El Paso Corporation and Global Infrastructure Partners (GIP) have formed a joint venture and entered into a definitive agreement to construct, own and operate the Ruby interstate natural gas pipeline. Ruby is a 675-mile natural gas pipeline that will transport gas from the growing Rocky Mountain supply region to West Coast markets. It will run from Opal, WY to Malin, OR on the California/Oregon border. Ruby is estimated to require an investment of $3 billion and is expected to be placed into service in March 2011.
GIP has committed up to $700 million of funding during construction through providing Ruby with up to $555 million in the form of a senior secured loan and/or convertible preferred equity and indirectly providing Ruby with a further $145 million through an investment in convertible preferred equity of Cheyenne Plains Pipeline which is an existing natural gas pipeline wholly owned by El Paso. El Paso will assume all construction and development obligations in connection with the construction of Ruby. Upon completion of construction, GIP and El Paso will own the common equity of Ruby on a 50/50 basis.