Fitch Rates Rockies Express Pipeline's Commercial Paper Program 'F2'.

NEW YORK -- Fitch has initiated ratings coverage on Rockies Express Pipeline LLC (REX) by assigning it a short-term debt rating of 'F2'. The short-term rating applies to REX's $2.0 billion commercial paper (CP) program. The CP is backstopped by a $2.0 billion five-year, unsecured revolving credit facility due April 28, 2011. The facility can be amended to allow for borrowings up to $2.5 billion.

Borrowings under the REX credit facility and CP program will be used to partially finance the construction of the Rockies Express interstate natural gas pipeline (REX Pipeline). Total cost of the pipeline is currently estimated at approximately $4.4 billion. The REX Pipeline is a 1,663-mile system designed to deliver natural gas produced in the Rocky Mountain region to markets in the Midwest and eastern U.S. The project has secured 10-year, binding firm shipper commitments for all 1.8 billion cubic feet per day of capacity. The pipeline will be built in segments with an initial 136-mile supply area piece recently completed. A key segment running 713 miles from Cheyenne, Wyoming to Audrian County, Missouri is projected to be in service by January 2008. A 622-mile portion extending east from Missouri to Clarington, Ohio is expected to be completed in June 2009.

REX is currently owned by Kinder Morgan Energy Partners, L.P. (NYSE: KMP) -- 51%, Sempra Energy (Sempra) (NYSE: SRE) -- 25%, and ConocoPhillips (NYSE: COP) -- 24%. The three owners of REX unconditionally guarantee borrowings under the CP program and credit facility severally (not jointly) in the same portion as their percentage ownership of REX. Each guarantor, at its sole discretion, may assume the payment obligations of the other guarantors. Each guarantor covenants that it will not sell or transfer any portion of its interest in REX to any person other than a guarantor of the CP if such person has a long-term senior unsecured credit rating lower than the lowest rated guarantor. Post the completion of REX the ownership will be KMP (50%), Sempra (25%), and COP (25%).

REX's 'F2' rating primarily reflects the short-term ratings of its owners and their obligations under the loan documents to guarantee principal and interest. Also considered are the overall financial and operating characteristics of the owners, including ability to satisfy payment obligations. A tertiary consideration is the construction and operating status of the REX Pipeline. Relevant credit ratings of the owners are as follows: COP, Issuer Default Rating (IDR) 'A-', Rating Outlook Positive, USD CP program 'F2'; Sempra, IDR 'A', Rating Outlook Stable, short-term 'F1' (issued by Sempra Global and guaranteed by Sempra); and KMP, IDR 'BBB+' on Rating Watch Negative, short-term 'F2' (not on Rating Watch). On May 30, 2006, Fitch put KMP's 'BBB+' IDR and senior unsecured ratings on Rating Watch Negative following the announcement of a management led leveraged buyout (LBO) of Kinder Morgan Inc. (KMI). KMI has a significant ownership interest in KMP, including owning the 2% general partner interest. Fitch has affirmed KMP's 'F2' short-term rating and has further indicated that should Fitch take a rating action on KMP's long-term rating due to the LBO transaction it would likely be no more than one notch.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.