Exhibit 1.1




                         KANEB PIPE LINE PARTNERS, L.P.

                                 3,000,000 UNITS

                     REPRESENTING LIMITED PARTNER INTERESTS

                             UNDERWRITING AGREEMENT

                                                                  March 18, 2003

SALOMON SMITH BARNEY INC.
As Representative of the Several Underwriters listed on Schedule I


c/o SALOMON SMITH BARNEY INC.
388 Greenwich Street, 34th Floor
New York, New York 10013

Dear Sirs:

     Kaneb  Pipe Line  Partners,  L.P.,  a  Delaware  limited  partnership  (the
"Partnership"),  proposes to sell an  aggregate  of  3,000,000  units (the "Firm
Units")  representing  limited  partner  interests  in the  Partnership,  to the
several  Underwriters  named in  Schedule  I hereto  (the  "Underwriters").  The
Partnership  also  proposes  to sell to the  Underwriters,  upon the  terms  and
conditions set forth in Section 2 hereof, up to an additional 450,000 units (the
"Additional  Units").  The Firm Units and the Additional  Units are  hereinafter
collectively  referred to as the "Offered Units," and the Offered Units and each
unit  representing a limited partner interest in the Partnership  outstanding on
the  date  hereof  are  collectively  referred  to  as  the  "Units."  The  term
"Representative"  as used herein  means  Salomon  Smith Barney Inc. and the term
"Underwriters" means either the singular or the plural as the context requires.

     The   Partnership,   the  General   Partner,   Kaneb  Pipe  Line  Operating
Partnership, L.P., a Delaware limited partnership (the "Operating Partnership"),
Support Terminals  Operating  Partnership,  L.P., a Delaware limited partnership
("STOP"),  Support  Terminal  Services,  Inc., a Delaware  corporation  ("STS"),
StanTrans,  Inc., a Delaware  corporation  ("STI"),  StanTrans Holding,  Inc., a
Delaware  corporation  ("STH"),  StanTrans  Partners,  L.P., a Delaware  limited
partnership ("STP"),  ST/Center  Chillicothe  Terminal,  LLC, a Delaware limited
liability company ("STC"), ST Linden Terminal, LLC, a Delaware limited liability
company  ("STL"),  ST Services Ltd., a United Kingdom  corporation  ("STK"),  ST
Eastham Ltd., a United  Kingdom  corporation  ("STE"),  Shore  Terminals  LLC, a
Delaware limited  liability company  ("Shore"),  Kaneb Pipe Line Holding Company
LLC,  a  Delaware   limited   liability   company   ("KPH"),   Statia  Terminals
International  N.V., a Netherlands  Antilles limited  liability company ("Statia
International"),  Statia  Technology,  Inc.,  a  Delaware  corporation  ("Statia
Technology"), and Statia Marine, Inc., a Cayman Islands company ("Statia Marine"
and, together with Statia International and Statia Technology,  collectively the
"Statia Companies"), (the Operating Partnership,  STOP, STS, STI, STH, STP, STL,
STC, STK, STE, Shore, KPH and the Statia Companies are collectively  referred to
herein as the "Operating  Entities," and  individually  referred to herein as an
"Operating  Entity"),  are  sometimes  collectively  referred  to  herein as the
"Companies."

     Each of the Partnership and Kaneb Pipe Line Company LLC, a Delaware limited
liability  company  and the general  partner of the  Partnership  (the  "General
Partner"),  confirms as follows its agreement with you, as the Representative of
the Underwriters,  and each of the other  Underwriters,  on whose behalf you are
acting,   in  connection  with  the  purchases  of  the  Offered  Units  by  the
Underwriters.

     1. REGISTRATION STATEMENT AND PROSPECTUS.  The Partnership has prepared and
filed  with  the  Securities  and  Exchange  Commission  (the  "Commission")  in
accordance  with the provisions of the  Securities Act of 1933, as amended,  and
the  rules and  regulations  of the  Commission  thereunder  (collectively,  the
"Act"), a registration  statement on Form S-3 (Registration No. 333-98621) under
the Act (the  "registration  statement").  Such registration  statement has been
declared effective by the Commission.  The term "Registration Statement" as used
in this  Agreement  means the  registration  statement  (including all financial
schedules and exhibits), as amended at the time it becomes effective, or, if the
registration   statement  became  effective  prior  to  the  execution  of  this
Agreement,  as supplemented or amended prior to the execution of this Agreement.
If  it is  contemplated,  at  the  time  this  Agreement  is  executed,  that  a
post-effective  amendment to the  registration  statement will be filed with the
Commission  and must be declared  effective  before the  offering of the Offered
Units may commence, the term "Registration  Statement" as used in this Agreement
means the registration statement as amended by said post-effective amendment. If
it is contemplated,  at the time this Agreement is executed, that a registration
statement  will be filed  pursuant  to Rule  462(b)  under  the Act  before  the
offering of the Offered Units may commence, the term "Registration Statement" as
used in this Agreement includes such registration statement.  "Basic Prospectus"
means the prospectus in the form included in the  Registration  Statement at the
time that the  Registration  Statement was declared  effective or in the form in
which it has been most  recently  filed with the  Commission  on or prior to the
date of this  Agreement.  "Final  Prospectus"  means the  prospectus  supplement
relating  to the  Offered  Units and the  offering  thereof  that is first filed
pursuant to Rule 424(b) under the Act after the date and time this  Agreement is
executed  and  delivered  by  the  parties  hereto,   together  with  the  Basic
Prospectus.

     All references in this Agreement to financial  statements and schedules and
other   information   that  is  "contained,"   "included"  or  "stated"  in  the
registration statement, the Registration Statement, the Basic Prospectus, or the
Final  Prospectus  (or other  references of like import) shall be deemed to mean
and include all such financial  statements  and schedules and other  information
that is filed as a part of or  incorporated  by  reference  in the  registration
statement,   Registration  Statement,   the  Basic  Prospectus,   or  the  Final
Prospectus,  as the  case  may  be.  Any  reference  in  this  Agreement  to the
registration statement, the Registration Statement, the Basic Prospectus, or the
Final  Prospectus  shall  be  deemed  to  refer  to and  include  the  documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act,
as of the date of the registration statement,  the Registration  Statement,  the
Basic Prospectus, or the Final Prospectus, as the case may be, and any reference
to any amendment or supplement to the registration  statement,  the Registration
Statement,  the Basic  Prospectus,  or the Final  Prospectus  shall be deemed to
refer to and include any  documents  filed after such date under the  Securities
Exchange Act of 1934, as amended (the "Exchange  Act") which,  upon filing,  are
incorporated  by reference  therein,  as required by paragraph (b) of Item 12 of
Form S-3. As used herein, the term "Incorporated  Documents" means the documents
which at the time are incorporated by reference in the  registration  statement,
the Registration Statement, the Basic Prospectus,  the Final Prospectus,  or any
amendment or supplement thereto.

     2. AGREEMENTS TO SELL AND PURCHASE.  The Partnership hereby agrees, subject
to all the terms and  conditions set forth herein,  to sell to each  Underwriter
and, upon the basis of the  representations,  warranties  and  agreements of the
Partnership  and the General  Partner  herein  contained  and subject to all the
terms and  conditions  set forth  herein,  each  Underwriter,  severally and not
jointly, agrees to purchase from the Partnership,  at a purchase price of $34.99
per Unit (the  "Purchase  Price Per  Unit"),  the number of Firm Units set forth
opposite  the name of such  Underwriter  in Schedule I hereto (or such number of
Firm Units increased as set forth in Section 10 hereof).

     Over-Allotment.  The Partnership also agrees,  subject to all the terms and
conditions set forth herein, to sell to the Underwriters, and, upon the basis of
the  representations,  warranties  and  agreements  of the  Partnership  and the
General Partner herein contained and subject to all the terms and conditions set
forth  herein,  the  Underwriters  shall  have the  right to  purchase  from the
Partnership,  at the per unit purchase  price  described  below,  pursuant to an
option (the "over-allotment option") which may be exercised at any time and from
time to time prior to 9:00 P.M.,  New York City time,  on the 30th day after the
date of the Final Prospectus (or, if such 30th day shall be a Saturday or Sunday
or a  holiday,  on the next  business  day  thereafter  when the New York  Stock
Exchange is open for trading),  up to an aggregate of 450,000  Additional Units.
Additional   Units  may  be   purchased   only  for  the   purpose  of  covering
over-allotments made in connection with the offering of the Firm Units. Upon any
exercise of the  over-allotment  option,  each  Underwriter,  severally  and not
jointly,  agrees to purchase from the Partnership the number of Additional Units
(subject to such  adjustments as you may determine in order to avoid  fractional
units) which bears the same  proportion to the number of Additional  Units to be
purchased by the Underwriters as the number of Firm Units set forth opposite the
name of such  Underwriter  in  Schedule I hereto  (or such  number of Firm Units
increased as set forth in Section 10 hereof)  bears to the  aggregate  number of
Firm Units.

     3. TERMS OF PUBLIC OFFERING. It is understood that the several Underwriters
propose  to offer the  Offered  Units for sale to the public as set forth in the
Final Prospectus.

     4. DELIVERY OF THE OFFERED UNITS AND PAYMENT THEREFOR.

     Delivery  to the  Underwriters  of the Firm Units,  against  payment of the
purchase price therefor in immediately available funds, shall be made by causing
The Depository  Trust Company ("DTC") to credit the Firm Units to the account or
accounts  designated by Salomon Smith Barney Inc. on behalf of the  Underwriters
at DTC.  The time and date of such  delivery  shall be no later than 11:00 A.M.,
New York City time, on March 21, 2003 (the "Closing Date").  The other documents
to be delivered at the Closing Date by or on behalf of the parties  hereto shall
be delivered at such time and date at the offices of Andrews & Kurth L.L.P., 600
Travis,  Suite 4200,  Houston,  Texas  77002.  The place of closing for the Firm
Units  and the  Closing  Date may be  varied by  agreement  between  you and the
Partnership.

     Delivery to the Underwriters of any Additional Units to be purchased by the
Underwriters,  against  payment of the purchase  price  therefor in  immediately
available funds,  shall be made by causing DTC to credit the Additional Units to
the account or accounts designated by Salomon Smith Barney Inc. on behalf of the
Underwriters at DTC at such time on such date (the "Option Closing Date"), which
may be the same as the  Closing  Date but shall in no event be earlier  than the
Closing  Date nor earlier  than two nor later than ten  business  days after the
giving of the notice hereinafter referred to, as shall be specified in a written
notice  from  you on  behalf  of the  Underwriters  to  the  Partnership  of the
Underwriters'  determination to purchase a number,  specified in such notice, of
Additional Units. The other documents to be delivered at the Option Closing Date
by or on behalf of the parties  hereto  shall be delivered at such time and date
at the offices of Andrews & Kurth L.L.P., 600 Travis, Suite 4200, Houston, Texas
77002. The place of closing for any Additional Units and the Option Closing Date
for such  Additional  Units  may be  varied  by  agreement  between  you and the
Partnership.

     5.  AGREEMENTS  OF THE  PARTNERSHIP  AND THE GENERAL  PARTNER.  Each of the
Partnership  and the General  Partner  agrees with the several  Underwriters  as
follows:

     (a) If,  at the time  this  Agreement  is  executed  and  delivered,  it is
necessary for the Registration  Statement or a post-effective  amendment thereto
to be declared  effective before the offering of the Offered Units may commence,
the  Partnership  will  endeavor  to cause the  Registration  Statement  or such
post-effective amendment to become effective as soon as possible and will advise
you promptly and, if requested by you, will confirm such advice in writing, when
the  Registration   Statement  or  such  post-effective   amendment  has  become
effective.

     (b)  Prior  to the end of the  period  of time  referred  to in the  second
sentence of paragraph (e) below,  the Partnership  will advise you promptly and,
if requested by you, will confirm such advice in writing:  (i) of any request by
the Commission for amendment of or a supplement to the  Registration  Statement,
the Basic  Prospectus,  or the Final  Prospectus or for additional  information;
(ii)  of the  issuance  by the  Commission  of any  stop  order  suspending  the
effectiveness   of  the   Registration   Statement  or  of  the   suspension  of
qualification  of the Offered Units for offering or sale in any  jurisdiction or
the initiation of any  proceeding  for such purpose;  and (iii) of any change in
any of the Companies' financial condition,  business,  properties,  net worth or
results  of  operations,  or of the  happening  of any  event,  which  makes any
statement  of a  material  fact made in the  Registration  Statement,  the Basic
Prospectus or the Final Prospectus (as then amended or  supplemented)  untrue or
which  requires the making of any  additions  to or changes in the  Registration
Statement,  the Basic  Prospectus  or the Final  Prospectus  (as then amended or
supplemented) in order to state a material fact required by the Act to be stated
therein or necessary in order to make the statements therein not misleading,  or
of the  necessity  to amend or  supplement,  the Basic  Prospectus  or the Final
Prospectus  (as then  amended  or  supplemented)  to  comply  with the Act,  the
Exchange Act or any other  applicable  securities  laws. If at any time prior to
the end of the period of time  referred to in the second  sentence of  paragraph
(e)  below,   the  Commission   shall  issue  any  stop  order   suspending  the
effectiveness  of the  Registration  Statement,  the Partnership will make every
reasonable  effort  to  obtain  the  withdrawal  of such  order at the  earliest
possible time.

