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TSP/TSP Name:  8001703-EL PASO NATURAL GAS CO. L.L.C. Critical: N
Notice Type Desc (1):  TSP CAPACITY OFFERING Notice Type Desc (2):  TSP CAP OFFERING
Notice Eff Date/Time:  09/16/2019 5:18:32PM Notice End Date/Time:  10/19/2019 9:00:00am
Post Date/Time:  9/16/2019 5:18:32 PM Notice ID: 606469
Reqrd Rsp:  5 Rsp Date: 
Notice Stat Desc:  INITIATE Prior Notice: 
Subject:  AZ to CA Residual and Exp Cap O.S.
Notice Text:

Open Season Notice of Expansion Firm Capacity on El Paso Natural Gas Company, L.L.C. (EPNG)

Bid Deadline – 2:00 PM Mountain Time, October 18, 2019

 

Portable Document Format (.pdf) file of Open Season:

https://pipeline2.kindermorgan.com/PortalWeb/PortalDocs.aspx?code=EPNG&parent=1600

 

EPNG is conducting a binding Open Season for (1) certain residual capacity which will be made available as a result of EPNG's South Mainline Expansion Project, which is more fully described in Docket No. CP18-332-000 (“Residual Capacity) and (2) certain expansion capacity which would enable EPNG to increase its delivery capability from certain Arizona receipt points to certain California delivery points (“Expansion Capacity”).  The Expansion Capacity requires certain system enhancements including modifications and installation of additional facilities at EPNG's existing Vail Compressor Station (referred to herein as the "Enhancement Project").  In combination, the Residual Capacity and the Expansion Capacity will enable EPNG to effectuate transportation of up to 94,500 Dth per day from the Primary Receipt Point to the Primary Delivery Point described below.

 

Rate Schedule:

FT-1

Volume / TCD:

94,500 Dth/day (starting at a varying quantity when the Residual Capacity becomes available on the In-Service Date of the South Mainline Expansion Project – anticipated to be July 1, 2020 – and increasing to a flat 94,500 Dth/day on the In-Service Date of the Enhancement Project – anticipated to be April 1, 2022)

Primary Receipt Point:

IWILCOXD (302080)

Note: Gas received at this location must have been transported on the EPNG pipeline to this Point of Receipt.  There are no other sources of gas that can be accessed at this Point of Receipt.

 

Secondary Receipt/Delivery Points:

If (1) the point-to-point reservation rate is not less than $2.3026 per Dth per month (which, for illustrative purposes, is equivalent to $0.0757 per Dth on a daily basis) or (2) the total delivered rate to delivery points in California is at or above EPNG's existing California Maximum Recourse Rate, then all receipt and delivery points will be available at the same rate per Dth as awarded in accordance with this Open Season.

 

Primary Delivery Point:

INORBAJA (301693)

 

Parties interested in capacity from other primary points of receipt and/or to other primary points of delivery are encouraged to contact the Business Development representatives listed below.

 

Capacity Start Date:

The Residual Capacity will be available upon the in-service date of EPNG's South Mainline Expansion Project, which is more fully described in Docket No. CP18-332-000.

 

The Expansion Capacity will be available upon the in-service date of EPNG's Enhancement Project.

Recommended Reservation Bid Rate:

In order to economically justify EPNG's capital investment in the Enhancement Project, EPNG anticipates that it will require a negotiated point-to-point reservation rate of not less than $2.3026 per Dth per month (which, for illustrative purposes, is equivalent to $0.0757 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.

Applicability of Usage Rates:

Successful bidder(s) with a Negotiated Reservation Rate of not less than $2.3026 per Dth per month (which, for illustrative purposes, is equivalent to $0.0757 per Dth on a daily basis) will be subject to a Usage Rate of $0.0000 per Dth for transportation service from Primary Receipt Point(s) to the Primary Delivery Point(s).  All other bidders will be subject to the applicable Usage Rate stated in EPNG's Tariff.

