El Paso Natural Gas Company Binding Open Season. Delaware Basin to Waha

Transcription

1 INTRODUCTION El Paso Natural Gas Company Binding Open Season Delaware Basin to Waha In response to increasing demand for take-away capacity from the Delaware Basin with deliveries to the Waha area interconnections, El Paso Natural Gas Company, L.L.C. ( EPNG ) is offering incremental pipeline capacity that can be made available using a combination of new and existing pipeline assets. EPNG encourages interested parties to submit bids during the open season in the manner provided below. As is discussed more fully in the Project Description section of this Open Season below, in addition to the near term capacity expansions offered in this Open Season, EPNG believes a larger expansion of capacity in this area is possible, and EPNG invites statements of interest in that larger project. This Open Season will commence at 1:00 p.m., Mountain Clock Time ("MCT"), on Wednesday, December 23, 2015, and will close at 1:00 p.m., MCT, on Tuesday, January 26, PROJECT DESCRIPTION The in-service date(s) for the incremental pipeline capacity ( Incremental Pipeline Capacity ) is projected to be September 1, The expansion routes have been designed to connect the major existing Delaware Basin processing plants with deliveries to the existing high pressure EPNG Waha Pool as well as the proposed Waha area pipelines. The Incremental Pipeline Capacity that is offered in this Open Season is described as follows: Up to 160,000 Dthd from Keystone area points of receipt within New Mexico into EPNG s Line Nos. 1100, 1103, 3191 to points of delivery to Waha. Up to 95,000 Dthd from points of receipt into EPNG s Line Nos to points of delivery to Waha. The capacity offered in this Open Season will include the right to deliver gas on a secondary basis to all points within the EPNG Waha Pool inclusive of IVALEROW (Valero), IOASISWA (Oasis), ILONEWA (Lonestar), IWESTARW (Oneok) and WAHATRAN, and other deliveries within the WAHA Area, as well as Keystone Gas Storage and Grama Ridge Storage, all at the same contracted rate. EPNG anticipates that bids with terms equal to or greater than 5 years and with reservation rates of at least $0.10 per Dth will be required for the near term expansion projects to go forward and/or for capacity to be awarded under this Open Season.

2 EPNG has additional greenfield expansion capabilities, which can provide from 750,000 Dthd to 1,600,000 Dthd of incremental capacity to Waha ( Greenfield Expansion Opportunity ). Receipt points can include most Delaware Basin tailgate plants, as well as receipt points into EPNG s New Mexico Line Nos. 1100, 1103, 3191 and and Texas Line Nos and The development of this expansion capacity would not be completed on the same timeline as the capacity that is offered in this Open Season, and would not be available for service until approximately mid-2018, subject to securing necessary transportation commitments and the timely receipt of all necessary regulatory authorizations. To assist EPNG in a decision on whether to pursue this larger capacity expansion project, interested parties are invited to submit non-binding expressions of interest in the 2018 Expansion Capacity in the space provided on the Bid Sheet attached hereto. PROJECT BENEFITS EPNG believes the capacity offered in this Open Season will provide the following unique benefits to potential shippers: 1. Near-term availability of expansion capacity, which could be coupled with capacity on the longer-term greenfield expansion possibility discussed above to meet the production growth profiles of the shippers; 2. Bidders may request access to other transportation capacity on EPNG at/from Waha, including access to: EPNG s Keystone Pool, Texas intrastate pipelines, southwestern and California markets; 3. Secondary delivery access to designated points within EPNG s Waha Pool will be made available with no additional charges; and 4. Secondary delivery access to Kinder Morgan s Keystone Gas Storage and Grama Ridge Storage in the Keystone area. EPNG believes that the timely development of this project will greatly enhance its customers service options by providing new and/or enhanced services. This will provide EPNG customers with valuable tools to manage around potential opportunities in the development of the Mexican natural gas market, and any other market opportunities on the EPNG Pipeline, as well as on interconnecting pipelines.

