Follow up from Red Lake meeting

Following up on our conversation re: Red Lake storage

assuming only a Phoenix lateral gets built off TW, no mainline or SJ expansion:
Capital cost is estimated at $304mm.

A fully subscribed rate on volume of 750,000/d to get a 15% ROR would be $.152/MMBtu (with zero fuel retention).

If we assume a more gradual volume ramping up, beginning with 50% load factor in year 1 climbing to 100% in year 8, the target transport rate would need to be $.248 (closer to my "top of the head" $.30 we discussed yesterday).

Both of these scenarios assume 80/20 Debt/equity and a salvage value in year 20 of the project equal to 1/3 of the capital cost.

Also,
regarding the Kern River expansion, what might the likelihood be of Mojave receiving Kern gas and backhauling to TW for delivery into Aquila Red Lake? If the Kern volume of 700,000 (out of 900,000 capacity) doesn't go to Calif end-users, I think Mojave will have a somewhat stranded segment from Cal border to the Kern interconnect. We could then take this gas and haul it to Phoenix.

Let me know what you think
kh