Issued February 21, 2018 Haynesville Global Access Pipeline LLC Notice of Non-Binding Open Season
Notice of Non-Binding Open Season Haynesville Global Access Pipeline LLC ( HGAP ), a wholly-owned subsidiary of Tellurian Inc., hereby announces a Non-Binding Open Season for transportation services for the Haynesville Global Access Pipeline ( Project or Pipeline ). HGAP is proposing to construct, own and operate the Project, an approximate 200-mile long, 42-inch diameter interstate natural gas pipeline originating in the heart of the prolific Haynesville natural gas production region and facilitating connections to natural gas markets in the U.S. Gulf Coast and around the world through proposed interconnections with pipelines that supply natural gas to LNG export facilities. HGAP is part of Tellurian s previously announced proposed Tellurian Pipeline Network that represents a $7.0 billion investment in U.S. infrastructure, creating approximately 15,000 jobs in Texas and Louisiana. The investment is incremental to the $15.2 billion investment that Tellurian plans for Driftwood LNG, a proposed liquefied natural gas (LNG) export facility near Lake Charles, Louisiana. The proposed Pipeline will aggregate natural gas production indirectly from the Barnett and Anadarko Basin, Marcellus and Utica basin shales, and directly from the Haynesville shale. It will link this natural gas production directly to the high growth markets of Southwest Louisiana, which could grow to 8.0 Bcf/d by 2025 and bypass increasingly constrained locations in and around Perryville, Louisiana. As proposed, HGAP intends to put the Project in-service no later than April 2023 or earlier as determined by the needs of its shippers. Map of proposed HGAP pipeline route 1201 Louisiana Street Suite 3100 Houston, TX 77002 TEL + 1 832 962 4000 www.tellurianinc.com 2
Overview HGAP is announcing this Non-Binding Open Season to solicit participation in its proposed Pipeline on a firm basis, for terms ranging from 10 to 20 years and for shipper classes ranging from Standard to Foundation. The Pipeline is anticipated to have as many as 18 meter locations, one mainline compressor station and lateral lines of varying diameters to connect to other third-party pipelines located in the Haynesville production region to the growing market located near Lake Charles, Louisiana. Participation in the Open Season will be considered Non-Binding on all participants, including Tellurian and HGAP, until such parties have executed a binding precedent agreement ( PA ). Once HGAP more precisely determines the scope of the proposed facilities and the participating shippers, the participating shippers will be asked to sign a binding PA after they are notified of the award of capacity. The Pipeline is proposed to have three rate zones: Zone 1 or the North Louisiana Zone would provide transportation service originating from points as far north as Claiborne Parish, Louisiana, on the Gulf Crossing Pipeline system ( Gulf Crossing ) and Mid- Continent Express Pipeline ( MEP ), and to the Regency Intrastate Gas System ( RIGS ) located in Webster Parish, Louisiana. A stand-alone rate is proposed for this zone and would include all points/interconnects within the zone. As proposed, Zone 1 would consist of a minimum 30-inch diameter pipeline capable of transporting a minimum of 400 million standard cubic feet per day. Depending upon shipper interests, this section can be expanded to a 42-inch pipeline and 2 Bcf/d of capacity. Execution of this zone is contingent upon sufficient shipper interest. Zone 2 or the Haynesville Zone would originate near RIGS and would terminate at the proposed Tennessee Gas interconnect located in Sabine Parish, Louisiana. As proposed, Zone 2 would consist of a 42- inch diameter pipeline with a capacity of up to 2 Bcf/d. Zone 3 or the Market Zone would originate south of Tennessee Gas in Sabine Parish, Louisiana, and then traverse Vernon, Beauregard, Allen, and Jefferson Davis Parishes, and terminate at delivery points located near Gillis, Louisiana in Jefferson Davis and Calcasieu Parishes, Louisiana. Zone 3 would consist of a 42-inch diameter pipe capable of transporting up to 2 Bcf/d. 1201 Louisiana Street Suite 3100 Houston, TX 77002 TEL + 1 832 962 4000 www.tellurianinc.com 3
Zone map of proposed HGAP pipeline route 1201 Louisiana Street Suite 3100 Houston, TX 77002 TEL + 1 832 962 4000 www.tellurianinc.com 4
HGAP may implement up to 11 receipt meter stations along the proposed Pipeline route. Each meter is intended to provide connectivity to existing or proposed plants in the Haynesville region and to potential thirdparty pipelines located in Webster, Bossier, Caddo, Red River, De Soto and Sabine Parishes, Louisiana. The potential receipt points may include the locations illustrated below. Prospective shippers are encouraged to suggest additional receipt points with other third-party pipes, cryogenic gas plants or gathering system common points. HGAP is also proposing up to 7 delivery points. These could include a connection with the pipelines as identified below located near Gillis, Louisiana, or just northeast of Lake Charles, Louisiana, as illustrated below. Similar to the receipt points, HGAP encourages the shippers to provide alternate delivery points for consideration. 1201 Louisiana Street Suite 3100 Houston, TX 77002 TEL + 1 832 962 4000 www.tellurianinc.com 5
