Columbia Gulf Transmission initiated an open season Monday to run through Friday, May 25, for bids for new capacity and capacity turnback on a project to expand its connection with Sabine Pipeline at the Henry Hub.

Columbia said it is contemplating a compression addition to expand deliveries to the hub from connections on its system at or near Perryville, LA and coming from production basins located in Texas, Louisiana and Arkansas. Columbia Gulf is targeting a 200 MMcf/d expansion, but the ultimate size will depend on transportation customer bids net of capacity that is turned back. If the open season indicates enough support for the expansion, construction would be aimed at an in-service date of March 1, 2009, provided and priced under Rate Schedule FTS-1 (firm transportation service) and FTS-2.

Interested parties may bid for FT capacity between their designated receipt point (subject to available capacity) and delivery at Henry Hub. Bidders should submit their highest-value offer for transportation capacity based upon combined rate and term. If Columbia Gulf decides to accept a discounted demand rate for the service, the discount will apply to all delivery points in Columbia Gulf's onshore zone, but will only apply to delivery points in Columbia Gulf's mainline zone that fall within the shipper's primary contract path.

For mainline deliveries made outside a shipper's primary contract path, shippers will be subject to Columbia Gulf's then-effective recourse rates for Rate Schedule FTS-1. Shippers will also be subject to Columbia Gulf's then-effective commodity rates for both FTS-1 and FTS-2 service.

Given the anticipated backhaul nature of the FTS-1 portion of this transportation service, Columbia Gulf plans to charge the then-effective lost and unaccounted-for portion of its retainage, currently established at 0.222% for FTS-1 transportation. This will apply to the extent that shippers deliver gas to Rayne from either a physical receipt point located on Columbia Gulf's mainline or a receipt point of the Columbia Gulf Mainline Pool.

For the FTS-2 portion of this transportation service, Columbia Gulf will charge its then-effective retainage, currently 0.388%. The retainage is subject to periodic adjustment pursuant to the terms and conditions contained in its tariff.

Columbia Gulf also is seeking binding proposals from existing customers to turn back firm capacity under their FTS-2 rate schedule that would reduce the scope of the facilities required for the construction of the proposed expansion. In order to turn back capacity, a customer must have FT capacity on Columbia Gulf's East Lateral system 365 days per year with a primary delivery point of Henry Hub. No other capacity held under other Columbia Gulf rate schedules is eligible to be turned back. The turnback would become effective as necessary in order to accommodate any requested in-service dates for expansion service under the open season and continue through the remaining term of the customer's FTS-2 service agreement.

The pipeline noted that reverse open season bids are not automatically effective, but rather are subject to Columbia Gulf's evaluation and approval. In addition, the aggregate turnback capacity accepted by Columbia Gulf will not exceed the amount of expansion capacity to be built. Any turnback of capacity, once established pursuant to a binding arrangement with Columbia Gulf, will be permanent and nonrecallable.

If the FT requests submitted during the open season exceed the amount of delivery point capacity that Columbia Gulf decides to construct and make available, the capacity will be allocated based upon the net present value (NPV) of the base demand or other revenue guarantees contained in the nomination form bids. NPV will be determined based upon the volume, rate and term included in the bid.

For information about the open season or turnback, or for a copy of the nomination form, contact JohnMcNamara at (713) 267-4737 or jmcnamara@nisource.com or Pete Brastrom at (713) 267-4735 or pbrastrom@nisource.com.

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