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Open Season
EAST CHEYENNE GAS STORAGE, LLC
ANNOUNCES A NON-BINDING OPEN SEASON
FOR PHASE 1 FIRM GAS STORAGE SERVICE
April 26, 2010
East Cheyenne Gas Storage, LLC (“East Cheyenne”), a wholly owned subsidiary
of Merchant Energy Partners, LLC, is conducting a non-binding Open Season to gauge
prospective customers’ interest in contracting for up to 4 Bcf of storage capacity
initially to be made available in a new interstate natural gas storage project located
in Logan County, Colorado. This new gas storage facility, known as the East Cheyenne
Gas Storage Project (the “Project”), will provide natural gas storage services to
meet existing and anticipated demands for peak day, load following, balancing, and
seasonal storage services to natural gas markets throughout the Midwest and Western
U.S. following, balancing, and seasonal storage services.”
East Cheyenne will be subject to regulation as an interstate natural gas storage
facility under the federal Natural Gas Act. It will obtain from the Federal Energy
Regulatory Commission (“FERC”) certificates of public convenience and necessity
authorizing it to construct, own and operate the Project as well as authorization
to charge market-based rates for the services it will offer. East Cheyenne has initiated
the process by which it will obtain the required FERC approvals. Submissions that
East Cheyenne has made to FERC for review of the Project may be found through FERC’s
Web site (www.ferc.gov), in the eLibrary tab,
at Docket No. CP10-34-000. following, balancing, and seasonal storage services.”
East Cheyenne plans to begin construction of Phase 1 of the Project in the summer
of 2010 and anticipates an in-service date for the initial 4 Bcf of working gas
capacity by May, 2011. Parties submitting a proposal in this Open Season will be
expressing an interest in contracting for firm gas storage service that will commence
in May 2011 or later. following, balancing, and seasonal storage services.”
Rates, including fuel retention percentages, will be negotiated market-based rates.
The rates that East Cheyenne will accept will be determined after the conclusion
of this non-binding Open Season and are dependent upon the final scope of the facilities
design and firm service commitments. following, balancing, and seasonal storage
services.”
This Open Season will commence on April 26, 2010, and close May 7, 2010, 5:00 p.m.
MDT. following, balancing, and seasonal storage services.”
For questions concerning this Open Season or to obtain Open Season packages, contact
David Hooker at (720) 351-4001 or by email at
dhooker@mepco.us.com. A link to the Open Season Request Form can be found
in the section “Bid Document and Follow-Up Process” below. Completed forms can be
faxed to (720) 351-4201 or mailed directly to David Hooker at the address shown
under “Contact Information“ prior to the deadline.
CHEYENNE PROJECT OVERVIEW
East Cheyenne is soliciting interest from prospective customers in contracting for
up to 4 Bcf of storage capacity initially to be made available in May of 2011 from
its natural gas storage project located in Logan County, Colorado. (click on map
to enlarge)
The Project is targeting interested parties seeking (i) additional supply flexibility,
(ii) reliable gas supply to meet demand peaks that exceed production and long-haul
pipeline throughput, (iii) load following capability to match gas-fired electric
generation dispatch, and (iv) a load management tool for handling imbalances and
price volatility.
PROJECT DESCRIPTION
- Phase 1 will include 4 Bcf of working gas capacity and roughly 5,000 horsepower
of gas fired compression. With this capacity and horsepower, East Cheyenne will
be capable of injecting approximately 50,000 Mcfd and redelivering roughly 40,000
Mcfd in Phase 1.
- East Cheyenne contemplates constructing a Phase 1 interconnection with Trailblazer
Pipeline Company, near Peetz, Colorado in Logan County, approximately 18 miles west
of Trailblazer’s Compressor Station No. 601. East Cheyenne only intends to construct
the Trailblazer interconnect, one of the Project’s three prospective pipeline interconnections,
during Phase 1.
DESCRIPTION OF FIRM SERVICES OFFERED IN THIS OPEN SEASON
- East Cheyenne is seeking expressions of interest in contracting in Phase 1 for Firm
Storage Service, which will consist of:
- Receipt on any day of a prospective customer’s
gas per the customer’s nomination, up to the customer’s maximum daily injection
quantity (“MDIQ”) specified in the customer’s executed firm storage service agreement,
plus fuel reimbursement at the point(s) of receipt, and the injection of gas to
be received into storage, provided customer’s storage inventory has not exceeded
customer’s maximum storage quantity;
- The storage of gas in amounts up to a prospective
customer’s firm maximum storage quantity (“MSQ”); and
- The withdrawal from storage on any day of
a prospective customer’s gas per customer’s nomination up to the customer’s maximum
daily withdrawal quantity (“MDWQ”) specified in the customer’s executed firm storage
service agreement and the delivery of such gas to the point(s) of delivery, provided
that the customer has a quantity of gas in customer’s firm storage inventory not
less than the quantity customer shall have nominated for withdrawal on such day.
- The terms and conditions of service that East Cheyenne anticipates offering will
be governed by East Cheyenne’s FERC Gas Tariff. East Cheyenne has made a pro forma
version of this tariff available for prospective customer review on its Web site
(www.eastcheyenne.com).
