General:
Enogex is a provider of integrated natural gas midstream services and is engaged in the business
of gathering, processing, transporting, storing and marketing natural gas. Most of Enogex's
natural gas gathering, processing, and transportation and storage assets are strategically located
in the Arkoma and Anadarko basins of Oklahoma and the Texas Panhandle. Enogex's operations
are organized into three business segments: (i) natural gas transportation and storage, (ii) natural
gas gathering and processing and (iii) natural gas marketing. At December 31, 2011, Enogex and
its subsidiaries owned: (i) approximately 6,019 miles of intrastate natural gas gathering pipelines
in Oklahoma and Texas; (ii) approximately 2,250 miles of intrastate natural gas transportation
pipelines in Oklahoma; (iii) two underground natural gas storage facilities in Oklahoma
operating at a combined working gas level of 24 billion cubic feet with 650 MMcf/d of
maximum withdrawal capacity and 650 MMcf/d of injection capacity; (iv) 638,350 horsepower
of owned compression and (v) eight operating natural gas processing plants, with a current total
inlet capacity of 1,105 MMcf/d, all located in Oklahoma.
Transportation and Storage:
Enogex owns and operates intrastate natural gas transportation pipelines in Oklahoma with 1.94
TBtu/d of average daily throughput in 2011. The majority of the transportation system is
contracted under fee-based capacity arrangements. Customers include electric utility companies,
primarily OG&E and Public Service Company of Oklahoma, in which Enogex provides natural
gas transportation services to the utility power plants. In addition, Enogex provides fee-based
firm and interruptible transportation services on both an intrastate basis and pursuant to Section
311 of the Natural Gas Policy Act on an interstate basis. Enogex also owns and operates two
underground natural gas storage facilities in Oklahoma. The storage facilities are primarily
contracted on a fee basis with the majority of contracts one to three years in length.
Gathering and Processing:
Enogex's intrastate gathering systems are located in Oklahoma and the Texas Panhandle with
1.36 TBtu/d of average daily gathered volumes in 2011. Enogex owns and operates eight natural
gas processing plants, with a current total inlet capacity of 1,105 MMcf/d and has contracted to
have access to up to 230 MMcf/d of capacity in six third-party plants. Where the quality of
natural gas received dictates the removal of NGLs, such gas is aggregated through the gathering
system to the inlet of one or more processing plants operated or utilized by Enogex. The
resulting processed stream of natural gas is then delivered from the tailgate of each plant into
Enogex's intrastate natural gas transportation system. In 2011, Enogex extracted and sold 685
million gallons of NGLs.
Enogex also has a 50 percent interest in Atoka, which operated a 20 MMcf/d refrigeration
processing plant which processed gas gathered in the Atoka area. The processing plant was
leased on a month-to-month basis. In August 2011, management made a decision to use thirdparty processing exclusively for gathered volumes dedicated to Atoka and, therefore, to take the
processing plant out of service and return it to the lessor in accordance with the rental agreement.
Enogex gathers and processes natural gas pursuant to a variety of arrangements generally
categorized as fee-based, percent-of-proceeds, percent-of-liquids and keep-whole arrangements.
Percent-of-proceeds, percent-of-liquids and keep-whole arrangements involve varying levels of
commodity price risk to Enogex because Enogex's margin is based in part on natural gas and
NGLs prices. Enogex seeks to mitigate its exposure to fluctuations in commodity prices in
several ways, including managing its contract portfolio. In managing its contract portfolio,
Enogex classifies its gathering and processing contracts according to the nature of commodity
risk implicit in the settlement structure of those contracts.
Gathering Terms:
High Pressure Gathering Fees – Fees charged to customers for the service of receiving and
transporting the customer’s natural gas through Enogex’s high pressure gathering pipelines.
Compression Fees - Fees charged to customers for the service of compressing the customer’s
natural gas to facilitate its transportation through Enogex’s gathering pipelines.
Purchase/Sale Margins - Gains or losses on the sale of natural gas purchased from producers by
Enogex.
