Tallgrass Energy and Rockies Express Pipeline Announce Zone 3 Project Near Completion

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Tallgrass Energy and Rockies Express Pipeline LLC (“REX”) announced Thursday that the 0.8 billion cubic feet per day REX Zone 3 Capacity Enhancement Project is nearly complete. REX’s Zone 3 is capable of bidirectional natural gas transportation and can now move 2.6 billion cubic feet per day of natural gas from Clarington, Ohio, to delivery points as far as Mexico, Missouri.

Zone 3 provides significant takeaway capacity for Appalachian natural gas along with flexible transportation routes through its 20 pipeline interconnects and delivery points. Zone 3 capacity from east-to-west is contracted at 2.6 billion cubic feet per day with a weighted average remaining contract life of 16 years as of December 31, 2016.

“The completion of the Capacity Enhancement Project marks another important milestone in the transformation of REX into the nation’s northernmost bi-directional natural gas header system,” said Matt Sheehy, Senior Vice President & Chief Commercial Officer for Tallgrass and REX’s President. “Our original Capacity Enhancement shippers saw the long-term value in the project over two years ago when they contracted with us. Since then, as others embraced the REX value proposition, we have steadily added incremental long-term customers to this project, fully subscribing the 0.8 billion cubic feet per day.”

Two days earlier, Tallgrass Energy announced it acquired Tallgrass Terminals LLC and Tallgrass NatGas Operator LLC from the privately held Tallgrass Development for $140 million in cash. The acquisition represented Tallgrass Energy’s fifth dropdown acquisition from Tallgrass Development and was funded at closing through borrowings on Tallgrass Energy’s revolving credit facility.

Tallgrass operates across 10 states as a midstream energy operator with transportation, storage, terminal and processing assets while serving some of the nation’s most prolific crude oil and natural gas basins.