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IR/PS in the News : EcoAmericas "LNG terminal plans proliferate in Baja California" By Eric Niiler Tijuana, Mexico -- T wo new proposals by international energy companies to build liquefied natural gas (LNG) terminals on the Baja California coastline are drawing opposition from environmentalists and tourism operators who charge the projects will threaten coastal resources. The projects, intended to help quench nearby Southern California's thirst for energy, also are being criticized on grounds they're receiving Mexican government support without having first been presented to local communities. Late last month, Royal Dutch-Shell confirmed that it intends to build a terminal near Ensenada to receive overseas shipments of liquefied natural gas. The $500 million project is set for completion in 2006. A month earlier, Houston-based Marathon Oil Company had unveiled plans to build a $900 million liquefied natural gas complex just south of Tijuana. That brings to four the number of LNG terminal projects slated for Baja California coastal sites ranging from the Playas area of Tijuana to the community of Sauzal, just north of Ensenada. The other two are joint efforts-one by Sempra Energy and CMS Energy Corp., and another by Phillips Petroleum and El Paso Corp. Critics of the energy projects say the companies involved are taking advantage of Mexico's current lack of LNG environmental and safety regulations to use Baja California as a low-cost entryway to the Southern California market. The projects have yet to receive approval from state and federal regulatory authorities in Mexico, and environmental groups appear determined to fight them. "We're worried that Baja California is being offered for sale to anyone who says they favor economic development," says Rodolfo Anguiano, director of the Tijuana-based Gaviotas Ecology Group. The project currently attracting the most attention is Marathon's. The LNG complex, to be located less than 15 miles (24 kms) south of the U.S. border in the middle of one of Mexico's most popular tourist destinations, would be Baja California's largest industrial facility. Marathon's plans call for the construction of a terminal to receive liquid natural gas tankers arriving from Indonesia; onshore LNG re-gasification facilities; pipelines to ship the gas north to the United States; and a 400-megawatt, gas-fired power plant that would serve Southern California. Marathon spokeswoman Susan Richardson says the complex would be operational in 2005; she adds it has the support of Tijuana's mayor and the governor of Baja California. Says Richardson: "We're moving forward, and it's a serious proposal." Liquefied natural gas accounts for 5% of global natural-gas consumption, but demand for it is growing. Natural gas is liquefied through refrigeration and compression to ease its transport. It is then off-loaded and converted back to a gaseous form in re-gasification facilities. Natural gas and electricity from the new Marathon complex will flow north through existing transmission lines, an existing natural-gas line and new gas lines being planned. How tight the oversight? Anguiano and other critics assert there is no assurance new facilities will be adequately overseen. They note that an existing state-owned electrical plant in nearby Rosarito Beach has had a history of breakdowns and environmental violations. Baja California's environmental attorney general, Alejandro Alvarez Cardenas, in January filed felony charges against Mexico's Federal Electricity Commission (CFE) for improper hazardous-waste storage and ocean discharges of waste from the facility. The Rosarito Beach plant is next door to an LNG facility proposed by El Paso Corp. and Phillips Petroleum. That $400 million facility would receive gas from the Timor Sea by way of a liquefying plant Phillips is building in Darwin, Australia. The joint venture paid $16 million for a 74-acre (30-hectare) coastal plot and is leasing another parcel. University of California San Diego political science lecturer Mark Spalding says the tourist-dependent Baja coast isn't a good place for such facilities. The region generates most of Baja's $700 million per year in tourism income. "All of us are concerned Baja California is going to be the unfair recipient of the pollution, while California gets the energy," says Spalding, who consults for environmental groups. In the past year, however, tourism has slumped as more American vacationers have stayed home in the wake of last September's terrorist attacks. In addition, Baja California's maquiladora industry has lost more than 35,000 jobs. Baja governor Eugenio Elorduy says the region needs to diversity its economy. "This project would serve as a symbol to the global marketplace that Mexico is a good place to conduct business," he said recently. Mexican officials also argue that the new terminals will be regulated properly, pointing out that a congressional committee in Mexico City is now drafting rules for LNG facilities. While environmental and safety impacts loom largest in the debate about the liquefied natural gas projects, questions also have cropped up about public disclosure. Some critics complain that neither the energy companies nor Mexican authorities have adequately informed local residents about the energy projects. "What are the potential risks and consequences for the region?" asks Roberto Valdes, president of Bajamar Real Estate Services, a 350-home coastal resort development south of Rosarito Beach. "This is something we are just finding out." For their part, local officials are gauging the potential consequences of the projects. Tijuana Mayor Jesus González Reyes does not anticipate a threat to public safety. But he wants to make sure new gas pipelines do not complicate new-home construction. Tijuana needs 30,000 to 40,000 new homes every year, he points out, and many are being built in the area between downtown Tijuana and the coast-where gas pipelines would run. "I'm not saying I'm against the projects," González says, "but we are just getting information about them now." » Back to IR/PS
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