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Transportation Rate Clarification

A shipper who wishes to combine different volumes and terms into a single, longer term contract may do so, however, as volumes change over the term of the contract, the shipper’s transportation rate will adjust accordingly per the applicable term- and volume-related rates under the Tariff. 

For example: during the Open Season period, a shipper submits a TSA that combines a 100,000 barrel per day bid for 15 years with a 50,000 barrel per day bid for 10 years.  In this example, the shipper’s transportation rate would be the 150,000 barrel per day rate (for a 10-year term) for the first ten years ($1.19) and the 50,000 barrel per day rate (for a 15-year commitment) for the last five years ($1.18). 

A shipper seeking this rate treatment should indicate in its TSA that its contract requests should be treated as a single contract.

Amendment Note

Shell Pipeline has amended the TSA and IM to reflect clarifications to (a) the definition of Regular Shipper, and (b) partial assignment rights for committed shippers.  The remainder is unchanged.

Specific locations of clarifications:

Immediate Regular Shipper Status and assignment of associated volume history: 

  • TSA Article 2.03: please refer to the updated language, “Following the Commencement Date, either the Committed Volume or the shipped volume, whichever is higher, will be used for purposes of the prorationing calculations to allocate capacity among Regular Shippers.  Should Shipper transfer or assign all or part of its rights under this Agreement in accordance with this Agreement’s  terms, for purposes of prorationing under the Tariff the transferee and/or assignee will receive recognition of all or a part, proportionally, of the higher of such assignor/transferor Shipper's most recent twelve months of shipped or Committed Volume transported or paid for pursuant to such Agreement.”
  • Schedule C – Pro Forma Tariff: please refer to “Exception to Rule 75” language, which implements the same clarification.
  • IM Key Terms (pages 6 and 7), Article 1: please refer to the Immediate Regular Shipper Status note, which implements the same clarification.

Partial Assignment clarification:

  • TSA Article 15: please refer to the updated language and the example clarifying partial assignment rights for shippers.

Overview

The Westward Ho project envisions building a new pipeline, originating in St. James, LA to connect the St. James, Houma and Clovelly, LA markets with the Texas markets. 

Shell Pipeline’s Westward Ho project would allow US Gulf of Mexico refiners enhanced access to the growing domestic production, such as the announced Mars, Jack, St. Malo, and Big Foot fields, as well as the foreign crudes available at St. James and Clovelly, LA.  Westward Ho is expected to be connected to, and to complement, all major crude pipelines and storage facilities in the St. James and Clovelly, LA areas.   

The Westward Ho could enable the distribution of approximately 900,000 bbls per day of crude across the region depending upon crudes types shipped (including such crude types as condensate, diluents, etc. as long as the crude types meet the SPLC specifications defined in its tariff rules and regulations). 

SPLC estimates that the Westward Ho project could be completed and commissioned by third quarter 2015.

Scope and Form of Solicitations of Interest

SPLC is requesting binding capacity commitments from interested parties in the prospective Westward Ho Project. Interested parties should submit their binding bids by completing and executing the Transportation Services Agreement (“TSA”) and sending it to SPLC by no later than June 15, 2012 at 12:00 PM CDT (Noon).

SPLC has the sole and exclusive right to determine whether to proceed with the Westward Ho Project, however, it will notify bidders within 30 days of the close of the Open Season of its decision to either terminate the Westward Ho Project or to seek final senior management approval of the project (“FID” or “Final Investment Decision”).  

Binding Bids

SPLC is soliciting various parties’ to participate in the above described Westward Ho Project Open Season.    We request that you indicate your company’s interest by submitting an executed TSA, including your company’s response to Exhibit A of the attached TSA, no later than June 15, 2012 at 12:00 PM CDT (Noon).  TSAs must be executed by a duly authorized representative.