Sempra to charge more for gas on West Coast

Sempra, the parent company of San Diego Gas and Electric, will charge customers on the West Coast more than in the East:

Natural-gas prices in the West will be higher than those in the Southeast producing region because of waning Western production and the construction of terminals to import liquefied natural gas on the Gulf of Mexico, Sempra Energy's LNG chief said Thursday.

Declining production from the San Juan Basin in Colorado and New Mexico will help boost higher Western prices during the next several years, Sempra LNG President Darcel Hulse told a CWC Group conference on LNG on Wednesday.

San Diego-based Sempra owns the largest U.S. natural- gas utility.

"The West Coast will be a premium to Henry" Hub, Hulse said. "When you lose the San Juan basin, then you shift."

Spot prices at the benchmark Henry Hub in Erath, La., have averaged $6.56 per million Btu this year – 4.1 percent higher than the $6.29 index price tied to five California border sites, according to Bloomberg data. Wholesale Henry Hub gas last year averaged 5.4 percent higher than the California index.

Sempra's answer is, of course, to build its own LNG receiving terminal and sell the natural gas back to itself. A better idea may be to consider supporting other companies' efforts to bring natural gas into California markets and prevent such price manipulation!