     (c) The Partnership  will furnish to you,  without charge (i) six copies of
the manually  signed copy of the  Registration  Statement  corresponding  to the
EDGAR  version  as filed  with the  Commission  and of each  amendment  thereto,
including financial  statements and all exhibits to the registration  statement,
(ii) such number of conformed copies of the Registration Statement as originally
filed and of each amendment thereto, but without exhibits, as you may reasonably
request,  (iii) such  number of copies of the  Incorporated  Documents,  without
exhibits,  as you may reasonably request,  and (iv) such number of copies of the
exhibits to the Incorporated Documents as you may reasonably request.

     (d)  Prior  to the end of the  period  of time  referred  to in the  second
sentence of paragraph (e) below,  the Partnership will not file any amendment to
the  Registration  Statement or make any  amendment or  supplement  to the Final
Prospectus or any Rule 462(b) registration statement or file any document which,
upon filing becomes an Incorporated  Document, of which you shall not previously
have been  advised  or to which,  after you shall  have  received  a copy of the
document proposed to be filed, you shall reasonably object.

     (e) The Partnership  shall cause the Final  Prospectus to be filed pursuant
to,  and in  compliance  with,  Rule  424(b)  under the Act.  As soon  after the
execution and delivery of this Agreement as possible and thereafter from time to
time for such  period  as in the  opinion  of  counsel  for the  Underwriters  a
prospectus  is required by the Act to be delivered in  connection  with sales by
any Underwriter or dealer,  the Partnership will  expeditiously  deliver to each
Underwriter  and each  dealer,  without  charge,  as many  copies  of the  Final
Prospectus  (and of any amendment or supplement  thereto) as you may  reasonably
request. The Partnership consents to the use of the Final Prospectus (and of any
amendment or supplement  thereto) in accordance  with the  provisions of the Act
and with the  securities  or Blue Sky  laws of the  jurisdictions  in which  the
Offered Units are offered by the several Underwriters and by all dealers to whom
Offered Units may be sold,  both in connection with the offering and sale of the
Offered Units and for such period of time thereafter as the Final  Prospectus is
required by the Act to be delivered in connection  with sales by any Underwriter
or  dealer.  If during  such  period of time any event  shall  occur that in the
judgment of the Partnership or in the opinion of counsel for the Underwriters is
required  to  be  set  forth  in  the  Final  Prospectus  (as  then  amended  or
supplemented)  or should be set forth  therein  in order to make the  statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading,  or if it is necessary to supplement  or amend the Final  Prospectus
(or to file under the Exchange Act any document which,  upon filing,  becomes an
Incorporated  Document)  in order to comply  with the Act or any other law,  the
Partnership  will forthwith  prepare and, subject to the provisions of paragraph
(d) above,  file with the  Commission  an  appropriate  supplement  or amendment
thereto  (or  to  such  document),   and  will  expeditiously   furnish  to  the
Underwriters  and dealers a reasonable  number of copies  thereof.  In the event
that the Partnership  and you, as  Representative  of the several  Underwriters,
agree  that  the  Final  Prospectus  should  be  amended  or  supplemented,  the
Partnership, if requested by you, will promptly issue a press release announcing
or disclosing the matters to be covered by the proposed amendment or supplement.

     (f) The  Partnership  will  cooperate  with  you and with  counsel  for the
Underwriters in connection with the registration or qualification of the Offered
Units for offering and sale by the several Underwriters and by dealers under the
securities or Blue Sky laws of such  jurisdictions as you may designate and will
file such  consents  to  service  of process  or other  documents  necessary  or
appropriate in order to effect such registration or qualification; provided that
in no event shall the  Partnership be obligated to qualify to do business in any
jurisdiction  where it is not now so qualified or to take any action which would
subject it to service of process in suits,  other than those  arising out of the
offering or sale of the Offered Units, in any  jurisdiction  where it is not now
so subject.

     (g) The Partnership will make generally available to its security holders a
consolidated  earnings  statement,   which  need  not  be  audited,  covering  a
twelve-month  period  commencing  after the effective  date of the  Registration
Statement and ending not later than 15 months thereafter, as soon as practicable
after  the end of such  period,  which  consolidated  earnings  statement  shall
satisfy the provisions of Section 11(a) of the Act.

     (h) During the period of five years hereafter, the Partnership will furnish
to you (i) as soon as available, a copy of each report of the Partnership mailed
to  unitholders  or filed with the  Commission,  and (ii) from time to time such
other information concerning the Partnership as you may request.

     (i) If  this  Agreement  shall  terminate  or  shall  be  terminated  after
execution  pursuant to any  provisions  hereof  (otherwise  than pursuant to the
second sentence of Section 10 hereof or by notice given by you terminating  this
Agreement  pursuant  to Section  10 or  Section 11 hereof) or if this  Agreement
shall be terminated by the Underwriters because of any failure or refusal on the
part of the  Partnership  or the  General  Partner  to comply  with the terms or
fulfill any of the conditions of this Agreement, the Partnership and the General
Partner,  jointly and  severally,  agree to reimburse the  Underwriters  for all
out-of-pocket  expenses  (including  reasonable fees and expenses of counsel for
the Underwriters) incurred by them in connection herewith.

     (j) Except as provided in this  Agreement,  neither the Partnership nor the
General Partner will sell, contract to sell or otherwise dispose of or hedge any
Units  or  any  securities   substantially   similar  to,  convertible  into  or
exercisable  or  exchangeable  for Units,  or grant any  options or  warrants to
purchase  any  securities   substantially   similar  to,   convertible  into  or
exercisable or exchangeable for Units, for a period of 90 days after the date of
the Final Prospectus (the "Lock-Up  Period"),  without the prior written consent
of Salomon Smith Barney Inc.  Notwithstanding the foregoing, the Partnership may
issue Units to sellers of  terminalling  facilities  or pipelines in  connection
with acquisitions from such sellers of such terminalling facilities or pipelines
by the  Partnership;  provided that the Partnership has received  assurance from
such  sellers  that they will not sell or  otherwise  dispose  of such  units in
contravention of this paragraph (j) during the Lock-Up Period.

     (k) The  Partnership  has furnished to you "lock-up"  letters,  in form and
substance  satisfactory  to you,  signed  by each of the  current  officers  and
directors  of the  General  Partner set forth on Schedule II hereto and by Kaneb
Services LLC ("KSL") (on behalf of itself and its affiliates).

     (l) Except as stated in this  Agreement  and in the Final  Prospectus,  the
Partnership and the General Partner have not taken, nor will they take, directly
or indirectly,  any action  designed to or that might  reasonably be expected to
cause or result in  stabilization  or  manipulation of the price of the Units to
facilitate the sale or resale of the Offered Units.

     (m) The  Partnership and the General Partner will use their best efforts to
have the Offered  Units listed,  subject to notice of issuance,  on the New York
Stock Exchange on or before the Closing Date.

     (n) The  Partnership  will  apply  the net  proceeds  from  the sale of the
Offered Units  substantially in accordance with the description set forth in the
Final Prospectus.

(o) The Partnership, during the period of time referred to in the second
sentence in paragraph (e) above, will file all documents required to be filed
with the Commission pursuant to the Exchange Act within the time periods
required by the Exchange Act.

6.  REPRESENTATIONS  AND WARRANTIES OF THE PARTNERSHIP AND THE GENERAL  PARTNER.
Each of the Partnership and the General Partner  represents and warrants to each
Underwriter that:

     (a) Disclosure.  The Basic Prospectus  included as part of the registration
statement as originally filed or as part of any amendment or supplement thereto,
and the Final Prospectus  filed pursuant to Rule 424(b) under the Act,  complied
when so filed in all material  respects  with the  provisions of the Act and did
not contain any untrue  statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements  therein,
in the light of the  circumstances  under which they were made, not  misleading,
and the  statements  made in such  documents  within the coverage of Rule 175(b)
under the Act were made with a reasonable  basis and in good faith,  except that
this  representation  and warranty  does not apply to statements in or omissions
from the Basic  Prospectus or the Final  Prospectus made in reliance upon and in
conformity  with  information  relating  to  any  Underwriter  furnished  to the
Partnership  in writing  by or on behalf of any  Underwriter  expressly  for use
therein.  The Commission  has not issued any order  preventing or suspending the
use of the Basic Prospectus or the Final Prospectus.

     (b) Compliance  with  Registration  Requirements.  The  Partnership and the
offering  of  the  Offered  Units   contemplated  by  this  Agreement  meet  the
requirements  for using Form S-3 under the Act, and the  Registration  Statement
meets  the  requirements  set  forth in Rule  415(a)(1)(x)  under  the Act.  The
Registration Statement in the form in which it became effective and also in such
form  as it may be  when  any  post-effective  amendment  thereto  shall  become
effective and the Final Prospectus and any supplement or amendment  thereto when
filed with the  Commission  under Rule  424(b)  under the Act,  complied or will
comply in all material  respects with the  provisions of the Act and will not at
any such times contain an untrue statement of a material fact or omit to state a
material fact required to be stated  therein or necessary to make the statements
therein not misleading,  and the statements made or to be made in such documents
within the  coverage of Rule 175(b) under the Act were made or will be made with
a  reasonable  basis and in good  faith,  except  that this  representation  and
warranty  does not apply to  statements  in or omissions  from the  Registration
Statement or the Final  Prospectus  made in reliance upon and in conformity with
information relating to any Underwriter  furnished to the Partnership in writing
by or on behalf of any Underwriter through you expressly for use therein.

     (c) Incorporated  Documents.  The Incorporated  Documents heretofore filed,
when they were filed (or, if any amendment with respect to any such document was
filed,  when such amendment was filed),  conformed in all material respects with
the  requirements of the Exchange Act and the rules and regulations  thereunder,
any further  Incorporated  Documents so filed will, when they are filed, conform
in all material respects with the requirements of the Exchange Act and the rules
and  regulations  thereunder;  no such  document  when it was filed  (or,  if an
amendment  with respect to any such document was filed,  when such amendment was
filed),  contained an untrue  statement of a material fact or omitted to state a
material  fact  required to be stated  therein or necessary in order to make the
statements  therein not  misleading;  and no such further  document,  when it is
filed, will contain an untrue statement of a material fact or will omit to state
a material fact required to be stated  therein or necessary in order to make the
statements therein not misleading.

     (d)  Capitalization  of the  Partnership and  Authorization  of Partnership
Interests.  The  capitalization  of  the  Partnership  is as  set  forth  in the
Registration Statement and the Final Prospectus under  "Capitalization." All the
outstanding  Units and the limited partner  interests  represented  thereby have
been duly  authorized  and  validly  issued,  are fully  paid and  nonassessable
(except as provided in the Delaware Revised Uniform Limited Partnership Act (the
"Delaware  Act") and are free of any preemptive or similar  rights;  the Offered
Units and the  limited  partner  interests  represented  thereby  have been duly
authorized and, when issued, delivered and paid for in accordance with Section 4
hereof, will be validly issued,  fully paid and nonassessable except as provided
in the  Delaware  Act and  free of any  preemptive  or  similar  rights  and the
Underwriters will acquire the Offered Units free and clear of any lien,  adverse
claim,  security interest,  equity, or other encumbrance;  and the Units and the
Amended and Restated  Agreement of Limited  Partnership of the Partnership dated
as of July 23, 1998 (the  "Partnership  Agreement")  conform to the descriptions
thereof in the Registration Statement and the Final Prospectus.

     (e)  Formation,  Authority  and  Good  Standing  of  the  Partnership.  The
Partnership  has  been  duly  formed  and  is  validly  existing  as  a  limited
partnership in good standing under the Delaware Act, with partnership  power and
authority to own or lease its  properties  and conduct its business in each case
as described in the Final Prospectus and the Incorporated Documents and to enter
into and perform its obligations under this Agreement,  and is duly qualified or
registered  and is in good  standing as a foreign  limited  partnership  for the
transaction of business  under the laws of the State of Texas,  and there are no
other jurisdictions in which the failure so to qualify or register would subject
it to any liability or disability which is material to the financial  condition,
business,  properties, net worth or results of operations of the General Partner
or the  Partnership  and the Operating  Entities  considered as a whole or would
subject the limited  partners of the  Partnership  to any material  liability or
disability.

     (f)  Formation,  Authority and Good Standing of the  Partnership  Operating
Entities.  Each of the Operating Partnership,  STOP and STP has been duly formed
and is validly  existing as a limited  partnership  in good  standing  under the
Delaware  Act,  with  partnership  power  and  authority  to  own or  lease  its
properties and conduct its business as described in the Final  Prospectus and is
duly  qualified  or  registered  and  in  good  standing  as a  foreign  limited
partnership for the transaction of business under the laws of each  jurisdiction
in which it owns or leases  properties or conducts any business so as to require
such  qualification  or  registration,  other than any jurisdiction in which the
failure so to qualify  or  register  would not  subject it to any  liability  or
disability which is material to the financial condition,  business,  properties,
net worth or results of operations of the General Partner or the Partnership and
the  Operating  Entities  considered  as a whole or would  subject  the  limited
partners of the Partnership to any material liability or disability.

     (g) General Partner Interest in the Partnership. The General Partner is the
sole general partner of the Partnership  with a general partner  interest in the
Partnership of 1/99th;  such general partner  interest is duly authorized by the
Partnership Agreement, and has been validly issued to the General Partner and is
fully paid;  the General  Partner owns such general  partner  interest  free and
clear  of  any  lien,  adverse  claim,  security  interest,   equity,  or  other
encumbrance.

