Northern Border Partners, L.P.



            Northern Border Partners’ primary asset is its 70% interest in the Northern Border Pipeline Company (the other 30% is held by another PTP, TC PipeLines, L.P.).  However, thanks to a number of recent acquisitions, its business operations have expanded; and it now operates in three separate segments: interstate natural gas pipelines, natural gas gathering and processing, and a coal slurry pipelines.


Natural Gas Pipelines


The Northern Border Pipeline Company owns a 1,249-mile United States interstate pipeline system that transports natural gas from the Montana-Saskatchewan border to natural gas markets in the Midwestern United States.  This pipeline system connects with multiple pipelines, which provide more than 40 shippers with access to the various natural gas markets served by those pipelines.  Initially constructed in 1982, the pipeline has undergone several expansions and extensions, the most recent in 2001.  In the year ended December 31, 2003, Northern Border Pipeline transported approximately 22% of the total amount of natural gas imported from Canada to the United States.


The pipeline system has pipeline access to natural gas reserves in the western Canadian sedimentary basin in the provinces of Alberta, British Columbia, and Saskatchewan in Canada, as well as the Williston Basin in the United States.  It also has access to synthetic gas produced at the Dakota Gasification plant in North Dakota.


The system consists of 822 miles of 42-inch diameter pipe designed to transport 2,374 million cubic feet per day from the Canadian border to Ventura, Iowa; 30-inch diameter pipe and 36-inch diameter pipe, each approximately 147 miles in length, designed to transport 1,484 million cubic feet per day in total from Ventura, Iowa to Harper, Iowa; and 226 miles of 36-inch diameter pipe and 19 miles of 30-inch diameter pipe designed to transport 844 million cubic feet per day from Harper, Iowa to a terminus near Manhattan, Illinois (Chicago area) ; and 35 miles of 30-inch diameter pipe designed to transport 545 mmcfd from Manhattan, Illinois to a terminus near North Hayden, Indiana.  Along the pipeline there are 16 compressor stations with total rated horsepower of 499,000 and measurement facilities to support the receipt and delivery of gas at various points.  Other Northern Border facilities include four field offices and a microwave communication system with 51 tower sites.


At its northern end, the pipeline system is connected to TransCanada's majority-owned Foothills Pipe Lines Ltd. system in Canada, which is connected to the Alberta system, owned by TransCanada, and the pipeline system owned by Transgas Limited in Saskatchewan.  The pipeline system also connects with facilities of Williston Basin Interstate Pipeline at Glen Ullin and Buford, North Dakota, facilities of Amerada Hess Corporation at Watford City, North Dakota and facilities of Dakota Gasification Company at Hebron, North Dakota in the northern portion of the pipeline system.


The pipeline system serves more than 40 firm transportation shippers with diverse operating and financial profiles. Based upon shippers' contractual obligations, as of December 31, 2003, 94% of the firm capacity is contracted by producers and marketers. The remaining firm capacity is contracted to local distribution companies (5%) and interstate pipelines (1%).  All of Northern Border Pipeline's capacity was under contract through December 31, 2003 and, assuming no extensions of existing contracts or execution of new contracts, approximately 70% and 59% is under contract through December 31, 2004 and 2005, respectively 


Northern Border Partners also owns Midwestern Gas Transmission, which it acquired on May 1, 2001 from El Paso Corporation for approximately $102 million.  The Midwestern Gas Transmission system extends from an interconnection with Tennessee Gas Transmission near Portland, Tennessee to a point of interconnection with several interstate pipeline systems near Joliet, Illinois. Midwestern Gas Transmission serves markets in Chicago, Kentucky, southern Illinois and Indiana.  The Midwestern Gas Transmission system consists of 350 miles of 30-inch diameter pipe with a capacity of 650 mmcfd for volumes transported from Portland, Tennessee to the north.  The system is also capable of moving approximately 350mmcfd southbound, depending upon receipt and delivery point locations.  There are six compressor stations capable of generating 70,170 horsepower.


