EXECUTION COPY

                                PLEDGE AGREEMENT

           THIS  PLEDGE  AGREEMENT  (as from time to time  amended,  modified or
supplemented, this "Agreement") dated as of February 17, 1998, is made by KINDER
MORGAN OPERATING L.P. "A", a Delaware limited  partnership (the "Pledgor"),  and
FIRST UNION  NATIONAL  BANK,  as  administrative  agent (in such  capacity,  the
"Administrative  Agent")  for the banks and other  financial  institutions  (the
"Lenders") parties to the Credit Agreement (as defined below).


                             PRELIMINARY STATEMENTS

           (A) Kinder  Morgan Energy  Partners,  L.P.  (the  "Company"),  Kinder
Morgan   Operating  L.P.  "B"  (the   "Subsidiary   Borrower"),   certain  other
subsidiaries of the Company, including the Pledgor (together with the Subsidiary
Borrower  in  its  capacity  as  a  Subsidiary  Guarantor,   collectively,   the
"Subsidiary  Guarantors"),  the Lenders,  the  Administrative  Agent and Goldman
Sachs  Credit  Partners  L.P.,  as  syndication  agent  (in such  capacity,  the
"Syndication  Agent"),  are parties to a Credit  Agreement  dated as of the date
hereof (as the same may be amended and in effect from time to time,  the "Credit
Agreement"),  providing,  subject  to the  terms  and  conditions  thereof,  for
extensions of credit to be made by the Lenders to the Company and the Subsidiary
Borrower;

           (B) The Pledgor is the owner of a 100% of the issued and  outstanding
member  interests  (collectively,  the  "Interests") of each of the Subsidiaries
listed  in Part I of  Schedule  I under  the title  "Limited  Liability  Company
Issuer" (all such  Subsidiaries  collectively,  the "Limited  Liability  Company
Issuers");

           (C) The  Pledgor is the owner of 100% of the  issued and  outstanding
shares (collectively the "Shares") of each of the Subsidiaries listed in Part II
of Schedule I under the title "Stock  Issuer" (the "Stock  Issuers" and together
with the Limited Liability Company Issuers collectively, the "Issuers"); and

           (D) In order to induce the Lenders to enter into the Credit Agreement
and to extend credit thereunder to the Company and the Subsidiary Borrower,  and
for other good and valuable consideration,  the receipt and sufficiency of which
are hereby  acknowledged,  the Pledgor has agreed to pledge and grant a security
interest  in the  Collateral  (as  defined  below) as  security  for the Secured
Obligations  (as  defined  below).  Accordingly,  the  parties  hereto  agree as
follows:



<PAGE>



SECTION 1. Defined Terms: Interpretation.

           1.01 Defined Terms.

           (a) The capitalized terms used herein which are defined in the Credit
Agreement and not otherwise defined herein have, as used herein,  the respective
meanings provided for therein.

           (b) Unless otherwise defined herein or in the Credit Agreement, terms
defined in Articles 8 and 9 of the UCC are used herein as therein defined.

           (c) As used in this  Agreement,  the  following  terms shall have the
following meanings:

           "Administrative  Agent" has the meaning specified in the Introduction
 hereof.

           "Agreement"   has   the   meaning   specified   in   the Introduction
 hereof.

           "Collateral" has the meaning specified in Section 3.

           "Company" has the meaning  specified in the  Preliminary Statements.

           "Credit  Agreement"  has the  meaning  specified  in the Preliminary
Statements.

           "Interests"   has   the   meaning   specified   in   the Preliminary
Statements.

           "Issuers" has the meaning  specified in the  Preliminary Statements.

           "Lenders" has the meaning  specified in the Introduction hereof.

           "Limited  Liability  Company  Issuers"  has the  meaning specified
in the Preliminary Statements.

           "Pledged   Interests"  has  the  meaning   specified  in Section 3.

           "Pledged Shares" has the meaning specified in Section 3.

           "Pledgor" has the meaning  specified in the Introduction hereof.

           "Proceeds"  has the meaning  specified in Section  9-306 of the UCC.

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<PAGE>


           "Secured Obligations" means collectively:

           (i)  the  payment  of  all   indebtedness  and  liabilities  by,  and
      performance  of all other  obligations  of, the Company and the Subsidiary
      Borrower in respect of the Loans;

           (ii) all  obligations  of the  Company  and the  Subsidiary  Borrower
      under,  with  respect to, and  relating  to the Letters of Credit  whether
      contingent or matured;

           (iii) all  obligations  of the Company or any  Restricted
      Subsidiary  (other than SFPP)  owing to any Lender  under any
      Hedging Agreement;

           (iv) the payment of all other  indebtedness  and  liabilities  by and
      performance  of all other  obligations  of, the Company and the Subsidiary
      Borrower to the  Administrative  Agent,  the Issuing  Bank and the Lenders
      under,  with  respect  to,  and  arising  in  connection  with,  the  Loan
      Documents,  and the payment of all  indebtedness  and  liabilities  of the
      Company and the  Subsidiary  Borrower  to the  Administrative  Agent,  the
      Issuing Bank and the Lenders for fees, costs, indemnification and expenses
      (including  reasonable  attorneys'  fees  and  expenses)  under  the  Loan
      Documents;

           (v) the payment of all sums advanced and costs and expenses  incurred
      by the Administrative Agent or any Lender under any Loan Document (whether
      directly or  indirectly)  in connection  with the  Obligations or any part
      thereof or any  renewal,  extension or change of or  substitution  for the
      Obligations or any part thereof, whether such advances, costs and expenses
      were made or incurred at the request of any Loan Party, the Administrative
      Agent, the Issuing Bank or any Lender; and

           (vi)  all  renewals,  extensions,   amendments  and  changes  of,  or
      substitutions or replacements  for, all or any part of the items described
      under clauses (i) through (v) above.

