DATE: October 15, 2024                                                                        TIME: 4:00 PM CDT

 

TO: ALL TENNESSEE GAS PIPELINE COMPANY, L.L.C. CUSTOMERS

 

RE:       Binding Open Season to Serve the Growing Demand in Southeast Markets  

            Mississippi Crossing Project – EXTENSION

(OPEN SEASON POSTING #1397)

 

I.  General

 

Due to customer interest in Tennessee Gas Pipeline Company, L.L.C.'s (“Tennessee”) proposed Mississippi Crossing Project (“MSX” or the “Project”), Tennessee has elected, pursuant to this notice, to update the binding open season (the “Open Season”) for the Project to extend the end date of the Open Season to 4:00 p.m. CDT on November 1, 2024. In connection with such extension, Tennessee is also updating: (a) Section IV of this notice to extend (1) the date by which it will notify potential shippers that are not Anchor Shippers (as hereinafter defined) of capacity awards and (2) the date by which such shippers shall execute Precedent Agreements (as hereinafter defined) and; (b) Section VIII of this notice to extend the date by which interested parties must respond to Tennessee's turnback capacity solicitation.

 

Tennessee is developing the Project to address increasing natural gas demand driven by power and LDC growth in Southeast markets. The Project will connect to existing TGP assets, including the 100, 800, and 500 legs, along with third-party pipelines that, in combination, will provide critical supply access at liquid trading points sourced by multiple supply basins.

 

Through the Project, Tennessee plans to develop an extension of its pipeline system (the “MSX Extension”) that would enable Tennessee to provide approximately 1,500,000 dekatherms ("Dth") per day (“Dth/day”) of firm transportation capacity (the “Project Capacity”) from the origination point of such extension at or near Greenville, Mississippi to (1) a new TGP delivery on the 500 line located in Lauderdale County, Mississippi (the “TGP 500L Delivery”), (2) a new delivery to Southern Natural Gas Company, L.L.C. located in Clarke County, Mississippi (the “SNG Delivery”), and (3) a new potential delivery to Transcontinental Gas Pipe Line Company, LLC in Choctaw County, Alabama (the “Transco T85 Delivery” and, together with the TGP 500L Delivery and the SNG Delivery, the “MSX Delivery Points”).

 

A map of the proposed Project is provided here. Potential shippers electing to submit Open Season bids shall have the option to allocate their requested Project Capacity among the receipt points and delivery points set forth in the attached Service Request Form (“SRF”).

 

The Open Season commenced on September 20, 2024 and will end at 4:00 p.m. CDT on November 1, 2024 (the “Open Season Period”). Unless otherwise indicated, capitalized terms that are used but not defined herein shall have the meanings ascribed to such terms in Tennessee's Tariff.

 

Project Capacity awarded pursuant to the Open Season may be made available through: (1) the MSX Extension, (2) modifications to and expansions of TGP's existing system, including the installation of appurtenant facilities and modifications, as may be required to meet the specific needs of the Project shippers; and/or (3) the use of capacity reserved pursuant to Article XXVI, Section 5.8 of the General Terms and Conditions ("GT&C") of Tennessee's Tariff (collectively, the “Project Facilities”). The commencement date for the Project Capacity (the “Commencement Date”) is anticipated to be November 1, 2028.

   

II.  Open Season/Submission of Bids

 

To participate in the Open Season, potential shippers that were not in active negotiations with Tennessee for Project Capacity as of the date the Open Season commenced must submit to Tennessee a completed confidentiality agreement and SRF, each in the form included with this notice and executed by an officer or other authorized representative of such potential shipper (a “Qualifying Binding Bid”). Upon receipt of a potential shipper's completed confidentiality agreement and SRF, Tennessee shall provide such potential shipper with the form of binding precedent agreement for the Project (a “Precedent Agreement”). The Precedent Agreement shall provide the potential shipper with the option to select service at the applicable recourse rate or at the negotiated reservation rate offered by Tennessee (the “Negotiated Rate”), which shall take into account, among other things, the primary term that the potential shipper has selected and whether such potential shipper has elected deliveries at the Transco T85 Delivery or mutually agreed delivery points other than the MSX Delivery Points.   

