Rockies Express Pipeline LLC
REX Zone 3 Capacity Enhancement Project
Volume 1
Public Information
March 30, 2015
Federal Energy Regulatory Commission Docket Branch, Room 1A 888 First Street, N.E. Washington, D.C. 20426
Attention: Ms. Kimberly D. Bose, Secretary
Re: Rockies Express Pipeline LLC; REX Zone 3 Capacity Enhancement Project Abbreviated Application for a Certificate of Public Convenience and Necessity
Ladies and Gentlemen:
Enclosed herewith for filing with the Federal Energy Regulatory Commission (“Commission”) is Rockies Express Pipeline LLC’s (“Rockies Express”) abbreviated application pursuant to Section 7(c) of the Natural Gas Act and Part 157 of the Commission's Regulations, for a certificate of public convenience and necessity authorizing the construction and operation of certain mainline compression and ancillary facilities that will enable Rockies Express to offer an additional 800,000 Dth/d of east-to- west firm transportation service within Zone 3 of its system. The project is referred to as the “REX Zone 3 Capacity Enhancement Project.”
Description of Items Being Filed
Rockies Express has organized the items being filed herein into the following volumes described below pursuant to the Commission’s Critical Energy Infrastructure Information (“CEII”) filing guidelines.
Public Information
Volume 1 is comprised of the following: • This letter of transmittal • Application text • Federal Register Notice • Exhibits required pursuant to Section 157.14 of the Commission’s Regulations (excluding Exhibits F-I, G/G-I , G-II, and I)
Volume 2 contains Exhibit F-I (Environmental Resource Reports), Reports 1 through 13
370 Van Gordon Street Lakewood, CO 80228-1519 303.763.2950
CEII
Volume 3 contains diagrams and drawings from the Environmental Resource Reports
Volume 4 contains Exhibit G/G-I and Exhibit G-II
Privileged Information
Volume 5 contains Exhibit I
Volume 6 contains the landowner list and cultural resource information from the Environmental Resource Reports
Filing Information
Rockies Express respectfully requests: (i) that Volumes 3 and 4 be treated as CEII; and (ii) that Volumes 5 and 6 be accorded privileged and confidential treatment pursuant to 18 C.F.R. § 388.112. Accordingly, Rockies Express has marked Volumes 3 and 4 with “Contains CEII – Do Not Release,” and Volumes 5 and 6 have been marked “Contains Privileged Information – Do Not Release.” The person to be contacted regarding this request for privileged treatment is:
David Haag Vice President, Regulatory Rockies Express Pipeline LLC 370 Van Gordon Street Lakewood, Colorado 80228-1519 Telephone: (303) 763-3258
Rockies Express is filing this application in accordance with the Commission’s eFiling procedures. In addition, two complete sets of the application will be submitted to OEP Room 62-46 and one complete set is being submitted to OGC-EP Room 101-56. As certified in the verification statement to this filing, the paper copies of the application contain the same information as the electronic version.
Very truly yours, Rockies Express Pipeline LLC
By /s/ David Haag David Haag Vice President, Regulatory
2
UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION
) Rockies Express Pipeline LLC ) Docket No. CP15-___-000 )
ABBREVIATED APPLICATION OF ROCKIES EXPRESS PIPELINE LLC FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY
Pursuant to Section 7(c) of the Natural Gas Act (“NGA”), 15 U.S.C. § 717f(c)
(2012), and Part 157 of the regulations of the Federal Energy Regulatory Commission
(“Commission” or “FERC”), 18 C.F.R. Part 157 (2014), Rockies Express Pipeline LLC
(“Rockies Express” or “REX”) hereby files this abbreviated application for a certificate of public convenience and necessity (“Application”) requesting authorization to construct and operate the new facilities to enable Rockies Express to offer an additional 800,000 dekatherms per day (“Dth/d”) of east-to-west firm transportation service within Zone 3 of its system. In particular, the proposed facilities will increase the Rockies Express Zone 3 east-to-west mainline capacity by 800,000 Dth/d from receipts at Clarington, Ohio to corresponding deliveries of 520,000 Dth/d and 280,000 Dth/d to Lebanon, Ohio and
Moultrie County, Illinois, respectively. The proposed facilities will allow the pipeline to meet demand for east-to-west transportation of gas from the Appalachian Basin to
Midwestern gas interconnects and markets, while continuing to meet all of its existing firm service obligations for both eastbound and westbound firm transportation (the “REX
Zone 3 Capacity Enhancement Project” or “Project”).
Rockies Express’s proposal includes: (i) the construction of three new mainline compressor stations located in Pickaway and Fayette Counties, Ohio and Decatur County, Indiana; (ii) the installation of additional compressor units at one existing compressor station located in Muskingum County, Ohio; and (iii) the construction of ancillary facilities.
As demonstrated herein, the REX Zone 3 Capacity Enhancement Project is required by the present and future public convenience and necessity. Through these proposed enhancements to its existing infrastructure, the Rockies Express system will be able to meet market demands for economical pipeline transportation capacity between the
Appalachian Basin gas producing markets and Midwestern consuming markets. As the
Project involves only the construction of new compressor stations, the addition of new compressor units at an existing compressor station, and certain ancillary facilities, the
Project will cause limited environmental disturbance. Further, the Project will not have any adverse rate or service consequences to existing shippers. Rockies Express proposes to provide service on the Project pursuant to its currently-approved tariff rates; however, the new service will be subject to a separately-stated fuel rate, ensuring that existing shippers do not subsidize the operations of the Project. Rockies Express respectfully requests that the Commission issue an order authorizing the REX Zone 3 Capacity
Enhancement Project on or before December 31, 2015, in order to allow Rockies Express to meet its in-service dates for the firm service shippers that have subscribed to the
Project. In support thereof, Rockies Express states as follows:
I. EXECUTIVE SUMMARY
The Rockies Express mainline is a large diameter, high pressure pipeline that spans over 1,700 miles between western Wyoming/Colorado and eastern Ohio. With connections or access to major Rocky Mountain and Appalachian supply basins, and
2 numerous interconnections with interstate pipelines, Rockies Express is a de facto header system.
The Rockies Express system originally was conceived and built as an outlet for
Rocky Mountain natural gas production. However, the pipeline recently has begun providing firm transportation from east-to-west in Zone 3 to enable Appalachian gas supplies to reach Midwest interconnects and markets.
The facilities described herein will expand the Rockies Express system’s east-to- west firm capacity in Zone 3 in order to meet new transportation demands for gas originating in the Appalachian Basin. The additional gas supplies will be delivered by
Rockies Express to Midwest pipeline interconnects and markets as far west as Illinois.
Based on the geographical location of the mainline and the physical attributes of its system, the Project is particularly well situated to provide an economic and reliable transportation alternative for Appalachian gas supplies with limited associated environmental and landowner disturbance.
By implementing the enhancements proposed herein, Rockies Express will have the ability to offer an additional 800,000 Dth/d of east-to-west forwardhaul capacity in
Zone 3. Existing firm shippers’ eastbound and westbound service will not be adversely impacted by the Project; rather, the facility enhancements sought herein will allow
Rockies Express to operate its system to continue meeting all current firm shippers’ contract obligations while also providing new shippers with firm east-to-west transportation service.
As demonstrated herein, the Project satisfies all of the criteria of the
Commission’s Policy Statement on the Certification of New Interstate Natural Gas
3 Pipeline Facilities (“Certificate Policy Statement”).1 As a threshold matter, Rockies
Express’s existing shippers will not subsidize the Project. Rather, the Project will be supported by firm commitments from shippers who will utilize virtually all of the newly- created east-to-west forwardhaul capacity.
Rockies Express conducted a non-binding open season for the Project and thereafter it received binding long-term commitments from new shippers for 700,000
Dth/d of the 800,000 Dth/d east-to-west forwardhaul capacity that will be created from the Project. After securing those commitments, Rockies Express conducted a binding open season; except for the pre-arranged shippers bids, no conforming bids were received in response to the binding open season.2
Rockies Express proposes to provide service on the Project pursuant to its currently-approved tariff rates, which, as demonstrated below, leaves Rockies Express the entity responsible for both marketing (on an open access basis) and the costs associated with the unsubscribed portion of the Project’s capacity.3 Further, in order to ensure that existing shippers do not subsidize the Project, Rockies Express proposes to establish a separately-stated rate for fuel.
Second, the Project will have no adverse effects on the pipeline’s existing shippers because existing firm commitments will continue to be satisfied pursuant to
1 Certification of New Interstate Natural Gas Pipeline Facilities, Statement of Policy, 88 FERC ¶ 61,227 (1999); order clarifying statement of policy, 90 FERC ¶ 61,128; order further clarifying statement of policy, 92 FERC ¶ 61,094 (2000) (“Certificate Policy Statement”). 2 The remaining Project capacity includes 100,000 Dth/d of receipts from Clarington, Ohio, of which the entire quantity could be delivered as far west as Lebanon, Ohio and up to 50,000 Dth/d could be delivered to points west of Lebanon located as far west as Moultrie, Illinois. 3 Although Rockies Express is proposing to provide service on the Project under its currently approved Zone 3 rate of $0.8792 per Dth/d, the calculated incremental rate associated with the Project’s capacity of $0.3644 per Dth/d was determined using the total Project capacity of 800,000 Dth/d (see Exhibit N). As explained herein, the currently unsubscribed capacity on the Project will be available pursuant to Rockies Express’ Tariff.
4 Rockies Express’s currently effective tariff. Further, with the establishment of a separately-stated fuel rate for the new service, existing eastbound and westbound shippers will not subsidize any of the costs of the Project. In fact, the Project will benefit existing pipelines and their captive customers because the proposed enhancements will provide interconnected pipelines and gas users access to a more diversified supply of gas. In addition, the Project is expected to result in additional throughput for interconnected pipelines in Rockies Express’s Zone 3.
Finally, the Project will have limited impacts on landowners and communities because the expansion capacity will be created by the construction of three new compressor stations, along with the addition of compressor units at one existing compressor station. Rockies Express has taken steps to minimize the impacts of the
Project on landowners and communities and plans to purchase the land necessary for construction through negotiation without the use of eminent domain. Thus, on balance, the public benefits of the Project far outweigh the minimal impacts.
For these reasons, and as fully demonstrated in this Application, the Project meets the Certificate Policy Statement’s test. Therefore, the Commission should find that the
Project is required by the public convenience and necessity and issue a certificate for the
Project.
II. COMMUNICATIONS
The names, titles, addresses, telephone numbers of the persons to whom correspondence and communications concerning this Application should be directed are as follows:
5 *David Haag *Mustafa P. Ostrander Vice President, Regulatory Assistant General Counsel ROCKIES EXPRESS PIPELINE LLC Lisa Purdy 370 Van Gordon Street Senior Attorney Lakewood, CO 80228-1519 ROCKIES EXPRESS PIPELINE LLC Tel. (303) 763-3258 370 Van Gordon Street [email protected] Lakewood, CO 80228-1519 Tel. (303) 763-3378 [email protected] [email protected]
*Paul Korman *Mona Tandon *Michael R. Pincus VAN NESS FELDMAN, LLP 1050 Thomas Jefferson Street, NW Washington, D.C. 20007-3877 Tel. (202) 298-1800 [email protected] [email protected] [email protected]
Each of the individuals identified above is designated to receive service pursuant to Rule
2010, 18 C.F.R. § 385.2010, of the Commission’s Rules of Practice and Procedure.
Rockies Express respectfully requests that the Commission waive Rule 203(b)(3), 18
C.F.R. § 385.203(b)(3), in order to allow Rockies Express to include all of these representatives on the official service list for this proceeding.
III. IDENTITY OF APPLICANT
The exact legal name of the applicant is Rockies Express Pipeline LLC. The principal place of business of Rockies Express is at 4200 West 115th Street, Suite 350,
Leawood, Kansas 66211-2609. Rockies Express is a Delaware limited liability company that is owned by three members: 50% by Rockies Express Holdings, LLC, an indirect wholly-owned subsidiary of Tallgrass Development, LP; 25% by P&S Project I, LLC, a
6 subsidiary of Sempra Energy; and 25% by COPREX LLC, a subsidiary of Phillips 66.
Rockies Express is managed by a Board of Directors comprised of representatives from each of its members. Tallgrass NatGas Operator, LLC, an indirect wholly-owned subsidiary of Tallgrass Development, LP, is the operator of Rockies Express’s system.
Rockies Express is a “natural-gas company” as defined by Section 2(6) of the NGA and is subject to the jurisdiction of the Commission.
IV. BACKGROUND AND EXISTING OPERATIONS
The existing Rockies Express facilities are comprised of over 1,700 miles of thirty-six and forty-two-inch pipeline, associated compression, and certain laterals of various diameters, which provides natural gas transportation services within the States of
Colorado, Wyoming, Nebraska, Kansas, Missouri, Illinois, Indiana and Ohio. The
Commission issued certificates of public convenience and necessity approving the original construction and operation of the Rockies Express pipeline in three phases:
REX/Entrega,4 REX-West,5 and REX-East.6 The three phases approximate the three rate zones on Rockies Express (Zone 1, Zone 2, and Zone 3). As relevant here, Zone 3 is the easternmost rate zone that encompasses approximately 642 miles of mainline facilities, including five compressor stations, extending between Audrain County, Missouri and
Monroe County, Ohio.
The Rockies Express facilities in Zone 3 also include the Seneca Lateral, a 14- mile, 24-inch pipeline lateral (with booster compression) located in Noble and Monroe
Counties, Ohio, which connects the MarkWest Seneca Gas Processing Plant to Rockies
4 Entrega Gas Pipeline Inc., 112 FERC ¶ 61,177, order on reh’g, 113 FERC ¶ 61,327 (2005). 5 Rockies Express Pipeline LLC, 119 FERC ¶ 61,069 (2007). 6 Rockies Express Pipeline LLC, 123 FERC ¶ 61,234, order granting and denying clarification, 125 FERC ¶ 61,160 (2008).
7 Express’s mainline. The Seneca Lateral has a firm capacity of 600,000 Dth/d. Rockies
Express initially placed the Seneca Lateral in service in June 2014. Rockies Express constructed, and currently is operating, the Seneca Lateral pursuant to Section 311(a) of the Natural Gas Policy Act of 1978 (“NGPA”).7 On March 2, 2015, Rockies Express filed an abbreviated application for a certificate of public convenience and necessity, in which it is seeking authority to convert the operation of the Seneca Lateral from Section
311(a) of the NGPA to Commission regulation pursuant to the NGA.8
Recently, the Commission approved certain system modifications necessary to enable Rockies Express to provide an additional 1,200,000 Dth/d of firm transportation service from east-to-west within Zone 3, while continuing to satisfy existing firm west- to-east transportation commitments (“Zone 3 East-to-West Project”).9 When complete, the Zone 3 East-to-West Project will transform Zone 3 of Rockies Express into a fully bi- directional system capable of effectuating forward haul deliveries in an eastward and westward direction within Zone 3. Rockies Express anticipates that the Zone 3 East-to-
West Project will be complete within the second quarter of 2015.