Right-of-First-Refusal (ROFR):

If bidder's bid does not qualify for a ROFR in accordance with Section 4.14(a) of EPNG's Tariff, then EPNG will consider bids conditioned upon receiving a contractual right-of-first-refusal, exercisable and administered in accordance with Section 4.14 of the General Terms and Conditions of EPNG's Tariff.

Recommended Bid Term:

In order to economically justify EPNG's capital investment in the Enhancement Project, EPNG anticipates that it will require a minimum bid term of twenty (20) years (although EPNG reserves the right to reject any bids inconsistent with the terms and conditions of this open season regardless of term).

Available Term:

Subject to EPNG's receipt of all necessary regulatory approvals, permits, rights of way and other surface rights, and other authorizations required for the construction and operation of the Enhancement Project, in a form and substance satisfactory to EPNG in its sole discretion, EPNG anticipates the ability to achieve an in-service date for the initial capacity on the In-Service Date of the South Mainline Expansion Project - – estimated to be July 1, 2020 – and increasing to a flat 94,500 Dth/day on the In-Service Date of the Enhancement Project – anticipated to be April 1, 2022) .

Conditions to Availability and Award of Capacity

The availability and award of capacity offered in this Open Season will be subject to:

 

·         Receipt of sufficient shipper commitments to economically justify the Enhancement Project;

·         Receipt of all necessary EPNG corporate approvals;

·         Availability of capacity required to provide the proposed services.

 

The conditions to the obligations of EPNG to provide the capacity must be satisfied in a manner, form and substance satisfactory to EPNG in its sole discretion.  Successful bidder(s) will be notified by 4:00 p.m., Mountain Time on December 17, 2019 confirming satisfaction of Conditions to Availability and Award of Capacity.

Open Season Start:

September 16, 2019 – 4:00 pm Mountain Time

 

Open Season End:

October 18, 2019 - 2:00 pm Mountain Time

 

Award Notification:

December 17, 2019 – 4:00 pm Mountain Time

 

Bid Sheet:

Email attached Bid Sheet to KMWestBids@KinderMorgan.com

 

NOTE:  EPNG will rely upon the time the bid is received to determine whether the bid was timely.  Bids that are received (as determined by the time stamp on the EPNG's email inbox) after the end date and time listed above will be considered invalid bids and will not be eligible for an award of capacity in this Open Season.  EPNG recommends that bids be submitted well in advance of the closing time listed above to minimize the risk that any email delay could cause a bid to be excluded from consideration.

 

GENERAL OPEN SEASON REQUIREMENTS

 

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: (1) the reservation rate per Dth/month, (2) the reservation rate per Dth/day (which will be converted to a Dth/month rate for the Transportation Service Agreement (TSA) by rounding to the fourth decimal the result of the formula ((daily rate x 365)/12), or (3) the maximum recourse rate.  In addition to the bid rate, each bid shall be subject to all other maximum rates, charges and surcharges, including ACA, Fuel, lost and unaccounted-for gas ("L&U"), retainage 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.

 

Bids offering discounted or negotiated rates must also provide that, subject at all times to FERC's approval of the particular costs, EPNG shall be entitled to recovery of Greenhouse Gas Emissions Costs incurred by EPNG attributable to natural gas transported by EPNG on its system.  As used herein "Greenhouse Gas Emissions Costs" means (a) the cost of any carbon emissions tax or other greenhouse gas assessment that is imposed on EPNG, and/or (b) the cost of any greenhouse gas mitigation efforts, including the costs of credits and offsets that EPNG incurs to comply with any greenhouse gas laws, rules or regulations.  If (i) EPNG is unsuccessful in having the FERC-approved Greenhouse Gas Emissions Costs incurred by it recovered through a FERC-approved surcharge applicable to all shippers, and (ii) such amounts are recoverable only through EPNG's FERC-approved recourse rates, then shipper must agree to modify its negotiated or discounted fixed monthly reservation rate by the amount of EPNG's maximum reservation rate under Rate Schedule FT-1 that is attributable to such costs.

 

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.

 

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 Enhancement Project, then EPNG reserves the right not to move forward with the project 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 the Enhancement Project 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.

