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 ENERGY PARTNERS, L.P., a Delaware limited partnership (the "Pledgor"), in
favor of 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) The Pledgor,  Kinder Morgan  Operating L.P. "B" (the  "Subsidiary
Borrower")  certain other  subsidiaries of the Pledgor (together with 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 Pledgor and the Subsidiary
Borrower;

           (B) The Pledgor is the owner of a 98.9899%  limited partner  interest
(collectively,  the "Interests") of each of the Subsidiaries listed in Part I of
Schedule I under the title  "Issuer" (all such  Subsidiaries  collectively,  the
"Issuers");

           (C) The Pledgor is the owner of 100% of the indebtedness evidenced by
the  promissory  notes (the  "Pledged  Debt") and issued by the  obligors  named
therein described in Part II of Schedule I; and

           (D) In order to induce the Lenders to enter into the Credit Agreement
and to extend credit thereunder to the Pledgor 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.

           "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.

           "Pledged   Debt"  has  the  meaning   specified  in  the Preliminary
Statements.

           "Pledged   Interests"  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.

           "Secured Obligations" means collectively:

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


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

           (iii) all  obligations  of the Pledgor 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 Pledgor 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
      Pledgor 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 Agent
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.

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

           "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

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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;

           (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.

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<PAGE>



           (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
      limited  partner  interests of each  Issuer.  No Lien exists or will exist
      upon the Pledged  Interests or any of the other limited partner  interests
      of any Issuer or the  Pledged  Debt at any time (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 Interests pledged hereunder.

           (b) The Pledged  Interests  listed on  Schedule I are,  and all other
      limited  partner  interests  which any 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 limited  partner  interests
      will  be  subject  to any  contractual  restriction,  or  any  restriction
      pursuant to the partnership agreement of such Issuer, upon the transfer of
      such limited partner  interests or other limited partner interests (except
      for any such restriction contained herein or in the Credit Agreement).

           (c) The  Pledged  Debt  has been  duly  authorized,  validly  issued,
      executed and delivered and is the legal,  valid and binding  obligation of
      the issuers thereof, and is not in default.

           (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).


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<PAGE>


           (e) The Interests  described in Part I of Schedule I constitute  100%
      of the issued and outstanding limited partner interests of each of Issuers
      described therein. Schedule I correctly identifies, as at the date hereof,
      the  respective  Issuers  of  the  Pledged  Interests.  The  Pledged  Debt
      constitutes all of the outstanding  indebtedness for money borrowed or for
      the deferred  purchase price of property owing by the respective  obligors
      thereof to the Pledgor.

           (f) None of the  partnership  agreements  creating any of the Issuers
      provide that the limited  partner  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 Pledged Interests.

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

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
      limited  partner  interests of the Issuers,  now or hereafter owned by the
      Pledgor (the Interests and all such additional  limited partner interests,
      collectively the "Pledged Interests");

           (ii)  all  securities,  moneys  or  other  property  representing  or
      constituting  the Pledged  Interests or  representing  a  distribution  in
      respect  of any of the  Pledged  Interests,  or  representing  a return of
      capital upon or in respect of the Pledged  Interests,  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;

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          (iii) 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  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, in which event only
      such Capital Stock shall be included as Collateral;

           (iv) the  Pledged  Debt and the  instruments  evidencing  the Pledged
      Debt, and all interest,  cash, instruments and other property from time to
      time  received,  receivable or otherwise  distributed  in respect of or in
      exchange for any or all of the Pledged Debt;

           (v) all additional indebtedness from time to time owed to the Pledgor
      by any obligor on the Pledged  Debt and the  instruments  evidencing  such
      indebtedness,  and all interest, cash, instruments and other property from
      time to time received,  receivable or otherwise  distributed in respect of
      or in exchange for any or all of such indebtedness; and

           (vi)  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.

           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.


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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  identified  in Schedule I, endorsed in blank
      accompanied by undated stock powers duly executed in blank.

           (b) if any of the 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 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,

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<PAGE>


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 limited partner  interests in addition to or in  substitution  for the
Interests, 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 limited partner interests 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 Interests to constitute at all
times 100% of the limited partner interest 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 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 interest 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 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,  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,

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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  interest  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  distribution  and other orders and  documents to that end,  provided
that if such  Event of  Default  is cured,  any such  distribution  or  interest
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 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,

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<PAGE>


      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  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

                                         -11-
<PAGE>


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  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

                                         -12-
<PAGE>

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.

           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).


                                         -13-
<PAGE>


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 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
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

                                         -14-
<PAGE>


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.

           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,

                                         -15-

<PAGE>


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.

           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  ENERGY   PARTNERS, L.P.

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


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




                                         -16-
<PAGE>



                                      Schedule I

Part I

                                                                     Percentage
                                                                       Interest
Issuer                                   Type of Interest             In Issuer

Kinder Morgan Operating L.P. "A"          Limited Partner             98.9899%
Kinder Morgan Operating L.P. "B"          Limited Partner             98.9899%
Kinder Morgan Operating L.P. "C"          Limited Partner             98.9899%
Kinder Morgan Operating L.P. "D"          Limited Partner             98.9899%




Part II


Obligor                                   Note Amount               Note Date

Kinder Morgan Operating L.P. "A"          $325,000,000         February 17, 1998
Kinder Morgan Operating L.P. "B"          $325,000,000         February 17, 1998
Kinder Morgan Operating L.P. "C"          $325,000,000         February 17, 1998
Kinder Morgan Operating L.P. "D"          $325,000,000         February 17, 1998
Kinder Morgan Natural Gas Liquids         $325,000,000         February 17, 1998
Corporation
Kinder Morgan CO2, LLC                    $325,000,000         February 17, 1998