El Paso Corp. (ticker: EP, exchange: New York Stock Exchange (.N))
News Release -
Tennessee Gas Pipeline Announces Completion of the First Phase of Contract Portfolio Restructuring
Texas, November 15, 1999-Tennessee Gas Pipeline Company, a business
unit of El Paso Energy Corporation (NYSE:EPG), announced today that it has
successfully completed the first phase of its contract portfolio restructuring.
Approximately 70 percent of Tennessee's total firm transportation and storage
portfolio was scheduled to expire in November 2000, with 30 percent remaining under
long-term contracts. For the 18 months prior to the November 1999 notice deadline,
Tennessee and its customers have been engaged in extensive negotiations concerning the
renewal of these contracts. The vast majority of those long-term customers have chosen to
renew their contracts at or near maximum tariff rates. As a result, 80 percent of
Tennessee's total capacity is now under long-term contracts. Of the remaining 20
percent, 15 percent is composed of contracts that were not renewed by historic long-term
capacity holders. Tennessee is now free to work with new customers over the next year to
enter into new contracts for this capacity. The remaining five percent represents
Tennessee's existing capacity currently held under short-term contracts.
"Over the past several years we've been very optimistic about the value of
capacity and services on Tennessee and have had very high expectations for the
recontracting process. This initial recontracting success clearly meets those
expectations," said John W. Somerhalder II, president of Tennessee Gas
Pipeline. The average transportation contract was extended for nearly three years from the
November 2000 scheduled expiration date, resulting in an average contract term on
Tennessee of over four years. Over 90 percent of the contracts that were extended were at
or near maximum tariff rates. Tennessee's firm storage remains fully subscribed at
The next phase of Tennessee's contract restructuring effort is to place the newly
available capacity with new customers. "We believe we have achieved the optimal
contract portfolio balance for the diverse and dynamic markets Tennessee serves,"
said Stephen Beasley, Tennessee's vice president of Marketing and Business
Development. "We have limited blocks of capacity to several very liquid markets that
will be attractive to marketers looking to take a significant position in a given market.
We also have capacity to serve developing power generation markets and we can maximize the
value of that portion of the capacity by making it available to new customers who plan to
serve those markets."
"The positive impact of these recently completed contract negotiations on customer
relations cannot be ignored," Beasley added. "After nearly two years of detailed
discussions regarding what matters to customers and how they value pipeline capacity, this
successful recontracting effort demonstrates Tennessee's ability to meet their needs.
It has been very rewarding to hear from customers, even those few who couldn't extend
their contracts, that they felt Tennessee had been as flexible as possible in trying to
find innovative solutions to their service needs."
With over $15 billion in assets, El Paso Energy Corporation provides comprehensive
energy solutions through its strategic business units: El Paso Natural Gas Company,
Tennessee Gas Pipeline Company, Southern Natural Gas Company, El Paso Field Services
Company, El Paso Merchant Energy Company, El Paso Production Company, and
El Paso Energy International Company. The company owns North America's largest
natural gas pipeline system, both in terms of throughput and miles of pipeline, and has
operations in natural gas transmission, gas gathering and processing, gas and oil
production, power generation, merchant energy services, and international project
development. Visit El Paso Energy's web site at www.epenergy.com.
This release includes forward-looking
statements and projections, made in reliance on the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. The company has made every reasonable effort to
ensure that the information and assumptions on which these statements and projections are
based are current, reasonable, and complete. However, a variety of factors could cause
actual results to differ materially from the projections, anticipated results or other
expectations expressed in this release. While the company makes these statements and
projections in good faith, neither the company nor its management can guarantee that the
anticipated future results will be achieved. Reference should be made to the company's
(and its affiliates') Securities and Exchange Commission filings for additional
important factors that may affect actual results.