Non-Binding Open Season "Clarington West Project"
East-to-West Transport from Clarington to Points West

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.

Clarington West Project Description

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 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.

REX in the Supply Area

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.

REX E2W Supply Area

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.

New Receipt Points (Location)Anticipated Design
Capacity (Dth/d)
Anticipated In-
Service Date
REX/PVR (Monroe County, OH)1,000,000Q1 2015
REX/Eureka Hunter (Monroe County, OH)350,000 – 1,000,000Oct 2014
REX/Equitrans (Monroe County, OH)750,000 – 1,000,000March 2016
REX/Dominion Transmission (Monroe County, OH)250,000 – 300,000Nov 2016
REX/Dominion East OH (Monroe County, OH)TBDQ1 2015

Interconnects and Market Access

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.

REX E2W Interconnects

Transportation Rates Applicable to Clarington West Project Receipts

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).

Forecasted Reservation Rate
for the Clarington West Project1
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.

Participating in this Open Season

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.

RREX 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.

Open Season Deadline

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.

Solicitation of Turn-back Capacity

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 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.

Information to be Included in your Indication of Interest

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;
    • Receipt points must be located within Zone 3,
    • 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;
    • Receipt points must be located within Zone 3,
    • 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 REXClaringtonWest@tallgrassenergylp.com by 5:00 p.m. EST on Friday, June 27, 2014. All bids submitted will be considered non-binding indications of interest.

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:

REXClaringtonWest@tallgrassenergylp.com

Matt Sheehy and/or Crystal Heter will schedule a telephonic meeting for any verbal discussion required.