Foreign sites sought for natural gas ports

As U.S. natural gas reserves remain tight, some energy companies are looking to Mexico, Canada, even the Bahamas for sites such as Puerto Libertad, Mexico, where they can receive the mammoth boats carrying liquefied natural gas, or LNG.

As a port of call, Puerto Libertad doesn't offer much. There's no public dock, no cargo cranes — not much at all except sand and shrubs and the unbroken horizon of the Gulf of California.

But for the huge tankers that carry natural gas around the world, this Mexican village is perfect: close enough to the United States to pump their volatile cargo over the border but remote enough that a leak, explosion or terrorist attack wouldn't pose a threat to the USA.

The companies say that their decision to go over the border has nothing to do with safety and that they are mainly drawn by the ability to sell gas in two countries at once. But the foreign sites are also a way of bypassing opponents in American cities who are jittery about the prospect of gas tanker ships on their shores.

"Everyone is concerned that LNG is a combustible material, and they don't want it anywhere near them," said Alex Steis, managing editor of Natural Gas Intelligence, a trade publication.

"It's the same stigma, or nearly the same stigma, as a nuclear facility, whether that (fear) is founded or not."

Gas to fuel the Southwest

About 60% of the gas imported at Puerto Libertad will be piped over the border near Sasabe to be sold throughout the American Southwest. The two partners in the $1 billion project, El Paso Corp. ep and DKRW Energy of Houston, are seeking contracts with gas shippers and could have the terminal operating by 2011, El Paso spokesman Richard Wheatley said.

"It's going to be a very big deal," said Fernando Garcia de León, a representative for the project in Sonora state, as he looked out at the azure water lapping at the desert. "Both Mexico and the United States will benefit."

Gas terminals are increasingly important as companies struggle to meet the USA's energy demands. Much of the United States' remaining gas reserves are off-limits to drillers because they're in protected areas off the Florida coast, in Alaska or the Rocky Mountains.

As a result, U.S. imports of natural gas rose 42% from 1996 to 2006, to nearly 4.2 trillion cubic feet — about 16% of all natural gas consumed in the USA.

Most of that gas was piped over the border from Canada, not shipped as LNG. The percentage has been increasing every year since the early 1990s.

To bring gas from fields around the globe, energy companies chill it to a liquid form and put it on ships.

The gas is transported, then turned back into vapor at the United States' four existing gas terminals: in Everett, Mass.; Cove Point, Md.; Elba Island, Ga.; and Lake Charles, La.

The Federal Energy Regulatory Commission predicts LNG imports will increase nearly 16% a year in the next two decades, meaning the country will need seven to nine new terminals.

That has set off a race among gas companies to build terminals, with some 45 projects announced for the USA, Canada and Mexico.

In the long term, increased imports should help keep a lid on prices, the Department of Energy and industry officials say.

"We would expect that adding new supplies would put downward pressure on prices and mitigate some of the volatility in the market," said Art Larson, a spokesman for Sempra Energy. sre

Safety fears

But the prospect of gigantic, dome-topped gas tankers edging into their harbors makes many Americans — and Mexicans — nervous.

In Mexico, many people still remember the Nov. 19, 1984, explosion of a liquefied petroleum gas depot that killed 334 people in Mexico City.

"Could you imagine an accident like that here? It would destroy and make the entire town disappear," said Armando Olea, president of Amigos en Libertad, a group formed to encourage resort developments in the Puerto Libertad area.

Further, Mexico has recently seen a wave of bombings aimed at gas pipelines. In July and September, the leftist People's Revolutionary Army bombed 10 gas pipelines in central and eastern Mexico. The attacks forced some of Mexico's biggest factories to shut down.

Gas companies say liquefied gas shipments are safe, noting that ships have made 33,000 deliveries without an accident in the last 40 years. The terminals use berms, double-hulled tanks and computer-controlled sensors to contain any leaks.

"We can put these facilities anywhere and operate them safely," said Bill Cooper, executive director of the Center for Liquefied Natural Gas in Washington.

Other experts aren't so sure. In February, the U.S. Government Accountability Office consulted 19 scientists and reported "conflicting assessments" of what would happen if a gas ship ignited.

One study, by Sandia National Laboratories, offered this prediction: If terrorists could blast a 53-square-foot hole in a ship, the resulting blaze would be so intense, it could cause second-degree burns to people more than a mile away.

The LNG industry has already had one, fairly recent, catastrophe: On Jan. 19, 2004, an explosion at a liquefied natural gas plant in Skikda, Algeria, killed 27 people and injured 56.

Mexico takes the lead

Several proposed ports for the California coast have foundered because of fierce opposition by community and environmental groups.

The latest defeat came in May, when California Gov. Arnold Schwarzenegger rejected plans for a floating terminal the size of an aircraft carrier that would have been anchored 14 miles off the coast of Ventura County.

"It's awfully hard to find a remote site in the coastal zones," said Darcel Hulse, president of Sempra LNG.

Mexico, meanwhile, has been enthusiastic about the terminals. The country imports much of its gas from California and Texas, and the government is eager to find alternatives.

"This will help diversify our suppliers of gas at competitive prices and reduce our dependence on gas from the state of Texas," President Felipe Calderón told a meeting of governors on Friday.

The country's first gas terminal opened last year near the east coast city of Tampico, and another is under construction near the Pacific city of Manzanillo.

In Puerto Libertad, many residents said they were excited about the terminal and the 1,500 construction jobs it is expected to generate. Aside from a Federal Electricity Commission generating plant, there are few jobs in town.

Ascension Manjarrez is building a 28-room motel behind her restaurant to house the workers. Fishermen Maximo and Juan Vejar are building 16 little cabañas to rent near the beach.

"You can't stop progress," said Maximo Vejar. "This plant is the future."

•Hawley is Latin America correspondent for USA TODAY and The Arizona Republic