| The 2,000-mile Questar Pipeline draws gas from Rocky Mountain producing areas
in Utah, Wyoming, and Colorado, and interconnects with pipelines including Colorado
Interstate Gas, Kern River Gas Transmission, Northwest Pipeline, Overthrust Pipeline,
Questar Gas Co., Rocky Mountain Natural Gas Co., TransColorado Pipeline, Williams
Gas Pipeline Central, and Wyoming Interstate Co.,
The volatility of natural gas prices has given rise to a basis market that
is quoted as a differential to the price of the New York Mercantile Exchange,
Inc., natural gas futures contract which has evolved into the benchmark for
forward natural gas markets industry-wide due to its liquidity and transparency.
To better help market participants offset their price risk in this major market
center, the Exchange provides a Questar Pipeline Rocky Mountain basis swap futures
contract. The final settlement is calculated as the Platts Inside FERC's
Gas Market Report Questar Pipeline Rocky Mountain index price minus the
final settlement price of the Exchange's benchmark natural gas futures contract
for the corresponding month on the last trading day. Platts Inside FERC
calculates the Questar Pipeline index price from its monthly bid week survey
of buyers and sellers who are shipping base-load gas on the pipeline.
The contract size of 2,500 million Btus represents a commonly traded market
unit and is one-quarter of the size of the natural gas futures contract, giving
market participants additional flexibility in managing price risk. The contract
must be traded in a multiple of the number of calendar days in the month.
All positions will be aggregated and margined according to the value at risk
as calculated by the SPAN® system. Cross margining offsetting positions
across markets can reduce margin obligations.
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