3 LENGTH of OPEN SEASON This Open Season will commence at 1:00 p.m., Mountain Clock Time ("MCT"), on Wednesday, December 23, 2015, and will close at 1:00 p.m., MCT, on Tuesday, January 26, Parties interested in bidding in this Open Season should submit bid(s) to EPNG before the close of the Open Season. EPNG reserves the right to extend or modify this Open Season by posting a notice on its Electronic Bulletin Board (EBB). Successful bidder(s) in the binding open season will be notified once EPNG evaluates receipt and delivery point combinations and expansion economics. EPNG anticipates providing notification of awards of capacity on or before February 12, Each successful bidder in the binding open season shall enter into a Firm Transportation Service Agreement ( FTSA ) reflecting the terms of its bid as awarded by EPNG. The FTSA will be consistent with the appropriate form of service agreement contained in EPNG's FERC Gas Tariff (as modified to reflect the specific terms and conditions included in this Open Season). SUBMISSION OF BIDS Parties interested in bidding in this Open Season should submit a completed Bid Sheet (which may be accessed using the link provided below) to EPNG before the close of the open season via at the following address: KMWestBids@KinderMorgan.com. By submitting a Bid Sheet to EPNG, the bidding party certifies that (a) all information contained in the request is complete and accurate, (b) it satisfies, or will be able to satisfy, all the requirements of EPNG's FERC Gas Tariff, and (c) the person submitting the bid has full authority to bind the bidding party. The bid rate must be presented as the reservation rate per Dth/month or stated as the maximum tariff rate. In addition to the bid rate, each bidding party shall be subject to the applicable maximum usage rate and maximum usage surcharges, all other maximum rates, charges and surcharges, including ACA, Fuel and L&U, and any other authorized surcharges assessed under the applicable Rate Schedule of EPNG's FERC Gas Tariff as those amounts may be amended or superseded from time-to-time. This includes incremental lateral charges and any third party charges resulting from the use of capacity that EPNG may hold on other pipelines. EPNG reserves the right to reject negotiated rate bids, bids that have rates less than the maximum recourse rate, bids stated as the dollar equivalent of the current maximum recourse rate, bids that are incomplete, contain offers of varying rates within the term, contain additional or modified terms or are inconsistent with the provisions of EPNG's FERC Gas Tariff. EPNG also reserves the right to reject bids for quantities that are not for the same quantity for each month of the season or for the year. Any decision to proceed with negotiations or to consummate any project agreements shall be in EPNG s sole discretion and EPNG reserves the right to not proceed with any or all of the expansion opportunities regardless of the extent or nature of any bids that are received.

4 EPNG notes that FERC Order No. 894, in some cases, prohibits multiple affiliates of the same entity from bidding in an open season for capacity in which the pipeline may allocate capacity on a pro rata basis. It appears to EPNG that the restrictions imposed by FERC Order No. 894 will be applicable in this Open Season and FERC recommends that potential bidders review and adhere to the requirements of that FERC Order. EVALUATION CRITERIA If EPNG receives bids for capacity in excess of the actual amount of available capacity, then the capacity will be allocated based on the Present Value (PV) of the aggregate bids that generate the highest Present Value to EPNG. PV will be the sum of the present values for all of the months beginning with the first month capacity is available through the end date of the bid term. The present value for each month will be calculated as follows: PV = (R X Q)/((1+i)to the power of n) Where: R = the monthly reservation bid rate Q = the monthly bid quantity i = the monthly discount rate of.2708% (This is the annual discount rate of 3.25% divided by 12). n = the number of months from the earliest date the capacity is available in the open season to the month the revenue will be received (the first month capacity is available n = 1, the second month n = 2, and so on) In accordance with Section 9.9(b) of the General Terms and Conditions (GT&C) of EPNG's FERC Gas Tariff, if there is not sufficient capacity available to meet all acceptable bids, and if two or more acceptable bids are of equivalent PV, then the capacity will be allocated pro rata among those bidders, unless one or more of the bidders have elected not to have their bids prorated (as indicated on their Open Season Bid Sheet). PRIMARY POINT RE-DESIGNATION AND/OR BIDS INCORPORATING EXISTING CAPACITY Consistent with Section 8.1(f)(iii) of the GT&C of EPNG s Tariff, shippers seeking to redesignate to primary receipt or delivery points that are the subject of this open season should submit that request as a bid in this open season. The PV of such redesignation bids will be based on any incremental revenues (e.g., proposed redesignation to non-discounted points or to points in a higher rate zone) that would result from the granting of the re-designation request. Re-designation bids that do not result in any incremental revenues will have a PV of $0. Additionally, bids for incremental service pursuant to this open season will have a higher priority than re-designation requests involving the capacity which is the subject of this open season. Bids which involve the addition of the expansion capacity offered in this Open Season with existing capacity will be evaluated based on the PV of the incremental revenues

