FIRST AMENDMENT

      THIS FIRST  AMENDMENT  to the Credit  Agreement  referred  to below  (this
"First Amendment"), is made and entered into as of this 26th day of August, 1998
by and among KINDER  MORGAN,  INC., a  corporation  organized  under the laws of
Delaware (the "Borrower"), the Lenders party to the Credit Agreement (as defined
below) and  identified on the signature  pages hereto,  and FIRST UNION NATIONAL
BANK, as Administrative Agent for the Lenders.


                              Statement of Purpose

      The Lenders  have  extended  certain  credit  facilities  to the  Borrower
pursuant to the Amended and Restated Credit  Agreement dated as of June 18, 1998
(as further amended,  restated,  supplemented or otherwise modified, the "Credit
Agreement"),  by and among the  Borrower,  the  Lenders  and the  Administrative
Agent.

      The Borrower has requested that the Lenders amend the Credit Agreement to,
among other things,  revise certain provisions of the Credit Agreement,  and the
Lenders  have  agreed to do so, but only on the terms and  conditions  set forth
below in this First Amendment.

      NOW  THEREFORE,  for good and  valuable  consideration,  the  receipt  and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:

      1.  Definitions.  All  capitalized  undefined  terms  used in  this  First
Amendment shall have the meanings assigned thereto in the Credit Agreement.

      2.   Amendments.

      (a) Section  1.1 is hereby  modified  to add in  appropriate  alphabetical
order the following defined term:

           ""Eligible  Assignee"  means,  with respect to any  assignment of the
      rights,  interest and obligations of a Lender hereunder,  a Person that is
      at the time of such  assignment (a) a commercial  bank organized under the
      laws of the United States or any state thereof,  having  combined  capital
      and surplus in excess of  $500,000,000,  (b) a commercial  bank  organized
      under the laws of any other  country that is a member of the  Organization
      of Economic Cooperation and Development, or a political subdivision of any
      such  country,   having   combined   capital  and  surplus  in  excess  of
      $500,000,000,  (c) a finance company, insurance company or other financial
      institution which in the ordinary course of business extends credit of the
      type   extended   hereunder  and  that  has  total  assets  in  excess  of
      $1,000,000,000,  (d)  already a Lender  hereunder  (whether as an original
      party to this  Agreement  or as the assignee of another  Lender),  (e) the
      successor  (whether by transfer of assets,  merger or otherwise) to all or
      substantially  all of the  commercial  lending  business of the  assigning
      Lender,  or (f) any other  Person that has been  approved in writing as an
      Eligible Assignee by the  Administrative  Agent and, so long as no Default
      or Event of Default has occurred and is continuing, the Borrower."


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      (b) Section 1.1 of the Credit  Agreement  shall be amended by deleting the
definition of "KMI Cash Flow" and inserting the following new definition in lieu
thereof:

           ""KMI Cash Flow" means  (without  duplication),  with  respect to the
      Borrower  and  its  Consolidated   Subsidiaries   for  any  period,   cash
      distributions  received  during  such period by Kinder  Morgan  G.P.  from
      Kinder Morgan Energy and the KMEP Operating Subsidiaries less all expenses
      of  the  Borrower  and  its  Consolidated  Subsidiaries  for  such  period
      (excluding Interest Expense, income taxes, depreciation,  amortization and
      expenses of Kinder Morgan G.P. which are customarily  reimbursed by Kinder
      Morgan Energy and the KMEP Operating  Subsidiaries  in accordance with the
      terms of the Second Amendment to Amended and Restated Agreement of Limited
      Partnership  of Kinder Morgan Energy  Partners,  L.P. dated as of February
      14, 1997)."

      (c) Section 2.7 of the Credit  Agreement  shall be amended in its entirety
by inserting the following Section 2.7 in lieu thereof:

           "SECTION 2.7. Use of Proceeds. The Borrower shall use the proceeds of
      the Revolving Credit Loans solely (a) prior to August 19, 1998, for future
      general corporate  purposes in an amount not greater than $5,600,000,  (b)
      prior to December 31, 1998,  to finance  investments  permitted by Section
      11.3(d), make dividends and distributions permitted by Section 11.6(e) and
      pay income  taxes and  Interest  Expense and (c) on or after  December 31,
      1998, to finance investments permitted by Section 11.3(d)."

      (d)  Section  2.3(b)  of the  Credit  Agreement  shall be  amended  in its
entirety by inserting the following in lieu thereof:


                "(b) Mandatory Repayments.

                     (i) If at any time the outstanding  principal amount of all
           Revolving Credit Loans exceeds the Revolving Credit Commitment of all
           the  Lenders  less the L/C  Obligations,  the  Borrower  shall  repay
           immediately upon notice from the Administrative  Agent, by payment to
           the  Administrative  Agent  for  the  account  of  the  Lenders,  the
           Revolving  Credit Loans in an amount equal to such excess.  Each such
           repayment  shall be  accompanied  by any amount  required  to be paid
           pursuant to Section 5.10 hereof.

