From: kevin.hyatt@enron.com
To: michelle.lokay@enron.com
Date: 2000-12-20 14:05:00+00:00
Subject: Gomez to Puckett Tie-In strategy Issues

---------------------- Forwarded by Kevin Hyatt/ET&S/Enron on 12/20/2000 
02:05 PM ---------------------------


Christine Stokes
12/08/2000 02:15 PM
To: Steven Harris/ET&S/Enron@ENRON, Kevin Hyatt/ET&S/Enron@Enron
cc:  
Subject: Gomez to Puckett Tie-In strategy Issues

Here is the latest status of Transwestern's Gomez to Puckett project on the 
south-end and some of the strategic issues behind this project:

Project Overview:  Tranwestern's Gomez-Puckett Tie-Over project would connect 
Transwestern's Lone Star compressor toTW's most southerly south-end 20" line 
(currently a sour line).  The sour line would be first be cleaned and tested 
for MAOP.  Potential plant connects to this line include the Coyanosa plant 
(currently owned by Koch) and Western's Gomez plants.  Potential incremental 
plant supplies would be 100-150 MMcf/d of supplies.

Scenario 1:  If Transwestern is willing to be completely at risk for the $2 
MM required for the sour line conversion and compression tie-in costs, this 
options currently exists and we could move forward.  These costs do not 
include the individual plant connections, which could easily be 
$400,000-500,000 each.   This would be a relatively high-risk decision.

Scenario 2:  If Transwestern wants shipper contracts to support this project 
in part, or in full, the following significant issues need to be considered:

   -   Possible ownership changes of the Koch Coyanosa plant to Richardson 
Products Company.  There is a moderate to high probability that Richardson 
Products Company will purchase the Coyanosa plant, currently owned by Koch.  
It is in close proximity to their MiVida system which they purchased last 
year and have recently indicated an interest to interconnect with 
Transwestern at the Lone Star, Ward location (cost estimates were complete 
this week).  Koch has confirmed this rumor of potential acquisition.   
Currently Koch has 100 MMcf/d of its own equity gas at the plant, but if the 
rumor of the sale of the plant is correct, I may be dealing directly with 
Richardson Products rather than Koch.   Another factor to be considered with 
this scenario is that if Richardson Products company owns and operates the 
Coyanosa plant, they will already have made some strategic decisions about 
where their 100 MMcf/d of equity gas will go.   It is possible that through 
their MiVida system, Transwestern could have access to this plant gas at 
another locational interconnect with Transwestern without having to spend a 
penny for the line conversion and connection to the Coyanosa Plant.    Bottom 
line is, if Richardson Products does acquire this plant, we needs to take a 
step back and look at other scenarios which may be cheaper for accessing this 
plant's gas.

- Western Gas Resources contract participation issues:  Western Gas Resources 
will eventually have two plants that could be tied into the converted sour 
line:  1) Western's existing Gomez plant, and, 2) the newly to-be-acquired 
plant sold to them by NNG.   The sale of NNG's Gomez to Mitchell line and the 
NNG Gomez plant to Western Gas Resources must occur first.  Western will not 
focus its business attention to the possible connection of either Gomez plant 
to Transwestern's south-end line prior to this event.  They will eventually 
prepare a Declaratory Order to make the newly acquired plant and pipeline 
facilities from NNG non-jurisdictional.   NNG & Western have signed the Sale 
Agreement and the transfer of funds is expected 1st quarter of 2001 subject 
to due-diligence result.  NNG is currently preparing the abandonment filing 
for these assets and Western is in the process of their field due-diligence.  
Environmental issues (some contamination) relative to the asset sale have 
arisen and must be corrected prior to transfer of assets.   All of these 
issues may take a good part of 2001 to be resolved.

To Do's:  Monday (when I assume my beautiful, song-bird voice will return), I 
plan to discuss the interconnect costs of tying in Richardson's 20" MiVida 
line to Transwestern at the Lone Star Ward location.   We received 
Richardson's request for this estimate a couple of weeks ago and the estimate 
is about $320,000 (for facilities) plus $100,000 (tax gross-up)*.   In my 
conversation, I will try to get Brad Brigham to indicate the timing or 
validity of Richardson's possible purchase of this Koch plant.  Once a new 
facts can be obtained, it will make the decision making and risk evaluation 
process of implementing the Gomez to Puckett tie-in project easier to 
understand and take a position on.