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EnCana to Support Kinder Morgan-Sempra Energy $3 Billion Natural Gas Pipeline Project

Posted on: Tuesday, 18 October 2005, 15:00 CDT

HOUSTON and SAN DIEGO, Oct. 18 /PRNewswire-FirstCall/ -- Kinder Morgan Energy Partners, L.P. and Sempra Pipelines & Storage, a unit of Sempra Energy , today announced that subsidiaries of EnCana Corporation Toronto -- EnCana Marketing (USA) Inc. and Entrega Gas Pipeline Inc. -- have entered into a Memorandum of Understanding (MOU), whereby EnCana has agreed to support the previously announced $3 billion Rockies Express natural gas pipeline project. This Kinder Morgan-Sempra Energy 1,500-mile pipeline -- the largest natural gas pipeline project built in the United States in more than 20 years -- plans to deliver natural gas from producing areas in the Rocky Mountain region to the upper Midwest and Eastern United States.

Under the MOU, EnCana Marketing (USA) Inc. has agreed to negotiate with the Kinder Morgan-Sempra Energy project for firm transportation capacity on the pipeline during an upcoming binding open season. The deal, subject to execution of definitive agreements and to approvals from the respective parties' boards of directors, is expected to make EnCana Marketing (USA) Inc. a significant anchor shipper on the new project.

"EnCana's commitment goes a long way toward making this project a reality," said Scott Parker, president of Kinder Morgan's Natural Gas Pipelines Group. "Projects are proposed and open seasons are conducted frequently, but pipelines don't get built without real shipper support like we have received from EnCana, Sempra Energy and the Wyoming Natural Gas Pipeline Authority." EnCana's affiliate, Entrega Gas Pipeline Inc., recently commenced construction of a 330-mile 36 to 42-inch pipeline linking growing western Rockies production areas to the Cheyenne Hub in northeastern Colorado. Under the terms of the MOU and subject to final negotiations, it is contemplated that the Entrega Gas Pipeline would be sold to the Kinder Morgan-Sempra Energy project group. In combination, the Entrega Gas Pipeline and the Kinder Morgan-Sempra Energy pipeline project have the potential to create a major new gas transmission pipeline from the Rockies to eastern markets. Under a previous agreement, Entrega contracted Kinder Morgan to operate the Entrega Gas Pipeline, and Kinder Morgan will now market the available capacity on the project.

"The Rockies Express Pipeline should serve as a great benefit to both producers in the Rockies region and for U.S. consumers relying more and more on secure domestic energy sources," said George Liparidis, president of Sempra Pipelines & Storage. "We believe that other producers, local distribution companies and marketers will follow EnCana's lead in committing to development of infrastructure to transport reliable Rocky Mountain natural gas supplies to Midwest and East Coast markets."

As designed, the preliminary route of the Rockies Express Pipeline will originate at the Cheyenne Hub in northeastern Colorado and extend to eastern Ohio with an ultimate route to be selected based on shipper interest. The proposed 42-inch diameter pipeline will have capacity of up to 2 billion cubic feet per day. Conditional commitments now account for approximately one-half of the pipeline's total capacity and strong interest has been expressed for additional capacity from other parties. The commitments and indications of interest from parties other than EnCana Marketing (USA) Inc. include:

* The Wyoming Natural Gas Pipeline Authority (WNGPA) has entered into an exclusive agreement with KMP and Sempra Pipelines & Storage regarding an MOU that could result in the WNGPA contracting for up to 200 million cubic feet per day (MMcf/day) on the pipeline and extension of the project upstream to the Opal Hub in Wyoming. * Five Midwest local distribution companies and one power generating company have entered into exclusivity agreements for the project. * A Sempra Energy affiliate has agreed to bid for 200 MMcf/day of firm transportation capacity.

In light of the significant commitments to the project already received, the sponsors intend to file with the Federal Energy Regulatory Commission to request commencement of the National Energy Policy Act pre-filing process this month.

The pipeline will maximize the value of growing Rockies production by creating unprecedented access to multiple markets and storage, while providing markets in the upper Midwest and Eastern United States with direct access to reliable, long-lived domestic natural gas supplies to meet growing demand. Along with providing producers much-needed takeaway capacity, the pipeline will feature multiple interconnects with other major pipeline systems and create significant flexibility for reaching other demand-anchored markets. Producers will also be able to more effectively address the price differential between Rocky Mountain basins and the demand centers to which the pipeline will ultimately deliver the gas to.

