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Home My WebLink AboutCook Inlet Gas Gathering Grant 2012t+do 7Jo23 "yh[vel Alas ARP Alaska Energy Authority /axQS ENERGY AUTHORITYGrantAgreement Grant Agreement Number CFDA Number Amount of Funds: 7910006 NA $4.000.000 Project Code(s)Proposal Number:Period of Performance: 409033 NP10106 From:July 1,20114 To:June 30,2012 Project Title: Cook Inlet Gas Gathering System oR .Grantee-:Grantor | Name ' Chugach Electrical Association Alaska Energy Authority Street/PO Box Street/PO Box P.O.Box 196300 813 W.Northern Lights Blvd City/State/Zip City/State/Zip Anchorage,AK 99519 Anchorage,AK 99503 Contact Person Contact Person Ronald K.Vecera James Strandberg,Project Manager Phone:Fax:E-mail:Phone:Fax:E-mail: 907-762-4759 907-762-4191 }ron_vecera@chugachelectric |907-771-3069 |907-771-3044 com jstromberg@aidea.org AGREEMENT The Alaska Energy Authority (hereinafter 'Authority')and Chugach Electrical Association (hereinafter 'Grantee'),agree as set forth herein. Section |.The Authority shall grant funds to pay for expenses incurred by the Grantee under the terms and conditions of this Agreement,in an amount not to exceed §4,000,000,unless the grant amount is amended as provided herein. Section Il.The Grantee shall apply the grant funds to the Project and perform all of the work and other obligations required by this Agreement. Section Ill.Performance under this agreement begins July 1,2011 and shall be completed no later than June Attachments/Forms (As required) Attachment 1:Financial Report/Request for Reimbursement Form Attachment 2:Progress Report Form Attachment 3:Notice of Grant Closeout Attachment 4:White Paper for project 30,2012. Section IV.The agreement consists of this page and the following: Appendices Appendix A:General Provisions Appendix B:Standard Provisions Appendix C:Grantee Proposal/Scope of Work Appendix D:Project Management & Reporting Requirements Appendix E:Project Budget & Reimbursement Provisions AMENDMENTS:Any amendments to this Agreement must be signed by authorized representatives of Grantee and the Authority and should be listed here. Grantee --.Authority... -Project Manager ..«Executive Director or -.mae -Designee 2 02-0 Signature Date |Signature Date |Signature Date Printed Name and Title Bradley W.Evans,CEO Printed Name and Title James Strandberg,Project Manager Sara Fisher-Goad, AEA Executive Director Cook Inlet Gas Gathering System Grant Agreement #7910006 Table of Contents Grant No.7910006 AGREEMENT cocccssscccssssscsssvsssssscvsvesssssecsessvscscesssevessassossssassavecsssssaseesssssssussessssssssesssssseraesessseusaveesssssasesanannecenssseees 1 APPENDIX A GENERAL PROVISIONS 5 1.DEFINITIONS oocccccccccscscsecssescssstecsusecsucssssseessuveccsssessssnvescsssscssssnsesssssvecssnvessasssuasesssecescesammsssenessssneiearanssaneenees 5 2.AUTHORITY SAVED HARMLESS............1.5 3.WORKERS'COMPENSATION INSURANCE...5 4.INSURANCE ooo.cscccsssssssesesssesccsseesentesssecesseseesses a) 5.EQUAL EMPLOYMENT OPPORTUNITY (EEO)6 6.PUBLIC PURPOSES wosssccsseesssccssseessssessssssseesesese 6 7.OFFICIALS NOT TO BENEFIT ...6 8.GOVERNING LAW .oocccccsccscccsessssssssecssssavesssvccssevesssnsscsssssesssvecssssncessssesseesesessesneseses 6 9.COMPLIANCE WITH APPLICABLE LAW AND FUNDING SOURCE REQUIREMENTS..6 10,SEVIERABILITY vocccccccsccssecccssseccoseecsssccssssecssvesessvesssssteossavecsssnsecsssnusesessssesssusssessansoessssecssessussesssnesssanesensesnes 6 11.NON-WAIVER vicccccccsssvecscesscesvecsssucccansveccessssveessssnsectessaseseessssuursecsessanuassessssiansessnusssnevecssssssusessessesuereessanesssen 7 12.INTEGRATION........0....a] 13...GRANTEE NOT AGENT OF AUTHORITY wa 14,DISPUTES cocscccccccccccsssecscsccsssvsecsssssscssssvessessauessssssiresessssssssesssssevessssssssnsvessssesuuesesssssussvesscscassvessssesavvecsesnenseee 7 15,TERMINATION..ccccsssscscscssssssssssssssccssevecscovsvscssssssssssssvusssssssusssessssssssnssccassescuesssssssssuuesscsssseveecsenssvaveesssseseeen 7 16.TERMINATION DUE TO LACK OF FUNDING 8 17.NO ASSIGNMENT OR DELEGATION..........818.|NO THIRD PARTY BENEFICIARIES.819,|NO ADDITIONAL WORK OR MATERIAL...1.8 20,CHANGES.veveecccssssssessssssssseesssssneesensees 8 21.RIGHT TO WITHHOLD FUNDS.........822,|REMISSION OF UNEXPENDED FUNDS......a 823.|TAX COMPLIANCE RESPONSIBILITIES OF GRAN 8 24,LOBBYING ACTIVITIES.......ccccssscsssesssssssscsseessssessesees a)25.|FINANCIAL MANAGEMENT AND ACCOUNTING 926.|PROCUREMENT STANDARDS...secsessussorsscesasssssusees wd27.-REPORTING REQUIREMENTS ...cccseecsssseessene .secscssssanccsassusarsaneesen mn)28,OWNERSHIP OF DOCUMENTS AND PRODUCTS.wiccsssssssssscssssssecssscssssssessesseeseeeee a en) 29.INSPECTIONS AND RETENTION OF RECORDS...secsssauevesssrasesessesasitensnecse ssessssaseveesenseueses 9 30,AUDITS.cccessccssssssssssesscsssstccssescssssecssssessssuseeaseesssseeses31.|LEGAL AUTHORITY 32.GRANT CLOSE OUT APPENDIX B STANDARD PROVISIONS 11 1.GRANT FUNDING SOURCES ....ccscscessssesssssssscssesessensessssssecssussessssssescessssnscisnsessassneeceusseciessnvsessanessssereesese 1 2.GOVERNING LAWS ........... 3.ELIGIBLE COSTS |... 4.INSURANCE REQUIREMEN APPENDIX B1_STANDARD PROVISIONS FOR GENERAL DESIGN &CONSTRUCTION GRANT....12 1.DECLARATION OF PUBLIC BENEFIT .......i . 2.GRANTEE PROJECT MANAGER...csccsssssssscsssssessosssssssecssssssssssssesssssssssussssssstssssesasseensessees3.APPROVAL TO PROCEED WITH NEXT PHASE.... 4.CONTRACTS FOR ENGINEERING SERVICES .....scsssssssssseessn5.SITE CONTROL......sestuuessesueesssuvecsens 6.PERMITS..cccccccesessccssssccssssssesssseccossesssureosscssessseeecsssssecsssenseesss 7.EXCLUSION OF EXISTING ENVIRONMENTAL HAZARDS - 8.ENVIRONMENTAL STANDARDS o.escsscsscsssssssseccsscvssssusccossssevsceccssssassasscssseneserssenes Page 2 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 9.CURRENT PREVAILING RATES OF WAGE AND EMPLOYMENT PREFERENCE........sssscsssssssssssesssessesees 13 10.CONSTRUCTION PLANS AND SPECIFICATIONS REVIEW.........ccccscssesseneeeseeees 14 11.CONSTRUCTION INSURANCE AND BONDING..............14 12.POST CONSTRUCTION CERTIFICATION ..14 13.OWNERSHIP OF FACILITIES......cc cssessessessereeereees 14 14,OPERATION AND MAINTENANCE OF FACILITIES 00.0...ss cecsssoesssscsensscsecsensrscsesesoneseseseenneneessnsasesseeeteeeetene 15 APPENDIX C GRANTEE PROPOSAL/SCOPE OF WORK 16 APPENDIX D PROJECT MANAGEMENT &REPORTING REQUIREMENTS 18 1,PROJECT MANAGEMENT .........c:ssccsstescceessneeccnsrcessenssucsaavassseuseaeseseaeaseeedsuseeeesosecnneeaenseceapeesraeanseneseresseeres 18 2.CONTACT PERSONS ......ccccccccesssereresecsesessasssececsecsensceseeevseasenssecesnesenssateseetaeasscaveneesserseareenntsecnsanscesaseseseeeaees 18 3.MONTHLY PROGRESS AND FINANCIAL REPORTS..19 4,DOCUMENTATION AND RECORD KEEPING........::ccssceseseesetserscesedeeeeseessseessaesssanssnsasresatsaseacaseasseseaneaness 19 APPENDIX E PROJECT BUDGET &REIMBURSEMENT PROVISIONS 20 1.ALLOWABLE COSTS ......cccsssssseessssssesscensececteresseesesaecoeensaaseeeseeasneesseneeeneeesneeaseeasneceneeneaeeaseaaeaesstennaesetonsteeeea.--_Direct Labor &Benefits .........cescsscssssseesnesssressnsssseveesaes b.Travel,Meals,or Per Diem. c.Equipment ve A.Supplies...esssecersrevsveveeves e.Contractual S€rvices.....c.cccsessesssseveneoees f Construction Services g.Other Direct Costs." 2.SPECIFIC EXPENDITURES NOT ALLOWED ..........:sceceseccscseseseesesesseeeseeeneees 3.MATCH...cesssesceseseeceeeeneenenseeneenesases ".wees . 4.COST SHARE MATCH REQUIREMENTS ........:cccseceseecescosstssenseseneessevsneaeavanssesasaseesaaesneers 5.VALUING IN-KIND SUPPORT AS MATCH . 6.GRANT DISBURSEMENTS........ccccsssssstscssescrecsersssereeenosese 7.WITHHOLDING OF GRANT FUNDS .......esssscssessssscesseeesteeees sees 8.ADVANCE DISBURSEMENTS ..........cscscosscesceccesseeecssteseecsseceseesuesseeesesnarensuaeesaearsusesanesstesgsasaranseeesesenertanegs 9.UNEXPENDED GRANT FUNDS AND INTEREST EARNED ... 10.BUDGET ADJUSTMENTS AND CHANGES ......cceesccssseccesenteseseres ATTACHMENT 1.FINANCIAL REPORT/REQUEST FOR REIMBURSEMENT FORM.......ccsssesscsssssee 025 ATTACHMENT 2 PROGRESS REPORT FORM :26 ATTACHMENT3 NOTICE OF PROJECT CLOSEOUT 27 ATTACHMENT 4 WHITE PAPER:REMOVAL OF CHECK VALVES AND INSTALLATION OF COMPRESSION TO ALLOW EAST TO WEST FLOW THROUGH CIGGS DUAL SUB-SEA PIPELINES 28 1 INTRODUCTION...31 2 COOK INLET GAS FLOW AND PRODUCTION 31 2.1 PIPELINE GAS FLOW:EAST SIDE OF COOK INLET .......... 2.1.1 |ENSTAR compressor upgrade plan2.2 PIPELINE GAS FLOW:WEST SIDE OF COOK INLET 2.3 IN-GROUND STORAGE ..........sesseee 3.PROJECTED COOK INLET FLOW SCENARIOS,WINTER 2011/2012 35 3.1 COLD DAY FLOW AT 350 MMSCED ......ccscsssssesssesssssesnsarsssarsseesesneorsssesescesessssasssessessseasssenseersnsesesseseeesgenne 36 3.1.1 Alb equipment on-line 0...cessssecsessscerssssenessneassesseentensensnsensenseecnsaeesessenesenasaeaseseneeneaeaseonss 1 36 Page 3 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 1.2 Loss of some BRU production 1.3 Loss ofall production from the Steethead platform .. 3.2 PEAK FLOW ON EXTREMELY COLD DAY AT 425 MMSCED .... 3.2.1 All equipment on-line,location of temporary compression... 3.2.2.Loss af some BRU production,temporary compression... 3.2.3 Loss ofall production from the Steelhead platform ......... 3.3 JUSTIFICATION OF PROPOSED COOK INLET TRANSMISSION SYSTEM MODIFICATIONS .. 3.3.1 Remove check valves to allow east-west flow through CIGGS.cusses:45 3.3.2.Install temporary gas compressor to enhance east-west flow eee 4 5 Page 4 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 |APPENDIX A GENERAL PROVISIONS 1.Definitions In this Grant Agreement,attachments and amendments: a)"Authority”means the Alaska Energy Authority,a public corporation of the State of Alaska. b)"Authorized Representatives”means those individuals or entities authorized by an entity to act on its behalf,with delegated authority sufficient to accomplish the purposes for which action is needed. c)"Executive Director'means the Executive Director of the Authority or the Executive Director's authorized representative. d)"Matching contributions”means the cash,loan proceeds,in-kind labor,equipment,land,other goods,materials,or services a grantee provides to satisfy any match requirements of a grant or to complete the Project. e)"Project”means Cook Inlet Gas Gathering System as defined in Appendix C (Scope of Grant)for which funds have been made available. f)"Project Manager”means the employee of the Authority responsible for assisting the Grantee with technical aspects of the Project and is one of the Grantor's contacts for the Grantee during all phases of the Project. g)"State”means the State of Alaska.eo)ne "Economic Life”means_years from the date of the final disbursement.oo... 2.Authority Saved Harmless As a condition of this Grant,the Grantee agrees to defend,indemnify,and hold harmless the Authority and the State of Alaska,and their agents,servants,contractors,and employees,from and against any and all claims,demands,causes of action,actions,and liabilities arising out of, or in any way connected with this grant or the project for which the grant is made,howsoever caused,except to the extent that such claims,demands,causes of action,actions or liabilities are the proximate result of the sole negligence or willful misconduct of the Authority or the State of Alaska. 3.Workers'Compensation Insurance The Grantee shall provide and maintain Workers'Compensation Insurance as required by AS 23.30 for all employees engaged in work under this Grant Agreement.The Grantee shall require any contractor to provide and maintain Workers'Compensation Insurance for its employees as required by AS 23.30. 4,Insurance The Grantee is responsible for obtaining and maintaining any necessary insurance and endorsements as defined in Appendix B Standard Provisions.Proof of insurance coverage must be included with the first reimbursement or advance request.Continued proof of Page 5 of 46 number for this'one /is this statement Sos _--77]Comment [e +Jim,do you havea |:- necessary' me jw Cook tntet Gas Gathering System Grant Agreement #7810006 insurance coverage must be presented with the first reimbursement or advance request of the grantee's fiscal year for the life of the grant.Reimbursement and advance requests will not be processed if proper documentation of insurance has not been submitted. 5.Equal Employment Opportunity (EEO) The Grantee may not discriminate against any employee or applicant for employment because of race,religion,color,national origin,age,physical handicap,sex,marital status,changes in marital status,pregnancy,or parenthood.The Grantee shall post in a conspicuous place, available to employees and applicants for employment,a notice setting out the provisions of this paragraph. The Grantee shall state in all solicitations or advertisements for employees to work on Authority funded projects,that it is an Equal Opportunity Employer (EEO)and that all qualified applications will receive consideration for employment without regard to race,religion,color, national origin,age,physical handicap,sex,marital status,changes in marital status, pregnancy or parenthood. The Grantee shall include the provisions of this EEO article in every contract relating to this Grant Agreement and shall require the inclusion of these provisions in every agreement entered into by any of its contractors,so that those provisions will be binding upon each contractor and subcontractor. 6.Public Purposes The Grantee agrees that the Project to which this Grant Agreement relates shall be dedicated to public purposes and any project constructed or equipment or facilities acquired,shall be owned and operated for the benefit of the general public.The Grantee shall spend monies appropriated under this grant only for the purposes specified in the Grant Agreement.The benefits of the Project shall be made available without regard to race,religion,color,national origin,age,physical handicap,sex,marital status,changes in marital status,pregnancy or parenthood. 7.Officials Not To Benefit No member of or delegate to Congress or the Legislature,or officials or employees of the Authority or Federal government may share any part of this agreement or any benefit to arise from it. 8.Governing Law This Grant Agreement is governed by the laws of the State of Alaska.Any civil action arising from this Agreement shall be brought in the Superior Court for the Third Judicial District of the State of Alaska at Anchorage. 9.Compliance with Applicable Law and Funding Source Requirements The Grantee shall comply with all applicable local,state and federal statutes,regulations, ordinances and codes,whether or not specifically mentioned herein.Refer to Appendix B Standard Provisions for more specific requirements. 10.Severability If any section,paragraph,clause or provision of this Agreement is held invalid or unenforceable, the remainder of this Agreement shall be unaffected and enforced to the fullest extent possible, Page 6 of 46 Cook Intet Gas Gathering System Grant Agreement #7910006 and the invalid or unenforceable provision shall be deemed replaced with a valid and enforceable provision that is as similar as possible to such invalid or unenforceable provision. 11.Non-waiver The failure of either party at any time to enforce a provision of this Agreement shall in no way constitute a waiver of the provision,nor in any way 'affect the validity of this Agreement,or any part hereof,or the right of such party thereafter to enforce each and every provision hereof. 12.Integration This instrument and all appendices,amendments,attachments,hereto embody the entire Agreement of the parties concerning the grant funds granted hereunder.There are no promises,terms,conditions,or obligations regarding said funds other than those contained in the documents described above;and such documents shall supersede all previous communications,representations or agreements,either oral or written,between the parties hereto.To the extent there is any conflict between the provisions of Appendix A and B theGrantee's application or proposal,the provisions of Appendix A and B prevail. 13.Grantee Not Agent of Authority The Grantee and any agents and employees of the Grantee act in an independent capacity and are not officers or employees or agents of the Authority in the performance of this Grant Agreement. 14,Disputes Any dispute arising under this Grant Agreement which is not disposed of by mutual agreement must be dealt with in accordance with 3 AAC 108.915. 15.Termination a)The Grantee shall have no rights to compensation or damages for terminationexceptasprovidedinthisSection. b)In addition to all other rights available under law,the Authority may terminate this Agreement or stop work on the Project for the convenience of the Authority or for cause upon ten (10)days written notice., c)"Cause”for termination shall exist when the Grantee has failed to perform under this Agreement,has provided incorrect or misleading information or has failed to provide information which would have influenced the Authority's actions.In order for termination to be for cause,the Grantee's failure to perform or the Grantee's provision of incorrect, misleading,or omitted information must be material. d)If this Agreement is terminated for cause,the Grantee shall be entitled to no compensation.The Grantee shall reimburse the Authority for all grant funds expended under this Agreement by the Grantee or on the Grantee's behalf including interest accrued from the date of disbursement.The Grantee shall also reimburse the Authority for any costs incurred to collect funds subject to reimbursement,and for any damages incurred by the Authority as a result of the Grantee's failure to perform or provision of incorrect or misleading information.The Authority may require the Grantee to return to the Authority some or all of the Project assets if this Agreement is terminated for cause. Page 7 of 46 Cook inlet Gas Gathering System Grant Agreement #7910006 e)If this Agreement is terminated at the sole request of the Authority for the sole reason of its convenience,the Grantee is not required to reimburse the Authority for funds expended prior to the date of termination.If the Grantee has incurred costs under this agreement,the Grantee shall only be reimbursed by the Authority for eligible costs the Grantee incurred prior to the date of termination of the Agreement.However,prior to making any claim or demand for such reimbursement,the Grantee shall use its best effort to reduce the amount of such reimbursement through any means legally available to it.The Authority's reimbursement to the Grantee shall be limited to the encumbered, unexpended amount of funds available under this Agreement. 16.Termination Due to Lack of Funding In the event funding from the Authority,federal or other sources is withdrawn,reduced,or limited in any way after the effective date of this agreement and prior to normal completion,the Authority may terminate the agreement,reduce funding,or re-negotiate subject to those new funding conditions. 17.No Assignment or Delegation The Grantee may not assign or delegate this Grant Agreement,or any part of it,or any right to any of the money to be paid under it,except with the written consent of the Executive Director or Designee. 18.No Third Party Beneficiaries Except as otherwise specified in this agreement,no person is a third party beneficiary of this Agreement and this Agreement creates no third party rights.Specifically,any person who is not a party to this Agreement shall be precluded from bringing any action asserting the liability of a party or asserting any right against a party to this Agreement,through the terms of this Agreement.No person,other than a party to this Agreement,may bring any action based upon this Agreement for personal injuries,property damages,or otherwise. 19.No Additional Work or Material No claims will be allowed for additional work,materials,or equipment,not specifically authorized in this Grant Agreement,which are performed or furnished by the Grantee. 20.Changes Any changes which have been agreed to by both parties will be attached and made a part ofthisGrant,Agreement by use of a written Amendment.Any such Amendment must be dated and signed by Authorized Representatives of the Authority and the Grantee. 21.'Right to Withhold Funds The Authority may withhold payments under this Grant Agreement for non-compliance with any of the provisions of this Grant Agreement. 22.Remission of Unexpended Funds The Grantee shall return all unexpended grant monies to the Authority within 90 days of the Project completion. 23.Tax Compliance Responsibilities of Grantee The Grantee is responsible for determining applicable federal,state,and local tax requirements,for complying with all applicable tax requirements,and for paying all applicable Page 8 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 taxes.The Authority may issue an IRS Form 1099 for Grant payments made.The Grantee shall pay all federal,state and loca!taxes incurred by the Grantee and shall require the payment of all applicable taxes by any contractor or any other persons in the performance of this Grant Agreement. 24.Lobbying Activities In accepting these funds,the Grantee agrees and assures that none of the funds will be used for the purpose of lobbying activities before the United States Congress or Alaska Legislature. No portion of these funds may be used for lobbying or propaganda purposes as prohibited in AS 37.05.321,18 U.S.C.1913,31 U.S.C.1352,or other laws as applicable. 25.Financial Management and Accounting The Grantee shail establish and maintain a financial management and accounting system that conforms to generally accepted accounting principles.In addition,the accounting system mustkeepseparateallgrantfundsawardedunderthisgrantagreement. 26.Procurement Standards Grantees will follow competitive purchasing procedures that:1)provide reasonable competitive vendor selection for small dollar procurements;2)provide for competitive bids or requests for proposals for contracts and procurements greater than $100,000;3)provide a justification process for non-competitive procurements or contracts;4)document the source selection methods used for all contracts,equipment,or material transactions greater than $10,000;5) and comply with other procurement requirements as defined in Appendix B.Grantees who have questions about their procurement procedures or a specific procurement should contact the Authority's Grant Manager. 27.Reporting Requirements The Grantee shall submit progress reports to the Authority according to the schedule established in Appendix D of this Grant Agreement. 28.Ownership of Documents and Products All designs,drawings,specifications,notes,artwork,computer programs,reports and other work developed with grant funds in the performance of this agreement are public domain andwillbeusedbytheAuthorityand/or public without notice or compensation to the Grantee.The Grantee agrees not to assert any rights and not to establish any claim under the design patent or copyright laws.Except as otherwise specifically agreed,and without limiting any Intellectual Property requirements of a federal funding agency,the Authority shall have unlimited rights to use and to disseminate any data produced or delivered in the performance of the contract. 29.'Inspections and Retention of Records The Grantee shall keep a file for financial,progress and other records relating to the performance of the grant agreement.The file must be retained for a period of four years from the fully executed close out of the grant agreement or until final resolution of any audit findings claim or litigation related to the grant.The Authority may inspect,in the manner and at reasonable times it considers appropriate,records and activities under this Grant Agreement. Page 9 of 46 Cook inlet Gas Gathering System Grant Agreement #7810006 30.Audits This Grant Agreement is subject to 2 AAC 45.010 single audit regulations for State Grants. The Grantee must comply with all provisions of 2 AAC 45.010 and any additional audit requirements outlined in Appendix D. Commercial (for-profit)entities shall obtain an audit by an independent auditing firm similar to a program audit prepared under OMB A-133.The auditee and auditor shall have basically the same responsibilities for the federal or state program as they would have for an audit of a major program in a single audit.The expenditure threshold is $500,000 in the commercial entity's fiscal year. 31,Legal Authority The Grantee certifies that it possesses legal authority to accept grant funds under the State of Alaska and to execute the Project described in this Grant Agreement by signing the Grant Agreement document.The Grantee's relation to the Authority and the State of Alaska shall be at all times as an independent Grantee. 32.Grant Close out Upon completion of all work and expenditure of all grant funds related to the Project the Authority will provide written notice to the Grantee that the Grant will be closed.The Grantee shall sign the Notice of Project Closeout within 30 days after it is delivered by the Authority. The Grant will be considered closed upon receipt of the signed Notice of Project Closeout. The Grant will be administratively closed if the Grantee fails to return the Notice of Project Closeout within 30 days after it is delivered by the Authority.If the Grantee has a valid reason for the Grant to remain open,they must contact the Authority in writing within 30 days. No additional reimbursements will be made to the Grantee after the grant is closed out. Page 10 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 |Appendix B_Standard Provisions 1...Grant Funding Sources This Grant is subject to appropriation and availability of funds as listed below: State of Alaska $4,000,000 Legislative Grant SLA-12 AR 52161-16 Grantee acknowledges that if additional grant funds are made available they are subject to the terms and conditions of this Agreement and any amendment. . 2.Governing Laws The Grantee shall perform all aspects of this Project in compliance with all applicable state, federal and local laws. 3.Eligible Costs The Authority,as Grantor,shall have sole discretion to determine which project costs are eligible to be paid from Grant monies under this agreement.Only direct costs of the Project are eligible for payment or reimbursement from grant funds.Indirect costs are not allowed under this grant unless approved by the Authority in Appendix E. 4.insurance Requirements The following insurance requirements are in effect for this Project.Grant funds will be used to procure Project related insurance and the Authority will work with the Grantee to ensure that these requirements are met.Insurance will be obtained with an insurance carrier or carriers covering injury to persons and property suffered by the State of Alaska,Alaska Energy Authority or by a third party as a result of operations under this grant.The insurance shall provide protection against injuries to all employees of the Project engaged in work under this grant.All insurance policies shall be issued by insurers that (i)are authorized to transact the business of insurance in the State of Alaska under AS 21 and (ii)have a Bests Rating of at least A-VII and be required to notify the Authority,in writing,at least 30 days before cancellation of any coverage or reduction in any limits of liability. Where specific limits and coverage are shown,it is understood that they shall be the minimum acceptable and shall not limit the Grantee's indemnity responsibility.However,costs for any coverage in excess of specific limits of this agreement are the responsibility of the Grantee and may not be charged to this grant agreement. Page 11 of 46 Cook inlet Gas Gathoring System Grant Agreement #7910006 The following policies of insurance shall be maintained with the specified minimum coverageandlimitsinforceatalltimesduringtheperformanceworkunderthisProject: 1.Workers'Compensation:as required by AS 23.30.045,for all employees engaged in work under this Project.The coverage shall include: a.Waiver of subrogation against the State and the Alaska Energy Authority and Employer's Liability Protection at $500,000 each accident/each employee and $500,000 policy limit; 2.Commercial General Liability,on an occurrence policy form covering all operationsunderthisProjectwithcombinedsinglelimitsnotlessthan:a.$1,000,000 Each Occurrence; b.$1,000,000 Personal Injury; c.$1,000,000 General Aggregate;and d.$1,000,000 Products-completed Operations Aggregate. The State of Alaska and Alaska Energy Authority shall be named as an individual insured. 3.Automobile Liability:covering all vehicles used in Project work,with combined single limits no less than $1,000,000 each occurrence. All of the above insurance coverage shall be considered to be primary and non-contributory to any other insurance carried by the State of Alaska and Alaska Energy Authority,whether self- insurance or otherwise. The Authority's acceptance of deficient evidence of insurance does not constitute a waiver of Grant requirements. |Appendix Bi Standard Provisions for General Design &Construction Grant 1.Declaration of Public Benefit The parties acknowledge and agree that the Project shall be constructed,owned and operated for the benefit of the general public and will not deny any person use and/or benefit of Project facilities due to race,religion,color,national origin,age,physical handicap,sex,marital status, changes in marital status,pregnancy or parenthood. 2.Grantee Project Manager For construction projects,the Grantee will contract or hire competent persons to manage all phases of the Project subject to approval of the Authority.Work at a minimum will include; management of Grantee's labor for the project,engineering firms and consultants, procurement,management of construction contractors,selection of equipment,review of plans and specifications,on-site inspections and review and approval of work,and other duties to ensure that the completed work conforms with the requirements of the grant and the construction documents. lf the Grantee fails to provide adequate project management the Authority may terminate the Grant or assume project management responsibilities with the concurrence of the Grantee. Costs for a Project Manager must be reasonable to be considered an eligible grant expense. Page 12 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 3.Approval to Proceed With Next Phase A grant award may be for one or more phases of a project.The grantee must achieve substantial completion of work or of designated grant milestones and receive approval from the Authority prior to proceeding to the next phase of work. 4,Contracts for Engineering Services In the event the Grantee contracts for engineering services,the Grantee will require that the engineering firm certify that it is authorized to do business in the State of Alaska and provide proof of licensing and insurance. 