Notice Text. Non-Binding Open Season Notice Kinder Morgan Powder River Lateral NGL Pipeline Project June 23, 2014

Transcription

1 TSP Name: Colorado Interstate Gas Company, L.L.C. TSP: Notice ID: 9081 Critical: N Notice Type Desc: Other Notice Stat Desc: Initiate Prior Notice: Notice Eff Date: 06/23/2014 Notice Eff Time: 01:30:25 PM Reqrd Rsp Desc: No response required. Post Date: 06/23/2014 Post Time: 05:30:25 PM Notice Text Non-Binding Open Season Notice Kinder Morgan Powder River Lateral NGL Pipeline Project June 23, 2014 Kinder Morgan (KM) in conjunction with one or more of its affiliated companies, is conducting a non-binding Open Season for natural gas liquids (NGL) transportation capacity made available, in part, by abandoning the Colorado Interstate Gas Company, L.L.C. (CIG) Powder River Lateral from gas service and converting to unfractionated NGL service. The new common-carrier pipeline system would consist of approximately ninety-six (96) miles of existing sixteen-inch (16") diameter pipeline running from near Douglas, Wyoming to an interconnect with Overland Pass Pipeline near Laramie, Wyoming, including new pumping and metering facilities. Since the pipeline is already constructed, KM is projecting rates as low as four cents (4 ) per gallon. KM is conducting this Open Season on the terms described below. OPEN SEASON This non-binding Open Season will commence on June 23, 2014, and will close at 2:00 p.m., Mountain Time on July 21, Bids should be sent to KM at KMWestBids@kindermorgan.com and must be received prior to the close of the Open Season. KM intends to contact bidders and provide them with Throughput & Deficiency Agreements T&DA)by July 25, By submitting a Bid, the bidding party will be representing that it has full authority to enter into negotiations to contract for NGL transportation service. Questions concerning this Open Season should be directed to: Laine Lobban Greg Ruben Description of The Powder River Lateral NGL expansion The project consists of the abandonment of the lateral and compression from gas service, the construction of pump and meter facilities, and the operation of these facilities to provide NGL transport service from the growing Powder River Basin near Wyoming Interstate Company, L.L.C.'s Douglas Compressor Station in Township 33 North, Range 73 West, Converse County, Wyoming to an interconnect with Overland Pass Pipeline near Laramie, Wyoming. The Powder River Basin is experiencing an increasing horizontal rig count and a corresponding increase in oil, NGL, and associated gas production while continuing to experience declines in gas production from coal seam wells. The Powder River Lateral has no remaining firm transportation contracts, and shippers desiring continued gas service can inquire with KM's affiliate - Wyoming Interstate Company, L.L.C. - about transportation on its Medicine Bow

2 Lateral. KM expects the new facilities to have an initial capacity of 30,000 to 60,000 barrels per day with expansion potential for over 100,000 barrels per day with the addition of more pump stations. KM anticipates being able to place the project into service by the 4th quarter SUMMARY OF CERTAIN COMMERCIAL TERMS OF THE THROUGHPUT & DEFICIENCY AGREEMENTS The following summarizes the more significant commercial terms of the project: 1. Service Types. Three types of committed service are being made available under this Open Season: (a) Firm Committed Service. If permitted by applicable law, the Firm Committed Volume of Firm Committed Shippers will not be subject to prorationing to accommodate the volumes of historical and uncommitted shippers under ordinary operating conditions. (b) Non-Firm Committed Service. The Non-Firm Committed Volume of Non-Firm Committed Shippers will be subject to prorationing, with the same priority as that given to historical shippers under the Tariff. (c) Non-Firm Committed Acreage or Plant Dedication Incentive Program. Shippers who exclusively dedicate all owned or controlled NGLs for the term of their Acreage or Plant Dedication Transportation Agreement will not be subject to prorationing; provided, however, that if KM does not have sufficient capacity for dedicated volumes, then the volume for which capacity does not exist will be released from the Acreage or Plant Dedication Incentive Program. KM reserves the right to review any bid(s) to participate in the Acreage or Plant Dedication Incentive Programs to ensure the underlying acreage is adequate to economically justify KM's capital investment in the Powder River Lateral Conversion Project. KM's review will include an assessment of both the quantity and quality of the underlying acreage. 2. Term. Potential Committed Shippers will be permitted to select an initial term of not less than ten (10) years, commencing on the In-Service Date of the Powder River Lateral Conversion Project. The "In-Service Date" is the date KM (a) places the Powder River Lateral Conversion Project into service for purposes of transporting NGLs and (b) a shipper's receipt point(s) and delivery point(s) are operational and capable of receiving and delivering scheduled quantities of NGLs. 3. Minimum Commitments. The daily minimum volume commitment submitted by a potential Firm Committed Shipper or Non-Firm Committed Shipper must be at least one thousand (1,000) bpd over the term of the T&DA. 4. Tariff Rates (per barrel). Different tariff rates for the Powder River Lateral Conversion Project will be established for each priority of service, with a minimum term of ten (10) years. The initial Firm Committed Shipper Rates, Non-Firm Committed Shipper Rates, and Acreage/Plant Dedication Incentive Rates are as set forth below: Character of Service Term Rate per Barrel Rate per Gallon Volume Firm Committed Service 10years $2.32 $ for volumes of 1,000 bpd or more Non-Firm Committed 10years $2.10 $0.05 Acreage/Plant Dedication Incentive Program Non-Firm Committed 10years $1.68 $0.04 Service Uncommitted Service N/A $2.31 $ Commencing on the In-Service Date, the Firm Committed Shipper Rates, Non-Firm