     (h) General  Partner  Interest in the  Operating  Partnership.  The General
Partner is the sole general partner of the Operating  Partnership with a general
partner  interest  in the  Operating  Partnership  of 1%; such  general  partner
interest is duly  authorized  by the Amended and  Restated  Agreement of Limited
Partnership  of the  Operating  Partnership  dated as of September 27, 1989 (the
"Operating Partnership  Agreement"),  by and between the General Partner and the
Partnership,  and has been  validly  issued to the General  Partner and is fully
paid; and the General Partner owns such general partner  interest free and clear
of any lien, adverse claim, security interest, equity, or other encumbrance.

     (i) General  Partner  Interest in STOP. STS is the sole general  partner of
STOP  with a  general  partner  interest  in STOP of 1%;  such  general  partner
interest is duly  authorized  by the  Agreement of Limited  Partnership  of STOP
dated as of February 10, 1993 (the "STOP Partnership Agreement"), by and between
STS and the  Operating  Partnership,  and has been validly  issued to STS and is
fully paid;  and STS owns such general  partner  interest  free and clear of any
lien, adverse claim, security interest, equity, or other encumbrance.

     (j) General Partner Interest in STP. STI is the sole general partner of STP
with a general partner  interest in STP of 1%; such general partner  interest is
duly authorized by the Agreement of Limited Partnership of STP dated as of March
11, 1996 (the "STP  Partnership  Agreement"  and,  together with the Partnership
Agreement,   the  Operating  Partnership  Agreement  and  the  STOP  Partnership
Agreement, the "Kaneb Partnership Agreements"),  by and between STI and STH, and
has been  validly  issued to STI and is fully  paid;  and STI owns such  general
partner interest free and clear of any lien,  adverse claim,  security interest,
equity, or other encumbrance.

     (k) Limited Partner Interest in the Operating Partnership.  The Partnership
is the sole limited partner of the Operating Partnership, with a limited partner
interest in the Operating  Partnership of 99%; such limited partner  interest is
authorized by the Operating Partnership  Agreement,  has been validly issued and
is fully paid and  nonassessable  (except as provided in the Delaware  Act); and
the Partnership owns such limited partner interest in the Operating  Partnership
free and clear of any lien, adverse claim,  security interest,  equity, or other
encumbrance.

     (l) Limited Partner Interest in STOP. The Operating Partnership is the sole
limited partner of STOP,  with a limited  partner  interest in STOP of 99%; such
limited partner  interest is authorized by the STOP Partnership  Agreement,  has
been validly issued and is fully paid and  nonassessable  (except as provided in
the Delaware  Act);  and the  Operating  Partnership  owns such limited  partner
interest in STOP free and clear of any lien,  adverse claim,  security interest,
equity, or other encumbrance.

     (m) Limited  Partner  Interest in STP. STH is the sole  limited  partner of
STP,  with a  limited  partner  interest  in STP of 99%;  such  limited  partner
interest is authorized by the STP Partnership Agreement, has been validly issued
and is fully paid and  nonassessable  (except as provided in the Delaware  Act);
and STH owns such limited partner  interest free and clear of any lien,  adverse
claim, security interest, equity, or other encumbrance.

     (n) Formation,  Authority and Good Standing of the General  Partner and the
Non-Partnership  Operating  Entities.  The  General  Partner  and  each  of  the
Operating  Entities  that is a United States or foreign  corporation  or limited
liability  company  has  been  duly  organized  and  is  validly  existing  as a
corporation or limited liability  company,  as the case may be, in good standing
under  the laws of the  jurisdiction  of its  organization,  with  corporate  or
limited  liability  company,  as the case may be, power and  authority to own or
lease its  properties,  to conduct its business  and, in the case of the General
Partner,  to  act as  general  partner  of the  Partnership  and  the  Operating
Partnership and to enter into and perform its  obligations  under this Agreement
and, in the case of STS,  to act as general  partner of STOP and, in the case of
STI, to act as general  partner of STP, in each case as  described  in the Final
Prospectus,  and is duly  qualified  or  registered  and in good  standing  as a
foreign  corporation or limited liability  company,  as the case may be, for the
transaction of business under the laws of each  jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such qualification
or registration,  other than any jurisdiction in which the failure so to qualify
or  register  would not  subject  it to any  liability  or  disability  which is
material to the financial condition,  business, properties, net worth or results
of  operations  of the  General  Partner or the  Partnership  and the  Operating
Entities  considered  as a whole or would  subject the  limited  partners of the
Partnership to any material liability or disability.

     (o) Member  Interests  and  Capital  Stock of the  General  Partner and the
Corporate Operating Entities. All of the issued and outstanding member interests
or shares of capital stock, as the case may be, of each of the General  Partner,
STS, STI, STH, STK and STE have been duly  authorized and validly issued and are
fully paid and  nonassessable  and are free of any preemptive or similar rights;
all of the issued and  outstanding  member  interests of the General Partner are
owned by KSL,  free and clear of any lien,  adverse  claim,  security  interest,
equity,  or other  encumbrance;  all of the  issued  and  outstanding  shares of
capital stock of STS, STI, STH, STK and STE are owned  directly or indirectly by
the Operating  Partnership,  free and clear of any lien, adverse claim, security
interest,  equity,  or other  encumbrance,  except  as  described  in the  Final
Prospectus.

     (p) Member  Interests  of STL and STC.  All of the  issued and  outstanding
member  interests of each of STL and STC have been duly  authorized  and validly
issued and are fully paid and  nonassessable  and are free of any  preemptive or
similar rights; STOP owns a 50% managing member interest in each of STL and STC,
free and clear of any lien, adverse claim,  security interest,  equity, or other
encumbrance.

     (q) Member  Interests of Shore.  All of the issued and  outstanding  member
interests of Shore have been duly  authorized  and validly  issued and are fully
paid and nonassessable and are free of any preemptive or similar rights; and all
of the  issued  and  outstanding  member  interests  of Shore  are  owned by the
Operating  Partnership  free and  clear of any  lien,  adverse  claim,  security
interest, equity or other encumbrance.

     (r) Capital Stock of Statia  Companies.  All of the issued and  outstanding
shares of capital stock or member interests,  as the case may be, of each of the
Statia Companies have been duly authorized and validly issued and are fully paid
and nonassessable  and are free of any preemptive or similar rights;  and all of
the issued and outstanding  shares of capital stock or member interests,  as the
case  may  be,  of each of the  Statia  Companies  are  owned  by the  Operating
Partnership free and clear of any lien, adverse claim, security interest, equity
or other encumbrance.

     (s) Kaneb Partnership Agreements.  Each of the Kaneb Partnership Agreements
has been duly authorized, executed and delivered by the parties thereto and is a
valid and legally binding agreement of the parties thereto,  enforceable against
the parties thereto in accordance with its terms, subject, as to enforcement, to
bankruptcy,  insolvency,  reorganization,  moratorium  and other laws of general
applicability  relating  to  or  affecting  creditors'  rights  and  to  general
equitable principles.

     (t) Subsidiaries.  All the Partnership's  subsidiaries  (collectively,  the
"Subsidiaries")  are listed in an exhibit to the Partnership's  Annual Report on
Form  10-K for the year  ended  December  31,  2001,  which is  incorporated  by
reference into the Registration  Statement except for STC, which was not listed,
and KPH, Statia  International,  Statia Technology and Statia Marine, which were
not Subsidiaries at the time. The Partnership has no Subsidiaries other than the
Operating Entities.

     (u)  Sufficiency  of  Disclosure.   There  are  no  legal  or  governmental
proceedings  pending  or, to the  knowledge  of the  Partnership  or the General
Partner,  threatened  against  any  of the  Companies,  or to  which  any of the
Companies,  or to which any of their respective  properties is subject, that are
required to be described in the  Registration  Statement or the Final Prospectus
but are not  described  as  required,  and there are no  agreements,  contracts,
indentures,   leases  or  other   instruments,   and  there  are  no   affiliate
transactions, that are required to be described in the Registration Statement or
the Final Prospectus or to be filed as an exhibit to the Registration  Statement
or any Incorporated  Document that are not described or filed as required by the
Act or the Exchange Act.

     (v) Absence of Violations and Defaults; Absence of Proceedings. None of the
Companies is (i) in violation of (1) its partnership  agreement,  certificate or
articles of incorporation,  bylaws,  member agreement,  or other  organizational
documents,  as the case may be,  or (2) any law,  ordinance,  administrative  or
governmental  rule or  regulation  applicable  to any of the Companies or of any
decree of any court or governmental  agency or body having jurisdiction over any
of the Companies,  which violation would subject any of them to any liability or
disability which is material to the financial condition,  business,  properties,
net worth or results of operations of the General Partner or the Partnership and
the Operating Entities considered as a whole or would subject the Partnership or
the limited partners of the Partnership to any material liability or disability,
or  (ii)  in  default  in any  respect  in the  performance  of any  obligation,
agreement  or  condition  contained  in any bond,  debenture,  note or any other
evidence  of  indebtedness  or in  any  agreement,  indenture,  lease  or  other
instrument  to which any of the  Companies is a party or by which any of them or
any of their respective  properties may be bound which default would subject any
of them to any  liability  or  disability  which is  material  to the  financial
condition,  business,  properties,  net worth or  results of  operations  of the
General Partner or the Partnership  and the Operating  Entities  considered as a
whole  or  would  subject  the  Partnership  or  the  limited  partners  of  the
Partnership to any material liability or disability.  Except as disclosed in the
Prospectus,  there are no actions, suits, claims,  investigations or proceedings
pending or threatened  to which any of the Companies or any of their  respective
officers is a party or of which any of their  respective  properties is subject,
at law or in  equity,  or  before or by any  federal,  state,  local or  foreign
governmental or regulatory  commission,  board, body,  authority or agency which
could  result in a  judgment,  decree or order  that  would  subject  any of the
Companies to any  liability  or  disability  which is material to the  financial
condition,  business,  properties,  net worth or  results of  operations  of the
General Partner or the Partnership  and the Operating  Entities  considered as a
whole or would subject the limited  partners of the  Partnership to any material
liability or disability or prevent consummation of the transactions contemplated
hereby.

     (w) Absence of Consents, Conflicts and Violations. Neither the issuance and
sale of the Units,  the execution,  delivery or performance of this Agreement by
the Partnership or the General  Partner nor the  consummation by the Partnership
or the General Partner of the transactions  contemplated hereby (i) requires any
consent,  approval,  authorization  or other order of or  registration or filing
with, any court,  regulatory body,  administrative  agency or other governmental
body, agency or official (except such as may be required for the registration of
the Offered Units under the Act and the Exchange Act, which have been or will be
effected in  accordance  with this  Agreement  and except as may be required for
compliance  with the securities or Blue Sky laws of various  jurisdictions),  or
(ii) conflicts or will conflict with or constitutes or will  constitute a breach
of, or a default under, the partnership  agreement,  the certificate or articles
of incorporation,  bylaws, member agreement, or other organizational  documents,
as the case may be, of any of the Companies, or (iii) conflicts or will conflict
with or  constitutes  or will  constitute a breach of, or a default  under,  any
material agreement,  indenture,  lease or other material instrument to which any
of the  Companies is a party or by which any of them or any of their  respective
properties  may be bound,  or (iv)  violates or will violate any  statute,  law,
regulation or filing or judgment,  injunction, order or decree applicable to any
of the Companies or any of their  respective  properties,  or will result in the
creation or imposition of any lien,  charge or encumbrance  upon any property or
assets  of any of the  Companies  pursuant  to the  terms  of any  agreement  or
instrument  to which any of them is a party or by which any of them may be bound
or to which any of the property or assets of any of them is subject.

     (x) Independent Accountants. The accountants,  KPMG LLP and Arthur Andersen
LLP, who have certified or shall certify the financial  statements audited by it
included or  incorporated  by reference in the  Registration  Statement  and the
Final Prospectus (or any amendment or supplement thereto) are independent public
accountants as required by the Act. After  reasonable  efforts,  the Partnership
has not been able to obtain Arthur  Andersen LLP's consent to the  incorporation
by reference into the Registration Statement of its audit report with respect to
the Partnership's Form 8-K/A filed with the Commission on May 9, 2002.

     (y) Financial  Statements.  The historical financial  statements,  together
with related  schedules and notes,  included or incorporated by reference in the
Registration Statement and the Final Prospectus (and any amendment or supplement
thereto),  present fairly (i) the consolidated  financial  position,  results of
operations and cash flows of the  Partnership  and the Operating  Entities,  and
(ii) the financial position of the General Partner and the Partnership,  in each
case on the basis stated in the  Registration  Statement at the respective dates
or for the respective  periods to which they apply;  such statements and related
schedules  and notes have been prepared in accordance  with  generally  accepted
accounting  principles  ("GAAP")  consistently  applied  throughout  the periods
involved,  except as disclosed therein;  and the other financial and statistical
information and data included or  incorporated by reference in the  Registration
Statement and the Final Prospectus (and any amendment or supplement thereto) are
accurately  presented  and prepared on a basis  consistent  with such  financial
statements and the books and records of the Partnership,  the Operating Entities
and the  General  Partner,  as the case may be.  The pro  forma  financial  data
included in the Final Prospectus  include  assumptions that provide a reasonable
basis for  presenting  the  significant  effects  directly  attributable  to the
acquisition  of the  Statia  Companies  and the other  transactions  and  events
described therein,  the related pro forma adjustments give appropriate effect to
those assumptions,  and the pro forma adjustments reflect the proper application
of those  adjustments to the historical  financial  statement amounts in the pro
forma  data  included  in the Final  Prospectus.  The pro forma  financial  data
included in the Final Prospectus comply as to form in all material respects with
the applicable  accounting  requirements of Regulation S-X under the Act and the
pro forma  adjustments have been properly  applied to the historical  amounts in
the compilation of this data.

