HOUSTON and OKLAHOMA CITY, Nov. 4 - El Paso Corporation (NYSE: EP) and Enogex Inc., the natural gas pipeline subsidiary of OGE Energy Corp. (NYSE: OGE), announced today that they have signed a letter of intent (LOI) 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. For more information, visit http://www.elpaso.com .
OGE Energy Corp., headquartered in Oklahoma City, is the parent company of Enogex Inc., a natural gas pipeline business with principal operations in Oklahoma which gather approximately 1 Bcf/day of natural gas and has a total average system throughput of approximately 1.4 Bcf/day. For more information, visit http://www.oge.com .
El Paso Cautionary Statement Regarding Forward-Looking Statements
This release includes forward-looking statements and projections, made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The company has made every reasonable effort to ensure that the information and assumptions on which these statements and projections are based are current, reasonable, and complete. However, a variety of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this release, including, without limitation, the receipt of the necessary capacity commitments for this project; the receipt of necessary governmental approvals for this project; our ability to successfully construct and operate the proposed facilities described in this release; general economic conditions in geographic regions or markets served by El Paso Corporation and its affiliates, or where operations of the company and its affiliates are located, and other factors described in the company's (and its affiliates') Securities and Exchange Commission filings. While the company makes these statements and projections in good faith, neither the company nor its management can guarantee that anticipated future results will be achieved. Reference must be made to those filings for additional important factors that may affect actual results. The company assumes no obligation to publicly update or revise any forward-looking statements made herein or any other forward-looking statements made by the company, whether as a result of new information, future events, or otherwise.
Enogex Cautionary Statement Regarding Forward-Looking Statements
Some of the matters discussed on this news release may contain forward- looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the words "anticipate," "believe," "estimate," "expect," "intend," "project," "objective," "plan," "possible," "potential," "project" and similar expressions. Actual results may vary materially. Factors that could cause actual results to differ materially include, but are not limited to: general economic conditions, including the availability of credit, actions of rating agencies and their impact on capital expenditures, Enogex's ability to obtain financing on favorable terms; prices of electricity, natural gas and natural gas liquids, each on a stand-alone basis and in relation to each other; business conditions in the energy industry; competitive factors including the extent and timing of the entry of additional competition in the markets served by Enogex; unusual weather; federal or state legislation and regulatory decisions and initiatives that affect cost and investment recovery, have an impact on rate structures or affect the speed and degree to which competition enters Enogex's markets; environmental laws and regulations that may impact Enogex's operations; changes in accounting standards, rules or guidelines; creditworthiness of suppliers, customers and other contractual parties; the higher degree of risk associated with Enogex's nonregulated business compared with OGE Energy Corp.'s regulated utility business; and other risk factors listed in the reports filed by OGE Energy Corp. with the Securities and Exchange Commission.