 

Current EPNG shippers may submit bids which include requests to reform their existing effective FTSAs (which may include point redesignations) to utilize the offered capacity.  For purposes of evaluating bids and awarding capacity, EPNG will consider only the incremental revenue that would be generated by the bid (e.g., the incremental revenue associated with a higher reservation rate, an increase in Transportation Contract Demand, or for a term that extends beyond the current FTSA term end date etc.).

 

EPNG also reserves the right to seek clarification of bids that have what appears to be an obvious error.  Any clarification by bidders must be provided in writing and within the time requested by EPNG.  Such clarifications shall be incorporated as part of the binding bid submitted by the bidder.

 

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 expansion 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.  Requests for capacity received after the close of the Open Season period will be subject to the terms and conditions set forth in this Open Season

 

BID CONDITIONS

 

EPNG will consider bids that are conditioned upon (1) receipt of the approval of bidder's management, management committee, and/or board of directors or other appropriate management structure by November 15, 2019; and/or (2) bidder securing capacity to any Arizona receipt/delivery points necessary to achieve a contiguous transportation path from the Permian Basin to the California border.  EPNG does not anticipate accepting any other conditions for bids submitted during this Open Season.  EPNG will review all bids and award capacity based upon the criteria outlined below.

 

EVALUATION CRITERIA

 

If EPNG receives acceptable bids for capacity in excess of the Residual Capacity and the Expansion Capacity offered, then EPNG will award and/or allocate the capacity in a manner that yields the highest total Present Value (PV) as calculated below.  In determining which bid(s) yield the highest total PV, EPNG reserves the right to combine multiple bids, in whole or in part, in a manner that results in a total PV of the combined bids that exceeds the highest PV achievable by accepting one or more of the disaggregated bids.  This process could result in a bidder being awarded less capacity than requested (unless such bidder elects on its bid sheet not to accept a pro rata allocation of capacity).

 

PV will be calculated as 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.  Bids stating a commencement date upon the in-service date of any to-be-constructed facilities will be evaluated using EPNG's estimate of the completion date of the required facilities (i.e., July 1, 2020).

 

The PV 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 0.4517% (which is the annual discount rate of 5.42% 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).

 

To provide a fair evaluation, the PV of bids that will be subject to the Usage Rate stated in EPNG's Tariff will also include the value of such Usage Rate, assuming a 100% load factor usage.

 

EXECUTION OF FTSA(S)

 

Each successful bidder and EPNG shall enter into and execute a FTSA reflecting the terms of its bid as awarded by EPNG.  All successful bidders shall execute and return the FTSA within the earlier of the day before the first day of the term of firm transportation service in the bid as awarded by EPNG or twenty (20) business days following the day EPNG tenders the FTSA to the bidder (“Execution Date”).  If a successful bidder fails to fully execute and return the FTSA on or before the Execution Date, then EPNG reserves the right to cancel the successful bidder's binding bid without prejudice as to EPNG's right to seek any and all permitted remedies as a result of the breach of the bid.  The FTSA will be in the form contained in EPNG's Tariff.  EPNG and any successful bidder may mutually agree to enter into and execute more than one FTSA that together reflect all the terms of the successful bid as awarded by EPNG.

 

CREDITWORTHINESS REQUIREMENTS

 

By no later than February 1, 2020, each successful bidder must demonstrate, and maintain throughout the term of the related FTSA(s), satisfaction of creditworthiness in the manner set forth below:

 
1.     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 1.
 
If at any time prior to or 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 1, 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 1, Rated Bidder shall satisfy its creditworthiness obligation by providing one of the forms of credit support described in Section 2 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 1.
 
2.     If at the time bidder is unable to satisfy its creditworthiness obligations in the manner set forth in Section 1 above, then bidder shall satisfy its creditworthiness obligations by providing and maintaining, at its option: (a) an irrevocable, unconditional guarantee of its obligations in connection with this Open Season, and any related 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 1; or (b) an irrevocable letter of credit acceptable to EPNG and from a bank acceptable to EPNG equal to the lesser of two (2) years or the period of time remaining in the term, of the anticipated charges in connection with this Open Season, and any related 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.
 