                     (ii) If on January  10,  1999,  the  outstanding  principal
           amount  of  all  Revolving  Credit  Loans  exceeds  $10,000,000,  the
           Borrower shall  immediately  repay such outstanding  Revolving Credit
           Loans in an amount equal to such excess over  $10,000,000;  provided,
           that such repayment shall not result in a corresponding  reduction to
           the Aggregate Commitment. Each such repayment shall be accompanied by
           any amount required to be paid pursuant to Section 5.10 hereof."

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      (e) Section 4.2(c) of the Credit  Agreement shall be amended by adding the
following sentence to the end of such Section:

                "Any amount  borrowed  under this Section 4.2 and  subsequently
           repaid or prepaid may not be reborrowed."

      (f)  Section  5.12(e)  of the  Credit  Agreement  shall be  amended in its
entirety by inserting the following in lieu thereof:

           "(e) Delivery of Tax Forms. Each Lender organized under the laws of a
      jurisdiction  other  than the  United  States or any state  thereof  shall
      deliver to the Borrower,  with a copy to the Administrative  Agent, on the
      Closing Date or concurrently with the delivery of the relevant  Assignment
      and  Acceptance,  as applicable,  (i) two United States  Internal  Revenue
      Service  Forms 4224 or Forms 1001,  as  applicable  (or  successor  forms)
      properly  completed  and  certifying  in each  case  that  such  Lender is
      entitled to a complete  exemption from  withholding or deduction for or on
      account of any United States  federal  income taxes,  and (ii) an Internal
      Revenue Service Form W-8 or W-9 or successor  applicable form, as the case
      may be, to establish an exemption  from United States  backup  withholding
      taxes. Each such Lender further agrees to deliver to the Borrower,  with a
      copy to the Administrative Agent, a Form 1001 or 4224 and Form W-8 or W-9,
      or successor applicable forms or manner of certification,  as the case may
      be, on or before the date that any such form  expires or becomes  obsolete
      or the occurrence of any event  requiring a change in the most recent form
      previously  delivered by it to the  Borrower,  certifying in the case of a
      Form 1001 or 4224 that such Lender is entitled to receive  payments  under
      this  Agreement  without  deduction or  withholding  of any United  States
      federal income taxes (unless in any such case an event (including  without
      limitation any change in treaty,  law or regulation) has occurred prior to
      the date on which any such  delivery  would  otherwise  be required  which
      renders  such  forms  inapplicable  or the  exemption  to which such forms
      relate  unavailable  and such  Lender  gives  prompt  and  timely  written
      notification to the Borrower and the  Administrative  Agent that it is not
      entitled to receive  payments  without  deduction or withholding of United
      States  federal  income  taxes)  and,  in the  case of a Form  W-8 or W-9,
      establishing an exemption from United States backup withholding tax.

           Notwithstanding  anything in this Section 5.12(e) to the contrary,  a
      Lender  organized  under the laws of a jurisdiction  other than the United
      States or any state thereof shall not be required to deliver Forms 4224 or
      Forms 1001 as otherwise required by this Section 5.12(e) if such Lender is
      entitled to a complete  exemption from  withholding or deduction for or on
      account of any United States  federal  income taxes by  application of the
      "portfolio  interest" exception to the payment of such taxes under Section
      871(h) or 881(c) of the Code (the "Portfolio Interest Exception") and such
      Lender delivers to the Borrower,  with a copy to the Administrative Agent,
      on the Closing  Date or  concurrently  with the  delivery of the  relevant
      Assignment  and  Acceptance,  as  applicable,  two United States  Internal
      Revenue Service Forms W-8 (or successor forms) properly  completed and, by
      the  delivery  thereof in lieu of Forms 4224 or Forms  1001,  such  Lender
      hereby  certifies  that such  Lender is  eligible  for,  and is  otherwise
      entitled to a complete exemption from

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      withholding  or deduction for or on account of any United  States  federal
      income taxes by application of, the Portfolio Interest Exception; and such
      Lender  further  agrees to  deliver  to the  Borrower,  with a copy to the
      Administrative  Agent,  a  Form  W-8  (or  successor  form  or  manner  of
      certification of Lender's continued  eligibility of the Portfolio Interest
      Exception)  on or  before  the date  that such  form  expires  or  becomes
      obsolete  or the  occurrence  of any event  requiring a change in the most
      recent  form  previously  delivered  by it to  the  Borrower  (and  by the
      delivery of such  replacement  form such Lender hereby certifies that such
      Lender remains eligible for the Portfolio Interest  Exception),  unless in
      any such case an event (including without limitation any change in treaty,
      law or  regulation)  has  occurred  prior to the  date on  which  any such
      delivery would otherwise be required which renders such form  inapplicable
      or the Portfolio Interest Exception unavailable, in which event the Lender
      hereby  agrees to, and shall  otherwise  be  required  to, give prompt and
      timely written  notification to the Borrower and the Administrative  Agent
      that  it  is  not  entitled  to  receive  payments  without  deduction  or
      withholding of United States federal income taxes."

