported, then turned back into vapor at the United States' four existing gas terminals in Everett, Mass.; Cove Point, Md.; Elba Island, Ga.; and Lake Charles, La.
The Federal Energy Regulatory Commission predicts LNG imports will increase nearly 16 percent a year in the next two decades, meaning the country will need seven to nine new terminals.
That has set off a race among gas companies to build terminals, with some 45 projects announced for the United States, Canada and Mexico as of September.In the long term, the increased imports should help keep a lid on prices, the Department of Energy and industry officials say.
"We would expect that adding new supplies would put downward pressure on prices," said Art Larson, a spokesman for Sempra Energy.
Safety fears
But the prospect of gigantic gas tankers edging into their harbors makes many Americans - and Mexicans - nervous. In Mexico, many people still remember the 1984 explosion of a gas depot that killed 334 people in Mexico City.
"Could you imagine an accident like that here? It would destroy and make the entire town disappear," said Armando Olea, president of Amigos en Libertad, a group formed to encourage resort developments in the Puerto Libertad area.
Further, Mexico has recently seen a wave of bombings aimed at gas pipelines. In July and September, the leftist People's Revolutionary Army bombed 10 gas pipelines in central and eastern Mexico. The attacks forced some of Mexico's biggest factories to shut down.
Gas companies insist that liquefied-gas shipments are safe, noting that ships have made 33,000 deliveries without an accident in the past 40 years. The terminals use berms, double-hulled tanks and computer-controlled sensors to contain any leaks.
"We can put these facilities anywhere and operate them safely," said Bill Cooper, executive director of the Center for Liquefied Natural Gas in Washington.
Other experts aren't so sure. In February, the U.S. Government Accountability Office consulted 19 scientists and reported "conflicting assessments" of what would happen if a gas ship ignited.
But one study, by Sandia National Laboratories, offered this prediction: if terrorists could blast a 53-square-foot hole in a ship, the resulting blaze would be so intense it could cause second-degree burns to people more than a mile away.
The industry has already had one catastrophe: On Jan. 19, 2004, an explosion at a liquefied-natural-gas plant in Skikda, Algeria, killed 27 people and injured 56.
Mexico taking lead
Experts say the Puerto Libertad terminal and another in Baja California will help fill a gaping hole in the U.S. gas supply, because there are no others anywhere on the Pacific coast of North America.
Several proposed ports for the California coast have foundered because of fierce opposition by community and environmental groups. The latest defeat came in May, when California Gov. Arnold Schwarzenegger rejected plans for a floating terminal the size of an aircraft carrier that would have been anchored 14 miles off the coast of Ventura County.
"It's awfully hard to find a remote site in the coastal zones," said Darcel Hulse, president of Sempra LNG.
Mexico, meanwhile, has been enthusiastic about the terminals. The country imports much of its gas from California and Texas, and the government is eager to find alternatives.
"This will help diversify our suppliers of gas at competitive prices and reduce our dependence on gas from the state of Texas," President Felipe Calderón told a meeting of governors on Friday.
The country's first gas terminal opened last year near the east coast city of Tampico, and another is under construction near the Pacific city of Manzanillo. Another proposed terminal in the Pacific port of Topolobampo could send gas to Arizona.
In Puerto Libertad, many residents said they were excited about the terminal and the 1,500 construction jobs it is expected to generate. Aside from a Federal Electricity Commission generating plant, there are few jobs in town.
Ascension Manjarrez is building a 28-room motel behind her restaurant to house the workers. Fishermen Maximo and Juan Vejar are building 16 little cabañas to rent near the beach.
"You can't stop progress," Maximo Vejar said. "This plant is the future."
Reach the reporter at chris .hawley@arizonarepublic.com.
Chris Hawley
The Arizona Republic
Oct. 22, 2007 12:00 AM
PUERTO LIBERTAD, Sonora - As a port of call, Puerto Libertad doesn't offer much. There's no public dock, no cargo cranes - not much at all, in fact, besides sand and shrubs and the unbroken horizon of the Gulf of California.
But for the huge tankers that carry natural gas around the world, this Mexican village is perfect: close enough to the United States to pump their volatile cargo over the border, but remote enough that a leak, explosion or terrorist attack wouldn't destroy an entire city.
As the United States runs out of natural-gas reserves, some energy companies are looking to Mexico, Canada and even the Bahamas for remote sites, like Puerto Libertad, where they can receive the mammoth boats carrying liquefied natural gas, or LNG. They can then sell it in the foreign country and pipe it across the border to U.S. homes and businesses.
advertisement
The foreign sites are also a way of bypassing opponents in American cities who are jittery about the prospect of gas tanker ships on their shores.
"Everyone is concerned that LNG is a combustible material, and they don't want it anywhere near them," said Alex Steis, managing editor of Natural Gas Intelligence, a trade publication. "It's the same stigma, or nearly the same stigma, as a nuclear facility, whether that (fear) is founded or not."