5.Site Control If the grant Project involves the occupancy and use of real property,the Grantee assures that it has the legal right to occupy and use such real property for the purposes of the grant,and further that there is legal access to such property.The Grantee is responsible for securing the real property interests necessary for the construction and operation of the Project,through ownership,leasehold,easement,or otherwise,and for providing evidence satisfactory to the Authority that it has secured these real property interests. 6.Permits It is the responsibility of the Grantee to identify and ensure that all permits required for the construction and operation of this Project by the Federal,State,or Local governments have been obtained unless otherwise stated in Appendix C.These permits may include,but are not limited to,Corps of Engineers,Environmental Protection Agency,Alaska Department of Environmental Conservation,State Historic Preservation Office,State Fire Marshal,Alaska Department of Natural Resources,Alaska Department of Fish and Game and Boroughs. 7.Exclusion of Existing Environmental Hazards Grant funds for investigation,removal,decommissioning,or remediation of existing environmental contamination or hazards,are not allowed unless specifically specified and approved in Appendix C. 8.Environmental Standards The Grantee will comply with applicable environmental standards,including without limitation applicable laws for the prevention of pollution,management of hazardous waste,and evaluation of environmental impacts. 9.Current Prevailing Rates of Wage and Employment Preference To the extent required by federal and State law construction projects may require certain grantees to include the requirements for Davis Bacon and Little Davis Bacon when contracting for construction services.This requires contractors to pay minimum rates of pay for specific classes of workers and provide certified payrolls to the State Department of Labor.The current wage rates can be found at the following web sites: The Federal wage rates at http://www.wdol.gov/ The State wage rates at http:/Awww.labor.state.ak.us/Iss/pamp600.htm Page 13 of 46 ae -debt. Cook Inlot Gas Gathering System Grant Agreement #7910006 lf federal funding sources require federal Davis Bacon compliance,the Grantee must use both the Federal and State wage scale and the contractor is required to pay the higher of the State weorFederalwagescale.When only State Funds are used that requires "Little Davis Bacon,"the Grantee is only required to follow the State Rate schedule.bie wet ; For projects that are only State funded,contractors are also required to use local residents 42 pendwheretheyareavailableandqualifiedinaccordancewithAS36.10.150-180,and 8 AAC 30.064 -088.dn eeirigTheGranteeisresponsibleforidentifyinganyothersourcesofprojectfundsandforensyA a compliance with applicable wage scales for all sources of project funding.Ifa Grantee pe eves pre peetheyortheircontractorsmaybeexemptfromtheserequirements,they should contactthe StateofAlaskaDepartmentofLaborandWorkforceDevelopment,Wage and HourBe ministration,ontoforadeterminationandforwardacopyofthatdeterminationtotheAtithority's Grant Administrator. 10._Construction Plans and Specifications Review y Angndtere at review.Concurrence that...i before grant Grantee will provide the plans and specifications to the Authority f the plans and specifications are consistent with the grant award funds will be released for construction related costs. Comment [eww2]+Jim,I changed this one based on our conversation with Brian B regarding Fire Island. Construction Insurance and Bonding When the value of the construction is anticipated to be greater than $100,000,prior to Dragnetbeginningconstructiononaprojectfundedbythisgrant,the Grantee or grantee's contractor(s)must provide the Authority;1}proof of adequate insurance as defined in Appendix B.#4 of the thes ponte agrantagreement,and 2)either a payment and performance bond,as may be required by AS pet36.25.010,a surety in form and substance acceptable to the Authority,or some other guarantee 4 nd TerorassuranceacceptabletotheAuthoritythattheGranteeortheGrantee's contractor has the *th capacity,qualifications,and financial resources necessary to complete construction of the aradle wetprojectasproposedinthegrantorconstructioncontract(s)funded by this grant.OT lr12.Post Construction Certification C p)utUponcompletionofconstructiontheGranteewillsubmitafinalreportthatincludes:lly wke"Certification that all work is completed in accordance with the grant and all costs . claimed are eligible costs and represent work completed on the Project;aa pt 2eSummaryoftotalprojectcostiactuding-detaitedfunding-seurees-and-any-outstanding--pe.a¢Certification that there is a release of any contractor or subcontractor liens on the pen .thetproject;:ov Cornqtncorer-Ope/wetierA wrt ,*Identification of any outstanding construction jes s;and,rug |tVip¢As-built drawings.--__ret The Grantee shall assume all liabilities arising fr ip and operation of the Project.L Grantee will not sell,transfer,encumber,or dis}any of its interest in the facilities yer yh AYconstructedwiththisgrantfundingduringtheecoifeoftheProjectwithoutpriorwrittenpotttpapprovaloftheAuthority.te pwn » Covlrel thee aweor.Page 14 of 46 £.Cay&Lhe a Aching hee,$woe Chartelive +P4lo ey -|Comment.[eww3]1:This one probably not ffeeded since Marathon owns the lines?\ Cook Inlet Gas Gathering System ys Grant Agreement #7910006 Lo14.'Operationdad Maintenance of Facilities _--]Comment [eww4]:Sameascommentabove.- In the event that the Grantee is no lopge Authority may require the Grante i i contribution of the Authority,aefaComment CewwS]:Jim,I went ahead anddeletedthetwoprovisionsregardingtariffsand PCE based on above comment, Page 15 of 46 )all opie Nerninnhle corts snrewrd ta Wirrettror . Cook inlet Gas Gathering System Grant Agreement #7910006 |Appendix C Grantee Proposal/Scope of work The reliable supply and deliverability of increasingly constrained Cook Inlet natural gas is essential to the fuel supply security of South Central Alaska.Chugach Electric Association,Inc. (Chugach),Anchorage Municipal Light &Power (ML&P)and Enstar Natural Gas Company (Enstar)rely on a secure supply of natural gas for the provision of reliable service to their respective consumers. The reliability of gas supply and deliverability can be increased with the ability to transport gas to the west side of Cook inlet via the Cook Inlet Gas Gathering System (CIGGS)pipeline.The availability of gas on the west side enhances gas supply reliability for Chugach's Beluga power plant and provides gas via another route for delivery to ML&P and Enstar. East to west gas flow can be accomplished by making valve changes.However,to flow the gas from east to west also requires additional compression.The compressor that will be installed will be rented.It is expected the compressor will only be needed for one year because the Cook Inlet Gas Storage Alaska (CINGSA)project that will go into service in 2012 is expected to deliver gas at a pressure adequate to mitigate the need for additional compression. A detailed summary of the Cook Inlet gas supply situation and the need for this project can be found in the study entitled:"White Paper:Removal of Check Valves and Installation of Compression to Allow East to West Flow through CIGGS Dual Sub-sea Pipelines”(See Attachment #4). Marathon is the owner of the CIGGS pipeline and will perform the work on behalf of the utilities. Chugach,ML&P and Enstar have entered into cost reimbursement agreements with Marathon to accomplish bi-directional gas flow and install the required metering.Chugach has entered into a reimbursement agreement with Marathon for the installation of the rental compressor. Scope of Work,Budget and Timeline The scope of work to accomplish the entire project consists of three components: 1.To enable bi-directional gas flow on the CIGGS pipeline,Marathon will perform the engineering,planning,procurement,construction,commissioning and documentation to: a.Remove check valves impeding bi-directional flow,either replacing with piping or otherwise removing the impediment. b.Design,fabricate and install bypass piping around the East Forelands separators,which as currently constructed,allow gas to flow in only one direction. c.Replace the CIGGS to Kenai Nikiski Pipeline (KNPL)401 control valve,which currently allows flow in only one direction,with a bi-directional control vaive. d.Other work as needed to implement east to west flow. e.Implement measures,procedures and training for scheduling,accounting,and control room activities to handle gas nominations from the existing and the new CIGGS east side receipt points to facilitate gas movement to all of the CIGGS delivery points,both East Side and West Side.Update all software accordingly. Page 16 of 46 4 tant Cook Inlet Gas Gathering System Grant Agreement #7910006 2.To install required metering,Marathon will perform the engineering,planning,procurement,construction,commissioning and documentation to: a.Upgrade the CIGGS to KNPL metering at meter 401 meter by replacing the existing meter with a bi-directional meter. b.Set up the KNPL pipeline operations and procedures to allow use of Meter 401 as a delivery point from KNPL into CIGGS. c.Implement measures,procedures and training for scheduling,accounting,and gas control to facilitate and allow nominations for gas transportation from all of the various KNPL receipt points to the new 401 delivery point into CIGGS. Update all software accordingly. d.File and seek any necessary regulatory approvals. 3.To install a rented compressor,Marathon will perform the engineering,planning, procurement,construction,commissioning and documentation to: a.Identify a suitable block valve in the KNPL mainline at Kenai Pipeline Junction or, if none exists,install such a valve. b.Identify a suitable tee in the KNPL mainline on each side of the above mentioned block valve or,if none exists,install such tee. c.Install a double block and bleed bal!valve on each such tee. d.Contract for a rental compressor and arrange for its delivery to KPL Junction and return compress to vendor. e.Lease land for the compressor.4 f.Clear and grade fand and do other site preparation such as lighting,security, power and water hook-ups. g.Install suction and discharge piping between KNPL tees and rental compressor.Oo h.Install fuel gas tap and hook-up.-;On A4i,Provide bycontract for prusical operation and_maintenance of the compressor 4 abyalocalteamofpeopléwhowilloperatethecompressorandopenandclose associated valves.j.After demobilization,r¢turn site to condition consistent with site lease.whk.Obtain all permits and needed regulatory approvals. (installing the rented compressor)is to be completed by V/VOctober31,2011 at a cost not/to exceed $2.7 million.This amount is capital cost only and «--Oedoesnot_include_monthly operation and maintenance expenses such as rental of the --:--compressor and operations and maintenance expense.mG speretina avd ole cndir Chu Page 17 of 46 Cook Inlot Gas Gathering System Grant Agreement #7910006 Cost breakdown for the CIGGS projects: Bi-directional Compression Project Project Administration $200,000 $270,000 Engineering 400,000 405,000 Construction 1,300,000 1,890,000 Other "100,000 135,000 Total $2,000,000 $2,700,000 |Appendix D Project Management &Reporting Requirements 1.Project Management The Grantee will notify the Authority immediately of any significant organizational changes during the term of the grant,including changes in key personnel or tax status,any unforeseen problem or project delay that may cause a change to the work plan or budget or that may otherwise affect the Grantee's ability to perform its commitments under this Grant Agreement. Any unreported or unapproved changes to the work plan or budget evident in reports may result in an amendment being required,costs disallowed,suspension or termination of the grant as described in Appendix A. 2.Contact Persons For the Grantee For The Authority Grant Manager Grant Manager Ronald K.Vecera Butch White,Grants Administrator P.O.Box 196300 813 W.Northern Lights Blvd. Anchorage,AK 99519 Anchorage,Alaska 99503 ron_vecera@chugachelectric.com bwhite@aidea.org 907-762-4759 907-771-3052 Project Manager Project Manager Ronald K.Vecera James Strandberg P.O.Box 196300 813 W.Northern Lights Blvd. Anchorage,AK 99519 Anchorage,Alaska 99503 ron_vecera@chugachelectric.com istrandberq@aidea.org 907-762-4759 907-771-3069 Page 18 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 / 3.Monthly Progress and Financial Reports The Grantee will provide monthly status reports by email (or other method allowed by the Authority,if email is not available)to the Authority's Project Manager.These reports are due starting the first full month after the award of the grant.This report must update the Authority on the project's progress,regulatory and compliance issues,possible delays,and grant expenditures during the month.These Monthly Progress Reports must summarize,in one or two pages,the progress made on grant tasks during the month and identify any difficulties in completing tasks or meeting goals or deadlines.The Grantee must also include with the report copies of any work products due to the Authority during this period. Reports are considered fate five (5)days after the due date.No further payments will be made without submission and approval of required reports.Work completed after the twenty-day period when required reports have not been submitted is at the Grantee's risk,and costs incurred may be disallowed.Repeated failure to submit reports in a timely manner could result in suspension or termination of the grant. Ail reports and deliverables required in this agreement must have been submitted and approved by the Authority prior to the final payment being released. 4.Documentation and Record Keeping The Grantee shall maintain the following in their files: Grant application, Grant agreement and any amendments, All written correspondence or copies of emails relating to the Grant, Reports,including any consultant work products, A separate accounting of grant income and expenditures,; Supporting documentation for the expenditures charged to the grant (including supporting documentation for all required matching contributions). The Authority and any authorized federal representative may inspect,in the manner and at any reasonable time either considers appropriate,the Grantee's facilities,records,and activities funded by this Grant Agreement. Page 19 of 46 Cook Inlet Gas Gathering System Grant Agreement #7810006 Appendix E Project Budget &Reimbursement Provisions 1.Allowable Costs Allowable costs under this grant include all reasonable and ordinary costs for direct labor & benefits,travel,equipment,supplies,contractual services,construction services,and other direct costs identified and approved in the Project budget that are necessary for and incurred as a direct result of the Project and consistent with the requirements noted in Appendix B 3 Eligible Costs. A cost is reasonable and ordinary if,in its nature and amount,it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the costs. Allowable costs are only those costs that are directly related to activities authorized by the Grant Agreement and necessary for the Project.The categories of costs and additional limits or restrictions are listed below: a.Direct Labor &Benefits Include salaries,wages,and employee benefits of the Grantee's employees for that portion of those costs attributable to the time actually devoted by each employee to,and necessary for the Project.Direct labor costs do not include bonuses,stock options,other payments above base compensation and employee benefits,severance payments or other termination allowances paid to the Grantee's employees. b.Travel,Meals,or Per Diem Include reasonable travel expenses necessary for the Project.These include necessary transportation and meal expenses or per diem of Grantee employees for which expenses the employees are reimbursed under the Grantee's standard written operating practice for travel and per diem or the current State of Alaska Administrative Manual for employee travel. c.Equipment Include costs of acquiring,transporting,leasing,installing,operating,and maintaining equipment necessary for the Project,including sales and use taxes. Subject to prior approval of the Authority's Project Manager,costs or expenses necessary torepairorreplaceequipmentdamageorlossesincurredinperformanceofworkunderthegrantmaybeallowed.However,damage or losses that result from the Grantee's employees,officer's,or contractor's gross negligence,willful misconduct,or criminal conduct will not be allowed. d.Supplies Include costs of material,office expenses,communications,computers,and supplies purchased or leased by the Grantee necessary for the Project. Page 20 of 46 Cook inlet Gas Gathering System Grant Agreement #7910006 2. e.Contractual services Include the Grantee's cost of contract services necessary for the Project.Services may include costs of contract feasibility studies,project management services,engineering and design,environmental studies,field studies,and surveys for the project as well as costs incurred to comply with ecological,environmental,and health and safety laws. f.Construction Services For construction projects this includes the Grantee's cost for construction contracts,labor, equipment,materials,insurance,bonding,and transportation necessary for the Project. Work performed by the Grantee's employees during construction may be budgeted under direct labor and benefits.Contracted project management or engineering may be budgeted under contractual services and major equipment purchases made by the Grantee may be budgeted under equipment. g.Other Direct Costs : In addition to the above the following expenses necessary for the Project may be allowed. e Net insurance premiums paid for insurance required for the grant Project; e Costs of permits and licenses for the grant Project; e Non-litigation legal costs for the Project directly relating to the activities;in this paragraph,"non-litigation legal costs”includes expenses for the Grantee's legal staff and outside legal counsel performing non-litigation legal services; e Office lease/rental payments; e Other direct costs for the Project directly relating to the activities and identified in the grant documents;and/or e Land or other real property or reasonable and ordinary costs related to interests in land including easements,right-of-ways,or other defined interests. Specific Expenditures not allowed Ineligible expenditures include costs for overhead,lobbying,entertainment ,alcohol,litigation, payments for civil or criminal restitution,judgments,interest on judgments,penalties,fines, costs not necessary for and directly related to the grant Project,or any costs incurred before the beginning date of the grant as indicated on the signature page. Overhead costs described in this section include: e salaries,wages,applicable employee benefits,and business-related expenses of the Grantee's employees performing functions not directly related to the grant Project; e office and other expenses not directly related to the grant Project;and *costs and expenses of administration,accounting,human resources,training,property and income taxes,entertainment,self-insurance,and warehousing. Page 21 of 46 Cook Inlet Gas Gatharing System Grant Agreomont 4 7910006 3.Match The Grantee is not required to provide a match for this Project. 4,Cost Share Match Requirements Cost sharing or matching is that portion of the Project costs not borne by the Authority.The Authority will accept all contributions,including cash and in-kind,as part of the Grantees'cost sharing or matching when such contributions meet the following criteria: 5. Are provided for in the Project budget; Are verifiable from the Grantee's records; Are not included as contributions for another state or federally assisted project or program;(The same funds can't be counted as match for more than one program.) Are necessary and reasonable for proper and efficient accomplishment of the Project or program objectives; Are allowable costs; Are not paid by the State or federal government under another award,except for authorized by the State or federal statute to be used for cost sharing or matching; Must be incurred within the grant eligible time period. Valuing In-Kind Support as Match If the Grantee chooses to use in-kind support as part of or its entire match,the values of those contributions must be approved by the Authority at the time the budget is approved.The values will be determined as follows: The value of real property will be the current fair market value as determined by an independent third party or a valuation that is mutually agreed to by the Authority and the Grantee and approved in the grant budget. The value assessed to Grantee equipment or supplies will not exceed the fair market value of the equipment or supplies at the time the grant is approved or amended. Equipment usage will be valued based on approved usage rates that are determined in accordance with the usual accounting policies of the recipient or the rates for equipment that would be charged if procured through a competitive process.Rates paid will not exceed the fair market value of the equipment if purchased. Rates for donated personal services will be based on rates paid for similar work and skill level in the recipient's organization.If the required skills are not found in the recipient organization,rates will be based on rates paid for similar work in the labor market. Fringe benefits that are reasonable,allowable,and allocable may be included in the valuation. Transportation and lodging provided by the Grantee for non-local labor will not exceed the commercial rates that may be available within the community or region.. Page 22 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 6.Grant Disbursements The Grantee must request disbursement of grant funds in the form and format required by the Authority with appropriate back-up documentation and certifications.(See Attachment 1) Reimbursements are made for actual costs incurred and must be for approved milestones.The back-up documentation must demonstrate the total costs incurred are allowable,and reflect the amount being billed.Documentation must include: e Aledger summarizing cost being billed e Asummary of direct labor costs supported by timesheets or other valid time record to document proof of payment Travel and per diem reimbursement documentation Contractor or vendor pay requests Invoices Detailed ledger of costs being charged to this grant Payment of grant funds will be subject to the Grantee complying with its matching contribution requirements of the Grant. Payment of grant funds will be made by the Authority to the Grantee within 30 days from receipt of a properly completed,supported,and certified Reimbursement Request (See Attachment 1). 7.Withholding of Grant Funds If,upon review of the monthly billings,the Authority discovers errors or omissions in the billings it will notify the Grantee within thirty (30)days of receipt of the billing.Payment for the portion of billings for which there is an error or omission may be withheld pending clarification by Grantee. Grant funds may be withheld for the following reasons: e The Grantee fails to provide adequate back-up documentation. e The Authority determines that a specific expense is not allowed under the grant. e The Grantee's matching contribution requirements are not met. Up to 10%of the Authority's contribution of grant funds may be retained by the Authority untiltheProjectiscompletedandallrequiredfinaldocumentationandreportsarereceivedand accepted by the Authority. Page 23 of 46 Cook Inlet Gas Gatharing System Grant Agreement #7910006 8.Advance Disbursements In most instances,payments to a Grantee will be made on a cost reimbursable basis.If the Authority determines that cost reimbursement will significantly inhibit the Grantee's ability to perform the Project and determines that an advance is in the public interest,the Authority may recommend an advance to the Grantee of an amount not to exceed a projected thirty (30)day cash need,or twenty percent (20%)of the grant amount,whichever amount is less. Before the Authority will issue an advance,the Grantee must provide in writing,and the Authority must approve a "Request for Advance Payment”form which includes: a.justification of the need for the advance, b.documentation of anticipated line item costs associated with the advance. All advances will be recovered with the Grantee's next Financial/Progress Report form.Should earned payments during the terms of this Grant Agreement be insufficient to recover the full amount of the advance,the Grantee will repay the unrecovered amount to the Authority when requested to do so by the Authority,or at termination of the Grant Agreement. 9.Unexpended Grant Funds and Interest Earned Any grant funds not expended under this agreement and any interest accruing on the grant funds belong to the Authority and shall be returned to the Authority. 10.Budget Adjustments and Changes When a Grantee faces increased unbudgeted costs,the grantee should contact the Authority's Project Manager.Budget adjustments cannot increase the grant award amount.Cost overruns that may require reduced scope of work will require Authority approval and an amendment to the grant.If a budget adjustment or other changes indicate to the Authority's Project Manager that the project can't be completed as currently planned and budgeted for,the Project Manager will not approve the release of additional grant funds until the grantee provides sufficient information on how the grantee intends to complete the revised project. Budget Adjustments The Grantee shall identify budget changes on its Financial Reports submitted to the Authority. At least quarterly,the Authority will compare actual costs to budgeted distributions based on the Financial Report/Request for Reimbursement form.Costs charged to grant funds must reflectadjustmentsmadeasaresultoftheactivityactuallyperformed.The budget estimates or otherdistributionpercentagesmustberevisedatleastquarterly,if necessary,to reflect changed circumstances. Page 24 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 |Attachment 1 Financial Report/Request for Reimbursement Form Grantee:Chugach Electrical Association Project: THIS REQUEST IS FOR FINAL PAYMENT |_| Cook Inlet Gas Gathering System Period:to Grant Number:7910006 A B c D=B+C E=A-D BUDGET SUMMARY TOTAL GRANT PRIOR EXPENDITURES TOTAL GRANTBUDGETEXPENDITURESTHISPERIODEXPENDITURESBALANCE BY TASK OR MILESTONE : Administration $470,000 Engineering 805,000 Construction 3,190,000 Other 235,000 TOTAL $4,700,000 BY FUND SOURCES (2.eS oS A os = Grant Funds $4,000,000 Other contributions 700,000 TOTAL $4,700,000 CERTIFICATION Form requires two original signatures.The person certifying must be different from the person preparing the report. One signature should be the authorized representative of the Grantee organization or highest ranking officer;the other should be the person who prepared the report. |certify to the best of my knowledge and belief that the information reported on both the Financial Report above and the attached Progress Report are correct.In addition,funds were spent and work performed in accordance with the grant agreement terms and conditions. Certified By:Prepared By: Printed Name:Printed Name: Title:Date:Title:Date: Page 25 of 46 Cook Inlet Gas Gathering System Grant Agreoment #7810006 Attachment 2.Progress Report Form Grantee:Chugach Electrical Association Project Name:Cook Inlet Gas Gathering System Grant #7910006 Period of Report:to Project Activities Completed: Existing or Potential Problems: Activities Targeted for Next Reporting Period: Prepared By:Date: Printed Name: Page 26 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 |Attachment 3 Notice of Project Closeout NOTICE OF PROJECT CLOSEOUT ALASKA ENERGY AUTHORITY Project Name:Cook Inlet Gas Gathering System Grantee:Chugach Electrical Association Grant Number:7910006 The Alaska Energy Authority certifies and acknowledges that the Grant referenced above has been completed,and that all tasks have been satisfactorily carried out in accordance with the terms and conditions of Agreement Number:7910006. Project Manager Date Alaska Energy Authority Chugach Electrical Association certifies that the Grant named above is complete in accordance with the terms and conditions of Alaska Energy Authority Agreement Number:7910006. Pursuant to Appendix B1 #15 'Performance/Operation and Maintenance (O&M)Reporting',the grantee is required to provide detailed reports annually,for five years. Authorized Signature Title Printed Name Date Page 27 of 46 Cook Inlet Gas Gatharing System Grant Agreomont #7810006 Attachment 4 White Paper:Removal of Check Valves and Installation of Compression to Allow East to West Flow through CIGGS Dual Sub-sea Pipelines White Paper: Removal of Check Valves and Installation of Compression to Allow East to West Flow through CIGGS Dual Sub-Sea Pipelines Prepared by: Chugach Electric Association Anchorage Municipal Light and Power ENSTAR Natural Gas Company March,2011 Page 28 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 Contents 1 INTRODUCTION 31 2 COOK INLET GAS FLOW AND PRODUCTION 31 2.1 PIPELINE GAS FLOW:EAST SIDE OF COOK INLET 2.1.1 ENSTAR compressor upgrade plan 2.2 PIPELINE GAS FLOW:WEST SIDE OF COOK INLET .......sssessssreeeereereeses 2.3 IN-GROUND STORAGE ......cscsscssssssessnsorsrssenscntensenenesereseaes ” 3 PROJECTED COOK INLET FLOW SCENARIOS,WINTER 2011/2012 35 3.1 COLD DAY FLOW AT 350 MMSCFD 3.1.1 All equipment on-line ........0.0..... 3.1.2 Loss of some BRU production 3.1.3.Loss of all production from the Steelhead platform ................ 3.2.PEAK FLOW ON EXTREMELY COLD DAY AT 425 MMSCFD 3.2.1 All equipment on-line,location of temporary compression .... 