     (z) Authorization of Underwriting Agreement. The execution and delivery of,
and the  performance by each of the  Partnership  and the General Partner of its
obligations  under this Agreement have been duly and validly  authorized by each
of the  Partnership  and the  General  Partner,  as the  case  may be,  and this
Agreement has been duly executed and  delivered by each of the  Partnership  and
the General Partner and  constitutes the valid and legally binding  agreement of
each of the Partnership and the General Partner, enforceable against each of the
Partnership and the General Partner in accordance with its terms,  except (i) as
rights to indemnification  and contribution  hereunder may be limited by federal
or state securities laws and (ii) as to enforcement  generally may be subject to
bankruptcy,  insolvency,  reorganization and other laws of general applicability
relating to or affecting creditors rights and to general equitable principles.

     (aa) No Material  Adverse Change.  Except as disclosed in the  Registration
Statement and the Final  Prospectus  (or any  amendment or supplement  thereto),
subsequent to the respective  dates as of which such information is given in the
Registration  Statement and the Final Prospectus (or any amendment or supplement
thereto), none of the Companies has incurred any liability or obligation, direct
or contingent,  or entered into any  transaction,  not in the ordinary course of
business,  that is  material to the limited  partners  of the  Partnership,  the
General Partner or the Partnership and the Operating  Entities taken as a whole,
and there has not been any change in the  capital  stock,  member  interests  or
partners'  capital,  or material  increase in the  short-term  debt or long-term
debt,  of  any  of  the  Companies,  or  any  material  adverse  change,  or any
development  involving  or which  may  reasonably  be  expected  to  involve,  a
prospective  material  adverse  change,  in the financial  condition,  business,
properties,  net worth or results of  operations  of the General  Partner or the
Partnership and the Operating  Entities taken as a whole or which is material to
the limited partners of the Partnership.

     (bb) Title to Property. Each of the Companies has good and marketable title
to all property (real and personal)  described in the Final  Prospectus as being
owned by it, free and clear of all liens,  claims,  security  interests or other
encumbrances  except such as are  described  or referred to in the  Registration
Statement and the Final  Prospectus or in a document  filed as an exhibit to the
Registration  Statement  or  except  as do not  materially  interfere  with  the
ownership or benefits of ownership of such property,  taken as a whole, provided
that with  respect  to the  "Transmission  Assets"  (defined  as all  pipelines,
easements, rights of way, leases and appurtenant facilities for the transmission
and distribution of refined petroleum products),  the Operating  Partnership has
sufficient title to enable it to use the Transmission Assets in its business and
that any lack of title has not had, and to their best  knowledge,  will not have
any material  adverse effect on the Operating  Partnership's  ability to use the
Transmission  Assets,  and all the property described in the Final Prospectus as
being  held  under  lease by each of the  Companies  is held by it under  valid,
subsisting and enforceable leases.

     (cc) Environmental Laws. Except as disclosed in the Registration  Statement
and the  Final  Prospectus  and  except  as would  not,  individually  or in the
aggregate, result in a liability or disability that is material to the financial
condition,  business,  properties,  net worth or  results of  operations  of the
General Partner or the Partnership  and the Operating  Entities  considered as a
whole  or  would  subject  the  Partnership  or  the  limited  partners  of  the
Partnership to any material  liability or disability,  (i) none of the Companies
is in violation of any federal,  state,  local or foreign  statute,  law,  rule,
regulation,  ordinance,  code,  policy or rule of common law or any  judicial or
administrative  interpretation  thereof including any judicial or administrative
order, consent, decree or judgment, relating to pollution or protection of human
health, the environment  (including,  without  limitation,  ambient air, surface
water, groundwater,  land surface or subsurface strata) or wildlife,  including,
without limitation,  laws and regulations  relating to the release or threatened
release  of  chemicals,  pollutants,  contaminants,  wastes,  toxic  substances,
hazardous substances, petroleum or petroleum products (collectively,  "Hazardous
Materials") or to the manufacture,  processing,  distribution,  use,  treatment,
storage,  disposal,  transport or handling of Hazardous Materials (collectively,
"Environmental  Laws"),  (ii) none of the Companies fails to possess any permit,
authorization or approval required under any applicable Environmental Laws or to
be in  compliance  with  their  requirements,  (iii)  there  are no  pending  or
threatened  administrative,  regulatory  or judicial  actions,  suits,  demands,
demand  letters,   claims,   liens,   notices  of  noncompliance  or  violation,
investigations  or  proceedings  relating to any  Environmental  Law against the
Companies,  and (iv) there are no events or circumstances  that might reasonably
be  expected  to form  the  basis  of an  order  or  claim  for  cost  recovery,
contribution,  natural resource damages, clean-up or remediation,  or an action,
suit or proceeding by any private party or governmental body or agency,  against
or affecting the Companies relating to Hazardous  Materials or any Environmental
Laws.

     (dd) Absence of Offering  Material.  None of the Companies has  distributed
and, prior to the later to occur of (i) the Closing Date and (ii)  completion of
the distribution of the Offered Units,  will distribute any offering material in
connection  with the  offering  and sale of the  Offered  Units  other  than the
Registration  Statement,  the Basic  Prospectus,  the Final  Prospectus or other
materials, if any, permitted by the Act.

     (ee)  Possession  of Licenses and Permits.  Each of the  Companies has such
permits,  licenses,  franchises and authorizations of governmental or regulatory
authorities ("Permits") as are necessary to own its respective properties and to
conduct its business in the manner described in the Final Prospectus, subject to
such  qualifications  as may be set forth in the Final  Prospectus,  the lack of
which would subject any of them to any liability or disability which is material
to the  financial  condition,  business,  properties,  net worth or  results  of
operations of the General Partner or the Partnership and the Operating  Entities
considered as a whole or would subject the  Partnership or the limited  partners
of  the  Partnership  to any  material  liability  or  disability;  each  of the
Companies has fulfilled and performed all its material  obligations with respect
to such Permits and no event has occurred which allows, or after notice or lapse
of time would allow,  revocation or termination  thereof or results in any other
material  impairment of the rights of the holder of any such Permit,  subject in
each case to such qualification as may be set forth in the Final Prospectus, the
revocation or termination of which would subject any of them to any liability or
disability which is material to the financial condition,  business,  properties,
net worth or results of operations of the General Partner or the Partnership and
the  Operating  Entities  considered  as a whole or would  subject  the  limited
partners of the Partnership to any material liability or disability; and, except
as  described  in the  Final  Prospectus,  none of  such  Permits  contains  any
restriction that is materially burdensome to any of the Companies.

     (ff)  Internal  Accounting  Controls.  The  Companies  maintain a system of
internal accounting  controls  sufficient to provide reasonable  assurances that
(i)  transactions  are  executed  in  accordance  with  management's  general or
specific  authorization;  (ii)  transactions are recorded as necessary to permit
preparation  of financial  statements  in  conformity  with  generally  accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted  only in accordance  with  management's  general or specific
authorization;  and (iv) the recorded accountability for assets is compared with
existing  assets at reasonable  intervals and  appropriate  action is taken with
respect to any differences.

     (gg) Absence of NASD Conflict of Interest.  No more than ten percent of the
net  proceeds  from the sale of the Offered  Units are intended to be or will be
paid to members of the National  Association of Securities Dealers or associated
or  affiliated  persons of such members,  or members of the immediate  family of
such members.

     (hh) Tax  Returns and  Payments.  Each of the  Companies  has filed all tax
returns  required to be filed, the failure of which to file would subject any of
them  to any  liability  or  disability  which  is  material  to  the  financial
condition,  business,  properties,  net worth or  results of  operations  of the
General Partner or the Partnership  and the Operating  Entities  considered as a
whole or would subject the limited  partners of the  Partnership to any material
liability or disability, which returns are complete and correct, and none of the
Companies  is in default in the  payment of any taxes which were due and payable
pursuant to said returns or any interest,  penalties or assessments with respect
thereto,  which default would subject any of them to any liability or disability
which is material to the financial condition, business, properties, net worth or
results  of  operations  of the  General  Partner  or the  Partnership  and  the
Operating  Entities  considered as a whole or would subject the limited partners
of the  Partnership to any material  liability or  disability.  There are no tax
returns of any of the Companies that are currently being audited by state, local
or federal taxing  authorities or agencies (and with respect to which any of the
Companies has received  notice),  where the findings of such audit, if adversely
determined,  would  subject any of the  Companies to any liability or disability
which is material to the financial condition, business, properties, net worth or
results  of  operations  of the  General  Partner  or the  Partnership  and  the
Operating  Entities  considered as a whole or would subject the limited partners
of the Partnership to any material liability or disability.

     (ii) Absence of Registration Rights. Except for the General Partner who has
waived its rights,  no holder of any interest in or security of the  Partnership
or any other person has any right to require  registration of Units or any other
partnership  interest  in or other  security of the  Partnership  because of the
filing  of the  Registration  Statement  or  consummation  of  the  transactions
contemplated by this Agreement.

     (jj)  Possession of  Intellectual  Property.  Each of the Companies owns or
possesses  all patents,  trademarks,  trademark  registrations,  service  marks,
service mark registrations, trade names, copyrights, licenses, inventions, trade
secrets and rights  described in the Final  Prospectus as being owned by them or
any of them or necessary  for the conduct of their  respective  businesses,  and
neither the  Partnership  nor the  General  Partner is aware of any claim to the
contrary  or any  challenge  by any  other  person  to the  rights of any of the
Companies with respect to the foregoing.

     (kk) Investment Company Act. None of the Companies is, or as of the Closing
Date will be, an "investment  company" as that term is defined in the Investment
Company Act of 1940, as amended (the  "Investment  Company Act"),  or subject to
regulation under the Investment Company Act.

     (ll) Public Utility Holding Company Act. None of the Companies is a "public
utility company" or a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary  company"
of a "holding  company," as such terms are defined in the Public Utility Company
Act of 1935, as amended;  none of the  Companies is subject to regulation  under
the Public Utility Holding Company Act of 1935, as amended.

     (mm) Net Worth of the  General  Partner.  For all taxable  years  beginning
before  December 31, 1997,  the General  Partner had (excluding its interests in
the Partnership  and the Operating  Partnership and any notes or receivables due
from the Operating Partnership) a net worth of at least $5 million.

     (nn) Net Worth of STS. For all taxable years beginning  before December 31,
1997, STS had (excluding its interests in STOP and any notes or receivables  due
from STOP) a net worth of at least $5 million.

     (oo) Qualifying Income. For each taxable year of the Partnership, less than
10% of the gross income of the  Partnership  has been derived from sources other
than  (i)  the  exploration,   development,  production,  processing,  refining,
transportation or marketing of any mineral or natural  resource,  including oil,
gas or products  thereof,  or (ii) other items of  qualifying  income within the
meaning of Section 7704(d) of the Code.

     (pp) Absence of Restrictions.  Except as described in the Final Prospectus,
there are no preemptive  rights or other rights to subscribe for or to purchase,
nor any  restriction  upon the  voting or  transfer  of,  any  interests  in the
Partnership  or  any  Operating  Entity  pursuant  to  any  agreement  or  other
instrument to which the  Partnership  or any  Operating  Entity is a party or by
which  any one of them may be bound.  Neither  the  filing  of the  Registration
Statement  nor the  offering  or  sale  of the  Units  as  contemplated  by this
Agreement  gives rise to any rights for or relating to the  registration  of any
Units or other  securities of the  Partnership or any Operating  Entity,  except
such rights as have been waived or satisfied. The Offered Units, when issued and
delivered  against  payment  therefor as provided  herein,  will  conform in all
material respects to the description thereof contained in the Final Prospectus.

     (qq) No Business  Interruptions.  None of the Companies has sustained since
the date of the  latest  audited  financial  statements  included  in the  Final
Prospectus  any  material  loss or  interference  with its  business  from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor  dispute  or court or  governmental  action,  investigation,  order or
decree, otherwise than as set forth or contemplated in the Final Prospectus.

     (rr) Absence of Labor Dispute; Compliance with Labor Laws. No labor dispute
with the  employees of any of the  Companies  exists or, to the knowledge of the
Companies,  is imminent or  threatened,  which might  reasonably  be expected to
subject  any of them to any  liability  or  disability  which is material to the
financial condition, business, properties, net worth or results of operations of
the General Partner or the Partnership and the Operating Entities  considered as
a whole.  Each of the  Companies is in  compliance  with all federal,  state and
local  employment  labor laws,  including,  but not limited to, laws relating to
non-discrimination  in hiring,  promotion and pay of  employees,  except for any
noncompliance  that could not  reasonably  be  expected  to  subject  any of the
Companies to any  liability  or  disability  which is material to the  financial
condition,  business,  properties,  net worth or  results of  operations  of the
General Partner or the Partnership  and the Operating  Entities  considered as a
whole or would subject the limited  partners of the  Partnership to any material
liability or disability.

