Pony Express Pipeline
Uncommitted Shipper Meeting
July 17, 2014
Lakewood, Colorado
Confidential Presentation
Introduction
Steven Kelley – Scheduler, Oil Logistics
CONFIDENTIAL
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Pony Express Pipeline – Meeting Agenda
Introduction – Steve Kelley, Scheduler Oil Logistics
Construction Update – Doug Johnson, General Manager
Line Fill
PXP Web Site – www.TallgrassEnergyLP.com
Credit Application
-- Break Time -Nominations / Prorations / Scheduling
Regulatory Filings / Tariff
Accounting Processes – Mona Walker, Manager Operation Accounting
Tallgrass PXP Contacts
CONFIDENTIAL
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PXP Construction Status
Doug Johnson – General Manager
CONFIDENTIAL
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System Map
CONFIDENTIAL
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Pony Express Pipeline – Construction Update
•
PXP Construction Update
 Mainline – 20”, 22”, 24”
 New 24” Build, Lincoln County, KS to Cushing, OK
 Conversion Pipe: Guernsey – Lincoln Co. KS
 Guernsey Station
 Mainline Pump Stations
 Hydro-test:
 Conversion Pipe 19/32 sections complete
 New Build 4/9 sections complete
•
Deeprock Terminal – Cushing, OK
•
Ponca City Lateral
•
Northeast Colorado Lateral (NECL)
 Pipeline
 Sterling Tank Farm
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Pony Express Terminus at Cushing
• Deeprock

Tanks
•
3 existing tanks
•
6 new tanks completed

Twin 24-inch pipelines to connecting terminals

Interconnections
 Tariff includes delivery to Rose Rock, Blue Knight, Enbridge,
Plains, or Enterprise
 Additional fee by Deeprock for deliveries to:
• NGL
• Seaway
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NECL Northeast Colorado Lateral – Sterling
 Pawnee Lateral  Buckingham Lateral -
13 miles of 16”
54 miles of 20”
 Sterling Tank Farm – 6 new tanks under construction.
 4 – 250,000
 2 – 150,000
 5 additional pump stations on the PXP mainline.
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Line Fill Process
CONFIDENTIAL
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System Map
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Line Fill
 Three pipeline segments: 20”, 22”, and 24”
 20” pipeline, 139 miles
 22” pipeline, 242 miles
 24” pipeline, 312 miles
 Storage tank (~130,000 bbl working capacity) has been secured at Ft. Laramie to
assist with operational flexibility during line fill
 July
 Begin oil flood of Guernsey pump station on/about 7/22
 Line fill will begin on/about 7/23
 August/September
 Complete remaining 22” line fill
 Complete 24” Section line fill
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Uncommitted Shipper Meeting - July 17 – Lakewood, CO
Steven Kelley - Scheduler, Oil Logistics
CONFIDENTIAL
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Somewhere in Wyoming
CONFIDENTIAL
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PXP Guernsey Station
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Deeprock-Cushing to PXP Delivery Points
CONFIDENTIAL
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Shipper Meeting – July 17 – Lakewood, CO
www.TallgrassEnergyLP.com
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www.TallgrassEnergyLP.com
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System Map
CONFIDENTIAL
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System Map
CONFIDENTIAL
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Pony Express Pipeline (PXP)- System Information
CONFIDENTIAL
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Pony Express Pipeline – Nomination Information
CONFIDENTIAL
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PXP – Common Stream Descriptions
CONFIDENTIAL
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PXP – Information for Walk-Up Shippers
CONFIDENTIAL
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PXP – Information for Walk-Up Shippers
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PXP – Information for Walk-Up Shippers
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PXP – Information for Walk-Up Shippers
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PXP – Information for Walk-Up Shippers
CONFIDENTIAL
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PXP – Rules and Regulations
CONFIDENTIAL
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PXP – Tariff Rates
CONFIDENTIAL
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PXP - Forms
CONFIDENTIAL
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PXP – Credit Application Form
CONFIDENTIAL
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PXP – Credit Application
CONTACT INFO:
Kevin O’Brien
Treasury Manager
303-763-3406
Kevin.Obrien@TallgrassEnergyLP.com
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PXP – Credit Application
Potential shippers are encouraged to
arrange credit at the earliest possible
time.
