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                                                                   EXHIBIT 10.20


                          INTERCOMPANY STATE INCOME TAX
                             ALLOCATION AND PAYMENTS


The following is a revision to the Unitary State Income Tax Allocation Policy.
This revision is effective for tax years being after 01/29/01.


I.       DEFINITIONS - When used in the context of this policy:

         A.       "El Paso" shall refer to El Paso Corporation or its delegate;

         B.       "Unitary State" shall refer to those states where El Paso
                  files a unitary return and the taxable income (loss) is
                  determined based on unitary income (loss) and apportionment
                  factors;

         C.       "Consolidated States" shall refer to those states where El
                  Paso files a single consolidated return and the taxable income
                  (loss) is determined by consolidating separately determined
                  taxable income (loss) and apportionment factors;

         D.       "Stand Alone Taxable Income (Loss)" shall refer to the taxable
                  (loss) determined based on the separate taxable income (loss)
                  and separate apportionment factors of each subsidiary. This
                  taxable income (loss) will only be used in the computation of
                  intercompany state income tax allocations and payments.

II.      EFFECTIVE DATE - The state intercompany billing policy as revised shall
         be effective beginning with the 2001 tax year.

III.     STATE COVERED BY THIS POLICY - This policy shall apply to the following
         states:

         A.       Unitary States: Alabama, California, Colorado, Illinois,
                  Indiana, Kansas, Kentucky, Missouri, and Utah.

         B.       Consolidated States: Arkansas, Connecticut, Iowa,
                  Massachusetts, Mississippi, Oklahoma, Rhode Island, South
                  Carolina and Virginia.

IV.      CALCULATION OF STATE INTERCOMPANY TAX PAYABLE (RECEIVABLE) - The
         intercompany tax payable (receivable) shall be calculated as follows:

         A.       Unitary States - Each subsidiary included in the unitary
                  return, shall prepare and supply to El Paso a computation of
                  the stand-alone taxable income (loss) for such state. Each
                  subsidiary shall also supply information to El Paso concerning
                  payments made to such state based on their unitary tax
                  liability.

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                  This information shall be supplied at the time and in the
                  manner prescribed by this policy.

                  After El Paso has received all necessary information, the
                  intercompany tax payable (receivable) for each subsidiary
                  shall be calculated as follows:

                           Stand Alone Taxable Income (Loss)
                           X     State Tax Rate
                           ----------------------------------------------
                           Gross Intercompany Tax Payable (Receivable)

                  NOTE:    Stand-alone NOL's will be paid in the current year.
                           Benefits received through carryback or carryforward
                           of unitary NOL's will vest to El Paso. SRLY NOL's
                           will be considered only to the extent they offset
                           stand-alone taxable income.

         B.       Consolidated States - The intercompany tax payable
                  (receivable) for each subsidiary doing business in a
                  consolidated state shall be calculated as follows:

                           Stand Alone Taxable Income (Loss)
                           X      State Tax Rate
                           ----------------------------------------------
                           Gross Intercompany Tax Payable (Receivable)
                           -      Prior Year NOL's Used To Offset Current
                                  Year Income (@ The State Rate)
                           +      Current Year NOL's Not Used To Offset
                           Current Year Income (@ The State Rate)
                           ----------------------------------------------
                           Net Intercompany Tax Payable (Receivable)
                           ==============================================


                  NOTE:    NOL's will only be paid to the extent they are
                           utilized to offset current year income or generate
                           benefits through carryback to a previous year. NOL's
                           not utilized in the current year or a carryback year,
                           will be carried forward and paid when they are
                           utilized to offset income in a subsequent year. SRLY
                           NOL's will be considered only to the extent they
                           offset stand-alone taxable income.

                           The taxable income (loss) used in the above
                           calculation shall be income (loss) for each
                           subsidiary used in computing the consolidated taxable
                           income (loss) and tax liability reported to the
                           state.

         C.       The net intercompany payable (receivable) for all unitary and
                  consolidated states will be computed 1 time for each tax year
                  during the month of November.

                  Intercompany billings will be completed within 30 days of the
                  date in which the stand-alone information is received. If
                  updated

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                  information is needed for the consolidated states, it will be
                  requested under a separate memo. The schedule attached as
                  Exhibit A to this policy should be used when supply unitary
                  stand-alone information for the second quarter and extension
                  request. For the final return, each subsidiary should supply
                  El Paso with an unsigned separate company unitary state tax
                  return reflecting that subsidiary's stand alone taxable income
                  (loss).


                  NOTE:    Payments should be made within 10 days of receipt of
                           the intercompany billing. If not received timely El
                           Paso will create the payment through the use of the
                           intercompany account.


V.       STATE TAX SETTLEMENTS BASED ON NET INTERCOMPANY TAX PAYABLE - After the
         net intercompany tax payable (receivable) has been determined,
         subsidiaries with net intercompany tax payable shall remit a payment to
         El Paso for their net intercompany payable if such payable exceeds
         $100,000.


VI.      STATE TAX SETTLEMENTS BASED ON NET INTERCOMPANY TAX RECEIVABLES - After
         the net intercompany tax payable (receivable) has been determined,
         subsidiaries with net intercompany tax receivable shall be reimbursed
         by El Paso if such receivable exceeds $100,000.


VII.     INTENT OF STATE ALLOCATION POLICY - It is the intent of this
         intercompany state income tax allocation policy to collect no more than
         the separately determined stand alone tax liability from each
         subsidiary doing business in the states listed above. The unitary
         approach to state tax filing generates significant benefits to certain
         subsidiaries and in some cases results in the payment of state taxes by
         subsidiaries which otherwise would owe no state tax. The consolidated
         approach to state tax filing generates significant benefits to certain
         subsidiaries taxable income by offsetting that taxable income with
         losses from other subsidiaries. It is therefore necessary to allocate
         the separate tax liabilities in such a way that subsidiaries generating
         tax losses will be compensated for their losses.


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