Sat to Dry Conversion – When a producer delivers “wet” natural gas (containing more than 7
lbs. of water per Mcf), the natural gas is deemed to be saturated and Enogex settles on a saturated
Btu basis.
Imbalance – The difference in the amount of natural gas that was requested (i.e. nominated) and
the amount that was actually shipped.
Fuel Recoveries – Enogex charges fixed zonal fuel percentages for natural gas shipped on the
East Zone and West Zone of the Enogex System. The fuel percentages for each Zone are
adjusted annually and are in effect from January 1 through December 31. If estimates of usage
are different from actual usage, over or under recoveries of fuel can result. The monthly margin
impact of over or under recovered fuel is dependent upon whether or not a particular Zone is
currently in a net over or under recovered position.
Natural gas length – A long natural gas position that arises from over-recovered gathering fuel,
contractual gains such as sat to dry upgrades and the use of electric compression.
Processing Terms:
Fixed fee – A fee-based processing arrangement whereby the producer pays Enogex a fee per
MMBtu of natural gas processed. Producers keep the rights to all NGLs and all residue natural
gas. Enogex has no exposure to commodity prices under these contracts except for any natural
gas that is contractually retained for plant fuel that exceeds actual natural gas used for fuel.
Percentage of Liquids (POL) – A processing arrangement whereby Enogex retains a
percentage of NGLs recovered during natural gas processing. Enogex has price exposure to
NGLs under these contracts and also to any natural gas that is contractually retained for plant
fuel that exceeds actual natural gas used for fuel.
Percentage of Proceeds (POP) – A processing arrangement whereby Enogex retains a
percentage of NGLs and residue natural gas. Enogex has price exposure to natural gas and
NGLs under these contracts.
Keep whole – A gathering contract without a processing contract whereby Enogex returns to
producers 100% of the Btu content of the raw gas in exchange for retaining ownership of all
NGLs. Enogex has price exposure to natural gas and NGLs under these contracts.
Purchase for Resale – An arrangement whereby Enogex purchases a producer’s volumes under
POL, POP or fixed fee arrangements and resells them.
Take-In-Kind – An arrangement whereby Enogex returns a producer’s volumes under POL,
POP or fixed fee arrangements for the producer’s disposition.
Residue - Natural gas that remains after the removal of NGLs.
Shrinkage - The reduction in volume and/or heating value of natural gas due to the removal of
NGLs or Condensate.
GPM – Gallons of NGLs per MCF (thousand cubic feet)
Processing Plant
Lean Oil
Gas/Electric
2011 Average Daily Inlet Volumes
(MMcf/d)
178
South Canadian (A) (B)
Cox City (C) (D)
2011
1994
Cryogenic
Cryogenic
Electric
Gas/Electric
74
155
200
180
Thomas (A)
Clinton (A)
1981
2009
Cryogenic
Cryogenic
Gas
Electric
132
122
135
120
Roger Mills (C)
Canute (C)
2008
1996
Refrigeration
Cryogenic
Electric
Electric
29
51
100
60
Wetumka (A)
1983
Cryogenic
Gas/Electric
37
60
778
1,105
Calumet (A)
Total
Year
Installed
1969
Type of Plant Fuel Capability
Inlet Capacity
(MMcf/d)
250
(A) These processing plants are located on property that Enogex owns in fee.
(B) This plant was placed into service in December 2011.
(C) These processing plants are located on easements or leased property as described above.
(D) On December 8, 2010, a fire occurred at Enogex's Cox City natural gas processing plant destroying
major components of one of the four processing trains, representing 120 MMcf/d of the total 180 MMcf/d
of capacity, at that facility. Gas volumes normally processed at the Cox City plant were diverted to other
facilities or bypassed around Enogex's system to accommodate production and all of the impacted
gathered volumes were back online in December 2010. The damaged train was replaced and the facility
was returned to full service in September 2011. Average daily inlet volumes were calculated using
October through December 2011 inlet volumes.
Enogex System Map
Note: The 200 Mcf/d Wheeler processing plant is scheduled for completion in the 3rd quarter of 2012 and
the 200 Mcf/d McClure processing plant is scheduled for completion in the 4th quarter of 2013.