The Midwestern Gas Transmission system connects with multiple pipeline systems that provide its shippers access to various markets served by those pipelines.  Because of its position in the U.S. grid, Midwestern Gas Transmission is configured to receive gas volumes at both ends of its system.  In the north end, Midwestern Gas Transmission can receive gas from ANR Pipeline Company, Northern Border Pipeline, Natural Gas Pipeline Company of America, Alliance Pipeline, The Peoples Gas Light and Coke Company and Trunkline Gas Company.  The significant receipt point on the southern end of the system is the interconnection with Tennessee Gas Transmission at Portland, Tennessee.  Additionally, Midwestern Gas Transmission is capable of receiving gas at five other interconnections along its pipeline system.  With respect to market access, Midwestern Gas Transmission is capable of delivering natural gas at points of interconnection with the interstate pipeline systems of ANR Pipeline Company, Guardian Pipeline, L.L.C., Natural Gas Pipeline Company of America, Northern Border Pipeline, and Texas Gas Transmission Company as well as interconnections with local distribution companies.  In addition, a number of end users and electric power generation facilities can be served by connections off the pipeline system.


               In January 2003 Northern Border acquired the Viking Gas Transmission Company, including a one-third interest in Guardian Pipeline, L.L.C.  The Viking Gas Transmission system extends from an interconnection with TransCanada near Emerson, Manitoba to an interconnection with ANR Pipeline Company near Marshfield, Wisconsin and has interconnections with Northern Natural Gas Company and Great Lakes Gas Transmission to serve markets in Minnesota, Wisconsin and North Dakota.  The system contains 499 miles of mainline pipe and 174 miles of looping and lateral pipes, along with 8 compressor stations with a total horsepower of 68,650.  The Viking Gas Transmission system serves over 40 firm transportation shippers. Based upon shipper contractual obligations as of December 31, 2003, approximately 81% of the firm transportation capacity is contracted by local distribution companies, 12% by marketers and 7% by end-users.  
               Guardian Pipeline is a 141-mile interstate natural gas pipeline system that went into service on December 7, 2002. This system transports natural gas from Joliet, Illinois to a point west of Milwaukee, Wisconsin. Subsidiaries of Wisconsin Public Service and Wisconsin Energy Corporation hold the remaining interests in this system. Wisconsin Gas Company, a subsidiary of Wisconsin Energy Corporation, has contracted for 87% of the pipeline's 750 mmcfd capacity. Guardian Pipeline is currently operated by Trunkline Gas Company, which is part of the Panhandle Companies. Northern Plains Natural Gas Company, a general partner of Northern Border, has been selected to be the operator of Guardian Pipeline effective July 1, 2004.


Natural Gas Gathering and Processing


Northern Borders’ gas gathering and processing segment provides services for the gathering, treating, processing and compression of natural gas and the fractionation of natural gas liquids ("NGLs") for third parties and related field services.  Properties in this segment include:


Ø                  Bear Paw Energy, L.L.C., acquired in March 2001.  Bear Paw, which has extensive gathering and processing operations, will become part of the Partnership’s U.S. midstream business.  Bear Paw owns approximately 600 miles of high and low pressure gathering pipelines in the Powder River Basin in Wyoming and has approximately 226,000 leasehold production acres under dedication.  In the Williston Basin in Montana, North Dakota and Saskatchewan, Bear Paw owns over 3,000 miles of gathering pipelines and four processing plants with 90 MMcf/d of capacity.


Ø                  Crestone Energy Ventures, a wholly-owned subsidiary of Northern Border, holds ownership interests in various Rocky Mountain properties, including a 100 percent ownership of Crestone Gathering Services; a 49 percent interest in Bighorn; a 33 percent interest in Fort Union; and a 35 percent interest in Lost Creek. These entities collectively own over 300 miles of gas gathering facilities in Wyoming. Crestone Gathering Services provides gas gathering services to third parties and the facilities connect to the interstate gas pipeline grid serving gas markets in the Rocky Mountain, the Midwest and California.  Following the Bear Paw acquisition, its gathering facilities in northeastern Montana were integrated with those of Crestone Gathering.  Between the two this comprises approximately 1,100 miles of high and low pressure gathering pipelines, approximately 71 compressor stations with approximately 114,000 installed horsepower and long-term volumetric contracts with producers covering approximately 300,000 acres of dedicated reserves in the Powder River Basin.