3.2.2 Loss of some BRU production,temporary compression 3.2.3.Loss of all production from the Steelhead platform 3.3 JUSTIFICATION OF PROPOSED COOK INLET TRANSMISSION SYSTEM MODIFICATIONS... 3.3.1 Remove check valves to allow east-west flow through CIGGS : 3.3.2 Install temporary gas compressor to enhance east-west flOW .........sssese List of Figures Figure 2.1:ENSTAR east side profile,500 psig to Kalifonsky Figure 2.2:ENSTAR east side profile,575 psig Kalifonsky inlet .. Figure 2.3:ENSTAR east side profile,650 psig Kalifonsky inlet Figure 2.4:ENSTAR east side profile,650 psig Kalifonsky inlet,4 Gudenrath compressors..............000 Figure 3.1:Cold day,all equipment on-line ..wee Figure 3.2:Cold day,loss of 25 MMscfd from BRU Figure 3.3:Cold day,loss of all Steelhead supply Figure 3.4:Peak flow day,all equipment on-line Figure 3.5:Peak flow,loss of 25 MMscfd supply from BRU Figure 3.6:Peak flow,loss of all Steelhead platform supply Figure 3.7:Schematic of possible compressor CONNECTIONS .........sssscsesssseseseessesetecstensenenees List of Tables . Table 2.1:ENSTAR planned upgrades to east side Cook Inlet compression,horsepower?"........sssesseseeeee Table 2.2:Estimated winter flow capacity of ENSTAR's east side Cook Inlet system..........ccccccssssssseeees Table 3.1:Cook Inlet pipelines,general configurations Table 3.2:Approximate rental compressor flow rates,MMscfd*** Page 29 of 46 44 Cook tnlot Gas Gathoring System Grant Agreement #7910006 Abbreviations APC Alaska Pipeline Company (ENSTAR) APPL Anchor Point pipeline (also APL) BRU Beluga River Unit BPP Beluga Power Plant CLA Chugach Electric Association CoP ConocoPhillips CIGGSCook Inlet Gas Gathering System CINGSA Cook Inlet Natural Gas Storage,Alaska ENSTAR ENSTAR Natural Gas Company F Degrees Fahrenheit FNG Fairbanks Natural Gas HEA Homer Electric Association KKPL Kenai Kachemak pipeline KNPL Kenai Nikiski pipeline KPL Kenai pipelines LNG Liquefied natural gas MAOP Maximum allowable operating pressure MAP Marathon Alaska Production MPL Marathon Pipeline MLP Municipal Light &Power MMscfd Million standard cubic fect per day MOC Marathon Oil Company psi Pounds per square inch psig Pounds per square inch gage Page 30 of 46 Cook iniet Gas Gathering System Grant Agreement #7910006 1 Introduction Natural gas transmission pipelines encircle north Cook Inlet via APL,KNPL,CIGGS,and MPL Beluga pipelines.CIGGS dual sub-sea pipelines run between Granite Point on the west side of Cook Inlet and the East Forelands near Nikiski,Check valves in the CIGGS pipeline system currently allow flow only from west to east.Cook Inlet gas producers,purchasers and transporters (hereafter referred to as Parties)have agreed that utility customers would be best served by removing these check valves and installing temporary compression at KPL junction to allow gas flow from east to west across Cook Inlet.The purpose of this white paper is to document benefits of east to west flow through the sub-sea pipelines. The scope of this white paper is limited to justification of the proposed check valve removal and compression installation,and is not intended to be an exhaustive study.A description of ENSTAR's east Cook Inlet transmission system and ENSTAR's compression upgrade plan is included to document east side capacity constraints.Cook Inlet gas transmission flow scenarios during the winter of 2011/2012 are present to illustrate the need for proposed system modifications. 2 Cook Inlet gas flow and production 2.1 Pipeline gas flow:east side of Cook Inlet Currently,all Cook Inlet east side gas production must be stored,consumed locally,or transported to the Anchorage area via the east side because check valves on the CIGGS pipeline system prevent flow from west to east across Cook Inlet.Theoretically,east side gas could be routed to a west side user by shipping gas north through Anchorage,Palmer and Wasilla;but projected volumes would exceed current east side system capacity. ENSTAR operates the Kalifonsky Beach and Gudenrath compressor stations with connecting dua!pipelines on the east side of Cook Inlet maintaining a minimum pressure of approximately 550 pounds per square inch gage (psig)at the ENSTAR Potter Station.This minimum pressure is required to serve consumers within the city via ENSTAR's Anchorage area gas transmission pipeline system. 2.1.1 ENSTAR compressor upgrade plan In-ground storage is being added to address ongoing declines in annual production and peak day delivery.This storage will not be available for operation until after the winter of 2011/2012. Regardless of planned compression upgrades,east side flow capacity to Anchorage will remain limited by pipeline capacity. Maximum flow through a pipeline segment occurs when the inlet gas is at the pipeline maximum allowable operating pressure (MAOP)and the outlet pressure is at the desired target.MOAP of pipelines downstream of Kalifonsky and Gudenrath stations are 880 and 1050 psig respectively. In order to increase flow past this maximum,intermediate compressor stations must be added or new pipelines installed in parallel with existing ones (known as line looping). Maximum east side system flow will occur when the Gudenrath discharge pressure is 1050 psig. Various methods exist to achieve MAOP at Gudenrath discharge,but the least expensive and quickest is to add compression at both Kalifonsky and Gudenrath stations.ENSTAR plans to upgrade and add new compression at these stations in stages as shown in Table 2.1.Compression additions and upgrades are shown in red font with off-line spare compression shown in blue font. Page 31 of 46 Cook inlet Gas Gathoring System Grant Agreement #7810006 "KE”through "K5”refer to numbers of individual compressor units at Kalifonsky.Similar numbering is used for Gudenrath. Table 2.1:ENSTAR planned upgrades to east side Cook Intet compression,horsepower* Kalifonsky Station Gudenrath Station Year Kl K3 K4 KS5 Total Gl G2 G3 G4 Total prior 1200 1200 1200 3600 1200 1200 1200 1200 3600 2010 {200 1200 1200 1oao 4000 1200 1200 1200 1200 3600 2011 1200 1200 1200 1600 4000 1200 (200 1600 1600 4400 2012 1600 1200 1200 1600 4400 1200 1200 1600 1600 4400 *Additions &upgrades shown in red font;off-line spares shown in blue font Critical to east side Anchorage deliverics is ensuring consistent delivery pressure to the ENSTAR compression facility at Kalifonsky.Flow through the east side system increases with increasing Kalifonsky inlet pressure as shown in Table 2.2. Table 2.2:Estimated winter flow capacity of ENSTAR's east side Cook Inlet system MMsefd to Anchorage at 550 psig at Installed horsepower**various Kalifonsky inlet pressures Kalifonsky Gudenrath 500 psig 575 psig 650 psig 2011/2012 4000 4400 189 209 229 2012/2013 4400 4400 195 216 229 **Does not include station spare,reflects planned upgrades Hydraulic profiles of ENSTAR's east side pipeline system at 550 and 650 psig inlet pressures to Kalifonsky for the 2011/2012 winter are shown below.Raising Kalifonsky inlet pressure from 500 to 650 psig raises Kalifonsky discharge to near MAOP and Gudenrath discharge pressure by about 100 psi,but not to MAOP. ENSTAR's operating philosophy is to have one off-line spare compressor unit available at each compressor station for back up reasons.ENSTAR could operate all four Gudenrath units for a gain of about 6 MMscfd as shown in Figure 2.4.ENSTAR plans to replace aging compression at Kalifonsky with larger equipment during the summer of 2012,which will reduce sensitivity of overall system capacity to Kalifonsky inlet pressure. Page 32 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 ENSTAR east side Cook Inlet system 4000 Hp at Kaiifonsky,4400 Hp at Gudenrath 500 psig inlet Kalfonsky,550 psig to Potter Operatingpressure(psig)BERESESSERSRFTRRTEEE486 id inlet,15 to 20 added via Royalty Line 2 Fuel,189 id to ge market SY N\ aN SNN\ o 10 a x a a Milepost Figure 2.1:ENSTAR east side profile,500 psig to Kalifonsky 207 MMscfd inlet,15 20to ENSTAR east side Cook iniet system 4000 Hp at Kalifonsky,4400 Hp at Gudenrath 575 psig to Kallfonsky,550 psig to Potter 'added via Royatty Line 2 MMscfd Fuel,209 MMscfd to Anchorage Market Operatingpressure(psig)EGESSERRRASATSRERS™ S. aN \ N ™. \ \ \ °10 2 30 o Li Milepost Figure 2.2:ENSTAR east side profile,575 psig Kalifonsky inlet Page 33 of 46 Cook Inlet Gas Gathoring System Grant Agreement #7910006 Operatingpressure(psig}ENSTAR east side Cook Inlet system 4000 Hp at Kalifonsky,4400 Hp at Gudenrath 650 psig to Kalifonsky,550 psig at Potter 227 intet,15 to Sold ,20 MMscfd added via Royaity Line 2 Fuel,229 d to Anchorage market N\ NNN SN\™s\. N \ AN \N\ \ \ N\ N\ AY 10 20 30 40 50 60 70 Milepost Figure 2.3:ENSTAR east side profile,650 psig Kalifonsky inlet Operatingpressure(psig)ESSSSSSSSTSTZERESESSESENSTAR eaat side Cook Inlet system 4000 Hp at K 6600 Hp at850palgtoKalifonsky,660 psig at Potter232MMscfdInlet,15 MMscfd to Soldotna,20 MMscfd added via Royalty Line 3 MMscfd Fuel,235 MMscfd to Anchorage market 10 20 x»a 50 Li)70 Milepost Figure 2.4:ENSTAR east side profile,650 psig Kalifonsky inlet,4 Gudenrath compressors 2.2 Pipeline gas flow:West side of Cook Inlet Current peak gas production from the west side of Cook Inlet is about 190 MMscfd,with additional deliverability provided by the Pretty Creek Storage Facility.West side gas sources Page 34 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 include the Steelhead platform,various wells near the Granite Point Junction,the Beluga River Unit (BRU)and various wells east/northeast of the BRU (see Figure 3.1).West side production is expected to be 160 MMscfd by the end of 2011 and may decline 10-20%annually in subsequent years. Currently gas from the Steelhead platform can be transported across Cook Inlet through CIGGS for injection into in-ground storage near Nikiski,consumed on the Kenai peninsula,transported on ENSTAR pipelines to Anchorage,or routed west on BPL toward the BRU and then on the ENSTAR Beluga pipeline.Gas near Granite Point Junction may be routed west to east through CIGGS,or can be routed northeast on BPL towards the BRU and to the ENSTAR Beluga pipeline. Approximately half of the 60 MMscfd from the Steelhead platform is Marathon (MAP) production which may be shipped to the LNG plant or other consuming parties.MAP has the option to deliver Steelhead gas to CEA (effective April 1,2011),ENSTAR (under current contracts)or other consuming parties.CEA's preference is to purchase MAP's Steelhead gas,which can be transported from Granite Poiritfortheast on BPL to the Beluga Power Plant (BPP).- The balance of Steelhead production is Unocal's and is usually transported across CIGGS to the east side for sale to ENSTAR or temporarily stored in Swanson River.Unocal's Steelhead gas can physically be tendered to ENSTAR at ENSTAR's Beluga pipeline,incurring incremental pipeline tariffs for transport via Marathon's Beluga pipeline from Granite Point to ENSTAR's Beluga pipeline. Aurora transports approximately 5 MMscfd via Marathon's Beluga pipeline and then ENSTAR's Beluga pipeline for delivery to Fairbanks Natural Gas west of Wasilla.BRU gas is currently contracted to supply a portion of the BPP,supply MLP's power plants and meet Union's obligations to ENSTAR.Approximately 15 MMscfd of production north and east of the BPP is delivered into ENSTAR's system including gas from Ivan River,Stump Lake and Lewis River fields;and from Pretty Creek in-ground storage. 2.3 In-ground storage There is limited in-ground gas storage on the west side of Cook Inlet at the Pretty Creek Storage Gas is currently being stored in-ground on the east side of Cook Inlet in the Swanson River and Kenai Gas fields.CINGSA's new in-ground storage in the Cannery Loop field,on the east sideofCookInlet,willsupptément existing storage and is expected to be operational by the winter of 2012-2013. Historically a significant portion of Cook Inlet gas production was liquefied at the Kenai LNG plant for export to Japan.ConocoPhillips and Marathon recently announced that the Kenai LNG plant will be shut down in the spring of 2011.It is unclear how the LNG plant shut down will affect seasonal Cook Inlet gas production.There is a concern by the producers that summer 2011 production curtailment may have an adverse effect on reserves and deliverability. 3 Projected Cook Inlet flow scenarios,winter 2011/2012 Natural gas supplies and demand have changed over the past decades with relatively moreproductionandgasstorageontheeastsideofCookInletthanonthewest.Currently,all gas from__east side production and storage must flow north through ENSTAR's dual pipeline system across.'Turnagain Arm to reach Anchorage.As discussed elsewhere,ENSTAR is upgrading and adding Page 35 of 46 Cook Inet Gas Gathering System Grant Agreement #7810006 compression on their cast side system,but a practical flow limit exists without adding new pipelines. Cook Inlet gas producers,consumers and transporters are concerned that the overall Cook Inlet gas pipeline transportation system may be insufficient to move gas from the Nikiski area to consumers during cold days of high demand and very cold days of peak demand.Diagrams of possible Cook Inlet flow scenarios for the winter of 2011/2012 are offered in this section to illustrate that gas consumers will be best served by: 1.Removing check valves in the dual CIGGS sub-sea pipeline to allow gas flow from southeast to northwest across Cook Inlct;hereafter referred to as east-west flow;and 2.Adding temporary compression at KPL junction on the cast side to enhance east-west flow while accommodating many commercial issues between Parties. Flow diagrams are discussed assuming the above two proposals have been implemented.General Cook Inlet operations are described in Section 3.1.1.Detailed discussions of these proposals follow presentation of the flow diagrams. For the purposes of this document,a cold day is defined as any combination of weather conditions that results in a system-wide Cook Inlet demand of 350 MMscfd."Cold day”and "350 MMscfd demand”are used interchangeably in this document.An extreme cold day is defined as any weather circumstance that results in system-wide Cook Inlet demand of 425 MMscfd.The terms "extreme cold day”,"425 MMscfd demand”and "design peak”refer to the same circumstance. 3.1 Cold day flow at 350 MMscfd 3.1.1 All equipment on-line General configurations of Cook Inlet pipelines with MAOP are shown in Table 3.1.It is important to note that CIGGS pipelines have higher MAOPs than the pipelines to which they connect.Production from Steelhead and Granite Point area is compressed to enter the CIGGS system at high pressure. Cold day operation with all production and gas transmission equipment on-line is depicted in Figure 3.1.Referring to Figure 3.1,approximately 25 MMscfd of MAP's relatively high pressure production from the Steelhead platform plus approximately 5 MMscfd of Aurora Granite Point area production can flow through MPL's Beluga pipeline to the BPP.MAP's production can either be consumed within the BPP or pass around the plant with Aurora's gas to enter the lower pressure ENSTAR Beluga pipeline. Table 3.1:Cook Inlet pipelines,general configurations Nominal diameter |Length |MAOP(inches)|_(miles)(psig) Marathon CIGGS west side 16 26.11 1118 CIGGS sub-sea dual 2x10,each 21 1920 CIGGS east side 16 5.26 L118 Beluga (Granite Point to Beluga)16 16.2 1440 KNPL (Kenai to Nikiski)20 17.55 975 ENSTAR Beluga (Beluga to Anchorage)20 101.6 1031 Royalty 8 24 1050 Page 36 of 46 Cook iniet Gas Gathering System Grant Agreement #7910006 Dual,Kalifonsky to Gudenrath 12 &16 22.88 880 Dual,Gudenrath to Burnt Island 12 &16 38.8 1050 Dual,Burnt Island to Potter 12 &12 9 780 KKPL (Kenai -Kachemak)12 49 1480 APPL (Anchor Point -KKPL)8 211 1480 ConocoPhillips North Cook Inlet 2x10 &16 2772 2222 Unocal Swanson River 16 2977 1200 During a cold day,collectively about 15 MMscfd of west side gas supply would be available from Ivan River,Stump Lake,Lewis River and Pretty Creek Storage.All west side production routed through ENSTAR's Beluga pipeline would be consumed by west side demand with approximately 10 MMscfd required to pass through Anchorage to Palmer to make up the shortfall in west side production.The alternative to transport additional gas through the ENSTAR dual pipelines under this scenario is not certain due to pipeline pressure problems involving gas transport through Anchorage to the Wasilla/Palmer area. Approximately 35 MMscfd of Steelhead production would be routed through the high pressureCIGGSsystemtoKPLjunctionwhereitwouldeithersenttostorageatSwansonRiverortenderedtoENSTARviatheRoyaltyline,or routed down KNPL to ENSTAR.Unocal has invested capital to configure their Steelhead production to take advantage of CIGGS high operating pressure so that gas delivered to the east side can be injected it into Swanson River storage with less compression than otherwise,or delivered to ENSTAR's Kenai pipelines without additional compression. Gas is delivered to Homer Electric Association (HEA)from MPL's KNPL.Gas is delivered to Kenai from various sources prior to the inlet of ENSTAR's Kalifonsky station.Approximately 15 MMscfd would be delivered to Soldotna and other consumers from the ENSTAR dual pipeline system between Kalifonsky and Gudenrath stations (shown on the drawing as H/K/S near Soldotna). Page 3?of 46 Cook Inlet Gas Gathering System Grant Agreement #7810006 P Westside poduchon anddemand AOo ees :Beluga |8 BRU :oo |River :con Unit Pratty Creek &ay :Be pate v misc.west side Me :6U Steelhead cus }Beluge ay H 'Steelhead West Granite Pt i Beluga Power |Beluga : Junction od plant ' Flow 30 |Flow 45 |C1068 Flow 5 'Flow 35 |Oual 'all Auroragas : Ta Fairbanks NG North Cook Inlet Rewceerrecereerseenenceae , 10 Tesoro 4'Swanson River Cannery |_.L009 Flow 190 {Flow 10 lfonsk ud hKenaiGasKalifonskiGudenrat! Field Kenal |station station -hochorace |3o MLP 2O0H/K/S 145 Anch :bone KKPL Supply =35U |All numeric values are GO Steelhead approximate MMscfd.$Aurava -Marathon pipelines 85 BRU --Enstar pipelines 15 PC &west -ConocoPhillips 185 East side :=- Unocal APPL Figure 3.1;Cold day,all equipment on-line Gas from Marathon's Kenai Gas Field is tendered to ENSTAR via the KNPL.Approximately, 190 MMscfd of east side gas would be transported north via ENSTAR's east side system to south Anchorage at current east side delivery pressures. 3.1.2.Loss of some BRU production A number of compressors will be used in the BRU to deliver a total of 85 MMscfd of supply and loss of any one of these compressors would not result in loss of all BRU supply.Cook Inlet flow assuming loss of some BRU compression with the resulting loss of 25 MMscfd of BRU supply is shown in Figure 3.2. Only one of many postulated circumstances for gas flow around the BPP and BRU is depicted. Regardless of how gas would be physically consumed by or routed around the BPP,25 MMscfd of gas that prior was routed through MPL's CIGGS dual lines from west to east must now be routed through MPL's Beluga pipeline with potential impact on tariffs. The flow rate to Anchorage via ENSTAR's east side system to Anchorage would not change. Page 38 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 350 MMscfd Cook Inlet demand and production,25 BRU loss West side production and demand eee eee eee eee eee eee eee eee eee 3 ;60 BRU : H Pretty Creek& 'misc.west side 15 PC '60 Steelhead cies t :West Granite Pt i Beluga Power {Beluga H i Junction ->plant :' Flow 55 }Flow 45 |:Flow 5 ! :Flow 10 |Oual *AllAurora gas :as ; Meee en ene cnn n eee ee ee cee cer ee tenn fen e ee eee e eee teen eet ee 4 to Fawbanks WG NG:' North i :i Cook Inlet be nncewn ener amen een ncawe ee 'Flow 40 H 10 Tesoro Swanson :Wasilla ::Palmer 50 WP ' Cannery [_.Rororeecpecgresowseccrorccrers *Loop Flow 190 f Flow 10 lifonski Gud thKenaiGasKalifonskilenra Field .Kenai j station station |acrorace ]35 MLP 20 H-K-S 145 Anch KKPL Supply =350 Demand =350 All numeric values are 60 Steelhead 85 CEA approximate MMscfd.5 Aurora 5 Fairbanks NG --Marathon pipelines 60 BRU 50 Wasilla/Palmer -Enstar pipelines APPL 15 PC&west 35 MLP -ConocoPhillips 210 East side 145 ENSTAR Anchorage -Unocal 30 HEA/Kenai/Soidotna &Tesoro Figure 3.2:Cold day,loss of 25 MMscfd from BRU 3.1.3 Loss of all production from the Steelhead platform Steelhead platform is equipped with two gas compressors;one with 60 MMscfd capacity and the other with 40 MMscfd.A circumstance in which both Steelhead compressors are off-line with loss of all supply is depicte d in Figure 3.3.A total of 245 MMscfd of east side supply would need to be found with 25 MMscfd sent east to west via CIGGS.Check valves on the CIGGS dual sub- sea pipeline would have to East side supply routed eas Swanson River or Royalty be removed to allow east to west flow. t to west would come from KKPL to KNPL,KNPL,North Cook Inlet, pipelines,all of which operate at a lower pressure than CIGGS.Either CIGGS pipeline pressure must be reduced or east side compression installed for east side gas to enter CIGGS.For reasons described in Section 3.2.2,installation of temporary rental compression is proposed to allow flow from KPL junction east to west through CIGGS. Page 39 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 350 MMscfd Cook Inlet demand and production,no Steelhead PWestnde production anddemand «:f eee .Beluga |8 BRU4eaeGo|RiverAur|rosea}Unit Pretty Creek&peSinise?BSCEA YY mise.west side 19 PC Slee!4 --_ +O Steelhead cIGGs :Beluga a H 'Steelhead West Granite Pt H Beluga Power "i i Belues : junction -p>|plant i Flow 30 "-T5ciGGs 'Flow 25 |Dual FAM AUrorazas :Wineee renee eee teem eet emer ees eee ne ween neon to Fautants BK H Removecheckvaves -----_____>North }iInstallcompressionCookinletMeeeeeencenceneceseertee:i 10 Tesoro sinmoceen|Swanson PwWasitia .iver|Palmer 5Q WP ' Cannery |_Strrees crise soc scascecearenedtLoopFlow190{Flow 10 f.Kenal Gas Kalifonskt ela t Gudenrath f Field Kenal |station station H Anchorage 35 MUP 20H KS 145 Anch |r .1 KKPL Supply 30 Demand 350 All numeric values are |U Steelhead ae CTA approximate MMscfd.|5 Aurore %Fanbantes NG --Marathon pipelines 85 BRU 50 Wasilia/Palniey -Enstar pipelines ApPL 15 PC &west 1 MEP -ConocoPhlilips 245 bast side 145 ENSTAR Anchorape --Unocal JO EA/Kenat/oldetne &lesore.| Figure 3.3:Cold day,loss of all Steelhead supply 3.2 Peak flow on extremely cold day at 425 MMscfd Common to all peak flow scenarios is that some flow is required east to west through CIGGS; therefore,existing CIGGS check valves must be removed.Peak east side supply requirements are anticipated to range between 260 and 320 MMscfd depending on postulated scenarios. Availability of east side supply will be a challenge for all peak flow scenarios.The following peak flow scenarios are based on removal of CIGGS check valves and installation of compression at KPLjunction. 3.2.1 All equipment on-line,location of temporary compression Operation of the Cook Inlet gas transmission system subject to peak flow on an extremely cold day with all supply and gas transmission equipment on-line is shown in Figure 3.4.Flow through ENSTAR's east Cook Inlet system is shown at a rate greater than simulated flow at low KNPL inlet pressure,but less than 230 MMscfd simulated maximum flow achieved with higher KNPL inlet pressures (see Table 2.2).This mid-range value was selected to reasonably depict operation below theoretical maximum. Page 40 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 425 MMscfd Cook Inlet demand and production,100%on-line {Westside productionanddemand SS3 5 BRU -O }'Bel H ;S Aurora *60 River:' :!roe}Unit Pretty Creek&:'85 CEA 4 misc.west side 15 PC '!60 Steelhead cies beluga 25 1 :West Granite Pt Power L_Beluga ' H Junction [Lent}]' Flow 70 |Flow 8s | i Flow 5 ciGGs Flow 45 i t Dual *AllAurora gas 2 SL ie 'nes|eee +to Fairbanks NG i ' cies North':: East Cook Inlet Loserarcnarrecnrncereecnn ,: 10 Tesoro |*tesoro™KPL junct Swanson :;HEA River - 'H Cannery Royalty Mewerer Poca ceceorrereeecececest Loop KNPL Flow 220 i Flow 10 KenaiGas ]°"©:|Katifonski Gudenrath I nehorage |Field Kenai |station Soldotna station Anchorage '|40 MLP 25 H-K-S 190 Anch KKPL Supply =425 Demand =425 All numeric values are 60 Steelhead 85 CEA approximate MMscfd.5 Aurora 5 Fairbanks NG - -Marathon pipelines 85 BRU 70 Wasilla/Palmer -Enstar pipelines APPL 15 PC &west 40 MLP -=ConocoPhillips 260 East side 190 ENSTAR Anchorage Unocal 3S HEA/Kenai/Soldotna &Tesoro Figure 3.4:Peak flow day,all equipment on-line An incremental 75 MMscfd of peak supply from east side storage and production will be required to satisfy peak demand as compared to a normal cold day operation (425 -350 MMscfd).Capacity of ENSTAR's east Cook Inlet system is not sufficient to move all this incremental supply to Anchorage and MLP,let alone Wasilla and Palmer.All west side production,plus a small amount of east side gas will have to be routed through west side pipelines. 3.2.2 Loss of some BRU production,temporary compression Cook Inlet transmission flows during peak demand and loss of part of BRU supply are depicted in Figure 3.5,Regardless of commercial gas trade agreements,approximately 30 MMscfd of gas would physically need to flow east-west across CIGGS.It is unlikely that replacement gas would be available on a peak day in the event of a 25MMcfd production loss. Page 41 of 46 Cook Iniet Gas Gathanng System Grant Agreement #7910006 425 MMscfd Cook Inlet demand and production,25 BRU loss Wee prot a:Beluga |00 BRL5Aurora*60 RiverBOcagyahaponteUnit Pratty Creek&bor85CEAmisc,wast side 1S HC GOStevtbead canes Beluga Qa ; :West Granite Pt Beluga Power t Beluge j junction --p>|plant : _Flow95 >|Flow 85 |Flow 30 f ||ss"canaSs6aStobautoenbsdie,Y SFNG + 7 North :'CIGGs '' fast Cook Inlet Me tteretseesneceteneersens :|Flow 80 : 10 Tesoro cue [Swanson ':():Wasilla 'River '|patmer |70 WP : Cannery |_nn hr ainiennennineaes ,Loop Flow 220 |Flow 10 ki ud hKenalGasKallfonskl=Soldotna F Gudenrat =| Fleld Kenal }station Soldotna station Anchorage |40 MLP 25K S L90 Anch oO "KKPL supply 425 Desiarh ath :Allnumeric values are OU)Gteolhead HOOLA |approximate MMsefd,5 Autos 4S Fanbanks NG |-Marathon pipelines 60 BRU 7)Wastlla/tatiner |-Enstar pipelines APPL IPO B west Au MUP +--ConocoPhilllps 285 East side 190 ENSTAR Anchorage 35 HEASKenaifsoldotna &lesoro Figure 3.5:Peak flow,loss of 25 MMscfd supply from BRU 3.2.2.1 Temporary gas compression East-west flow through CIGGS can be achieved by either reducing operating pressures of CIGGS and downstream west side pipelines to below KNPL operating pressure,or installing compression to raise gas from KNPL to historically higher CIGGS operating pressures.It is proposed to install temporary gas compression at KPLjunction to raise east side gas pressure because this would: ¢Allow ENSTAR to maintain line pack in its Beluga pipeline for emergency gas supply during periods of peak gas demand; e Allow gas to physically be bypassed around the BPP; e Mitigate potential commercial issues regarding transmission system operations near KPL junction. Line pack Without proposed east side gas compression,CIGGS operating pressure would have to be reduced below that of KNPL in order for gas to move east to west.System pressures would Page 42 of 46 Cook Iniet Gas Gathering System Grant Agreement #7910006 progressively drop through CIGGS and MPL's Beluga pipeline to the BPP.Inlet pressure to ENSTAR's Beluga pipeline would be set at the outlet pressure from MPL's Beluga pipeline for gas to proceed northeast to Wasilla. By definition,a peak flow day is a circumstance in which most if not all Cook Inlet production and transportation equipment would be on line to meet demand.ENSTAR has historically operated its Beluga pipeline at around 800 psig to provide line pack to serve as emergency supply should transmission or production equipment fail thereby reducing gas deliverability.The stored gas by line pack allows for a 10-20 MMscf temporary supply to address producer or transportation issues. ENSTAR transports gas for MLP and CEA;however,these companies are not ENSTAR customers.Should MLP or CEA loose supply entering ENSTAR's system,ENSTAR would quickly curtail gas delivery to MLP or CEA respectively by the same amounts.Line pack maintained in the ENSTAR Beluga pipeline for ENSTAR customers also provides MLP and CEA very limited,but crucial time to secure replacement supplies. As depicted in Figure 3.5,loss of part of BRU production could result in more gas bypassing the Beluga power plant than available from the BRU.If ENSTAR operates its Beluga pipeline at normal pressures ensuring emergency line pack,and such pressures exceeded the pressure of gas delivered to the BPP from the south;plant bypass could not occur.Under such conditions only 60 MMscfd of high pressure gas would be available from the BRU,and a 10 MMscfd deliverability shortfall would occur in Wasilla. Installation of compression on the east side of Cook Inlet to allow east-west flow with high CIGGS operating pressures would increase system operating flexibility by allowing ENSTAR to maintain emergency line pack while gas bypass around the BPP. Gas bypass around the Beluga Power Plant As described above,if east to west deliveries are to be made,east side compression will be required to maintain existing gas contracts and deliveries.Shippers on MPL's BPL may have to enter into new contracts,gas trade/exchange agreements,or other commercial arrangements to make deliveries to the BPP and displace BRU production that would instead be delivered at a higher pressure into ENSTAR's system.The installation of east side Cook Inlet compression for east to west flow would alleviate these problems and allow deliveries to continue under existing agreements. East side pressure related issues Unocal currently transports gas from the Steelhead platform to Swanson River storage via CIGGS pipelines.Unocal operates its Swanson River storage injection compression to take advantage of relatively high suction pressures achieved via Steelhead compression and high CIGGS pipeline operating pressures.High CIGGS east side pressures provide Unocal with the option to preferentially route gas to ENSTAR's Royalty pipeline thereby bypassing Marathon's KNPL pipeline and avoiding the associated tariff. Unocal would like to retain the ability to inject gas into Swanson River during east to west flow through CIGGS.Gas can't simultaneously flow both directions through CIGGS and a trade agreement would be required for Unocal to receive equivalent gas volumes for Swansori River injection.At issue is whether traded gas available on the east side would be at the same pressure as Unocal's gas that otherwise would have been delivered west to east.Unocal would be disadvantaged if traded gas was at a lower pressure thereby requiring operation of incrementally more Swanson River injection compression. Page 43 of 46 Cook tnlot Gas Gathering System Grant Agreement 4 7810006 Compression could be installed at the west end of the CIGGS East pipeline where it intersects CIGGS dual sub-sea pipeline,or on the cast of end of CIGGS East pipeline at KPLjunction. MAOP of CIGGS dual sub-sea pipelines is greater than that of CIGGS East (see Table 3.1). Installing the compressor at the intersection of CIGGS East and dual sub-sea pipelines would allow higher compressor discharge pressures and theoretically more east-west flow capacity than if instatled at KPL junction. Installing compression at the intersection of CIGGS East and dual sub-sea pipeline would not address Unocal's commercial issues described above because KPLjunction operating pressurewouldbethesameasKNPL.It is proposed to install the compression at KPLjunction to mitigateadversecommercialimpacttoUnocal. 