           "Secured  Parties"  means (i) the Lenders,  (ii) the Issuing Bank and
(iii) the Administrative Agent.

           "Security Interests" means the security interests granted pursuant to
Section  3, as well as all other  security  interests  created  or  assigned  as
additional  Collateral for the Secured Obligations pursuant to the provisions of
this Agreement.

           "Shares" has the meaning  specified  in the  Preliminary Statements.

           "Stock  Issuers"  has  the  meaning   specified  in  the Preliminary
Statements.

           "Subsidiary  Borrower" has the meaning  specified in the Preliminary
Statements.

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<PAGE>



           "Subsidiary  Guarantors"  has the meaning  specified  in the
Preliminary Statements.

           "Syndication  Agent" has the  meaning  specified  in the Preliminary
Statements.

           "UCC" means the Uniform  Commercial  Code in effect from time to time
in the State of New York; provided that if by reason of mandatory  provisions of
law,  the  perfection  or the  effect of  perfection  or  non-perfection  of the
Security  Interest in any Collateral is governed by the Uniform  Commercial Code
as in effect in a jurisdiction other than the State of New York, "UCC" means the
Uniform  Commercial Code as in effect in such other jurisdiction for purposes of
the  provisions  hereof  relating to such  perfection or effect of perfection or
non-perfection.

           1.02 Interpretation.

           (a) In this Agreement, unless a clear contrary intention appears:

           (i)  the singular  number includes the plural number and
      vice versa;

           (ii) reference to any gender includes each other gender;

           (iii) the words "herein," "hereof" and "hereunder" and other words of
      similar  import  refer  to  this  Agreement  as a  whole  and  not  to any
      particular Section or other subdivision;

           (iv)  reference to any Person  includes such Person's  successors and
      assigns  but,  if  applicable,  only if such  successors  and  assigns are
      permitted  by this  Agreement,  and  reference to a Person in a particular
      capacity  excludes  such  Person in any other  capacity  or  individually,
      provided  that  nothing in this clause (iv) is intended to  authorize  any
      assignment not otherwise permitted by this Agreement;

           (v) reference to any agreement  (including this Agreement),  document
      or  instrument  means such  agreement,  document or instrument as amended,
      supplemented  or modified  and in effect  from time to time in  accordance
      with  the  terms  thereof  and,  if  applicable,  the  terms  hereof,  and
      references to any Note includes any note issued in renewal, rearrangement,
      reinstatement,    enlargement,    amendment,   modification,    extension,
      substitution or replacement therefor;

           (vi)  unless  the  context  indicates  otherwise,  reference  to  any
      Section, Schedule or Exhibit means such Section hereof or such Schedule or
      Exhibit hereto;

           (vii) the word "including" (and with  correlative  meaning "include")
      means  including,  without  limiting  the  generality  of any  description
      preceding such term;

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<PAGE>



           (viii) with respect to the  determination  of any period of time, the
      word  "from"  means "from and  including"  and the word "to" means "to but
      excluding"; and

           (ix)  reference  to  any  law,   ordinance,   statute,   code,  rule,
      regulation, interpretation or judgment means such law, ordinance, statute,
      code, rule, regulation,  interpretation or judgment as amended,  modified,
      codified  or  reenacted,  in whole or in part,  and in effect from time to
      time.

           (b) The Section  headings herein are for  convenience  only and shall
not affect the construction hereof.

           (c) No provision of this Agreement  shall be interpreted or construed
against  any  Person  solely  because  that  Person or its legal  representative
drafted such provision.

SECTION 2. Representations and Warranties of the Pledgor.

           The Pledgor represents and warrants as follows:

           (a) The Pledgor is the sole beneficial owner of the Collateral listed
      on  Schedule I and will be the sole  beneficial  owner of all of the other
      member interests of each Limited  Liability Company Issuer. No Lien exists
      or will  exist  upon the  Pledged  Interests  (and no right or  option  to
      acquire  the same  exists in favor of any other  Person),  except  for the
      pledge and security interest in favor of the Administrative  Agent for the
      benefit of the  Secured  Parties  created or provided  for  herein,  which
      pledge and security interest  constitute a first priority perfected pledge
      and security interest in and to all of the Pledged Interests.

           (b) The Pledged  Interests listed on in Part I of Schedule I are, and
      all other member interests which any Limited  Liability Company Issuer may
      hereafter issue will be, duly authorized, validly existing, fully paid and
      non-assessable  and  none of such  Pledged  Interests  is and none of such
      other member interests will be subject to any contractual restriction,  or
      any restriction  pursuant to the operating  agreement of such Issuer, upon
      the transfer of such member  interests or other member  interests  (except
      for any such restriction contained herein or in the Credit Agreement).

