The WEST Header and MGS are wholly owned subsidiaries of Magnum Energy Midstream Holdings, LLC (“MEM”). MEM is a wholly owned subsidiary of Magnum Development, LLC, a Haddington Ventures, LLC, portfolio company. Haddington principals have been involved in the merchant gas transportation and storage business since its emergence in the early 1990s. A list of Haddington’s active and realized investments can be viewed at www.hvllc.com.
Frequently Asked Questions
Most traditional natural gas pipeline infrastructure projects have been designed to flow uni-directionally, from supply point to end-user. Historically single directional flows worked well for traditional 24-hour ratable gas deliveries. With the introduction of intermittent renewable energy sources, the need for strategically located natural gas infrastructure to provide intra-day flexibility has become increasingly important. By utilizing multiple HDMC salt caverns for gas storage and large capacity pipe for natural gas transportation, the WEST Header Project is being designed with increased flexibility of gas flows in mind. In fact, the WEST Header Project can be described as an environmentally friendly pipeline project that further enables the development of intermittent renewable energy resources by providing a “shock absorber” or “battery” that allows for intraday flexibility in managing the growing “duck curve.” True bi-directional, intra-day, no-notice, hourly load following, peak hour supply reliability and traditional storage and transportation service, will be available to meet the current and future hourly demands of the Western Energy Corridor. In short, The WEST Header Project is being designed to function as a “true header” pipeline.
The Western US Energy markets are currently undergoing a significant paradigm shift. This paradigm shift is being driven by several factors, including aggressive solar and wind capacity development in the Western Interconnection, increasingly tighter pipeline balancing requirements, long-term reliability issues with existing infrastructure, hydro uncertainty, along with coal and nuclear retirements. Additionally, as producers of Rockies natural gas seek new domestic and international markets, including potential West Coast LNG exports and exports to Mexico, the need for strategically located deliverability options is becoming increasingly important.
With this paradigm shift in dynamics comes a significant increase in volatility for the markets. MEM believes that strategic, dependable and flexible natural gas infrastructure projects such as the WEST Header Project will be critical in providing the tools necessary for managing this volatility. The WEST Header Project initiative is grounded in three basic beliefs:
- Renewable energy investments such as wind and solar will continue to be developed on a utility scale for the foreseeable future. Consequently, this leads to an increase in the intermittency of renewable energy sources for years to come, and thereby increasing energy market volatility.
- Additional natural gas fired generation in the Western U.S energy markets will be required to maintain system flexibility and provide for system reliability during hours of renewable energy intermittency.
- New flexible and strategically located natural gas infrastructure will be required to:
- provide a reliable and timely fuel source to manage the increase in volatility associated with the development of additional gas fired generation and renewable intermittency;
- to maintain system integrity throughout the Western U.S. energy markets and;
- effectuate future anticipated deliveries to new markets including, West Coast LNG and international markets.
Current scope for the WEST Header calls for a combination of 24-inch, 36-inch, 42-inch and 48-inch pipe to be utilized in the design. Design capacity for the West Header will potentially be up to 2,000,000 Dth/day.
MGS is currently certificated for up to 40,000,000 Dth of working gas storage capacity, utilizing four caverns. Each natural gas storage cavern will have working gas capacity of approximately 10,000,000 Dth.
The intent of this non-binding Open Season is to gauge Shipper interest in the WEST Header Project to transport and store natural gas supplies. The level of Shipper interest in the WEST Header Project will ultimately determine the size and scope of the overall facilities.
The WEST Header Project, through its FERC approved market rate-based tariff and a new proposed FERC cost of service-based pipeline transportation tariff (including a daily reservation recourse rate), will offer a wide variety of highly flexible transportation, storage and storage-related services. The estimated initial recourse rate(s) for storage and transportation services will be calculated using the WEST Header Project’s estimated cost of the facilities, estimates for operation and maintenance expenses based on costs for similar facilities, the billing determinants under the WEST Header Project, and other cost factors. All reservation rates will be dependent on the final WEST Header Project scope and facility requirements, which will be determined following the completion of this Open Season.
In addition to the applicable storage and transportation rates, shippers may also be responsible for compressor fuel and line loss make-up retention, electric power charges, commodity charges and all applicable surcharges as approved or required by the Federal Energy Regulatory Commission for transportation service under the WEST Header Project, all as amended from time to time.
The West Header Project seeks a primary term for firm service of fifteen years (15) or longer for anchor/foundation shippers. MEM may consider but reserves the right to accept or reject any requests for firm service under the WEST Header Project with a primary term of less than 15 years.