Ø                  The Bighorn and Fort Union systems gather coal bed methane gas produced in the Powder River basin in northeastern Wyoming. The Bighorn system consists of approximately 90 miles of pipeline running from southwest of Gillette to north of Spotted Horse, Wyoming and 12 compressor facilities in various stages of completion. The Bighorn system is capable of gathering more than 250 mmcfd of natural gas for delivery to the Fort Union gathering system.  The Fort Union gathering system is capable of delivering more than 634 MMcf/d of natural gas into the interstate pipeline grid.  Fort Union facilities include a gathering trunkline with 103 miles of 24-inch pipeline from Gillette to Glenrock, Wyoming and a CO2 extraction plant. 


Bear Paw Energy's and Crestone Gathering's facilities are interconnected with the facilities of Bighorn and Fort Union, and all the gathering facilities interconnect to the interstate gas pipeline grid serving gas markets in the Rocky Mountains, the Midwest and California.


Ø                  The Lost Creek system gathers natural gas produced from conventional gas wells in the Wind River basin in central Wyoming and consists of 106 miles of gathering header.  Facilities include 106 miles of 24-inch pipeline extending from the Madden field in the 39 miles, 5,000 HP of electric compression and a hydrocarbon decontrol plant. The system is capable of delivering more than 275 MMcf/d of production into the interstate pipeline grid.


Ø                  Canadian Midstream Business Northern Border owns, through a wholly-owned subsidiary, Border Midstream Services, an interest in the Canadian Midstream business consisting of the Mazeppa Plant, the Gladys Plant, and a minority interest in the Gregg Lake/Obed Pipeline, all of which are located in Alberta, Canada. The Mazeppa Plant is a sour gas processing plant with 80 mmcfd of capacity and pipelines consisting of 115 miles of gathering systems. The Gladys Plant is a sour gas processing plant with 10 mmcfd of capacity. The Gregg Lake/Obed Pipeline consists of 85 miles of gathering lines with a capacity of 150 MMcf/d.


Coal Slurry Pipeline


            Through the Black Mesa Pipeline Pipeline Company, a wholly-owned subsidiary, Northern Border owns a 273-mile, 18-inch diameter coal slurry pipeline which originates at a coal mine in Kayenta, Arizona.  The coal slurry pipeline transports crushed coal suspended in water. It traverses westward through northern Arizona to the 1,500 megawatt Mohave Power Station located in Laughlin, Nevada.  The coal slurry pipeline is the sole source of fuel for the Mohave Power Station, which consumes an average of 4.8 million tons of coal annually.  The capacity of the pipeline is fully contracted to the coal supplier for the Mohave Power Station through the year 2005.


Business Strategy


            Northern Border’s business strategy is focused on growing its businesses, its income and cash flow, and its distributions to unitholders. The strategy involves three main components:


Ø      Continue to focus on safe, efficient, and reliable operations and the further development of the company’s regulated pipelines.  Northern Borders intends to maintain its position as a low cost transporter of Canadian gas to the Midwestern U.S. and provide highly valued services to its customers.

Ø      Developing its gas gathering and processing segment, where it is building on its established business relationships with producers and marketers in the Canadian and Rocky Mountain supply basins.

Ø      Continuing to acquire complementary businesses, with a goal of approximately $200 to $250 million of capital expenditures annually in growth through acquisitions and internal development.  Northern Border targets businesses that leverage its core competencies of energy transportation, are conservative in terms of commodity price risk, are located in the U.S. and Canada, and provide immediate earnings and cash flow contribution.  The focus will be on acquisitions of natural gas assets including interstate and intrastate natural gas pipelines, storage facilities and gathering and processing assets.  Northern Border anticipates financing its capital expenditures and acquisitions conservatively through an appropriate mix of additional borrowings and equity issuances.


            Northern Border Partners trades on the New York Stock Exchange under the symbol NYSE/NBP.  For more information, visit northern Borders’ website at or contact Ellen Konsdorf, Director of Investor Relations, at 402-492-7500, or e-mail [email protected].



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*As of June 30, 2003 and June 28, 2002



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