           (c) The Pledged  Shares  listed in Part II of Schedule I are, and all
      other shares of capital stock which any Stock Issuer may  hereafter  issue
      will be, duly authorized,  validly existing, fully paid and non-assessable
      and none of such  Pledged  Shares  is and  none of such  other  shares  of
      capital  stock  will be  subject to any  contractual  restriction,  or any
      restriction  pursuant to the Articles or Certificate of  Incorporation  of
      such Issuer, upon the transfer of

                                         -5-
<PAGE>


      such shares of capital  stock or other shares of capital stock (except for
      any such restriction contained herein or in the Credit Agreement).

           (d) No authorization,  approval, or other action by, and no notice to
      or filing with, any Governmental  Authority is required either (i) for the
      pledge by the Pledgor of the Collateral  pursuant to this Agreement or for
      the execution, delivery or performance of this Agreement by the Pledgor or
      (ii) for the exercise by the  Administrative  Agent of the voting or other
      rights  provided for in this  Agreement or the remedies in respect of such
      Collateral  pursuant  to this  Agreement  (except  as may be  required  in
      connection  with such  disposition by laws affecting the offering and sale
      of securities generally).

           (e) The Interests  described in Part I of Schedule I constitute  100%
      of the issued and  outstanding  member  interests  of each of the  Limited
      Liability  Company Issuers and the Shares described in Part II of Schedule
      I constitute 100% of the issued and  outstanding  capital stock of each of
      the Stock Issuers described therein.  Schedule I correctly identifies,  as
      at the date hereof,  the respective  Issuers of the Pledged  Interests and
      the Pledged Shares.

           (f)  None  of the  operating  agreements  for any  Limited  Liability
      Company  Issuers  provides  that the member  interests  of such Issuer are
      securities  governed  by  Article  8 of the  UCC and  none of the  Pledged
      Interests  is a "security"  within the meaning of Section  8-102(a) of the
      UCC.

           (g) This  Agreement  creates a valid  and  perfected  first  priority
      security  interest in the Collateral,  securing the payment of the Secured
      Obligations.

           (h) Upon the  filing of a  financing  statement  in the office of the
      Secretary of State of the State of Texas, the Administrative Agent for the
      benefit of the other Secured  Parties will have a perfected first priority
      security  interest in the Limited Liability  Company  Interests,  securing
      payment of the Secured Obligations.

           (i) The delivery of the Shares to the  Administrative  Agent pursuant
      to the Agreement  creates a valid and perfected  first  priority  security
      interest in the Shares, securing payment of the Secured Obligations.


                                         -6-
<PAGE>


           SECTION 3.  The Security Interests.

           (a) In order to secure the full and  punctual  payment of the Secured
Obligations  in  accordance   with  the  terms   thereof,   the  Pledgor  hereby
hypothecates,  transfers and grants to the Administrative  Agent for the ratable
benefit of the  Secured  Parties a  continuing  security  interest in and to all
right, title and interest of the Pledgor in the following property,  whether now
owned or existing or  hereafter  acquired  or arising  and  regardless  of where
located (all being collectively referred to as the "Collateral"):

           (i) the  Interests  identified  in Part I of Schedule I and all other
      member interests of the Limited Liability Company Issuers now or hereafter
      owned  by the  Pledgor  (the  Interests  and all  such  additional  member
      interests, collectively, the "Pledged Interests");

           (ii) the Shares represented by the certificates identified in Part II
      of Schedule I and all other shares of Capital  Stock of whatever  class of
      the Stock Issuers,  now or hereafter  owned by the Pledger (the Shares and
      all such additional shares collectively, the "Pledged Shares");

           (iii) all shares, securities, moneys or other property representing
      or constituting the Pledged Interests or Pledged Shares or representing a
      distribution  or dividend in respect of any of the  Pledged  Interests  or
      Pledged Shares,  or representing a return of capital upon or in respect of
      the Pledged  Interests or Pledged  Shares,  or resulting  from a split-up,
      revision,  reclassification  or other like change of the Pledged Interests
      or  otherwise  received  in  exchange  therefor,   and  any  subscriptions
      warrants,  rights or options  issued to the  holders of, or  otherwise  in
      respect of, the Pledged Interests or Pledged Shares;

           (iv)  without  affecting  the  obligations  of the Pledgor  under any
      provision prohibiting such action hereunder or under the Credit Agreement,
      in the event of any  consolidation or merger in which an Issuer is not the
      surviving entity,  all of the Capital Stock of the successor entity formed
      by or resulting  from such  consolidation  or merger,  in which event only
      such Capital  Stock shall be included as  Collateral  excluding (A) in the
      case of a corporation,  directors' qualifying shares, (B) in the case of a
      limited  partnership,  a 1.5% general partner interest and (C) in the case
      of a limited liability company, a 1.5% member interest; and

           (v)  all  Proceeds  of and to any  of  the  property  of the  Pledgor
      described in the preceding clauses of this Section 3 (including all causes
      of action,  claims and  warranties now or hereafter held by the Pledgor in
      respect of any of the items  listed  above) and, to the extent  related to
      any  property  described  in said  clauses  or such  Proceeds,  all books,
      correspondence, credit files, records, invoices and other papers.