     (ss) Insurance. The Companies maintain insurance covering their properties,
operations,  personnel  and  businesses  against  such  losses  and risks as are
reasonably  adequate to protect them and their businesses in a manner consistent
with other  businesses  similarly  situated.  None of the Companies has received
notice  from any  insurer  or agent of such  insurer  that  substantial  capital
improvements  or other  expenditures  will have to be made in order to  continue
such  insurance,  and all such insurance is outstanding and duly in force on the
date hereof and will be outstanding and duly in force on the Closing Date.

     (tt)  Absence of Notice.  None of the  Companies  have sent or received any
communication  regarding  termination  of,  or intent  not to renew,  any of the
contracts or agreements  referred to or described in, or filed as an exhibit to,
the  Registration  Statement  or Base  Prospectus,  and no such  termination  or
non-renewal  has been  threatened by the Partnership or, to the knowledge of the
Partnership  after  due  inquiry,  any  other  party  to any  such  contract  or
agreement,  which  termination or non-renewal would subject any of the Companies
to any  liability or disability  which is material to the  financial  condition,
business,  properties, net worth or results of operations of the General Partner
or the  Partnership  and the Operating  Entities  considered as a whole or would
subject the limited  partners of the  Partnership  to any material  liability or
disability.

     (uu)  Stabilization.  None of the  Companies,  nor any of their  directors,
officers or controlling  persons has taken,  directly or indirectly,  any action
intended,  or which might reasonably be expected,  to cause or result, under the
Act or otherwise, in or which has constituted,  stabilization or manipulation of
the price of any security of the Partnership to facilitate the sale or resale of
the Units.

     (vv) Violations.  None of the Companies, nor to the Partnership's knowledge
after due inquiry, any employee or agent of the Companies,  has made any payment
of funds of the  Companies or received or retained any funds in violation of any
law, rule or regulation,  which  payment,  receipt or retention of funds is of a
character  required  to be  disclosed  in the  Registration  Statement  or  Base
Prospectus.

     (ww) Benefit Plans. With respect to each employee benefit plan, program and
arrangement  (including,  without  limitation,  any  "employee  benefit plan" as
defined in Section 3(3) of the Employee  Retirement Income Security Act of 1974,
as amended ("ERISA"))  maintained or contributed to by any of the Companies,  or
with respect to which any of the Companies could incur any liability under ERISA
(collectively,  the "Benefit  Plans"),  no event has  occurred  and, to the best
knowledge  of  each  of the  Companies,  there  exists  no  condition  or set of
circumstances, in connection with which any of the Companies could be subject to
any liability under the terms of such Benefit Plans,  applicable law (including,
without limitation,  ERISA and the Internal Revenue Code of 1986, as amended) or
any  applicable  agreement  that  would  subject  any  of the  Companies  to any
liability or disability which is material to the financial condition,  business,
properties,  net worth or results of  operations  of the General  Partner or the
Partnership  and the Operating  Entities  considered as a whole or would subject
the limited partners of the Partnership to any material liability or disability.

7. INDEMNIFICATION AND CONTRIBUTION.

     (a) Each of the Partnership and the General Partner, jointly and severally,
agrees to indemnify and hold harmless each Underwriter, the directors, officers,
employees and agents of each  Underwriter and each person,  if any, who controls
any Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act from and against any and all losses, claims,  damages,  liabilities
and expenses  (including  reasonable costs of  investigation)  arising out of or
based upon any untrue  statement or alleged untrue  statement of a material fact
contained in the Basic  Prospectus,  the Final  Prospectus  or the  Registration
Statement or in any amendment or supplement  thereto, or arising out of or based
upon any omission or alleged  omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses,  claims,  damages,  liabilities or expenses arise
out of or are based upon any untrue  statement  or  omission  or alleged  untrue
statement  or  omission  which has been made  therein  or omitted  therefrom  in
reliance  upon  and  in  conformity  with  the  information   relating  to  such
Underwriter  furnished  in  writing  to the  Partnership  by or on behalf of any
Underwriter   through  the  Representative   expressly  for  use  in  connection
therewith.

     The  foregoing  indemnity  agreement  shall be in addition to any liability
which the Partnership or the General Partner may otherwise have.

     (b) If any  action,  suit  or  proceeding  shall  be  brought  against  any
Underwriter,  any director, officer, employee or agent of any Underwriter or any
person  controlling any Underwriter in respect of which  indemnification  may be
sought against the Partnership or the General Partner,  such Underwriter or such
director,  officer,  employee, agent or controlling person shall promptly notify
the  Partnership  and the  Partnership  and the General Partner shall assume the
defense thereof, including the employment of counsel and payment of all fees and
expenses.  Such Underwriter or any such director,  officer,  employee,  agent or
controlling  person shall have the right to employ separate  counsel in any such
action,  suit or proceeding and to participate in the defense  thereof,  but the
fees and expenses of such counsel shall be at the expense of such Underwriter or
such director,  officer,  employee,  agent or controlling  person unless (i) the
Partnership  and the General Partner have agreed in writing to pay such fees and
expenses, (ii) the Partnership and the General Partner have failed to assume the
defense and employ counsel,  or (iii) the named parties to any such action, suit
or proceeding (including any impleaded parties) include both such Underwriter or
such  director,   officer,   employee,  agent  or  controlling  person  and  the
Partnership  or the  General  Partner  and such  Underwriter  or such  director,
officer,  employee,  agent or controlling  person shall have been advised by its
counsel that representation of such indemnified party and the Partnership or the
General  Partner by the same counsel  would be  inappropriate  under  applicable
standards of professional  conduct  (whether or not such  representation  by the
same counsel has been proposed) due to actual or potential  differing  interests
between them (in which case the  Partnership  and the General  Partner shall not
have the right to assume  the  defense of such  action,  suit or  proceeding  on
behalf  of such  Underwriter  or such  controlling  person).  It is  understood,
however,  that the Partnership and the General Partner shall, in connection with
any one such action, suit or proceeding or separate but substantially similar or
related actions,  suits or proceedings in the same  jurisdiction  arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and  expenses of only one separate  firm of attorneys  (in addition to any local
counsel) at any time for all such Underwriters,  directors, officers, employees,
agents  and  controlling  persons  not  having  actual  or  potential  differing
interests  with you or among  themselves,  which  firm  shall be  designated  in
writing by Salomon Smith Barney Inc.,  and that all such fees and expenses shall
be reimbursed  as they are incurred.  The  Partnership  and the General  Partner
shall not be liable for any  settlement  of any such action,  suit or proceeding
effected without its written consent,  but if settled with such written consent,
or if there be a final  judgment for the  plaintiff in any such action,  suit or
proceeding,  each  of the  Partnership  and  the  General  Partner  jointly  and
severally,  agrees to indemnify and hold harmless any Underwriter, to the extent
provided in the preceding  paragraph,  and any such controlling  person from and
against  any  loss,  claim,  damage,  liability  or  expense  by  reason of such
settlement or judgment.

     (c) Each Underwriter  agrees,  severally and not jointly,  to indemnify and
hold harmless each of the Partnership and the General Partner,  the directors of
the  General  Partner,  the  officers  of  the  General  Partner  who  sign  the
Registration  Statement,  and any person who  controls  the  Partnership  or the
General Partner within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, to the same extent as the foregoing indemnity from the Partnership
and  the  General  Partner  to  each  Underwriter,  but  only  with  respect  to
information relating to such Underwriter furnished in writing by or on behalf of
such  Underwriter   through  the   Representative   expressly  for  use  in  the
Registration  Statement or the Final  Prospectus  or any amendment or supplement
thereto.  If any  action,  suit or  proceeding  shall  be  brought  against  the
Partnership or the General Partner, any of the directors of the General Partner,
any such officer of the General Partner, or any such controlling person based on
the  Registration  Statement  or  the  Final  Prospectus  or  any  amendment  or
supplement  thereto,  and in  respect  of which  indemnification  may be  sought
against any Underwriter  pursuant to this paragraph (c), such Underwriter  shall
have the rights and duties given to the  Partnership  and the General Partner by
paragraph (b) above (except that if the Partnership or the General Partner shall
have assumed the defense  thereof such  Underwriter  shall not be required to do
so, but may employ  separate  counsel  therein  and  participate  in the defense
thereof,   but  the  fees  and  expenses  of  such  counsel  shall  be  at  such
Underwriter's  expense),  and the  Partnership  and  the  General  Partner,  the
directors of the General Partner,  any such officer of the General Partner,  and
any such  controlling  person  shall have the  rights  and  duties  given to the
Underwriters by paragraph (b) above. The foregoing  indemnity agreement shall be
in addition to any liability which the Underwriters may otherwise have.

     (d) If the indemnification provided for in this Section 7 is unavailable to
an  indemnified  party  under  paragraphs  (a) or (c)  hereof in  respect of any
losses,  claims,  damages,  liabilities or expenses referred to therein, then an
indemnifying  party,  in lieu of  indemnifying  such  indemnified  party,  shall
contribute to the amount paid or payable by such  indemnified  party as a result
of such losses, claims, damages,  liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative  benefits  received by the Partnership
and the General  Partner on the one hand and the  Underwriters on the other hand
from the offering of the Offered Units,  or (ii) if the  allocation  provided by
clause  (i)  immediately  above is not  permitted  by  applicable  law,  in such
proportion as is appropriate to reflect not only the relative  benefits referred
to in  clause  (i)  immediately  above  but  also  the  relative  fault  of  the
Partnership and the General Partner on the one hand and the  Underwriters on the
other in  connection  with the  statements  or omissions  that  resulted in such
losses, claims, damages,  liabilities or expenses, as well as any other relevant
equitable considerations.  The relative benefits received by the Partnership and
the General  Partner on the one hand and the  Underwriters on the other shall be
deemed to be in the same  proportion as the total net proceeds from the offering
(before  deducting  expenses)  received  by the  Partnership  bear to the  total
underwriting  discounts and commissions  received by the  Underwriters,  in each
case as set forth in the table on the cover  page of the Final  Prospectus.  The
relative fault of the  Partnership  and the General  Partner on the one hand and
the  Underwriters  on the other hand shall be  determined by reference to, among
other things,  whether the untrue or alleged untrue statement of a material fact
or the  omission  or  alleged  omission  to state a  material  fact  relates  to
information  supplied by the Partnership and the General Partner on the one hand
or by the  Underwriters  on the other  hand and the  parties'  relative  intent,
knowledge,  access to  information  and  opportunity  to correct or prevent such
statement or omission.

     (e) The Partnership, the General Partner and the Underwriters agree that it
would not be just and equitable if contribution  pursuant to this Section 7 were
determined by a pro rata allocation  (even if the  Underwriters  were treated as
one entity for such purpose) or by any other method of allocation  that does not
take account of the equitable considerations referred to in paragraph (d) above.
The amount  paid or payable by an  indemnified  party as a result of the losses,
claims,  damages,  liabilities  and expenses  referred to in paragraph (d) above
shall be deemed to include,  subject to the  limitations  set forth  above,  any
legal  or  other  expenses  reasonably  incurred  by such  indemnified  party in
connection with  investigating  any claim or defending any such action,  suit or
proceeding.  Notwithstanding  the  provisions of this Section 7, no  Underwriter
shall be required to contribute  any amount in excess of the amount by which the
total price of the  Offered  Units  underwritten  by it and  distributed  to the
public  exceeds the amount of any damages which such  Underwriter  has otherwise
been  required to pay by reason of such untrue or alleged  untrue  statement  or
omission or alleged omission.  No person guilty of fraudulent  misrepresentation
(within  the  meaning  of  Section  11(f)  of the  Act)  shall  be  entitled  to
contribution   from  any  person   who  was  not   guilty  of  such   fraudulent
misrepresentation.  The Underwriters' obligations to contribute pursuant to this
Section 7 are several in proportion to the respective  numbers of Firm Units set
forth  opposite  their names in Schedule I hereto (or such numbers of Firm Units
increased as set forth in Section 10 hereof) and not joint.

     (f) No indemnifying  party shall,  without the prior written consent of the
indemnified  party,  effect any settlement of any pending or threatened  action,
suit or  proceeding in respect of which any  indemnified  party is or could have
been a party and indemnity could have been sought  hereunder by such indemnified
party,  unless  such  settlement  includes  an  unconditional  release  of  such
indemnified  party from all  liability on claims that are the subject  matter of
such action, suit or proceeding.

     (g) Any losses,  claims,  damages,  liabilities  or  expenses  for which an
indemnified  party is entitled to  indemnification  or  contribution  under this
Section 7 shall be paid by the  indemnifying  party to the indemnified  party as
such  losses,  claims,  damages,  liabilities  or  expenses  are  incurred.  The
indemnity  and  contribution  agreements  contained  in this  Section  7 and the
representations  and warranties of the  Partnership  and the General Partner set
forth in this  Agreement  shall remain  operative  and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter, any
director,   officer,  employee  or  agent  of  any  Underwriter  or  any  person
controlling  any  Underwriter,  the  Partnership  or the  General  Partner,  the
directors  of the General  Partner or officers  of the General  Partner,  or any
person  controlling the Partnership or the General  Partner,  (ii) acceptance of
any Offered Units and payment therefor  hereunder,  and (iii) any termination of
this Agreement. A successor to any Underwriter,  any director, officer, employee
or agent of any Underwriter or any person controlling any Underwriter, or to the
Partnership  or the  General  Partner,  directors  or  officers  of the  General
Partner, or any person controlling the Partnership or the General Partner, shall
be entitled to the benefits of the  indemnity,  contribution  and  reimbursement
agreements  contained  in this Section 7. The term  "successor"  as used in this
Agreement  shall not include a  purchaser  from any  Underwriter  of any Offered
Units in his status as such purchaser.