PXP will only consider nominations for
which credit arrangements have been
made prior to nomination, or for
nominations accompanied by an
acceptable Letter of Credit or full
prepayment.
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Nominations
--- Break Time ---
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Guernsey Tank Farms
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Common Stream Descriptions
 Pony Express is a “multiple common stream” carrier. Pony Express will transport batches of
up to three common streams from its Guernsey origin, and a fourth common stream from
northeastern Colorado. The initial common streams are characterized as:
 BLS - The Bakken Light Sweet common stream or “BLS” will originate at Guernsey and will
contain not greater than .2% sulfur and will have an API gravity of not less than 40 degrees
or more than 46 degrees.
 MXS - The Mixed Sweet common stream or “MXS” will originate at Guernsey and will
contain not greater than .5% sulfur and will have an API gravity of not less than 30 degrees
or more than 38 degrees.
 GWI - The Guernsey Wyoming Intermediate common stream or “GWI” will originate at
Guernsey and will contain not greater than .42% sulfur and will have an API gravity of not
less than 36 degrees or more than 42 degrees.
 NIO - The Niobrara common stream or “NIO” will originate at receipt points on the NECL
and will contain not greater than .42% sulfur and will have an API gravity of not less than 36
degrees or more than 42 degrees.
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Nominations
Material Safety Data Sheets (MSDS)
Initial Nominations must be accompanied by an
appropriate MSDS.
Nominations lacking the appropriate MSDS will not be
considered.
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Nominations
Nominations
 Ten Percent (10%) of Available Capacity is for
Uncommitted Shippers
• Belle Fourche Joint Tariff =
12,200 bpd / 370,000 bpm
• Hiland HH Joint Tariff =
4,200 bpd / 127,000 bpm
• Local PXP Tariff =
6,100 bpd / 185,000 bpm
(figures are approximate)
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Nominations
Nominations (continued)
 All Nominations are due to PXP by 5:00 PM Central Time
on the 20th calendar day or the preceding business day if the
20th is on non-business day.
 All Nominations must include:
 Receipt Point:
•
•
•
Guernsey- PXP / Belle Fourche Joint Tariff
Guernsey- PXP / Hiland Joint Tariff
Guernsey- PXP Local Tariff
 Delivery Point:
•
•
Oklahoma
Other future sites
 Destination:
•
Rose Rock, BKEP, Enbridge, Plains, Enterprise, NGL (8¢),
Seaway (10¢), Ponca City (Phillips 66), or to LINEFILL.
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Nominations
 All Nominations must include:
 Crude Type:
•
•
•
•
BLS – Bakken Light Sweet
MXS – Mixed Sweet
GWI – Guernsey Wyoming Intermediate
NIO - Niobrara
 Volume:
•
•
•
In Barrels per Day (bpd)
By grade
By destination
 Minimum Nomination is 10,000 bbls per month per Silo.
 Can be different grades to total 10,000 bbls
 DO NOT OVER NOMINATE !
 Awarded Nominations are BINDING !
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Nominations Nominations (continued)
 Nominations for shipments on The Belle Fourche – PXP Joint Tariff
must be made to and confirmed by both BFPL and PXP.
 Nominations for shipments on The Hiland - PXP Joint Tariff must be
made to and confirmed by both Hiland and PXP.
 Shipments originating at Guernsey under the PXP Local Tariff
require Nomination and confirmation by PXP, and will need to be
confirmed by the applicable upstream Carrier.
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PXP – Nomination Form
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Nominations
Nominations (continued)
 All initial nominations must also include additional volume of 27% for
pro rata LINEFILL.
 EXAMPLE:
• 1st month Nomination
• 1st month ProRata Linefill
10,000 bbls
2,700 bbls
• 2nd month Nomination
• 2nd month ProRata Linefill
15,000 bbls
1,350 bbls
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Nominations
 In-Line Transfers
 By prior approval, In-Line Transfers may occur
between current Shippers
 Request must be submitted in writing to PXP for
approval
 A nominal fee will apply
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Nominations
 Linefill barrels may be withdrawn:
• 90 days after written notice to cease shipments, and
• After payment is received in full for all services by
PXP
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Prorations and Awarded Nominations
Prorations:
Based on SILO Concept:
 Source points at Guernsey:
o Belle Fourche Pipeline / PXP Joint Tariff
o Hiland Double H Pipeline / PXP Joint Tariff
o Local PXP Tariff from Guernsey Sources
 Each SILO has defined capacity including 10% for Walk-up
 Each SILO prorated independently and separately
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Prorations and Awarded Nominations –
Prorations: Examples
 Belle Fourche 10% is 370,000 bbls/month
• IF 37+ Shippers Nominate 10,000 bpm or more, then 37
Shippers will each be awarded 10,000 barrels of
capacity through a random selection process.