3.2.3 Loss of all production from the Steelhead platform Cook Inlet gas transmission pipeline flow subject to an extremely cold day and loss of all Steelhead platform supply is depicted in Figure 3.6.East side production will be severely taxed to provide the postulated 320 MMscfd deliverability.It is unlikely that the loss of Steelhead production could be replaced by production or storage gas on the peak day. The circumstance depicted in Figure 3.6 will create commercial issues for shippers because gas previously tendered 1o ENSTAR on the east side will be burdened with incremental tariffs from Marathon's CIGGS and Belugas pipelines. 425 MMscfd Cook Inlet demand and production,no Steelhead :Westside production and demand Beluga |85 BRU'60 |River ''oe]Unit 'f [invewestsige |USPC |'OSteelhead x 2 4!ciaes Beluga .{; ;Granite Pt Power L__Beluga :}Junction |plant -: cies Flow 45 : H Flow 65 t Oual *AlLAULUraBas :eS6Sc +to Farbanks WG GBB : North ;'CIGGS ::Kast Cookintet |te--n--vovreeeseeeseeeeee |Flow 80 : 10 Tesoro |Tesoro |KPLjunct -=- ----- |Swanson wasile |0 i HEA ver |Palmer WP H Cannery Royalty ge me Tpmeneseneccseneess'Loop [7 Flow 220 |Flow 10- Kenal Gas Kalifonskt Gudenrath =|arehorase |Soldoti Ancho:Fleld Kenai |station =station menorage |40 MLP 25 H-K-S 190 Anch woe KKPL Supply =425 Demand 2425Allnumericvaluesare0Stealhead85CEA approximate MMscfd.5 Aurora 5 Fairbanks NG {--Marathon pipelines 85 BRU 70 Wasilla/Palmer |-Enstar pipelines APPL 15 PC &west 40 MLP ConocoPhillips 320 East side 190 ENSTAR Anchorage - -Unocal 35 HEA/Kenal/Soldotea &Tesora Figure 3.6:Peak flow,loss of all Steelhead platform supply Page 44 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 3.3 Justification of proposed Cook Inlet transmission system modifications 3.3.1.Remove check valves to allow east-west flow through CIGGS Anticipated peak demand during the winter of 2011/2012 cannot be met unless check valves are removed to allow east-west gas flow through CIGGS.Maximum capacity of ENSTAR's east Cook Inlet transmission system is insufficient to deliver all necessary east side production to Anchorage.An obvious side benefit of providing for CIGGS east-west flow would be to allow west side transmission lines to move east side gas if ENSTAR's east side compression or pipelines were compromised for whatever reason. It is possible to configure the CIGGS dual sub-sea pipeline to allow simultaneous flow in opposite directions.Valves and piping modifications to allow such bi-directional flow would be more expensive than simply removing CIGGS check valves.The proposed removal of CIGGS check valves is based on the premise that commercial terms can be developed to avoid the need for simultaneous bi-directional flow across Cook Inlet. 3.3.2 Install temporary gas compressor to enhance east-west flow East to west flow through CIGGS can be achieved by either lowering operating pressures of CIGGS,Marathon Beluga and ENSTAR Beluga pipelines to less than KNPL,causing the issues and challenges described above,or east to west flow can be achieved by installing compression at KPL junction to raise the pressure of gas from KNPL.Installation of compression at KPL junction will enhance security of flow for parties responsible to move gas from the east side of Cook Inlet to the west side during normal operations while also allowing ENSTAR to maintain pressure and line pack in their Beluga pipeline for contingency supply during periods of peak system-wide demand. Lowering west side operating pressures was rejected in favor of installing compression at KPL junction because: e ENSTAR Beluga line pack during periods of high or peak flow can be maintained; e Gas can be transported under stress conditions from the Marathon 16 inch Beluga Line to the ENSTAR 20 inch Beluga line thereby providing more operational flexibility; e Raising gas pressure at KPL junction provides more east side operational flexibility; e Potential commercial issues associated with east to west flow are avoided,and; e CEA will have a full range of supply options for the BPP. 3.3.2.1 Compressor capacity Approximate throughput rates for a generic 1000 Hp reciprocating compressor are shown in Table 3.2. Table 3.2:Approximate rental compressor flow rates,MMscfd*** Outlet,psig |600}700)800]900]100 0 500 psig inlet 92 49 34 27 22 575 psig inlet 86 50 36 29 650 psig inlet 82 52 38 ***40 degree feed and 65%adiabatic efficiency Page 45 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 3.3.2.2 Compressor connections A schematic ofa possible compressor connection at KPL junction is shown in Figure 3.7.The connection scheme shown would compress KNPL gas into the CIGGS line entering KPL junction upstream of existing pipe manifolds,valves and instrumentation.This would allow Unocal to route gas to Swanson River or to ENSTAR's Royalty line using existing piping and at pressures similar to current operation with west to east CIGGS flow. 20”KNPL Existing 16”CIGGS pipingat Kquid EY knockout Rental compressor Figure 3.7;Schematic of possible compressor connections Page 46 of 46 James Strandberg From:Shawn Calfa Sent:Wednesday,August 31,2011 10:08 AM To:James Strandberg Ce:Butch White Subject:CIGGS Grt 7910006 Grant Award Attachments:Grt 7910006 Grant Award.doc Categories:Red Category Mail GUID:{3303547D-C5A7-4C3F-90F7-0344E8EC76D3} Jim, Here is the latest version of the CIGGS grant award.Please disregard the version butch sent you.I have made a few changes and I have included the "White Paper”from CEA. Thank you, Shawn Alaska Energy Authority |-- )aGrantAgreement@=-ENERGY AUTHORITY Grant Agreement Number CFDA Number Amount of Funds: 7910006 NA $4,000,000 Project Code(s)Proposal Number:Period of Performance: 409033 NP10106 From:July 1,2011 To:June 30,2012 Project Title: Cook Inlet Gas Gathering System Grantee Grantor Name ;«ti Alaska Energy AuthorityChugachElectricalAssociation Street/PO Box Street/PO Box P.O.Box 196300 813 W.Northern Lights Blvd City/State/Zip City/State/Zip Anchorage,AK 99519 Anchorage,AK 99503 Contact Person Contact Person Ronald K.Vecera James Strandberg,Project Manager Phone:Fax:E-mail:Phone:Fax:E-mail: 907-762-4759 907-762-4191 |ron_vecera@chugachelectric |907-771-3069 |907-771-3044 |jstromberg@aidea.orgcom AGREEMENT The Alaska Energy Authority (hereinafter 'Authority)and Chugach Electrical Association (hereinafter 'Grantee'),agree as set forth herein. Section |.The Authority shall grant funds to pay for expenses incurred by the Grantee under the terms and conditions of this Agreement,in an amount not to exceed $4,000,000,unless the grant amount is amended as provided herein. Section Il.The Grantee shall apply the grant funds to the Project and perform all of the work and other obligations required by this Agreement. Section Ill.Performance under this agreement begins July 1,2011 and shall be completed no later than June Attachments/Forms (As required) Attachment 1:Financial Report/Request for Reimbursement Form Progress Report Form Notice of Grant Closeout White Paper for project Attachment 2: Attachment 3: Attachment 4: 30,2012. Section IV.The agreement consists of this page and the following: Appendices Appendix A:General Provisions Appendix B:Standard Provisions Appendix C:Grantee Proposal/Scope of Work Appendix D:Project Management & Reporting Requirements Appendix E:Project Budget & Reimbursement Provisions AMENDMENTS:Any amendments to this Agreement must be signed by authorized representatives of Grantee and the Authority and should be listed here. Grantee Authority Project Manager Executive Director or Designee Signature Date |Signature Date |Signature Date Printed Name and Title Bradley W.Evans,CEO Printed Name and Title James Strandberg.Project Manager Sara Fisher-Goad, AEA Executive Director Cook Inlet Gas Gathering System Grant Agreement #7910006 Table of Contents Grant No.7910006 AGREEMENT voecsssccssscssssvessssssesssavesssssvssssssscestssustsssssssssessecssssvsssuccessssesssssessssssssuseesssecesssenssssensasecsusecssssecssesensessenss 1 APPENDIX A GENERAL PROVISIONS 5 1.DEFINITIONS ..sccccscssssessssssssecsssssssssesessssnsevssscssscsevssessssaueesssssessssssvecssssssessesuusesssssecsssnssessssssesssansvecsassessesseve 5 2,AUTHORITY SAVED HARMLESS...........5 3,WORKERS'COMPENSATION INSURANCE ..5 4.INSURANCE oo.sscsseeessssssssssssssereesesseseeesseeseen 5 5.EQUAL EMPLOYMENT OPPORTUNITY (EEO)6 6.PUBLIC PURPOSES .0....0sssescesscssssesscssseesssnessssseese 6 7.OFFICIALS NOT TO BENEFIT uu...6 8.GOVERNING LAW .vcesecssssssssesssscssssessssssssassesseececssssessssssessssieseessiseesssneseeseneesssnnenees 6 9.COMPLIANCE WITH APPLICABLE LAW AND FUNDING SOURCE REQUIREMENTS 6 10.SEVERABILITY o.cscccsscssssssssscssssssssscsssssussscssssecsenuesscsssescessssussssessivecsessunvesssuasssassuveseessncsssusussessnvessssaneessssans 6 PL.NON-WAIVER cisccccsesscsssssssssesssssssecssssesvesusessssssssusensessaseseesssessesssinssessnvesssntessessitessessinessssiseessssnteceesnneeeesanees 7 12.INTEGRATION.ese eessssessssessesssseessssees .7 13.GRANTEE NOT AGENT OF AUTHORITY...w7 14,DISPUTES vo ccseeessscsssecssssssssescssssssvessssssenscesssssssersusessssstsesessnuvessssttesesninescsstivsssssitecersnenesssissesssstesessnneeeeseees 7 15.TERMINATION...ccsccsccssssscsesecsssssesseccesssssvscssessesarssssssssnsessssssisssssssnesesssssessssuiseseesnsessestiessesssesseesnueceesttenentsed 716.|TERMINATION DUE TO LACK OF FUNDING 8 17.|NO ASSIGNMENT OR DELEGATION..........8 18.|NO THIRD PARTY BENEFICIARIES...819.|NO ADDITIONAL WORK OR MATERIAL..8 20.CHANGES wooesseessssssstsscsssssseseessessneeseee 8 21.|RIGHT TO WITHHOLD FUNDB...........8 22.REMISSION OF UNEXPENDED FUNDS ....ecsccesssseessssees 8 23.TAX COMPLIANCE RESPONSIBILITIES OF GRANTEE...824,--LOBBYING ACTIVITIES ..issscsssssesescsserseeessssseeecsneeesssens 9 25.FINANCIAL MANAGEMENT AND ACCOUNTING.9 26.|PROCUREMENT STANDARDS..9 27.REPORTING REQUIREMENTS ....sscsssssssesseeses 9 28.|OWNERSHIP OF DOCUMENTS AND PRODUCTS.9 29.INSPECTIONS AND RETENTION OF RECORDS oo...sssssssseessossssssssssnesesstieersusseseessnnsesssisseesnneesesesiecseess 9 JO.AUDITS .eecccecsssccccsscssssecsssssssssecsscssassunessessensessusecassvesessssvsvscsssssescessusseessssnecssssssesssnssessesssueessssssersesnerssssenses31.|LEGAL AUTHORITY...32.GRANT CLOSE OUT...esses APPENDIX B STANDARD PROVISIONS 11 1.GRANT FUNDING SOURCES o0.cc.ccsssssssssssssssssssessscessssuscsssvcsssssssssvecssssessssesssssusesssscsssseceusvecsssvsessaeesssesessees MH 2.GOVERNING LAWS ...........11 3.ELIGIBLE COSTS .......:ceccc H 4.INSURANCE REQUIREMENTS ...0....ccssssssssssssssesssssecsessssssessssssnsesssssseessssnieseestisessssisssessansesessniseseseeeeseeseeees 1 APPENDIX BI STANDARD PROVISIONS FOR GENERAL DESIGN &CONSTRUCTION GRANT....12 1.DECLARATION OF PUBLIC BENEFIT ...c..sscsssssssssssscssssssssssssevecsssssessesssssesesnsissecssssessessnseessssissesssiteesesensees 12 2.GRANTEE PROJECT MANAGER ....-cssccccccsssee 12 3.APPROVAL TO PROCEED WITH NEXT PHASE...13 4,CONTRACTS FOR ENGINEERING SERVICES ....ccsssssssssssssseecsssssseesssstessssnmsssssssssssessnnssensinissesssueesesensees 135.SITE CONTROL oo.ccsccccccsssssssescsccusssuvececssssussevssursessesisessssssecsessssseesssussesensavessesnsessssstseseessseesssssiesessneneeseeees 13 6.PERMITS...ccccsecssssssscsssssssssessssssssesecessssssecesseseeeesncseesansess 13 7.EXCLUSION OF EXISTING ENVIRONMENTAL HAZARDS ..13 8.ENVIRONMENTAL STANDARDS .0...ssssssssssssssessssscessosssesssesessvessssssisssecssnsesesstessesssssssestaneseesisieeessnineresees 13 Page 2 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 9.CURRENT PREVAILING RATES OF WAGE AND EMPLOYMENT PREFERENCE ...........::cccccsscseescesseeseees 13 10,CONSTRUCTION PLANS AND SPECIFICATIONS REVIEW..........cccccccssessesseeeees 14 11.CONSTRUCTION INSURANCE AND BONDING...............14 12.POST CONSTRUCTION CERTIFICATION .........ccccceccscesceseseseeseseesesessenacaeseesenscsensesssecesessesseeesseenensesasensats 14 13 OWNERSHIP OF FACILITIES .......cccccccccccescececsscseeceesecsaecaseesnaessaeeseseecsneeenseeeeeseeaeseaeecsaseeaeesasesnesetasetseeeeess 14 14 OPERATION AND MAINTENANCE OF FACILITIES .0......cscccccscsscsseesesseeseecosceeeceeseseeateaeeseecaeceaesaeeeeenaeentens 15 APPENDIX C GRANTEE PROPOSAL/SCOPE OF WORK 16 APPENDIX D PROJECT MANAGEMENT &REPORTING REQUIREMENTS 18 1.PROJECT MANAGEMENT ....0....cccccccceeescsecesseecseeeceseecenesenersaeecseessaeesscessacecaeesaaeesaeessaeessaessaaeeanenasseaeteseess 2.CONTACT PERSONS 00....ccccccccccecccesceece ce cee ee ceseseeaeeeeaecsacesenensaecnaneseanessceceeeeenesenaeseaaeseasecsseceeeensseeseesineesieeess 3.MONTHLY PROGRESS AND FINANCIAL REPORTS wee 4.DOCUMENTATION AND RECORD KEEPING..u....ccecccecsssscsseeseeessscececcecosesaecuecucesacesseaeceasaceseessaeenessesease APPENDIX E PROJECT BUDGET &REIMBURSEMENT PROVISIONS.20 1.ALLOWABLE COSTS 0.0..c.cccccescessssesseesessesnecsssnseacecaacsnesscsscaecesessasseaeaeenssusavaeesassasessecssseaseessasenesassaseasceseaes 20 A.---dDitrect Labor &Bere fits .....cceccceccccccssseesssesssveseencesteecosenensesensesecanenseneseesesaeccessenesseeqesaeaessesencessesssassesaeseeaes 20 b.Travel,Meals,or Per Diem ...cccscccssccsevecsescevesesscenssseccsnsessnecseasssnenscaceencenenenseasaasessenetenepaeseneeseataceneneneaes 20 c.Equipment...20 A.Supplies...cece e. f g. 2. 3. 4.COST SHARE MATCH REQUIREMENTS ........ccccccscscssseseesseeseeesesesseseesaesseseeecseseaseaseaeeeseaeesatssaesessaasnaseneees 22 5.VALUING IN-KIND SUPPORT AS MATCH.22 6.GRANT DISBURSEMENTS ............0::06 23 7.WITHHOLDING OF GRANT FUNDS 23 8.ADVANCE DISBURSEMENTS..........ccccccecceesseseeeseeesneeaes 24 9.UNEXPENDED GRANT FUNDS AND INTEREST EARNED 24 10.BUDGET ADJUSTMENTS AND CHANGESou...sccccccsssscsesessesseseeseesoeesesseseesseeesecsesseeesseeesseesesseaseecesseeaseaees 24 ATTACHMENT 1 FINANCIAL REPORT/REQUEST FOR REIMBURSEMENT FORM.wsssssssssssesessoreenee 25 ATTACHMENT 2 PROGRESS REPORT FORM 26 ATTACHMENT 3 NOTICE OF PROJECT CLOSEOUT 27 ATTACHMENT 4 WHITE PAPER:REMOVAL OF CHECK VALVES AND INSTALLATION OF COMPRESSION TO ALLOW EAST TO WEST FLOW THROUGH CIGGS DUAL SUB-SEA PIPELINES 28 1 INTRODUCTION 31 2 COOK INLET GAS FLOW AND PRODUCTION 31 2.1 PIPELINE GAS FLOW:EAST SIDE OF COOK INLET...3 2.1.1 ENSTAR compressor upgrade plan...wl 2.2 PIPELINE GAS FLOW:WEST SIDE OF COOK INLET..34 2.3 IN-GROUND STORAGE00.00...cesses ecient eens cent cnn en eens een ece eer cna ree ree pds caa te radsbeaceeratiaeseeetanensneesnaee 35 3.PROJECTED COOK INLET FLOW SCENARIOS,WINTER 2011/2012 35 3.1 COLD DAY FLOW AT 350 MMSCED...0...scssceeccceeccee ce ceceeceecseeseeeeeseeecneseecnsesnesacseenensenscatesonaeatsenaeetsneee®36 3.1.1 Ald equipment ON-Vine oc...cesses es teects nesses tensteneeesseseatsenesenenstenseseneceecnsseasnescecasasenesecnaesasnaeseereaes 36 Page 3 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 3.1.2 Loss ofsome BRU production saseeuosestenerstenee cesneeeesesenscessesnsssensevensasassassnseseuseacneness 38 3.1.3 Loss ofall production from the Steelhead platform .........0000000+seeneeeseeeeenesesesevauentesevasacacueetes 39 3.2 PEAK FLOW ON EXTREMELY COLD DAY AT 425 MMSCED .......ccccccsssscsesseseesessenseeeseesseessnesenaeceeeasieeas 40 3.2.1 All equipment on-line,location of temporary compression..40 3.2.2 Loss of some BRU production,temporary compression...4l 3.2.3 Loss of all production from the Steelhead platfOrim ........ccccsesssssessesstetssssesetseasenseneaes 44 3.3 JUSTIFICATION OF PROPOSED COOK INLET TRANSMISSION SYSTEM MODIFICATIONS .. 3.3.1 Remove check valves to allow east-west flow through CIGGS\....cccscscssccscesesseesteceesone 3.3.2 Install temporary gas compressor to enhance east-west flOW ......cccscrcsees Page 4 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 |APPENDIX A GENERAL PROVISIONS 1.Definitions In this Grant Agreement,attachments and amendments: a)"Authority”means the Alaska Energy Authority,a public corporation of the State of Alaska. b)"Authorized Representatives”means those individuals or entities authorized by an entity to act on its behalf,with delegated authority sufficient to accomplish the purposes for which action is needed. c)"Executive Director'means the Executive Director of the Authority or the Executive Director's authorized representative. d)"Matching contributions”means the cash,loan proceeds,in-kind labor,equipment,land, other goods,materials,or services a grantee provides to satisfy any match requirements of a grant or to complete the Project. e)"Project”means Cook Inlet Gas Gathering System as defined in Appendix C (Scope of Grant)for which funds have been made available. f)"Project Manager”means the employee of the Authority responsible for assisting the Grantee with technical aspects of the Project and is one of the Grantor's contacts for the Grantee during all phases of the Project. g)"State”means the State of Alaska. h)"Economic Life”means)years from the date of the final disbursement.=_.----"{Comment [eww1]:Jim,do you have anumberforthisone/is this statement 2.Authority Saved Harmless necessary? As a condition of this Grant,the Grantee agrees to defend,indemnify,and hold harmless the Authority and the State of Alaska,and their agents,servants,contractors,and employees,from and against any and all claims,demands,causes of action,actions,and liabilities arising out of, or in any way connected with this grant or the project for which the grant is made,howsoever caused,except to the extent that such claims,demands,causes of action,actions or liabilities are the proximate result of the sole negligence or willful misconduct of the Authority or the State of Alaska. 3.Workers'Compensation Insurance The Grantee shall provide and maintain Workers'Compensation Insurance as required by AS 23.30 for all employees engaged in work under this Grant Agreement.The Grantee shall require any contractor to provide and maintain Workers'Compensation Insurance for its employees as required by AS 23.30. 4.Insurance The Grantee is responsible for obtaining and maintaining any necessary insurance and endorsements as defined in Appendix B Standard Provisions.Proof of insurance coverage must be included with the first reimbursement or advance request.Continued proof of Page 5 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 insurance coverage must be presented with the first reimbursement or advance request of the grantee's fiscal year for the life of the grant.Reimbursement and advance requests will not be processed if proper documentation of insurance has not been submitted. 5.Equal Employment Opportunity (EEO) The Grantee may not discriminate against any employee or applicant for employment because of race,religion,color,national origin,age,physical handicap,sex,marital status,changes in marital status,pregnancy,or parenthood.The Grantee shall post in a conspicuous place, available to employees and applicants for employment,a notice setting out the provisions of this paragraph. The Grantee shall state in all solicitations or advertisements for employees to work on Authority funded projects,that it is an Equal Opportunity Employer (EEO)and that all qualified applications will receive consideration for employment without regard to race,religion,color, national origin,age,physical handicap,sex,marital status,changes in marital status, pregnancy or parenthood. The Grantee shall include the provisions of this EEO article in every contract relating to this Grant Agreement and shall require the inclusion of these provisions in every agreement entered into by any of its contractors,so that those provisions will be binding upon each contractor and subcontractor. 6.Public Purposes The Grantee agrees that the Project to which this Grant Agreement relates shall be dedicated to public purposes and any project constructed or equipment or facilities acquired,shall be owned and operated for the benefit of the general public.The Grantee shall spend monies appropriated under this grant only for the purposes specified in the Grant Agreement.The benefits of the Project shall be made available without regard to race,religion,color,national origin,age,physical handicap,sex,marital status,changes in marital status,pregnancy or parenthood. 7.Officials Not To Benefit No member of or delegate to Congress or the Legislature,or officials or employees of the Authority or Federal!government may share any part of this agreement or any benefit to arise from it. 8.Governing Law This Grant Agreement is governed by the laws of the State of Alaska.Any civil action arising from this Agreement shall be brought in the Superior Court for the Third Judicial District of the State of Alaska at Anchorage. 9.Compliance with Applicable Law and Funding Source Requirements The Grantee shall comply with all applicable local,state and federal statutes,regulations, ordinances and codes,whether or not specifically mentioned herein.Refer to Appendix B Standard Provisions for more specific requirements. 10.Severability If any section,paragraph,clause or provision of this Agreement is held invalid or unenforceable, the remainder of this Agreement shall be unaffected and enforced to the fullest extent possible, Page 6 of 46 Cook inlet Gas Gathering System Grant Agreement #7910006 and the invalid or unenforceable provision shall be deemed replaced with a valid and enforceable provision that is as similar as possible to such invalid or unenforceable provision. 11.Non-waiver The failure of either party at any time to enforce a provision of this Agreement shall in no way constitute a waiver of the provision,nor in any way affect the validity of this Agreement,or any part hereof,or the right of such party thereafter to enforce each and every provision hereof. 12.Integration This instrument and all appendices,amendments,attachments,hereto embody the entire Agreement of the parties concerning the grant funds granted hereunder.There are no promises,terms,conditions,or obligations regarding said funds other than those contained in the documents described above;and such documents shall supersede all previous communications,representations or agreements,either oral or written,between the parties hereto.To the extent there is any conflict between the provisions of Appendix A and B theGrantee's application or proposal,the provisions of Appendix A and B prevail. 13.Grantee Not Agent of Authority The Grantee and any agents and employees of the Grantee act in an independent capacity and are not officers or employees or agents of the Authority in the performance of this Grant Agreement. 14,Disputes Any dispute arising under this Grant Agreement which is not disposed of by mutual agreement must be dealt with in accordance with 3 AAC 108.915. 15.Termination a)The Grantee shall have no rights to compensation or damages for termination except as provided in this Section. b)In addition to all other rights available under law,the Authority may terminate this Agreement or stop work on the Project for the convenience of the Authority or for cause upon ten (10)days written notice. c)"Cause"for termination shall exist when the Grantee has failed to perform under this Agreement,has provided incorrect or misleading information or has failed to provide information which would have influenced the Authority's actions.In order for termination to be for cause,the Grantee's failure to perform or the Grantee's provision of incorrect, misleading,or omitted information must be material. d)If this Agreement is terminated for cause,the Grantee shail be entitled to no compensation.The Grantee shall reimburse the Authority for all grant funds expended under this Agreement by the Grantee or on the Grantee's behalf including interest accrued from the date of disbursement.The Grantee shall also reimburse the Authority for any costs incurred to collect funds subject to reimbursement,and for any damages incurred by the Authority as a result of the Grantee's failure to perform or provision of incorrect or misleading information.The Authority may require the Grantee to return to the Authority some or all of the Project assets if this Agreement is terminated for cause. Page 7 of 46 Cook Iniet Gas Gathering System Grant Agreement #7910006 e)If this Agreement is terminated at the sole request of the Authority for the sole reason of its convenience,the Grantee is not required to reimburse the Authority for funds expended prior to the date of termination.If the Grantee has incurred costs under this agreement,the Grantee shall only be reimbursed by the Authority for eligible costs the Grantee incurred prior to the date of termination of the Agreement.However,prior to making any claim or demand for such reimbursement,the Grantee shall use its best effort to reduce the amount of such reimbursement through any means legally available to it.The Authority's reimbursement to the Grantee shall be limited to the encumbered, unexpended amount of funds available under this Agreement. 16.Termination Due to Lack of Funding In the event funding from the Authority,federal or other sources is withdrawn,reduced,or limited in any way after the effective date of this agreement and prior to normal completion,the Authority may terminate the agreement,reduce funding,or re-negotiate subject to those new funding conditions. 17.No Assignment or Delegation The Grantee may not assign or delegate this Grant Agreement,or any part of it,or any right to any of the money to be paid under it,except with the written consent of the Executive Director or Designee. 18.No Third Party Beneficiaries Except as otherwise specified in this agreement,no person is a third party beneficiary of this Agreement and this Agreement creates no third party rights.Specifically,any person who is not a party to this Agreement shall be precluded from bringing any action asserting the liability of a party or asserting any right against a party to this Agreement,through the terms of this Agreement.No person,other than a party to this Agreement,may bring any action based upon this Agreement for personal injuries,property damages,or otherwise. 19.No Additional Work or Material No claims will be allowed for additional work,materials,or equipment,not specifically authorized in this Grant Agreement,which are performed or furnished by the Grantee. 20.Changes Any changes which have been agreed to by both parties will be attached and made a part of this Grant Agreement by use of a written Amendment.Any such Amendment must be dated and signed by Authorized Representatives of the Authority and the Grantee. 21.Right to Withhold Funds The Authority may withhold payments under this Grant Agreement for non-compliance with any of the provisions of this Grant Agreement. 22.Remission of Unexpended Funds The Grantee shall return all unexpended grant monies to the Authority within 90 days of the Project completion. 23.Tax Compliance Responsibilities of Grantee The Grantee is responsible for determining applicable federal,state,and local tax requirements,for complying with all applicable tax requirements,and for paying all applicable Page 8 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 taxes.The Authority may issue an IRS Form 1099 for Grant payments made.The Grantee shall pay all federal,state and local taxes incurred by the Grantee and shall require the payment of all applicable taxes by any contractor or any other persons in the performance of this Grant Agreement. 24.Lobbying Activities In accepting these funds,the Grantee agrees and assures that none of the funds will be used for the purpose of lobbying activities before the United States Congress or Alaska Legislature. No portion of these funds may be used for lobbying or propaganda purposes as prohibited in AS 37.05.321,18 U.S.C.1913,31 U.S.C.1352,or other laws as applicable. 25.Financial Management and Accounting The Grantee shall establish and maintain a financial management and accounting system that conforms to generally accepted accounting principles.In addition,the accounting system must keep separate all grant funds awarded under this grant agreement. 26.Procurement Standards Grantees will follow competitive purchasing procedures that:1)provide reasonable competitive vendor selection for small dollar procurements;2)provide for competitive bids or requests for proposals for contracts and procurements greater than $100,000;3)provide a justification process for non-competitive procurements or contracts;4)document the source selection methods used for all contracts,equipment,or material transactions greater than $10,000;5) and comply with other procurement requirements as defined in Appendix B.Grantees who have questions about their procurement procedures or a specific procurement should contact the Authority's Grant Manager. 27.Reporting Requirements The Grantee shall submit progress reports to the Authority according to the schedule established in Appendix D of this Grant Agreement. 28.Ownership of Documents and Products All designs,drawings,specifications,notes,artwork,computer programs,reports and other work developed with grant funds in the performance of this agreement are public domain and will be used by the Authority and/or public without notice or compensation to the Grantee.The Grantee agrees not to assert any rights and not to establish any claim under the design patent or copyright laws.Except as otherwise specifically agreed,and without limiting any Intellectual Property requirements of a federal funding agency,the Authority shall have unlimited rights to use and to disseminate any data produced or delivered in the performance of the contract. 