8.  CONDITIONS OF  UNDERWRITERS'  OBLIGATIONS.  The several  obligations  of the
Underwriters  to purchase the Firm Units  hereunder are subject to the following
conditions:

     (a) If,  at the time  this  Agreement  is  executed  and  delivered,  it is
necessary for the registration  statement or a post effective  amendment thereto
to be declared  effective before the offering of the Offered Units may commence,
the registration  statement or such  post-effective  amendment shall have become
effective not later than 5:30 P.M.,  New York City time, on the date hereof,  or
at such later date and time as shall be  consented to in writing by you, and all
filings, if any, required by Rule 424 under the Act shall have been timely made;
no stop order suspending the  effectiveness of the registration  statement shall
have been issued and no proceeding  for that purpose shall have been  instituted
or, to the knowledge of the Partnership,  the General Partner, threatened by the
Commission,  and any request of the Commission for additional information (to be
included in the  Registration  Statement or the Final  Prospectus  or otherwise)
shall have been complied with to your satisfaction.

     (b)  Subsequent to the effective  date of this  Agreement,  there shall not
have occurred (i) any change, or any development involving a prospective change,
in or affecting the financial  condition,  business,  properties,  net worth, or
results of operations of the Companies not contemplated by the Final Prospectus,
which in your opinion,  as  Representative  of the several  Underwriters,  would
materially, adversely affect the market for the Offered Units, or (ii) any event
or  development  relating to or involving any of the Companies or any officer or
director of the General  Partner  which  makes any  statement  made in the Final
Prospectus untrue or which, in the opinion of the Partnership and its counsel or
the  Underwriters  and their counsel,  requires the making of any addition to or
change in the Final Prospectus in order to state a material fact required by the
Act or any other  law to be stated  therein  or  necessary  in order to make the
statements  therein  not  misleading,  if amending  or  supplementing  the Final
Prospectus  to reflect such event or  development  would,  in your  opinion,  as
Representative of the several Underwriters,  adversely affect the market for the
Offered Units.

     (c) You shall have  received on the Closing Date, an opinion of Fulbright &
Jaworski  L.L.P.,  special counsel for the Partnership and the General  Partner,
dated the Closing Date and addressed to the several Underwriters,  substantially
in the form of Exhibit A attached  hereto.  In addition,  such  special  counsel
shall have furnished to you their written  opinion,  dated such Closing Date, in
form and substance satisfactory to you in your reasonable judgment, with respect
to the legal  conclusions  described in the Final  Prospectus  under the caption
"Tax Considerations."

     (d) You shall have  received  on the  Closing  Date an opinion of Andrews &
Kurth L.L.P., counsel for the Underwriters, dated the Closing Date and addressed
to the several Underwriters,  with respect to the matters referred to in clauses
(17), (19), (20), (25) (but only with respect to the Registration  Statement and
the Final  Prospectus and any  supplements or amendments  thereto) and the first
paragraph  following  clause (29) of Exhibit A and such other related matters as
you may reasonably request.

     (e) You shall have received letters addressed to the several  Underwriters,
and dated  the date  hereof  and the  Closing  Date  from KPMG LLP,  independent
certified public accountants,  substantially in the forms heretofore approved by
you.

     (f) (i) No stop order  suspending  the  effectiveness  of the  Registration
Statement  shall have been issued and no proceedings for that purpose shall have
been taken or, to the knowledge of the Companies,  shall be  contemplated by the
Commission at or prior to the Closing  Date;  (ii) there shall not have been any
change in the partnership  interests,  member  interests or capital stock of the
Companies  nor any material  increase in the short term or long term debt of the
Companies (other than in the ordinary course of business) from that set forth or
contemplated in the Registration Statement or the Final Prospectus;  (iii) there
shall not have been, since the respective dates as of which information is given
in the Registration Statement and the Final Prospectus,  except as may otherwise
be stated in the  Registration  Statement  and Final  Prospectus,  any  material
adverse change in the financial condition,  business,  properties,  net worth or
results  of  operations  of the  General  Partner  or the  Partnership  and  the
Operating  Entities taken as a whole;  (iv) none of the Companies shall have any
liabilities or obligations, direct or contingent (whether or not in the ordinary
course  of  business),  that  are  material  to  the  limited  partners  of  the
Partnership,  or the  General  Partner  or the  Partnership  and  the  Operating
Entities,  taken as a whole,  other than  those  reflected  in the  Registration
Statement or the Final Prospectus (or any amendment or supplement thereto);  and
(v) all the  representations  and warranties of the  Partnership and the General
Partner  contained in this Agreement  shall be true and correct on and as of the
Closing  Date as if made  on and as of the  Closing  Date,  and you  shall  have
received certificates,  dated the Closing Date and signed by the chief executive
officer (or other  comparable  officers) and the chief financial  officer of the
General Partner for and on behalf of the General Partner and the Partnership (or
such other  officers as are  acceptable to you), to the effect set forth in this
Section 8(g) and in Section 8(h) hereof,  and with respect to such other matters
as you shall reasonably request.

     (g) None of the  Partnership or the General Partner shall have failed at or
prior  to the  Closing  Date to  have  performed  or  complied  with  any of its
agreements  herein contained and required to be performed or complied with by it
hereunder at or prior to the Closing Date.

     (h) Prior to commencement of the offering of the Offered Units, the Offered
Units shall have been  listed,  subject to notice of  issuance,  on the New York
Stock Exchange.

     (i) Each of the Partnership and the General Partner shall have furnished or
caused to be  furnished to you such further  certificates  and  documents as you
shall have  reasonably  requested that are customary in closing  transactions of
the nature  contemplated  by this  Agreement.  All such opinions,  certificates,
letters and other  documents will be in compliance  with the  provisions  hereof
only if they are reasonably  satisfactory  in form and substance to you and your
counsel.  Any  certificate  or  document  signed by any  officer of the  General
Partner,  for its own account or on behalf of the  Partnership  and delivered to
you pursuant to the terms or requirements of this Agreement,  as  Representative
of the  Underwriters,  or to  counsel  for the  Underwriters,  shall be deemed a
representation  and warranty by the  Partnership and the General Partner to each
Underwriter as to the statements  made therein.  The several  obligations of the
Underwriters  to  purchase   Additional  Units  hereunder  are  subject  to  the
satisfaction on and as of any Option Closing Date of the conditions set forth in
this  Section  8,  except  that,  if any Option  Closing  Date is other than the
Closing Date, the  certificates,  opinions and letters referred to in paragraphs
(c)  through  (j) shall be dated the Option  Closing  Date in  question  and the
opinions  called for by paragraphs  (c), (d) and (e) shall be revised to reflect
the sale of Additional Units.

9.  EXPENSES.  Each of the  Partnership  and the  General  Partner,  jointly and
severally,  agrees to pay the  following  costs and expenses and all other costs
and expenses  incident to the  performance  by the  Partnership  and the General
Partner of any of their obligations hereunder: (i) the preparation,  printing or
reproduction,  and filing  with the  Commission  of the  registration  statement
(including financial statements and exhibits thereto), the Final Prospectus, and
each amendment or supplement to any of them; (ii) the printing (or reproduction)
and delivery  (including  postage,  air freight charges and charges for counting
and  packaging)  of  such  copies  of  the  Registration  Statement,  the  Final
Prospectus, the Incorporated Documents, and all amendments or supplements to any
of them, as may be reasonably  requested for use in connection with the offering
and sale of the Offered Units; (iii) the preparation,  printing, authentication,
issuance and delivery of certificates for the Offered Units, including any stamp
taxes in connection  with the original  issuance and sale of the Offered  Units;
(iv) the  reproduction  and  delivery of this  Agreement,  the  preliminary  and
supplemental  Blue Sky Memoranda and all other  agreements or documents  printed
(or  reproduced)  and delivered in  connection  with the offering of the Offered
Units; (v) the listing of the Offered Units on the New York Stock Exchange; (vi)
the  registration or qualification of the Offered Units for offer and sale under
the  securities  or Blue Sky laws of the  several  states as provided in Section
5(f) hereof  (including  the  reasonable  fees,  expenses and  disbursements  of
counsel for the  Underwriters  relating to the  preparation,  reproduction,  and
delivery  of the  preliminary  and  supplemental  Blue  Sky  Memoranda  and such
registration  and  qualification);  (vii) the filing fees in connection with any
filings required to be made with the National Association of Securities Dealers,
Inc.; (viii) the  transportation  and other expenses incurred by or on behalf of
the   Partnership's,   the  General   Partner's  or  any   Operating   Entities'
representatives  in connection with  presentations to prospective  purchasers of
the Offered Units;  (ix) the fees and expenses of the  Partnership's and General
Partner's  accountants and the fees and expenses of counsel (including local and
special counsel) for the Partnership and the General  Partner;  and (x) any fees
payable to DTC. It is understood,  however,  that, except as provided in Section
5(i),  Section 7 and this  Section 9 hereof,  the  Underwriters  will pay all of
their own costs and expenses  associated with the offering of the Offered Units,
including  the fees of their  counsel,  transfer  taxes on  resale of any of the
Offered Units by them, and any  advertising  expenses  connected with any offers
they may make.

10. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become effective: (i) upon
the execution and delivery hereof by the parties hereto; or (ii) if, at the time
this Agreement is executed and delivered,  it is necessary for the  Registration
Statement or a post-effective  amendment thereto to be declared effective before
the  offering  of the  Offered  Units may  commence,  when  notification  of the
effectiveness of the Registration Statement or such post-effective amendment has
been released by the  Commission.  Until such time as this Agreement  shall have
become effective, it may be terminated by the Partnership,  by notifying you, or
by you, as the  Representative  of the several  Underwriters,  by notifying  the
Partnership.  If any one or more of the  Underwriters  shall  fail or  refuse to
purchase Offered Units which it or they have agreed to purchase  hereunder,  and
the  aggregate  number of Offered  Units which such  defaulting  Underwriter  or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of the Offered Units,  each  non-defaulting  Underwriter
shall be obligated,  severally,  in the  proportion  which the number of Offered
Units set forth  opposite its name in Schedule I hereto  bears to the  aggregate
number  of  Offered  Units set forth  opposite  the names of all  non-defaulting
Underwriters  or in such other  proportion as you may specify in accordance with
Section 20 of the Master  Agreement  Among  Underwriters of Salomon Smith Barney
Inc.,  to  purchase  the  Offered  Units which such  defaulting  Underwriter  or
Underwriters  agreed, but failed or refused, to purchase.  If any Underwriter or
Underwriters  shall fail or refuse to purchase  Offered  Units and the aggregate
number of Offered  Units with respect to which such default  occurs is more than
one-tenth of the aggregate number of Offered Units and arrangements satisfactory
to you and the Partnership for the purchase of such Offered Units by one or more
non-defaulting  Underwriters  or other party or parties  approved by you and the
Partnership are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Partnership.  In any such case  which  does not  result in  termination  of this
Agreement,  either you or the  Partnership  shall have the right to postpone the
Closing  Date,  but in no event for longer  than seven  days,  in order that the
required changes, if any, in the Registration Statement and the Final Prospectus
or any other documents or arrangements  may be effected.  Any action taken under
this paragraph  shall not relieve any defaulting  Underwriter  from liability in
respect of any such default of any such  Underwriter  under this Agreement.  The
term "Underwriter" as used in this Agreement includes,  for all purposes of this
Agreement, any party not listed in Schedule I hereto who, with your approval and
the  approval of the  Partnership,  purchases  Offered  Units which a defaulting
Underwriter  agreed, but failed or refused,  to purchase.  Any notice under this
Section  10 may be  given  by  telegram,  telecopy  or  telephone  but  shall be
subsequently confirmed by letter.

11.  TERMINATION OF AGREEMENT.  This  Agreement  shall be subject to termination
without  liability  on the part of any  Underwriter  to the  Partnership  or the
General  Partner by notice to the  Partnership,  if prior to the Closing Date or
any Option  Closing Date (if different from the Closing Date and then only as to
the Additional  Units),  as the case may be, (i) trading in the Units shall have
been  suspended by the  Commission or the New York Stock  Exchange or trading in
securities generally on the New York Stock Exchange,  American Stock Exchange or
the Nasdaq  National  Market shall have been suspended or materially  limited or
minimum  prices shall have been  established  on any such exchange or the Nasdaq
National Market,  (ii) a general  moratorium on commercial banking activities in
New  York or  Texas  shall  have  been  declared  by  either  federal  or  state
authorities,  or (iii) there shall have  occurred  any  material  disruption  in
securities  settlement  or clearance  services or (iv) there shall have occurred
any outbreak or escalation of hostilities, declaration by the United States of a
national emergency or war, or other  international or domestic calamity,  crisis
or change in political, financial or economic conditions, the effect of which on
the  financial  markets of the United  States is such as to make it, in the sole
judgment of the  Representative,  impracticable  or  inadvisable  to commence or
continue the offering or delivery of the Offered  Units as  contemplated  by the
Final Prospectus  (exclusive of any supplement  thereto) or to enforce contracts
for  the  resale  of the  Offered  Units  by the  Underwriters.  Notice  of such
termination may be given to the  Partnership by telegram,  telecopy or telephone
and shall be subsequently confirmed by letter.