      (g) Section  7.1(b) of the Credit  Agreement  shall be amended by deleting
the first sentence thereof and by inserting the following in lieu thereof:

           "Each  Subsidiary  of the  Borrower as of the Closing Date is listed
      on Schedule 7.1(b)."

      (h) Section  7.1(m) of the Credit  Agreement  shall be amended by deleting
the first sentence thereof and by inserting the following in lieu thereof:

           "As of the Closing  Date,  each of the Borrower and its  Subsidiaries
      has a stable work force in place and is not,  as of the  Closing  Date and
      except as set forth on Schedule 7.1(m), party to any collective bargaining
      agreement nor has any labor union been recognized as the representative of
      its employees."

      (i) Section 11.6 of the Credit  Agreement shall be amended by deleting the
word "and" at the end of paragraph  (c) thereof and by deleting the period "."at
the end of paragraph  (d) thereof and  inserting "; and" at the end of paragraph
(d) thereof  and by  inserting  the  following  new  paragraph  (e)  immediately
following paragraph (d) as follows:

           "(e) prior to December 31,  1998,  the Borrower may from time to time
      pay cash dividends to its shareholders  with the proceeds of the Revolving
      Credit  Loans  so long as an  amount  equal to the  outstanding  principal
      amount of Revolving  Credit Loans in excess of $10,000,000 is deposited in
      an investment account with the Administrative Agent."

      (j) Section  14.10(b)(i) of the Credit  Agreement  shall be amended in its
entirety by inserting the following in lieu thereof:

                "(i) if less than all of the assigning Lender's Commitment is to
      be  assigned,  the  Commitment  so  assigned  shall  not be less  than (A)
      $10,000,000 if such  assignment is made by First Union in connection  with
      the initial syndication of the

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<PAGE>


      Commitments, except as otherwise agreed to by First Union and the Borrower
      and  (B)  $5,000,000  in  connection  with  any  assignment  by  a  Lender
      thereafter;"

      (k) Section  14.10(d) of the Credit  Agreement  shall be amended by adding
the following sentence to the end of such Section:

           "No  assignment  pursuant to this  Section  14.10 shall be  effective
unless  and until it has been  recorded  in the  Register  as  provided  in this
Section 14.10."

      (l) Exhibit F to the Credit Agreement is hereby amended in its entirety by
inserting Schedule 1 hereto in lieu thereof.

      3.  Conditions.  The  effectiveness  of  this  First  Amendment  shall  be
conditioned upon the following:

           (a)  Execution.  Receipt  by the  Administrative  Agent of this First
      Amendment  duly  executed by the  Borrower,  Administrative  Agent and the
      Lenders.

           (b)  Additional  Items.  Receipt by the  Administrative  Agent of any
      other document or instrument reasonably requested by it in connection with
      the execution of this First Amendment.

      4. Limited  Amendment.  Except as  expressly  amended  herein,  the Credit
Agreement and each other Loan Document  shall  continue to be, and shall remain,
in full force and effect.  This First  Amendment shall not be deemed (a) to be a
waiver of, or consent to, or a  modification  or amendment of, any other term or
condition  of  the  Credit  Agreement  or any  other  Loan  Documents  or (b) to
prejudice  any other right or rights which the  Administrative  Agent or Lenders
may now have or may have in the future  under or in  connection  with the Credit
Agreement or the Loan Documents or any of the instruments or agreements referred
to therein, as the same may be amended, restated or otherwise modified from time
to time.

      5.  Representations and Warranties.  By its execution hereof, the Borrower
hereby  certifies  on  behalf of itself  and its  Subsidiaries  that each of the
representations  and warranties set forth in the Credit  Agreement and the other
Loan  Documents  is true and correct as of the date hereof as if fully set forth
herein (except for any such representations and warranties made as of a specific
date  which  shall be true and  correct as of such date) and that as of the date
hereof no Default or Event of Default has occurred and is continuing.

      6. Governing Law. This First  Amendment shall be governed by and construed
in accordance with the laws of the State of North Carolina.

      7.  Counterparts.  This  First  Amendment  may  be  executed  in  separate
counterparts,  each of which when  executed and delivered is an original but all
of which taken together constitute one and the same instrument.

                            [Signature Pages Follow]

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<PAGE>


     IN WITNESS  HEREOF,  the parties hereto have caused this First Amendment to
be duly executed as of the date and year first above written.


                               KINDER MORGAN, INC.
                               as Borrower


                               By: /s/William V. Morgan
                                   ----------------------------------
                                   Name:  William V. Morgan
                                   Title: President



                               FIRST UNION NATIONAL BANK,
                               as Administrative Agent and Lender

                               By: /s/Ted A. Gardner
                                   ----------------------------------
                                   Name:  Ted A. Gardner
                                   Title: Senior Vice President