29.'Inspections and Retention of Records The Grantee shall keep a file for financial,progress and other records relating to the performance of the grant agreement.The file must be retained for a period of four years from the fully executed close out of the grant agreement or until final resolution of any audit findings claim or litigation related to the grant.The Authority may inspect,in the manner and at reasonable times it considers appropriate,records and activities under this Grant Agreement. Page 9 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 30.Audits This Grant Agreement is subject to 2 AAC 45.010 single audit regulations for State Grants. The Grantee must comply with all provisions of 2 AAC 45.010 and any additional audit requirements outlined in Appendix D. Commercial (for-profit)entities shall obtain an audit by an independent auditing firm similar to a program audit prepared under OMB A-133.The auditee and auditor shall have basically the same responsibilities for the federal or state program as they would have for an audit of a major program in a single audit.The expenditure threshold is $500,000 in the commercial entity's fiscal year. 31.Legal Authority The Grantee certifies that it possesses legal authority to accept grant funds under the State of Alaska and to execute the Project described in this Grant Agreement by signing the Grant Agreement document.The Grantee's relation to the Authority and the State of Alaska shall be at all times as an independent Grantee. 32.Grant Close out Upon completion of all work and expenditure of all grant funds related to the Project the Authority will provide written notice to the Grantee that the Grant will be closed.The Grantee shall sign the Notice of Project Closeout within 30 days after it is delivered by the Authority. The Grant will be considered closed upon receipt of the signed Notice of Project Closeout. The Grant will be administratively closed if the Grantee fails to return the Notice of Project Closeout within 30 days after it is delivered by the Authority.If the Grantee has a valid reason for the Grant to remain open,they must contact the Authority in writing within 30 days. No additional reimbursements will be made to the Grantee after the grant is closed out. Page 10 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 |Appendix B Standard Provisions 1.Grant Funding Sources This Grant is subject to appropriation and availability of funds as listed below: State of Alaska $4,000,000 Legislative Grant SLA-12 AR 52161-16 Grantee acknowledges that if additional grant funds are made available they are subject to the terms and conditions of this Agreement and any amendment. 2.Governing Laws The Grantee shall perform all aspects of this Project in compliance with all applicable state, federal and local laws. 3.Eligible Costs The Authority,as Grantor,shall have sole discretion to determine which project costs are eligible to be paid from Grant monies under this agreement.Only direct costs of the Project are eligible for payment or reimbursement from grant funds.Indirect costs are not allowed under this grant unless approved by the Authority in Appendix E. 4.Insurance Requirements The following insurance requirements are in effect for this Project.Grant funds will be used to procure Project related insurance and the Authority will work with the Grantee to ensure that these requirements are met.Insurance will be obtained with an insurance carrier or carriers covering injury to persons and property suffered by the State of Alaska,Alaska Energy Authority or by a third party as a result of operations under this grant.The insurance shall provide protection against injuries to all employees of the Project engaged in work under this grant.All insurance policies shall be issued by insurers that (i)are authorized to transact the business of insurance in the State of Alaska under AS 21 and (ii)have a Bests Rating of at least A-Vil and be required to notify the Authority,in writing,at least 30 days before cancellation of any coverage or reduction in any limits of liability. Where specific limits and coverage are shown,it is understood that they shall be the minimum acceptable and shall not limit the Grantee's indemnity responsibility.However,costs for any coverage in excess of specific limits of this agreement are the responsibility of the Grantee and may not be charged to this grant agreement. Page 11 of 46 Cook Iniet Gas Gathering System Grant Agreement #7910006 The following policies of insurance shall be maintained with the specified minimum coverage and limits in force at all times during the performance work under this Project: 1.Workers'Compensation:as required by AS 23.30.045,for all employees engaged in work under this Project.The coverage shall include: a.Waiver of subrogation against the State and the Alaska Energy Authority and Employer's Liability Protection at $500,000 each accident/each employee and $500,000 policy limit; 2.Commercial General Liability,on an occurrence policy form covering all operations under this Project with combined single limits not less than: a.$1,000,000 Each Occurrence; b.$1,000,000 Personal injury; c.$1,000,000 General Aggregate;and d.$1,000,000 Products-completed Operations Aggregate. The State of Alaska and Alaska Energy Authority shall be named as an individual insured. 3.Automobile Liability:covering all vehicles used in Project work,with combined single limits no less than $1,000,000 each occurrence. All of the above insurance coverage shall be considered to be primary and non-contributory to any other insurance carried by the State of Alaska and Alaska Energy Authority,whether seif- insurance or otherwise. The Authority's acceptance of deficient evidence of insurance does not constitute a waiver of Grant requirements. |Appendix B1 Standard Provisions for General Design &Construction Grant 1.Declaration of Public Benefit The parties acknowledge and agree that the Project shall be constructed,owned and operated for the benefit of the general public and will not deny any person use and/or benefit of Project facilities due to race,religion,color,national origin,age,physical handicap,sex,marital status, changes in marital status,pregnancy or parenthood. 2.Grantee Project Manager For construction projects,the Grantee will contract or hire competent persons to manage all phases of the Project subject to approval of the Authority.Work at a minimum will include; management of Grantee's labor for the project,engineering firms and consultants, procurement,management of construction contractors,selection of equipment,review of plans and specifications,on-site inspections and review and approval of work,and other duties to ensure that the completed work conforms with the requirements of the grant and the construction documents. If the Grantee fails to provide adequate project management the Authority may terminate the Grant or assume project management responsibilities with the concurrence of the Grantee. Costs for a Project Manager must be reasonable to be considered an eligible grant expense. Page 12 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 3.Approval to Proceed With Next Phase A grant award may be for one or more phases of a project.The grantee must achieve substantial completion of work or of designated grant milestones and receive approval from the Authority prior to proceeding to the next phase of work. 4.Contracts for Engineering Services In the event the Grantee contracts for engineering services,the Grantee will require that the engineering firm certify that it is authorized to do business in the State of Alaska and provide proof of licensing and insurance. 5.Site Control If the grant Project involves the occupancy and use of real property,the Grantee assures that it has the legal right to occupy and use such real property for the purposes of the grant,and further that there is legal access to such property.The Grantee is responsible for securing the real property interests necessary for the construction and operation of the Project,through ownership,leasehold,easement,or otherwise,and for providing evidence satisfactory to the Authority that it has secured these real property interests. 6.Permits It is the responsibility of the Grantee to identify and ensure that all permits required for the construction and operation of this Project by the Federal,State,or Local governments have been obtained unless otherwise stated in Appendix C.These permits may include,but are not limited to,Corps of Engineers,Environmental Protection Agency,Alaska Department of Environmental Conservation,State Historic Preservation Office,State Fire Marshal,Alaska Department of Natural Resources,Alaska Department of Fish and Game and Boroughs. 7.Exclusion of Existing Environmental Hazards Grant funds for investigation,removal,decommissioning,or remediation of existing environmental contamination or hazards,are not allowed unless specifically specified and approved in Appendix C. 8.Environmental Standards The Grantee will comply with applicable environmental standards,including without limitation applicable laws for the prevention of pollution,management of hazardous waste,and evaluation of environmental impacts. 9.Current Prevailing Rates of Wage and Employment Preference To the extent required by federal and State law construction projects may require certain grantees to include the requirements for Davis Bacon and Little Davis Bacon when contracting for construction services.This requires contractors to pay minimum rates of pay for specific classes of workers and provide certified payrolls to the State Department of Labor.The current wage rates can be found at the following web sites: The Federal wage rates at http://www.wdol.gov/ The State wage rates at http:/Avww.labor.state.ak.us/Iss/pamp600.htm Page 13 of 46 Cook Iniet Gas Gathering System Grant Agreement #7910006 If federal funding sources require federal Davis Bacon compliance,the Grantee must use both the Federal and State wage scale and the contractor is required to pay the higher of the State or Federal wage scale.When only State Funds are used that requires "Little Davis Bacon,”the Grantee is only required to follow the State Rate schedule. For projects that are only State funded,contractors are also required to use local residents where they are available and qualified in accordance with AS 36.10.150-180,and 8 AAC 30.064 -088. The Grantee is responsible for identifying any other sources of project funds and for ensuring compliance with applicable wage scales for all sources of project funding.If a Grantee believes they or their contractors may be exempt from these requirements,they should contact the State of Alaska Department of Labor and Workforce Development,Wage and Hour Administration, for a determination and forward a copy of that determination to the Authority's Grant Administrator. 10.Construction Plans and Specifications Review the plans and specifications are consistent with the grant award must be received before grant funds will be released for construction related costs. 11.Construction Insurance and Bonding When the value of the construction is anticipated to be greater than $100,000,prior to beginning construction on a project funded by this grant,the Grantee or grantee's contractor(s) must provide the Authority;1)proof of adequate insurance as defined in Appendix B.#4 of the grant agreement,and 2)either a payment and performance bond,as may be required by AS 36.25.010,a surety in form and substance acceptable to the Authority,or some other guarantee or assurance acceptable to the Authority that the Grantee or the Grantee's contractor has the Capacity,qualifications,and financial resources necessary to complete construction of the project as proposed in the grant or construction contract(s)funded by this grant. 12,Post Construction Certification Upon completion of construction the Grantee will submit a final report that includes: e Certification that all work is completed in accordance with the grant and all costs claimed are eligible costs and represent work completed on the Project; e Summary of total project cost including detailed funding sources and any outstanding debt; e Certification that there is a release of any contractor or subcontractor liens on the project; e Identification of any outstanding construction issues;and, As-built drawings. 13.|Ownership of Facilities The Grantee shall assume all liabilities arising from the ownership and operation of the Project. Grantee will not sell,transfer,encumber,or dispose of any of its interest in the facilities constructed with this grant funding during the economic life of the Project without prior written approval of the Authority. Page 14 of 46 zl based on our conversation with Brian BSeen[eww2]:Jim,I changed this oneregardingFireIsland. Comment [eww3]:This one probably not needed since Marathon owns the lines? Cook Inlet Gas Gathering System Grant Agreement #7910006 7]Comment [eww4]:Sameascommentabove.14.Operation and Maintenance of Facilities The Grantee is required to maintain and operate the facilities defined in Appendix C of this agreement for the economic life of the facility or the specific period of time designated herein. In the event that the Grantee is no longer operating the facilities for the intended purposes the Authority may require the Grantee to reimburse the Authority an amount based on the total contribution of the Authority,the value of the assets,and the terms and conditions of this agreement.The Authority may require that the assets acquired under this agreement be soldandtheproceedsreturnedtotheAuthority,apo [eww5]:Jim,I went ahead anddeletedthetwoprovisionsregardingtariffsand PCE based on above comment. Page 15 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 |Appendix C_Grantee Proposal/Scope of work The reliable supply and deliverability of increasingly constrained Cook Inlet natural gas is essential to the fuel supply security of South Central Alaska.Chugach Electric Association,Inc. (Chugach),Anchorage Municipal Light &Power (ML&P)and Enstar Natural Gas Company (Enstar)rely on a secure supply of natural gas for the provision of reliable service to their respective consumers. The reliability of gas supply and deliverability can be increased with the ability to transport gas to the west side of Cook Inlet via the Cook Inlet Gas Gathering System (CIGGS)pipeline.The availability of gas on the west side enhances gas supply reliability for Chugach's Beluga power plant and provides gas via another route for delivery to ML&P and Enstar. East to west gas flow can be accomplished by making valve changes.However,to flow the gas from east to west also requires additional compression.The compressor that will be installed will be rented.It is expected the compressor will only be needed for one year because the Cook Inlet Gas Storage Alaska (CINGSA)project that will go into service in 2012 is expected to deliver gas at a pressure adequate to mitigate the need for additional compression. A detailed summary of the Cook Inlet gas supply situation and the need for this project can be found in the study entitled:"White Paper:Removal of Check Valves and Installation of Compression to Allow East to West Flow through CIGGS Dual Sub-sea Pipelines”(See Attachment #4). Marathon is the owner of the CIGGS pipeline and will perform the work on behalf of the utilities. Chugach,ML&P and Enstar have entered into cost reimbursement agreements with Marathon to accomplish bi-directional gas flow and install the required metering.Chugach has entered into a reimbursement agreement with Marathon for the installation of the rental compressor. Scope of Work,Budget and Timeline The scope of work to accomplish the entire project consists of three components: 1.To enable bi-directional gas flow on the CIGGS pipeline,Marathon will perform the engineering,planning,procurement,construction,commissioning and documentation to: a.Remove check valves impeding bi-directional flow,either replacing with piping or otherwise removing the impediment. b.Design,fabricate and install bypass piping around the East Forelands separators,which as currently constructed,allow gas to flow in only one direction. c.Replace the CIGGS to Kenai Nikiski Pipeline (KNPL)401 control valve,which currently allows flow in only one direction,with a bi-directional control valve. d.Other work as needed to implement east to west flow. e.Implement measures,procedures and training for scheduling,accounting,and control room activities to handle gas nominations from the existing and the new CIGGS east side receipt points to facilitate gas movement to all of the CIGGS delivery points,both East Side and West Side.Update all software accordingly. Page 16 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 2.To install required metering,Marathon will perform the engineering,planning, procurement,construction,commissioning and documentation to: a.Upgrade the CIGGS to KNPL metering at meter 401 meter by replacing the existing meter with a bi-directional meter. b.Set up the KNPL pipeline operations and procedures to allow use of Meter 401 as a delivery point from KNPL into CIGGS. c.Implement measures,procedures and training for scheduling,accounting,and gas control to facilitate and allow nominations for gas transportation from all of the various KNPL receipt points to the new 401 delivery point into CIGGS. Update all software accordingly. d.File and seek any necessary regulatory approvals. 3.To install a rented compressor,Marathon will perform the engineering,planning, procurement,construction,commissioning and documentation to: a. b. c. d. e. f. g. h. j. k. Identify a suitable block valve in the KNPL mainline at Kenai Pipeline Junction or, if none exists,install such a vaive. Identify a suitable tee in the KNPL mainline on each side of the above mentioned block valve or,if none exists,install such tee. Install a double block and bleed ball valve on each such tee. Contract for a rental compressor and arrange for its delivery to KPL Junction and return compress to vendor. Lease land for the compressor. Clear and grade land and do other site preparation such as lighting,security, power and water hook-ups. Install suction and discharge piping between KNPL tees and rental compressor. Install fuel gas tap and hook-up. Provide by contract for physical operation and maintenance of the compressor by a local team of people who will operate the compressor and open and close associated valves. After demobilization,return site to condition consistent with site lease. Obtain all permits and needed regulatory approvals. The first phases of the project (enabling bi-directional flow and installing required metering)are to be completed by October 31,2011 at a combined cost not to exceed $2 million. The second phase of the project (installing the rented compressor)is to be completed by October 31,2011 at a cost not to exceed $2.7 million.This amount is capital cost only and does not include monthly operation and maintenance expenses such as rental of the compressor and operations and maintenance expense. Page 17 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 Cost breakdown for the CIGGS projects: Bi-directional Compression Project Project Administration $200,000 $270,000 Engineering 400,000 405,000 Construction 1,300,000 1,890,000 Other 100,000 135,000 Total $2,000,000 $2,700,000 |Appendix D Project Management &Reporting Requirements 1.Project Management The Grantee will notify the Authority immediately of any significant organizational changes during the term of the grant,including changes in key personnel or tax status,any unforeseen problem or project delay that may cause a change to the work plan or budget or that may otherwise affect the Grantee's ability to perform its commitments under this Grant Agreement. Any unreported or unapproved changes to the work plan or budget evident in reports may result in an amendment being required,costs disallowed,suspension or termination of the grant as described in Appendix A. 2.Contact Persons For the Grantee For The Authority Grant Manager Grant Manager Ronald K.Vecera Butch White,Grants Administrator P.O.Box 196300 813 W.Northern Lights Blvd. Anchorage,AK 99519 Anchorage,Alaska 99503 ron_vecera@chugachelectric.com bwhite@aidea.org 907-762-4759 907-771-3052 Project Manager Project Manager Ronald K.Vecera James Strandberg P.O.Box 196300 813 W.Northern Lights Blvd. Anchorage,AK 99519 Anchorage,Alaska 99503 ron_vecera@chugachelectric.com istrandberq@aidea.org 907-762-4759 907-771-3069 Page 18 of 46 Cook inlet Gas Gathering System Grant Agreement #7910006 3.Monthly Progress and Financial Reports The Grantee will provide monthly status reports by email (or other method allowed by the Authority,if email is not available)to the Authority's Project Manager.These reports are due starting the first full month after the award of the grant.This report must update the Authority on the project's progress,regulatory and compliance issues,possible delays,and grant expenditures during the month.These Monthly Progress Reports must summarize,in one or two pages,the progress made on grant tasks during the month and identify any difficulties in completing tasks or meeting goals or deadlines.The Grantee must also include with the report copies of any work products due to the Authority during this period. Reports are considered late five (5)days after the due date.No further payments will be made without submission and approval of required reports.Work completed after the twenty-day period when required reports have not been submitted is at the Grantee's risk,and costs incurred may be disallowed.Repeated failure to submit reports in a timely manner could result in suspension or termination of the grant. All reports and deliverables required in this agreement must have been submitted and approved by the Authority prior to the final payment being released. 4,Documentation and Record Keeping The Grantee shall maintain the following in their files: Grant application, Grant agreement and any amendments, All written correspondence or copies of emails relating to the Grant, Reports,including any consultant work products, A separate accounting of grant income and expenditures, Supporting documentation for the expenditures charged to the grant (including supporting documentation for all required matching contributions). The Authority and any authorized federal representative may inspect,in the manner and at any reasonable time either considers appropriate,the Grantee's facilities,records,and activities funded by this Grant Agreement. Page 19 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 |Appendix E Project Budget &Reimbursement Provisions 1.Allowable Costs Allowable costs under this grant include all reasonable and ordinary costs for direct labor & benefits,travel,equipment,supplies,contractual services,construction services,and other direct costs identified and approved in the Project budget that are necessary for and incurred as a direct result of the Project and consistent with the requirements noted in Appendix B 3 Eligible Costs. A cost is reasonable and ordinary if,in its nature and amount,it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the costs. Allowable costs are only those costs that are directly related to activities authorized by the Grant Agreement and necessary for the Project.The categories of costs and additional limits or restrictions are listed below: a.Direct Labor &Benefits Include salaries,wages,and employee benefits of the Grantee's employees for that portion of those costs attributable to the time actually devoted by each employee to,and necessary for the Project.Direct labor costs do not include bonuses,stock options,other payments above base compensation and employee benefits,severance payments or other termination allowances paid to the Grantee's employees. b.Travel,Meals,or Per Diem Include reasonable travel expenses necessary for the Project.These include necessary transportation and meal expenses or per diem of Grantee employees for which expenses the employees are reimbursed under the Grantee's standard written operating practice for travel and per diem or the current State of Alaska Administrative Manual for employee travel. c.Equipment Include costs of acquiring,transporting,leasing,installing,operating,and maintaining equipment necessary for the Project,including sales and use taxes. Subject to prior approval of the Authority's Project Manager,costs or expenses necessary to repair or replace equipment damage or losses incurred in performance of work under the grant may be allowed.However,damage or losses that result from the Grantee's employees,officer's,or contractor's gross negligence,willful misconduct,or criminal conduct will not be allowed. d.Supplies Include costs of material,office expenses,communications,computers,and supplies purchased or leased by the Grantee necessary for the Project. Page 20 of 46 Cook inlet Gas Gathering System Grant Agreement #7910006 2. e.Contractual services Include the Grantee's cost of contract services necessary for the Project.Services may include costs of contract feasibility studies,project management services,engineering and design,environmental studies,field studies,and surveys for the project as well as costs incurred to comply with ecological,environmental,and health and safety laws. f.Construction Services For construction projects this includes the Grantee's cost for construction contracts,labor, equipment,materials,insurance,bonding,and transportation necessary for the Project. Work performed by the Grantee's employees during construction may be budgeted under direct labor and benefits.Contracted project management or engineering may be budgeted under contractual services and major equipment purchases made by the Grantee may be budgeted under equipment. g.Other Direct Costs In addition to the above the following expenses necessary for the Project may be allowed. e Net insurance premiums paid for insurance required for the grant Project; e Costs of permits and licenses for the grant Project; e Non-litigation legal costs for the Project directly relating to the activities;in this paragraph,"non-litigation legal costs”includes expenses for the Grantee's legal staff and outside legal counsel performing non-litigation legal services; e Office lease/rental payments; e Other direct costs for the Project directly relating to the activities and identified in the grant documents;and/or e Land or other real property or reasonable and ordinary costs related to interests in land including easements,right-of-ways,or other defined interests. Specific Expenditures not allowed Ineligible expenditures include costs for overhead,lobbying,entertainment ,alcohol,litigation, payments for civil or criminal restitution,judgments,interest on judgments,penalties,fines, costs not necessary for and directly related to the grant Project,or any costs incurred before the beginning date of the grant as indicated on the signature page. Overhead costs described in this section include: e salaries,wages,applicable employee benefits,and business-related expenses of the Grantee's employees performing functions not directly related to the grant Project; e office and other expenses not directly related to the grant Project;and e costs and expenses of administration,accounting,human resources,training,property and income taxes,entertainment,self-insurance,and warehousing. Page 21 of 46 Cook inlet Gas Gathering System Grant Agreement #7910006 3.Match The Grantee is not required to provide a match for this Project. 4.Cost Share Match Requirements Cost sharing or matching is that portion of the Project costs not borne by the Authority.The Authority will accept all contributions,including cash and in-kind,as part of the Grantees'cost sharing or matching when such contributions meet the following criteria: 5. Are provided for in the Project budget; Are verifiable from the Grantee's records; Are not included as contributions for another state or federally assisted project or program;(The same funds can't be counted as match for more than one program.) Are necessary and reasonable for proper and efficient accomplishment of the Project or program objectives; Are allowable costs; Are not paid by the State or federal government under another award,except for authorized by the State or federal statute to be used for cost sharing or matching; Must be incurred within the grant eligible time period. Valuing In-Kind Support as Match If the Grantee chooses to use in-kind support as part of or its entire match,the values of those contributions must be approved by the Authority at the time the budget is approved.The values will be determined as follows: The value of real property will be the current fair market value as determined by an independent third party or a valuation that is mutually agreed to by the Authority and the Grantee and approved in the grant budget. The value assessed to Grantee equipment or supplies will not exceed the fair market value of the equipment or supplies at the time the grant is approved or amended. Equipment usage will be valued based on approved usage rates that are determined in accordance with the usual accounting policies of the recipient or the rates for equipment that would be charged if procured through a competitive process.Rates paid will not exceed the fair market value of the equipment if purchased. Rates for donated personal services will be based on rates paid for similar work and skill level in the recipient's organization.!f the required skills are not found in the recipient organization,rates will be based on rates paid for similar work in the labor market. Fringe benefits that are reasonable,allowable,and allocable may be included in the valuation. Transportation and lodging provided by the Grantee for non-local labor will not exceed the commercial rates that may be available within the community or region. Page 22 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 6.Grant Disbursements The Grantee must request disbursement of grant funds in the form and format required by the Authority with appropriate back-up documentation and certifications.