3 Committed Shipper Rates, and Acreage Dedication Incentive Rates will be subject to an annual escalation of two and one-half percent (2½ %) per year ("Annual Escalation"). The Annual Escalation shall take effect on July 1st of each year following the In-Service Date. 5. Deficiency Payments & Transportation Credits. Subject to the Tariff and T&DA, each Committed Shipper will remit to KM at the conclusion of each month during the effective term of its T&DA, regardless of the barrels actually transported, (a) its then-effective Firm Committed Shipper Rate multiplied by its Firm Committed Volume, and (b) its then-effective Non-Firm Committed Shipper Rate multiplied by its Non-Firm Committed Volume, as applicable, multiplied by the number of days in the month. Committed Shippers will receive a volumetric credit equal to the positive difference, if any, between a Shipper's Firm Committed Volume or Non-Firm Committed Volume for a given month, as applicable, and the volume nominated in such month by the Committed Shipper ("Transportation Credits"). Transportation Credits may be applied by Committed Shippers as prepaid transportation as follows: (a) During the Term of Shipper's T&DA. A Committed Shipper's Transportation Credits not arising as a result of a Force Majeure declared by the carrier (as Force Majeure is defined in the Tariff) may be nominated at any time during the six months following the month in which such Transportation Credits accrued during the term of Shipper's T&DA. Such Transportation Credits not used during the six-month period will expire. Transportation Credit volumes will be allocated capacity under the Tariff as follows: in a month in which the aggregate nominations of Firm Committed Shippers are less than the aggregate of such shippers' Firm Committed Volumes, Transportation Credit volumes will be treated as Firm Committed Volumes in the event of prorationing; otherwise, Transportation Credit volumes will be subject to prorationing as provided in the Tariff. (b) Credit volumes due to Force Majeure of 60 days or less. A Committed Shipper's Transportation Credits arising from a carrier Force Majeure, of less than 60 days, may be nominated at any time during the term of Shipper's T&DA. (c) Credit volumes for Force Majeure for 61 days or greater. Beginning on the sixty-first day, a committed Shipper's payment obligations under the TD&A are suspended. To the extent Shipper has not utilized the credited volumes prior to the expiration of the TD&A, the TD&A will be extended day-for-day equal to the number of the Force Majeure days greater than sixty days, subject to the payment of Shipper's applicable Firm Committed Shipper Rate, Non-Firm Committed Shipper Rate, or Acreage/Plant Dedication Incentive Rates 6. Line Fill Requirements. Subject to the Tariff and T&DA, each Committed Shipper will be responsible for a pro rata share of the line fill necessary to ensure efficient operation of the Powder River Lateral Conversion Project. Shipper's line fill obligation can be fulfilled either by: (a) Shipper supplying such line fill or; (b) Shipper agreeing to have KM supply the line fill and recovering its cost via a FERC-approved rate, provided that the Committed Shipper's T&DA for which KM is providing line fill commits to shipping only one grade of NGLs throughout the term of its T&DA. 7. NGL Quality. In addition to the quality specifications set forth in the Tariff, NGLs tendered by Shipper shall not fall below the minimum, or exceed the maximum, ranges set forth below: Constituent Specification Composition Carbon Dioxide, Maximum Note 1 Methane, Maximum Note 2 Aromatics, Maximum LV% Olefins, Maximum Note 3 Vapor Pressure At 100 F psig, Maximum 600

4 Corrosiveness Copper Strip at 100 F Volatile Sulfur PPM by Weight, Maximum No ppm Hydrogen Sulfide Pass Distillation End Point at 14.7 psia, F, Maximum 375 F Note 4 Color Saybolt Number, Minimum +27 Note 4 Dryness Free Water 34 F Product Temperature Product containing 65 mole % or more Ethane, F, Maximum 90 F Product containing less than 65 mole % Ethane, F, Maximum 110 F Note 1: Carbon Dioxide Maximum is 0.35 L.V.% (8038 ppmw) of the Ethane. Note 2: Methane Maximum is 0.5 L.V.% of the total components excluding N2 and CO2 and 1.5 L.V.% of the Ethane. Note 3: Olefin Maximum is 1.0 L.V.% (10,000 ppmw) of the total stream, C4 Olefin Maximum is.1 L.V.% (1,000 ppmw) of the Normal Butane. Note 4: Distillation and Color to be run on that portion of the mixture having a boiling point of 70 F and above at atmospheric pressure. The foregoing is neither a complete summary of the terms of the T&DA nor a complete summary of the provisions described. Interested potential shippers should read the T&DA and its schedules in their entirety. If there is a discrepancy between the summaries contained in these Open Season Terms and the T&DA, the T&DA shall control. PROJECT CONDITIONS The parties recognize that KM must abandon existing facilities from gas service and construct additional facilities in order to provide transportation service for Shipper under its T&DA. KM will provide updates on the progress towards in-service and shall provide Shipper notice of the scheduled In-Service Date of the additional facilities prior to the anticipated In-Service Date. 1. KM's obligations under the T&DA are subject to: (a) The receipt and acceptance by KM of a FERC approval to abandon facilities, as well as the receipt by KM of all other necessary regulatory approvals, permits and other authorizations for the additional facilities in form and substance satisfactory to KM in its sole discretion. (b) The approval of the appropriate management, management committee, and/or board of directors of KM and/or its parent companies to approve the level of expenditures for the additional facilities. 2. Shipper's obligations under its T&DA are subject to and conditioned upon the fulfillment of each of the conditions precedent set forth below: (a) The filing, on or before September 30, 2014, by KM of a 7(b) abandonment with FERC. (b) The receipt by KM of all necessary regulatory approvals, permits and other authorizations for the additional facilities in form and substance satisfactory to KM in its sole discretion by August 31, 2015.

5 (c) The commencement by KM of construction of the additional facilities contemplated by and/or described in this Open Season within sixty (60) days of receiving the approvals set forth in Section 2(b) above. (d) The approval of the appropriate management, management committee, and/or board of directors of Shipper and/or its parent companies within thirty (30) days of the conclusion of this Open Season. CREDITWORTHINESS REQUIREMENTS Successful bidders shall be required to maintain sufficient evidence of satisfaction of creditworthiness throughout the term of their T&DA, as follows: 1. If Shipper is rated by Standard & Poor's Corporation ("S&P") and/or Moody's Investor Service ("Moody's") (hereinafter referred to as a "Rated Shipper"), then the Rated Shipper shall satisfy its creditworthiness obligations by making a demonstration to KM that: (i) Shipper's senior unsecured debt securities are rated at least BBB- by S&P or Baa3 by Moody's or Shipper's long-term issuer rating is at least A- by S&P or A3 by Moody's (in the event Shipper is rated differently by multiple agencies, the lowest rating shall be used in making such determination); and (ii) Shipper is not under review for possible downgrade by S&P and/or Moody's to a level below that set forth in subpart (i) of this Section 1; and (iii) the net present value of all anticipated charges under Shipper's T&DA, and all other service agreements that Shipper has with KM as of the date of Shipper's T&DA, is less than fifteen percent (15%) of Shipper's Tangible Net Worth. If Shipper has multiple service agreements with KM, then the total potential fees and charges of all such service agreements shall be considered in determining creditworthiness. For purposes of this Section 1, "Tangible Net Worth" shall mean, for a corporation, the sum of the capital stock, paid-in capital in excess of par or stated value, and other free and clear equity reserve accounts less goodwill, patents, unamortized loan costs or restructuring costs, and other intangible assets. Only actual tangible assets are included in KM's assessment of creditworthiness. 2. If Shipper does not meet the criteria described above, then Shipper (hereinafter referred to as a "Non-Rated Shipper") may request that KM evaluate its creditworthiness based upon the level of service requested relative to the Shipper's current and future ability to meet its obligations. Such credit appraisal shall be based upon KM's evaluation of the following information and credit criteria: (a) S&P and Moody's opinions, watch alerts, and rating actions and reports, rating, opinions and other actions by Dun and Bradstreet and other credit reporting agencies will be considered in determining creditworthiness. (b) Consistent financial statement analysis will be applied by KM to determine the acceptability of Shipper's current and future financial strength. Shipper's balance sheets, income statements cash flow statements and auditor's notes will be analyzed along with key ratios and trends regarding liquidity, asset management, debt management, debt coverage, capital structure, operational efficiency and profitability. (c) Shipper must not be operating under any chapter of the bankruptcy laws and must not be subject to liquidation or debt reduction procedures under state laws and there must not be pending any petition for involuntary bankruptcy. An exception may be made for a Shipper who is a debtor-in-possession operating under Chapter XI of the Federal Bankruptcy Act if KM is assured that the service billing will be paid promptly as a cost of administration under the federal court's jurisdiction, based on a court order in effect, and if the Shipper is continuing and continues in the future to make payment. (d) Whether Shipper is subject to any lawsuits or judgments outstanding which could materially impact its ability to remain solvent. (e) The nature of the Shipper's business and the effect on that business of general economic conditions and economic conditions specific to it, including

6 Shipper's ability to recover the costs of KM's services through filings with regulatory agencies or otherwise to pass on such costs to its customers. Any other information, including any information provided by Shipper, that is relevant to Shipper's current and future financial strength and Shipper's ability to make full payment over the term of the contract. 3. If at any time during the Term (i) a Rated Shipper's S&P or Moody's rating falls below the levels described in Section 1 above, or (ii) a Rated Shipper becomes unrated or otherwise fails to satisfy the requirements of this Section, or (iii) a Non-Rated Shipper fails to satisfy KM's creditworthiness evaluation, in KM's sole discretion, then for the time period that the Rated Shipper's ratings are below that level or a Rated Shipper is unrated or is otherwise unable to satisfy the requirements of this Section, or a Non-Rated Shipper fails to satisfy KM's creditworthiness evaluation, Shipper shall satisfy its creditworthiness obligation by providing one of the forms of credit support described in Section 4 below. If a Rated Shipper subsequently becomes able to satisfy the S&P or Moody's rating levels described in Section 1 above, the Rated Shipper may immediately satisfy its creditworthiness obligations in the manner provided in Section 1. If a Non-Rated Shipper subsequently becomes able to satisfy KM's creditworthiness evaluation, the Non-Rated Shipper may immediately satisfy its creditworthiness obligations in the manner provided in Section If at the time of the execution of Shipper's T&DA or at any time thereafter during the Term, Shipper is unable to satisfy its creditworthiness obligations in the manner set forth in Section 1 or Section 2 above, then Shipper shall satisfy its creditworthiness obligations by providing and maintaining, at its option: (i) an irrevocable, unconditional guarantee of its obligations under Shipper's T&DA, in a form acceptable to KM, in its sole discretion, equal to three (3) years of the anticipated charges under Shipper's T&DA and issued by another person or entity which satisfies the creditworthiness standards set forth in Section 1; or (ii) an irrevocable letter of credit, substantially in a form acceptable to KM, in its sole discretion, equal to three (3) years of the anticipated charges under Shipper's T&DA; or (iii) such other credit arrangements which are mutually agreed to by KM and Shipper, and which are accepted by KM on a nondiscriminatory basis. 5. Upon request by KM, Shipper shall promptly provide evidence to KM of Shipper's creditworthiness, as set forth above, which KM may share with its lenders or creditors or any nationally recognized rating agency that is then maintaining a rating of KM's debt securities. 6. If any change in ratings or conditions requires Shipper to change the manner in which it satisfies the creditworthiness requirements of Shipper's T&DA, Shipper shall make that demonstration (including if necessary the provision of any guarantee or letter of credit) within thirty (30) days of the change in ratings or conditions requiring the new demonstration of creditworthiness. 7. Notwithstanding any statement to the contrary set forth elsewhere in this Section, Shipper shall at no time during the Term be required to provide a guaranty or letter of credit in an amount exceeding the remaining anticipated charges under Shipper's T&DA. OPEN SEASON PROCEDURES KM is in the process of drafting and finalizing a Throughput & Deficiency Agreement ("T&DA"), and a Rules and Regulations Tariff and a Rates Tariff (collectively "Tariff"). Once the T&DA and Tariff are complete, they will be provided to potential shippers. A potential shipper desiring to become a Committed Shipper on the Powder River Lateral Conversion Project or participate in the Acreage Dedication Incentive Program must (i) submit one or more bid sheets to KM at KMWestBids@kindermorgan.com prior to the close of the Open Season,(ii) complete, execute and deliver two copies of the T&DA to KM on or before August 31, 2014, (iii) demonstrate its ability to satisfy the credit requirements of the T&DA on or before August 31, 2014, and (iv) have received any required management or Board of Directors' approvals within thirty (30) days of the conclusion of the Open Season.

7 Successful bidders will be required to execute T&DAs. Bid Sheet 1 row(s) retrieved