RATES
- Rates, including fuel retention, will be negotiated market-based rates. The minimum
rates that East Cheyenne will deem acceptable will be determined after the conclusion
of this non-binding Open Season and are dependent upon the final scope of facilities
and firm service commitments.
CONTRACT TERM FOR PHASE 1 SERVICE
- No minimum or maximum term.
TARGETED PHASE 1 IN-SERVICE DATE
BID DOCUMENT AND FOLLOW-UP PROCESS
This non-binding Open Season will commence on April 26, 2010, and end May 7, 2010
at 5:00 p.m. MDT. Parties wishing to indicate their interest in contracting with
East Cheyenne for firm gas storage services must submit a completed
Open Season Request Form.
Following the close of the Open Season, East Cheyenne will begin the process of
negotiating binding precedent agreements and finalizing the Project design. All
prospective Phase 1 customers wanting to enter into a binding precedent agreement
will have to provide evidence of creditworthiness satisfactory to East Cheyenne.
The creditworthiness standards East Cheyenne will apply are set forth in the General
Terms and Conditions of its pro forma FERC Gas Tariff.
This offering of firm gas storage services is explicitly made subject to and conditioned
upon East Cheyenne’s receipt of all applicable regulatory approvals in form and
substance acceptable to East Cheyenne. East Cheyenne reserves the right to i) reject
any bids, ii) revise the scope of the Project in any way, and iii) consistent with
applicable regulations, to terminate further participation in the Open Season process.
CONTACT INFORMATION
The information provided in this packet is intended to assist the interest parties
in preparing the Open Season Non-Binding Request Form. All inquires or requests
for additional information or clarifications should be directed to:
David Hooker
East Cheyenne Gas Storage, LLC
10901 W Toller Rd, Suite 200
Littleton, Colorado 80127
Telephone: (720) 351-4001
Fax: (720) 351-4201
E-Mail: dhooker@mepco.us.com
WEB SITE LINKS FOR OPEN SEASON INFORMATION
Open Season information can also be found on East Cheyenne’s Web site at: www.eastcheyenne.com
Phase 1 Open Season Terms & Instructions
April 26, 2010 through May 7, 2010
Bids due no later than 5:00 PM MDT
Firm Storage Service under Rate Schedule FSS
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Maximum Available Storage Capacity:
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4,000,000 Dth
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Prospective FSS Customer Allocations:
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Maximum Storage Quantity (“MSQ”):
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1,000,000 to 4,000,000 Dth
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Maximum Daily Injection Quantity (“MDIQ”):
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0 to 50,000 Dth
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Maximum Daily Withdrawal Quantity (“MDWQ”):
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0 to 40,000 Dth
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Start Date: Earliest available start date is May 1, 2011; later start dates are
acceptable
Turns: ~2 Turn Service
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Ratchets Applicable to Phase 1 Service
Although East Cheyenne’s Rate Schedule FSS contemplates service reductions based
on the level of a customer’s storage inventory pursuant to ratchets to be applied
to the customer’s MSQ, East Cheyenne intends to offer only unratcheted service to
prospective customers that contract for Phase 1 service.
Other Common Terms
- Commodity Fee = not less than $0.01/Dth on injection and $0.01/Dth on withdrawal
- Fuel Rate = to be negotiated
- Initial interconnects are those which will be in service and noted as such on the
Request for Service form
Use of Open Season Results
At the conclusion of the Phase 1 Open Season, East Cheyenne will evaluate the bids
received and rank them according to overall economic benefit to East Cheyenne.
Upon completing its evaluation of each non-binding bid, East Cheyenne will notify
bidders of East Cheyenne’s interest in entering into negotiations with such bidders.
The purpose of these negotiations will be to conclude and execute one or more precedent
agreements committing East Cheyenne and successful bidders, upon the satisfaction
of specified conditions precedent, to enter into one or more firm service agreements
under Rate Schedule FSS. East Cheyenne will contact each bidder that participated
in the Phase 1 Open Season regarding negotiations for firm storage service before
it contacts or enters into discussions for service with any prospective customers
that did not participate in the Phase 1 Open Season.
East Cheyenne reserves the right to reject any bid that (i) may detrimentally impact
facility design, (ii) yields an economic value that is unacceptable to East Cheyenne,
(iii) does not satisfy all of the terms of this Phase 1 Open Season, (iv) does not
contain all of the required information specified in the notice of the Open Season,
(v) contains terms and conditions other than those contained in East Cheyenne’s
pro forma FERC Gas Tariff, and/or (vi) does not meet East Cheyenne’s creditworthiness
requirements (which are set forth in Section 3.3 of the General Terms and Conditions
of its FERC Gas Tariff).
All bids are due by no later than 5:00 p.m. MDT, on May 7, 2010. Bids are to be
submitted either by fax (720) 861-5700 or by email to
dhooker@mepco.us.com.
Non-Binding Phase 1 Open Season Bid Form
Open Season Announcement
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“Providing natural gas storage and related services to meet market demand for load
following, balancing, and seasonal storage services.”
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