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$1B-Plus Desalination Plant Proposed for Camp Pendleton

Regional leaders continue their push to make North San Diego County into desalination central.

Poseidon Resources and new partner Barclays Capital are seeking financial backers for Poseidon’s proposed $300 million plant to turn ocean water into drinking water.

The plant is slated for a coastal site in Carlsbad, with completion still a few years away. The plant is on track to break ground this year and Poseidon hopes to close financing by December, executives said.

Meanwhile, the San Diego County Water Authority is pushing ahead with studies to build a second desalination plant , possibly bigger than Poseidon’s and costing more than $1 billion , at the mouth of the Santa Margarita River. The site is just north of Oceanside on Marine Corps Base Camp Pendleton.

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If all goes as planned, and the Marines agree, the plant could be converting saltwater as early as 2018.

Southern California communities draw the bulk of their water from the Colorado River and the northern reaches of the state.

Drought and environmental concerns leave limited supplies. Community leaders see the desalination projects as ways to augment those sometimes fickle water sources.

The Poseidon plant, which would create up to 50 million gallons of freshwater daily, has been through a gauntlet of environmental studies and approvals, while the Camp Pendleton proposal has yet to begin the years-long study process.

The county water authority also needs to ink a memorandum of understanding with the Marines to put the plant on the North County base.

“Camp Pendleton supports the idea of a desalination facility on the base in concept, provided that it would not interfere with Camp Pendleton’s ability to conduct training or otherwise accomplish its military mission,” said a base spokesman. He added the Marines want to see added studies before giving the OK.


Financial Adviser

Poseidon said in mid-June it had hired Barclays Capital, the investment banking division of London-based Barclays, as its financial adviser.

“Our goal is to do bonds but we’ll probably support it with commercial bank debt if needed,” said Andy Kingman, Poseidon’s chief financial officer. Kingman declined to say how much money Poseidon hopes to raise. It would be more than $300 million, he said.

Barclays will spend the summer coordinating the development of technical reports, rating agency presentations and execution of debt financing, according to a Poseidon news release.

The county water authority estimates its desalination plant would cost between $1.25 billion and $1.9 billion, depending on capacity. The higher estimate would go toward a plant producing up to 100 million gallons per day , or twice as much freshwater as the Poseidon plant.

The lower figure applies to a plant with the same 50 million gallon capacity as Poseidon’s.

Poseidon expects to build its plant for $300 million because it plans to use the existing ocean water intake and disposal pipes from the neighboring NRG Energy Encina power plant in Carlsbad.

Water authority board members in June approved spending $5.7 million over four years to study the Camp Pendleton proposal.

At the earliest, the water authority could kick off environmental review of the Camp Pendleton plant toward the end of 2010 or the beginning of 2011, said Bob Yamada, water resources manager for the agency. The review process could last two years or longer.

The beauty of the site is it could accommodate expansion, possibly to 150 million gallons a day, Yamada said. “You wouldn’t have to build it large to start with.”

The plant would require 40 megawatts to 100 megawatts of electrical power to operate.


Proliferation Of Plants

Poseidon, the backer of the Carlsbad plant, has gone after its project using private money. Kingman declined to say how much. Poseidon is also working on a desalination plant for Huntington Beach.

Tampa, Fla., has spent $158 million to build and then repair a desalination plant, the largest in the United States, according to the St. Petersburg Times.

The plant began operating in 2003 but repairs pushed the opening date to 2008.

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