Rockies Express transports gas from the Rocky Mountain and Appalachian producing basins to markets and downstream pipelines located throughout the Midwest through its jurisdictional interstate pipeline on an open-access, non-discriminatory basis pursuant to transportation rate schedules and general terms and conditions authorized in its Third Revised Volume No. 1 of its FERC Gas Tariff (“Tariff”).
7 15 U.S.C. § 3371(a). Rockies Express filed the Advance Notifications of Construction for the Seneca Lateral Project and the Seneca Compressor Expansion Project in Docket Nos. CP13-539-000 and CP14- 194-000, respectively, and the Commission’s staff issued Environmental Assessment Reports upon the conclusion of the thirty-day review periods in each docket. 8 Abbreviated Application of Rockies Express Pipeline LLC for a Certificate of Public Convenience and Necessity, Docket No. CP15-102-000 (March 2, 2015). 9 Rockies Express Pipeline LLC, 150 FERC ¶ 61,161 (2015).
8 V. MARKET DEMAND
The U.S. has experienced substantial growth in gas production in the Appalachian
Basin, including from the Marcellus and Utica shale formations in Ohio, West Virginia, and Pennsylvania. As a consequence, natural gas market participants are seeking an economical and near-term transportation solution to move these new supplies to
Midwestern markets,10 which include retail consumers, commercial users, and new gas- fired power generation that is anticipated to replace certain coal plants. Based on the location of its mainline and existing Midwest delivery points, Rockies Express is uniquely positioned to provide Midwest gas consuming markets greater access to the burgeoning Appalachian production while continuing to provide an outlet for Rocky
Mountain production.
Rockies Express initially conducted a non-binding open season from May 30,
2014 to June 27, 2014, to assess market interest in transporting gas quantities in an east- to-west (westbound) direction within Zone 3. Thereafter, Rockies Express held a binding open season from March 2, 2015 to March 13, 2015 to solicit interest in the firm transportation of gas on the Project beginning in the third or fourth quarter of 2016.11
Ultimately, Rockies Express secured long-term binding commitments (“Precedent
Agreements”) with six shippers for a total firm transportation commitment of 700,000
Dth/d. The following table identifies these shippers, the contract term, and each shipper’s quantity:
10 See, e.g., Office of Enforcement’s 2013 State of the Markets Report at p. 7 (Mar. 20, 2014) (available at http://www.ferc.gov/market-oversight/reports-analyses/st-mkt-ovr/2013-som.pdf.);Office of Enforcement’s 2014 State of the Markets Report at p. 8 (available at http://ferc.gov/market-oversight/reports-analyses/st- mkt-ovr/2014-som.pdf). 11 A copy of both open season notices is attached hereto as Exhibit Z-1.
9 Shipper Term Quantity (Years) (Dth/d) American Energy – Utica, LLC 15 150,000 EdgeMarc Energy Holdings, LLC 15 50,000 EQT Energy, LLC 15 200,000 Gulfport Energy Corporation 15 50,000 Jay-Bee Oil & Gas, Inc. 15 150,000 Triad Hunter, LLC 15 100,000 TOTAL 700,000
Rockies Express herein proposes to construct new mainline facilities within Zone
3 to enable Rockies Express to provide 800,000 Dth/d of new east-to-west forward haul transportation service, while continuing to meet all of its existing eastbound and westbound firm commitments. This proposed east-to-west Zone 3 capacity is in addition to the currently contracted 600,000 Dth/d of east-to-west firm transportation received on the Rockies Express mainline from the Seneca Lateral and—upon completion—the additional 1,200,000 Dth/d of east-to-west capacity generated by the Zone 3 East-to-West
Project certificated in Docket No. CP14-498. This incremental westbound flow will complement the historic eastbound flow on the mainline with no adverse effect to any existing eastbound or westbound shippers’ firm transportation service.
The attached Exhibits G and G-II provide detailed diagrams describing the operational characteristics for the service to be provided by the Project. Diagram 1 presents the maximum east-to-west flow design capacity in Zone 3 utilizing the zone’s existing facilities (as modified in accordance with the NGA Section 7(c) certificate issued in Docket No. CP14-498). Diagram 2 presents the bi-directional operation of Zone 3 at the anticipated contract subscription level and associated receipt-delivery pairings as of
February 2015 (again, reflecting the facilities authorized in Docket No. CP14-498).
Diagram 3 illustrates Zone 3 operations and completion of the facilities proposed herein
10 and reflects the maximum singular east-to-west flow design capacity in Rockies
Express’s Zone 3 from receipt interconnects proximate to Clarington, Ohio (2,000,000
Dth/d) and the Seneca Lateral (600,000 Dth/d) to delivery interconnects proximate to
Lebanon, Ohio (520,000 MDth/d); and 2,080,000 Dth/d to the NGPL delivery interconnect in Moultrie County, Illinois. Diagram 4 is essentially a combination of
Diagrams 2 and 3 that reflects the Project’s operational design (Diagram 3) layered onto the pipeline’s expected operations as of April 2015 (Diagram 2). Diagram 4 illustrates that Rockies Express can meet all of its existing and anticipated Zone 3 contractual obligations.
The Precedent Agreements, which contain the detailed conditions under which the negotiated rate contracts for service on the Project will be executed, are attached as
Exhibit I and submitted herewith in Volume 5. Rockies Express requests privileged treatment of the Precedent Agreements under Section 388.112 of the Commission’s regulations,12 because they contain commercially sensitive, non-public information.
Public release now of the specific terms of the Precedent Agreements will put Rockies
Express and its Project shippers in a commercially detrimental position, since natural gas market participants are still actively negotiating other commercial arrangements in the
Appalachian region. Nonetheless, Rockies Express confirms that the terms and conditions of service under the negotiated rate contracts to be executed will conform to the standard form of service agreement for shippers under Rate Schedule FTS. Not later than 30 days and not earlier than 60 days before placing the Project in service, as required by Section 154.207 of the Commission’s regulations,13 Rockies Express will file either
12 18 C.F.R. § 388.112. 13 18 C.F.R. § 154.207.
11 the negotiated rate contracts or revised tariff sections containing the information required by the Commission’s negotiated rates policy.14
VI. REX ZONE 3 CAPACITY ENHANCEMENT PROJECT PROPOSAL
Rockies Express requests that the Commission issue a certificate of public convenience and necessity under NGA Section 7(c) authorizing Rockies Express to construct and operate the following facilities comprising the REX Zone 3 Capacity
Enhancement Project:
1. New Compressor Stations
The Project will involve the construction of the following new compressor stations: 15
a. Columbus Compressor Station: Four Solar Mars 100 gas compressor sets
site-rated at 12,357 horsepower each (49,428 total horsepower) and ancillary
equipment, located in Section 11, Township 9 North, Range 21 West, Walnut
Township, Pickaway County, Ohio.
b. Washington Court House Compressor Station: One Solar Mars 100 gas
compressor set site-rated at 12,745 horsepower and two Solar Mars 90 gas
compressor sets site-rated at 9,523 horsepower each (31,791 total horsepower)
and ancillary equipment, located in Jefferson Township, Fayette County,
Ohio.
14 See Section 33 of the General Terms and Conditions for service of Rockies Express’ FERC Gas Tariff, Third Revised Volume No. 1 for the negotiated rates provision. See generally, NorAm Gas Transmission Company, 77 FERC ¶ 61,011 at p. 61,037 (1997). 15 Rockies Express will monitor the proposed compressor stations to determine whether they may meet the parameters discussed in the Interstate Natural Gas Association of America White Paper entitled “Waste Energy Opportunities for Interstate Natural Gas Pipelines” (February 2008) for the potential for recovery of waste heat.
12 c. St. Paul Compressor Station: Three Solar Mars 100 gas compressor sets site-
rated at 12,346 horsepower each (37,038 total horsepower) and ancillary
equipment, located in Section 35, Township 12 North, Range 8 East, Adams
Township, Decatur County, Indiana.
2. Additional Compressor Horsepower at Existing Station
a. Chandlersville Compressor Station: Three Solar Mars 100 gas compressor sets
site-rated at 12,800 horsepower each (38,400 total horsepower) and ancillary
equipment installed in parallel with the existing compressor units, located in
Sections 19 and 20, Township 11 North, Range 13 West, Harrison and Brush
Creek Townships, Muskingum County, Ohio.
3. Ancillary Facilities
In addition to the facilities described above for which certificate authorization is requested, Rockies Express will construct and operate, under the authority of Section
2.55(a) of the Commission’s regulations,16 the following ancillary facilities:
1. Power and Control Room buildings with an office for personnel at the
proposed Columbus, Washington Court House, and St. Paul Compressor
Station sites and new Power Distribution Center buildings at the existing
Hamilton (Section 1, Township 2 East, Range 4 North, Turtlecreek
Township, Warren County, Ohio) and Chandlersville Compressor Station
sites; and
2. Gas cooling equipment at the proposed Columbus, Washington Court
House, and St. Paul Compressor Station sites and at the existing Hamilton
and Chandlersville Compressor Station sites.
16 18 C.F.R. § 2.55(a)
13 The total estimated construction cost for the Project facilities is $532,072,560, including overhead and contingency. The details of this estimated cost are submitted as
Exhibit K. In accordance with the Commission’s order issued March 18, 2010 in Docket
No. AD10-3-000, the Allowance for Funds Used During Construction (“AFUDC”) accruals are calculated consistent with the following conditions: “(1) capital expenditures for the project have been incurred; and (2) activities that are necessary to get the construction project ready for its intended use are in progress.”17
VII. COST OF SERVICE, REVENUES, AND PROPOSED RATES
Rockies Express is entering into 15-year negotiated rate agreements for a total of
700,000 Dth/d with those new shippers identified above in this Application. As demonstrated by Exhibit N, the incremental reservation rate revenues associated with the
Project exceed the costs to render the new east-to-west firm transportation from the facilities proposed herein. Consequently, Rockies Express proposes to apply its currently effective Part 284 transportation reservation rates as the applicable recourse rates for service on the capacity to be created as a result of the Project.18 However, in order to ensure that existing shippers will not subsidize the cost of fuel associated with the
Project, Rockies Express proposes to establish a separately-stated fuel rate applicable exclusively to the shippers utilizing the REX Zone 3 Capacity Enhancement Project.
Rockies Express is providing herein under Exhibit N, a Revenues-Expenses-
Income Statement that shows the pro forma revenues and costs in constructing and operating the proposed facilities. Exhibit N reflects the estimated cost of service
17 Florida Gas Transmission Co., 130 FERC ¶ 61,194, at P 25 (2010). 18 The Commission has already determined that Rockies Express’s currently effective Tariff rates for transportation under Rates Schedule FTS, which are stated as a zonal matrix, apply to east-to-west transportation within Zone 3. See Rockies Express Pipeline LLC, 145 FERC ¶ 61,176 at P 46 n40 (2013).
14 attributable to the proposed facilities for the first three years of operations and the estimated rate base attributable to the proposed facilities.19 Exhibit N demonstrates that the capital cost and incremental cost of service are met from the negotiated rate firm shipper contracts.
Rockies Express proposes to charge a separate fuel rate for shippers on the
Project. This separately-stated fuel rate is derived on Exhibit P and is estimated at 1.24 percent, compared to the current Zone 3 rate of 0.13 percent. Additionally, Rockies
Express proposes to charge a separately-stated electric cost of $0.0309 per Dth, compared to the current Zone 3 electric cost of $0.0082 per Dth.
VIII. ENVIRONMENTAL COMPLIANCE
The proposed Project facilities are designed, and will be constructed, in a manner that will minimize environmental impacts and landowner disruption. Rockies Express will acquire the additional land necessary to construct and operate the new Columbus,
Washington Court House and St. Paul Compressor Stations as follows: approximately
24.008 acres at Columbus; 40.779 acres at Washington Court House; and 80 acres at St.
Paul. Additional land will not be required at the existing Hamilton and Chandlersville stations.
Rockies Express intends to obtain the additional land required for the Project directly from private landowners through negotiation; Rockies Express does not anticipate using eminent domain. An Environmental Report submitted herewith as
Exhibit F-I provides an analysis of the existing environmental conditions and the impact of the proposed facilities on the environment. Within the larger land areas acquired by
19 Rockies Express is using the same return and depreciation factors from its cost of service contained in Docket No. CP07-208.
15 Rockies Express, disturbance for three new compressor stations will be as follows: 23.4 acres of construction disturbance with a resulting permanent disturbance of 9.9 acres at
Columbus; 25.9 acres of construction disturbance with a resulting 9.5 acres of permanent disturbance at Washington Court House; and 21.1 acres of construction disturbance with a resulting 9.1 acres of permanent disturbance at St. Paul.20 The construction disturbance at Chandlersville and Hamilton will be in previously disturbed areas within the fence line of the existing sites.
Rockies Express has been, and continues to be, engaged in consultations and coordination with the affected federal and state government agencies concerning the proposed construction activities associated with the Project. The proposed Columbus and
Washington Court House Compressor Stations, located in Ohio, involve consultation with the U.S. Fish and Wildlife Service (“USFWS”) Region 3, the Ohio State Historic
Preservation Office (“Ohio SHPO”), Native American Tribes, the Ohio Environmental
Protection Agency (“Ohio EPA”), and the Ohio Department of Natural Resources. The proposed St. Paul Compressor Station, located in Indiana, involves consultation with the
USFWS Region 3, the Indiana Department of Natural Resources (“Indiana DNR”) –
Division of Historic Preservation and Archaeology, Native American Tribes, the Indiana
Department of Environmental Management (“Indiana DEM”), and the Indiana DNR –
Division of Fish and Wildlife. Requests for consultation and concurrences were submitted to the USFWS, state historical preservation authorities, Tribes and state wildlife agencies in March 2015.
20 Rockies Express recognizes the applicability of the Indiana Utility Regulatory Commission’s voluntary pipeline construction guidelines, established pursuant to Indiana Code 8-1-22.6 et seq., to the St. Paul Compressor Station.
