El Paso, Enogex Deal Advances Continental Connector Pipeline Project

El Paso Continental Connector
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El Paso and Enogex Inc., the natural gas pipeline subsidiary of OGE Energy Corp. have signed a letter of intent designed to accelerate El Paso's Continental Connector pipeline project. The LOI provides for a lease of up to 750,000 dekatherms per day (Dth/d) of capacity on the Enogex pipeline system with an option to expand up to 1.5 million Dth/d to become an integral part of Continental Connector. The LOI also contemplates a commitment by Enogex to secure up to 500,000 Dth/d of capacity subscriptions for the project. These arrangements would significantly reduce the amount of new mainline construction required, resulting in less environmental disturbance and an earlier in-service target date of winter 2007-2008.

Under the letter of intent, the Continental Connector project will use existing or expanded El Paso pipeline systems to transport capacity- constrained natural gas from Rocky Mountain and Mid-Continent supply regions to Custer, Oklahoma. At Custer, this gas and local Mid-Continent production will be transported on existing and expanded Enogex systems for Continental Connector under a long-term lease arrangement for re-delivery in the vicinity of Bennington, Oklahoma. From there, gas will be transported on new pipeline facilities through the Perryville, Louisiana Hub to a termination with Tennessee and Southern Natural Pipelines at Pugh, Mississippi.

"Today's announcement with Enogex is a major step forward for Continental Connector," said El Paso's Eastern Pipeline President, Stephen C. Beasley. "With this new letter of intent we gain the opportunity for immediate access to significant Mid-Continent supplies, leverage Enogex's extensive infrastructure and reduce the construction time to be in service. Continental Connector is a strategic infrastructure project that will link key Rocky Mountain, Mid-Continent, and East Texas natural gas regions with a variety of markets in need of supply diversity. We are working to have this pipeline in service for the 2007-2008 winter season."

"Our letter of intent with El Paso provides Enogex and Mid-Continent producers with greater options for the long term, notably the ability to move more natural gas to key markets, and provides the company with opportunities for growth," said John McDougal, Enogex vice president. "The Rockies and the Mid-Continent, in particular, have needed alternative market access for some time, and we believe Continental Connector provides an efficient, flexible, and cost-effective link between supplies and markets served by Enogex and El Paso. Coupled with the new Bennington-to-Perryville segment, the existing pipeline assets of both El Paso and Enogex should make the Continental Connector project available to Rockies and Mid-Continent producers sooner than alternatives and in increments that match producers' needs."

    Key benefits of the contemplated agreement:

    -- Affords Enogex the ability to gather and deliver greater volumes of
       Oklahoma Mid-Continent gas supplies;
    -- Eliminates up to 180 miles of new pipeline construction for Continental
       Connector's planned segment across the Mid-Continent region;
    -- Reduces time required to bring new pipeline segments into service;
    -- Lessens environmental impacts associated with new construction; and
    -- Provides the ability to better match pipeline capacity increases over
       time with increasing natural gas volumes from Rocky Mountain and Mid-
       Continent producers, providing cost efficiencies for shippers.

The commitments and obligations under the letter of intent are subject to various conditions, including definitive documentation and boards of directors' and regulatory approvals.

El Paso Corporation provides natural gas and related energy products in a safe, efficient, and dependable manner. The company owns North America's largest natural gas pipeline system and one of North America's largest independent natural gas producers.


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