12. INFORMATION  FURNISHED BY THE UNDERWRITERS.  The statements set forth in the
third, ninth and tenth paragraphs under the caption  "Underwriting" in the Final
Prospectus,  constitute  the only  information  furnished by or on behalf of the
Underwriters through you as such information is referred to in Sections 6(b) and
7 hereof.

13. MISCELLANEOUS. Except as otherwise provided in Sections 5, 10 and 11 hereof,
notice given pursuant to any provision of this Agreement shall be in writing and
shall be delivered  (i) if to the  Partnership  or the General  Partner,  at the
office of the Partnership at 2435 N. Central Expressway,  Suite 700, Richardson,
Texas 75080 c/o Kaneb Pipe Line Company,  Attention: Edward D. Doherty, Chairman
of the  Board;  or  (ii)  if to  you,  as  the  Representative  of  the  several
Underwriters,  in care of Salomon Smith Barney Inc., 388 Greenwich  Street,  New
York, New York 10013, Attention: General Counsel. This Agreement has been and is
made solely for the benefit of the several  Underwriters,  the Partnership,  the
General  Partner  and the  directors,  officers,  employees  and  agents  of the
Underwriters,  the directors and officers of the General Partner,  and the other
controlling  persons  referred  to in  Section  7 hereof  and  their  respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the term
"successor"  nor the term  "successors  and  assigns" as used in this  Agreement
shall include a purchaser  from any  Underwriter  of any of the Offered Units in
his status as such purchaser. As the National Association of Securities Dealers,
Inc.  ("NASD") views the Units as interests in a direct  participation  program,
each Underwriter  agrees that it will offer the Offered Units in compliance with
Rule 2810 of the NASD's Conduct Rules.

14.  APPLICABLE  LAW.  This  Agreement  shall be  governed by and  construed  in
accordance  with the laws of the State of New York  applicable to contracts made
and to be performed within the State of New York.

15.  REPRESENTATIONS,  AGREEMENTS  AND  INDEMNITIES  TO SURVIVE.  The respective
agreements, representations, warranties, indemnities and other statements of the
Partnership,  the General Partner and its officers and of the  Underwriters  set
forth in or made  pursuant  to this  Agreement  will  remain  in full  force and
effect,  regardless of any investigation made by or on behalf of any Underwriter
or the  Partnership  or any of the  officers,  directors,  employees,  agents or
controlling  persons referred to in Section 7 hereof,  and will survive delivery
of and payment for the Offered  Units.  The  provisions  of Sections  5(i) and 7
hereof shall survive the termination or  cancellation  of this  Agreement.  This
Agreement may be signed in various  counterparts  which together  constitute one
and the same  instrument.  If signed in  counterparts,  this Agreement shall not
become effective unless at least one counterpart hereof shall have been executed
and delivered on behalf of each party hereto.

16. SECTION HEADINGS;  COUNTERPARTS. The section headings in this Agreement have
been inserted as a matter of convenience of reference and are not a part of this
Agreement.  This Agreement may be signed in various  counterparts which together
constitute  one and  the  same  instrument.  If  signed  in  counterparts,  this
Agreement  shall not become  effective  unless at least one  counterpart  hereof
shall have been executed and delivered on behalf of each party hereto.



                             [Signatures to Follow]



<PAGE>
     Please  confirm  that the  foregoing  correctly  sets  forth the  agreement
between the Partnership, the General Partner and the several Underwriters.

                                  Very truly yours,

                                  KANEB PIPE LINE PARTNERS, L.P.

                                  BY:    KANEB PIPE LINE COMPANY LLC,
                                         its General Partner

                                  By:  /s/E D DOHERTY
                                      ------------------------------------------
                                      Edward D. Doherty
                                      Chairman of the Board and Chief
                                           Executive Officer



                                  KANEB PIPE LINE COMPANY LLC

                                  By:  /s/E D DOHERTY
                                      ------------------------------------------
                                      Edward D. Doherty
                                      Chairman of the Board and Chief
                                           Executive Officer


<PAGE>

     Confirmed  as of the date first above  mentioned on behalf of itself and on
behalf of the other  several  Underwriters  named in  Schedule I hereto as their
Representative.

                                 SALOMON SMITH BARNEY INC.
                                 as Representative of the Several Underwriters

                                 By:  SALOMON SMITH BARNEY INC.

                                 By:   /s/ ABNAY PANDE
                                      ------------------------------------------
                                      Abnay N. Pande
                                      Vice President



<PAGE>
                                    EXHIBIT A

                       FORM OF OPINION OF ISSUER'S COUNSEL

     We have acted as special  counsel to the Companies in  connection  with the
sale  to  you  an of  aggregate  3,000,000  Units  pursuant  to an  Underwriting
Agreement dated March [ ], 2003 (the "Agreement"),  among the Underwriters,  the
Partnership  and the  General  Partner.  Capitalized  terms used but not defined
herein have the same meanings  herein as such terms have in the  Agreement.  The
opinions  expressed  herein  are being  furnished  to you at the  request of the
Partnership pursuant to Section 8(c) of the Agreement.

     We  have  participated  in the  preparation  of,  and  have  examined,  the
Registration  Statement on Form S-3  (Registration  No.  333-98621) filed by the
Partnership  under the Act,  which  became  effective  on September 3, 2002 (the
"Effective Date"), the Basic Prospectus and the Final Prospectus.

     We have also examined  originals or copies of such  partnership  records of
the  Partnership,  limited  liability  company  records of the General  Partner,
certificate  and other  communications  of  public  officials,  certificates  of
officers of the General Partner, certificate of the transfer agent for the Units
and  such  other  documents  as we have  deemed  necessary  for the  purpose  of
rendering  the opinions  expressed  herein.  As to questions of fact material to
those  opinions,  we have,  to the  extent  we  deemed  appropriate,  relied  on
certificates  of  officers  of  the  General  Partner,  certificates  and  other
communications of public  officials,  certificates of the transfer agent for the
Units and on the factual representations of the General Partner contained in the
Agreement.  We have  assumed  the  genuineness  of all  signatures  on,  and the
authenticity of, all documents  submitted to us as originals,  the conformity to
authentic original documents of all documents submitted to us as copies, the due
authorization,  execution  and delivery by the parties  thereto,  other than the
Partnership and the General  Partner,  of all documents  examined by us, and the
legal capacity of each individual who signed any of those documents.

     Based upon the foregoing,  and having regard for such legal  considerations
as we deem relevant, we are of the opinion that:

     1. Each of the  Partnership,  the Operating  Partnership,  STOP and STP has
been duly  formed  and is  validly  existing  as a limited  partnership  in good
standing  under the Delaware Act, with  partnership  power and authority to own,
lease and operate its properties and to conduct its business as described in the
Final  Prospectus  and,  with  respect  to  the  Partnership,   to  perform  its
obligations  pursuant to the Agreement  and to issue,  sell and deliver the Firm
Units as contemplated by the Agreement.

     2.  The  Unitholders  are  not  liable  under  the  laws of the  States  of
California  and Texas for the  liabilities  of the  Partnership or the Operating
Entities, except in each case to the same extent as under the Delaware Act or as
otherwise described in the Final Prospectus.

     3. The General  Partner  has been duly formed and is validly  existing as a
limited  liability company in good standing under the Delaware Limited Liability
Company Act (the "Delaware LLC Act"),  with limited  liability company power and
authority to own, lease and operate its  properties,  to conduct its businesses,
to act as the general partner of the  Partnership and the Operating  Partnership
and to perform  its  obligations  pursuant  to the  Agreement  in each case,  as
described  in the Final  Prospectus;  the  outstanding  member  interests of the
General  Partner have been duly authorized and validly issued and are fully paid
and  nonassessable  and are  owned of  record  by KSL,  free and  clear,  to our
knowledge, of any security interest, lien, encumbrance or adverse claim.

     4. Each of STH, STI and STS has been duly organized and is validly existing
as a corporation in good standing under the General Corporation Law of the State
of Delaware (the "DGCL"),  with corporate  power and authority to own, lease and
operate its  properties  and to conduct its  business as  described in the Final
Prospectus;  all of the outstanding  shares of capital stock of each of STH, STI
and STS have been duly authorized, validly issued and are nonassessable;  all of
the  outstanding  shares of capital stock of STH are owned of record by STI, all
of the outstanding shares of capital stock of STI are owned of record by STS and
all of the outstanding shares of capital stock of STS are owned of record by the
Operating  Partnership,  in each case, free and clear, to our knowledge,  of any
security interest, lien, encumbrance or adverse claim.

     5. The General  Partner is the sole general  partner of the Partnership and
the Operating  Partnership with a general partner interest in the Partnership of
1/99th and a general partner  interest in the Operating  Partnership of 1%; such
general partner interests have been duly authorized and validly issued,  and the
General  Partner owns of record and, to our  knowledge,  beneficially  owns such
general  partner  interests  free and  clear  of any  security  interest,  lien,
encumbrance or adverse claim.

     6.  The   Partnership  is  the  sole  limited   partner  of  the  Operating
Partnership,  with a limited  partner  interest  of 99%;  such  limited  partner
interest  has been duly  authorized  and validly  issued,  and is fully paid and
nonassessable,  except as provided in the Delaware Act; the Partnership  owns of
record and, to our knowledge, beneficially owns such limited partner interest in
the  Operating  Partnership  free and  clear  of any  security  interest,  lien,
encumbrance or adverse claim.

     7. STS is the sole general partner of STOP with a general partner  interest
in STOP of 1%;  such  general  partner  interest  has been duly  authorized  and
validly issued and STS owns of record and, to our knowledge,  beneficially  owns
such general  partner  interest free and clear of any security  interest,  lien,
encumbrance or adverse claim.

     8. The Operating  Partnership is the sole limited  partner of STOP,  with a
limited  partner  interest of 99%; such limited  partner  interest has been duly
authorized  and validly  issued and is fully paid and  nonassessable,  except as
provided in the Delaware Act; the Operating  Partnership owns of record, and, to
our knowledge,  beneficially owns such limited partner interest in STOP free and
clear of any security interest, lien, encumbrance or adverse claim.

     9. Each of KPH, STL and STC has been duly formed and is validly existing as
a limited  liability  company in good standing  under the Delaware LLC Act, with
limited  liability  company  power and  authority to own,  lease and operate its
properties  and conduct its business as described in the Final  Prospectus;  all
the outstanding  member  interests of KPH, STL and STC have been duly authorized
and validly issued, are fully paid and nonassessable,  and a 50% managing member
interest in each of STL and STC is owned of record by STOP,  free and clear,  to
our knowledge, of any security interest, lien, encumbrance or adverse claim.

     10. STI is the sole general partner of STP with a general partner  interest
in STP of 1%; such general partner interest has been duly authorized and validly
issued and STI owns of record  and,  to our  knowledge,  beneficially  owns such
general  partner  interest  free  and  clear  of any  security  interest,  lien,
encumbrance or adverse claim.

     11. STH is the sole limited partner of STP, with a limited partner interest
of 99%;  such  limited  partner  interest has been duly  authorized  and validly
issued, and is fully paid and nonassessable,  except as provided in the Delaware
Act; STH owns of record and, to our  knowledge,  beneficially  owns such limited
partner  interest  in STP  free  and  clear  of  any  security  interest,  lien,
encumbrance or adverse claim.

     12.  Shore  has been  duly  formed  and is  validly  existing  as a limited
liability  company in good  standing  under the Delaware  LLC Act,  with limited
liability  company power and authority to own,  lease and operate its properties
and  conduct  its  business  as  described  in the  Final  Prospectus;  all  the
outstanding  member  interests  of Shore have been duly  authorized  and validly
issued  and are  fully  paid and  nonassessable  and are  owned of record by the
Operating  Partnership,  free  and  clear,  to our  knowledge,  of any  security
interests, lien, encumbrance or adverse claim.

     13. Statia  Technology has been duly  organized and is validly  existing in
good standing as a corporation  under the DGCL, with power and authority to own,
lease and operate its  properties  and conduct its  business as described in the
Final Prospectus;  all of the issued and outstanding  shares of capital stock of
Statia  Technology  have been duly  authorized  and validly issued and are fully
paid and  nonassessable  and are owned of record by the  Operating  Partnership,
free and clear, to our knowledge,  of any security interests,  lien, encumbrance
or adverse claim.

     14. KSL is the sole member of the General  Partner and has been duly formed
and is validly  existing as a limited  liability  company in good standing under
the Delaware LLC Act, with limited liability company power and authority to own,
lease and operate its  properties  and conduct its  business as described in the
Final Prospectus.

     15. The authorized and outstanding partnership interests of the Partnership
are as set forth under the caption "Kaneb Partners" in the Final Prospectus; and
the authorized  partnership interests of the Partnership conform in all material
respects  as to legal  matters to the  description  thereof  set forth under the
captions "Cash Distributions" and "Tax Considerations" in the Final Prospectus.

     16.  All the  partnership  interests  of the  Partnership  have  been  duly
authorized and validly issued, and are fully paid and  nonassessable,  except as
provided in the  Delaware  Act and there are no  preemptive  or other  rights to
subscribe for or to purchase  partnership  interests of the Partnership pursuant
to any statute,  the Partnership  Agreement or any agreement or other instrument
to which the  Partnership is a party filed as an exhibit to, or  incorporated by
reference in, the Registration Statement.