16 Required air permitting for the Columbus and Washington Court House
Compressor Stations was submitted to the Ohio EPA – Division of Air Pollution Control in December, 2014. The Columbus Compressor Station requires a Permit to Install prior to construction and operation. Following construction, Rockies Express will be required to apply for and obtain a Title V permit to operate within twelve months of commencing operation of the Columbus Compressor Station because emissions will exceed the Title V major source threshold for criteria pollutants NOx and CO. Emissions from the
Washington Court House Compressor Station will not exceed the Title V major source threshold for criteria pollutants; therefore, Rockies Express has applied for a Permit to
Install and Operate. The St. Paul Compressor Station requires a Title V permit for the installation and operation, and this was submitted to the Indiana DEM – Office of Air
Quality in January, 2015. Further detail on the types of permits and modeling required is provided in Resource Report 9. Noise Impact Assessments have been completed and
Rockies Express will commit to the proposed noise mitigation measures that will bring the new compressor stations and existing compressor station modifications into compliance with the Commission’s 55 dBA Ldn sound limit at Noise Sensitive Areas.
Rockies Express also commits to compliance with the Commission’s Upland Erosion
Control, Revegation, and Maintenance Plan, (May 2013) (“Plan”) and Wetland and
Waterbody Construction and Mitigation Procedures (May 2013) (“Procedures”) for all construction and reclamation activities. Rockies Express’s adherence to the
Commission’s Plan and Procedures will ensure sufficient protection of environmental resources impacted by the Project.21
21 See Rockies Express Pipeline LLC, 150 FERC ¶ 61,161, at P 32 (Plan and Procedures are refined protection measures the adoption of which is evidence of sufficient mitigation measures).
17 As set forth in the Environmental Report that accompanies this Application,
Rockies Express has complied, and will continue to comply, with the Commission’s landowner requirements contained in 18 C.F.R. § 157.6(d). A list of affected landowners is included with the Environmental Report.22
Within three business days following the Commission’s issuance of a notice of the Application, Rockies Express will mail the required formal notification letter in conformance with 18 C.F.R. § 157.6(d)(3) to each affected landowner and the county, state and federal governments and agencies involved in the Project.23 Further, within three business days after the Commission assigns a docket number for the Application, an electronic copy of the Application will be made available for review in centrally located public libraries in each of the counties where construction will occur. A hard copy of the
Application will be furnished to any requesting party. Within fourteen days after the assignment of a docket number, a notice that the Application has been filed will be published twice in newspapers of general circulation in the affected counties.
IX. COMPLIANCE WITH THE CERTIFICATE POLICY STATEMENT
On September 15, 1999, the Commission issued its Certificate Policy Statement to provide guidance regarding the evaluation of applications to certificate new construction.24 The Certificate Policy Statement established criteria for determining
22 Rockies Express mailed a letter dated May 5, 2014 to all landowners along the pipeline right-of-way in Zone 3 introducing Tallgrass Development, LP as the party that acquired Kinder Morgan’s ownership interest in Rockies Express and as the new operator of the pipeline. The letter also made the landowners aware of Rockies Express’s future plans to develop new natural gas transportation services and facilities in connection with its existing pipeline to move the growing supply of natural gas from the production areas in the Northeast to the gas markets in the Midwest and upper Midwest regions. 23 Within 30 days after the application filing date, Rockies Express will file an updated list of affected landowners, including information concerning any notices that were returned as undeliverable. 24 Certificate Policy Statement, 88 FERC ¶ 61,227 (1999); order clarifying statement of policy, 90 FERC ¶ 61,128; order further clarifying statement of policy, 92 FERC ¶ 61,094 (2000).
18 whether there is a need for a proposed project and whether the proposed construction will serve the public interest and is required by the public convenience and necessity.25 In deciding whether to authorize the construction of new pipeline facilities, the
Commission, under the Certificate Policy Statement, will balance the public benefits created by the proposed project against the potential adverse consequences that could result from the project.26 Pursuant to this balancing process, the Commission has stated that its goal is to give appropriate consideration to the enhancement of competitive transportation alternatives, the possibility of overbuilding, subsidization by existing customers, the applicant’s responsibility for unsubscribed capacity, the avoidance of unnecessary disruptions of the environment, and the unneeded exercise of eminent domain in evaluating new pipeline construction.27
Pursuant to the Certificate Policy Statement, the threshold requirement for a pipeline proposing a new project is that the pipeline must be prepared to financially support the project without relying on subsidization from its existing customers.28 Once the no-subsidization requirement has been demonstrated, the next inquiry under the
Commission’s Certificate Policy Statement is to determine whether the applicant has made efforts to eliminate or minimize any adverse effect the project might have on (1) the applicant’s existing customers, (2) existing pipelines in the market and their captive customers, or (3) landowners and communities affected by the route of the new pipeline.29 If residual adverse effects on these interest groups are identified after efforts have been made to minimize them, the Commission will evaluate the project by
25 Id., 88 FERC ¶ 61,227, at p. 61,743. 26 Id. at p. 61,745. 27 Dominion Transmission, Inc., 104 FERC ¶ 61,267 at P 16 (2003). 28Certificate Policy Statement, 88 FERC ¶ 61,227, at p. 61,745. 29 Id.
19 balancing the evidence of public benefits to be achieved against these residual adverse effects. The Commission has stated that this is essentially an economic test.30 Only when the benefits outweigh the adverse effects on economic interests will the
Commission proceed to complete the environmental analysis where other interests are considered.
As set forth below, the proposed REX Zone 3 Capacity Enhancement Project meets the threshold requirement and the additional tests set forth in the Certificate Policy
Statement.
1. The Project Will Not Result in Subsidization by Existing Shippers
Under the Certificate Policy Statement, the threshold requirement for certification of new facilities is a finding that the applicant will financially support the project without relying on subsidization from its existing customers.31 As shown in Rockies Express’s
Exhibit N, the incremental reservation rate revenues exceed the cost of service on the facilities proposed herein. The east-to-west capacity that will be created by the proposed facilities will be nearly fully subscribed under 15-year negotiated rate contracts.
Accordingly, Rockies Express proposes to use the maximum applicable reservation rate under Rate Schedule FTS transportation as the recourse reservation rate for the capacity created from the facilities. The use of the existing Zone 3 recourse rates will not result in existing shippers subsidizing the east-to-west firm transportation under this Project. In order to ensure that the existing shippers do not subsidize the fuel costs associated with the new compression associated with the Project, Rockies Express proposes to establish a separately-stated fuel rate that will be paid exclusively by the shippers that utilize the
30 See id., 88 FERC ¶ 61, 227 at p. 61,745. 31 Williston Basin Interstate Pipeline Co., 103 FERC ¶ 61,269 at P 21 (2003).
20 Project capacity. The REX Zone 3 Capacity Enhancement Project, therefore, meets the threshold requirement of the Commission’s Certificate Policy Statement. This finding is demonstrated in Exhibits N and P and is consistent with prior Commission precedent.32
2. Effect of the Project on Other Constituent Groups
i. The Project Will Not Adversely Affect Existing Shippers
The Project will not adversely affect existing shippers’ eastbound or westbound transportation service. Existing shippers’ firm service obligations will continue to be met following the expansion of the Zone 3 facilities and the quality of their firm service will not be diminished as a result of the Project. Indeed, the new compressor stations and compressor horsepower will further enhance system reliability. Simply put, existing shippers will not experience any change to their current service quality once the Project facilities go into service. The flow diagrams included herein as Exhibit G demonstrate that existing firm shippers’ service can be maintained, even as Rockies Express provides additional east-to-west firm transportation capacity.
ii. The Project Will Not Adversely Affect Other Pipelines in the Market and Their Customers
By enhancing Rockies Express’s ability to transport additional Appalachian supplies from east-to-west in Zone 3, consumers and pipelines in the Midwest will enjoy enhanced supply diversity and potentially lower gas costs as a result of the Project.
Furthermore, with respect to the consuming markets served directly and indirectly by
Rockies Express, the Project should help to alleviate the gas supply and deliverability concerns cited by Commission Staff and numerous industry presenters during the April 1,
32 See Rockies Express Pipeline LLC, 128 FERC ¶ 61,036, at P 16 (2009); El Paso Natural Gas Co., 104 FERC ¶ 61,303, at P 19 (2003).
21 2014 Technical Conference addressing cold weather events that occurred in the winter of
2013/2014.33
Rockies Express operates as a de facto “supply header” that is strategically positioned to transport natural gas reserves from supply basins located on each end of its mainline. The Rockies Express mainline system interconnects with pipelines and storage facilities that serve major markets in the United States. Increased receipts of Appalachian gas also will benefit interconnected downstream pipelines by providing them an opportunity for additional throughput. Accordingly, rather than suffering adverse consequences, interconnecting pipelines and their customers should benefit from increased supplies and supply diversity entering the Rockies Express system due to the
Project. This expansion of Rockies Express’s east-to-west Zone 3 capacity is entirely consistent with the Commission’s goal of fostering an efficient nationwide pipeline grid in which buyers and sellers of natural gas have the maximum ability to reach one another.34
iii. The Project Will Have Minimal Impacts on Private Landowners
The Project will have minimal impacts on landowners and communities because the Rockies Express pipeline is built and in service. The new compressor stations will be placed on parcels of significant size that provide a buffer area between adjacent properties and the station facilities. All construction at existing compressor stations will take place within the station fence line. Rockies Express does not currently anticipate the
33 See, e.g., Commission Staff presentation titled, “Winter 2013-2014 Operations and Market Performance in RTOs and ISOs,” Docket No. AD14-8-000 (Apr. 1, 2014) (available at http://www.ferc.gov/legal/staff- reports/2014/04-01-14.pdf); Pre-Filed Comments of John Sturm, Vice President, Corporate & Regulatory Affairs, the Alliance for Cooperative Energy Services, Docket No. AD14-8-000 (Apr. 1, 2014); Statement of Michael J. Kormos, Executive Vice President, Operations, PJM Interconnection, L.L.C. at p. 10, Docket No. AD14-8-000 (Apr. 1, 2014). 34 See Capacity Transfers on Intrastate Natural Gas Pipelines, 133 FERC ¶ 61,065, at P 18 (2010).
22 need to use eminent domain authority to acquire any property associated with this
Project. To the extent this Project will result in additional emissions, such emissions will be below the applicable federal and state permitting thresholds. Further, Rockies Express is adopting certain specified mitigation measures to ensure compliance with the
Commission’s noise requirements. Therefore, Rockies Express has taken significant steps to minimize impacts to landowners and communities.
3. The Benefits of the Project Outweigh Any Residual Adverse Effects
As noted above, under the Certificate Policy Statement, the Commission will evaluate a proposed project by balancing the evidence of public benefits to be achieved against any residual adverse effects. The REX Zone 3 Capacity Enhancement Project meets this test.
With the Project in-service, Rockies Express will meet new east-to-west firm transportation demand without adversely affecting the cost or quality of service to its existing eastbound or westbound firm transportation shippers, without adversely affecting interconnected pipelines and their customers, and with only minimal impacts to landowners and communities.
The Project will provide benefits through the efficient utilization of existing pipeline infrastructure, without subsidy by existing shippers. Further, the Project can be completed with minimal impact to the environment and landowners, since Rockies
Express’s proposed construction will only permanently impact approximately 34 acres.
Because the Project will not adversely affect any current shippers, and Rockies Express has minimized all adverse impacts to the environment and landowners, the benefits outweigh any remaining adverse impacts. Accordingly, the public benefits that would be
23 achieved by this Project more than outweigh any potential adverse impact that could result from the proposed construction. The Commission recently issued a certificate of public convenience and necessity for Rockies Express’s Zone 3 East-to-West Project
“[b]ased on the benefits the project will provide and the minimal adverse impacts to
Rockies Express’s existing customers, other pipelines and their captive customers, and landowners and surrounding communities.”35 Similarly, the Commission should find that the instant Project also has met the requirements of the Certificate Policy Statement and, therefore, should approve the Project.
X. PUBLIC CONVENIENCE AND NECESSITY
Rockies Express’s request for certificate authorization to construct and operate the facilities necessary to implement the REX Zone 3 Capacity Enhancement Project is required by the present and future public convenience and necessity. In addition to meeting the criteria set forth in the Certificate Policy Statement, the Project provides additional public benefits. The proposed Project responds to the need to provide Midwest markets with economical and reliable access to Appalachian Basin gas supplies. This gas supply, in turn, will meet the demands of retail utility customers, domestic industry, and gas fired power plants. The Project, therefore, will benefit the Appalachian gas producing and Midwestern gas consuming markets, as additional transportation flexibility and optionality will be created to transport natural gas to market, all without a significant impact on the environment.
Rockies Express’s pipeline system plays a substantial and unique transportation role in the region, originally connecting gas from Colorado, Wyoming and the Rocky
35 Rockies Express Pipeline LLC, 150 FERC ¶ 61,161, at P 20.
24 Mountain production basins to major interstate pipelines and end use markets. Approval of this Application will enable Rockies Express to meet the growing gas supply needs of the Midwestern United States while providing a valuable takeaway option for
Appalachian producers.
The increased transportation flexibility created by the Project will allow new supplies of gas to serve retail end users, industry, and power generation load in the
Midwest and Rockies Express’s Zone 3. This supply increase and diversity, in turn, will bring increased gas price competition and supply stability and diversity in the face of growing demand for natural gas. Both consumers and suppliers will benefit from these increased transportation options. Further, as the Commission’s Division of Energy
Market Oversight observed in its recently issued 2014 State of the Markets Report, natural gas remains a major driver of electricity prices, particularly in regions served by
Rockies Express.36
Once the Project is complete, Rockies Express will have the ability to flow an additional 800,000 Dth/d of gas from east-to-west in Zone 3. No new mainline pipeline is required by the Project. Under all operating scenarios, existing firm contract shippers will continue to be fully served. Existing shippers will not face any risk of subsidization of the Project costs or associated fuel.
The proposed Project facilities have been designed, and will be constructed, in a manner that will minimize environmental impacts. The facilities to be constructed are located on privately-owned land within the existing fenced project site at the
Chandlersville and Hamilton Compressor stations and on privately-owned land for the
36 Office of Enforcement’s 2014 State of the Markets Report at p. 11 (available at http://ferc.gov/market- oversight/reports-analyses/st-mkt-ovr/2014-som.pdf).
25 proposed new Columbus, Washington Court House and St. Paul Compressor Stations.
The Environmental Report, submitted as Exhibit F-I to this Application, demonstrates that Rockies Express has addressed, and taken measures to minimize, any adverse environmental impacts from the Project.