5 resulting from the addition of the expansion capacity (e.g., the increased revenues resulting from an increase in the reservation rate for the combined transportation capacity and/or the increased revenues resulting from an extension of the term of the capacity commitment). CREDITWORTHINESS REQUIREMENTS The successful bidder(s) for expansion capacity must satisfy creditworthiness requirements to be determined based upon the size, nature and expense of the incremental facilities that are required to provide the expansion capacity. Any bidder with concerns about its ability to satisfy the creditworthiness requirement should contact EPNG to discuss this matter. Questions concerning this open season may be directed to your Account Representative in the EPNG Marketing or Business Development group, or: Tom Dobson (719) Greg Ruben (719) EFFECT OF OPEN SEASON & NECESSARY AUTHORIZATIONS Nothing in this binding open season or any submitted Open Season Bid form should be construed as an offer by EPNG to develop any of the projects and/or to enter into any definitive agreement(s) for service. Any decision to proceed with negotiations or to consummate any project agreements shall be in EPNG s sole discretion and this binding open season creates no obligation by EPNG with respect thereto. Any decision to proceed with the project(s) described herein shall be subject to EPNG s receipt of sufficient shipper commitments to justify an economic investment and timely receipt of all necessary regulatory approvals, permits, and other authorizations required for the construction and operation of such project(s). SUBMISSION OF STATEMENTS OF INTEREST IN GREENFIELD EXPANSION OPPORTUNITY Parties interested in a larger expansion of capacity in this area (which may involve a greenfield construction effort of new facilities) may submit a non-binding expression of interest using the appropriate portion of the attached Bid Sheet. Non-binding expressions of interest may be submitted either with or without a binding Bid for the capacity that is offered in this Open Season, and will be evaluated by EPNG and used to develop proposals for the expansion capacity that may be offered in a future open season.

6 Delaware Basin to Waha Pipeline El Paso Natural Gas Company Binding Bid Form for Incremental Pipeline Capacity Due Date January 26, Bidding Party 2. Address 3. Contact Phone E mail 4. Contract Start Date In-Service Date of the Expansion Capacity The later of the In-Service Date or 5. Willing to Accept Pro Rata Allocation of MDQ: Yes; No 6. Term of Contract 7. Rate Information; please indicate any rate limitations to your expressed interest: Monthly Reservation Rate per Dth: Transporter s Maximum Authorized Monthly Reservation Rate, plus applicable Commodity Charges, ACA, FL&U, or other authorized surcharges, if any. plus applicable Commodity Charges, ACA, FL&U, or other authorized surcharges, if any 8. Requested Point(s) and Capacities Primary Receipt Point(s) MDQ (Quantity in Dth) Primary Delivery Point(s) MDQ (Quantity in Dth) TOTAL Please return completed form by via at the following address: KMWestBids@KinderMorgan.com.

7 Non-Binding Expression of Interest For Greenfield Expansion Opportunity Due Date January 26, 2016 For the benefit of EPNG in developing additional capacity expansion offerings, the party identified below provides this expression of interest in expansion capacity: 1. Interested Party 2. Address 3. Contact Phone E mail 4. Date/Dates on which the interested party desires capacity (anticipated to be no earlier than mid-2018): 5. Duration of Potential Commitment for Capacity (stated in months or years): 6. Requested Point(s) and Capacities Primary Receipt Point(s) MDQ (Quantity in Dth) Start Date of Flow Primary Delivery Point(s) MDQ (Quantity in Dth) Start Date of Flow TOTAL Please return completed form by via at the following address: KMWestBids@KinderMorgan.com.