Wednesday, August 17, 2005

Sempra venture diverts natural gas from California

Sempra, the parent company of SoCal Gas and SDG&E, will build a pipeline to take natural gas from the Western U.S. to the Midwest:

Kinder Morgan Energy Partners, L.P. and Sempra Pipelines & Storage, a unit of Sempra Energy , today announced that the two companies have entered into a Memorandum of Understanding (MOU) to pursue development of a proposed new natural gas pipeline that would link producing areas in the Rocky Mountain region to the upper Midwest and Eastern United States. As designed, the 42-inch diameter pipeline would have capacity of up to 2 billion cubic feet per day and is estimated to cost $3 billion. The preliminary route of the 1,500-mile pipeline would originate at the Wamsutter Hub in Wyoming and extend to eastern Ohio with an ultimate route to be selected based on shipper interest.

Normally, that gas could be coming to California--but since Sempra is already building an LNG terminal in Mexico for our markets, this move stands to drive up California prices making their LNG importation more inline with market rates.