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Subject: Northwest Pipeline Announces Reverse Open Season Northwest has announced its Colorado Hub Connection Project ( Subject: Northwest Pipeline Announces Reverse Open Season
Northwest has announced its Colorado Hub Connection Project (
CHC) proposing to
construct a lateral from the Greasewood Hub and/or Meeker Hub areas (Hubs) to a
mainline tie-in point near Sand Springs, Colorado. The CHC project will provide a direct
outlet for Piceance Basin gas supplies to access markets served by Northwest.
In
addition, as part of the CHC project, Northwest has proposed the use of its existing
available mainline capacity to provide a combined lateral and mainline firm service from
either of the Hubs to Northwest
s mainline delivery points near Ignacio, Colorado, where
Northwest interconnects with El Paso Natural Gas Company and Transwestern Pipeline
Company, LLC.
Northwest recently completed an open season wherein it received numerous Expressions
of Interest in the CHC from shippers who may be interested in contracting for existing
capacity on Northwest
s mainline system to be used in conjunction with services that
Northwest has proposed as part of the CHC project.
The open season resulted in
expressions of interest totaling more than 600MDth/d of mainline capacity for contract
terms up to 15 years.
To determine whether current holders of existing capacity on Northwest
s mainline
system have an interest in relinquishing capacity that could be used in connection with
the proposed CHC project, Northwest is conducting this reverse open season (
ROS)
seeking relinquishments of southflow capacity in the corridor extending from Stanfield,
Oregon, to Ignacio, Colorado.
In contemplation of this ROS, Northwest has already entered into a Memorandum of
Agreement (
MOA) with an existing shipper who is offering to relinquish certain
Stanfield, Oregon, to Ignacio, Colorado, capacity that may be used in the CHC project.
This offer and any other offers of relinquishment received in response to this ROS will be
evaluated on a non-discriminatory basis.
As currently contemplated, the CHC project will allow Northwest to build new lateral
facilities connecting its mainline system with gas supplies being developed in the
Piceance Basin.
The costs of such new facilities are anticipated to be offset by
Northwest
s ability to collect maximum rates under long-term contracts for certain south
flow capacity available on the southern portion of Northwest
s mainline system (the
Southend Capacity) that Northwest has historically only been able to market on a short-
term basis or at discounted rates. Through the sale of Northwest
s available Southend
Capacity, Northwest believes that the basic economics of the proposed CHC project can
be justified. Thus, potential sales to interested CHC shippers of Northwest
s Southend
Capacity will be satisfied first before recontracting the capacity commitments that other
Shippers might offer for use in the CHC project via capacity relinquishment.
While the CHC project has a proposed in-service date of November 1, 2010, Northwest
will also consider the possible relinquishment of capacity in the Stanfield, Oregon, to
Ignacio, Colorado, corridor, commencing with dates both earlier and later than November 1, 2010. The possible relinquishment of capacity at times other than the projected in-
service date of new CHC facilities (projected to be November 1, 2010), will ultimately be
dependent upon possible new transportation commitments from prospective shippers
willing to take such capacity at times other than coincidental with the in-service date of
the CHC facilities. The relinquishment is also subject to (1) Northwest first securing new
capacity commitments for Northwest
s available Southend Capacity, (2) Northwests
determination in its sole discretion that the capacity will used in the CHC project, and (3)
Northwest receiving all necessary regulatory approvals and completing the CHC project.
If the aggregate capacity relinquishment offers exceed the amount that Northwest, in its
sole discretion, incorporates
into the CHC,
Northwest
will
determine which
relinquishments will be accepted, after giving due consideration to (1) those capacity
commitments that provide the greatest benefit to Northwest
s displacement capabilities,
and (2) those relinquishment offers that Northwest estimates would provide the greatest
benefit to Northwest
s system and the CHC project. Northwest plans to complete these
evaluations following the execution of the CHC transportation precedent agreements but
not later than December 31, 2007.
Any Shipper desiring to permanently relinquish eligible firm capacity must execute and
submit a binding MOA, by facsimile (801) 584-7076, certified mail or courier, to
Northwest by 3:00 p.m. (MDT), July 27, 2007. Interested Shippers should contact Hank
Henrie at (801) 584-6625 to obtain a pro forma MOA which will (1) address the terms
and conditions associated with any offer of relinquishment of capacity, and (2) set forth
the specific capacity paths and commitments a Shipper may want to offer for
relinquishment.
The MOA will also specify that Northwest
s ultimate acceptance of
relinquished capacity for use in the CHC will be contingent upon receipt of all required
regulatory approvals and actual commencement of construction of the CHC incorporating
the relinquished capacity.