                                         -7-
<PAGE>




           All  certificates  or  instruments  representing  or  evidencing  the
Collateral shall be delivered to and held by or on behalf of the  Administrative
Agent pursuant hereto and shall be in suitable form for transfer by delivery, or
shall be accompanied  by duly executed  instruments of transfer or assignment in
blank, all in form and substance  satisfactory to the Administrative  Agent. The
Administrative  Agent shall have the right,  at any time in its sole  discretion
and without notice to the Pledgor,  to transfer to or to register in the name of
the  Administrative  Agent or any of its nominees any or all of the  Collateral,
subject  only to the  revocable  rights  specified  in Section  4.03(b)  and (c)
hereof.

           (b) The  inclusion of Proceeds in this  Agreement  does not authorize
the Pledgor to sell,  dispose of or otherwise  use the  Collateral in any manner
not specifically authorized hereby or by the Credit Agreement.

SECTION 4.   Further Assurances; Remedies.

           In  furtherance  of the grant of the Security  Interest,  the Pledgor
hereby agrees with each Lender and the Administrative Agent as follows:

           4.01 Delivery and Other Perfection. The Pledgor shall:

           (a) deliver to the Administrative Agent prior to or concurrently with
      the execution and delivery of this  Agreement  all  certificates,  if any,
      representing  the  Interests  or the  Shares  identified  in  Schedule  I,
      endorsed in blank  accompanied  by undated  stock powers duly  executed in
      blank.

           (b) if any of the shares,  securities,  instruments,  moneys or other
      property  required to be pledged by the  Pledgor  under  Section  3(a) are
      received by the Pledgor,  forthwith either (x) transfer and deliver to the
      Administrative  Agent such  securities or  instruments  so received by the
      Pledgor  duly  endorsed  in blank or  accompanied  by undated  powers duly
      executed  in  blank),  all  of  which  thereafter  shall  be  held  by the
      Administrative  Agent pursuant to the terms of this Agreement,  as part of
      the Collateral or (y) take such other action as the  Administrative  Agent
      shall deem  necessary  or  appropriate  to duly  record  the Lien  created
      hereunder in such  securities,  instruments,  moneys or other  property in
      said clauses (i), (ii) and (iii); and

           (c)  give,  execute,   deliver,  file  and/or  record  any  financing
      statement,  notice, instrument,  document,  agreement or other papers that
      may be  reasonably  requested  by the  Administrative  Agent  in  order to
      create,  preserve,  perfect or  validate  the  security  interest  granted
      pursuant  hereto or to enable the  Administrative  Agent to  exercise  and
      enforce its rights  hereunder  with  respect to such  pledge and  security
      interest, including causing any or

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<PAGE>


      all of the  Collateral  to be  transferred  of record into the name of the
      Administrative  Agent or its nominee (and the Administrative  Agent agrees
      that if any  Collateral  is  transferred  into its name or the name of its
      nominee,  the  Administrative  Agent will thereafter  promptly give to the
      Pledgor  copies of any  notices  and  communications  received  by it with
      respect  to  the   Collateral).   The  Pledgor   hereby   authorizes   the
      Administrative  Agent  to  file  one or  more  financing  or  continuation
      statements,  and  amendments  thereto,  relative to all or any part of the
      Collateral  without the signature of the Pledgor where permitted by law. A
      carbon,  photographic  or  other  reproduction  of this  Agreement  or any
      financing  statement  covering the Collateral or any part thereof shall be
      sufficient as a financing statement where permitted by law.

           4.02 Other Financing  Statements and Liens;  Additional  Shares.  (a)
Without the prior written consent of the Administrative  Agent (granted with the
authorization  of the  Lenders  as  specified  in  Section  11.02 of the  Credit
Agreement),  the Pledgor shall not file or suffer to be on file, or authorize or
permit  to be  filed  or to be on  file,  in  any  jurisdiction,  any  financing
statement  or like  instrument  with  respect  to the  Collateral  in which  the
Administrative  Agent is not named as the sole secured  party for the benefit of
the other Secured Parties.

           (b) The  Pledgor  agrees  that it will (i) cause the  Issuers  not to
issue any Capital Stock in addition to or in  substitution  for the Interests or
the Shares, as the case may be, except to the Pledgor and (ii) pledge hereunder,
immediately upon its acquisition  (directly or indirectly)  thereof, the Pledgor
will  execute  such  documentation  as  requested  by the  Administrative  Agent
pledging,  and evidencing  the pledge  hereunder of, such Interests or Shares or
other securities.

           (c) The  Pledgor  agrees  that,  from time to time  upon the  written
request of the  Administrative  Agent, the Pledgor will execute and deliver such
further documents and do such other acts and things as the Administrative  Agent
may reasonably request in order fully to effect the purposes of this Agreement.

           4.03 Collateral.

           (a) The Pledgor  will cause the  Pledged  Limited  Liability  Company
Interests or the Pledged  Shares to  constitute at all times 100% of the Capital
Stock of each Issuer then outstanding.

           (b) Unless an Event of Default  shall have occurred and be continuing
and the  Administrative  Agent has  notified  the Pledgor to the  contrary,  the
Pledgor shall have the right to exercise all voting, consensual and other powers
of ownership pertaining to the Collateral for all purposes not inconsistent with
the terms of this Agreement,  the Credit Agreement,  the other Loan Documents or
any other instrument or agreement  referred to herein or therein,  provided that
the Pledgor  agrees that it will not vote the  Collateral  in any manner that is
inconsistent with the terms

                                         -9-
<PAGE>


of this Agreement,  the Credit  Agreement,  the other Loan Documents or any such
other instrument or agreement;  and the  Administrative  Agent shall execute and
deliver to the Pledgor or cause to be executed and  delivered to the Pledgor all
such  proxies,  powers of  attorney,  dividend  and other  orders,  and all such
instruments,  without  recourse,  as the Pledgor may reasonably  request for the
purpose of enabling  the  Pledgor to  exercise  the rights and powers that it is
entitled to exercise pursuant to this Section 4.03(b).