     17.  The  Offered  Units have been duly  authorized  and,  when  issued and
delivered to the  Underwriters  against payment  therefor in accordance with the
terms of the Agreement,  will be validly issued,  fully paid and  nonassessable,
except as provided in the Delaware  Act, and free of any  preemptive  or, to the
knowledge  of such  counsel,  similar  rights that  entitle or will  entitle any
person to acquire any partnership  interest in the Partnership upon the issuance
thereof by the Partnership.

     18.  [The  form of  certificate  for the  Units  conforms  in all  material
respects to the requirements of the Partnership Agreement].

     19. The Registration Statement and all post-effective  amendments,  if any,
have  become  effective  under  the Act and,  to our  knowledge,  no stop  order
suspending the  effectiveness of the Registration  Statement has been issued and
no  proceedings  for that purpose have been  instituted or are threatened by the
Commission;  and any  required  filing  of the  Basic  Prospectus  and the Final
Prospectus  pursuant  to Rule  424(b) of the Act has been made in the manner and
within the time period required by Rule 424(b).

     20. The Agreement has been duly authorized,  executed and delivered by each
of the Partnership and the General Partner.

     21.  Each of the Kaneb  Partnership  Agreements  has been duly  authorized,
executed and delivered by the parties thereto and is a valid and legally binding
agreement of the parties  thereto,  enforceable  against the parties  thereto in
accordance  with its  terms,  except as such  enforceability  may be  limited by
applicable  bankruptcy,  insolvency,   reorganization,   moratorium,  fraudulent
conveyance  or  transfer  or other  similar  laws  affecting  creditors'  rights
generally  and by general  principles  of equity  (regardless  of  whether  such
enforceability  is  considered  in a proceeding  in equity or at law) and to the
extent  that  rights  to  indemnity  and  contribution   under  the  Partnership
Agreements  may be limited by  federal  or state  securities  laws or the public
policy underlying such laws.

     22.  Neither  the  offer,  sale or  delivery  of the  Offered  Units by the
Partnership,  the  execution,  delivery or  performance  of the  Agreement,  nor
performance  by the  Partnership  and the General  Partner of their  obligations
under the  Agreement  constitutes  or will  constitute a breach of, or a default
under, any agreement,  indenture,  lease or other instrument to which any of the
Companies  is a  party  or by  which  any of  them  or any of  their  respective
properties  is  bound or  affected  that has  been  filed as an  exhibit  to the
Registration  Statement or to any Incorporated  Document,  or will result in the
creation  or  imposition  of any  lien,  charge or  encumbrance  under the terms
thereof upon any property or assets of any of the  Companies,  nor will any such
action result in any violation of (a) the partnership agreement,  certificate or
articles of  incorporation,  bylaws,  member  agreement or other  organizational
documents of any of the  Companies,  as the case may be, (b) any statutory  law,
regulation or ruling  (assuming  compliance with all applicable state securities
and Blue Sky  laws),  or (c) any  judgment,  injunction,  order or decree of any
court, governmental agency or arbitrator that is known to us to be applicable to
any of the Companies or any of their respective properties.

     23. To our knowledge,  except for the General Partner, which has waived its
rights, no holder of any interest in or security of the Partnership or any other
person has any right to require  registration of Units or any other  partnership
interest  or other  security  of the  Partnership  because  of the filing of the
Registration  Statement or consummation of the transactions  contemplated by the
Agreement.

     24. No  consent,  approval,  authorization  or  waiver  of, or notice to or
filing with, or other action by, any court or governmental authority is required
to be obtained or made by the  Partnership  or General  Partner by any  material
statutory  law,  regulation  or ruling as a condition to the issuance or sale of
the  Offered  Units  by the  Partnership,  the  execution  and  delivery  by the
Partnership or the General  Partner of the Agreement,  or the performance by the
Partnership  or the General  Partner of their  obligations  under the Agreement,
except  such  others as have  been  obtained  or taken or are in full  force and
effect and except such as may be required  under  state  securities  or Blue Sky
laws  governing  the  purchase  and  distribution  of the  Offered  Units by the
Underwriters, as to which we express no opinion.

     25. The Registration Statement and the Final Prospectus and any supplements
or amendments thereto (except for the financial statements and the notes thereto
and the schedules and other  financial  data  included  therein,  as to which we
express  no  opinion)  comply  as to  form in all  material  respects  with  the
requirements  of the Act;  each of the  Incorporated  Documents  (except for the
financial statements and the notes thereto and the schedules and other financial
data included therein, as to which we express no opinion) complies as to form in
all material respects with the Exchange Act and the rules and regulations of the
Commission thereunder.

     26. To our  knowledge  (a) other than as disclosed in the Final  Prospectus
(or any  supplement  thereto),  there are no legal or  governmental  proceedings
pending to which any of the  Companies is a party or  threatened  against any of
the Companies which are required to be disclosed in the  Registration  Statement
or the Final  Prospectus (or any amendment or supplement  thereto) and (b) there
are no contracts, licenses, agreements, leases or other documents of a character
that are  required to be described  in the  Registration  Statement or the Final
Prospectus (or any amendment or supplement thereto) or to be filed as an exhibit
to the  Registration  Statement  or  any  Incorporated  Document  that  are  not
described or filed as required, as the case may be.

     27. The statements in the Registration  Statement and the Final Prospectus,
under the captions  "Cash  Distributions,"  "Conflicts of Interest and Fiduciary
Responsibilities  --  Fiduciary  Responsibility  of  the  General  Partner"  and
"Investment in Kaneb Partners by Employee  Benefit  Plans,"  insofar as they are
descriptions  of  contracts,  agreements or other legal  documents,  or refer to
statements of law or legal  conclusions,  are accurate in all material  respects
and present fairly the information required to be shown.

     28.  None of the  Companies  is or will  be,  after  giving  effect  to the
offering  and sale of the  Offered  Units and the  application  of the  proceeds
thereof as  described  in the Final  Prospectus,  an  "investment  company" or a
company  "controlled"  by an "investment  company" or a "promoter" or "principal
underwriter" for a "registered  investment company" as such terms are defined in
the  Investment  Company  Act  or a  "public  utility  company"  or  a  "holding
company,"or a "subsidiary company" of a "holding company,"or an "affiliate" of a
"holding company" or of a "subsidiary  company" of a "holding  company," as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended;
none of the Companies is subject to regulation  under the Public Utility Holding
Company Act of 1935, as amended.

     29. Upon delivery of the Offered Units to the Underwriters  pursuant to the
Agreement and payment therefor as contemplated  therein,  the Underwriters  will
acquire the Offered  Units free and clear of any liens,  encumbrances,  security
interests,  charges  or claims of record  (a) in  respect  of which a  financing
statement under the Uniform  Commercial Code of the State of Delaware naming the
General  Partner  or the  Partnership  as debtor is on file in the office of the
Secretary of State of the State of Delaware or (b) otherwise known (based solely
upon our participation as special counsel in matters relating to the offering of
the Offered Units and without having conducted an independent  investigation) to
us, except as created by the Agreement or by the  Underwriters or any person who
acquires  an  interest  in the Offered  Units  through  the  Underwriters  or as
provided by the Delaware Act.

     30. The Offered  Units are duly  authorized  for  listing,  subject only to
official notice of issuance, on the New York Stock Exchange.

     Although  we have not  undertaken,  except as  otherwise  indicated  in our
opinion, to determine independently,  and are not passing upon and do not assume
any  responsibility  for, the accuracy,  completeness  or fairness of any of the
statements  in  the  Registration   Statement,   we  have  participated  in  the
preparation of the Registration  Statement and the Final  Prospectus,  including
review and discussion of the contents thereof  (including  review and discussion
of the  contents  of all  Incorporated  Documents),  and nothing has come to our
attention  that  has  caused  us to  believe  that  the  Registration  Statement
(including the Incorporated  Documents) at the time the  Registration  Statement
became  effective  and  as of  the  signing  of  the  Agreement,  or  the  Final
Prospectus,  as of its date  and as of the  date  hereof,  contained  an  untrue
statement of a material  fact or omitted to state a material fact required to be
stated  therein or necessary to make the  statements  therein not  misleading or
that any amendment or supplement to the Final  Prospectus,  as of its respective
date,  and as of the  date  hereof,  as the case may be,  contained  any  untrue
statement of a material  fact or omitted to state a material  fact  necessary in
order to make the statements  therein,  in the light of the circumstances  under
which they were made,  not misleading  (it being  understood  that we express no
opinion with respect to the financial  statements  and the notes thereto and the
schedules and other financial data included in the Registration Statement or the
Final Prospectus or any Incorporated Document).

     In rendering the opinions  expressed in paragraphs 3 through 13, terms used
therein that are defined in the UCC shall have the meanings assigned therein. In
rendering  the opinions  expressed  in  paragraphs 3 through 13, we have relied,
without investigation,  upon the accuracy and completeness of the certifications
from the office of the  Secretary of State of Delaware  dated March , 2003,  for
each of KSL, the General Partner, the Parent Partnership, the Partnership,  KPH,
STI,  STS,  STH,  STOP,  STL,  and STC that  there  are no  presently  effective
financing  statements,  federal tax liens, or utility security instruments filed
in the  office of the  Delaware  Secretary  of State  that name such  respective
entities  as  debtor  and cover as  collateral  any of the  ownership  interests
identified in paragraphs 3 through 13, and further,  we have assumed that at all
times from and  including  the date  through  which each UCC Search  Certificate
conducted its search and to and through the date of the delivery of this opinion
letter,  there have been no filings made in the Office of the Secretary of State
of the State of Delaware in which the applicable  entities are named as a debtor
and that cover, in whole or in part, or any proceeds thereof.

     To our knowledge,  there are no material legal or governmental  proceedings
pending or threatened  against any of the Operating  Entities,  by or before the
Federal Energy Regulatory Commission ("FERC") or on appeal from the FERC, except
as set forth in or contemplated by the Final Prospectus.

     The opinions  expressed  herein are limited  exclusively to the laws of the
State of Texas, the DGCL, the Delaware Act, the Delaware LLC Act and the federal
statutory laws, rules and regulations of the United States of America.

     As used herein,  the phrase "to our  knowledge" or words of similar  import
means  conscious  awareness of facts or other  information by the lawyers in our
firm who, based on our records as of 3:00 p.m. on March [ ], 2003,  have devoted
substantive  attention to legal matters on behalf of the Companies since January
1, 2001.  With your  consent,  we have not  examined  any  records of any court,
administrative tribunal or similar entity.

     The opinions expressed herein are furnished to you for your sole benefit in
connection with the  transactions  contemplated  by the Agreement.  The opinions
expressed herein may not be relied upon by you for any other purpose and may not
be relied upon for any  purpose by any other  person  without our prior  written
consent, except that the transfer agent for the Units may rely upon this opinion
in connection with those transactions.


                                   SCHEDULE I




<TABLE>
<CAPTION>

Underwriter                                                                                       Number of
                                                                                                 Firm Units
<S>                                                                                               <C>
Salomon Smith Barney Inc...........................................................               1,800,000
A.G. Edwards & Sons, Inc...........................................................                 900,000
McDonald Investments, Inc..........................................................                 300,000
                                                                                        ------------------------

     Total.........................................................................               3,000,000
                                                                                           ========================
</TABLE>

<PAGE>

                                   SCHEDULE II

                             OFFICERS AND DIRECTORS


<TABLE>
<CAPTION>

<S>                                                                                      <C>
--------------------------------------------------------------------------------------- --------------------------------
                                       Officers                                                    Directors
--------------------------------------------------------------------------------------- --------------------------------
--------------------------------------------------------------------------------------- --------------------------------
Edward D. Doherty - Chairman of the Board and Chief Executive Officer                             Sangwoo Ahn
--------------------------------------------------------------------------------------- --------------------------------
--------------------------------------------------------------------------------------- --------------------------------
Jimmy L. Harrison - President                                                                   John R. Barnes
--------------------------------------------------------------------------------------- --------------------------------
--------------------------------------------------------------------------------------- --------------------------------
L. Leroy Anderson, Jr. - Vice President, Regulatory Affairs                                     Murray R. Biles
--------------------------------------------------------------------------------------- --------------------------------
--------------------------------------------------------------------------------------- --------------------------------
James D. Reiter - Vice President, Operations                                                  Frank M. Burke, Jr.
--------------------------------------------------------------------------------------- --------------------------------
--------------------------------------------------------------------------------------- --------------------------------
Ronald D. Scoggins - Senior Vice President                                                      Charles R. Cox
--------------------------------------------------------------------------------------- --------------------------------
--------------------------------------------------------------------------------------- --------------------------------
Howard C. Wadsworth - Vice President, Treasurer and Secretary                                    Hans Kessler
--------------------------------------------------------------------------------------- --------------------------------
--------------------------------------------------------------------------------------- --------------------------------
Ronnie G. Wahl - Vice President, Transportation                                                James R. Whatley
--------------------------------------------------------------------------------------- --------------------------------
--------------------------------------------------------------------------------------- --------------------------------
Fred T. Johnson - President of ST Services
--------------------------------------------------------------------------------------- --------------------------------
--------------------------------------------------------------------------------------- --------------------------------
J. Mark Jones - Acquisition and Planning Manager
--------------------------------------------------------------------------------------- --------------------------------
--------------------------------------------------------------------------------------- --------------------------------
Lee E. Childres - Vice President, Engineering
--------------------------------------------------------------------------------------- --------------------------------
--------------------------------------------------------------------------------------- --------------------------------
Joe Graham - Controller
--------------------------------------------------------------------------------------- --------------------------------

</TABLE>