Accordingly, when the benefits from the Project to the U.S. gas market, domestic producers and existing shippers on Rockies Express are all considered, along with the minimal impact on the environment and landowners, Rockies Express submits that the
Project is required by the public convenience and necessity, and should be approved.
XI. WAIVER
Pursuant to Rules 801 and 802 of the Commission’s Rules of Practice and
Procedure, 18 C.F.R. §§ 385.801 and 385.802, Rockies Express requests that the
Commission’s shortened procedures be applied to this Application. Accordingly,
Rockies Express requests that the intermediate decision procedure be omitted and waives oral hearing and opportunity for filing exceptions to the decision of the Commission. As set forth under these procedures, the decision of the Commission will be final, subject to reconsideration by the Commission upon request for rehearing as provided by statute.
XII. EXHIBITS
In accordance with Section 157.14 of the Commission’s regulations, 18 C.F.R.
§ 157.14, the following exhibits are attached or omitted for the reason indicated.
Exhibit A – Articles of Incorporation and Bylaws
Rockies Express requests the incorporation by reference of Exhibit A to its application filed June 10, 2014 in Docket No. CP14-498-000.
26 Exhibit B – State Authorization
Rockies Express requests the incorporation by reference of Exhibit B to its application filed May 31, 2006 in Docket No. CP06-354-000.
Exhibit C – Company Officials
Rockies Express requests the incorporation by reference of Exhibit C to its application filed March 2, 2015 in Docket No. CP15-102-000.
Exhibit D – Subsidiaries and Affiliation
Rockies Express requests the incorporation by reference of Exhibit D to its application filed June 10, 2014 in Docket No. CP14-498-000.
Exhibit E – Other Pending Applications and Filings
Omitted. There are no applications or filings made by Rockies Express with and now pending before this Commission that directly and significantly affects this
Application.
Exhibit F – Location of Facilities
Attached hereto as part of this Volume 1.
Exhibit F-I – Environmental Report
Attached hereto as Volumes 2, 3 and 6.
Exhibit G/G-I – Flow Diagrams
Attached hereto as part of Volume 4.
Exhibit G-II – Flow Diagram Data
Attached hereto as part of Volume 4.
Exhibit H – Total Gas Supply Data
Omitted. For support see Exhibit I.
27 Exhibit I – Market Data
Attached hereto as part of Volume 5.
Exhibit J – Federal Authorization
Attached hereto as part of this Volume 1.
Exhibit K – Cost of Facilities
Attached hereto as part of this Volume 1.
Exhibit L – Financing
Omitted. The cost of the proposed expansion facilities will be financed through short-term loans and funds on hand.
Exhibit M – Construction, Operation and Management
Rockies Express requests the incorporation by reference of Exhibit M to its application filed June 10, 2014 in Docket No. CP14-498-000.
Exhibit N – Revenues-Expenses-Income
Attached hereto as part of this Volume 1.
Exhibit O – Depreciation and Depletion
Attached hereto as part of this Volume 1.
Exhibit P – Tariff
Rockies Express includes herewith as part of this Volume 1 pro forma Tariff sections reflecting the establishment of a separately-stated fuel rate for service using the
Project facilities.
Exhibit Z-1 – Open Season Notices
Attached hereto as part of this Volume 1.
Exhibit Z-2 – Protective Agreement
28 Attached hereto as part of this Volume 1, pursuant to 18 C.F.R.
§ 388.112(b)(2)(i).
XIII. FEDERAL REGISTER NOTICE
Appended hereto is a Notice, prepared in conformity with Sections 2.1 and
157.6(b)(7) of the Commission’s regulations, 18 C.F.R. §§ 2.1 and 157.6(b)(7), suitable for publication in the Federal Register.
[Remainder of page left blank intentionally]
29 XIV. AUTHORIZATION REQUESTED
WHEREFORE, Rockies Express Pipeline LLC respectfully requests the
Commission to issue a certificate of public convenience and necessity, on or before
December 31, 2015, authorizing the construction and operation of the proposed REX
Zone 3 Capacity Enhancement Project, as more fully set forth herein.
Respectfully submitted,
ROCKIES EXPRESS PIPELINE LLC
By /s/ David Haag
David Haag Vice President, Regulatory
Mustafa P. Ostrander Assistant General Counsel Lisa Purdy Senior Attorney ROCKIES EXPRESS PIPELINE LLC 370 Van Gordon Street Lakewood, CO 80228-1519 (303) 763-3378
Paul Korman Mona Tandon Michael R. Pincus VAN NESS FELDMAN, LLP 1050 Thomas Jefferson Street, NW Washington, D.C. 20007-3877 (202) 298-1800
Dated: March 30, 2015
30
Rockies Express Pipeline LLC
Federal Register Notice
UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION
Rockies Express Pipeline LLC ) Docket No. CP15-______
NOTICE OF APPLICATION
(April __, 2015)
Take notice that on March 30, 2015, Rockies Express Pipeline LLC (“Rockies Express” or “REX”), whose mailing address is 370 Van Gordon Street, Lakewood, Colorado 80228-1519, filed an application at Docket No. CP15-______pursuant to Section 7(c) of the Natural Gas Act (“NGA”), and Part 157 of the Federal Energy Regulatory Commission's (“Commission”) Regulations, requesting a certificate of public convenience and necessity authorizing the construction and operation of certain additional mainline compression and ancillary facilities that upon completion will comprise Rockies Express’ proposed REX Zone 3 Capacity Enhancement Project. The application is on file with the Commission and open to public inspection. This filing is available for review at the Commission or may be viewed on the Commission’s web site at http://www.ferc.gov using the “eLibrary” link under the tab “Documents & Filing.” Enter the docket number excluding the last three digits in the docket number field to access the document. For assistance, please contact FERC Online Support at [email protected] or toll free at (866) 208-3676, or for TTY, contact (202) 502-8659.
Rockies Express is requesting authorization to construct and operate certain mainline compression and ancillary facilities that will enable an additional 800,000 Dth/d of east-to-west firm transportation service within Zone 3 of its system. Specifically, the REX Zone 3 Capacity Enhancement Project facilities, upon construction, will increase the Zone 3 east-to-west capacity by 800,000 Dth/d from receipts at Clarington, Ohio to corresponding deliveries of 520,000 Dth/d and 280,000 Dth/d to Lebanon, Ohio and Moultrie County, Illinois, respectively. The total estimated cost for the proposed project is approximately $532,072,560.
Any questions regarding this application should be directed to David Haag, Vice President of Regulatory, Rockies Express Pipeline LLC, 370 Van Gordon Street, Lakewood, Colorado 80228-1519, phone (303) 763-3258.
Pursuant to Section 157.9 of the Commission's rules, 18 CFR 157.9, within 90 days of this Notice the Commission staff will either: complete its environmental assessment (“EA”) and place it into the Commission’s public record (eLibrary) for this proceeding; or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the final environmental impact statement (“FEIS”) or EA for this proposal. The filing of the EA in the Commission’s public record for this proceeding or the issuance of a Notice of Schedule for Environmental Review will serve to notify federal and state agencies of the timing for the completion of all necessary reviews, and the subsequent need to complete all federal authorizations within 90 days of the date of issuance of the Commission staff's FEIS or EA.
There are two ways to become involved in the Commission's review of this project. First, any person wishing to obtain legal status by becoming a party to the proceedings for this project should file with the Federal Energy Regulatory Commission, 888 First Street, NE, Washington, D.C. 20426, a motion to intervene in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 385.214 or 385.211) and the Regulations under the NGA (18 CFR 157.10). A person obtaining party status will be placed on the service list maintained by the Secretary of the Commission and will receive copies of all documents filed by the applicant and by all other parties. A party must submit 7 copies of filings made with the Commission and must mail a copy to the applicant and to every other party in the proceeding. Only parties to the proceeding can ask for court review of Commission orders in the proceeding.
However, a person does not have to intervene in order to have comments considered. The second way to participate is by filing with the Secretary of the Commission, as soon as possible, an original and two copies of comments in support of or in opposition to this project. The Commission will consider these comments in determining the appropriate action to be taken, but the filing of a comment alone will not serve to make the filer a party to the proceeding. The Commission's rules require that persons filing comments in opposition to the project provide copies of their protests only to the party or parties directly involved in the protest.
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commenters will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with the Commission's environmental review process. Environmental commenters will not be required to serve copies of filed documents on all other parties. However, the non-party commenters will not receive copies of all documents filed by other parties or issued by the Commission (except for the mailing of environmental documents issued by the Commission) and will not have the right to seek court review of the Commission's final order.
The Commission strongly encourages electronic filings of comments, protests and interventions in lieu of paper using the “eFiling” link at http://www.ferc.gov. Persons unable to file electronically should submit an original and 5 copies of the protest or intervention to the Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426.
Comment Date:
Kimberly D. Bose Secretary
2
Rockies Express Pipeline LLC
Exhibit F
Location of Facilities
Exhibit F REX Zone 3 Capacity Enhancement Operated by:
Lake Michigan
Lake Erie
Existing & Future Receipts Illinois Indiana Ohio
CHANDLERSVILLE
WASHINGTON BLUE MOUND BAINBRIDGE COURT Clarington !H HOUSE HAMILTON SENECA CS ST. PAUL COLUMBUS MEXICO
Lebanon Existing & Future Receipts
Missouri
Rockies Express Pipeline-Zone 3 Proposed REX Compressor Station REX Bi-Directional Pipeline Existing REX Compressor Station-to be Modified Rockies Express Pipeline-Zone 2 Existing REX Compressor Station Arkansas !H ExistingT NGePnL/nMoeulstries Deeleivery Interconnect
Prepared by: SADavis 22 January 2015 Design Scale: none File: REX_Zone 3 Capacity Enhancement_7c Filing_A_v115d.mxd
Rockies Express Pipeline LLC
Exhibit J
Federal Authorization Exhibit J REX Capacity Enhancement Project Federal Authorizations Requiring Approval Date Submittal Date/ Received/ Anticipated Anticipated Permit Issuing Agency Submittal Approval Date Status FEDERAL Certificate of Public FERC March 2015 Convenience and Necessity Natural Gas Act Sec 7(c) Clearance under Section 7 U.S. Fish and March 2015 April 2015 Request for concurrence of the Endangered Species Wildlife Service sent to OH USFWS on Act (ESA) (USFWS) Region 3 3/30/2015. Migratory Bird Treaty Act (Ohio and Indiana) (MBTA) March 2015 April 2015 Request for concurrence sent to IN USFWS on 3/30/2015. Sec 404 Permit Clean U.S. Army Corps of No PCN N/A N/A Water Act (CWA) and Sec Engineers (USACE) Required 401 WQC, CWA Huntington and Louisville Districts Native American NAGPRA March 2015 N/A Letters to tribes sent on Consultation Consultation 3/30/15. OHIO Permit to Install (PTI) Ohio Environmental December October 2015 Protection Agency 2014 (EPA) – Division of Air Pollution Control Permit to Install and Ohio EPA – Division December July 2015 Operate (PTIO) of Air Pollution 2014 Control Class I Title V Operating Ohio EPA June 2017 June 2018 Permit National Historic Ohio State Historic March 2015 May 2015 Request for concurrence Preservation Act (NHPA) Preservation Office sent to OH SHPO on Sec 106 Consultation (SHPO) 3/30/15. State-listed T&E Species Ohio Department of March 2015 April 2015 Request for concurrence Natural Resources sent to ODNR on (ODNR) – Division 3/30/15. of Wildlife INDIANA Part 70 Application – Indiana Department January 2015 June 2015 Construction Permit of Environmental Application Management (IDEM) – Office of Air Quality Exhibit J REX Capacity Enhancement Project Federal Authorizations Requiring Approval Date Submittal Date/ Received/ Anticipated Anticipated Permit Issuing Agency Submittal Approval Date Status State-listed Species Indiana Department March 2015 April 2015 Request for concurrence Consultation of Natural Resources sent to IDNR on 3/30/15. (IDNR) – Division of Fish and Wildlife NHPA Section 106 IDNR – Division of March 2015 May 2015 Request for concurrence Consultation Historic Preservation sent to IN SHPO on and Archaeology 3/30/15. Construction/Land Indiana Department November December Disturbance Storm Water of Environmental 2015 2015 Permit Quality (IDEM)
Rockies Express Pipeline LLC
Exhibit K
Cost of Facilities
Rockies Express Pipeline LLC
Exhibit N
Revenues-Expenses-Income Docket No. CP15-_____ Exhibit N Page 1 of 6 Rockies Express Pipeline LLC Cost of Service First Three Years of Operation