Kinder Morgan and Sempra Pipelines & Storage are sharing responsibility for development activities. Kinder Morgan owns two-thirds of the equity in the proposed pipeline and Sempra owns one-third. Pending customer commitments and regulatory approval, the proposed pipeline is projected to be staged into service in late 2007 and continuing through 2009.

For information on the project, contact Jeff Rawls at Kinder Morgan (303) 914-4903 or Ryan O'Neal at Sempra Pipelines & Storage (619) 696-4585.

Kinder Morgan Energy Partners, L.P. is one of the largest publicly traded pipeline limited partnerships in America. KMP owns or operates more than 25,000 miles of pipelines and approximately 145 terminals. Its pipelines transport more than 2 million barrels per day of gasoline and other petroleum products and up to 8.4 billion cubic feet per day of natural gas. Its terminals handle over 80 million tons of coal and other dry-bulk materials annually and have a liquids storage capacity of approximately 65 million barrels for petroleum products and chemicals. KMP is also the leading provider of CO2 for enhanced oil recovery projects in the United States.

The general partner of KMP is owned by Kinder Morgan, Inc. , one of the largest energy transportation and storage companies in America. Combined, the two companies have an enterprise value of approximately $31 billion.

Sempra Pipelines & Storage acquires, builds and operates natural gas pipelines and storage facilities in Mexico and the United States. Sempra Energy, based in San Diego, is a Fortune 500 energy-services holding company with 2004 revenues of $9.4 billion. The Sempra Energy companies' 13,000 employees serve more than 29 million consumers in the United States, Europe, Canada, Mexico, South America and Asia.

This news release includes forward-looking statements. Although Kinder Morgan believes that its expectations are based on reasonable assumptions, it can give no assurance that such assumptions will materialize. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein are enumerated in Kinder Morgan's Forms 10-K and 10-Q as filed with the Securities and Exchange Commission.

This press release contains statements that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When Sempra Energy uses words like "believes,""expects,""anticipates,""intends,""plans,""estimates,""may,""would,""should" or similar expressions, or when Sempra Energy discusses its strategy or plans, the company is making forward-looking statements. Forward- looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future results may differ materially from those expressed in the forward-looking statements. Forward-looking statements are necessarily based upon various assumptions involving judgments with respect to the future and other risks, including, among others: local, regional, national and international economic, competitive, political, legislative and regulatory conditions and developments; actions by the California Public Utilities Commission, the California State Legislature, the California Department of Water Resources, the Federal Energy Regulatory Commission and other regulatory bodies in the United States and other countries; capital markets conditions, inflation rates, interest rates and exchange rates; energy and trading markets, including the timing and extent of changes in commodity prices; the availability of natural gas; weather conditions and conservation efforts; war and terrorist attacks; business, regulatory, environmental, and legal decisions and requirements; the status of deregulation of retail natural gas and electricity delivery; the timing and success of business development efforts; the resolution of litigation; and other uncertainties, all of which are difficult to predict and many of which are beyond the control of the company. These risks and uncertainties are further discussed in the company's reports filed with the Securities and Exchange Commission that are available through the EDGAR system without charge at its Web site, http://www.sec.gov/ and on the company's Web site, http://www.sempra.com/ .

Sempra Pipelines & Storage is not the same company as the utilities, SDG&E or SoCalGas, and Sempra Pipelines & Storage is not regulated by the California Public Utilities Commission.

Kinder Morgan Energy Partners, L.P.; Sempra Pipelines & Storage

CONTACT: Rick Rainey, Media Relations, +1-713-369-9452, or Mindy Mills,Investor Relations, +1-713-369-9490, both of Kinder Morgan Energy Partners,L.P.; or Jennifer Andrews, Media Relations, +1-877-866-2066, or KarenSedgwick, Investor Relations, +1-877-736-7727, both of Sempra Pipelines &Storage

Web site: http://www.kindermorgan.com/http://www.sempra.com/

Source: PRNewswire-FirstCall

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