Subject: Big Sandy Project
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Date: Tue, 6 Feb 2001 20:22:00 -0800 (PST)

Kirk,
We've put together a quick estimate of the cost to install the interconnect and measurement facilities off Transwestern.  The estimate was based on the original operating conditions of Phase 1 (80 MMcf/d) and Phase 2 (120 MMcf/d) given to us early in discussions with George Briden.  The subject facilities will include a 16" tie-in to both TW 30" mainlines (a redundancy feature, allowing continued use of one line if the other line is temporarily taken out of service for maintenance or is the subject of some type of failure), mainline valves, turbine meter, gallagher flow conditioner, telemetry, flow control, etc.  The order of magnitude (+/-30%) estimated cost is $416,700.   

Not knowing your design and proposed schematic showing joint operations with El Paso and/or Southern Trails, this estimate does not include a pressure control and/or pressure let down equipment.   Consequently, the project will have to control pressure in the lateral system.   As you know, it's operationally problematic to design for both pressure and flow control into a common header system accepting deliveries from multiple pipelines operating at different pressures.   However, Transwestern will be amenable to working with the project and the other interstate pipelines to optimize the ultimate design of all metering and lateral pipeline facilities.

Also, the $416K estimate does not include any build up for income tax.  If the project reimburses Transwestern for the cost of Transwestern constructing the interconnect and metering station, Transwestern will recognize a taxable event.  Use approx. 30% as an effective corporate tax rate for purposes of calculating the price build-up.   As a means to avoid the tax consequence, Transwestern is agreeable to the idea of the project building the metering station to Transwestern's specifications, with Transwestern operating the facilities under an Operating Agreement.  We can discuss these structuring questions as the project develops and we get to the point of executing project documents for the provisioning of service to the project.  

Our facility planners and I are available to answer questions for you.   Please give me a call.

Kirk Ketcherside <[email-masked]> on 02/02/2001 01:14:51 PM
To:	[email-masked]
cc:	 

Subject:	follow-up to our conversation

Jeff-
Nice visiting with you regarding the Big Sandy project.
I will look forward to seeing your new interconnect proposal next week.
As for my particulars, in addition to my email address herein, please
see the following:

Kirk Ketcherside
IGI Resources, Inc.
7241 Sanderling Court
Carlsbad, CA 92009

760/918-0001 Office phone
760/918-0003 Office fax

Thanks and have nice weekend.
Kirk