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NGPL Extends Transportation, Storage Contracts with Nicor, BP Canada

Kinder Morgan subsidiary Natural Gas Pipeline Company of America (NGPL) said it has extended long-term, firm transportation and storage contracts with Chicago-based Northern Illinois Gas Co. (Nicor) and BP Canada Energy Marketing (BP), covering 1.1 million Dth/d (1.07 Bcf/d) of firm transportation capacity service and 52.5 Bcf of firm storage capacity.

Kinder Morgan CEO Richard D. Kinder said that virtually all of the capacity on NGPL's 5.8 Bcf/d pipeline system is sold out through the 2005-06 heating season. As part of the agreement with BP, NGPL said it will provide as much as 200,000 Dth/d of firm transportation capacity through April 30, 2007. The new firm transportation deal with Nicor, NGPL's largest customer, extends into the first quarter of 2009. Nicor has signed up for a total of 917,865 Dth/d of firm service. The previous Nicor agreement was due to expire next March.

In addition, Nicor has extended two contracts for firm storage service on NGPL: one for 16.5 Bcf of working capacity has been extended to March 2009, and another for 25.5 Bcf was extended until March 2010.

Gary Bartlett, vice president of supply contracting at Nicor, said the contracts represent the bulk of Nicor's transportation and storage capacity on NGPL, which also encompasses the largest portion of Nicor's total transportation and storage portfolio. The 9,800-mile pipeline system is one of the Chicago market's largest gas transporters. "NGPL is by far our largest supplier of transport and storage services," he said. "We also have contracts with Midwestern Gas and with Northern Natural."

Bartlett said the transportation contracts include capacity on the various parts of NGPL's system, including the Amarillo line, the Gulf Coast line, and some short-haul transportation in the Chicago area, as well as storage. Although he would not say how much Nicor paid for the firm transportation capacity on NGPL, Bartlett said rates have gone up because of demand growth. "We feel we've negotiated a very favorable contract. We held ourselves in a good position without a lot of increases in costs."

Nicor has been seeing its peak-day sendouts rising while baseloads are not rising much. That makes it hard for the utility to satisfy its demand needs, relying heavily on storage and winter-only firm transportation capacity.

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