Line No. Description Year 1 Year 2 Year 3 (a) (b) (c) (d) Cost of Service: 1 Operating Expense 1/ $ 7,608,638 $ 7,608,638 $ 7,608,638 2 Ad Valorem Taxes 1/ 6,438,078 6,438,078 6,438,078 3 Return and Income Taxes 2/ 77,250,386 72,993,327 69,025,653 4 Depreciation Expense 3/ 15,107,611 15,107,611 15,107,611 5 Total Cost of Service $ 106,404,713 $ 102,147,654 $ 98,179,980
6 Incremental Volume (Dth/d) 800,000 800,000 800,000
7 Incremental Rate (100% L.F.) $ 0.3644 $ 0.3498 $ 0.3362
8 Current Zone 3 Rate (100% L.F.) 4/ $ 0.8792 $ 0.8792 $ 0.8792
Notes: 1/ Based on the ratio of expense to gross plant from 2013 FERC Form 2. 2/ See Exhibit N, Page 2 of 6, Line 6. 3/ See Exhibit N, Page 3 of 6, Line 4. 4/ Rockies Express proposes to charge its existing Part 284 Zone 3 Recourse Rate because it exceeds the Incremental Rate. Docket No. CP15-_____ Exhibit N Page 2 of 6 Rockies Express Pipeline LLC Rate Base and Return First Three Years of Operation
Line No. Description Year 1 Year 2 Year 3 (a) (b) (c) (d) Rate Base: 1 Gross Plant 1/ $ 532,072,560 $ 532,072,560 $ 532,072,560 2 Accumulated Depreciation 2/ 7,553,805 22,661,416 37,769,027 3 Net Plant [Ln 1 - Ln 2] $ 524,518,755 $ 509,411,144 $ 494,303,533
4 Accumulated Deferred Income Tax 3/ $ 2,203,773 $ 15,879,520 $ 27,598,647
5 Total Rate Base [Ln 3 - Ln 4] $ 522,314,982 $ 493,531,624 $ 466,704,886
6 Return and Income Taxes @ 14.79% 4/ $ 77,250,386 $ 72,993,327 $ 69,025,653
Notes: 1/ See Exhibit K, Page 1 of 3. 2/ See Exhibit N, Page 3 of 6. 3/ See Exhibit N, Page 4 of 6. 4/ Factors underlying currently effective rates approved by the Commission in Docket No. CP07-208. Docket No. CP15-_____ Exhibit N Page 3 of 6 Rockies Express Pipeline LLC Book Depreciation Expense and ADDA First Three Years of Operation
Line No. Description Year 1 Year 2 Year 3 (a) (b) (c) (d)
Book Depreciation and ADDA: 1 Beginning Depreciable Plant $ 528,238,143 $ 528,238,143 $ 528,238,143 2 Additions - - - 3 Ending Depreciable Plant $ 528,238,143 $ 528,238,143 $ 528,238,143
4 Book Depreciation @ 2.86% per year 1/ $ 15,107,611 $ 15,107,611 $ 15,107,611
5 Accumulated Book Depreciation (ADDA) $ 7,553,805 $ 22,661,416 $ 37,769,027
Note: 1/ Factors underlying currently effective rates approved by the Commission in Docket No. CP07-208. Docket No. CP15-_____ Exhibit N Page 4 of 6 Rockies Express Pipeline LLC Tax Depreciation and Deferred Income Taxes First Three Years of Operation
Line No. Description Year 1 Year 2 Year 3 (a) (b) (c) (d)
Tax Depreciation and Deferred Income Taxes:
7 Beginning Depreciable Plant $ 528,238,143 $ 528,238,143 $ 528,238,143 8 Additions - - - 9 Ending Depreciable Plant $ 528,238,143 $ 528,238,143 $ 528,238,143
10 Tax Depreciation 1/ $ 26,411,907 $ 50,182,624 $ 45,164,361 11 Accumulated Tax Depreciation 26,411,907 76,594,531 121,758,892
12 Net Tax Plant $ 501,826,236 $ 451,643,612 $ 406,479,251
13 Total Book Depreciation 2/ $ 15,107,611 $ 15,107,611 $ 15,107,611
14 Total Tax Depreciation [Line 10 1/] $ 26,411,907 $ 50,182,624 $ 45,164,361
15 Deferred Income Tax [(Ln 14 - Ln13) * 38.99%] $ 4,407,545 $ 13,675,747 $ 11,719,127
16 Accumulated Deferred Income Tax $ 2,203,773 $ 15,879,520 $ 27,598,647
Notes: 1/ Reflects application of MACRS 15 Yr convention 2/ See Exhibit N, Page 3 of 6, Line 4. Docket No. CP15-_____ Exhibit N Page 5 of 6
Rockies Express Pipeline LLC Incremental Revenues vs. Cost of Service First Three Years of Operation
Line No. Description Year 1 Year 2 Year 3 (a) (b) (c) (d)
1 Incremental Revenues - Transportation $ 124,008,842 $ 124,008,842 $ 124,008,842 2 Incremental Revenues - Fuel $ 16,687,799 $ 16,687,799 $ 16,687,799 $ 140,696,641 $ 140,696,641 $ 140,696,641
3 Incremental Cost of Service - Non-Gas 106,404,713 102,147,654 98,179,980 4 Incremental Cost of Service - Fuel 1/ $ 19,071,770 $ 19,071,770 $ 19,071,770 $ 125,476,483 $ 121,219,424 $ 117,251,750
5 Excess Revenues Over Costs $ 15,220,158 $ 19,477,217 $ 23,444,891
Note: 1/ Fuel retention factors associated with the new facilities are proposed to be assessed on a stand-alone basis, therefore, fuel costs are reflected at proposed Incremental Fuel Reimbursement Rates per Exhibit P. Docket No. CP15-____ Exhibit N Page 6 of 6 Rockies Express Pipeline LLC
Calculation of Incremental Rate Schedule FTS Zone 3 Revenues
Line No. Rates Revenues Shipper MDQ Reservation Commodity Reservation Commodity Total 1/ 2/ 1 American Energy Partners - Utica, LLC 150,000 $16.7292 $0.0025 $30,112,560 $136,875 $30,249,435
2 EQT Energy, LLC 130,000 $13.6875 $0.0025 $21,352,500 $118,625 $21,471,125 3 70,000 $16.7292 $0.0025 $14,052,528 $63,875 $14,116,403
4 Gulfport Energy Corporation 40,000 $13.6875 $0.0025 $6,570,000 $36,500 $6,606,500 5 10,000 $16.7292 $0.0025 $2,007,504 $9,125 $2,016,629
6 Edgemarc Energy Holdings, LLC 50,000 $13.6875 $0.0025 $8,212,500 $45,625 $8,258,125
7 Jay-Bee Oil & Gas, Inc. 150,000 $13.6875 $0.0025 $24,637,500 $136,875 $24,774,375
8 Triad Hunter, LLC 100,000 $13.6875 $0.0025 $16,425,000 $91,250 $16,516,250
9 Unsubscribed 100,000 $0 $0 $0
10 Total Transportation 800,000 $124,008,842
Gas Electric Total 11 Fuel 3/ 700,000 700,000 12 365 365 13 255,500,000 255,500,000 14 Proposed Stand-Alone Fuel Reimbursement 1.24% $0.0309 15 3,156,064 $7,907,629 16 February, 2015 Average Appalachia, Columbia Gas $2.7820
17 $8,780,169 $7,907,629 $16,687,799
Notes: 1/ See Exhibit I - Firm Transportation Negotiated Rate for the East-to-West Project . 2/ Maximum effective tariff Commodity rate as stated on Currently Effective Rates - FTS Section Version: 0.0.0 of Rockies Express' FERC Gas Tariff, Third Revised Volume No. 1. 3/ Revenues at Currently Effective Zone 3 Fuel Reimbursement Rates: Gas Electric Total 255,500,000 255,500,000 0.71% $0.0009 1,814,050 $229,950 $2.7820 $5,046,687 $229,950 $5,276,637
Rockies Express Pipeline LLC
Exhibit O
Depreciation and Depletion Docket No. CP15- -000 Exhibit O
ROCKIES EXPRESS PIPELINE LLC DEPRECIATION AND DEPLETION
Rockies Express proposes to utilize a transmission depreciation rate of 2.86% per year applicable to the proposed facilities. This rate corresponds to the depreciation rate underlying Rockies Express’ currently effective rates approved by the Commission in
Docket No. CP07-208.
Rockies Express Pipeline LLC
Exhibit P
Tariff
Docket No. CP15- -000 Exhibit P Page 1 of 2
ROCKIES EXPRESS PIPELINE LLC Tariff
The transportation service associated with the new facilities proposed herein will be provided by Rockies Express pursuant to its existing Rate Schedule FTS. Rockies Express proposes to apply its currently effective Part 284 transportation rates as the applicable recourse rates for service on the capacity to be created as a result of the project. However, in order to ensure that existing shippers will not subsidize the cost of fuel associated with the project,
Rockies Express proposes to establish a separately-stated fuel rate to apply exclusively to the shippers utilizing the REX Zone 3 Capacity Enhancement Project facilities.
Exhibit P, Page 2 of 2 reflects the derivation of the stand-alone fuel reimbursement rate proposed to be charged for transportation hereunder. Also attached as part of Exhibit P are pro forma tariff sections that reflect the stand-alone fuel reimbursement rate proposed herein. Docket No. CP15-____ Exhibit P Page 2 of 2 Rockies Express Pipeline LLC
Calculation of Separately Stated Fuel Rate
Mainline Fuel Consumption to Meet Firm Service Deliveries @ 100% Load Factor Without With Separately Separately Line Proposed Proposed Stated Stated No. Mainline Station Facilities Facilities Fuel Electric (Dth/d) (Dth/d) (Dth/d) (kWh/d) 1/ 2/ 1 Mexico 3,291 3,293 2 2 Blue Mound 0 0 0 3 Bainbridge 0 0 0 4 St. Paul 0 0 0 5 Hamilton (kWh/d) 177,878 531,588 0 353,710 6 Washington CH 0 0 0 7 Columbus 0 4,426 4,426 8 Chandlersville 0 5,134 5,134 10 Total Dth/d 3,291 12,853 9,562 11 Total kWh/d 177,878 531,588 353,710 12 Cost/kWh X $0.0700 13 $24,759.70
14 Throughput (Dth/d) 800,000 800,000
15 Fuel Reimbursement Percentage 1.20% 16 Miscellaneous Fuel Used In System Operations 0.04% 17 L&U 0.00% 18 Total Fuel Reimbursement 1.24% $0.0309
Annual Fuel Cost Total Fuel Electric 19 Throughput (Dth/d) 800,000 800,000 20 X 365 X 365 21 292,000,000 292,000,000 22 Proposed Fuel Reimbursement X 1.24% X $0.0309 23 3,606,930 24 February, 2015 Average Appalachia, Columbia Gas X $2.7820
25 Annual Fuel Cost $19,071,770 $10,034,479 $9,037,291
Currently Effective Zone 3 Fuel Reimbursement 4/
Gas Electric 26 Fuel 0.13% $0.0082 27 L&U 0.00% $0.0000
28 Total Zone 3 Current FL&U Reimbursement 0.13% $0.0082
Notes: 1/ Exhibit G, Page 2 of 4. 2/ Exhibit G, Page 4 of 4. 4/ As accepted effective April 1, 2014 in Docket No. RP15-584.
Pro Forma Tariff Sections Rockies Express Pipeline LLC
FERC Gas Tariff Currently Effective Rates - ITS/FTS/BHS FL&U Third Revised Volume No. 1 Section Version: 9.0.0
ITS/FTS/BHS Fuel and Lost and Unaccounted-for Reimbursement Percentages 1/ 2/ 3/
Receipt Delivery Minimum % Maximum % Zone 4/ Zone 5/ Fuel F-VAP 6/ L&U Total 7/ 8/
Zone 1 Zone 1 0.53% + 0.00% + 0.00% = 0.53%
Zone 2 0.85% + 0.00% + 0.00% = 0.85% Zone 3 0.98% + 0.00% + 0.00% = 0.98%
Zone 2 Zone 2 0.32% + 0.00% + 0.00% = 0.32% Zone 3 0.45% + 0.00% + 0.00% = 0.45%
Zone 3 Zone 3 0.13% + 0.00% + 0.00% = 0.13%
1/ Fuel and Lost and Unaccounted-for Reimbursement Percentages ("FL&U %") shall be applied to and retained from volumes received into Transporter's System. This percentage is subject to adjustment in accordance with Section 38 of the General Terms and Conditions of this Tariff. Any separately stated fees and/or charges are in addition to the FL&U % stated above.
2/ The current cost component of the L&U rate is 0.00% for Zones 1 through 3. The L&U rate applicable to all Backhauls, including service pursuant to Rate Schedule BHS, shall be 0.00%.
3/ Discounts or exemptions to the applicable FL&U percentages may only be afforded under FERC policy, as it may exist from time-to-time. Specific FL&U percentages may be developed, filed and included in this Tariff to apply to specific transactions, consistent with FERC policy. In such event, and absent provision otherwise, Transporter shall bear the risk of any under-recovery of FL&U, consistent with the provisions of Section 33 (Negotiated Rates) of the General Terms and Conditions of this Tariff.
4/ Zone 1 shall encompass all points west of and including the Cheyenne Hub located in Weld County, Colorado. Zone 2 shall encompass all points east of the Cheyenne Hub, to and including the PEPL Interconnect, located in Audrain County, Missouri. Zone 3 shall encompass all points east of the PEPL Interconnect, located in Audrain County, Missouri, to and including delivery points in Clarington, Ohio.
5/ Id.
Issued on: March 30, 2015 Effective on:
Rockies Express Pipeline LLC
FERC Gas Tariff Currently Effective Rates - ITS/FTS/BHS FL&U Third Revised Volume No. 1 Section Version: 9.0.0
6/ Per Section 38.6 of the General Terms and Conditions of this Tariff the Under or Over Recovered Fuel ("F-VAP") will be calculated such that each current deferred account will be amortized in the following 12 month period.
7/ Firm transportation provided by the incremental capacity approved by FERC order issued July 16, 2009 at Docket No. CP09-58-000 (Meeker to Cheyenne Expansion Project), shall be assessed 0.38% incremental fuel and the applicable L&U component of 0.00%, plus the applicable incremental service F-VAP of 0.00%, for all receipt and delivery points between the Meeker Hub and Wamsutter Hub and all receipt and delivery points between the Wamsutter Hub and the Cheyenne Hub, in lieu of the otherwise applicable Zone 1 fuel rate component.
8/ Firm transportation provided by the incremental capacity approved by FERC order issued ______at Docket No. ______(REX Zone 3 Capacity Enhancement Project), shall be assessed 1.24% incremental fuel and the applicable L&U component of 0.00%, plus the applicable incremental service F-VAP of 0.00%, for all receipt and delivery points within Zone 3 in lieu of the otherwise applicable Zone 3 fuel rate component.
Issued on: March 30, 2015 Effective on:
Rockies Express Pipeline LLC
FERC Gas Tariff Currently Effective Rates - ITS/FTS/BHS Power Cost Tracker Third Revised Volume No. 1 Section Version: 2.0.0
ITS/FTS/BHS Power Cost Tracker (PCT) Reimbursement Charges 1/ 2/
Receipt Delivery Maximum Zone 3/ Zone 4/ EPC PCVAC 5/ Total 6/ 7/
Zone 1 Zone 1 $0.0008 + $0.0000 = $0.0008
Zone 2 $0.0271 + $0.0000 = $0.0271
Zone 3 $0.0353 + $0.0000 = $0.0353
Zone 2 Zone 2 $0.0263 + $0.0000 = $0.0263
Zone 3 $0.0345 + $0.0000 = $0.0345
Zone 3 Zone 3 $0.0082 + $0.0000 = $0.0082
1/ Power Cost Tracker Reimbursement Charges ("PCT"), subject to adjustment shall be applied to volumes delivered on Transporter's System. This charge is subject to adjustment in accordance with Section 40 of the General Terms and Conditions of this Tariff.
2/ Discounts or exemptions to the applicable PCT charges may only be afforded under FERC policy, as it may exist from time-to-time. Specific PCT charges may be developed, filed and included in this Tariff to apply to specific transactions, consistent with FERC policy. In such event, and absent provision otherwise, Transporter shall bear the risk of any under-recovery of PCT charges, consistent with the provisions of Section 33 (Negotiated Rates) of the General Terms and Conditions of this Tariff.