• IF 30 Shippers Nominate 10,000 bpm and 2 Shippers
Nominate 60,000 bpm, then all 32 Shippers will be
awarded 10,000 bpm (32 x 10,000 = 320,000) and each
of the Shippers who Nominated 60,000 bpm will be
awarded an additional 25,000 bpm.
 Awarded Capacity then is:
o 30 Shippers @ 10,000 bpm (300,000 bpm)
o 2 Shippers @ 35,000 bpm ( 70,000 bpm)
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Prorations and Awarded Nominations
A New Shipper may graduate in a Silo to Regular Shipper status by
Nominating and Shipping on PXP in each month of the Base Period
in that Silo.
Base Period means the twelve (12) calendar month period:
 Beginning thirteen (13) months prior to the current month, and
 Excluding the Month preceding the current Month
 Base Period Example: Shipper begins in Sept 2014 and ships for 12
consecutive months in one Silo.
 In October 2015, a New Shipper would graduate to Regular Shipper after
satisfying the Base Period definition. Ship 12 months (Sept thru Aug)
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Scheduling
 All Nominations are due to PXP by the 20th calendar day.
 PXP will promptly notify all shippers of any proration and
awarded capacity.
 PXP will develop and distribute a monthly
pumping/delivery schedule to all shippers and
connecting carriers
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Regulatory Filings
 PXP expects FERC tariff filing to occur in August.
 Current estimation is that the initial Uncommitted (local) Rate
for transportation of crude oil from Guernsey to Cushing will
be up to $4.25 per barrel.
 The estimated rate is subject to change as we near
completion of the system and will be filed with the FERC prior
to our in-service date.
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Mona Walker – Manager, Operational Accounting
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PXP Commercial Transaction Management System
Energy Solutions International (ESI)
 Pony Express Pipeline will be utilizing Synthesis and Pipeline Scheduler
for commercial transaction processing.
 Synthesis is one of the industry best-of-class software systems in the
midstream oil and gas industry.
 Benefits of the PXP operating system to shippers include:
 Scheduler: Efficiently and accurately schedule the pipeline system
– Make changes, recalculate, and immediately see results and communicate to
shippers
– Ability to see system future states, with current conditions
– Interface seamlessly with transactional accounting system for accurate and
efficient monthly close processes
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PXP Commercial Transaction Management System
Energy Solutions International (ESI) (continued)
 Option to accept nominations from and pass information to shippers via Internet
 Import measurement data for transactional calculations
 Inventory, and book-to-physical calculations
 Tie nominations, tickets, contracts, tariffs together for full financial calculations
and accurate shipper statements
 Generate and send shipper invoices
 Ad hoc reporting and analysis which will allow us to timely responses to shipper
requests
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Accounting Procedures
PXP will apply:
A Common Stream, Available Oil Model
• Applies to all shipments
 Joint Tariff
 PXP Local Tariff
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Accounting Procedures
Credit:
 New Shippers are required to submit a request for shipper
status.
 Each Shipper is subject to continual review of its financial
position.
 PXP reserves the right to limit credit to any Shipper when
financially prudent.
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Accounting Procedures
Billing:
 Shippers will be billed on the 15th calendar day of the
invoice month for all barrels delivered.
 Receipt and delivery tickets are the controlling
documents upon which such billing is based.
 Shippers will receive one invoice that identifies all
charges on Joint Tariff and PXP systems.
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Accounting Procedures
Billing:
 The billing documents included in the invoice package will
include:
 Shipper statement
 PXP Inventory statement
 Pipeline and terminal loss allowance assessment
 Delivered barrel transportation tariff charges
 Any other applicable fees which may include demurrage
and pumping fees
 Payment is due on the 20th calendar day of the invoice
month
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Shipper Questions and Discussion
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Pony Express Pipeline - Contacts
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Pony Express Pipeline
Uncommitted Shipper Meeting
July 17, 2014
Confidential Presentation