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Pipeline project to transport natural gas liquids from Kentucky to Louisiana coast

Would produce 200,000 barrels per day of mixed NGLs

OWENSBORO, Ky. (March 8, 2013) — Two pipeline companies are planning a joint venture to transport natural gas liquids from Kentucky to the U.S. Gulf Coast.

Pipeline projectWilliams and Boardwalk Pipeline Partners on Wednesday announced a joint venture that would develop the pipeline project, which would transport natural gas liquids from the infrastructure-constrained Marcellus and Utica shale plays in upper Appalachia to the rapidly expanding petrochemical and export complex on the U.S. Gulf Coast, as well as the developing petrochemical market in the Northeast U.S.

The proposed “Bluegrass Pipeline” design would provide producers with 200,000 barrels per day of mixed NGLs take-away capacity in Ohio, West Virginia and Pennsylvania. The proposed pipeline could be increased to 400,000 barrels per day to meet market demand, primarily by adding additional liquids pumping capacity. It would deliver mixed NGLs from these producing areas to proposed new fractionation and storage facilities, which would have connectivity to petrochemical facilities and product pipelines along the coasts of Louisiana and Texas. Williams and Boardwalk are also exploring development of a new export liquefied petroleum gas terminal and related facilities on the Gulf Coast to provide customers access to international markets.

As proposed, the Bluegrass Pipeline would include the following:

– Constructing a new NGL pipeline from producing areas in West Virginia and Ohio to an interconnect with Boardwalk’s Texas Gas Transmission LLC system (Texas Gas) in Hardinsburg, Ky.;

– Converting a portion of Texas Gas from Hardinsburg, Ky. to Eunice, La. (the “TGT Loop Line”) from natural gas service to NGL service, including construction of new pump stations and related facilities; and

– Constructing a new large-scale fractionation plant and expanding natural gas liquids storage facilities in Louisiana and a new pipeline connecting these facilities to the converted TGT Loop Line.

By combining new construction with an existing pipeline, Williams and Boardwalk believe that the Bluegrass Pipeline can be placed into service and begin serving customers sooner than other options. Williams and Boardwalk are engaged in comprehensive project development planning including project design, cost estimating, economic and risk analysis, customer contracting, permitting and other legal and regulatory approvals and right-of-way acquisition. Williams and Boardwalk expect to sanction the project this year and place the planned project into service in the second half of 2015 assuming all necessary conditions are met.

“We are designing Bluegrass Pipeline to provide these two world-class resource plays with access to one of the largest and most dynamic petrochemical markets in the world. In turn, this will help producers in Ohio, Pennsylvania and West Virginia achieve an attractive value for their ethane and other liquids,” said Alan Armstrong, president and chief executive officer of Williams. “The current infrastructure challenge with natural gas liquids in the Northeast is slowing drilling and isolating liquids supplies from the robust markets in the Gulf that are poised to grow substantially over the next five years.”

Given current market dynamics in the Northeast, existing liquids systems and local outlets will be overwhelmed by 2016, he said. Total NGL volumes in the Northeast are expected to exceed 1.2 million barrels per day by 2020.

“The proposed Bluegrass Pipeline joint venture would support Williams’ midstream assets in the region, offer an attractive return and enable Williams to become the premier NGL infrastructure provider by economically linking the Utica and Marcellus region to petrochemical complexes on the U.S. Gulf,”Armstong added.

The unique arrangement of this planned project would create several strategic advantages, said Stan Horton, president and CEO of Boardwalk, including a “faster in-service date complemented by a significantly reduced construction footprint than could be achieved with a completely organic project.”

Sanctioning and completion of this project is subject to, among other conditions, negotiation and execution of definitive joint venture and related agreements; execution of customer contracts sufficient to support the project; and the parties’ receipt of all necessary approvals, including board approvals and regulatory approvals, such as antitrust clearance under the Hart-Scott-Rodino Antitrust Improvements Act, approvals by the Federal Energy Regulatory Commission (FERC), among others. Before Texas Gas Transmission may begin converting the TGT Loop Line, it must receive abandonment authority from FERC. Boardwalk plans to file the abandonment application with FERC by May 1, 2013, and the abandonment process is estimated to take between nine to 12 months.

Boardwalk Pipeline Partners has two home offices, one in Owensboro and one in Houston.