           (c) The  Pledgor  shall be entitled to receive and retain any and all
distributions  and  dividends  paid  in  respect  of the  Collateral,  provided,
however,  that any and all (A)  distributions and interest paid or payable other
than in cash in  respect  of,  and  instruments  and  other  property  received,
receivable  or  otherwise  distributed  in respect of, or in exchange  for,  any
Collateral, (B) distributions or dividends paid or payable in cash in respect of
any Collateral in connection with a partial or total  liquidation or dissolution
or in connection with a reduction of capital, capital surplus or paid-in-surplus
(other  than  distributions  or  dividends  paid  by  KMNGL  to the  Pledgor  in
connection with the  dissolution  and liquidation of KMNGL),  and (C) cash paid,
payable or  otherwise  distributed  in  redemption  of, or in  exchange  for any
Collateral,  shall be, and shall be forthwith  delivered  to the  Administrative
Agent to hold as, Collateral and shall, if received by the Pledgor,  be received
in trust for the benefit of the  Administrative  Agent,  be segregated  from the
other  property  or funds of the  Pledgor,  and be  forthwith  delivered  to the
Administrative  Agent as  Collateral  in the same form as so received  (with any
necessary endorsement).

           (d) If any Event of Default shall have occurred, then so long as such
Event of Default shall continue,  and whether or not the Administrative Agent or
any other  Secured Party  exercises  any available  right to declare any Secured
Obligation  due and  payable  or seeks or  pursues  any  other  relief or remedy
available  to it  under  applicable  law or under  this  Agreement,  the  Credit
Agreement,  the other Loan  Documents  or any other  agreement  relating to such
Secured  Obligation,  and the Administrative  Agent so requires by notice to the
Pledgor,  all distributions  and other dividends  received by the Pledgor on the
Collateral shall be paid directly by the Pledgor to the Administrative Agent and
retained  by it as  part  of the  Collateral,  subject  to  the  terms  of  this
Agreement,  and, if the  Administrative  Agent shall so request in writing,  the
Pledgor agrees to execute and deliver to the  Administrative  Agent  appropriate
additional  dividend,  distribution  and other orders and documents to that end,
provided  that if such  Event of  Default  is cured,  any such  distribution  or
dividend theretofore paid to the Administrative Agent shall, upon request of the
Pledgor (except to the extent theretofore  applied to the Secured  Obligations),
be returned by the Administrative Agent to the Pledgor.

           4.04 Events of Default,  Etc. During the period during which an Event
of Default shall have occurred and be continuing:

           (a)  the  Administrative  Agent  shall  have  all of the  rights  and
      remedies  with respect to the  Collateral of a secured party under the UCC
      (to the extent permitted by law

                                         -10-
<PAGE>


      whether or not the UCC is in effect in the  jurisdiction  where the rights
      and  remedies are  asserted)  and such  additional  rights and remedies to
      which a  secured  party  is  entitled  under  the  laws in  effect  in any
      jurisdiction  including  if the  Administrative  Agent  has  notified  the
      Pledgor that it intends to exercise such right,  the right, to the maximum
      extent  permitted  by law, to exercise  all voting,  consensual  and other
      powers of ownership  pertaining to the Collateral as if the Administrative
      Agent were the sole and absolute  owner thereof (and the Pledgor agrees to
      take all such action as may be appropriate to give effect to such right);

           (b) upon and  during  the  continuance  of an Event of  Default,  the
      Administrative  Agent in its discretion may, in its name or in the name of
      the Pledgor or otherwise, demand, sue for, collect or receive any money or
      property at any time  payable or  receivable  on account of or in exchange
      for any of the Collateral, but shall be under no obligation to do so; and

           (c) the  Administrative  Agent may,  upon not less than ten  Business
      Days'  prior  written  notice to the  Pledgor of the time and place,  with
      respect to the  Collateral or any part thereof that shall then be or shall
      thereafter   come  into  the   possession,   custody  or  control  of  the
      Administrative Agent, the other Secured Parties or any of their respective
      agents,  sell,  assign  or  otherwise  dispose  of all or any part of such
      Collateral,  at such  place or places as the  Administrative  Agent  deems
      best, and for cash or for credit or for future delivery  (without  thereby
      assuming  any  credit  risk),   at  public  or  private   sale,   and  the
      Administrative  Agent or any Lender or anyone  else may be the  purchaser,
      lessee,  assignee or recipient of any or all of the Collateral so disposed
      of at any public sale (or, to the extent  permitted by law, at any private
      sale)  and  thereafter  hold the same  absolutely,  free from any claim or
      right of  whatsoever  kind,  including  any right or equity of  redemption
      (statutory  or  otherwise),  of the Pledgor,  any such demand,  notice and
      right or equity being hereby  expressly  waived and released.  The Pledgor
      agrees  that  such  ten  Business  Days'  notice  constitutes  "reasonable
      notification"  within  the  meaning  of  Section  9-504  of the  UCC.  The
      Administrative  Agent may,  without  notice or  publication,  adjourn  any
      public or private sale or cause the same to be adjourned from time to time
      by  announcement  at the time and place fixed for the sale,  and such sale
      may be made at any time or place to which the sale may be so adjourned.

The proceeds of each collection,  sale or other  disposition  under this Section
4.04 shall be applied in accordance with Section 4.08 hereof.

           The  Pledgor  recognizes  that,  by  reason of  certain  prohibitions
contained  in the  Securities  Act of 1933,  as amended,  and  applicable  state
securities laws, the Administrative Agent may be compelled,  with respect to any
sale of all or any part of the Collateral, to limit purchasers to those who will
agree, among other things, to acquire the Collateral for their own account,  for
investment  and not  with a view to the  distribution  or  resale  thereof.  The
Pledgor  acknowledges that any such private sales may be at prices lower than at
a public sale without such restrictions, and notwithstanding such circumstances,
agrees that any such private sale shall be deemed to have been

                                         -11-
<PAGE>


made in a commercially reasonable manner and that the Administrative Agent shall
have no obligation to engage in public sales and no obligation to delay the sale
of any  Collateral  for the period of time  necessary  to permit the  respective
Issuer thereof to register it for public sale.

           4.05  Deficiency.  Without limiting the obligations of the Pledgor to
pay the  Secured  Obligations,  if the  proceeds  of sale,  collection  or other
realization  of or upon the  Collateral  pursuant  to  Section  4.04  hereof are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Secured  Obligations,  the Pledgor  shall  remain  liable for any
deficiency.

           4.06 Removals, Etc. Without at least 30 days' prior written notice to
the  Administrative  Agent,  the Pledgor shall not (a) maintain any of its books
and  records  with  respect  to the  Collateral  at any office or  maintain  its
principal place of business at any place other than at the address indicated for
the Pledgor in the Credit  Agreement  or (b) change its name,  or the name under
which it does business, from the name shown on the signature pages hereto.

           4.07 Private  Sale.  The  Administrative  Agent and the other Secured
Parties shall incur no liability as a result of the sale of the  Collateral,  or
any part thereof,  at any private sale pursuant to Section 4.04 hereof conducted
in a  commercially  reasonable  manner  and in  compliance  with all  applicable
securities laws. The Pledgor hereby waives any claims against the Administrative
Agent or any other Secured Party arising by reason of the fact that the price at
which the Collateral may have been sold at such a private sale was less than the
price  that  might  have  been  obtained  at a public  sale or was less than the
aggregate amount of the Secured Obligations.

           4.08  Application of Proceeds.  Except as otherwise  herein expressly
provided or as otherwise  required by law, the proceeds of any collection,  sale
or other realization of all or any part of the Collateral  pursuant hereto,  and
any other cash at the time held by the  Administrative  Agent under this Section
4, shall be applied by the  Administrative  Agent as provided in Section 7.03 of
the Credit Agreement.  The Administrative Agent may make distributions hereunder
in cash or in kind or on a ratable basis or in any combination thereof.

           4.09 Attorney-in-Fact.  Without limiting any rights or powers granted
by this  Agreement to the  Administrative  Agent,  while no Event of Default has
occurred and is continuing,  upon the  occurrence and during the  continuance of
any  Event  of  Default,  the  Administrative  Agent  is  hereby  appointed  the
attorney-in-fact  of the Pledgor for the purpose of carrying out the  provisions
of this Section 4 and taking any action and executing any  instruments  that the
Administrative  Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney-in-fact is irrevocable and coupled with an
interest.  Without  limiting the  generality  of the  foregoing,  so long as the
Administrative  Agent shall be entitled under this Section 4 to make collections
in respect of the Collateral, to the extent permitted by law, the Administrative
Agent shall have the right and power to receive,  endorse and collect all checks
made payable to the order of the Pledgor

                                         -12-
<PAGE>


representing  any  distribution or other payment in respect of the Collateral or
any part thereof and to give full discharge for the same.

SECTION 5. Administrative Agent.

           5.01  Limitation  on Duty of  Administrative  Agent  in Respect of
Collateral.

           The powers conferred on the Administrative Agent hereunder are solely
to protect its interest in the  Collateral and shall not impose any duty upon it
to exercise any such powers.  Except for  reasonable  care in the custody of any
Collateral in its possession and the accounting for moneys actually  received by
it hereunder,  the Administrative  Agent shall have no duty as to any Collateral
or as to the taking of any  necessary  steps to preserve  rights  against  prior
parties or any other rights  pertaining to any  Collateral.  The  Administrative
Agent  shall be deemed to have  exercised  reasonable  care in the  custody  and
preservation  of the  Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Administrative Agent accords its
own property,  it being understood that the Administrative  Agent shall not have
any  responsibility for (a) ascertaining or taking action with respect to calls,
conversions,  exchanges,  tenders or other matters  relative to any  Collateral,
whether or not the  Administrative  Agent has or is deemed to have  knowledge of
such matters,  or (b) taking any necessary  steps to preserve rights against any
parties with respect to any Collateral.

           5.02 Concerning the Administrative Agent.

           The provisions of Article VIII of the Credit Agreement shall inure to
the benefit of the  Administrative  Agent in respect of this Agreement and shall
be  binding  upon the  parties  to the  Credit  Agreement  in such  respect.  In
furtherance  and not in derogation of the rights,  privileges  and immunities of
the Administrative Agent therein set forth:

           (A) The Administrative Agent is authorized to take all such action as
is  provided to be taken by it as the  Administrative  Agent  hereunder  and all
other action  reasonably  incidental  thereto.  As to any matters not  expressly
provided for herein  (including the timing and methods of  realization  upon the
Collateral)  the  Administrative  Agent  shall  act or  refrain  from  acting in
accordance  with  written  instructions  from the  Required  Lenders  or, in the
absence of such instructions, in accordance with its discretion.

           (B)  The  Administrative  Agent  shall  not be  responsible  for  the
existence,  genuineness  or value of any of the  Collateral or for the validity,
perfection,  priority or enforceability of the Security  Interests in any of the
Collateral,  whether  impaired by operation of law or by reason of any action or
omission to act on its part hereunder.  The  Administrative  Agent shall have no
duty to ascertain or inquire as to the  performance  or observance of any of the
terms of this Agreement by the Pledgor.

                                         -13-
<PAGE>



           5.03 Appointment of Agents and Attorneys-in-Fact.

           The Administrative  Agent may employ agents and  attorneys-in-fact in
connection  herewith  and  shall  not  be  responsible  for  the  negligence  or
misconduct (except for gross negligence, willful misconduct or unlawful conduct)
of any such agents or  attorneys-in-fact  selected by it in good faith.  Without
limiting the foregoing,  at any time or times, in order to comply with any legal
requirement in any jurisdiction,  the  Administrative  Agent may appoint another
bank or trust company or one or more other Persons, either to act as co-agent or
co-agents, jointly with the Administrative Agent, or to act as separate agent or
agents on behalf of the Secured  Parties with such power and authority as may be
necessary  for the  effective  operation  of the  provisions  hereof  and may be
specified in the instrument of appointment  (which may, in the discretion of the
Administrative  Agent, include provisions for the protection of such co-agent or
separate agent similar to the provisions of the Credit Agreement  referred to in
Section 5.02).

SECTION 6. Miscellaneous.

           6.01 No Waiver. No failure on the part of the Administrative Agent or
any other Secured  Party to exercise,  and no course of dealing with respect to,
and no delay in exercising,  any right,  power or remedy hereunder shall operate
as  a  waiver  thereof;  nor  shall  any  single  or  partial  exercise  by  the
Administrative  Agent or any other Secured  Party of any right,  power or remedy
hereunder  shall  operate as a waiver  thereof;  nor shall any single or partial
exercise by the  Administrative  Agent or any other  Secured Party of any right,
power or remedy hereunder  preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies herein are cumulative
and are not exclusive of any remedies provided by law.

           6.02.Notices.  All notices, requests,  consents and demands hereunder
shall be in writing  and  telecopied  or  delivered  to the  intended  recipient
pursuant to Section  11.01 of the Credit  Agreement  and shall be deemed to have
been given at the times specified in that Section 11.01.

           6.03.Expenses.  Without duplication of the obligations of Pledgor set
forth  in  the  Credit   Agreement,   the  Pledgor   agrees  to  reimburse   the
Administrative  Agent and each other Secured Party for all reasonable  costs and
expenses of the Administrative Agent and each other Secured Party (including the
reasonable  fees and expenses of legal counsel) in connection with (a) any Event
of Default and any  enforcement or collection  proceeding  resulting  therefrom,
including,   without  limitation,  all  manner  of  participation  in  or  other
involvement with (i) performance by the Administrative  Agent of any obligations
of the  Pledgor in  respect of the  Collateral  that the  Pledgor  has failed or
refused to perform,  (ii)  bankruptcy,  insolvency,  receivership,  foreclosure,
winding up or liquidation  proceedings,  or any actual or attempted sale, or any
exchange, enforcement, collection, compromise or settlement in respect of any of
the  Collateral,  and for the care of the  Collateral and defending or asserting
rights and claims of the Administrative Agent in respect thereof, by litigation

                                         -14-
<PAGE>


or  otherwise,  (iii)  judicial  or  regulatory  proceedings  and (iv)  workout,
restructuring or other negotiations or proceedings  (whether or not the workout,
restructuring  or transaction  contemplated  thereby is consummated) and (b) the
enforcement  of this  Section  6.03,  and all such costs and  expenses  shall be
Secured Obligations entitled to the benefits of the collateral security provided
pursuant to Section 3 hereof.

           6.04.Amendments,  Etc.  The terms of this  Agreement  may be  waived,
altered or amended only by an instrument in writing duly executed by the Pledgor
and the  Administrative  Agent (with the consent of the Lenders as  specified in
Section 11.02 of the Credit  Agreement).  Any such  amendment or waiver shall be
binding upon the  Administrative  Agent, each Lender,  each holder of any of the
Secured Obligations and the Pledgor.

           6.05  Certain  Documents.  If any  agreement,  certificate  or  other
writing,  or any action taken or to be taken,  is by the terms of this Agreement
required to be  satisfactory  to the  Administrative  Agent or any other Secured
Party,   the   determination  of  such   satisfaction   shall  be  made  by  the
Administrative  Agent or such Secured  Party in their or its sole and  exclusive
judgment.