 

To the extent a potential shipper has any minimum contract quantity below which it does not desire the Project Capacity or any contingencies to its bid, it should so indicate in the “Additional Information” section of the SRF.

 

Potential shippers should submit bids to: 

 

Tennessee Gas Pipeline Company, L.L.C.

Attention: Alison Stringer

Email: tgpbidroom@kindermorgan.com AND alison_stringer@kindermorgan.com

 

III.  Anchor Shipper Status

 

A shipper may qualify as an “Anchor Shipper” for the Project by executing a Precedent Agreement no later than the close of the Open Season that contemplates: (a) a minimum transportation quantity (“TQ”) of 200,000 Dth/day; and (b) a minimum primary term of 20 years.

  

Anchor Shipper benefits, as further set forth in Anchor Shippers' Precedent Agreements, may include: (a) a commitment that such Anchor Shippers' Project Capacity shall not be subject to proration; (b) contractual extension rights; (c) optional interim capacity (if available before the Commencement Date); (d) a most favored nations provision; (e) the right to request capacity that would be shared with an approved counterparty on a seasonal basis; and (f) the right to participate in future expansions of the MSX Extension.  

 

IV. Evaluation Method and Award Process

 

Participation in the Open Season shall be considered binding on the bidders upon submission of their Qualifying Binding Bids and/or executed Anchor Shipper Precedent Agreements. To the extent Tennessee receives Qualifying Binding Bids and Anchor Shipper Precedent Agreements in the Open Season for greater than the Project Capacity, Tennessee reserves the right to proceed with the Project as contemplated and address requests for excess capacity in a subsequent project and/or open season. Tennessee further reserves (1) the right to reject any bids for Project Capacity that it receives during the Open Season, including any Qualifying Binding Bids, on a not unduly discriminatory basis and (2) the right to suspend or terminate further development of the Project in whole or in part.

 

Upon the expiration of the Open Season Period, Tennessee will evaluate the Qualifying Binding Bids on a total net present value (“NPV”) basis using the following factors:

 

NPV = En [R*(1 / (1+i)**n)]

En = summation of months 1 through n (Sigma) 

n = term in months 

R = incremental firm monthly reservation revenue 

i = monthly discount factor of 0.8333% 

 

The term in months (“n”) will be no more than 240 months.

 

If the total Project Capacity requested during the Open Season pursuant to Qualifying Binding Bids and Anchor Shipper Precedent Agreements exceeds the Project Capacity, Tennessee will first award Project Capacity to Anchor Shippers. Thereafter, Tennessee will award Project Capacity to other potential shipper(s) submitting the Qualifying Binding Bid(s) with the highest NPV. As between Qualifying Binding Bids of equal NPV, Project Capacity shall be awarded on a pro-rata basis.

 

Tennessee shall notify potential non-Anchor Shippers submitting Qualifying Binding Bids of whether they were awarded Project Capacity by November 8, 2024. If a potential non-Anchor Shipper is awarded Project Capacity, then, on or before November 22 2024 (or such later date as may be determined by Tennessee), such potential shipper must submit to Tennessee an executed binding Precedent Agreement for the Project.

      

V.  Firm Transportation Service      

 

Service for the shippers awarded Project Capacity will be provided under Tennessee's Rate Schedule FT-A and other applicable provisions of Tennessee's Tariff.

 

In addition to the applicable reservation rate selected by each Project shipper, and unless otherwise agreed by such shipper and Tennessee as set forth in such shipper's Precedent Agreement, each such shipper shall also be subject to: (1) the applicable Rate Schedule FT-A maximum applicable commodity rate; (2) the applicable Rate Schedule FT-A Fuel and Loss Retention Percentage (“F&LR”) and Electric Power Cost Rates (“EPCR”); and (3) all other applicable surcharges as set forth in Tennessee's Tariff, including, but not limited to, any applicable annual charge adjustment (“ACA”) surcharge. 

