Power producers and energy advocates in the Rocky Mountain region are looking south of the border for market options on the Pacific coast, as the prospects for an export facility in the western United States United seem more and more improbable.
As development of the Jordan Cove liquefied natural gas (LNG) project in Oregon is suspended following regulatory setbacks, the LNG site Energia Costa Azul (ECA) led by Sempra Energy in Baja California, Mexico, More and more looks like a viable market option for stranded gas in the Rockies, industry officials said Wednesday during a webinar hosted by Rice University’s Baker Institute Center for Energy Studies.
“The Energia Costa Azul plant is a great opportunity for Rocky Mountain gas,” said Andrew Browning, president of the Western States and Tribal Nations Natural Gas Initiative (WSTN). The organization has a significant membership that includes a handful of energy companies including Sempra, counties and regulators in Colorado, Wyoming and Utah, the Ute Indian tribe, and the state of Baja California.
West Coast Projects
The ECA project, one of several liquefaction terminals being considered for the west coast of Mexico, would allow gas exports from the United States to bypass the Panama Canal and reach demand markets in the Pacific more quickly and efficiently. lower cost. The initial phase of the project would consist of a single train of 3.5 million metric tons / year, although a proposed extension will increase it to 10 mmt.
According to Sempra LNG Regional Vice President Brian Lloyd, feed gas is already supplied for the initial phase, but the second phase would require a new pipeline from the Permian Basin or elsewhere in the West to supply ECA LNG.
He added that gas from the Rocky Mountain Basins would add diversity to its offerings for Asian LNG buyers looking to upset their wallets.
“We enter into 20-year purchase and sale contracts… and so we know that over those 20 years you are going to see changes in gas supply, gas demand and grid configuration. pipelines, ”he said. “So one of the things we’re proud of is that our buyers who use our infrastructure have access to multiple pools.”
Sempra is also developing the recently inaugurated Vista Pacifico LNG terminal further south, in Topolobampo in the state of Sinaloa. This project, like ECA LNG, would import natural gas from American shale basins for re-export as LNG.
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Vista Pacifico would have an export capacity of 3-4mm, Lloyd said. The company has received permits from the US Department of Energy to export to countries with which the US has free trade agreements (FTAs) and expects to receive non-FTA approval within months to come, he added.
“Unlike Phase 2 of the ECA, we believe there is pipeline capacity in the United States and Mexico that we believe can move additional volumes off the west coast of North America,” said he declared.
ECA LNG and projects like this could lay a lifeline for natural gas production in the region, which has been in decline for years as explorers have prioritized oil targets amid low gas prices, said Wes Adams, assistant director of oil and gas at the Utah school. and Institutional Trust Land Administration.
“From Utah’s point of view, we need a catalyst,” he said. “I think what we need is to do a drawdown deal, and we have to represent sustainability to do that. So if we have a viable option to export LNG to the west coast and the reserves available, the rest will sort of fall into place. But we really need these Asian countries to really seize this opportunity to engage in a long-term drawdown agreement that could support additional drilling in the Rockies.
Eyes on the offer
Browning said the region’s major gas basins – Wyoming’s Green River, Colorado Piceance, Utah’s Uinta and New Mexico and Colorado’s San Juan – could supply nearly 11.5 Bcf / d for re-export to Mexico.
The pipeline capacity to supply the second phase ECA LNG from the Rocky Mountain basins does not yet exist, he added. His group is currently analyzing potential routes and clearing obstacles that would need to be cleared to move forward.
“There are a number of different ways, including the existing El Paso system, as well as pipelines coming out of Utah through the San Juan Basin,” he said. “So we put a pencil on paper to figure out where the best routes would be.”
Browning also pitched the idea of using state bonding authorities to “fill” infrastructure gaps to transport gas from the region to ECA LNG, and said he was looking into how Western states could working together to provide raw materials.
“The concept of a state gas contract or a bundled approach has really not been done before, to our knowledge,” he said. “So we are looking at what that might look like, and we think this is a good opportunity for our states to exercise this authority to develop export markets for gas.”
Adams agreed that more pipes may be needed to supply ECA LNG in the future, but added that many existing pipelines may have some capacity available due to lower production.
“We probably have at least 40% more capacity on some lines, so we can ramp up pretty much immediately for this additional LNG delivery,” he said.
Sempra executives recently said during the company’s first quarter earnings call that it was looking for ways to “green” its LNG sites, including deploying carbon capture and sequestration technology and providing emission certificates to buyers.
Lloyd said CCS was unlikely to be implemented at the Baja California site, but Sempra could consider carbon conversion options in Mexico.
The company will use low-emission gas turbines, making ECA LNG “one of the low-carbon LNG terminals in the world,” he added.
“We think we can finally get to the liquefaction process, as we continue to build these facilities, which are very close to net zero.”
On the upstream side, Browning said WTSN was optimistic about efforts in Congress to advance blue hydrogen and CCS projects as part of the infrastructure talks.
“We’re looking at where we can fit into some of these proposed pilots,” he said.
“And we believe that the western states, with our vast natural gas supplies and our geology for carbon capture and sequestration, will be able to provide an ideal home for many of these pilot projects that are being proposed.
Lloyd said these efforts, along with a drive to reduce flaring in the Permian Basin, make ECA LNG even more attractive to carbon-conscious buyers. “We believe that some of the initiatives taken by Western states could ultimately make this gas very attractive from the point of view of greenhouse gas emissions,” he said. “And we think access to US producers and US gas markets is going to be a bit of a differentiator for us.”