Marketing

--  Red Lake / (Pataya) Storage  - per the press release, Aquila has purchased 100% of this project being developed by SouthWest Gas.  The proposed 12 Bcf facility, located 30 miles north of Kingman, Arizona near the terminus of TW, will begin its open season the week Feb. 4.  They anticipate tying into both TW and El Paso.  We are exploring options with Aquila to tie in the Sun Devil project plus a new compressor at Kingman, AZ.  The compressor will help Aquila buck TW's line pressure plus facilitate pressure requirements at the California border for TW.

--  Drafting new marketing proposals to both APS and Panda based on the lowered facility costs.  


Engineering -  New facility costs are estimated at $831 million and include an additional lateral to serve the APS Red Hawk plant.  Capacity to Phoenix will be 750,000 MMBtu/d with only 30,000/d available for Cal Border.  This is a $100 million improvement versus our original scenario.  The improvements are based on reduced pipe looping to serve Cal Border plus reduced or eliminated compressor stations.  The benefit is reflected in a lower initial capital cost plus lower annual operating expenses.  Rates to Phoenix are estimated at $0.45/MMBtu on a 20 year term with a project salvage value of less than $200mm at the end of the initial term.