3/ Zone 1 shall encompass all points west of and including the Cheyenne Hub located in Weld County, Colorado. Zone 2 shall encompass all points east of the Cheyenne Hub, to and including the PEPL Interconnect, located in Audrain County, Missouri. Zone 3 shall encompass all points east of the PEPL Interconnect, located in Audrain County, Missouri, to and including delivery points in Clarington, Ohio.
4/ Id.
Issued on: March 30, 2015 Effective on:
Rockies Express Pipeline LLC
FERC Gas Tariff Currently Effective Rates - ITS/FTS/BHS Power Cost Tracker Third Revised Volume No. 1 Section Version: 2.0.0
5/ Per Section 40.6 of the General Terms and Conditions of this Tariff the under or over-recovered PCT Reimbursement Charges ("PCVAC") will be calculated such that each current deferred account will be amortized in the following 12 month period.
6/ Firm transportation provided by the incremental capacity approved by FERC order issued July 16, 2009 at Docket No. CP09-58-000 (Meeker to Cheyenne Expansion Project), shall be assessed $0.0002 incremental PCT, plus the applicable incremental service PCVAC of $0.0000, for all receipt and delivery points between the Meeker Hub and Wamsutter Hub and all receipt and delivery points between the Wamsutter Hub and the Cheyenne Hub, in lieu of the otherwise applicable Zone 1 PCT rate component.
7/ Firm transportation provided by the incremental capacity approved by FERC order issued ______at Docket No. ______(REX Zone 3 Capacity Enhancement Project), shall be assessed $0.0309 incremental PCT and the applicable incremental service PCVAC of $0.0000, for all receipt and delivery points within Zone 3 in lieu of the otherwise applicable Zone 3 PCT rate component.
Issued on: March 30, 2015 Effective on:
Rockies Express Pipeline LLC
Exhibit Z-1
Open Season Notices
Non -Binding Open Season “Clarington West Project”
East -to -West Transport from Clarington to Points West
Page 1 of 8
NON-BINDING OPEN SEASON – CLARINGTON WEST PROJECT
Rockies Express Pipeline LLC (“REX”) is conducting a non-binding open season (“Open Season”) to solicit interest in additional east-to-west capacity for Appalachian producers to move their gas out of the production basin and into the attractive Midwest markets and interconnects beginning in 2016-2017. REX is accepting bids for new firm transportation capacity, under Rate Schedule FTS, from physical receipt points in or around Clarington, to available delivery points in REX’s Zone 3 including deliveries at Lebanon and points west as far as MGT Edgar, (the “Clarington West Project”). This announcement provides a description of the Clarington West Project, applicable terms and conditions of service, the Open Season deadline, bid submission and other relevant information concerning the Open Season.
REX is a 1,698-mile natural gas pipeline system that extends from Clarington, Ohio to Wyoming and Colorado. REX recently held a binding open season and received long-term firm commitments for 1.2 Bcf/d of new east-to-west capacity within Zone 3 commencing in 2015, subject to the receipt of regulatory approvals and construction to support bi-directional flows (“Zone 3 East-to-West Project”). The Zone 3 East-to-West Project, when coupled with Seneca Lateral receipts of 0.6 Bcf/day commencing in 2014, provides for up to 1.8 Bcf/day of east-to-west firm transportation capacity from Appalachian supply basins.
Given the supply projections and corresponding demand for additional east-to-west firm capacity from the Appalachian basins, REX is conducting this non-binding Open Season to solicit interest in a subsequent expansion of east-to-west capacity in Zone 3 beginning in 2016 and 2017. Given the rapid production growth in the Appalachian production basin, multiple new sources of supply are expected to be added as receipt points to REX in Zone 3 prior to 2016.
The Clarington West Project will provide customers significant diversity in terms of market access. From interconnected systems off REX, producers can access the attractive Midwest markets such as Chicago and Detroit, as well as traditional Gulf Coast and Southeast markets.
REX is assessing market demand for the expansion of Zone 3 facilities to provide up to 2.4 Bcf/d of additional east-to-west capacity incremental to the 1.8 Bcf/d expansion described above. Depending on the results of this Open Season and the binding commitments that REX ultimately secures from prospective shippers, the Clarington West Project could consist of pipeline looping, new or expanded compressor stations, new receipt point facilities, new delivery point facilities, and the expansion of existing delivery point facilities. The expected bi-directional REX system would operate flexibly to meet both existing west-to-east firm transportation commitments from the Rockies supply basins and the new demand for east-to-west firm transportation from Appalachian supply basins. REX will utilize
Page 2 of 8
NON-BINDING OPEN SEASON – CLARINGTON WEST PROJECT
the information received in this Open Season to determine the appropriate design capacity of the Clarington West Project.
As currently contemplated, REX anticipates the Clarington West Project would have an in- service date between Q2 2016 and Q2 2017. However, these dates are subject to change based on the outcome of this and any subsequent open season(s) and may include a phased-in in-service of the Clarington West Project.
The REX pipeline eastern limit lies in Monroe County, Ohio which is well-positioned to bring eastern supplies from the Utica and Marcellus shale plays as well as other conventional Appalachian production onto REX for transport to market areas. The map below shows the eastern portion of the REX pipeline and its near proximity to the Blue Racer Natrium and Berne gas processing facilities and the MarkWest Seneca gas processing facility.
Page 3 of 8
NON-BINDING OPEN SEASON – CLARINGTON WEST PROJECT
Numerous new receipts will be placed in-service over the next twenty-four (24) months which will bring gas to the REX mainline. The table below shows these anticipated receipt points, the anticipated capacity and anticipated in-service date of each. Open Season bidders are advised that receipts from points not listed below are subject to several conditions, including without limitation, REX’s agreement on the precise location of the receipt point, REX’s agreement as to the specific equipment and configuration of the point, reimbursement to REX of all direct and indirect costs associated with construction of such facilities (including tax gross up), and execution of a Facilities Interconnect and Operating Agreement satisfactory to REX that provides for the construction and operation of the facilities. Bidders should identify their desired receipt point(s), which may either be anticipated or proposed new points. Bidders are advised that gas must be brought to the REX mainline at a pressure of 1480 psig and conform to the quality specifications contained in the REX tariff.
N w (L ) ( / ) - v REX/PVR (Monroe County, OH) 1,000,000 Q1 2015 REX/ Eureka Hunter (Monroe County, OH) 350,000-1,000,000 Oct 2014 REX/Equitrans (Monroe County, OH) 750,000-1,000,000 March 2016 REX/Dominion Transmission (Monroe County, OH) 250,000 – 300,000 Nov 2016 REX/Dominion East OH (Monroe County, OH) TBD Q1 2015
REX Zone 3 has extensive options for delivery to attractive Midwest markets such as Chicago and Detroit, as well as traditional Gulf Coast and Southeast markets. The map below shows the delivery points that currently exist on REX’s system. REX anticipates expansion of delivery points as part of this overall expansion project and will use the information provided by Bidders to assist in identifying the point and capacity needs of the market. Bidders should identify their desired delivery points located within Zone 3. REX reserves the right to reject any bid to the extent it involves deliveries that occur outside of Zone 3.
Page 4 of 8
NON-BINDING OPEN SEASON – CLARINGTON WEST PROJECT
Transportation rates on the Clarington West Project will be subject to the FERC’s approval of REX’s anticipated Natural Gas Act Section 7c filing(s), including east-to-west transport and applicable Zone 3 fuel and lost and unaccounted-for (“FL&U”) rates. Shippers utilizing the Clarington West Project facilities will pay transportation rates as well as all other applicable fees and surcharges in REX’s Tariff. For east-to-west forward haul volumes, without offsetting displacement, REX anticipates a fuel percentage of 1.00-2.25% (assuming a project size of 2.4 Bcf/d). REX provides the following indicative reservation rates which are subject to change pending the information received as to desired overall capacity, receipt point(s) and delivery point(s).
F v f 1
Clarington to Lebanon $0. 40 -0.45 /Dth per day
Clarington to ANR Shelby $0. 65 -0.70 /Dth per day
1 REX is willing to consider constructing to points west of ANR Shelby if bidders are interested. However forecasted rates for such a build are unknown at this time.
Page 5 of 8
NON-BINDING OPEN SEASON – CLARINGTON WEST PROJECT
To participate in this Open Season, interested parties desiring firm transportation capacity on the Clarington West Project should complete an Open Season Indication of Interest Form.
After the close of this non-binding Open Season, REX will follow-up with interested parties to determine next steps, and associated economics, with respect to development of the Clarington West Project, and timing of supply volumes.
REX reserves the right to proceed with bi-lateral negotiations with Open Season bidders on a non-discriminatory basis during and/or following the Open Season to execute binding Precedent Agreement(s) for transportation on REX and any associated construction and project timings. REX will select those parties on a not unduly discriminatory basis, considering a myriad of factors, including the NPV of each party’s bid, bidder’s credit worthiness, overall volumes, timing of bidder volumes, the feasibility of requested Receipt/Delivery points, and other factors that are relevant in REX’s reasonable determination. REX anticipates executing Precedent Agreement(s) within 45-75 days of the close of the Open Season. Precedent Agreement(s) may include provisions for steel and construction cost escalation. Shippers entering into binding Precedent Agreement(s) will be required to meet the credit obligations of REX’s tariff, including but without limitation, General Terms and Conditions 13.1.E.
As a result of this Open Season, and any associated Precedent Agreement(s) that may result, REX reserves the right to conduct a binding open season after determining market demand, identifying the facilities necessary, and executing prearranged Precedent Agreement(s). Nonetheless, REX also reserves the right to proceed with the Clarington West Project without holding a binding open season. REX further reserves the right to decline to proceed with all or parts of the Clarington West Project in its sole judgment.
This Open Season will begin at 10:30 a.m. Eastern Time (“EST”) on Friday, May 30, 2014 and end at 5:00 p.m. EST on Friday, June 27, 2014. Interested parties are advised to submit their completed Open Season Indication of Interest Forms by the end the Open Season. REX reserves the right to extend the end of the Open Season by providing notice on its Electronic Bulletin Board.
f -
REX requests that any shipper that currently has firm east-to-west capacity notify REX if it wishes to “turn back” its capacity. In order for REX to consider any turn back capacity in connection with the Clarington West Project, written notification must be received by REX prior to the end of the
Page 6 of 8
NON-BINDING OPEN SEASON – CLARINGTON WEST PROJECT
Open Season. Such notification must specify the contract number, primary receipt and delivery points and the volume the shipper is offering to turn back. Acceptance of turn back capacity is subject to REX’s confirmation that the contracted capacity reduces or eliminates cost to otherwise construct and expand its existing facilities.
f m f
REX requests that the following information be provided on the Open Season Indication of Interest Form included in this posting:
• Primary Receipt Point: Please indicate receipt point or provide County of proposed receipt point location and any additional information which will assist REX in approximating location for modeling purposes; o Receipt points must be located within Zone 3, o Please note whether bidder also has interest in a further project in which REX would provide compression to get into the REX Mainline. • Primary Delivery Point(s): Please specify, as a primary delivery point(s), existing delivery point(s) in Zone 3 of the REX mainline, including any desired expansion of existing delivery points which are currently fully subscribed; o Receipt points must be located within Zone 3, o Receipt points must result in an east-to-west primary path entirely within Zone 3. • MDQ by Primary Receipt/Delivery Point pairs • Term start date • Term end date • Rate: Please insert the specific dollar amount of your reservation rate bid in the appropriate blank on the Indication of Interest Form stated as $ per Dth per day. Please note, REX will treat this information as highly confidential and will not disclose this information except as required by law or regulation.
In addition to the bid reservation rate, bidders would also pay all other applicable tariff rates and charges, including without limitation, commodity rates, ACA, and FL&U, and other applicable surcharges. These rates and charges will be assessed per REX’s FERC Gas Tariff, and may later include incremental charges for transportation, FL&U, and other surcharges on any REX constructed laterals or booster compressors for which FERC issues REX a NGA Section 7(c) certificate of public convenience and necessity for operation All interested parties must email bids to [email protected] by 5:00 p.m. EST on Friday, June 27, 2014. All bids submitted will be considered non-binding indications of interest.
Page 7 of 8
NON-BINDING OPEN SEASON – CLARINGTON WEST PROJECT
Contact
REX welcomes your interest in the Clarington West Project. Please feel free to contact us to further discuss this Open Season by submitting questions in writing to the following address:
Matt Sheehy and/or Crystal Heter will schedule a telephonic meeting for any verbal discussion required.
Page 8 of 8
ROCKIES EXPRESS PIPELINE LLC CLARINGTON WEST PROJECT INDICATION OF INTEREST FORM
COMPANY NAME: ______CONTACT NAME: ______CONTACT PHONE #: ______TOTAL REQUESTED TRANSPORTATION QUANTITY: ______Dth/d VOLUME RAMP UP INFORMATION: ______TERM START DATE: ______TERM END DATE: ______MONTHLY RESERVATION RATE: $______/DTH PER DAY
SUPPLY POINT (County): ______MIDSTREAM PROVIDER: ______
PICK THREE DELIVERY POINTS AND INCLUDE DELIVERY VOLUME ON THE LINE NEXT TO EACH SELECTION. IF THE POINT IS NOT LISTED, PLEASE WRITE IT IN NEXT TO "OTHER".
REX PIN INTERCONNECT NAME VOLUME (Dth/d) 43537 MIDWSTRN/REX EDGAR 44415 PEPL/REX PUTNAM 44416 ANR/REX SHELBY 44417 COL GAS/REX LEB WARREN 44418 DOMINION/REX LEB WARREN 44419 TET/REX LEB WARREN 44420 TEX GAS/REX LEB WARREN 44472 VEC OH/REX LEB WARREN OTHER OTHER OTHER
NON-BINDING OPEN SEASON – CLARINGTON WEST PROJECT
FORM MUST BE EMAILED TO [email protected]
______SIGNATURE ______NAME ______TITLE ______DATE
Page 2 of 2
- -
Page 1 of 11
BINDING OPEN SEASON – ROCKIES EXPRESS PIPELINE ZONE THREE CAPACITY ENHANCEMENT
Rockies Express Pipeline LLC (“REX”) is pleased to announce a binding open season (“Open Season”) for natural gas market participants to transport gas from the Appalachian production basin to attractive Midwest markets and interconnects beginning in 2016. REX is accepting binding bids for new east-to-west firm transportation capacity via the Rockies Express Pipeline Zone Three Capacity Enhancement, under Rate Schedule FTS, from physical receipt points in or around Clarington, Ohio to available delivery points in REX’s Zone 3, including deliveries at Lebanon and delivery points as far west as NGPL Moultrie (the “Project”). This announcement provides a description of the Project, applicable terms and conditions of service, the bid submission deadline, bid guidelines, bid evaluation and award process and other relevant information concerning the Open Season.
