UGI STORAGE COMPANY ANNOUNCES NON-BINDING

OPEN SEASON FOR TRANSPORTATION SERVICE

 

November 11, 2013

 

OVERVIEW

UGI Storage Company (“UGI-S”) is conducting a Non-Binding Open Season (“Open Season”) for its Tioga Access Expansion Project (referred to herein as the “Project), which will provide between 175,000 dekatherms per day in the summer and 250,000 dekatherms per day in the winter of new pipeline capacity between Tennessee Gas Pipeline Meter 020213 – Mansfield and Meter 020253 – Wellsboro (near Station # 315). This capacity can be utilized by existing or future storage service customers of UGI-S for additional storage injection receipt options and by all shippers for interruptible wheeling service through the UGI-S existing system, including the Dominion Transmission, Inc.’s Meter 90008 - Tioga (all located in Tioga County, PA).  To the extent that bidders express sufficient interest in firm transportation service, UGI-S will consider adding a firm transportation rate schedule to its FERC Gas Tariff.

 

Shippers that participate in this Open Season and request a maximum daily quantity (“MDQ”) of at least 40,000 dekatherms per day for a minimum term of ten years will be eligible to become “Anchor Shippers” and will not be subject to pro rata allocation of Project pipeline capacity, to the extent necessary, and preference in regard to negotiated rates under the Project, in accordance with the Federal Energy Regulatory Commission’s (“FERC”) regulations and policies.

 

GENERAL DESCRIPTION OF THE PROJECT

The Project consists of:

 

(i)                   a loop of UGI-S’s existing 8” pipeline that connects its Mansfield and Wellsboro Tennessee Gas Pipeline receipt points with an additional natural gas pipeline;

(ii)                 a potential extension of UGI-S’s transmission pipeline to additional points of interconnection with local gas producers in Tioga County; and

(iii)                associated and required compression.

 

The size and scope of the Project and the amount of capacity to be made available will be fully defined based on the indications of interest received in this Open Season.  The Project is subject to approval by the Federal Energy Regulatory Commission (“FERC”). UGI-S expects to place the expanded capacity into service in early to mid-2015.

 

 

UGI Storage Company natural gas transportation facilities under consideration.

 

POTENTIAL RECEIPT AND DELIVERY POINTS

The Project will include approximately 11-15 miles of mainline piping, compression and interconnect facilities that will tie into the UGI-S existing storage system. Possible receipt and delivery point interconnects include:

 

Possible Interconnects                                                            [R] Receipt; [D] Delivery;

and [B] Bidirectional

·         Tennessee Gas Pipeline Meter 020213 (Mansfield, PA)                 [R]

·         Tennessee Gas Pipeline Meter 020253 (Wellsboro, PA)                [R]

·         Local production interconnects (various)                                     [R]

·         Dominion Transmission Meter 90008 (Tioga County, PA)                       [B]

·         UGI Central Penn Gas, Inc.                                                       [D]

·         UGI Storage Company                                                              [B]

 

DESCRIPTION OF SERVICES TO BE OFFERED

The expanded capacity can be utilized on a firm basis for storage injections under UGI-S existing tariff. If sufficient market demand exists, capacity made available from the Project offered as firm transportation service will be provided under a Rate Schedule that UGI-S will file with the FERC.  To the extent that the capacity is not fully subscribed on a firm basis or is operationally available on any day, it may be utilized for Interruptible Wheeling Service under UGI-S existing Rate Schedule IWS.  The applicability and character of UGI-S’s services will be governed by the terms and conditions of UGI-S’s FERC-approved gas tariff. A shipper transporting gas under a firm transportation service agreement will have firm rights to the agreed upon maximum daily contract quantity and will not be subject to prior claims by another shipper or another class of service.

 

OPEN SEASON

The Open Season will commence at 8:00 a.m. Central Time on Monday, November 11, 2013 and close at 5:00 p.m. Central Time on Friday, December 20, 2013.

 

RATES

UGI-S currently offers firm storage service at market-based rates. .A cost of service-based recourse rate will be established at FERC for the firm transportation service that may be offered from the Project. The initial recourse reservation rate for transportation service is currently estimated to be $0.22 per dth/day. Such estimated rate has been calculated using the current estimated cost of the new pipeline facilities, estimates for operation and maintenance expenses based on estimates for similar facilities, expected billing determinants as of the date of this notice and other cost factors. Please note that the actual initial recourse reservation rate may be higher or lower than the aforementioned estimated rate and shall be subject to adjustment pursuant to proceedings under the Natural Gas Act. UGI-S makes no representation or warranty of any kind whatsoever as to the actual recourse reservation rate that will be applicable to the transportation service. In addition to the daily reservation rates, shippers will be responsible for energy used for compression and line loss make-up retention, and all electric power unit rates (if any), commodity rates and surcharges as approved by the FERC for the transportation service.

 

UGI-S also plans to offer shippers a negotiated reservation rate for the transportation service. The negotiated rate: must be mutually agreed to by UGI-S and a shipper; may be less than, equal to, or greater than or less than the recourse rate; may be based on a rate design other than straight fixed variable; and may include a minimum quantity.  A cost of service-based recourse rate will be available for firm transportation service offered under UGI-S’s FERC Gas Tariff.

 

In addition, UGI-S will continue to offer Interruptible Wheeling Service to/from Dominion Transmission’s meter # 90008 at negotiable market-based rates.

 

CONTRACT TERM FOR TRANPORATION SERVICES

Flexible – subject to a minimum term requirement of ten years for bidders wishing to receive Anchor Shipper status.

