Magnum Gas Storage, LLC

Transcription

1 MAGNUM GAS STORAGE PROJECT OPEN SEASON FOR INTERSTATE NATURAL GAS STORAGE SERVICES Response Due By July 31, 2009, at 5:00 MDT June 9, 2009 Magnum Gas Storage, LLC (Magnum), invites your company to participate in a nonbinding Open Season in which expressions of interest are being sought for the first highdeliverability, multi-cycle rocksalt cavern natural gas storage facility to be developed in the Intermountain West. This facility the Magnum Gas Storage Project (Project) will offer highly customizable natural gas storage services that will be ideally suited to meeting the needs of natural gas-fired electric power generators, natural gas distribution companies, gas producers and gas marketers in the Rocky Mountain Region, as well as other markets in the Western U.S. that require the flexibility high performance natural gas storage can provide. The Magnum Gas Storage Project will be constructed in central Utah, and will interconnect directly or indirectly with multiple pipelines originating out of the Rockies. The Magnum Gas Storage Project is well advanced in its development. Magnum s drilling, coring, and 3D seismic exploration efforts confirm the existence of a very large mass of high quality salt under lands Magnum owns or controls by long-term agreement. During the third quarter of 2009, Magnum intends to file with the Federal Energy Regulatory Commission (FERC) an application for a Certificate of Public Convenience and Necessity authorizing Magnum to construct, own and operate the Project. Magnum plans to have its first salt cavern available for natural gas storage service beginning in early Interested parties are invited to submit their responses to this announcement by mail or at any of the addresses indicated on the attached bid form. This non-binding open season will run through 5:00 p.m. Mountain Daylight Time on July 31, Magnum will use the results of this non-binding Open Season to negotiate precedent agreements for firm storage services with individual customers. The availability of natural gas storage service at the Project site may also be attractive to companies interested in potential co-location of natural gas-fired generation, compressed air energy storage, or facilities for the storage of refined petroleum products or other nonhazardous substances. A summary of the Magnum Gas Storage Project and the Open Season appears below. For additional information, please contact Magnum s Rob Webster or Craig Broussard, or view Magnum s web site at

2 Magnum is developing a high-deliverability, salt-cavern-based natural gas storage facility that will be located in central Utah north of the town of Delta in Millard County, and just south of the Intermountain Power Project. The Magnum Gas Storage Project will be connected by a new header pipeline to the Kern River and Questar interstate natural gas systems at Goshen, Utah. Goshen provides direct access to Rockies-priced gas supplies via the Questar Pipeline. Physical haul and/or displacement capabilities exist on the Kern River system between Goshen and major gas plants (Opal/Pioneer) and pipelines (Northwest Pipeline GP, Rockies Express Pipeline LLC, Questar Overthrust Pipeline Company, Colorado Interstate Gas Company, and Ruby Pipeline LLC) in the Opal, Wyoming, area. Through these interconnections, the Magnum Gas Storage Project will be able to receive gas from various gas production sources throughout the Rocky Mountain Region and will be able to supply highly flexible storage services to markets in Utah and the Western U.S. Magnum s initial plans call for the development of two salt caverns through solution mining. Each natural gas storage cavern will have working gas capacity of 5.6 billion cubic feet (Bcf). Pending FERC authorization and market interest, Magnum will construct and operate a total of eight caverns with a potential combined working gas capacity of approximately 45 Bcf. Based on current operational and tariff constraints on the connecting pipelines, the Project will initially be capable of accepting natural gas at Opal for injections of up to 0.30 Bcfd and of supporting withdrawals of up to 0.50 Bcfd (designed for roughly 6-9 inventory turns annually). Depending upon shipper interest, the Project has the potential to offer incremental injection and withdrawal capabilities to customers able to accept delivery at Goshen. Magnum, based on market response, will offer a wide variety of flexible storage and storage-related services, including: Multi-turn storage service Firm Storage No-Notice Storage Firm Park and Loan Services Interruptible Storage Interruptible Park and Loan Services Firm Hourly Balancing Interruptible Hourly Balancing (potentially with an Enhanced service option affording customers a priority in return for a reservation charge) Interruptible Wheeling (potentially with an Enhanced service option affording customers a priority in return for a reservation charge)

