BUSINESS SECTION

New Report Spotlights Cross-Border Energy Project

Environment/Commerce News
By Kent Paterson
Frontera Norte Sur
September 11, 2005

The scramble for energy in both the United States and Mexico will likely intensify the push for increased energy production and transportation in and around the border region. A new report by the Santa Fe, NM-based E-Tech International consulting firm reviews one long-planned project in Sonora state that could receive a shot-in-the-arm from the energy crunch. Authored by E-Tech International Director Richard Kamp, the report examines the general economic and environmental issues surrounding a proposed liquefied natural gas (LNG) regasification facility for Puerto Libertad, Sonora, on the Gulf of California.

Planned by Houston-based DKRW Energy, the plant will supply LNG to both Sonora and Arizona if it is constructed. A pipeline which could possibly cut across the international border in the Nogales region will be used to deliver the US-destined product. A second pipeline would snake south toward the Hermosillo, Sonora, market.

Expected to be supplied daily by at least two tankers carrying LNG, about 1.0 billion Cubic Feet per Day of product  will be handled at the projected terminal. According to E-Tech International, DKRW Energy owns land already zoned for LNG in Puerto Libertad but still lacks authorization from the Mexican Federal Electricity Commission (CFE), Ministry of the Environment (Semarnat), Ministry of Labor, Ministry of the Interior, and the local fire department. Quoted in the report, DKRW Energy partner David Ramm expressed the intentions of his company to forge ahead with the necessary environmental permits. 

Although it's uncertain whether Mexican residential consumers will benefit, big consumers of DKRW's LNG could include Guaymas sardine factories and a Ford plant in Hermosillo. Financing and marketing still need to be worked out for the terminal to be a reality but construction could begin next year and be completed by 2009.

While not giving an exhaustive analysis of the all the potential environmental impacts stemming from the proposed LNG facility, E-Tech International's report provides a sketch of some of the issues at stake. The LNG terminal is planned for a community, Puerto Libertad, which already has seen its share of environmental degradation from a large thermoelectric plant operated by the CFE. In the construction of the Puerto Libertad thermoelectric, the Mexican government drained and scraped the surrounding land, destroying a mangrove estuary.   
      
To generate electricity, the plant uses combustoleo, a cheap, tar-distillate from the Mexican national oil company's refining process. The Montreal-based North American Commission for Environmental Cooperation estimates the Puerto Libertad plant emits 67,300 tones of sulfur dioxide annually, but air-pollution expert Kamp pegs the figure at probably more than 100,000 tons per year.  If DKRW launches its LNG project, the existing thermoelectric plant could be converted to a user of much cleaner LNG. In contrast to the burning of combustoleo, E-Tech International's Kamp asserts that the ambient air regasification process planned by DKRW is environmentally benign. Broader concerns arise, however, over the global warming effect of methane released by LNG, according to Kamp.

Since the LNG will be shipped into Puerto Libertad, a key environmental consideration is the possible impact of ship traffic on the marine life of the Gulf of California. Called the "aquarium of the world by Jacques Cousteau and recently declared a World Heritage Site by the United Nations, the Gulf is known for its incredible biodiversity. Some native species are endangered, and rare blue whales are known to prowl the Gulf's waters. Kamp says a broad range of ecological concerns will have to be addressed in an environmental impact statement submitted to Semarnat.  
 
Other developments in the works for the Puerto Libertad area will have an environmental and social impact in addition to the planned LNG terminal. Arizona Clean Fuels is contemplating an oil port, and a 100,000-person community complete with a NASCAR race track is on the drawing board for nearby Liberty Cove. South of Puerto Libertad, lands desired for a coastal highway meant to boost tourism are in dispute between the Sonoran state government and the indigenous Seri people. Violence reportedly broke out earlier in the year between the Seri and police.

The E-Tech International report cites another potential problem associated with the construction of a LNG terminal: the threat of catastrophe from either an accident or terrorism. Fears center around the flammability of an escaped cloud of gas, a disaster Kamp contends is best avoided by an offshore LNG terminal. The report's author says DKRW is not considering putting its plant off shore at the moment. Kamp adds he has "no answer" for whether there would be any environmental advantage to an offshore terminal- as opposed to hazardous emergency response- but the dilemma pf public safety versus ecological preservation is clearly "an important issue" to address in an environmental impact statement.
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(FNS Editor's Note: In its report, E-Tech International also reviewed the Arizona Clean Fuels project briefly mentioned in this story. That project will be the subject of an upcoming FNS article.)
Frontera NorteSur (FNS): on-line, U.S.-Mexico border news Center for Latin American and Border Studies New Mexico State University Las Cruces, New Mexico

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