3.     If at any time bidder is unable to satisfy the creditworthiness standards set forth in Section 1 above, then, upon reasonable request by EPNG, in addition to the requirements set forth in Section 2 above, 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.

 

4.     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.
 
Bidders that fail to satisfy the creditworthiness requirements of this section within a reasonable time will have their capacity award withdrawn.  EPNG reserves the right to seek any and all permitted remedies as a result of the breach of the bid.  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 Anthony Sanabria (719-667-7582) in the Business Development department.

Open Season Bid Sheet

 

Arizona-to-California Residual & Expansion Capacity

 

Form of Service:  Rate Schedule FT

 

Email Bid To: KMWestBids@KinderMorgan.com

 

  1. Shipper Information:

 

Legal Name of Bidder:                                                        

 

Name of Requesting Party:                                                             

 

Title of Requesting Party:                                                   

 

DUNS Number:                                                                  

 

Phone:                                                                               

 

B.    Capacity Bid:

 

Requested Term Start Date:                                    

 

Requested Term End Date:                                     

 

  If this box is checked and bidder's bid does not qualify for a ROFR in accordance with Section 4.14(a) of EPNG's Tariff, then this bid is subject to EPNG providing bidder a contractual ROFR in accordance with Section 4.14(f) of EPNG's Tariff.

 

 

Will you accept a pro rata allocation of capacity if necessary             Yes                 No

 

Offered Capacity:

 

2020

Primary

Receipt

Primary

Delivery

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

IWILCOXD

INORBAJA

 

 

 

 

 

 

20,928

17,274

1,314

2,627

84,903

94,500

Total

 

 

 

 

 

 

20,928

17,274

1,314

2,627

84,903

94,500

2021

Primary

Receipt

Primary

Delivery

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

IWILCOXD

INORBAJA

94,500

88,594

85,872

2,626

1,314

20,910

20,928

17,274

1,314

2,627

84,903

94,500

Total

94,500

88,594

85,872

2,626

1,314

20,910

20,928

17,274

1,314

2,627

84,903

94,500

2022

Primary

Receipt

Primary

Delivery

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

IWILCOXD

INORBAJA

94,500

88,594

85,872

94,500

94,500

94,500

94,500

94,500

94,500

94,500

94,500

94,500

Total

94,500

88,594

85,872

94,500

94,500

94,500

94,500

94,500

94,500

94,500

94,500

94,500

2023 forward

Primary

Receipt

Primary

Delivery

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

IWILCOXD

INORBAJA

94,500

94,500

94,500

94,500

94,500

94,500

94,500

94,500

94,500

94,500

94,500

94,500

Total

 

94,500

94,500

94,500

94,500

94,500

94,500

94,500

94,500

94,500

94,500

94,500

94,500

 

 

 

 

 

 

 

Capacity Bid Sheet:

 

2020

Primary

Receipt

Primary

Delivery

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

Primary

Receipt

Primary

Delivery

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

Primary

Receipt

Primary

Delivery

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2023 forward

Primary

Receipt

Primary

Delivery

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C.    Reservation Rate (select one):

 

  Maximum Recourse Rate

 

  Discounted Recourse Rate:  $ ________ per Dth per Month/Day

 

  Negotiated Rate:  $ ________ per Dth per Month/Day

 

 

D.    Applicability of Usage & Other Charges:

 

Successful bidder(s) with a Negotiated Reservation Rate of not less than $2.3026 per Dth per month (which, for illustrative purposes, is equivalent to $0.0.0757 per Dth on a daily basis) will be subject to a Usage Rate of $0.0000 per Dth for transportation service from Primary Receipt Point(s) to the Primary Delivery Point(s).  All other bidders will be subject to the applicable Usage Rate stated in EPNG's Tariff.  To provide a fair evaluation, the PV of bids that will be subject to the Usage Rate stated in EPNG's Tariff will also include the value of such Usage Rate, assuming 100% load factor usage.

 

In addition, all successful bidders will be subject to the applicable maximum commodity 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 may change from time to time. This includes incremental lateral charges and any third party charges resulting from the use of capacity that EPNG's may hold on other pipelines.

 

By submitting a bid 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.

 
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