X v v w
REX is a 1,698-mile natural gas pipeline system that extends between supply basins located in Wyoming/Colorado and eastern Ohio. Zone 3 of the REX pipeline extends between Audrain County, MO and Monroe County, OH. REX is in the process of establishing 1,200 MDth/d of new east-to-west firm capacity within Zone 3 commencing in 2015 (“East-to-West Project”). The East-to-West Project will enable REX to provide firm bi-directional flows in Zone 3, up to a total of 1,800 MDth/d in each direction.
X j
The Project will provide customers significant diversity in terms of market access. From systems interconnected to REX in Zone 3, shippers can access the attractive Midwest markets, such as Chicago and Detroit, as well as traditional Gulf Coast and Southeast markets.
Subject to the receipt of regulatory approvals, acquisition of land rights, and completion of system facility additions and modifications as described herein, REX is offering firm transportation, under Rate Schedule FTS, to transport from east-to-west an incremental 800 MDth/d of gas from existing and planned third-party receipt points in Zone 3 to delivery points in Zone 3. The proposed Project would bring the total Zone 3 east-to-west transportation capacity to 2,600 MDth/d. Multiple new sources of supply are expected to be added as receipt points into Zone 3 prior to 2016.
The Project would consist of new and expanded compressor stations, as well as the potential expansion of existing delivery point facilities. The expected bi-directional REX system in Zone 3 would operate flexibly to meet both existing west-to-east firm transportation commitments from the Rockies supply basins and the new and existing demand for east-to-west firm transportation in Zone 3 from Appalachian supply basins.
Page 2 of 11
BINDING OPEN SEASON – ROCKIES EXPRESS PIPELINE ZONE THREE CAPACITY ENHANCEMENT
As currently contemplated, it is anticipated that the Project would have an in-service date of Q3 2016, subject to the timely receipt of a Federal Energy Regulatory Commission (“FERC”) certificate of public convenience and necessity authorizing construction of the Project, as well as all other applicable permits and approvals.
b X
Recourse reservation rates for transportation on the Project will be the maximum reservation rate stated in REX’s FERC Gas Tariff, as it may be amended (the “Tariff”), for firm east-to-west transport, under rate schedule FTS, occurring solely within Zone 3. Transportation using the Project will be subject to a separately stated fuel and lost and unaccounted for (“FL&U”) rate for the Project (currently projected to be 3.43% for in-kind fuel retainage and $0.0064 per Dth/d for electric power costs (“PCT”)), subject to FERC approval of the same and annual adjustment thereafter pursuant to REX’s Tariff annual true-up mechanism. Shippers utilizing the Project facilities will pay transportation reservation rates, FL&U, PCT, as well as all other applicable fees and surcharges stated in REX’s Tariff.
F V u u d d
Clarington to Lebanon $0.45 per Dth/d 800 MDth/d 100 MDth/d of total 100 MDth/d available
Clarington to points in $0.55 per Dth/d 280 MDth/d 50 MDth/d of total 100 Zone 3 located west of MDth/d available Lebanon
A Shipper that has contracted for a primary path to Lebanon may utilize additional secondary delivery points west of Lebanon, within Zone 3, subject to a volumetric rate of $0.10 per Dth/d provided the resultant transportation flows from east-to-west. All deliveries occurring outside of Zone 3 shall be subject to the applicable maximum charges under the Tariff.
Page 3 of 11
BINDING OPEN SEASON – ROCKIES EXPRESS PIPELINE ZONE THREE CAPACITY ENHANCEMENT
X u
The eastern limit of the REX pipeline lies in Monroe County, Ohio, which is well-positioned to receive supplies from the Utica and Marcellus Shale plays as well as other conventional Appalachian production for transport to prime market areas and pipeline interconnections located throughout Zone 3. The map below shows the eastern portion of the REX pipeline and its near proximity to the Blue Racer Natrium and Berne gas processing facilities and the MarkWest Seneca gas processing facility.
REX anticipates that numerous new receipts will be placed into service over the next twenty- four (24) months, which will bring gas onto the REX mainline. The table below shows these anticipated receipt points, the anticipated capacity, and anticipated in-service date of each. Open Season bidders are advised that receipts from points not listed below are subject to several conditions, including without limitation, (i) the party seeking the interconnection must bear the cost of construction of the interconnection; alternatively, the party seeking the interconnection could construct the facilities in compliance with REX’s technical requirements; (ii) the proposed interconnection must not adversely affect REX’s operations; (iii) the proposed interconnection and resulting transportation must not result in diminished service to REX’s existing customers; (iv) the proposed interconnection must not cause REX to be in violation of any applicable environmental or safety laws or regulations with respect to the facilities required to establish an interconnection; and (v) the proposed interconnection must not cause REX to be in violation of its right-of-way agreements or any contractual obligations with respect to the interconnection facilities (collectively, the “Interconnection Conditions”). Bidders should identify their
Page 4 of 11
BINDING OPEN SEASON – ROCKIES EXPRESS PIPELINE ZONE THREE CAPACITY ENHANCEMENT
desired receipt point(s), which may be existing, anticipated or proposed new points. Bidders are advised that gas must be brought to the REX mainline at a pressure up to REX’s maximum allowable operating pressure of 1,480 psig and conform to the quality specifications contained in the Tariff.
d d w (L ) ( /d) - v Dominion East OH (Monroe County, OH) 200,000 -250,000 In -Service Eureka Hunter (Monroe County, OH) 30 0,000 -1,000,000 In -Service Regency (Monroe County, OH) 1,000,000 Q2 2015 Rice Olympus Midstream (Monroe County, OH) 385,000 -600,000 Q4 2015 Equitrans (Monroe County, OH) 750,000 -1, 200,000 Mar 2016 Dominion Transmission (Monroe County, OH) 250,000 – 300,000 Nov 2016 ETC Rover (Noble County, OH) 400,000 Nov 2016
d M
REX’s Zone 3 has extensive options for delivery to attractive Midwest markets such as Chicago and Detroit, as well as traditional Gulf Coast and Southeast markets. The map below shows the delivery points that currently exist in Zone 3 of REX’s system.
Page 5 of 11
BINDING OPEN SEASON – ROCKIES EXPRESS PIPELINE ZONE THREE CAPACITY ENHANCEMENT
The following table depicts the available delivery point capacity located within Zone 3. REX reserves the right to reject any bid to the extent it requests deliveries that are located outside of Zone 3.
v v b v ( /d) ( /d) 43537 MIDWSTRN/REX EDGAR 652 ,000 180 ,000 44413 NGPL/REX MOULTRIE 1,750 ,000 1 525 ,000 44414 TRUNKLNE/REX DOUGLAS 400 ,000 2 327 ,500 44415 PEPL/REX DEL PUTNAM 300 ,000 3 135,000 44416 ANR/REX SHELBY 1,200 ,000 4 340 ,000 44417 COL GAS/REX LEB WARREN 280 ,000 280 ,000 44418 DOMINION/REX LEB WARREN 585 ,000 585 ,000 44419 TET/REX LEB WARREN 980 ,000 980 ,000 44420 TEX GAS/REX LEB WARREN 490 ,000 5 490 ,000 44422 COL GAS/REX FAIRFIELD 280 ,000 275 ,000 44423 TGP/REX GUERNSEY 595 ,000 475 ,333 44430 CITIZENS/REX MORGAN 140 ,000 140 ,000 44472 VEC OH/REX LEB WARREN 140 ,000 140 ,000 44488 AMER IL/REX MOULTRIE 140 ,000 140 ,000 44497 AK STEEL/REX WARREN 100 ,000 100 ,000 44590 VEC IN/REX DECATUR 140 ,000 140 ,000 TBD TEX GAS/REX JOHNSON 250,000 6 250,000 1 Anticipated expansion up to 1,750 MDth/d 2 Anticipated expansion up to 400 MDth/d 3 Anticipated expansion up to 300 MDth/d 4 Anticipated expansion by ANR to ~1,200 MDth/d 5 Anticipated expansion by Texas Gas to 490 MDth/d, expandable to 600 MDth/d 6 Anticipated new delivery by Texas Gas
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BINDING OPEN SEASON – ROCKIES EXPRESS PIPELINE ZONE THREE CAPACITY ENHANCEMENT
d
REX has secured binding financial commitments (in the form of Precedent Agreements), from multiple Pre-arranged Shippers sufficient to proceed with the Project. Capacity committed to Pre- arranged Shippers on the Project with capacity commitments at or above 200,000 Dth/d will not be subject to capacity proration or reduction in this Open Season. The following terms reflect the minimum Pre-arranged Shipper commitments:
i. Aggregate Maximum Daily Quantity (“MDQ”): 50,000 Dth/d; ii. Primary Receipt Point(s): Designated in-service or planned physical point(s) of receipt into Zone 3 as described above or future point (s ); iii. Primary Delivery Points: Available delivery point capacity at Lebanon, NGPL Moultrie (PIN 44413), ANR Shelby (PIN 44416); iv. Flow direction: Selected primary receipt and delivery points must result in east-to- west flow occurring solely within Zone 3. v. Effective date: The in-service date of the Project, which is now anticipated to be Q3 2016 (the “In-Service Date”); vi. Primary Term: Fifteen (15) years; and vii. Applicable monthly reservation rates: $16.7292 per Dth per Month of MDQ ($0.55 per Dth per day on a 100% load factor basis) for deliveries in Zone 3 that are west of Lebanon; and $13.6875 per Dth per Month of MDQ ($0.45 per Dth per day on a 100% load factor basis) for deliveries in Zone 3 that are either at Lebanon or east of Lebanon;
Pre-arranged Shippers shall have the right to match higher bids as described below in Bid Evaluation and Award Process. Once capacity is awarded, all shippers will have equal rights with respect to transportation service on REX, that is, Pre-Arranged Shipper status confers only certain rights to match higher confirming bids in this Open Season, or as applicable, to be exempt from capacity pro rotation or reduction.
Except for the reservation rate applicable to a negotiated rate bid, all transportation rates, including recourse rate reservation bids, plus commodity, FL&U, and such other applicable fees and surcharges, will be subject to the approved and effective Tariff rates and surcharges for firm transportation service on the Project during the primary term of the contract and any extension thereof.
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BINDING OPEN SEASON – ROCKIES EXPRESS PIPELINE ZONE THREE CAPACITY ENHANCEMENT
d qu
REX reserves the right to consider only Conforming Bids in this Open Season. In order to qualify as a “Conforming Bid,” a bid must be submitted before the Open Season Bid Submission Deadline (as defined herein) and must meet each of the following minimum criteria:
i. Maximum Daily Quantity (“MDQ”) between 10,000 Dth/d and 600,000 Dth/d; bidders should indicate if they are not willing to accept proration of the volume provided in their bid in this Open Season, and acceptable minimum award MDQ quantities if prorated; ii. Required primary term of fifteen (15) years commencing on the In-Service Date; iii. Monthly negotiated reservation rate $16.7292 per Dth per month of MDQ ($0.55 per Dth per day on a 100% load factor basis) for deliveries in Zone 3 that are west of Lebanon; and $13.6875 per Dth per month of MDQ ($0.45 per Dth per day on a 100% load factor basis) for deliveries in Zone 3 that are either at Lebanon or east of Lebanon; or bid at the recourse reservation rate (currently $26.6651 per Dth per month or $0.8767 per Dth per day on a 100% load factor basis, but as approved and in effect during the primary term of the contract.); iv. Primary Receipt Point(s): Designated in-service or planned physical point(s) of receipt into Zone 3 as described above or future point(s) specified by bidder, subject to the Interconnection Conditions described above; and v. Primary Delivery Points: NGPL Moultrie (PIN 44413), ANR Shelby (PIN 44416), Texas Gas Lebanon (PIN 44420), Midwestern Edgar (PIN 43537), Trunkline Douglas (PIN 44414), PEPL Putnam (PIN 44415), Texas Gas Johnson County (PIN TBD), other Zone 3 delivery points may be considered on a case by case basis, subject to availability and the Interconnection Conditions as applicable; vi. Primary Receipt and Delivery Point elections must result in east-to-west transport occurring entirely within Zone 3.
Open Season bids failing to meet all of these minimum criteria will be deemed “Non- conforming Bids,” and REX shall have no obligation to consider Non-conforming Bids in this Open Season. REX may, but is not required to, consider Non-conforming Bids if acceptable to REX in its sole discretion. This acceptance process will be conducted in a not unduly discriminatory manner.
All interested parties must email bids to [email protected] by the Bid Submission Deadline (as defined herein). ALL BIDS RECEIVED WILL BE CONSIDERED BINDING.
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BINDING OPEN SEASON – ROCKIES EXPRESS PIPELINE ZONE THREE CAPACITY ENHANCEMENT
d v u d w d
Conforming Bids submitted in the Open Season will be evaluated prior to other bids submitted. Bids of negotiated rates exceeding the current Zone 3 recourse rate shall be evaluated at the maximum recourse rate only. Pre-arranged Shippers shall have the right to match recourse rate bids by submitting a recourse rate or a negotiated rate equal to the recourse rate for such MDQ. Any capacity that a Pre-arranged Shipper declines to match will be allocated to recourse rate bidders.
Pre-arranged Shippers shall have the right to match competing and higher negotiated rate bids in order to retain their bid MDQ. Capacity not awarded at recourse rate will be awarded among acceptable, conforming bidders and Pre-arranged Shippers as follows. Acceptable, conforming bids will be ranked by net present value (“NPV”), utilizing a discount factor of 3.25% and assuming application of the bid or negotiated reservation rate to the bid MDQ commencing on the In-Service Date of the Project, currently estimated to be Q3 2016, and through the primary fifteen (15) year term of the bid. The total volume and resulting weighted average rate of higher negotiated rate bids will be determined and will represent the rate for Pre-arranged Shippers to match. Pre-arranged Shippers will have the right to retain their entire MDQ by agreeing to pay the match rate for their prorated share of the conforming bid capacity. Any capacity that a Pre-arranged Shipper declines to match will be allocated to conforming and higher negotiated rate bidders based on NPV ranking.