  

VI.  Tennessee's Reservation of Rights

 

Tennessee reserves the following rights, in addition to all other rights that Tennessee has reserved herein or that Tennessee may have pursuant to its Tariff and FERC policies:  

 

(1)           the right, at any time during the Open Season, upon notice and in its sole discretion, to terminate the Open Season, to extend the Open Season Period, or to modify the Open Season;

 

(2)           the right to clarify and finalize bids containing non-specific or ambiguous bid information (including, without limitation, rate, term, and receipt or delivery points) or discrepancies in bid information; provided, that, Tennessee shall have no obligation to do so;

 

(3)           the right to reject, on a not unduly discriminatory basis, any bid, including any bid that, in Tennessee's sole determination, is incomplete, is inconsistent with the terms of the Open Season, contains additions or modifications to the terms of the Open Season, is otherwise deficient in any respect, or requests service outside the scope of the Open Season;

 

(4)           the right to reject any bid that does not specify capacity within the path described in this notice; and

 

(5)           the right to not award any portion of the Project Capacity.

 

The Open Season is subject to all applicable laws, orders, rules, and regulations of authorities having jurisdiction.

   

VII.  Creditworthiness

  

Following submission of an executed confidentiality agreement, Tennessee will conduct a credit evaluation of potential shippers in the manner outlined in the Precedent Agreement. Additionally, in the event a potential shipper is deemed non-creditworthy by Tennessee, the potential shipper must provide to Tennessee, as part of any binding agreement, credit assurance applicable to the Project, in form and substance acceptable to Tennessee in its sole discretion. Such creditworthiness requirements shall remain in effect during the term of the Precedent Agreement, as well as the term of shipper's transportation agreement(s) to be executed pursuant to such Precedent Agreement.

  

VIII.  Turnback Capacity Solicitation  

 

Any existing shipper that currently holds firm transportation capacity on Tennessee that it believes (subject to Tennessee's evaluation and confirmation in its sole discretion) could be used in lieu of a portion(s) of the proposed Project Capacity, as defined and accepted by Tennessee, is invited to notify Tennessee of its desire to permanently relinquish its capacity for use in the Project. Any shipper that desires to turn back such capacity must notify Tennessee, in writing, of the TQ, term, receipt point(s), delivery point(s), contract number(s), the reservation rate at which the shipper is willing to release the capacity back to Tennessee, and any other relevant information necessary to effectuate the permanent relinquishment of such capacity. In order for Tennessee to consider any anticipated turnbacks of capacity, such notification must be received by Tennessee by 4:00 PM CDT on October 25, 2024. This solicitation of turnback capacity is not binding on Tennessee. Turnback requests are subject to rejection or proration based upon the results of the Open Season and this turnback capacity solicitation as determined by Tennessee in its sole discretion. Tennessee must remain economically indifferent between the turnback offer and the proposed Project. To the extent Tennessee accepts a shipper's turnback request, the shipper turning back capacity shall remain responsible for any difference between the rate at which the capacity is turned back to Tennessee and the reservation rate under the Project shipper(s)'s firm transportation service agreement with Tennessee for the remaining term of the turnback shipper's firm transportation service agreement, but will not be responsible for any commodity charges, ACA, F&LR or EPCR charges, or any other authorized usage surcharges associated with the turnback capacity, and such shipper shall not be entitled to any credits associated with such capacity. 

 

Tennessee 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 are economically disadvantageous. The final design of the Project will take into consideration the results of this turnback capacity solicitation.

  

IX.  Contact Information

  

If you have any questions regarding the Open Season, please contact the following: 

 

Alison Stringer

713-420-5176

Alison_Stringer@kindermorgan.com

 

For media inquiries, please contact:

Katherine Hill

(713) 369-9176

Katherine_Hill@kindermorgan.com