3 These services will be particularly well suited to meeting the needs of natural gas-fired electric power generators for load following service. They will also meet the needs of natural gas distribution companies, gas producers and gas marketers that wish to develop significantly enhanced market optionality, maintain consistent gas takes, avoid imbalance penalties and provide highly flexible supply and producer services options. Magnum s pending FERC authorization will allow it to provide these storage services at market-based rates. The terms and conditions of Magnum s services will be governed by a Gas Tariff that Magnum will maintain on file with FERC. A pro forma copy of Magnum s tariff will be available on the Company s web site for review by potential Open Season participants. Magnum plans to request that FERC grant it a waiver of the shipper must hold title rule, which will allow Magnum to bundle transportation capacity that it purchases from third party pipelines with its storage services in order to offer a seamless delivered storage service to and from market centers. Magnum invites prospective customers to indicate their interest in such delivered storage service. Magnum has identified the hub at Opal, Wyoming, as a potential receipt and delivery point for delivered storage service. Magnum s Open Season is seeking nonbinding expressions of interest in the Project s injection/withdrawal design capacities and the number of annual turns of storage. Magnum anticipates that ultimately it will not accept binding bids for firm storage service proposing a term of less than five years and a reservation charge payment of less than $0.25/Dth/month for 6 turn per year service (which also includes wheeling through the header pipeline between the Project and Goshen). Magnum will consider bids for firm storage service featuring a greater or lesser number of annual inventory turns, with preference to be given to bids that appropriately recognize the enhanced value of service permitting a greater number of annual inventory turns. Magnum encourages bids that propose multiple year terms and will accord a preference to bids offering longer terms and larger storage capacity volumes. Magnum Gas Storage, LLC, is wholly owned by Magnum Development, LLC, a Haddington Ventures, LLC, portfolio company. Haddington principals have been involved in the merchant gas storage business since its emergence in the early 1990s. A list of Haddington s active and realized investments can be viewed at Additional information concerning Magnum Gas Storage, LLC, and the Magnum Gas Storage Project is available on Magnum s web site at and in the FERC Pre-filing Docket established for the Magnum Gas Storage Project, Docket No. PF09-3 (go to navigate to elibrary and enter this docket number in the Docket Number search box). Thank you for your interest in the Magnum Gas Storage Project.

4 NON-BINDING OPEN SEASON RESPONSE FORM Send to either: Rob Webster Craig Broussard MAGNUM GAS STORAGE, LLC MAGNUM GAS STORAGE, LLC 2150 South 1300 East, Suite South 1300 East, Suite 500 Salt Lake City, UT Salt Lake City, UT Telephone: Telephone: Prospective Customer s name and address: Company: Contact: Title: Address: Phone: Signature Date: This non-binding request is for firm storage service under Magnum s Proposed Rate Schedule FSS. (a) Requested Quantities: Maximum Storage Quantity (MSQ) Maximum Daily Injection Quantity (MDIQ) Maximum Daily Withdrawal Quantity (MDWQ) Dth Dth/day Dth/day (b) Estimated rates prospective Customer proposes to pay (note: Magnum will propose that its storage services include receipts and deliveries at Goshen and that storage charges will include use of the lateral extending to Goshen Monthly Storage Reservation Charge ($/Dth of MSQ): Injection Charge ($/Dth): $0.010 Withdrawal Charge ($/Dth): $0.025 Excess Injection Charge ($/Dth): Excess Withdrawal Charge ($/Dth): Fuel Charge (% of injection volumes, in kind): Estimated at 1.25% per injection cycle

5 (c) Term of Service (minimum of five years) Beginning Date: (Not earlier than Q1, 2012) Ending Date: (d) Requested Primary Point(s) of Receipt and Point(s) of Delivery, Dth/d quantity: Primary Points of Receipt Primary Points of Delivery Potential Interconnects: Questar Pipeline Company Kern River Gas Transmission Company Questar Gas Company (LDC) Opal, Wyoming (Off-System) Other (Off-System) Total (1) (1) Total quantities for receipt and delivery must be equal to requested MDIQ and MDWQ quantities. (e) Customer is a(n): (Check one) Local Distribution Company Intrastate Pipeline Company Interstate Pipeline Company Marketer/Broker Producer End User Other (please describe ) (f) Is Customer affiliated with Magnum? Yes/ No If yes, type of affiliation and the percentage of ownership between Magnum and Customer: Comments/Suggestions, ie. Alternative Service Parameters etc.: