EBB Notice – El Paso Natural Gas Company, L.L.C. Open Season
DESCRIPTION OF ENHANCEMENT CAPACITY
Responding to market interest for firm transportation capacity to serve customers in the Permian Basin, El Paso Natural Gas Company, L.L.C. ("EPNG") is conducting a Binding Open Season for up to 300,000 dekatherms (“Dth”) per day of capacity originating from existing or new receipt points on certain segments of EPNG's Line Nos. 1100, 1103, 1110 and 3191, for delivery to either Benedum-Midway or Mendoza Trail, as further described below. The following two tranches of capacity are mutually exclusive.
LINE 1100 TO MENDOZA TRAIL ENHANCEMENT CAPACITY
With certain system enhancements including construction of an additional pipeline segment between EPNG's Keystone and Wink Compressor Stations, installation of piping and valve modifications at EPNG's Keystone and Wink Compressor Stations, and the installation of certain other facility modifications at other locations on EPNG's system within the Permian Basin (referred to herein as the “Line 1100 to Mendoza Trail Modifications”), EPNG can increase the quantity available from Line Nos. 1100, 1103, 1110 and 3191 for delivery to Mendoza Trail by to up to 300,000 Dth per day (referred to herein as the “Line 1100 to Mendoza Trail Enhancement Capacity”):
Maximum Available Quantity: Up to 300,000 Dth per day
Primary Receipt Points: Up to 300,000 Dth per day from existing or new receipt points on Line Nos. 1100, 1103 and 1110 located between EPNG's Pecos River Station and up to 109,000 Dth per day from Line No. 3191 (“New Mexico Receipt Points”).
Primary Delivery Point: Mendoza Trail
Alternate Receipt Points: All available alternate New Mexico Receipt Points at the awarded contract rate as of the date the successful bidder enters into a Firm Transportation Service Agreement ("FTSA") with EPNG.
Alternate Delivery Points: All available delivery points within the Permian Basin (STML PER) at the awarded contract rate as of the date the successful bidder enters into an FTSA with EPNG.
Recommended Bid Rate: In order to economically justify EPNG's capital investment in the project, EPNG recommends either (1) a recourse rate bid, (2) a negotiated rate bid of not less than $2.585 per Dth per month (which, for illustrative purposes, is equivalent to $0.085 per Dth on a daily basis) for quantities of 300,000 Dth per day, or (3) a negotiated rate bid of not less than $3.559 per Dth per month (which, for illustrative purposes, is equivalent to $0.117 per Dth on a daily basis) for quantities of 200,000 Dth per day (although EPNG reserves the right to reject any bids inconsistent with the terms and conditions of this open season regardless of term).
Recommended Bid Term: In order to economically justify EPNG's capital investment in the project, EPNG recommends a minimum bid term of ten (10) years (although EPNG reserves the right to reject any bids inconsistent with the terms and conditions of this open season regardless of term).
Capacity Start Date: As early as the in-service date of the Line 1100 to Mendoza Trail Modifications. Subject to EPNG's receipt of sufficient shipper commitments and timely receipt of all necessary regulatory approvals, permits, and other authorizations required for the construction and operation of the Line 1100 to Mendoza Trail Modifications, in a form and substance satisfactory to EPNG in its sole discretion, EPNG anticipates the ability to achieve an in-service date as early as July 1, 2019.
EPNG's anticipates the ability to accept bids that propose Capacity Start Date on the later of (a) in-service date of the proposed Gulf Coast Express Project previously announced by Kinder Morgan Texas Pipeline LLC (“GCX”) or (b) the in-service date of the Line 1100 to Mendoza Trail Modifications; provided however, that EPNG anticipates requiring a Capacity Start Date no later than March 1, 2020, regardless of the actual in-service date of GCX.
LINE 1100 TO BENEDUM ENHANCEMENT CAPACITY
With certain system enhancements including construction of a new compressor station located near Crane, Texas, installation of piping and valve modifications at EPNG's Keystone Compressor Station, and the installation of certain other facility modifications at other locations on EPNG's system within the Permian Basin (“Line 1100 to Benedum Modifications”), EPNG can increase the New Mexico Receipt Points to Benedum by to up to 200,000 Dth per day (“Line 1100 to Benedum Enhancement Capacity”):
Maximum Available Quantity: Up to 200,000 Dth per day
Primary Receipt Points: New Mexico Receipt Points
Primary Delivery Point: Benedum-Midway
Alternate Receipt Points: New Mexico Receipt Points at the awarded contract rate as of the date the successful bidder enters into an FTSA with EPNG.
Recommended Bid Rate: In order to economically justify EPNG's capital investment in the project, EPNG recommends either (1) a recourse rate bid, or (2) a negotiated rate bid of not less than $2.890 per Dth per month (which, for illustrative purposes, is equivalent to $0.095 per Dth on a daily basis) (although EPNG reserves the right to reject any bids inconsistent with the terms and conditions of this open season regardless of term).
Capacity Start Date: Same as for Line 1100 to Mendoza Trail Enhancement Capacity
Please contact the Business Development representatives listed below if you are interested in any potential receipt-delivery combination or quantities not shown above.
LENGTH OF OPEN SEASON
This Open Season will commence at 10:00 a.m., Mountain Time (“MT”), on October 13, 2017, and will close at 2:00 p.m., MT, on November 10, 2017. EPNG reserves the right to extend or modify this Open Season by posting a notice on its Electronic Bulletin Board (EBB).
Successful bidder(s) will be notified by 4:00 p.m., MT, on November 14, 2017. Awards of capacity pursuant to this Open Season are expressly subject to final management approval of EPNG, or its corporate parent. Successful bidder(s) will be notified by 4:00 p.m., MT, on March 30, 2018 confirming receipt of final EPNG management approval.
EPNG will consider bids that are made contingent upon the receipt of subsequent approval by the bidder's management no later than March 1, 2018. If notice of the receipt of any required management approval is not communicated to EPNG by March 1, 2018, any award of capacity to the bidder will be withdrawn and EPNG may offer that capacity to other prospective shippers in any manner that is selected by EPNG.
SUBMISSION OF BIDS
Parties interested in bidding in this Open Season should submit completed Bid Sheet(s) (in the form attached hereto) to EPNG before the close of the open season via email at the following address: KMWestBids@KinderMorgan.com.
By submitting Bid Sheet(s) 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 Federal Energy Regulatory Commission ("FERC") Gas Tariff, Third Revised Volume No. 1A, as the same may be amended from time to time ("EPNG's 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 bid shall be subject to the applicable maximum usage rate and maximum usage surcharges, all other maximum rates, charges and surcharges, including ACA, Fuel and lost and unaccounted-for gas (“L&U”), and any other authorized surcharges assessed under the applicable Rate Schedule of EPNG's Tariff as those amounts maybe 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 Tariff. EPNG also reserves the right to reject bids for quantities that are not for the same quantity for the duration of the term.
If EPNG does not receive maximum recourse or negotiated rate bids for quantities and terms sufficient to economically justify EPNG's capital investment in the project(s), then EPNG reserves the right not to move forward with either of the projects described in this Open Season, or to negotiate with bidders to propose a more appropriately sized expansion at a corresponding rate. Existing shippers with capacity on EPNG's system that could be used in lieu of any of the potential system modifications described above should notify EPNG if they wish to permanently turnback their capacity through a release to prospective shippers in this Open Season. Those who wish to so release their capacity should notify EPNG of the amount, the term, and any other conditions that would be necessary to effectuate such a release of their capacity. Such notices should be submitted to EPNG before the close of the Open Season.
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.
Although this is a binding open season, EPNG reserves the right, in its sole discretion, to consider requests for enhancement capacity received after the close of the Open Season period, including requests to modify a participant's validly submitted bid, but shall be under no obligation to do so.
EPNG will review all bids and award capacity based upon the criteria outlined below.
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 bids that generate the highest PV to EPNG.
PV will be the sum of the present values for all of the months of service.
Bids stating a commencement date upon the in-service date of any to-be-constructed facility will be evaluated using EPNG's estimate of the completion date of the required facilities.
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 (the annual discount rate of 4.21% 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 EPNG's Tariff, if there is not sufficient capacity available to meet all acceptable bids, EPNG will award first to the bidder having the highest acceptable PV, followed by the bidder having the second highest acceptable PV, etc., until such time as the capacity is completely awarded (recognizing that bidders with lower PVs may have their bids prorated unless they have expressly elected otherwise in the Open Season Bid Sheet). If two or more acceptable bids are of equivalent PV, 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 Bid Sheet(s)).
Each successful bidder shall enter into an 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 Tariff.
CREDITWORTHINESS REQUIREMENTS
Each successful bidder entering into an FTSA in connection with the Open Season must demonstrate, and maintain throughout the term of such FTSA, satisfaction of creditworthiness in the manner set forth below:
(i) If bidder is rated by Standard & Poor's Corporation ("S&P") and/or Moody's Investor Service ("Moody's") (hereinafter referred to as a “Rated Bidder”), then the Rated Bidder shall satisfy its creditworthiness obligations by making a demonstration to EPNG that: (a) Rated Bidder's senior unsecured debt securities are rated at least BBB- by S&P or Baa3 by Moody's or Rated Bidder's long-term issuer rating is at least BBB- by S&P or Baa3 by Moody's (in the event Rated Bidder is rated differently by multiple agencies, the lowest rating shall be used in making such determination); and (b) Rated Bidder is not under review for possible downgrade by S&P and/or Moody's to a level below that set forth in subpart (a) of this section (i).
If at any time during the term of any FTSA executed in connection with this Open Season, a Rated Bidder's S&P or Moody's rating falls below the levels described above, or a Rated Bidder becomes unrated or otherwise fails to satisfy the requirements of this section (i), then for the time period that the Rated Bidder's ratings are below that level or a Rated Bidder is unrated or is otherwise unable to satisfy the requirements of this section (i), Rated Bidder shall satisfy its creditworthiness obligation by providing one of the forms of credit support described in section (ii) below. If a Rated Bidder subsequently becomes able to satisfy the S&P or Moody's rating levels described above, the Rated Bidder may immediately satisfy its creditworthiness obligations in the manner provided in this section (i).
(ii) If at the time of the execution of any FTSA in connection with this Open Season, or at any time thereafter, bidder is unable to satisfy its creditworthiness obligations in the manner set forth in section (i) above, then bidder shall satisfy its creditworthiness obligations by providing and maintaining, at its option: (a) an irrevocable, unconditional guarantee of its obligations under any FTSA executed in connection with this Open Season, acceptable to EPNG and issued by another person or entity which satisfies the creditworthiness standards set forth in section (i); or (b) an irrevocable letter of credit acceptable to EPNG and from a bank acceptable to EPNG equal to the lesser of three (3) years or the period of time remaining in the term, of the anticipated charges under any FTSA executed in connection with this Open Season; or (c) such other credit arrangements which are mutually agreed to by EPNG and bidder, and which are accepted by EPNG on a nondiscriminatory basis.
(iii) If at any time bidder is unable to satisfy the creditworthiness standards set forth in section (i) above, then, upon reasonable request by EPNG, bidder shall promptly provide evidence to EPNG of bidder's creditworthiness, which EPNG may share with its lenders or creditors or any nationally recognized rating agency that is then maintaining a rating of EPNG's debt securities.
(iv) If any change in ratings or conditions requires bidder to change the manner in which it demonstrates its satisfaction of its creditworthiness requirements, bidder shall make that demonstration (including if necessary the provision of any guarantee or letter of credit) within fifteen (15) business days of the change in ratings or conditions requiring the new demonstration of creditworthiness.
(v) Notwithstanding any statement to the contrary set forth elsewhere in this creditworthiness section, bidder shall at no time during the term of any FTSA executed in connection with this Open Season be required to provide a guaranty or letter of credit in an amount exceeding the remaining anticipated charges under any FTSA executed in connection with this Open Season.
Bidders that fail to satisfy the creditworthiness requirements of this section within a reasonable time will have their capacity award withdrawn. EPNG will treat the financial statements provided by prospective shippers as confidential.
CONTACT INFORMATION
Questions concerning this Open Season should be directed to Greg Ruben (719-520-4870) or Ken Ulrich (719-520-3712) in the Business Development department.
FORM OF BID SHEET
EPNG Permian to Mendoza Benedum
Form of Service: FT
Email Bid To: KMWestBids@KinderMorgan.com
A. Shipper Information:
Legal Name of Bidder:
Name of Requesting Party:
Title of Requesting Party:
DUNS Number:
Phone:
B. Line 1100 to Mendoza Trail Enhancement Capacity Bid:
Requested Term Start Date:
Requested Term End Date:
Transportation Contract Demand: Dth/day
Will you accept a pro rata allocation of capacity if necessary Yes No
Primary Receipt Point(s)
Maximum Daily Receipt Quantity (in Dth/Day)
Primary Delivery Point(s)
Maximum Daily Delivery Quantity (in Dth/Day)
Total Receipt Quantity
Total Delivery Quantity
Alternate Receipt Point(s): All available alternate receipt points on points on Line Nos. 1100, 1103 and 1110 east of EPNG's Pecos River Station and Line No. 3191, at the awarded contract rate, as of the date the successful bidder enters into an FTSA with EPNG.
Alternate Delivery Point(s): All available alternate delivery rights for all within Permian Basin points (STML PER), at the awarded contract rate, as of the date the successful bidder enters into an FTSA with EPNG.
Note: Any bidder seeking to utilize any to-be-constructed point(s) of receipt and/or delivery may identify an existing alternate point(s) of receipt and/or delivery for use prior to the in-service date of the to-be-constructed point(s).
Rate:
EPNG's maximum recourse rate
Discounted Recourse Rate: $ ________ per Dth per Month
Negotiated Rate: $ ________ per Dth per Month
In addition to the bid rate, successful bidders will 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 Tariff as those amounts maybe 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.
C. Line 1100 to Benedum Enhancement Capacity Bid:
D. Condition to Bid (Check if Applicable):
Shipper's bid will be subject to receipt of the approval of bidder's management, management committee, and/or board of directors or other appropriate management structure by no later than March 1, 2018. Any bid that is made subject to such a condition will be rejected if written evidence of the receipt of such approval is not provided to EPNG by 12:00 noon Mountain Time on March 1, 2018.