Foundation shipper status Shippers who: enter into a binding PA; commit to a minimum capacity of 500,000 mmbtu/d of natural gas that is directed to be delivered to or near Gillis, Louisiana; commit to a term of at least 20 years; and meet the credit provisions as provided in the PA, shall receive Foundation Shipper status. Foundation Shippers will enjoy benefits such as negotiated rates, contract extension rights, most favored nations benefits, pooling and wheeling rights for a negotiated fee, a right of refusal for short-term firm or seasonal capacity that becomes available as a result of ambient conditions, and other benefits negotiated on a not-unduly discriminatory basis. Anchor shipper status Shippers who: enter into a binding PA; commit to a minimum capacity of 250,000 mmbtu/d of natural gas that is directed to be delivered to or near Gillis, Louisiana; commit to a term of at least 10 years; and meet the credit provisions as provided in the PA, shall receive Anchor Shipper status. Anchor Shippers will enjoy benefits such as negotiated rates for their volumes, contract extension rights, access to secondary pooling and wheeling rights for a negotiated fee, secondary rights to short-term firm or seasonal capacity that becomes available as a result of environmental conditions and other benefits negotiated on a not-unduly discriminatory basis. Standard shipper status Shippers who: enter into a binding PA; commit to a minimum capacity of 100,000 mmbtu/d of natural gas that is directed to be delivered to or near Gillis, Louisiana; commit to a term of at least 10 years; and meet the credit provisions as provided in the PA, shall receive Standard Shipper status. Standard shippers will enjoy benefits such as negotiated rates for their volumes, contract extension rights, and other benefits negotiated on a not-unduly discriminatory basis. Contract term HGAP reserves the right to reject bids that provide a contract term of less than 20 years for Foundation Shippers and less than 10 years for Anchor and Standard Shippers. 1201 Louisiana Street Suite 3100 Houston, TX 77002 TEL + 1 832 962 4000 www.tellurianinc.com 6
Length of open season Beginning of open season: 12:00 PM CST, Wednesday, February 21, 2018 Close of open season: 4:00 PM CST, Friday, April 6, 2018 Transportation Rates HGAP will provide a cost of service-based, daily reservation recourse rate, which will be available for firm transportation service under the Project. While the ultimate recourse rate for firm transportation service will be a function of the final Project scope and definitive agreements (and dependent on firm path(s) and subscription levels), indicative firm recourse transportation rates projected for transportation and deliveries in each Zone are provided below: Zone 1 or the North Louisiana Zone ~$0.13 mmbtu/d Zone 2 or the Haynesville Zone ~$0.14 mmbtu/d Zone 3 or the Market Zone ~$0.25 mmbtu/d HGAP also will provide service on a negotiated daily reservation rate(s) basis, as negotiated and documented in a binding PA and based upon the facilities installed to meet the terms of the service. HGAP may, depending upon shipper interest, provide seasonal, short haul, wheeling or pooling services and other capacity arrangements on a short-term firm or on an interruptible basis, as available and based upon a priority basis in accordance with the shipper class. Short-term firm service is defined as the potential capacity above the nominal or summer day design case and the capacity that results from ambient conditions (e.g. up to the peak or winter design case) that could allow for system capacities to exceed the nominal or summer day design case. Any short-term firm service above the interruptible capacity would be limited to 1 year in duration under the terms of a Short-Term Firm Transportation Service Agreement at the posted rate or long-term shipper s negotiated commodity rate. Priority for the potentially available additional services will be based upon shipper status, with priority given to: 1 Foundation Shippers; then 2 Anchor Shippers; then 3 Standard Shippers; and then 4 non-long term or interruptible shippers based upon the highest NPV to HGAP. Retainage, surcharges and fuel In addition to the above indicated transportation rates, shippers will pay the applicable surcharges as allowed and approved by the Federal Energy Regulatory Commission ( FERC ), will be responsible for the applicable compressor fuel which is estimated to be less than 0.5% and/or electric power charges, and provide the applicable company use, loss and unaccounted for gas associated with transportation under HGAP s Rate Schedule as provided in HGAP s then effective FERC Gas Tariff. 1201 Louisiana Street Suite 3100 Houston, TX 77002 TEL + 1 832 962 4000 www.tellurianinc.com 7