(See Attachment 1) Reimbursements are made for actual costs incurred and must be for approved milestones.The back-up documentation must demonstrate the total costs incurred are allowable,and reflect the amount being billed.Documentation must include: A ledger summarizing cost being billed A summary of direct labor costs supported by timesheets or other valid time record to document proof of payment Travel and per diem reimbursement documentation Contractor or vendor pay requests Invoices Detailed ledger of costs being charged to this grant Payment of grant funds will be subject to the Grantee complying with its matching contribution requirements of the Grant. Payment of grant funds will be made by the Authority to the Grantee within 30 days from receipt of a properly completed,supported,and certified Reimbursement Request (See Attachment 1). 7.Withholding of Grant Funds If,upon review of the monthly billings,the Authority discovers errors or omissions in the billings it will notify the Grantee within thirty (30)days of receipt of the billing.Payment for the portion of billings for which there is an error or omission may be withheld pending clarification by Grantee. Grant funds may be withheld for the following reasons: e The Grantee fails to provide adequate back-up documentation. e The Authority determines that a specific expense is not allowed under the grant. e The Grantee's matching contribution requirements are not met. Up to 10%of the Authority's contribution of grant funds may be retained by the Authority until the Project is completed and all required final documentation and reports are received and accepted by the Authority. Page 23 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 8.Advance Disbursements In most instances,payments to a Grantee will be made on a cost reimbursable basis.If the Authority determines that cost reimbursement will significantly inhibit the Grantee's ability to perform the Project and determines that an advance is in the public interest,the Authority may recommend an advance to the Grantee of an amount not to exceed a projected thirty (30)day cash need,or twenty percent (20%)of the grant amount,whichever amount is less. Before the Authority will issue an advance,the Grantee must provide in writing,and the Authority must approve a "Request for Advance Payment”form which includes: a.justification of the need for the advance, b.documentation of anticipated line item costs associated with the advance. All advances will be recovered with the Grantee's next Financial/Progress Report form.Should earned payments during the terms of this Grant Agreement be insufficient to recover the full amount of the advance,the Grantee will repay the unrecovered amount to the Authority when requested to do so by the Authority,or at termination of the Grant Agreement. 9.Unexpended Grant Funds and Interest Earned Any grant funds not expended under this agreement and any interest accruing on the grant funds belong to the Authority and shall be returned to the Authority. 10.Budget Adjustments and Changes When a Grantee faces increased unbudgeted costs,the grantee should contact the Authority's Project Manager.Budget adjustments cannot increase the grant award amount.Cost overruns that may require reduced scope of work will require Authority approval and an amendment to the grant.If a budget adjustment or other changes indicate to the Authority's Project Manager that the project can't be completed as currently planned and budgeted for,the Project Manager will not approve the release of additional grant funds until the grantee provides sufficient information on how the grantee intends to complete the revised project. Budget Adjustments The Grantee shall identify budget changes on its Financial Reports submitted to the Authority. At least quarterly,the Authority will compare actual costs to budgeted distributions based on the Financial Report/Request for Reimbursement form.Costs charged to grant funds must reflect adjustments made as a result of the activity actually performed.The budget estimates or other distribution percentages must be revised at least quarterly,if necessary,to reflect changed circumstances. Page 24 of 46 Cook inlet Gas Gathering System Grant Agreement #7910006 |Attachment1 Financial Report/Request for Reimbursement Form THIS REQUEST IS FOR FINAL PAYMENT L_]| Grantee:Chugach Electrical Association Project:Cook Inlet Gas Gathering System Period:to Grant Number:7910006 A B c D=B+C E=A-D BUDGET SUMMARY TOTAL GRANT PRIOR EXPENDITURES TOTAL GRANT BUDGET EXPENDITURES THIS PERIOD EXPENDITURES BALANCE BY TASK OR MILESTONE Administration $470,000 Engineering 805,000 Construction 3,190,000 Other 235,000 TOTAL $4,700,000 BY FUND SOURCES Grant Funds $4,000,000 Other contributions 700,000 TOTAL $4,700,000 CERTIFICATION Form requires two original signatures.The person certifying must be different from the person preparing the report. One signature should be the authorized representative of the Grantee organization or highest ranking officer;the other should be the person who prepared the report. I certify to the best of my knowledge and belief that the information reported on both the Financial Report above and the attached Progress Report are correct.In addition,funds were spent and work performed in accordance with the grant agreement terms and conditions. Certified By:Prepared By: Printed Name:Printed Name: Title:Date:Title:Date: Page 25 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 |Attachment 2 Progress Report Form Grantee:Chugach Electrical Association Project Name:Cook Inlet Gas Gathering System Grant #7910006 Period of Report:to Project Activities Completed: Existing or Potential Problems: Activities Targeted for Next Reporting Period: Prepared By:Date: Printed Name: Page 26 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 |Attachment 3 Notice of Project Closeout NOTICE OF PROJECT CLOSEOUT ALASKA ENERGY AUTHORITY Project Name:Cook Inlet Gas Gathering System Grantee:Chugach Electrical Association Grant Number:7910006 The Alaska Energy Authority certifies and acknowledges that the Grant referenced above has been completed,and that all tasks have been satisfactorily carried out in accordance with the terms and conditions of Agreement Number:7910006. Project Manager Date Alaska Energy Authority Chugach Electrical Association certifies that the Grant named above is complete in accordance with the terms and conditions of Alaska Energy Authority Agreement Number:7910006. Pursuant to Appendix B1 #15 'Performance/Operation and Maintenance (O&M)Reporting',the grantee is required to provide detailed reports annually,for five years. Authorized Signature Title Printed Name Date Page 27 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 Attachment 4 White Paper:Removal of Check Valves and Installation of Compression to Allow East to West Flow through CIGGS Dual Sub-sea Pipelines White Paper: Removal of Check Valves and Installation of Compression to Allow East to West Flow through CIGGS Dual Sub-Sea Pipelines Prepared by: Chugach Electric Association Anchorage Municipal Light and Power ENSTAR Natural Gas Company March,2011 Page 28 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 Contents 1 INTRODUCTION 31 2 COOK INLET GAS FLOW AND PRODUCTION 31 2.1 PIPELINE GAS FLOW:EAST SIDE OF COOK INLET .........eescessseecrssseeceseesceseeenscersventeeceaseesenses 2.1.1 ENSTAR compressor upgrade plan.............seccee 2.2 PIPELINE GAS FLOW:WEST SIDE OF COOK INLET.wee 2.3 IN-GROUND STORAGE.......ssssccsrsscsorsesnessssesensssessssecesesssccesoneesesssnsoassensessneseassascsasecesosseceeeeseeeeeens 3 PROJECTED COOK INLET FLOW SCENARIOS,WINTER 2011/2012 35 3.1 COLD DAY FLOW AT 350 MMSCED ......c.cssssscessscssecessseerneesesnseeceassacenersstsceessesesceaseeeenseseesonsenes 36 3.1.1 All equipment on-line...36 3.1.2 Loss of some BRU production 0.0...ccs 38 3.1.3 Loss of all production from the Steelhead platform ..........139 3.2 PEAK FLOW ON EXTREMELY COLD DAY AT 425 MMSCED.......-40 3.2.1 All equipment on-line,location of temporary compression...40 3.2.2 Loss of some BRU production,temporary COMPTeSSION ..........cescsssseseesesseeeseeseesetectsteree 41 3.2.3.Loss of all production from the Steelhead platform «2.00.0...essesesesesetseetestseseceseseatseneenenens 44 3.3 JUSTIFICATION OF PROPOSED COOK INLET TRANSMISSION SYSTEM MODIFICATIONS ..45 3.3.1 Remove check valves to allow east-west flow through CIGGS............ccsscssssesessssneeeessseeee 45 3.3.2 Install temporary gas compressor to enhance east-west flOW «0.0.0...eeseseeceeeteeeeeteteeeeteees 45 List of Figures Figure 2.1:ENSTAR east side profile,500 psig to Kalifonsky.........ssesessscssesssseseseesseeensesensessteseeseseeee 33 Figure 2.2:ENSTAR east side profile,575 psig Kalifonsky inlet...33 Figure 2.3:ENSTAR east side profile,650 psig Kalifonsky inlet...sssseetseesssesetseeeeeens 34 Figure 2.4:ENSTAR east side profile,650 psig Kalifonsky inlet,4 Gudenrath compressors..34 Figure 3.1:Cold day,all equipment on-line ........ci ssessssssssecsssessrssssssonssssesarsnsssesesssessesnssssesenves 38 Figure 3.2:Cold day,loss of 25 MMscfd from BRU uu...ccccssssessstseseesssseseesscseseeeeee 139 Figure 3.3:Cold day,loss of all Steelhead supply.....40 Figure 3.4:Peak flow day,all equipment on-line Al Figure 3.5:Peak flow,loss of 25 MMscfd supply from BRU 00000....eeesesessseeereeesseneneneceeersessenenensnearaeaes 42 Figure 3.6:Peak flow,loss of all Steelhead platform supply «0.0.0.0...ce cssseesesesscceneeeseneeerereeserepeneenseees 44 Figure 3.7:Schematic of possible compressor CONNECTIONS ..........sseccseesseesreeserseeesseessecetseseseeesesessesesseeeee 46 List of Tables Table 2.1:ENSTAR planned upgrades to east side Cook Inlet compression,horsepower”..............:0 32 Table 2.2:Estimated winter flow capacity of ENSTAR's east side Cook Inlet system . Table 3.1:Cook Inlet pipelines,general configurations.........rm Table 3.2:Approximate rental compressor flow rates,MMscfd***. Page 29 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 Abbreviations APC Alaska Pipeline Company (ENSTAR) APPL Anchor Point pipeline (also APL) BRU Beluga River Unit BPP Beluga Power Plant CEA Chugach Electric Association COP ConocoPhillips CIGGSCook Inlet Gas Gathering System CINGSA Cook Inlet Natural Gas Storage,Alaska ENSTAR ENSTAR Natural Gas Company F Degrees Fahrenheit FNG Fairbanks Natural Gas HEA Homer Electric Association KKPL Kenai Kachemak pipeline KNPL Kenai Nikiski pipeline KPL Kenai pipelines LNG Liquefied natural gas MAOP Maximum allowable operating pressureMAPMarathonAlaskaProduction MPL Marathon Pipeline MLP Municipal Light &Power MMscfd Million standard cubic feet per day MOC Marathon Oil Company psi Pounds per square inch psig Pounds per square inch gage Page 30 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 1 Introduction Natural gas transmission pipelines encircle north Cook Inlet via APL,KNPL,CIGGS,and MPL Beluga pipelines.CIGGS dual sub-sea pipelines run between Granite Point on the west side of Cook Inlet and the East Forelands near Nikiski.Check valves in the CIGGS pipeline system currently allow flow only from west to east.Cook Inlet gas producers,purchasers and transporters (hereafter referred to as Parties)have agreed that utility customers would be best served by removing these check valves and installing temporary compression at KPLjunction to allow gas flow from east to west across Cook Inlet.The purpose of this white paper is to document benefits of east to west flow through the sub-sea pipelines. The scope of this white paper is limited to justification of the proposed check valve removal and compression installation,and is not intended to be an exhaustive study.A description of ENSTAR's east Cook Inlet transmission system and ENSTAR's compression upgrade plan is included to document east side capacity constraints.Cook Inlet gas transmission flow scenarios during the winter of 2011/2012 are present to illustrate the need for proposed system modifications. 2 Cook Inlet gas flow and production 2.1 Pipeline gas flow:east side of Cook Inlet Currently,all Cook Inlet east side gas production must be stored,consumed locally,or transported to the Anchorage area via the east side because check valves on the CIGGS pipeline system prevent flow from west to east across Cook Inlet.Theoretically,east side gas could be routed to a west side user by shipping gas north through Anchorage,Palmer and Wasilla;but projected volumes would exceed current east side system capacity. ENSTAR operates the Kalifonsky Beach and Gudenrath compressor stations with connecting dual pipelines on the east side of Cook Inlet maintaining a minimum pressure of approximately 550 pounds per square inch gage (psig)at the ENSTAR Potter Station.This minimum pressure is required to serve consumers within the city via ENSTAR's Anchorage area gas transmission pipeline system. 2.1.1 ENSTAR compressor upgrade plan In-ground storage is being added to address ongoing declines in annual production and peak day delivery.This storage will not be available for operation until after the winter of 2011/2012. Regardless of planned compression upgrades,east side flow capacity to Anchorage will remain limited by pipeline capacity. Maximum flow through a pipeline segment occurs when the inlet gas is at the pipeline maximum allowable operating pressure (MAOP)and the outlet pressure is at the desired target.MOAP of pipelines downstream of Kalifonsky and Gudenrath stations are 880 and 1050 psig respectively. In order to increase flow past this maximum,intermediate compressor stations must be added or new pipelines installed in parallel with existing ones (known as line looping). Maximum east side system flow will occur when the Gudenrath discharge pressure is 1050 psig. Various methods exist to achieve MAOP at Gudenrath discharge,but the least expensive and quickest is to add compression at both Kalifonsky and Gudenrath stations.ENSTAR plans to upgrade and add new compression at these stations in stages as shown in Table 2.1.Compression additions and upgrades are shown in red font with off-line spare compression shown in blue font. Page 31 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 "K1”through "K5”refer to numbers of individual compressor units at Kalifonsky.Similar numbering is used for Gudenrath. Table 2.1:ENSTAR planned upgrades to east side Cook Inlet compression,horsepower* Kalifonsky Station Gudenrath Station Year Kl K3 K4 KS Total Gl G2 G3 G4 Total prior 1200 1200 1200 3600 1200 1200 1200 1200 3600 2010 1200 1200 1200 1600 4000 1200 1200 1200 1200 3600 2011 1200 1200 1200 1600 4000 1200 1200 1600 1600 4400 2012 1600 1200 1200 1600 4400 1200 1200 1600 1600 4400 *Additions &upgrades shown in red font;off-line spares shown in blue font Critical to east side Anchorage deliveries is ensuring consistent delivery pressure to the ENSTAR compression facility at Kalifonsky.Flow through the east side system increases with increasing Kalifonsky inlet pressure as shown in Table 2.2. Table 2.2:Estimated winter flow capacity of ENSTAR's east side Cook Inlet system MMscfd to Anchorage at 550 psig at Installed horsepower**various Kalifonsky inlet pressures Kalifonsky Gudenrath 500 psig 575 psig 650 psig 2011/2012 4000 4400 189 209 229 2012/2013 4400 4400 195 216 229 **Does not include station spare,reflects planned upgrades Hydraulic profiles of ENSTAR's east side pipeline system at 550 and 650 psig inlet pressures to Kalifonsky for the 2011/2012 winter are shown below.Raising Kalifonsky inlet pressure from 500 to 650 psig raises Kalifonsky discharge to near MAOP and Gudenrath discharge pressure by about 100 psi,but not to MAOP. ENSTAR's operating philosophy is to have one off-line spare compressor unit available at each compressor station for back up reasons.ENSTAR could operate all four Gudenrath units for a gain of about 6 MMscfd as shown in Figure 2.4.ENSTAR plans to replace aging compression at Kalifonsky with larger equipment during the summer of 2012,which will reduce sensitivity of overall system capacity to Kalifonsky inlet pressure. Page 32 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 ENSTAR eastside Cook Inlet system4000HpatKalifonsky,4400 Hp at Gudenrath 500 psig inlet Kalifonsky,550 psig to Potter 186 MMscfd inlet,15 MMscfd to Soldotna,20 MMscfd added via Royalty Line 2 MMscfd Fuel,189 MMscfd to Anchorage market 40 820 800 780 760 740 ™ gmp=700 Fon }--- 3 6605uo aN aN o 72 SS =is S S580\\560 N 540 520 500 480 Y [)10 20 30 ee)50 0 70 Milepost Figure 2.1:ENSTAR east side profile,500 psig to Kalifonsky ENSTAR eastside Cook Iniet system4000HpatKaliy,4400Hpat575psigtoKalifonsky,550 psig to Potter 207 MMscfd Inlet,15 MMscfd to Soldotna,20 MMscfd added via Royalty Line 2 MMscfd Fuel,209 MMscfd to Anchorage Market 880 860 840 820 800 --780 3 NN3760&N\2 740 Xg720NX SQ-700 Xfoe\N\§660£\N\nen N\\a N\ \an \560 N $40 °10 2 30 0 50 oo 70 Milepost Figure 2.2:ENSTAR east side profile,575 psig Kalifonsky inlet Page 33 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 ENSTAR eastside Cook Inlet system 4000 Hp at Kalifonsky,4400 Hp at Gudenrath 650 psig to Kalifonsky,550 psig at Potter 227 MMscfd iniet,15 MMscfd to Soldotna,20 MMscfd added via Royalty Line 2 MMscfd Fuei,229 MMscfd to Anchorage market 940 920 900 880 860 =ots%200 aN 5 10Zz760 740E70 "Sn a5 700 XY N\=680ioo AN SbanANpostANatXonN \$60 BY 0 10 20 x 40 50 6 70 Milepost Figure 2.3:ENSTAR east side profile,650 psig Kalifonsky inlet ENSTAReastside Cook Inlet system4000HpatKalifonsky,5600 Hp at 650 psig to Kalifonsky,550 psig at Potter 232 MMscfd Iniet,15 MMscfd to Soldotna,20 MMscfd added via Royalty Line 3 MMscfd Fuel,235 MMscfd to Anchorage market 960ze S 900 880 860 840 z 8203aw Ne®780i700 S740 g 70 Sq700xX&680 X XNo66040aN\ N \bes N600580\ \560 ' 540 °10 20 30 "0 50 60 70 Milepost Figure 2.4:ENSTAR east side profile,650 psig Kalifonsky inlet,4 Gudenrath compressors 2.2 Pipeline gas flow:West side of Cook Inlet Current peak gas production from the west side of Cook Inlet is about 190 MMscfd,with additional deliverability provided by the Pretty Creek Storage Facility.West side gas sources Page 34 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 include the Steelhead platform,various wells near the Granite Point Junction,the Beluga River Unit (BRU)and various wells east/northeast of the BRU (see Figure 3.1).West side production is expected to be 160 MMscfd by the end of 2011 and may decline 10-20%annually in subsequent years. Currently gas from the Steelhead platform can be transported across Cook Inlet through CIGGS for injection into in-ground storage near Nikiski,consumed on the Kenai peninsula,transported on ENSTAR pipelines to Anchorage,or routed west on BPL toward the BRU and then on the ENSTAR Beluga pipeline.Gas near Granite Point Junction may be routed west to east through CIGGS,or can be routed northeast on BPL towards the BRU and to the ENSTAR Beluga pipeline. Approximately half of the 60 MMscfd from the Steelhead platform is Marathon (MAP) production which may be shipped to the LNG plant or other consuming parties.MAP has the option to deliver Steelhead gas to CEA (effective April 1,2011),ENSTAR (under current contracts)or other consuming parties.CEA's preference is to purchase MAP's Steelhead gas, which can be transported from Granite Point northeast on BPL to the Beluga Power Plant (BPP). The balance of Steelhead production is Unocal's and is usually transported across CIGGS to the east side for sale to ENSTAR or temporarily stored in Swanson River.Unocal's Steelhead gas can physically be tendered to ENSTAR at ENSTAR's Beluga pipeline,incurring incremental pipeline tariffs for transport via Marathon's Beluga pipeline from Granite Point to ENSTAR's Beluga pipeline. Aurora transports approximately 5 MMscfd via Marathon's Beluga pipeline and then ENSTAR's Beluga pipeline for delivery to Fairbanks Natural Gas west of Wasilla.BRU gas is currently contracted to supply a portion of the BPP,supply MLP's power plants and meet Union's obligations to ENSTAR.Approximately 15 MMscfd of production north and east of the BPP is delivered into ENSTAR's system including gas from Ivan River,Stump Lake and Lewis River fields;and from Pretty Creek in-ground storage. 2.3 In-ground storage There is limited in-ground gas storage on the west side of Cook Inlet at the Pretty Creek Storage Facility and there are currently only conceptual plans for development of more west side storage. Gas is currently being stored in-ground on the east side of Cook Inlet in the Swanson River and Kenai Gas fields.CINGSA's new in-ground storage in the Cannery Loop field,on the east side of Cook Inlet,will supplement existing storage and is expected to be operational by the winter of 2012-2013. Historically a significant portion of Cook Inlet gas production was liquefied at the Kenai LNG plant for export to Japan.ConocoPhillips and Marathon recently announced that the Kenai LNG plant will be shut down in the spring of 2011.It is unclear how the LNG plant shut down will affect seasonal Cook Inlet gas production.There is a concern by the producers that summer 2011 production curtailment may have an adverse effect on reserves and deliverability. 3 Projected Cook Inlet flow scenarios,winter 2011/2012 Natural gas supplies and demand have changed over the past decades with relatively more production and gas storage on the east side of Cook Inlet than on the west.Currently,all gas from east side production and storage must flow north through ENSTAR's dual pipeline system across Turnagain Arm to reach Anchorage.As discussed elsewhere,ENSTAR is upgrading and adding Page 35 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 compression on their east side system,but a practical flow limit exists without adding new pipelines. Cook Inlet gas producers,consumers and transporters are concerned that the overall Cook Inlet gas pipeline transportation system may be insufficient to move gas from the Nikiski area to consumers during cold days of high demand and very cold days of peak demand.Diagrams of possible Cook Inlet flow scenarios for the winter of 2011/2012 are offered in this section to illustrate that gas consumers will be best served by: 1.Removing check valves in the dual CIGGS sub-sea pipeline to allow gas flow from southeast to northwest across Cook Inlet;hereafter referred to as east-west flow;and 2.Adding temporary compression at KPL junction on the east side to enhance east-west flow while accommodating many commercial issues between Parties. Flow diagrams are discussed assuming the above two proposals have been implemented.General Cook Inlet operations are described in Section 3.1.1.Detailed discussions of these proposals follow presentation of the flow diagrams. For the purposes of this document,a cold day is defined as any combination of weather conditions that results in a system-wide Cook Inlet demand of 350 MMscfd."Cold day”and "350 MMscfd demand”are used interchangeably in this document.An extreme cold day is defined as any weather circumstance that results in system-wide Cook Inlet demand of 425 MMscfd.The terms "extreme cold day”,"425 MMscfd demand”and "design peak”refer to the same circumstance. 3.1 Cold day flow at 350 MMscfd 3.1.1 All equipment on-line General configurations of Cook Inlet pipelines with MAOP are shown in Table 3.1.It is important to note that CIGGS pipelines have higher MAOPs than the pipelines to which they connect.Production from Steelhead and Granite Point area is compressed to enter the CIGGS system at high pressure. Cold day operation with all production and gas transmission equipment on-line is depicted in Figure 3.1.Referring to Figure 3.1,approximately 25 MMscfd of MAP's relatively high pressure production from the Steelhead platform plus approximately 5 MMscfd of Aurora Granite Point area production can flow through MPL's Beluga pipeline to the BPP.MAP's production can either be consumed within the BPP or pass around the plant with Aurora's gas to enter the lower pressure ENSTAR Beluga pipeline. Table 3.1:Cook Inlet pipelines,general configurations Nominal diameter }Length}MAOP(inches)|(miles)(psig) Marathon CIGGS west side 16 26.11 1118 CIGGS sub-sea dual 2x10,each 21 1920 CIGGS east side 16 5.26 1118 Beluga (Granite Point to Beluga)16 16.2 1440 KNPL (Kenai to Nikiski)20 17.55 975 ENSTAR Beluga (Beluga to Anchorage)20 101.6 1031 Royalty 8 24 1050 Page 36 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 Dual,Kalifonsky to Gudenrath 12 &16 22.88 880 Dual,Gudenrath to Burnt Island 12 &16 38.8 1050 Dual,Burnt Island to Potter 12 &12 9 780 KKPL (Kenai -Kachemak)12 49 1480 APPL (Anchor Point -KKPL)8 21.1 1480 ConocoPhillips North Cook Inlet 2x10 &16 2227 222? Unocal Swanson River 16 2999 1200 During a cold day,collectively about 15 MMscfd of west side gas supply would be available from Ivan River,Stump Lake,Lewis River and Pretty Creek Storage.All west side production routed through ENSTAR's Beluga pipeline would be consumed by west side demand with approximately 10 MMscfd required to pass through Anchorage to Palmer to make up the shortfall in west side production.The alternative to transport additional gas through the ENSTAR dual pipelines under this scenario is not certain due to pipeline pressure problems involving gas transport through Anchorage to the Wasilla/Palmer area. Approximately 35 MMscfd of Steelhead production would be routed through the high pressure CIGGS system to KPL junction where it would either sent to storage at Swanson River or tendered to ENSTAR via the Royalty line,or routed down KNPL to ENSTAR.Unocal has invested capital to configure their Steelhead production to take advantage of CIGGS high operating pressure so that gas delivered to the east side can be injected it into Swanson River storage with less compression than otherwise,or delivered to ENSTAR's Kenai pipelines without additional compression. Gas is delivered to Homer Electric Association (HEA)from MPL's KNPL.Gas is delivered to Kenai from various sources prior to the inlet of ENSTAR's Kalifonsky station.Approximately 15 MMscfd would be delivered to Soldotna and other consumers from the ENSTAR dual pipeline system between Kalifonsky and Gudenrath stations (shown on the drawing as H/K/S near Soldotna). Page 37 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 350 MMscfd Cook Inlet demand and production,100%on-line i Westside productionanddemand 3 5 BRU ne15Aurora*60 Re Wie po---|Unit Pretty Creek&85 CEA ¥misc.west side 15 PC :60 Steelhead ciecs Beluga 25 West Granite Pt H Beluga Power {Beluga 'junction -->plant : |low 35 Flow 30 "--|Flow 45 |i Ow |nae "All Aurora gasine©Be ie 4 to Feirbente NG 5 FNG : North ':Cook Inlet Bocrnccereenacccceeeccnncs H |Flow 40 ' 10 Tesoro Swanson , River pasa 5SOWP ' Cannery |{_anne Gay enenieenmmnnaeaaas Kenai Gas Kalifonski Gudenrath i Field Kenai }station station $<aechorage ]35 MLP 20 H/K/S 145 Anch KKPL Supply =350 Ali numeric values are 60 Steeihead approximate MMscfd.5 Aurora -Marathon pipelines 85 BRU -Enstar pipelines APPL 15 PC &west --ConocoPhillips 185 East side -Unocal Figure 3.1:Cold day,all equipment on-line Gas from Marathon's Kenai Gas Field is tendered to ENSTAR via the KNPL.Approximately, 190 MMscfd of east side gas would be transported north via ENSTAR's east side system to south Anchorage at current east side delivery pressures. 3.1.2 Loss of some BRU production A number of compressors will be used in the BRU to deliver a total of 85 MMscfd of supply and loss of any one of these compressors would not result in loss of all BRU supply.Cook Inlet flow assuming loss of some BRU compression with the resulting loss of 25 MMscfd of BRU supply is shown in Figure 3.2. Only one of many postulated circumstances for gas flow around the BPP and BRU is depicted. Regardless of how gas would be physically consumed by or routed around the BPP,25 MMscfd of gas that prior was routed through MPL's CIGGS dual lines from west to east must now be routed through MPL's Beluga pipeline with potential impact on tariffs. The flow rate to Anchorage via ENSTAR's east side system to Anchorage would not change. Page 38 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 350 MMscfd Cook Inlet demand and production,25 BRU loss {Westside production anddemand =ss- =<S *s'"'= *™S™*™*™*S”S”S”SS”SS6 OBRUee'Bel :5 Aurora *35 River worry rove]Unit Pretty Creek&F]B5CEA &misc.west side |15 PC60SteelheadciesHBeluga25i iWestGranitePt'Beluga Power Beluga 'junction ->plant iFlow55[lt ||Flow 45 |H Flow S H'Flow 10 |Dual " "All Aurora gas a ' GR a 7 to Fairbanks NG SFNG North '' Cook Inlet Rrococccsscanccccesseeeecey |Flow 40 ' 10 Tesoro Swanson i Wasilla : River t Palmer SO.WP Cannery |_Royalty Moreno nprc dco sosececcccrensaeLoopFlow190fFlow10 Kenai Gi Kalifonski Gud th'enai Gas alifons!udenra Field Kenai |station station SS rvhorace |35 MLP 20 H-K-S 145 Anch KKPL Supply =350 Demand =350 All numeric values are 60 Steelhead 85 CEA approximate MMscfd.5 Aurora 5 Fairbanks NG --Marathon pipelines 60 BRU 50 Wasilla/Palmer -Enstar pipelines APPL 15 PC &west 35 MLP --ConocoPhillips 210 East side 145 ENSTAR Anchorage --Unocal 30 HEA/Kenai/Soldotna &Tesoro Figure 3.2:Cold day,loss of 25 MMscfd from BRU 3.1.3 Loss of all production from the Steelhead platform Steelhead platform is equipped with two gas compressors;one with 60 MMscfd capacity and the other with 40 MMscfd.A circumstance in which both Steelhead compressors are off-line with loss of all supply is depicted in Figure 3.3.A total of 245 MMscfd of east side supply would need to be found with 25 MMscfd sent east to west via CIGGS.Check valves on the CIGGS dual sub- sea pipeline would have to be removed to allow east to west flow. East side supply routed east to west would come from KKPL to KNPL,KNPL,North Cook Inlet, Swanson River or Royalty pipelines,all of which operate at a lower pressure than CIGGS.Either CIGGS pipeline pressure must be reduced or east side compression installed for east side gas to enter CIGGS.For reasons described in Section 3.2.2,installation of temporary rental compression is proposed to allow flow from KPL junction east to west through CIGGS. Page 39 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 350 MMscfd Cook Inlet demand and production,no Steelhead Westside production and demand Beluga |85 BRU River Unit Pretty Creek&misc.west side 15 PC0Steelheadcises25H :Steelhead West Granite Pt |__Beluga :;junction :|Flow 45 |CIGGS tFlow25tDual"All Aurora gas ' ne©Aisa os lies 4 to Fairbanks NG SFNG Remove checkvalves -----_______»;!North 'H .ciGGS :'Install compression East Cook Inlet Rononcccrareoneenseacosceey |Flow 40 : 10 Tesoro |Tesoro |KPLjunct Swanson «' , iRiWasillaH HEA Wer !Paimer 50 WP : Cannery Royalty ian hrs loop (777/Kne Flow 190P Ow -> Kenai Gas Kalifonski Gudenrath |Anchorage |Field Kenai |station Soldotna station Anchorage |35 MLP 20 H-K-S 145 Anch rm F KKPL Supply =350 Demand =350 numeric values are 0 Steelhead 85 CEA approximate MMscfd.5 Aurora 5 Fairbanks NG -Marathon pipelines 85 BRU 50 Wasilla/Palmer -Enstar pipelines APPL 15 PC &west 35 MLP -=ConocoPhillips 245 Eastside 145 ENSTAR Anchorage -Unocal 30 HEA/Kenai/Soldotna &Tesoro Figure 3.3:Cold day,loss of ali Steelhead supply 3.2 Peak flow on extremely cold day at 425 MMscfd Common to all peak flow scenarios is that some flow is required east to west through CIGGS; therefore,existing CIGGS check valves must be removed.Peak east side supply requirements are anticipated to range between 260 and 320 MMscfd depending on postulated scenarios. Availability of east side supply will be a challenge for all peak flow scenarios.The following peak flow scenarios are based on removal of CIGGS check valves and installation of compression at KPLjunction. 