The gas companies claim their decision to go over the border has nothing to do with safety, and that the foreign sites are simply a way to sell to two countries at once.
So next year, construction crews will descend on the sand dunes outside Puerto Libertad, 130 miles south of Lukeville, to begin construction of the Sonora Pacific LNG Terminal, a $1 billion joint venture between El Paso Corp. and DKRW Energy LLC of Houston. About 60 percent of its gas will be piped over the border near Sasabe to be sold throughout the American Southwest.
"It's going to be a very big deal," said Fernando Garcia de León, a spokesman for the project, as he looked out at the water lapping at the Sonoran desert. "Both Mexico and the United States will benefit."
Gassing up
Gas terminals are increasingly important as companies struggle to meet the country's energy demands. Much of the United States' remaining gas reserves are off-limits to drillers because they are in protected areas off the Florida coast, in Alaska or the Rocky Mountains. As a result, U.S. imports of natural gas rose 42 percent from 1996 to 2006, to nearly 4.2 trillion cubic feet.
To bring gas from fields around the globe, energy companies chill it to a liquid form and put it on ships. The gas is transported, then turned back into vapor at the United States' four existing gas terminals in Everett, Mass.; Cove Point, Md.; Elba Island, Ga.; and Lake Charles, La.
The Federal Energy Regulatory Commission predicts LNG imports will increase nearly 16 percent a year in the next two decades, meaning the country will need seven to nine new terminals.
That has set off a race among gas companies to build terminals, with some 45 projects announced for the United States, Canada and Mexico as of September.In the long term, the increased imports should help keep a lid on prices, the Department of Energy and industry officials say.
"We would expect that adding new supplies would put downward pressure on prices," said Art Larson, a spokesman for Sempra Energy.
Safety fears
But the prospect of gigantic gas tankers edging into their harbors makes many Americans - and Mexicans - nervous. In Mexico, many people still remember the 1984 explosion of a gas depot that killed 334 people in Mexico City.
"Could you imagine an accident like that here? It would destroy and make the entire town disappear," said Armando Olea, president of Amigos en Libertad, a group formed to encourage resort developments in the Puerto Libertad area.
Further, Mexico has recently seen a wave of bombings aimed at gas pipelines. In July and September, the leftist People's Revolutionary Army bombed 10 gas pipelines in central and eastern Mexico. The attacks forced some of Mexico's biggest factories to shut down.
Gas companies insist that liquefied-gas shipments are safe, noting that ships have made 33,000 deliveries without an accident in the past 40 years. The terminals use berms, double-hulled tanks and computer-controlled sensors to contain any leaks.
"We can put these facilities anywhere and operate them safely," said Bill Cooper, executive director of the Center for Liquefied Natural Gas in Washington.
Other experts aren't so sure. In February, the U.S. Government Accountability Office consulted 19 scientists and reported "conflicting assessments" of what would happen if a gas ship ignited.
But one study, by Sandia National Laboratories, offered this prediction: if terrorists could blast a 53-square-foot hole in a ship, the resulting blaze would be so intense it could cause second-degree burns to people more than a mile away.
The industry has already had one catastrophe: On Jan. 19, 2004, an explosion at a liquefied-natural-gas plant in Skikda, Algeria, killed 27 people and injured 56.
Mexico taking lead
Experts say the Puerto Libertad terminal and another in Baja California will help fill a gaping hole in the U.S. gas supply, because there are no others anywhere on the Pacific coast of North America.
Several proposed ports for the California coast have foundered because of fierce opposition by community and environmental groups. The latest defeat came in May, when California Gov. Arnold Schwarzenegger rejected plans for a floating terminal the size of an aircraft carrier that would have been anchored 14 miles off the coast of Ventura County.
"It's awfully hard to find a remote site in the coastal zones," said Darcel Hulse, president of Sempra LNG.
Mexico, meanwhile, has been enthusiastic about the terminals. The country imports much of its gas from California and Texas, and the government is eager to find alternatives.
"This will help diversify our suppliers of gas at competitive prices and reduce our dependence on gas from the state of Texas," President Felipe Calderón told a meeting of governors on Friday.
The country's first gas terminal opened last year near the east coast city of Tampico, and another is under construction near the Pacific city of Manzanillo. Another proposed terminal in the Pacific port of Topolobampo could send gas to Arizona.
In Puerto Libertad, many residents said they were excited about the terminal and the 1,500 construction jobs it is expected to generate. Aside from a Federal Electricity Commission generating plant, there are few jobs in town.
Ascension Manjarrez is building a 28-room motel behind her restaurant to house the workers. Fishermen Maximo and Juan Vejar are building 16 little cabañas to rent near the beach.
"You can't stop progress," Maximo Vejar said. "This plant is the future."
Reach the reporter at chris .hawley@arizonarepublic.com.
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