Existing shippers desiring to move their existing contract to an east to west firm transportation path within Zone 3 should submit a Service Request Form prior to the closing of this Open Season. With respect to such amendments, only incremental revenue will be included in the NPV evaluation for awarding capacity on the Project; incremental revenue and NPV can be created with a contract volume increase or rate increase commencing with the in-service of the Project, currently estimated to be Q3 2016, and applicable for a primary term of fifteen (15) years. If the amendment request does not result in incremental revenue to REX, the NPV assigned to the request will be deemed zero (0) for purposes of bid evaluating in this Open Season. Upon the In-Service Date, REX will offer available capacity, subject to the Tariff and any applicable incremental charges then in effect. Existing shippers are encouraged to email [email protected] if they require assistance in completing the Service Request Form.
An existing shipper that currently holds firm transportation capacity that it believes (subject to REX’s evaluation and confirmation) could be used in lieu of the a portion or portions of the proposed expansion capacity subject to this Open Season may notify REX of its desire to permanently relinquish its capacity for use in the proposed expansion. Shippers that wish to turn back such capacity must notify REX, in writing, of the total contract quantity, term, receipt point(s), delivery point(s), contract
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BINDING OPEN SEASON – ROCKIES EXPRESS PIPELINE ZONE THREE CAPACITY ENHANCEMENT
number(s), and any other relevant information necessary to effectuate the permanent relinquishment of such capacity. Notification must be received by the Bid Submission Deadline (as defined herein). This solicitation of turnback capacity is not binding on REX. Turnback requests are subject to rejection or pro ration based upon the results of this Open Season and this turnback solicitation, as determined by REX in its sole discretion.
REX will evaluate all turnback bids that are received and will determine whether or not to accept any offer for the permanent relinquishment of capacity based on the avoided cost of the construction of the additional Project capacity, including all costs incurred to date and any foregone revenues associated with the anticipated full construction of the Project expansion capacity. REX reserves the right to reject, in its sole discretion, any turnback requests that are incomplete, contain modifications to the terms of the turnback capacity solicitation, are submitted with any conditions on the turnback capacity, or that do not keep REX economically whole.
In addition to the bid reservation rate for the primary term, bidders shall also pay all other approved Tariff rates and charges, including without limitation, commodity rates, ACA, and FL&U, PCT, and other applicable surcharges. Except as to bid negotiated reservation rates for the Project transportation service, all transportation services shall be assessed per the Tariff, as approved and in effect from time-to-time. Such Tariff rates may include applicable incremental charges for lateral, booster and other non-mainline transportation services.
By submitting a bid in this Open Season, each bidder agrees it will execute the following binding agreements within ten (10) days after being tendered by REX: (i) a FTSA reflecting the terms of service of the bidder’s capacity award; and/or (ii) a binding Precedent Agreement in a form that is suitable to REX (a copy of which can be requested by email request to [email protected] ). Each shipper awarded capacity in this Open Season will be required to establish credit with REX in a manner consistent with the binding Precedent Agreement and its FERC Tariff, equal to up to twenty-seven (27) months of reservation charges for its awarded capacity or other terms agreed upon by the parties. Bidders awarded capacity in this Open Season at rates other than the recourse rate will be required to agree to support any notification, Tariff or regulatory filing made to the FERC, or other forums, which would assist REX in obtaining any necessary authorizations to construct and/or operate facilities or to provide services in the manner described in this announcement
Each shipper awarded capacity in this Open Season will be bound by, and required to comply with, the Tariff, as it may be amended from time to time, including but not limited to the General Terms and Conditions, all service agreements executed between shipper and REX, and all applicable rate schedules. In addition, shippers will be required to execute and comply with ancillary documents typically required of all REX shippers (e.g., user access forms for CONNECT).
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BINDING OPEN SEASON – ROCKIES EXPRESS PIPELINE ZONE THREE CAPACITY ENHANCEMENT
d
This Open Season will begin at 3:00 p.m. Mountain Time (“MST”) on Monday, March 2, 2015 and will end at 3:00 . . M F d , M 13, 2015 (“Bid Submission Deadline”). Interested parties are advised to submit their completed Open Season Bid Form by the end the Open Season. REX reserves the right to extend the duration of the Open Season by providing notice on its Electronic Bulletin Board. Bidders will be notified of bid results by no later than 3:00 p.m. MST on Friday, March 27, 2015.
REX welcomes your binding bid in the REX Zone Three Capacity Enhancement. Please feel free to contact us to further discuss this Open Season by submitting questions in writing to X @ . . Matt Sheehy and/or Crystal Heter will schedule a telephonic meeting for any verbal discussion required.
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ROCKIES EXPRESS PIPELINE ZONE THREE CAPACITY ENHANCEMENT BINDING OPEN SEASON BID FORM
In order to be valid, a bid must contain all of the information required by this Bid Form, and must be signed on the following page.
BIDDER COMPANY NAME: ______(the “Bidder”)
BA#: ______
CONTACT NAME: ______
CONTACT PHONE #: ______
MDTQ: ______Dth/d
WILLING TO ACCEPT LESS CAPACITY THAN BID MDTQ: Yes No
IF YES, MINIMUM ACCEPTABLE MDTQ: ______Dth/d
MONTHLY RESERVATION RATE: $______per Dth/d of MDTQ or “MAX”
TERM START DATE: ______TERM END DATE: ______
PRIMARY POINTS AND POINT MDRQ/MDDQ:
POINT NAME PIN MDRQ/MDDQ
RECEIPT ______
DELIVERY ______
Comments: ______
______
Remainder of page left blank intentionally. Bid form is not complete until signed on the next page.
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By completing this bid form and signing below, the Bidder represents and warrants that it understands that this form constitutes a binding bid in the Binding Open Season for the Rockies Express Pipeline Zone Three Capacity Enhancement and that, upon award of capacity in this open season, the Bidder will execute the following binding agreements within ten (10) days after being tendered by REX for up to the maximum rate, term and/or MDTQ indicated herein: (i) a Firm Transportation Service Agreement reflecting the terms of service of the Bidder’s capacity award; and/or (ii) a binding Precedent Agreement in a form that is suitable to REX (a copy of which can be obtained by email request to [email protected] ).
______SIGNATURE
______NAME
______TITLE
______DATE
Bid must be emailed to [email protected] on or before 3:00 PM (Mountain) on Friday, March 13, 2015.
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Rockies Express Pipeline LLC
Exhibit Z-2
Protective Agreement
UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION
Rockies Express Pipeline LLC ) Docket No. CP15-[___]-000
PROTECTIVE AGREEMENT
This Protective Agreement is made as of [______] (“Effective Date”) between [______] (“Recipient”) and Rockies Express Pipeline LLC (“Transporter”). In consideration for and as a condition to Transporter’s furnishing the Recipient access to certain Requested Information (as defined herein) as contemplated hereunder, the Recipient and Transporter agree as follows:
1. Recitals.
a. On March [__], 2015, Transporter filed with the Federal Energy Regulatory Commission (“Commission”) an application, pursuant to Section 7(c) of the Natural Gas Act requesting authorization to construct and operate certain additional mainline compression facilities within Zone 3 of its system that will enable an increase in the east-to-west firm transportation service, referred to as the “Zone 3 Capacity Enhancement Project” (“Filing”);
b. In the Filing, and any subsequent filings in the captioned docket relating to the Filing (“Proceeding”), Transporter has designated or may designate certain information as critical energy infrastructure information (“CEII”). Transporter specifically noted in its Filing that release of the information containing CEII to the public may place the assets and personnel of the Transporter at undue risk and, thus, should be deemed exempt from mandatory public disclosure under the Freedom of Information Act, 5 U.S.C. § 552;
c. On [______], Recipient filed a motion to intervene/notice of intervention in the Proceeding. Recipient desires to obtain access to certain information filed by Transporter designated as containing CEII and has made a written request for such information (the “Requested Information”), which includes an executed copy of the Protective Agreement and a statement of Recipient’s status in the Proceeding, consistent with 18 C.F.R. § 388.112(b)(2)(iii); and
d. Transporter has reviewed Recipient’s written request and has determined that no objection to disclosure is necessary; therefore, Transporter is willing to provide the Requested Information to Recipient within five (5) days of the written request under the terms of this Protective Agreement.
2. The Recipient, on behalf of itself and its Reviewing Representatives (as defined herein) acknowledges the following:
a. On October 11, 2001, the Commission issued a policy statement removing from public access previously public documents that detail the specifications of energy facilities licensed or certificated. See Treatment of Previously Public Documents, Docket No. PL02-1-000, 97 FERC ¶ 61,030 (2001). The Commission has since issued a series of orders on its procedures. The Commission established its rules for handling CEII in Order Nos. 630 and 630-A. See Critical Energy Infrastructure Information, Order No. 630, FERC Stat. & Regs., Regulations Preambles 2001-2005 ¶ 31,140 (2003); order on reh’g, Order No. 630-A, FERC Stat. & Regs, Regulations Preambles 2001-2005 ¶ 31,147 (2003). The CEII rules were clarified and modified in Order Nos. 683 and 683-A. See Critical Energy Infrastructure Information, Order No. 683, FERC Stat. & Regs. Regulations Preambles ¶ 31,228 (2006); order on reh’g, Order No. 683-A, 119 FERC ¶ 61,029 (2007). On October 30, 2007, the Commission issued its current CEII rules. See Critical Energy Infrastructure Information, Order No. 702, FERC Stat. & Regs. Regulations Preambles ¶ 31,258 (2007);
b. The Requested Information contains CEII and comes within the scope of the Commission’s rules for treatment of CEII; and
c. Individuals and/or organizations could misuse the Requested Information to jeopardize the security and/or integrity of the United States energy infrastructure, which, in turn, could harm persons or property in the United States.
3. By executing this Protective Agreement, the Recipient and all Reviewing Representatives (as defined herein) agree to each of the following:
a. The Protective Agreement shall govern the use of all Requested Information designated by Transporter as containing CEII consistent with 18 C.F.R. § 388.113(c)(1) that is produced by, or on behalf of, Transporter in the Proceeding and Recipient and all Reviewing Representatives to whom the Requested Information is disclosed shall be bound by the terms of this Protective Agreement;
b. Notwithstanding any order terminating this Proceeding, this Protective Agreement shall remain in effect until specifically modified or terminated by the Commission;
c. Recipient will not disclose the Requested Information to anyone other than a “Reviewing Representative” of Recipient, which shall include an attorney, paralegal, expert, consultant, or employee of the Recipient
2 who has a legitimate need to review the Requested Information for the Purpose (as defined herein) and with whom Recipient shares the Requested Information as dictated by the terms of this Protective Agreement; d. Prior to sharing any of the Requested Information with a Reviewing Representative, or allowing a Reviewing Representative to inspect, participate in a discussion(s) regarding, or otherwise access the Requested Information, the Recipient shall (1) inform all Reviewing Representatives of the confidential nature of the Requested Information and the terms and restrictions of this Protective Agreement and (2) require each Reviewing Representative to agree to be bound by this Protective Agreement and execute a copy of Appendix A attached hereto; e. Recipient will prepare and maintain a list of all Reviewing Representatives to whom disclosure of the Requested Information has been made, and provide the same to Transporter (along with copies of the executed Appendix A for each such Reviewing Representative) promptly upon request; f. Recipient and all Reviewing Representatives agree to use the Requested Information only for the limited purpose of analyzing Transporter’s application in the Proceeding with respect to the issues that are before the Commission in the Proceeding (the “Purpose”), and the Recipient and all Reviewing Representatives agree not to use the Requested Information for any other purpose; g. Recipient and all Reviewing Representatives acknowledge that the Requested Information provided to Recipient and Reviewing Representatives remains subject to all rules, procedures, and regulations established by FERC, including the provisions for confidential treatment of information submitted to FERC contained in 18 C.F.R. §§ 388.112 et seq., Docket No. PL02-1-000 and the Notice of Inquiry, and all future regulations, policy statements and rules ultimately promulgated by the Commission concerning confidential information and/or CEII; h. All Requested Information shall be maintained by Recipient and all Reviewing Representatives in a secure place. Recipient and all Reviewing Representatives may make copies of the Requested Information, but such copies shall become CEII and be subject to these same procedures. Recipient and all Reviewing Representatives may make notes, including memoranda, handwritten notes, or any other form of information, including electronic form and audio recordings, of the Requested Information, and which shall be treated as CEII if they contain CEII. Each page of Requested Information or notes of Requested Information that contain CEII shall be marked with “CONTAINS
3
CRITICAL ENERGY INFRASTRUCTURE INFORMATION—DO NOT RELEASE”;
i. Recipient and all Reviewing Representatives agree to destroy or return to Transporter all Requested Information, and any copies and notes thereof, upon the conclusion of the Proceeding. The Proceeding shall be concluded for purposes of the foregoing sentence once FERC issues a final, non-appealable order in the applicable docket(s) or, if FERC action in the applicable docket(s) is appealed by any party or participant in the Proceeding, upon the conclusion of all appellate proceedings and the exhaustion of all appellate rights with respect to the applicable docket(s). If requested by Transporter, Recipient shall also submit to Transporter an affidavit stating that, to the best of Recipient’s knowledge, all Requested Information and all notes of Requested Information have been returned to Transporter or destroyed;
j. Transporter reserves the right to pursue any legal or equitable remedies that may be available in the event of an actual or anticipated disclosure of the Requested Information; and
k. Transporter makes no representation or warranty, express or implied, concerning the Requested Information and Transporter disclaims any and all liability for damages—direct, indirect consequential, or otherwise—arising out of the Recipient’s and the Reviewing Representatives’ use of the Requested Information.
ACKNOWLEDGED AND AGREED TO AS OF THE DATE HEREOF:
[______]
Signature: ______
Name: ______
Title: ______
Date: ______
4
UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION
Rockies Express Pipeline LLC ) Docket No. CP15-[___]-000
PROTECTIVE AGREEMENT
APPENDIX A NON-DISCLOSURE CERTIFICATE
I hereby certify my understanding that access to the Requested Information, which contains CEII, is provided to me pursuant to the terms and restrictions set forth in this Protective Agreement, and that I have been given a copy of and have read the provisions contained herein, and that I agree to be bound by them. I understand that the contents of the Requested Information, any notes or other memoranda, or any other form of information that copies or discloses the Requested Information shall not be disclosed to anyone other than another person who has been granted access to this same Requested Information by the Federal Energy Regulatory Commission or by execution of this Protective Agreement. I acknowledge that a violation of this agreement may result in criminal or civil sanctions. I agree that my compliance with this agreement is subject to audit by the Federal Energy Regulatory Commission.
By: (Signature)
(Print Name)
Title:
Representing:
Date:
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