Rockies Express Pipeline Receives FERC Certificate to Begin Construction on REX-East

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Jun 02, 2008

Rockies Express Pipeline LLC., today announced the Federal Energy Regulatory Commission (FERC) has approved construction of Rockies Express-East (REX-East), which comprises 638 miles of 42-inch diameter pipeline that will extend from Audrain County, Mo., to Clarington, Ohio. Construction is expected to begin this summer. Subject to receipt of regulatory approvals, REX-East is expected to begin interim service to the Lebanon Hub in Warren County, Ohio, by Dec. 31, 2008, and be fully operational in the summer of 2009.

"The sponsor companies appreciate the timely manner in which the FERC completed its environmental review and authorized the certificate to construct on REX-East," said Scott Parker, president of Kinder Morgan Energy Partners' Natural Gas Pipelines group. "We are delighted that more than 1,000 miles of REX are in service, and we look forward to completing the final segment of the project." The 713-mile REX-West segment which runs from the Cheyenne Hub in Weld County, Colo., to Audrain County, Mo., became fully operational May 20. The initial 327 miles of REX extends from the Meeker Hub in Rio Blanco County, Colo., to the Wamsutter Hub in Sweetwater County, Wyo., to the Cheyenne Hub.

Rockies Express Pipeline LLC is a joint venture of Kinder Morgan Energy Partners (NYSE:KMP), Sempra Pipelines and Storage, a unit of Sempra Energy (NYSE:SRE), and ConocoPhillips (NYSE:COP), and is one of the largest natural gas pipelines to be constructed in North America. When completed, the 1,679-mile pipeline will transport gas from the prolific Rocky Mountain supply basins to markets in the Midwest and East and have a capacity of approximately 1.8 billion cubic feet per day. Binding firm commitments from creditworthy shippers have been secured for all of the capacity on the pipeline.

Market conditions for consumables, labor and construction equipment along with certain provisions in the final environmental impact statement have resulted in increased costs for REX and impacted certain projected completion dates. For example, REX currently expects that interim service on REX-East will begin by year end to Lebanon as opposed to its initial projection of Clarington. As previously disclosed, while it is still too early to estimate the precise cost impact, KMP believes that the cost increase will be no more than 5 to 10 percent of the total REX project estimate of approximately $5 billion. KMP is overseeing construction of the project and will operate the pipeline.

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