September 18, 2018 To All Southern Natural Gas Company Shippers RE: Open Season Announced for Firm Transportation (FT)/Expansion This is to announce an open season to solicit binding bids for firm transportation service ("FT") in Zone 2 of the Southern Natural Gas Company, L.L.C. (“SNG”) system from receipt pins near the McConnells area on the north system of SNG's system. SNG is considering modifying certain facilities to increase its ability to receive gas from this area by approximately 5,000 dth/day (“McConnells expansion facilities”). Incremental firm transportation capacity will be available from the McConnells area to delivery pins upstream of the Tarrant Compressor Station. The capacity available to be awarded may not be available in the same increments to all locations along SNG's north system and may not be available on particular laterals or at certain receipt or delivery pins. This proposed expansion does not offer any expanded capacity east of SNG's Tarrant Compressor Station.
The incremental firm transportation capacity is expected to be available by March 1, 2019. All bids for this capacity must have a requested start date equal to the in-service date of the proposed McConnells expansion facilities or no later than the first day of the month following such in-service date. The actual start date shall be subject to receipt of contracts for adequate capacity to support the project, regulatory approvals by SNG and SNG's construction schedule for the McConnells expansion facilities.
If bid capacity exceeds available capacity, SNG will award the capacity from bids received during the open season on the basis of net present value determined with reference to the rate, volume, term and the date the service is to commence, however, this open season is subject to a prearranged bid that has the right to match any bids with a higher net present value. In calculating the net present value, a discounted cash flow factor of 10.24% will be used. SNG will have the right to aggregate bids in a manner that generates the highest net present value to SNG. Receipt and delivery pin shifts will not be accepted in this open season.
The open season will commence as of the date and time this notice is posted and end at 1:00 p.m. CCT on October 2, 2018.
SNG will not consider bids with terms of less than six (6) years.
SNG reserves the right not to accept, in a not unduly discriminatory manner among similarly situated bids, any bid that is uneconomical to SNG; that would require the construction of additional facilities other than the McConnells expansion facilities; that would require the construction of facilities which are disproportionate in cost to the quantity bid; that does not meet the requirements of these open season guidelines; that contains unacceptable conditions or contingencies; or that contains a start date outside the in-service date of the McConnells expansion facilities as stated above. With the exception of any conditions precedent relating to receipt of regulatory approvals, Shippers must sign a precedent agreement with SNG and have removed all conditions to their bids by a date acceptable to SNG.
SNG reserves the right to not accept bids at less than the maximum tariff rate applicable to this expansion. Seasonal bids for incremental firm capacity will not be considered in this open season. The actual reservation rate to be paid by recourse rate shippers will depend on the ultimate cost and design of the McConnells expansion facilities after all the acceptable bids are taken into account. In addition, Shippers shall pay applicable commodity charges, surcharges and fuel, including fuel for deliveries on SNG's system. Only valid requests for service under the terms of SNG's tariff and under the terms of these open season guidelines will be considered. In the precedent agreement Southern will require each shipper to meet certain minimum financial criteria (the “Creditworthiness Test”) in order to proceed with the expansion opportunity. Shippers may submit bids to SNG for FT service by completing a standard transportation request form for FT service and emailing it to FTServiceRequest@kindermorgan.com. Please call your account manager if you need an FT Request Form or you can paste the following link in your browser and then click on SNG Service Request. http://pipeportal.kindermorgan.com/PortalUI/CommonForms.aspx?TSP=SNGD
On the request form, Shippers should indicate the term (start and end date), quantity (in dth/day), and receipt and delivery pins on SNG's system with the corresponding volume being bid.
Shippers should indicate in their bids the minimum amount of capacity they are willing to take in the event the full contract quantity of the bid is not available or if SNG must prorate the bids. If a bid is submitted in excess of the available capacity and the bids must be prorated, the bid in excess of the available capacity will be prorated as though the bidder bid for the maximum available capacity to be awarded.
SNG will take no longer than ten (10) business days to notify Shippers of bid awards. Shippers that have not executed a precedent agreement or an amendment to their Service Agreement with SNG by the close of the open season will be required to do so within thirty (30) business days of the award notice, otherwise, any remaining bids that have not been memorialized by a binding agreement will be rejected.
If you have any questions regarding the Open Season, please contact your Account Manager or Devy Traylor in Business Development at 205-325-3524.
SNG Marketing