3.2.1 All equipment on-line,location of temporary compression Operation of the Cook Inlet gas transmission system subject to peak flow on an extremely cold day with all supply and gas transmission equipment on-line is shown in Figure 3.4.Flow through ENSTAR's east Cook Inlet system is shown at a rate greater than simulated flow at low KNPL inlet pressure,but less than 230 MMscfd simulated maximum flow achieved with higher KNPL inlet pressures (see Table 2.2).This mid-range value was selected to reasonably depict operation below theoretical maximum. Page 40 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 425 MMscfd Cook Inlet demand and production,100%on-line TWestsideproductionanddemand 3 '85 BRU : !Pretty Creek& 'misc.west side 15 PC '60 Steelhead cices : Granite Pt Beluga Power j_Beluga ! junction -=>plant !Flow 70 |Flow 85 |;FI 5 ciccs Flow 45 ' H OW Dual "Ail Aurora gas B a ' Lee ee ee ee Pee +to Fairbanks NG SFNG North ''CIGGS :: East Cook Inlet Rooccnen secon ees esecseccc cy J Flow 80 '10 Tesoro |Tesoro |KPL junct Swanson 'i :Ri 'Wasilla ' HEA wer 'Palmer 7OWP Cannery Royatty a ieee Loop [7 KNPL Flow 220 |Flow 10 Gi lifonski Gud thKenaiGasKalifonskiudenra Field Kenai |station Soldotna station |rrerorage ]40 MLP 25 H-K-S 190 Anch KKPL Supply =425 Demand =425 All numeric values are 60 Steelhead 85 CEA approximate MMscfd.5 Aurora 5 Fairbanks NG -Marathon pipelines 85 BRU 70 Wasilla/Palmer -Enstar pipelines APPL 15 PC &west 40 MLP --ConocoPhillips 260 East side 190 ENSTAR Anchorage -Unocal 35 HEA/Kenai/Soldotna &Tesoro Figure 3.4:Peak flow day,all equipment on-line An incremental 75 MMscfd of peak supply from east side storage and production will be required to satisfy peak demand as compared to a normal cold day operation (425 -350 MMscfd).Capacity of ENSTAR's east Cook Inlet system is not sufficient to move all this incremental supply to Anchorage and MLP,let alone Wasilla and Palmer.All west side production,plus a small amount of east side gas will have to be routed through west side pipelines. 3.2.2 Loss of some BRU production,temporary compression Cook Inlet transmission flows during peak demand and loss of part of BRU supply are depicted in Figure 3.5.Regardless of commercial gas trade agreements,approximately 30 MMscfd of gas would physically need to flow east-west across CIGGS.It is unlikely that replacement gas would be available on a peak day in the event of a25MMcfd production loss. Page 41 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 425 MMscfd Cook Inlet demand and production,25 BRU loss :Westside production and demand 60 BRU H Pretty Creek& 'misc.west side 15 PC 60 Steelhead cices Beluga 0 'Granite Pt |}Beluga Power {Beluga ' junction ->|plant ' Flow95 |Flow 85 |Flow 30 t aes Flow 70 "All Aurora gastoFairbanksNG [gaat 5 ENG ciGcs North HEastCookInletSsosrreeecnnsassssseeccnn |Flow 80 | Swanson ';River i Wasilla 70 WP10Tesoro|Tesoro |KPLjunct :Palmer Cannery |_Royalty aii ihre Loop Flow 220 |Flow 10->> Kenai Gas Kalifonski Gudenrath SJ Archorage |AncheFieldKenai|station station nchorage |40 MLP 25 H-K-S 190 Anch KKPL Supply =425 Demand=425Allnumericvaluesare60Steethead85CEA approximate MMscfd.5 Aurora 5 Fairbanks NG -Marathon pipelines 60 BRU 70 Wasilla/Palmer -Enstar pipelines APPL 15 PC &west 40 MLP -ConocoPhillips 285 East side 190 ENSTAR Anchorage --Unocal 35 HEA/Kenai/Soldotna &Tesoro Figure 3.5:Peak flow,loss of25MMscfd supply from BRU 3.2.2.1.Temporary gas compression East-west flow through CIGGS can be achieved by either reducing operating pressures of CIGGS and downstream west side pipelines to below KNPL operating pressure,or installing compression to raise gas from KNPL to historically higher CIGGS operating pressures.It is proposed to install temporary gas compression at KPL junction to raise east side gas pressure because this would: e Allow ENSTAR to maintain line pack in its Beluga pipeline for emergency gas supply during periods of peak gas demand; Allow gas to physically be bypassed around the BPP; Mitigate potential commercial issues regarding transmission system operations near KPL junction. Line pack Without proposed east side gas compression,CIGGS operating pressure would have to be reduced below that of KNPL in order for gas to move east to west.System pressures would Page 42 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 progressively drop through CIGGS and MPL's Beluga pipeline to the BPP.Inlet pressure to ENSTAR's Beluga pipeline would be set at the outlet pressure from MPL's Beluga pipeline for gas to proceed northeast to Wasilla. By definition,a peak flow day is a circumstance in which most if not all Cook Inlet production and transportation equipment would be on line to meet demand.ENSTAR has historically operated its Beluga pipeline at around 800 psig to provide line pack to serve as emergency supply should transmission or production equipment fail thereby reducing gas deliverability.The stored gas by line pack allows for a 10-20 MMscf temporary supply to address producer or transportation issues. ENSTAR transports gas for MLP and CEA;however,these companies are not ENSTAR customers.Should MLP or CEA loose supply entering ENSTAR's system,ENSTAR would quickly curtail gas delivery to MLP or CEA respectively by the same amounts.Line pack maintained in the ENSTAR Beluga pipeline for ENSTAR customers also provides MLP and CEA very limited,but crucial time to secure replacement supplies. As depicted in Figure 3.5,loss of part of BRU production could result in more gas bypassing the Beluga power plant than available from the BRU.If ENSTAR operates its Beluga pipeline at normal pressures ensuring emergency line pack,and such pressures exceeded the pressure of gas delivered to the BPP from the south;plant bypass could not occur.Under such conditions only 60 MMsefd of high pressure gas would be available from the BRU,and a 10 MMscfd deliverability shortfall would occur in Wasilla. Installation of compression on the east side of Cook Inlet to allow east-west flow with high CIGGS operating pressures would increase system operating flexibility by allowing ENSTAR to maintain emergency line pack while gas bypass around the BPP. Gas bypass around the Beluga Power Plant As described above,if east to west deliveries are to be made,east side compression will be required to maintain existing gas contracts and deliveries.Shippers on MPL's BPL may have to enter into new contracts,gas trade/exchange agreements,or other commercial arrangements to make deliveries to the BPP and displace BRU production that would instead be delivered at a higher pressure into ENSTAR's system.The installation of east side Cook Inlet compression for east to west flow would alleviate these problems and allow deliveries to continue under existing agreements. East side pressure related issues Unocal currently transports gas from the Steelhead platform to Swanson River storage via CIGGS pipelines.Unocal operates its Swanson River storage injection compression to take advantage of relatively high suction pressures achieved via Steelhead compression and high CIGGS pipeline operating pressures.High CIGGS east side pressures provide Unocal with the option to preferentially route gas to ENSTAR's Royalty pipeline thereby bypassing Marathon's KNPL pipeline and avoiding the associated tariff. Unocal would like to retain the ability to inject gas into Swanson River during east to west flow through CIGGS.Gas can't simultaneously flow both directions through CIGGS and a trade agreement would be required for Unocal to receive equivalent gas volumes for Swanson River injection.At issue is whether traded gas available on the east side would be at the same pressure as Unocal's gas that otherwise would have been delivered west to east.Unocal would be disadvantaged if traded gas was at a lower pressure thereby requiring operation of incrementally more Swanson River injection compression. Page 43 of 46 Cook intet Gas Gathering System Grant Agreement #7910006 Compression could be installed at the west end of the CIGGS East pipeline where it intersects CIGGS dual sub-sea pipeline,or on the east of end of CIGGS East pipeline at KPL junction. MAOP of CIGGS dual sub-sea pipelines is greater than that of CIGGS East (see Table 3.1). Installing the compressor at the intersection of CIGGS East and dual sub-sea pipelines would allow higher compressor discharge pressures and theoretically more east-west flow capacity than if installed at KPL junction. Installing compression at the intersection of CIGGS East and dual sub-sea pipeline would not address Unocal's commercial issues described above because KPL junction operating pressure would be the same as KNPL.It is proposed to install the compression at KPL junction to mitigate adverse commercial impact to Unocal. 3.2.3 Loss of all production from the Steelhead platform Cook Inlet gas transmission pipeline flow subject to an extremely cold day and loss of all Steelhead platform supply is depicted in Figure 3.6.East side production will be severely taxed to provide the postulated 320 MMscfd deliverability.It is unlikely that the loss of Steelhead production could be replaced by production or storage gas on the peak day. The circumstance depicted in Figure 3.6 will create commercial issues for shippers because gas previously tendered to ENSTAR on the east side will be burdened with incremental tariffs from Marathon's CIGGS and Belugas pipelines. 425 MMscfd Cook Inlet demand and production,no Steelhead ee ee en nt ee eee en enn nee ee'West side production and demand 'Beluga |85 BRU'River Unit Pretty Creek &misc.west side 1S PC 0 Steelhead ciges 25 HWestGranitePt1 Beluga :junction :|Flow 85 |Flow65 f class ' ' ' : '*All Aurora gasLeessaeeeesneessoaeesensesseseesenspcelfcnecesccoseeseenteteesseeee,te arene NG 5 ENG ' ' cices North : East Cook inlet |bevz+-ereereeceeeeesceees :|Flow 80 : 10 Tesoro |Tesoro KPL junct Swanson 'Wasilla ' HEA River :Palmer 70 WP ! Cannery |_Royalty Sp nga Loop -F KNPL Flow 220 |Flow 10--> Kenai Gas Kalifonski Gudenrath _---_--_-__$-_-_-_-___-_-_-__J idotn:AnchiFieldKenai}station Soldotna station oreee |40 MLP 25 H-K-S 190 Anch KKPL Supply =425 Demand =425 Ail numeric values are 0 Steelhead 85 CEA approximate MMscfd.S Aurora S Fairbanks NG -Marathon pipelines 85 BRU 70 Wasitla/Palmer -Enstar pipelines APPL 15 PC &west 40 MLP --ConocoPhillips 320 East side 190 ENSTAR Anchorage -Unocal 35 HEA/Kenai/Soldotna &Tesoro Figure 3.6:Peak flow,loss of all Steelhead platform supply Page 44 of 46 Cook iniet Gas Gathering System Grant Agreement #7910006 3.3 Justification of proposed Cook Inlet transmission system modifications 3.3.1 Remove check valves to allow east-west flow through CIGGS Anticipated peak demand during the winter of 2011/2012 cannot be met unless check valves are removed to allow east-west gas flow through CIGGS.Maximum capacity of ENSTAR's east Cook Inlet transmission system is insufficient to deliver all necessary east side production to Anchorage.An obvious side benefit of providing for CIGGS east-west flow would be to allow west side transmission lines to move east side gas if ENSTAR's east side compression or pipelines were compromised for whatever reason. It is possible to configure the CIGGS dual sub-sea pipeline to allow simultaneous flow in opposite directions.Valves and piping modifications to allow such bi-directional flow would be more expensive than simply removing CIGGS check valves.The proposed removal of CIGGS check valves is based on the premise that commercial terms can be developed to avoid the need for simultaneous bi-directional flow across Cook Inlet. 3.3.2 Install temporary gas compressor to enhance east-west flow East to west flow through CIGGS can be achieved by either lowering operating pressures of CIGGS,Marathon Beluga and ENSTAR Beluga pipelines to less than KNPL,causing the issues and challenges described above,or east to west flow can be achieved by installing compression at KPL junction to raise the pressure of gas from KNPL.Installation of compression at KPL junction will enhance security of flow for parties responsible to move gas from the east side of Cook Inlet to the west side during normal operations while also allowing ENSTAR to maintain pressure and line pack in their Beluga pipeline for contingency supply during periods of peak system-wide demand. Lowering west side operating pressures was rejected in favor of installing compression at KPL junction because: e ENSTAR Beluga line pack during periods of high or peak flow can be maintained; e Gas can be transported under stress conditions from the Marathon 16 inch Beluga Line to the ENSTAR 20 inch Beluga line thereby providing more operational flexibility; Raising gas pressure at KPL junction provides more east side operational flexibility; Potential commercial issues associated with east to west flow are avoided,and; CEA will have a full range of supply options for the BPP. 3.3.2.1 Compressor capacity Approximate throughput rates for a generic 1000 Hp reciprocating compressor are shown in Table 3.2. Table 3.2:Approximate rental compressor flow rates,MMscfd*** Outlet,psig |600!700]800]900]100 0 500 psig inlet 92 49 34 27 22 575 psig inlet 86 50 36 29 650 psig inlet 82 $2 38 ***40 degree feed and 65%adiabatic efficiency Page 45 of 46 Cook Inlet Gas Gathering System Grant Agreement #7910006 3.3.2.2 Compressor connections A schematic of a possible compressor connection at KPL junction is shown in Figure 3.7.The connection scheme shown would compress KNPL gas into the CIGGS line entering KPL junction upstream of existing pipe manifolds,valves and instrumentation.This would allow Unocal to route gas to Swanson River or to ENSTAR's Royalty line using existing piping and at pressures similar to current operation with west to east CIGGS flow. ,Existing 1 pipingat 20”KNPL 16”CIGGS -eee=Jliquid knock out Rental compressor Figure 3.7:Schematic of possible compressor connections Page 46 of 46 CIGGS Grant Information Introduction The reliable supply and deliverability of increasingly constrained Cook Inlet natural gas is essential to the fuel supply security of Southcentral Alaska.Chugach Electric Association,Inc.(Chugach),Anchorage Municipal Light &Power (ML&P)and Enstar Natural Gas Company (Enstar)rely on a secure supply of natural gas for the provision of reliable service to their respective consumers. The reliability of gas supply and deliverability can be increased with the ability to transport gas to the west side of Cook Inlet via the Cook Inlet Gas Gathering System (CIGGS)pipeline.The availability of gas on the west side enhances gas supply reliability for Chugach's Beluga power plant and provides gas via another route for delivery to ML&P and Enstar. East to west gas flow can be accomplished by making valve changes.However,to flow the gas from east to west also requires additional compression.The compressor that will be installed will be rented.It is expected the compressor will only be needed for one year because the Cook Inlet Gas Storage Alaska (CINGSA)project that will go into service in 2012 is expected to deliver gas at a pressure adequate to mitigate the need for additional compression. A detailed summary of the Cook Inlet gas supply situation and the need for this project can be found in the attached study entitled:"White Paper:Removal of Check Valves and Installation of Compression to Allow East to West Flow through CIGGS Dual Sub-sea Pipelines”. Marathon is the owner of the CIGGS pipeline and will perform the work on behalf of the utilities.Chugach,ML&P and Enstar have entered into cost reimbursement agreements with Marathon to accomplish bi-directional gas flow and install the required metering. Chugach has entered into a reimbursement agreement with Marathon for the installation of the rental compressor. Scope of Work,Budget and Timeline The scope of work to accomplish the entire project consists of three components: 1.To enable bi-directional gas flow on the CIGGS pipeline,Marathon will perform the engineering,planning,procurement,construction,commissioning and documentation to: a.Remove check valves impeding bi-directional flow,either replacing with piping or otherwise removing the impediment. (\GGS CleainS CD b.Design,fabricate and install bypass piping around the East Forelands separators,which as currently constructed,allow gas to flow in only one direction. c.Replace the CIGGS to Kenai Nikiski Pipeline (KNPL)401 control valve, which currently allows flow in only one direction,with a bi-directional control valve. d.Other work as needed to implement east to west flow. e.Implement measures,procedures and training for scheduling,accounting, and control room activities to handle gas nominations from the existing and the new CIGGS east side receipt points to facilitate gas movement to all of the CIGGS delivery points,both East Side and West Side.Update all software accordingly. To install required metering,Marathon will perform the engineering, planning,procurement,construction,commissioning and documentation to: a.Upgrade the CIGGS to KNPL metering at meter 401 meter by replacing the existing meter with a bi-directional meter. b.Set up the KNPL pipeline operations and procedures to allow use of Meter 401 as a delivery point from KNPL into CIGGS. c.Implement measures,procedures and training for scheduling,accounting, and gas control to facilitate and allow nominations for gas transportation from all of the various KNPL receipt points to the new 401 delivery point into CIGGS.Update all software accordingly. d.File and seek any necessary regulatory approvals. To install a rented compressor,Marathon will perform the engineering, planning,procurement,construction,commissioning and documentation to: a.Identify a suitable block valve in the KNPL mainline at Kenai Pipeline Junction or,if none exists,install such a valve. b.Identify a suitable tee in the KNPL mainline on each side of the above mentioned block valve or,if none exists,install such tee. c.Install a double block and bleed ball valve on each such tee. d.Contract for a rental compressor and arrange for its delivery to KPL Junction and return compress to vendor. e.Lease land for the compressor. f.Clear and grade land and do other site preparation such as lighting, security,power and water hook-ups. g.Install suction and discharge piping between KNPL tees and rental compressor. h.Install fuel gas tap and hook-up. Provide by contract for physical operation and maintenance of the compressor by a local team of people who will operate the compressor and open and close associated valves. j.After demobilization,return site to condition consistent with site lease.be k.Obtain all permits and needed regulatory approvals. The first phases of the project (enabling bi-directional flow and installing required metering)are to be completed by October 31,2011 at a combined cost not to exceed $2 million. The second phase of the project (installing the rented compressor)is to be completed by October 31,2011 at a cost not to exceed $2.7 million.This amount is capital cost only and does not include monthly operation and maintenance expenses such as rental of the compressor and operations and maintenance expense. James Strandberg rom:Butch White Sent:Thursday,August 18,2011 9:15 AM To:Ron Vecera Ce:Shawn Calfa;James Strandberg Subject:RE:Information for CIGGS Grant Ron For the CIGGS grant,we have the draft ready;but the budget provided needs to be updated so AEA can tell what the funds are being used.Basically,we need the budget in the more traditional grant format: Admin Engineering Construction Other Call with questions.Butch From:Ron Vecera [mailto:Ron_Vecera@chugachelectric.com] Sent:Monday,August 08,2011 10:45 AM To:Butch White Ce:Thibert,Lee ubject:Information for CIGGS Grant Butch: Attached is background,scope of work,timeline and budget information for CIGGS grant document preparation. Please advise of any questions or further information needs.Thanks. Ron White Paper:CIGGS East to West Flow White Paper: Removal of Check Valves and Installation of Compression to Allow East to West Flow through CIGGS Dual Sub-Sea Pipelines Prepared by: Chugach Electric Association Anchorage Municipal Light and Power ENSTAR Natural Gas Company March,2011 CEA,ENSTAR and MLP March,2011 White Paper:CIGGS East to West Flow Contents 1 Introduction oo...csccesseesssecsssesssecsscesscesescseesseessseseseeessessesessesssesesesesseeosesssesesseostsceseoseseseees 1 2 Cook Inlet gas flow and production ......ec eesssessseseseesetsesseseasessessssssnsseesasesasscecseaseeseneeeesseasons 1 2.1.Pipeline gas flow:east side of Cook Inlet 0...cee esesescesscreesceesseensseessscensessessasseeene 1 2.1.1 ENSTAR compressor upgrade plan.........ceeesssescesesscesseecsesessecseeecetecnsesseeesesensseeeses I 2.2 Pipeline gas flow:West side of Cook Inlet...ec ceccssscceseeesssssesssesssseseesssessessessessanene 5 2.3 In-ground Storage ........seessesscrscsscsscsscssesssessesseseesssusesssuseuseusessesseuseseeuseueessesseseesseusesaenenea 5 3.Projected Cook Inlet flow scenarios,winter 2011/2012...........000.Lesaeecceeceecceaceeaeeeeeseteeeeneeaes 6 3.1 Cold day flow at 350 MMSCfd .........cescscsssssscsssssscsrssscetessssssrssessnecsuesssscssenessssnersaseasoesoes 6 3.1.1 All equipment on-line oo.c ccecceeesscsceseesssseeseessseessccscensessesessssceseseesteeneensasseee 6 3.1.2 Loss of some BRU production...eecssceesseeseessseeeseecsssesseessssesseessesseeessensseseees 8 3.1.3.Loss of all production from the Steelhead platform 0.0...ee eeeseseectecseeeeeeeenseeseeee 9 3.2 Peak flow on extremely cold day at 425 MMscf ..0....ees ecsesceeeeseeeceeeeeeneeseseneeseeseesees 10 3.2.1 All equipment on-line,location of temporary COMPFESSION ........ssescsseesertsctsseeeee 10 3.2.2 Loss of some BRU production,temporary COMPTeSSION .........ccsescseesteeseveseeeeseeees 11 3.2.3.Loss of all production from the Steelhead platform .........ccc essessesecreeeeeneeeeeeeenes 14 3.3 Justification of proposed Cook Inlet transmission system modifications ...........cece 15 3.3.1 Remove check valves to allow east-west flow through CIGGS2...eee eeeeeeeees 15 3.3.2 Install temporary gas compressor to enhance east-west flOW 0.0...teseesseseeteesoes 16 List of Figures Figure 2.1:ENSTAR east side profile,500 psig to Kalifonsky..........ccsccscsssessscssesssscssseesssseeeeeess 3 Figure 2.2:ENSTAR east side profile,575 psig Kalifonsky inlet................004 seseeseessesensesessoeeeeoes 3 Figure 2.3:ENSTAR east side profile,650 psig Kalifonsky inlet..........ccccsesssesseresserssessseenseees 4 Figure 2.4:ENSTAR east side profile,650 psig Kalifonsky inlet,4 Gudenrath compressors.......4 Figure 3.1:Cold day,all equipment On-line «0.0...ce eesscssesseeseseeseseesseseensesesenecenesssesseesseeneesesseenss 8 Figure 3.2:Cold day,loss of 25 MMscfd from BRU ........cccsscssesssscsscesesessenessseseeessesesersesserseesees 9 Figure 3.3:Cold day,loss of all Steelhead SuppLy..........ssssesesesssesssseceseneseeseensnseneneesssceseneeeenees 10 Figure 3.4:Peak flow day,all equipment OM-line..........seseesesessssesseneereneeeeesreseeneeenennenesnesssnens 11 Figure 3.5:Peak flow,loss of 25 MMscfd supply from BRU ......csssesessssecerssseenessesescessseseseeees 12 Figure 3.6:Peak flow,loss of all Steelhead platform Supply .........:sssseseseeesesseseresssenenenenenesesesenes 15 Figure 3.7:Schematic of possible compressor CONNECTIONS ........s.scsssesesetesseeseeeseensssesesssesseseeeenes 17 CEA,ENSTAR and MLP March,2011 ii White Paper:CIGGS East to West Flow List of Tables . Table 2.1:ENSTAR planned upgrades to east side Cook Inlet compression,horsepower* Table 2.2:Estimated winter flow capacity of ENSTAR's east side Cook Inlet system Table 3.1:Cook Inlet pipelines,general configurations eononeonas reer rrr reer rere eer errr ere rere sere r rrr err err rrrerirreer irri itt i rrr rr rss Table 3.2:Approximate rental compressor flow rates,MMSscfd***ooo ee eeeeeeceeceesetcenseeeenees 16 Abbreviations APC Alaska Pipeline Company (ENSTAR) APPL Anchor Point pipeline (also APL) BRU Beluga River Unit BPP Beluga Power Plant CEA Chugach Electric Association COP ConocoPhillips CIGGS Cook Inlet Gas Gathering System CINGSA Cook Inlet Natural Gas Storage,Alaska ENSTAR ENSTAR Natural Gas Company F Degrees Fahrenheit FNG Fairbanks Natural Gas HEA Homer Electric Association KKPL Kenai Kachemak pipeline KNPL Kenai Nikiski pipeline KPL Kenai pipelines LNG Liquefied natural gas MAOP Maximum allowable operating pressure MAP Marathon Alaska Production MPL Marathon Pipeline MLP Municipal Light &Power MMscfd Million standard cubic feet per day MOC Marathon Oil Company psi Pounds per square inch psig Pounds per square inch gage CEA,ENSTAR and MLP March,2011 White Paper:CIGGS East to West Flow 1 Introduction Natural gas transmission pipelines encircle north Cook Inlet via APL,KNPL,CIGGS,and MPL Beluga pipelines.CIGGS dual sub-sea pipelines run between Granite Point on the west side of Cook Inlet and the East Forelands near Nikiski.Check valves in the CIGGS pipeline system currently allow flow only from west to east.Cook Inlet gas producers,purchasers and transporters (hereafter referred to as Parties)have agreed that utility customers would be best served by removing these check valves and installing temporary compression at KPL junction to allow gas flow from east to west across Cook Inlet.The purpose of this white paper is to document benefits of east to west flow through the sub-sea pipelines. The scope of this white paper is limited to justification of the proposed check valve removal and compression installation,and is not intended to be an exhaustive study.A description of ENSTAR's east Cook Inlet transmission system and ENSTAR's compression upgrade plan is included to document east side capacity constraints.Cook Inlet gas transmission flow scenarios during the winter of 2011/2012 are present to illustrate the need for proposed system modifications. 2 Cook Inlet gas flow and production 2.1 Pipeline gas flow:east side of Cook Inlet Currently,all Cook Inlet east side gas production must be stored,consumed locally,or transported to the Anchorage area via the east side because check valves on the CIGGS pipeline system prevent flow from west to east across Cook Inlet.Theoretically,east side gas could be routed to a west side user by shipping gas north through Anchorage,Palmer and Wasilla;but projected volumes would exceed current east side system capacity. ENSTAR operates the Kalifonsky Beach and Gudenrath compressor stations with connecting dual pipelines on the east side of Cook Inlet maintaining a minimum pressure of approximately 550 pounds per square inch gage (psig)at the ENSTAR Potter Station.This minimum pressure is required to serve consumers within the city via ENSTAR's Anchorage area gas transmission pipeline system. 2.1.1 ENSTAR compressor upgrade plan In-ground storage is being added to address ongoing declines in annual production and peak day delivery.This storage will not be available for operation until after the winter of 2011/2012. Regardless of planned compression upgrades,east side flow capacity to Anchorage will remain limited by pipeline capacity. Maximum flow through a pipeline segment occurs when the inlet gas is at the pipeline maximum allowable operating pressure (MAOP)and the outlet pressure is at the desired target.MOAP of pipelines downstream of Kalifonsky and Gudenrath stations are 880 and 1050 psig respectively. In order to increase flow past this maximum,intermediate compressor stations must be added or new pipelines installed in parallel with existing ones (known as line looping). CEA,ENSTAR and MLP March,2011 Page 1 White Paper:CIGGS East to West Flow Maximum east side system flow will occur when the Gudenrath discharge pressure is 1050 psig. Various methods exist to achieve MAOP at Gudenrath discharge,but the least expensive and quickest is to add compression at both Kalifonsky and Gudenrath stations.ENSTAR plans to upgrade and add new compression at these stations in stages as shown in Table 2.1.Compression additions and upgrades are shown in red font with off-line spare compression shown in blue font. "K1”through "K5”refer to numbers of individual compressor units at Kalifonsky.Similar numbering is used for Gudenrath. Table 2.1:ENSTAR planned upgrades to east side Cook Inlet compression,horsepower* Kalifonsky Station Gudenrath Station Year Kl K3 K4 KS Total Gl G2 G3 G4 Total prior 1200 1200 1200 3600 1200 1200 1200 1200 3600 2010 1200 1200 1200 1600 4000 1200 1200 1200 1200 3600 2011 1200 1200 1200 1600 4000 1200 1200 1600 1600 4400 2012 1600 1200 1200 1600 4400 1200 1200 1600 1600 4400 *Additions &upgrades shown in red font;off-line spares shown in blue font Critical to East side Anchorage deliveries is ensuring consistent delivery pressure to the ENSTAR compression facility at Kalifonsky.Flow through the East side system increases with increasing Kalifonsky inlet pressure as shown in Table 2.2. Table 2.2:Estimated winter flow capacity of ENSTAR's east side Cook Inlet system MMscfd to Anchorage at 550 psig at Installed horsepower**various Kalifonsky inlet pressures Kalifonsky Gudenrath 500 psig 575 psig 650 psig 2011/2012 4000 4400 189 209 229 2012/2013 4400 4400 195 216 229 **Does not include station spare,reflects planned upgrades Hydraulic profiles of ENSTAR's East side pipeline system at 500,575 and 650 psig inlet pressures to Kalifonsky for the 2011/2012 winter are shown below.Raising Kalifonsky inlet pressure from 500 to 650 psig raises Kalifonsky discharge to near MAOP and Gudenrath discharge pressure by about 100 psi,but not to MAOP. ENSTAR's operating philosophy is to have one off-line spare compressor unit available at each compressor station for back up reasons.ENSTAR could operate all four Gudenrath units for a gain of about 6 MMscfd as shown in Figure 2.4.ENSTAR plans to replace aging compression at Kalifonsky with larger equipment during the summer of 2012,which will reduce sensitivity of overall system capacity to Kalifonsky inlet pressure. CEA,ENSTAR and MLP March,2011 Page 2 White Paper:CIGGS East to West Flow ENSTAR eastside Cook inlet system 4000 Hp at Kalifonsky,4400 Hp at Gudenrath 500 psig inlet Kalifonsky,550 psig to Potter 186 MMscfd Inlet,15 MMscfd to Soldotna,20 MMscfd added via Royalty Line 2 MMscfd Fuel,189 MMscfd to Anchorage market B40 820 800 780 =760 _740 2 720&00 LS&650 |-S - fs [|-- 2 -_-SS3620XTygoXNX*3 X XN560N 540 §20 500 480 T 7 T r r r 0 10 20 30 40 50 60 70 80 Milepost Figure 2.1:ENSTAR east side profile,500 psig to Kalifonsky ENSTAR eastside Cook Inlet system 4000 Hp at Kalifonsky,4400 Hp at Gudenrath 575 psig to Kalifonsky,550 psig to Potter 207 MMscfd Inlet,15 MMscfd to Soldotna,20 MMscfd added via Royalty Line 2 MMscfd Fuel,209 MMscfd to Anchorage Market 880 860 Pp840WS820DS800I we780SS760X Iwe@740 3 720 aN&700 \™N 2 680 \ ©seo \ . 