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SOCALGAS, SDG&E PROPOSE TO SUPPLY NATURAL GAS TO MEXICO'S PEMEX

 SOCALGAS, SDG&E PROPOSE TO SUPPLY NATURAL GAS TO MEXICO'S PEMEX
 LOS ANGELES, Jan. 30 /PRNewswire/ -- Southern California Gas Co. (SoCalGas) and San Diego Gas & Electric Co. (SDG&E) have joined in discussions with the government of Mexico on a proposal to supply natural gas services for the government-owned electric utility in northern Baja California.
 The California utilities point to increased pipeline capacity soon to be available that will deliver more gas into the state than the local market can absorb. Additionally, new supplies of Canadian gas will flow into California within the next two or three years. North America will have supplies available that greatly exceed demand, which means that low prices will be available from producers.
 In a proposal to Pemex, the government-owned-and-operated oil and gas monopoly in Mexico, SDG&E and SoCalGas outlines two options, but emphasized that both utilities are open to additional proposals.
 Option 1 provides for delivery of 24 million cubic feet of gas per day (MMcfd) in the first year, increasing to 144 MMcfd in the second. Gas would flow within one year after the agreement is signed. This would enable flexibility to use natural gas in electrical generating plants which now only consume oil.
 This option would involve construction of a two-mile pipeline extension from an existing SDG&E pipeline near the Otay Mesa region of San Diego County to the California border near Tijuana. Additionally, a pipeline from the border to the power plant must be constructed in Mexico.
 Option 2 is a large scale, long-term service proposal with daily volumes between 50 and 500 MMcfd. Additional pipeline and compressor construction would be required. Gas would flow under this arrangement three years after an agreement is reached.
 The California utilities would serve as transporters of the gas purchased from either out-of-state or California producers by Pemex. However, underground storage or other operational services could be provided by SoCalGas or SDG&E, if needed.
 Revenue generated by transporting gas to Mexico would be used to help maintain competitive rates for U.S. customers on both the SoCal and SGD&E systems. California's natural gas utilities earn their revenue from a charge on transporting the gas in their pipelines and not on the sale of the gas itself. The additional revenue would be passed along as a benefit to all customers.
 Baja California -- and in fact, much of Mexico -- experiences serious air quality problems. Natural gas supplies would permit the electric generators and other industries to switch from oil to cleaner natural gas.
 The California utilities jointly expressed a desire to work closely with officials in Mexico to make the project feasible by sharing the knowledge gained in dealing with the purchase and transportation of natural gas from Canadian and U.S. suppliers.
 In the United States, approvals would be needed from the Federal Energy Regulatory Commission and the California Public Utilities Commission.
 -0- 1/30/92
 /CONTACT: Dick Friend of SoCalGas, 213-244-3030; or Dave Kusumoto of SDG&E, 619-696-4289/ CO: SoCalGas; San Diego Gas & Electric; Pemex ST: California IN: UTI SU:


KJ -- LA033 -- 5534 01/30/92 18:14 EST
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Publication:PR Newswire
Date:Jan 30, 1992
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