Posted on 09/07/2006 8:26:04 PM PDT by thackney
MEXICO CITY, Sept 7 (Reuters) - Mexico will start importing shiploads of liquefied natural gas to a new LNG import terminal in October to avoid relying on already strained domestic gas production to feed three new power plants.
Mexico's main electricity provider, the CFE, has signed a contract with Royal Dutch Shell to buy an average of 500 million cubic feet of natural gas per day from the company's new LNG terminal at Altamira, on Mexico's northeast coast.
But delays with the plants means the CFE will buy an average of 282 million cfd of natural gas to start with, and 329 million cfd during 2007, a senior CFE official said.
"From 2008 we will start taking the 500 million cfd," the CFE's deputy director of investment projects, Alberto Ramos, said.
He said any additional gas needed would be purchased from state oil and gas monopoly Pemex, which supplies natural gas to Mexico's existing electricity plants.
Mexico currently fills a shortfall in domestic natural gas production with pricey imports from the United States, which is also looking to LNG to ease tight natural gas supplies.
Mexico's foray into the LNG market -- where supercooled natural gas in liquid form is shipped from cheap overseas markets and turned back to a gas form on arrival -- should ease import costs as demand for natural gas rises.
"We are doing it to give our projects energy security and feasibility. We have to guarantee supply over the long term," said Ramos.
Mexico's maiden LNG import terminal, a joint venture between Shell, Total and Mitsui, will fuel three new power plants: Tuxpan V, which is already running, Altamira V, which will be fully operational in the next few weeks and Tamazynchale, due to be ready next June.
Some analysts have fretted that U.S. gas prices could be affected if Mexico began importing the full 500 million cfd before all the plants were ready, as the CFE could use that gas elsewhere and reduce its need for U.S. imports.
A 138,000 cubic meter Shell-owned LNG carrier made a test delivery to the Altamira plant last month, after traveling 14 days from Shell's LNG plant in Nigeria.
Subsequent cargoes will be delivered by both Shell and Total, as holders of 75 percent and 25 percent respectively of the terminal's capacity.
Pemex's natural gas production hit a record 5.2 billion cfd in the first seven months of this year, 10 percent higher than a year ago, but not growing fast enough to catch up with swelling demand as Mexico switches power plants to run on gas.
U.S. Natural Gas Imports by Country
How much energy is released if one of these LNG supertankers ever blows up?
A lot, but they never actually are close enough to damage anything but the unloading and loading terminal that is way offshore for good reasons.
all of it?
Well, if part goes, it all goes, right?
LNG SAFETY MYTHS and LEGENDS
www.netl.doe.gov/publications/proceedings/02/ngt/Quillen.pdf
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