2 eso \aN 620 \\ \\600 X580X560N 540 T T r r T v 7 0 10 20 30 40 50 60 70 80 Milepost Figure 2.2:ENSTAR east side profile,575 psig Kalifonsky inlet CEA,ENSTAR and MLP March,2011 Page 3 White Paper:CIGGS East to West Flow ENSTAR eastside Cook Inlet system 4000 Hp at Kalifonsky,4400 Hp at Gudenrath 650 psig to Kalifonsky,550 psig at Potter 227 MMscfd inlet,15 MMscfd to Soldotna,20 MMscfd added via Royalty Line 2 MMscfd Fuel,229 MMscfd to Anchorage market 940 920 7 900 -880 SSnaoSSSN 820 aN . 3 a00 \SwEen<= 760 aN3\NNB740Xwa&720 AN DS3XNX\3 on aN So660NXpeed\620 AN800N\580 Xt560v 0 10 20 30 40 50 60 70 80 Milepost Figure 2.3:ENSTAR east side profile,650 psig Kalifonsky inlet ENSTAR east side Cook Inlet system4000HpatKalifonsky,5600 Hp at Gudenrath 650 psig to Kalifonsky,550 psig at Potter 232 MMscfd Inlet,15 MMscfd to Soldotna,20 MMscfd added via Royalty Line 3 MMscfd Fuel,235 MMscfd to Anchorage market 960 940 920 -900 SS880a860wseo|S =220 aN - 3 N\™S&800 <SS§780 X\aw3760XXa&740 X SS2720XaN=700s \N=680 XY X2860\N\640 s y620x600AN580X560'v 540 T 0 10 20 30 40 50 60 70 80 Milepost Figure 2.4:ENSTAR east side profile,650 psig Kalifonsky inlet,4 Gudenrath compressors CEA,ENSTAR and MLP March,2011 Page 4 White Paper:CIGGS East to West Flow 2.2 Pipeline gas flow:West side of Cook Inlet Current peak gas production from the west side of Cook Inlet is about 190 MMscfd,with additional deliverability provided by the Pretty Creek Storage Facility.West side gas sources include the Steelhead platform,various wells near the Granite Point Junction,the Beluga River Unit (BRU)and various wells east/northeast of the BRU (see Figure 3.1).West side production is.expected to be 160 MMscfd by the end of 2011 and may decline 10-20%annually in subsequent years. Currently gas from the Steelhead platform can be transported across Cook Inlet through CIGGS for injection into in-ground storage near Nikiski,consumed on the Kenai peninsula,transported on ENSTAR pipelines to Anchorage,or routed west on BPL toward the BRU and then on the ENSTAR Beluga pipeline.Gas near Granite Point Junction may be routed west to east through CIGGS,or can be routed northeast on BPL towards the BRU and to the ENSTAR Beluga pipeline. Approximately half of the 60 MMscfd from the Steelhead platform is Marathon (MAP) production which may be shipped to the LNG plant or other consuming parties.MAP has the option to deliver Steelhead gas to CEA (effective April 1,2011),ENSTAR (under current contracts)or other consuming parties.CEA's preference is to purchase MAP's Steelhead gas, which can be transported from Granite Point northeast on BPL to the Beluga Power Plant (BPP). The balance of Steelhead production is Unocal's and is usually transported across CIGGS to the east side for sale to ENSTAR or temporarily stored in Swanson River.Unocal's Steelhead gas can physically be tendered to ENSTAR at ENSTAR's Beluga pipeline,incurring incremental pipeline tariffs for transport via Marathon's Beluga pipeline from Granite Point to ENSTAR's Beluga pipeline. Aurora transports approximately 5 MMscfd via Marathon's Beluga pipeline and then ENSTAR's Beluga pipeline for delivery to Fairbanks Natural Gas west of Wasilla.BRU gas is currently contracted to supply a portion of the BPP,supply MLP's power plants and meet Union's obligations to ENSTAR.Approximately 15 MMscfd of production north and east of the BPP is delivered into ENSTAR's system including gas from Ivan River,Stump Lake and Lewis River fields;and from Pretty Creek in-ground storage. 2.3 In-ground storage There is limited in-ground gas storage on the west side of Cook Inlet at the Pretty Creek Storage Facility and there are currently only conceptual plans for development of more west side storage. Gas is currently being stored in-ground on the east side of Cook Inlet in the Swanson River and Kenai Gas fields.CINGSA's new in-ground storage in the Cannery Loop field,on the east side of Cook Inlet,will supplement existing storage and is expected to be operational by the winter of 2012-2013. Historically a significant portion of Cook Inlet gas production was liquefied at the Kenai LNG plant for export to Japan.ConocoPhillips and Marathon recently announced that the Kenai LNG plant will be shut down in the spring of 2011.It is unclear how the LNG plant shut down will CEA,ENSTAR and MLP March,2011 Page 5 White Paper:CIGGS East to West Flow affect seasonal Cook Inlet gas production.There is a concern by the producers that summer 2011 production curtailment may have an adverse effect on reserves and deliverability. 3 Projected Cook Inlet flow scenarios,winter 2011/2012 Natural gas supplies and demand have changed over the past decades with relatively more production and gas storage on the east side of Cook Inlet than on the west.Currently,all gas from east side production and storage must flow north through ENSTAR's dual pipeline system across Turnagain Arm to reach Anchorage.As discussed elsewhere,ENSTAR is upgrading and adding compression on their east side system,but a practical flow limit exists without adding new pipelines. Cook Inlet gas producers,consumers and transporters are concerned that the overall Cook Inlet gas pipeline transportation system may be insufficient to move gas from the Nikiski area to consumers during cold days of high demand and very cold days of peak demand.Diagrams of possible Cook Inlet flow scenarios for the winter of 2011/2012 are offered in this section to illustrate that gas consumers will be best served by: 1.Removing check valves in the dual CIGGS sub-sea pipeline to allow gas flow from southeast to northwest across Cook Inlet;hereafter referred to as east-west flow;and 2.Adding temporary compression at KPL junction on the east side to enhance east-westflowwhileaccommodatingmanycommercialissuesbetweenParties. Flow diagrams are discussed assuming the above two proposals have been implemented.General Cook Inlet operations are described in Section 3.1.1.Detailed discussions of these proposals follow presentation of the flow diagrams. For the purposes of this document,a cold day is defined as any combination of weather conditions that results in a system-wide Cook Inlet demand of 350 MMscfd."Cold day”and "350 MMscfd demand”are used interchangeably in this document.An extreme cold day is defined as any weather circumstance that results in system-wide Cook Inlet demand of 425 MMscfd.The terms "extreme cold day”,"425 MMscfd demand”and "design peak”refer to the same circumstance. 3.1 Cold day flow at 350 MMscfd 3.1.1 All equipment on-line General configurations of Cook Inlet pipelines with MAOP are shown in Table 3.1.It is important to note that CIGGS pipelines have higher MAOPs than the pipelines to which they connect.Production from Steelhead and Granite Point area is compressed to enter the CIGGS system at high pressure. Cold day operation with all production and gas transmission equipment on-line is depicted in Figure 3.1.Referring to Figure 3.1,approximately 25 MMscfd of MAP's relatively high pressure production from the Steelhead platform plus approximately 5 MMscfd of Aurora Granite Point area production can flow through MPL's Beluga pipeline to the BPP.MAP's production can CEA,ENSTAR and MLP March,2011 Page 6 White Paper:CIGGS East to West Flow either be consumed within the BPP or pass around the plant with Aurora's gas to enter the lower pressure ENSTAR Beluga pipeline. Table 3.1:Cook Inlet pipelines,general configurations Nominal diameter |Length}MAOP(inches)|(miles)(psig) Marathon CIGGS west side 16 26.11 1118 CIGGS sub-sea dual 2x10,each 21 1920 CIGGS east side 16 5.26 1118 Beluga (Granite Point to Beluga)16 16.2 1440 KNPL (Kenai to Nikiski)20 17.55 975 ENSTAR Beluga (Beluga to Anchorage)20 101.6 1031 Royalty 8 24 1050 Dual,Kalifonsky to Gudenrath 12 &16 22.88 880 Dual,Gudenrath to Burnt Island 12&16 38.8 1050 Dual,Burnt Island to Potter 12&12 9 780 KKPL (Kenai -Kachemak)12 49 1480 APPL (Anchor Point -KKPL)8 21.1 1480 ConocoPhillips North Cook Inlet 2x10 &16 222?222? Unocal Swanson River 16 222?1200 During a cold day,collectively about 15 MMscfd of west side gas supply would be available from Ivan River,Stump Lake,Lewis River and Pretty Creek Storage.All west side production routed through ENSTAR's Beluga pipeline would be consumed by west side demand with approximately 10 MMscfd required to pass through Anchorage to Palmer to make up the shortfall in west side production.The alternative to transport additional gas through the ENSTAR dual pipelines under this scenario is not certain due to pipeline pressure problems involving gas transport through Anchorage to the Wasilla/Palmer area. Approximately 35 MMscfd of Steelhead production would be routed through the high pressure CIGGS system to KPL junction where it would either sent to storage at Swanson River or tendered to ENSTAR via the Royalty line,or routed down KNPL to ENSTAR.Unocal has invested capital to configure their Steelhead production to take advantage of CIGGS high operating pressure so that gas delivered to the east side can be injected it into Swanson River storage with less compression than otherwise,or delivered to ENSTAR's Kenai pipelines without additional compression. Gas is delivered to Homer Electric Association (HEA)from MPL's KNPL.Gas is delivered to Kenai from various sources prior to the inlet of ENSTAR's Kalifonsky station.Approximately 15 MMscfd would be delivered to Soldotna and other consumers from the ENSTAR dual pipeline system between Kalifonsky and Gudenrath stations (shown on the drawing as H/K/S near Soldotna). CEA,ENSTAR and MLP March,2011 Page 7 White Paper:CIGGS East to West Flow 350 MMscfd Cook Inlet demand and production,100%on-line (Westside production anddemand 3 S BRU 1 'Bel5Aurora*60 River °'Auroral pon--}Unit Pretty Creek&' head CONES.85 CEA ¥misc.west side |15 PC '60 Steelhea ciecs Beluga 25 'West Granite Pt H Beluga Power Beluga : 'junction a plant r |Flow 30 ---}Flow 45 :CIGGS 'Flow 35 |Dual *all Aurora gas ree ae HLnOF4toFairbanksNGabanaSFNG:! NorthCookInlet Wa oecnaccancocaccncncnnnnn:|Flow 40 10 Tesoro ewanson WasillaWer'Palmer 50.WP Cannery |_ eeeees (ay aeanreeaaanaaaaas Loop Flow 190 t Flow 10 Kenai Gas Kalifonski |Gudenrath - / Field Kenai |station station |anchorage |35 MLP 20H/K/S 145 Anch KKPL Supply =350 All numeric values are 60 Steelhead approximate MMscfd.5 Aurora --Marathon pipelines 85 BRU -Enstar pipelines APPL 15 PC &west =ConocoPhillips 185 East side --Unocal Figure 3.1:Cold day,all equipment on-line Gas from Marathon's Kenai Gas Field is tendered to ENSTAR via the KNPL.Approximately, 190 MMscfd of east side gas would be transported north via ENSTAR's east side system to south Anchorage at current east side delivery pressures. 3.1.2 Loss of some BRU production A number of compressors will be used in the BRU to deliver a total of 85 MMscfd of supply and loss of any one of these compressors would not result in loss of all BRU supply.Cook Inlet flow assuming loss of some BRU compression with the resulting loss of 25 MMscfd of BRU supply is shown in Figure 3.2. Only one of many postulated circumstances for gas flow around the BPP and BRU is depicted. Regardless of how gas would be physically consumed by or routed around the BPP,25 MMscfd of gas that prior was routed through MPL's CIGGS dual lines from west to east must now be routed through MPL's Beluga pipeline with potential impact on tariffs. The flow rate to Anchorage via ENSTAR's east side system to Anchorage would not change. CEA,ENSTAR and MLP March,2011 Page 8 White Paper:CIGGS East to West Flow 350 MMscfd Cook Inlet demand and production,25 BRU loss Westside production and demand 'River Unit Pretty Creek &' t misc.west side 15 PC ;60 Steelhead cies 25 :w i |''|Steelhead ss Granite Pt ' Sele ''junction ' ||Flow 45 |'cilGGs t Flow 10 |Dual *All Aurora gas preeernenonapsten !Lone ee eee ee ee ee eee ee eee 4 to Fairbanks NG [eaeare SFNG Hy North 'CookIniet |be-----nrnrerteeeeeseenooe |Flow 40 | 10 Tesoro KPL junct Swanson 'Paes iver ;Palmer |20 WP Cannery |_Royaity MorronesPocgocccaceeccesccecccst Loop Flow 190 t Flow 10 Kenai Gas Kalifonski Gudenrath _ Soldot |Field Kenai |station Lporgotna |station Anchorage |35 MLP 20 H-K-S 145 Anch :KKPL Supply =350 Demand =350 All numeric values are 60 Steelhead 85 CEA approximate MMscfd.S Aurora 5 Fairbanks NG -Marathon pipelines 60 BRU 50 Wasilla/Palmer --Enstar pipelines APPL 15 PC &west 35 MLP --ConocoPhillips 210 East side 145 ENSTAR Anchorage -Unocal 30 HEA/Kenai/Soldotna &Tesoro Figure 3.2:Cold day,loss of 25 MMscefd from BRU 3.1.3.Loss of all production from the Steelhead platform Steelhead platform is equipped with two gas compressors;one with 60 MMscfd capacity and the other with 40 MMscfd.A circumstance in which both Steelhead compressors are off-line with loss of all supply is depicted in Figure 3.3.A total of 245 MMscfd of east side supply would need to be found with 25 MMscfd sent east to west via CIGGS.Check valves on the CIGGS dual sub-sea pipeline would have to be removed to allow east to west flow. East side supply routed east to west would come from KKPL to KNPL,KNPL,North Cook Inlet,Swanson River or Royalty pipelines,all of which operate at a lower pressure than CIGGS. Either CIGGS pipeline pressure must be reduced or east side compression installed for east side gas to enter CIGGS.For reasons described in Section 3.2.2,installation of temporary rental compression is proposed to allow flow from KPL junction east to west through CIGGS. CEA,ENSTAR and MLP March,2011 Page 9 White Paper:CIGGS East to West Flow 350 MMscfd Cook Inlet demand and production,no Steelhead '85 BRU Pretty Creek&: a misc.west side 15 PC '0 Steelhead cies | Steelhead West Granite Pt i Beluga Power Beluga ijunction->plant |7 !Flow 30 |Flow 45 |cIGGS Flow 5 '!Flow 25 f ,|ee ceceeneceeceeeteeeeees ;wofaroenteng LEeSE|)5 ENGRemovecheckvalves§-H---_____>' clGGs North 'Install compression Cook Inlet Ronn nenon enero eee c cen n non :J Flow 40 10 Tesoro |Swanson !WasillaRiver'Palmer 50WP Cannery |_Royaity ee eee Loop Flow 190 t Flow 10 > Kenai Gas Kalifonski Gudenrath 1 |Soldotna ;AnchorageFieldKenai}station [Soldotna |station &35 MLP 20 H-K-S 145 Anch KKPL Supply =350 Demand =350 All numeric values are 0 Steelhead 85 CEA approximate MMscfd.5 Aurora 5 Fairbanks NG ---Marathon pipelines 85 BRU 50 Wasilla/Palmer -Enstar pipelines APPL 15 PC &west 35 MLP --ConocoPhillips 245 East side 145 ENSTAR Anchorage-Unocal 30 HEA/Kenai/Soldotna &Tesoro Figure 3.3:Cold day,loss of all Steelhead supply 3.2 Peak flow on extremely cold day at 425 MMscfd Common to all peak flow scenarios is that some flow is required east to west through CIGGS; therefore,existing CIGGS check valves must be removed.Peak east side supply requirements are anticipated to range between 260 and 320 MMscfd depending on postulated scenarios. Availability of east side supply will be a challenge for all peak flow scenarios.The following peak flow scenarios are based on removal of CIGGS check valves and installation of compression at KPL junction. 3.2.1 All equipment on-line,location of temporary compression Operation of the Cook Inlet gas transmission system subject to peak flow on an extremely cold day with all supply and gas transmission equipment on-line is shown in Figure 3.4.Flow through ENSTAR's east Cook Inlet system is shown at a rate greater than simulated flow at low KNPL inlet pressure,but less than 230 MMscfd simulated maximum flow achieved with higher KNPL inlet pressures (see Table 2.2).This mid-range value was selected to reasonably depict operation below theoretical maximum. CEA,ENSTAR and MLP March,2011 Page 10 White Paper:CIGGS East to West Flow 425 MMscfd Cook Inlet demand and production,100%on-line Beluga 85 BRU5Aurora*60 |RiverRrorapon--|Unit Pretty Creek&' |fate]85CEA J misc.west side |15PC |60 Steelhead cscs Beluga 25 [steelhead }West Granite Pt Beluga Power x Beluga !junction -x>plant ' !Flow 70 |Flow 85 |;Flow 45 ''Flow 5 t *all Aurora gas bee ee ee ee ee eee eee ee ee ee eee eee ee +to Fairbanks NG [ererate SFNG North ' Cook Inlet bones enc tec tec eeceec estes '|Flow 80' ' ' ' ' 10 Tesoro Swanson : Ri WasillaiverPalmer |70WP Cannery |_Royalty ns ihn : Loop Flow 220 |Flow 10 Kenai Gas Kalifonski Gudenrath - Soldoti AFieldKenai|station Loowotna |station nchorage |40 MLP 25 H-K-S 190 Anch KKPL Supply =425 Demand =425 All numeric values are 60 Steelhead 85 CEA approximate MMscfd.S Aurora 5 Fairbanks NG ==Marathon pipelines 85 BRU 70 Wasilla/Palmer -Enstar pipelines APPL 15 PC &west 40 MLP ==ConocoPhillips 260 East side 190 ENSTAR Anchorage-Unocal 35 HEA/Kenai/Soldotna &Tesoro Figure 3.4:Peak flow day,all equipment on-line An incremental 75 MMscfd of peak supply from east side storage and production will be required to satisfy peak demand as compared to a normal cold day operation (425 -350 MMscfd).Capacity of ENSTAR's east Cook Inlet system is not sufficient to move all this incremental supply to Anchorage and MLP,let alone Wasilla and Palmer.All west side production,plus a small amount of east side gas will have to be routed through west side pipelines. 3.2.2 Loss of some BRU production,temporary compression Cook Inlet transmission flows during peak demand and loss of part of BRU supply are depicted in Figure 3.5.Regardless of commercial gas trade agreements,approximately 30 MMscfd of gas would physically need to flow east-west across CIGGS.It is unlikely that replacement gas would be available on a peak day in the event of a 25MMcfd production loss. CEA,ENSTAR and MLP March,2011 Page 11 White Paper:CIGGS East to West Flow 425 MMscfd Cook Inlet demand and production,25 BRU loss ;Beluga |60 BRU'*t5Aurora60|RiverRurorspo]Unit Pretty Creek&Sis 85 CEA ¥misc.west side |15 PC:60Steelhead ciecs Beluga 0 'Steelhead West _|Granite Pt Beluga Power Beluga 'junction --=>plant r ' !Flow 30 f |}Flow70 | 'Dual *All Aurora gas -_'Ln nn ee ce pee eee ee eee 4 to Fairbanks NG Eairbanks NG SFNG ' North 'Cook Inlet |be---2rereeeeeecnoneeenon-:|Flow 80 : 10 Tesoro !pwanson Wasillaiver :Palmer 70WP Cannery |_Royalty SN)mg errr org n nnn nner nsec ccccn at Loop Flow 220 |Flow 10 Kenai Gas Kalifonski Gudenrath _ {|Field Kenai |station station Anchorage |40 MLP 25 H-K-S 190 Anch KKPL Supply =425 Demand =425 All numeric values are 60 Steelhead 85 CEA approximate MMscfd.|S Aurora 5 Fairbanks NG --Marathon pipelines 60 BRU 70 Wasilla/Palmer -Enstar pipelines APPL 15 PC &west 40 MLP ==ConocoPhillips 285 East side 190 ENSTAR Anchorage-Unocal 35 HEA/Kenai/Soldotna &Tesoro Figure 3.5:Peak flow,loss of 25 MMscfd supply from BRU 3.2.2.1 Temporary gas compression East-west flow through CIGGS can be achieved by either reducing operating pressures of CIGGS and downstream west side pipelines to below KNPL operating pressure,or installing compression to raise gas from KNPL to historically higher CIGGS operating pressures.It is proposed to install temporary gas compression at KPL junction to raise east side gas pressure because this would: e Allow ENSTAR to maintain line pack in its Beluga pipeline for emergency gas supply during periods of peak gas demand; Allow gas to physically be bypassed around the BPP; Mitigate potential commercial issues regarding transmission system operations near KPL junction. CEA,ENSTAR and MLP March,2011 Page 12 White Paper:CIGGS East to West Flow Line pack Without proposed east side gas compression,CIGGS operating pressure would have to be reduced below that of KNPL in order for gas to move east to west.System pressures would progressively drop through CIGGS and MPL's Beluga pipeline to the BPP.Inlet pressure to ENSTAR's Beluga pipeline would be set at the outlet pressure from MPL's Beluga pipeline for gas to proceed northeast to Wasilla. By definition,a peak flow day is a circumstance in which most if not all Cook Inlet production and transportation equipment would be on line to meet demand.ENSTAR has historically operated its Beluga pipeline at around 800 psig to provide line pack to serve as emergency supply should transmission or production equipment fail thereby reducing gas deliverability. The stored gas by line pack allows for a 10-20 MMscf temporary supply to address producer or transportation issues. ENSTAR transports gas for MLP and CEA;however,these companies are not ENSTAR customers.Should MLP or CEA loose supply entering ENSTAR's system,ENSTAR would quickly curtail gas delivery to MLP or CEA respectively by the same amounts.Line pack maintained in the ENSTAR Beluga pipeline for ENSTAR customers also provides MLP and CEA very limited,but crucial time to secure replacement supplies. As depicted in Figure 3.5,loss of part of BRU production could result in more gas bypassing the Beluga power plant than available from the BRU.If ENSTAR operates its Beluga pipeline at normal pressures ensuring emergency line pack,and such pressures exceeded the pressure of gas delivered to the BPP from the south;plant bypass could not occur.Under such conditions only 60 MMscfd of high pressure gas would be available from the BRU,and a 10 MMscfd deliverability shortfall would occur in Wasilla. Installation of compression on the east side of Cook Inlet to allow east-west flow with high CIGGS operating pressures would increase system operating flexibility by allowing ENSTAR to maintain emergency line pack while gas bypass around the BPP. Gas bypass around the Beluga Power Plant As described above,if east to west deliveries are to be made,east side compression will be required to maintain existing gas contracts and deliveries.Shippers on MPL's BPL may have to enter into new contracts,gas trade/exchange agreements,or other commercial arrangements to make deliveries to the BPP and displace BRU production that would instead be delivered at a higher pressure into ENSTAR's system.The installation of east side Cook Inlet compression for east to west flow would alleviate these problems and allow deliveries to continue under existing agreements. East side pressure related issues Unocal currently transports gas from the Steelhead platform to Swanson River storage via CIGGS pipelines.Unocal operates its Swanson River storage injection compression to take advantage of relatively high suction pressures achieved via Steelhead compression and high CEA,ENSTAR and MLP March,2011 Page 13 White Paper:CIGGS East to West Flow CIGGS pipeline operating pressures.High CIGGS east side pressures provide Unocal with the option to preferentially route gas to ENSTAR's Royalty pipeline thereby bypassing Marathon's KNPL pipeline and avoiding the associated tariff. Unocal would like to retain the ability to inject gas into Swanson River during east to west flow through CIGGS.Gas can't simultaneously flow both directions through CIGGS and a trade agreement would be required for Unocal to receive equivalent gas volumes for Swanson River injection.At issue is whether traded gas available on the east side would be at the same pressure as Unocal's gas that otherwise would have been delivered west to east.Unocal would be disadvantaged if traded gas was at a lower pressure thereby requiring operation of incrementally more Swanson River injection compression. Compression could be installed at the west end of the CIGGS East pipeline where it intersects CIGGS dual sub-sea pipeline,or on the east of end of CIGGS East pipeline at KPL junction. MAOP of CIGGS dual sub-sea pipelines is greater than that of CIGGS East (see Table 3.1). Installing the compressor at the intersection of CIGGS East and dual sub-sea pipelines would allow higher compressor discharge pressures and theoretically more east-west flow capacity than if installed at KPL junction. Installing compression at the intersection of CIGGS East and dual sub-sea pipeline would not address Unocal's commercial issues described above because KPL junction operating pressure would be the same as KNPL.It is proposed to install the compression at KPL junction to mitigate adverse commercial impact to Unocal. 3.2.3 Loss of all production from the Steelhead platform Cook Inlet gas transmission pipeline flow subject to an extremely cold day and loss of all Steelhead platform supply is depicted in Figure 3.6.East side production will be severely taxed to provide the postulated 320 MMscfd deliverability.It is unlikely that the loss of Steelhead production could be replaced by production or storage gas on the peak day. The circumstance depicted in Figure 3.6 will create commercial issues for shippers because gas previously tendered to ENSTAR on the east side will be burdened with incremental tariffs from Marathon's CIGGS and Belugas pipelines. CEA,ENSTAR and MLP March,2011 Page 14 White Paper:CIGGS East to West Flow 425 MMscfd Cook Inlet demand and production,no Steelhead i Westside production anddemand 3 seu ti(i'éset*é*s'Beluga ' '*t5Aurora60|RiverRirarsp----]Unit Pretty Creek&'Sinise 85 CEA ¥misc.west side |15 PC0SteelheadcigsBeluga25 ;Steelhead West Granite Pt Beluga Power :Beluga H junction --=>plant ' |Flow 70 }Flow 85 |'Flow 45 ' 'Flow 65 t aad ' *All Aurora gas neLonececeeeweweeeeeeeeeeefeeeeeeeeeeeeeeeeeeeee4toFairbanksNGEairpanks NG 5SFNG : North :Cook Inlet boon ntcce ns neceo een ecn en ee '|Flow 80 : 10 Tesoro KPL junct Swanson i ! Ri 'Wasilla ' ver 'Palmer 70WP : Cannery |_Royalty 'ns ieee : Loop Flow 220 |Flow 10 Kenai Gas Kalifonski |Gudenrath - J Field Kenai |station station Anchorage |40 MLP 25 H-K-S 190 Anch 7 KKPL Supply =425 Demand =425 All numeric values are O Steelhead 85 CEA approximate MMscfd.S Aurora 5 Fairbanks NG --Marathon pipelines 85 BRU 70 Wasilla/Palmer -Enstar pipelines APPL 15 PC &west 40 MLP -ConocoPhillips 320 East side 190 ENSTAR Anchorage --Unocal 35 HEA/Kenai/Soldotna &Tesoro Figure 3.6:Peak flow,loss of all Steelhead platform supply 3.3Justification of proposed Cook Inlet transmission system modifications 3.3.1 Remove check valves to allow east-west flow through CIGGS Anticipated peak demand during the winter of 2011/2012 cannot be met unless check valves are removed to allow east-west gas flow through CIGGS.Maximum capacity of ENSTAR's east Cook Inlet transmission system is insufficient to deliver all necessary east side production to Anchorage.An obvious side benefit of providing for CIGGS east-west flow would be to allow west side transmission lines to move east side gas if ENSTAR's east side compression or pipelines were compromised for whatever reason. It is possible to configure the CIGGS dual sub-sea pipeline to allow simultaneous flow in opposite directions.Valves and piping modifications to allow such bi-directional flow would be more expensive than simply removing CIGGS check valves.The proposed removal of CIGGS CEA,ENSTAR and MLP March,2011 Page 15 White Paper:CIGGS East to West Flow check valves is based on the premise that commercial terms can be developed to avoid the need for simultaneous bi-directional flow across Cook Inlet. 3.3.2 Install temporary gas compressor to enhance east-west flow East to west flow through CIGGS can be achieved by either lowering operating pressures of CIGGS,Marathon Beluga and ENSTAR Beluga pipelines to less than KNPL,causing the issues and challenges described above,or east to west flow can be achieved by installing compression at KPL junction to raise the pressure of gas from KNPL.Installation of compression at KPL junction will enhance security of flow for parties responsible to move gas from the east side of Cook Inlet to the west side during normal operations while also allowing ENSTAR to maintain pressure and line pack in their Beluga pipeline for contingency supply during periods of peak system-wide demand. Lowering west side operating pressures was rejected in favor of installing compression at KPL junction because: e ENSTAR Beluga line pack during periods of high or peak flow can be maintained; Gas can be transported under stress conditions from the Marathon 16 inch Beluga Line to the ENSTAR 20 inch Beluga line thereby providing more operational flexibility; Raising gas pressure at KPL junction provides more east side operational flexibility; Potential commercial issues associated with east to west flow are avoided,and; e CEA will have a full range of supply options for the BPP. 3.3.2.1.Compressor capacity Approximate throughput rates for a generic 1000 Hp reciprocating compressor are shown in Table 3.2. Table 3.2:Approximate rental compressor flow rates,MMscfd*** Outlet,psig |600 700 |800}900 |1000 500 psig inlet 92 49 34 27 22 575 psig inlet 86 50 36 29 650 psig inlet 82 52 38 ***40 degree feed and 65%adiabatic efficiency 3.3.2.2.Compressor connections A schematic of a possible compressor connection at KPL junction is shown in Figure 3.7.The connection scheme shown would compress KNPL gas into the CIGGS line entering KPL junction upstream of existing pipe manifolds,valves and instrumentation.This would allow Unocal to route gas to Swanson River or to ENSTAR's Royalty line using existing piping and at pressures similar to current operation with west to east CIGGS flow. CEA,ENSTAR and MLP March,2011 Page White Paper:CIGGS East to West Flow ”|20”KNPL 1 Existing 1 16”CIGGS |pipingat |KPL junction,Lesuwlee Meter \ liquid knock out Rental compressor Figure 3.7:Schematic of possible compressor connections CEA,ENSTAR and MLP March,2011 Page 17