From: Contra Costa Times, Walnut Creek, Calif.
Published September 18, 2004 12:00 AM

Permit granted for Chevron's liquefied natural gas terminal

Mexican authorities have issued a conditional environmental permit for a controversial $650 million liquefied natural gas terminal that ChevronTexaco Corp. wants to build near an island eight miles off the coast of Baja California, a company spokeswoman said Friday.

ChevronTexaco's Baja terminal is one of several proposed or under consideration by big energy companies that could open the door for the importation of overseas natural gas to the West Coast of North America.

The company released a statement that described the permit authorization as "a major step in gaining approval for the project" and said that it "continues to make progress with the other permits required." That includes "critical permits" from two other Mexican agencies as well as go-aheads from state and local authorities in Mexico, according to Nicole Hodgson, a company spokeswoman.

Further steps will be needed to work out how ChevronTexaco will meet the conditions in a 110-page environmental permit issued Wednesday by Mexico's Secretariat of the Environment and Natural Resources, or SEMARNAT, Hodgson said.

Officials of SEMARNAT did not respond immediately to an e-mailed request for comment.

Natural gas already fuels about one-third of California's fleet of power plants but most supplies are imported through pipelines from distant fields in Canada, the Rocky Mountains and the Southwest. Growing demand for fuel threatens to boost electricity and heating prices, especially since the ability to boost production from existing sources remains in question.

Big energy companies are scrambling to fill the gap with LNG: natural gas produced overseas that must be chilled and pressurized for shipping in huge ocean tankers. ChevronTexaco is developing Gorgon, a large natural gas field in southwestern Australia, and is seeking to line up markets for its output. Gorgon LNG will serve markets on the West Coast, China and elsewhere in Asia, Hodgson said.

Plans for ChevronTexaco's Baja LNG terminal call for the import of about 1.4 billion cubic feet of natural gas a day, roughly equal to one-fifth of California's current demand. A joint venture of Sempra Energy, a San Diego-based utility holding company, and Shell Oil wants to build a $600-million terminal near Ensenada that could handle 1 billion cubic feet a day.

That sounds good to some energy policy makers, who recall that a dramatic jump in natural gas prices preceded the rolling blackouts and soaring wholesale electricity costs of California's 2000-01 energy crisis.

But Greenpeace, an environmental organization, recently organized a boat trip to Coronado Island to drum up opposition to the ChevronTexaco project. Loretta Lynch, a state Public Utilities Commission member who went on that trip, said that she learned that "the site is home to dozens of endangered species of plants and animals" and that the terminal would have a major impact.

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