 

TARGETED IN-SERVICE DATE

The Project is targeted to be in service in early to mid-2015, pending refinement on the scope of the expansion as a result of this Open Season.

 

BID DOCUMENTS AND FOLLOW-UP PROCESS

Shippers wishing to subscribe to this offering should complete and submit a Non-Binding Open Season Request Form. Shippers submitting a proposal will be expressing an indication of interest to contract for transportation service on the Project. All proposals received will be treated as confidential, and will not be shared with other potential shippers.

 

Upon close of the Open Season, UGI-S will begin the process of negotiating binding precedent agreements and finalizing the project design. All shippers that desire to enter into a binding precedent agreement will have to provide evidence of creditworthiness satisfactory to UGI-S. The offering of transportation services herein is explicitly subject to and conditioned upon, among other things, receiving (i) sufficient indications of interest (and, consequently, commitments under binding precedent agreements) to support the development of the Project, and (ii) all applicable regulatory approvals in a form and substance acceptable to UGI-S. UGI-S reserves the right to reject any bid requests, revise the scope of the Project in any way, and consistent with applicable regulations, terminate further participation in the Open Season process.

 

Upon receipt of all executed precedent agreements, UGI-S will again evaluate the total capacity requested. If the total capacity requested under the binding precedent agreements on the Project exceeds the planned scope of the Project, UGI-S, in its sole discretion, may:

 

(i)                   revise the scope of the Project;

(ii)                 starting with the shipper with the largest requested MDTQ, allow shippers to voluntarily reduce or revise their requested MDTQ and Project quantities, as applicable; and/or

(iii)                allocate the available transportation capacity under the Project.

 

If UGI-S allocates the available transportation capacity under the Project, then the capacity will be allocated as follows:

 

(i)                   If requests from Anchor Shippers exceed the Project capacity, all capacity will be allocated to Anchor Shippers.

(ii)                 All remaining capacity will be allocated to the other requesting shippers on a pro rata basis based on their requested capacity.

 

Shippers will be responsible for confirming availability of their requested receipt and delivery points with the point operators. Please note that the individual receipt and delivery meter capacities in most cases will be less than the transportation capacity under the Project.

 

CONTACT INFORMATION

The information provided in this packet is intended to assist the prospective customers in preparing the Non-Binding Open Season Request Form. All inquiries or requests for additional information or clarifications should be directed to:

 

UGI Storage Company

Attn: Anthony Cox

One Meridian Blvd., Suite 2C01

Wyomissing, PA 19610

Telephone: (610) 406-4322

Cellular: (484) 515-7183

Fax: (610) 374-1492

E-Mail: acox@ugistorage.com

 

Open Season information can also be found on the following website: http://www.ugistorage.com/tioga_access

 

DISCLAIMER

UGI-S reserves the right to decline to proceed with the Project, or to change its route or otherwise modify it. UGI-S also reserves the right to reject any and all bids that do not satisfy the requirements set forth in this Open Season Notice. Without limiting the foregoing, the UGI-S may, but is not required to, reject any request for service in which the Non-Binding Open Season Request Form is incomplete, is inconsistent with the terms and conditions outlined in this Open Season Notice, contains additional or modified terms, or is otherwise deficient in any respect. UGI-S also reserves the right to reject requests for service in the event requesting parties are unable to meet applicable creditworthiness requirements. No request for service shall be binding on UGI-S unless and until duly authorized representatives of both a requesting party and UGI-S have executed a binding precedent agreement.

 



NON-BINDING OPEN SEASON REQUEST FORM

 

1)     SHIPPER NAME: _________________________________________

 

SHIPPER ADDRESS:

 

___________________________________________

 

___________________________________________

 

___________________________________________

 

PERSON INITIATING NON-BINDING REQUEST FOR CAPACITY:

 

NAME: _________________________TITLE: _____________________

 

PHONE: _______________________ FAX: ________________________

 

EMAIL ADDRESS: ______________________________________________

 

2)     SERVICE COMMENCEMENT DATE: ________________

 

3)     CONTRACT TERM: ______ (10-year minimum to receive Anchor Shipper status)

 

4)     CLASS OF SERVICE REQUESTED (STORAGE, TRANSPORTATION OR WHEELING; FIRM OR INTERRUPTIBLE): _________________

 

5)       MAXIMUM DAILY TRANSPORT QUANTITY (MDTQ): _____________ Dth

(a minimum MDTQ bid of 40,000 Dth/d is required to receive Anchor Shipper status) 

 

6)     PRIMARY RECEIPT AND DELIVERY POINTS

 

REC

DEL

TCQ

a) Tennessee Gas Pipeline Meter 020213  (Mansfield, PA)

 

Y    N

 

______

b) Tennessee Gas Pipeline Meter 020253 (Wellsboro, PA)

 

Y    N

 

______

c) Dominion Transmission Meter 90008 (Tioga County, PA)

 

Y    N

Y    N

______

d) UGI Central Penn Gas, Inc.

 

 

Y    N

______

e) UGI Storage Company

 

Y    N

Y    N

______

f) Other Receipt and Delivery Points

 

Y    N

Y    N

______

    (i)

 

Y    N

Y    N

______

    (ii)

 

Y    N

Y    N

______

 

 

 

 

 

SIGNATURE: ________________________________ DATE: ______________

 

 

Please send, fax or email completed Non-Binding Open Season Request Form to: Frank Markle: One Meridian Blvd., Suite 2C01; Wyomissing, PA 19610; Fax: (610) 374-1492; E-Mail: fmarkle@ugistorage.com