           6.06 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the  respective  successors  and assigns of the Pledgor,
the  Administrative  Agent,  the other Secured Parties and each holder of any of
the Secured Obligations (provided, however, that the Pledgor shall not assign or
transfer  its  rights  hereunder  without  the  prior  written  consent  of  the
Administrative  Agent).  In  the  event  of an  assignment  of all or any of the
Secured  Obligations,  the rights  hereunder,  to the extent  applicable  to the
indebtedness  so  assigned,  may be  transferred  with such  indebtedness.  This
Agreement shall be binding on the Pledgor and its successors and assigns.

           6.07 Marshaling of Assets.  All rights to marshaling of assets of the
Pledgor,  including  any such right with respect to the  Collateral,  are hereby
waived by the Pledgor.

           6.08 Termination.  When all Secured  Obligations shall have been paid
in full and all of the  Commitments  of the Lenders shall have been  terminated,
this Agreement shall  terminate,  and the  Administrative  Agent shall forthwith
cause to be assigned, transferred and delivered, against receipt but without any
recourse,  warranty or representation  whatsoever,  any remaining Collateral and
money received in respect thereof, to or upon the order of the Pledgor.

           6.09   Severability.   If  any   provision   hereof  is  invalid  and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) the other  provisions  hereof  shall remain in full force and effect in such
jurisdiction  and shall be liberally  construed  in favor of the  Administrative
Agent and the other Secured  Parties in order to carry out the intentions of the
parties  hereto  as  nearly  as  may be  possible  and  (b)  the  invalidity  or
unenforceability  of any provision hereof in any  jurisdiction  shall not affect
the validity or enforceability of such provision in any other jurisdiction.

                                         -15-
<PAGE>



           6.10 Waivers.  The Pledgor  hereby  expressly  waives,  to the extent
permitted by applicable law (a) notice of the  acceptance by the  Administrative
Agent or any other Secured Party of this Agreement,  (b) notice of the existence
or  creation  or  non-payment  of all or any  of the  Secured  Obligations,  (c)
presentment,   demand,  notice  of  dishonor,  protest,  intent  to  accelerate,
acceleration  and  all  other  notices  whatsoever,  and (d)  all  diligence  in
collection or protection of or realization  upon the Secured  Obligations or any
thereof, any obligation hereunder, or any security for or guaranty of any of the
foregoing.

           6.11  Rescission.  The Pledgor agrees that, if at any time all or any
part of any payment theretofore applied by the Administrative Agent or any other
Secured  Party to any of the  Secured  Obligations  is or must be  rescinded  or
returned  by the  Administrative  Agent or such  Secured  Party  for any  reason
whatsoever  (including  the  insolvency,  bankruptcy  or  reorganization  of the
Pledgor or any of its  Affiliates),  such  Secured  Obligations  shall,  for the
purposes  of this  Agreement,  to the  extent  that such  payment  is or must be
rescinded or returned, be deemed to have continued in existence, notwithstanding
such application by the Administrative  Agent, and the Security Interest granted
hereunder  shall continue to be effective or be reinstated,  as the case may be,
as  to  such  Secured  Obligations,  all  as  though  such  application  by  the
Administrative Agent or such Secured Party had not been made.

           6.12  Limitation by Law. All rights,  remedies and powers provided in
this  Agreement  may be exercised  only to the extent that the exercise  thereof
does not violate any applicable provision of law, and all the provisions of this
Agreement are intended to be subject to all applicable  mandatory  provisions of
law which may be  controlling  and  which may not be  effectively  waived by the
Pledgor and to be limited to the extent  necessary  so that they will not render
this Agreement invalid,  unenforceable,  in whole or in part, or not entitled to
be recorded, registered or filed under the provisions of any applicable law.

           6.13  Counterparts.  This  Agreement may be executed in any number of
counterparts,  all of which taken  together  shall  constitute  one and the same
instrument  and either of the  parties  hereto may  execute  this  Agreement  by
signing any such counterpart.

           6.14  Governing  Law.  This  Agreement  shall  be  governed  by,  and
construed  in  accordance  with,  the law of the  State  of New York  except  as
required  by  mandatory  provisions  of law and  except to the  extent  that the
validity or  perfection of the Security  Interests,  or remedies  hereunder,  in
respect of any particular  Collateral are governed by the laws of a jurisdiction
other than the State of New York.


                                         -16-
<PAGE>


           IN WITNESS WHEREOF,  the Pledgor has caused this Agreement to be duly
executed by the authorized officer of its general partner as of the day and year
first above written.

                                 KINDER MORGAN OPERATING L.P. "A"

                                 By:  Kinder Morgan G.P., Inc.,
                                      its General Partner


                                      By: /s/ William V. Morgan
                                      Name: William V. Morgan
                                      Title: Vice Chairman



                                         -17-
<PAGE>


                                   Schedule I

Part I
                                                   PERCENTAGE INTEREST
LIMITED LIABILITY                                  IN LIMITED LIABILITY
COMPANY ISSUER                TYPE OF INTEREST     COMPANY ISSUER

Kinder Morgan CO2, LLC         Member Interest            100%




Part II

                                                                 PERCENTAGE
                      CERTIFICATE    CERTIFICATE       NO. OF    INTEREST IN
STOCK ISSUER               NO.           DATE          SHARES    STOCK ISSUER

Kinder Morgan              4        August 6, 1992      200          100%
Natural Gas Liquids
Corporation (formerly
Enron Natural Gas
Liquids Corporation)