Order granting rehearing for further consideration of the Commission's July 27, 2001 Order re Tennessee Gas Pipeline Company under RP01-458.

Exhibit No. SEA-4 Page 2 of 11 1 TABLE OF CONTENTS 2 FOR STATEMENT B 3 4 5 Section Page 6 7 8 I. Introduction and Overview ........................................................................... 1 9 II. Seaway Pipeline is Seeking Permission to Charge Market-Based 10 Rates For the Transportation of All Crude Oil ............................................ 1 11 III. Seaway Pipeline is Capable of Transporting All Types of Crude 12 Oil, and the Pipeline Does Transport Many Different Types of 13 Crude Oil ........................................................................................................ 2 14 IV. Supply-Side Substitution.............................................................................. 3 15 V. Demand-Side/End-Use Substitution ............................................................ 4 16 A. Crude Oil Composition and Characteristics ..................................................................... 4 17 B. Refinery Usage of Crude Oil ............................................................................................ 6 18 C. End-Use Substitutability of Crude Oil .............................................................................. 8 19 20 B-i Exhibit No. SEA-4 Page 3 of 11 1 STATEMENT B 2 3 THE PRODUCT MARKET SERVED BY SEAWAY PIPELINE 4 I. Introduction and Overview 5 The appropriate product market definition for Seaway Pipeline is the transportation 6 of all crude oil. This definition is appropriate for four reasons: (1) Seaway Pipeline 7 is seeking market-based rate authority for transportation of all crude oil; (2) Seaway 8 Pipeline is capable of transporting all types of crude oil, and the pipeline transports 9 many different types of crude oil; (3) Seaway Pipelines competitors can 10 transport/supply all types of crude oil (i.e., there is supply-side-substitution); and (4) 11 different types of crude oil are substitutes for each other within refineries due to the 12 nature of crude oil and the manner that it is processed by refineries (i.e., there is 13 demand-side/end-use substitution). These four reasons are discussed in detail 14 below. 15 II. Seaway Pipeline is Seeking Permission to Charge Market-Based Rates For 16 the Transportation of All Crude Oil 17 Seaway Pipeline is applying for market based rates for all of the crude oil that it 18 transports. The types of crude oil shipped or potentially shipped on Seaway Pipeline 19 includes all types of crude produced in the Cushing origin market, the Rocky Mountain 20 production area, and the Western Canada production area, including blends of crude oil 21 from all these areas. B-1 Exhibit No. SEA-4 Page 4 of 11 1 Because the Commission has determined that the appropriate product market 2 includes those services for which the applicant seeks to charge market-based rates, 1 3 the appropriate product market is the transportation of all crude oil. 4 III. Seaway Pipeline is Capable of Transporting All Types of Crude Oil, and the 5 Pipeline Does Transport Many Differ