Participation in the open season To participate in this Open Season, interested parties desiring firm transportation service or additional information about the Project should submit an Open Season Transportation Request Form (attached), by 4:00 PM CST, Friday, April 6, 2018. Specific attention should be paid to the primary term of service, total firm capacity requested (Maximum Daily Transportation Quantity or MDTQ ), and desired receipt and delivery point(s) combination or the desired receipt and delivery locations if not included in the proposed receipt or delivery locations. During this Non-Binding Open Season process, HGAP will follow-up with interested parties to enter into a Confidentiality Agreement and to initiate the negotiation of either a Letter of Intent ( LOI ) or a binding PA as well as to determine next steps with respect to development and design of the Project. Bid evaluation criteria HGAP will evaluate the prospective interest and/or any bids on a net present value ( NPV ) basis and take into consideration the total scope and cost impact on the Project economics as determined by HGAP. HGAP reserves the right to reject and remove from consideration non-conforming bids, bids that have a delayed inservice requirement beyond what is acceptable to HGAP including bids that require a contract with a partialyear term, or bids that fail to meet the minimum terms set forth above with regard to rate, contract term, credit, or any other economic criteria which could adversely affect the economics or operational viability of the Project. HGAP reserves the right to define and maintain the economic viability of the Project in its sole discretion. If HGAP receives acceptable bids for capacity in excess of the actual amount of available capacity and beyond the initial scope as defined herein, then the capacity may be allocated based on shipper status or as further defined below. Any modifications to the Project may be implemented and agreed upon as part of this initial Non-Binding Open Season, whereas any future modifications by the successful shippers may require a rate adjustment as agreed upon prior to implementing the change. Upon receipt of all timely submitted Open Season Transportation Request Forms, HGAP will evaluate the total capacity requested and if necessary make an initial allocation under the process described below. HGAP, in its sole discretion, may: revise the scope and/or capacity of the Project; evaluate and award capacity based upon the shipper status, with priority given to those shippers whose bids qualify them to be Foundation, Anchor and Standard Shippers; in the event of equal bids, work with the shippers to voluntarily reduce or revise their requested reservation volume and Project path quantities, as applicable; allocate the available firm transportation capacity under the Project; or determine not to pursue the Project. If HGAP allocates the available firm transportation capacity under the Project, then the capacity will be allocated first to those who qualify as Foundation Shippers, then to the Anchor Shippers, then to the Standard Shippers and ultimately, on a non-discriminatory basis, to the remaining shippers. Any remaining capacity beyond the Standard Shipper allotment will be allocated to other requesting shippers providing bids with the highest NPV. 1201 Louisiana Street Suite 3100 Houston, TX 77002 TEL + 1 832 962 4000 www.tellurianinc.com 8
If two or more acceptable bids are of equivalent NPV and shipper status, then the capacity will be allocated pro rata among those bidders, unless the affected bidders have elected not to have their bids prorated (as indicated on their Open Season Transportation Request Form(s)). Requests received by HGAP after the close of the Open Season period may be accepted or rejected by HGAP on a not-unduly discriminatory basis. Shippers are responsible for securing their own transportation arrangements on pipelines upstream and downstream of the designated receipt and delivery points and to facilitate any interconnect agreements with the final delivery point operators. Shippers will also be responsible for confirming the availability of their requested receipt and delivery points with the point operators. Please note that the individual receipt and delivery meter capacities in most cases could be more or less than the firm transportation capacity under the Project. HGAP reserves the right to reject any requests for service under the Project on a not-unduly discriminatory basis. HGAP reserves the right, in its sole discretion, to consider requests for capacity received after the close of the Open Season period but before the start of construction or rely upon this Non-Binding Open Season for any capacity arrangements as part of any PAs, including requests to modify a participant s validly submitted bid, but shall be under no obligation to do so. These procedures and the attached Open Season Transportation Request Form are provided solely to enable interested parties to participate and attempt to obtain an award of capacity or to help frame the design and capability of the proposed pipeline system. HGAP s decision to proceed with the proposed Project is subject to HGAP receiving a level of transportation interest, that in its sole discretion, HGAP determines to be acceptable and based upon HGAP securing Final Investment Decision from its parent company s Board of Directors. 1201 Louisiana Street Suite 3100 Houston, TX 77002 TEL + 1 832 962 4000 www.tellurianinc.com 9