Annual Report (Form 10-K), fiscal year 1993





Item 3. Legal Proceedings.
	East Line Litigation and FERC Proceeding: 	 	In August 1992, two East Line refiners, Navajo Refining Company 	("Navajo") and El Paso Refinery, L.P. ("El Paso") and its 	general partner, El Paso Refining, Inc., filed separate, though 	similar, lawsuits against the Partnership in New Mexico and 	Texas, respectively, seeking total actual damages in excess of 	$190 million, plus punitive damages, arising from the 	Partnership's alleged failure to provide additional pipeline 	capacity to Phoenix and Tucson, Arizona from El Paso, Texas. The 	Navajo action also sought an injunction to prohibit the 	Partnership from reversing the direction of flow (from westbound 	to eastbound) of its six-inch diameter pipeline between Phoenix 	and Tucson. Generally, the lawsuits allege that the refiners 	proceeded with significant refinery expansions under the belief 	that the Partnership would provide whatever pipeline capacity was 	required to transport their product into Arizona, and that they 	were damaged by their inability to ship additional volumes into 	that highly competitive market.
	In addition, El Paso filed a protest/complaint with the FERC in 	September 1992 seeking to block the reversal of the six-inch 	pipeline and challenging the Partnership's proration policy as 	well as the Partnership's existing East Line tariffs. The FERC 	ruled in April 1993, and has subsequently confirmed on rehearing, 	that the challenges to proration, line reversal and East Line 	tariffs must proceed under a complaint proceeding. That ruling 	expressly places the burden of proof on the complaining parties,
	who must show that the Partnership's rates and practices there at 	issue violate the requirements of the Interstate Commerce Act.
	In August 1993, Chevron U.S.A. Products Company ("Chevron") filed 	a complaint with the FERC challenging the Partnership's West Line 	tariffs and claiming that a service charge at the Partnership's 	Watson Station is in violation of the Interstate Commerce Act. In 	September 1993, the FERC ruled that the Partnership's West Line 	tariffs are deemed "just and reasonable" under the Energy Policy 	Act of 1992 and may only be challenged on the basis of "changed 	circumstances" and consolidated the various outstanding matters 	into a single proceeding. ARCO Products Company and Texaco 	Refining and Marketing Inc. intervened in the proceeding in 	January 1994. Navajo, Refinery Holding Company, L.P., a 	partnership formed by El Paso's long-term, secured creditors that 	purchased El Paso's refinery in May 1993, and an association of 	airlines serving the Phoenix airport constitute the remaining 	major outside parties to this FERC proceeding. Navajo, which had 	been under a 1985 FERC rate case settlement moratorium 	prohibiting it from challenging the Partnership's rates until 	November 1993, filed a separate complaint against both the East 	Line and West Line tariffs in December 1993.
	In November 1993, the FERC Administrative Law Judge ordered the 	Partnership to prepare a cost and revenue study, within certain 	guidelines, detailing rate base, revenues, and cost of service 	for calendar year 1993. On February 14, 1994, the Partnership 	submitted the 1993 cost and revenue study for its South Line to 	the parties to the FERC proceeding. Additional discovery requests 	were filed by the shippers and FERC staff on or before March 	14, 1994. The present procedural schedule calls for the shippers 	to present their case against the Partnership in late May 1994, 	and the FERC staff to present their case by late June 1994, 	although this timetable may be extended. The Partnership is 	maintaining a vigorous defense in the FERC proceeding as well 	as continuing efforts to resolve these matters.
	In October 1992, El Paso filed a petition for reorganization 	under Chapter 11 of the federal bankruptcy laws and halted 	refinery operations. All activity in El Paso's civil action 	against the Partnership has been stayed indefinitely by virtue of 	the bankruptcy proceeding. In November 1993, the El Paso 	bankruptcy was converted from a Chapter 11 to a Chapter 7 	proceeding, and an interim trustee was appointed. In addition, El 	Paso's general partner is presently in Chapter 11 bankruptcy 	proceedings. In February 1994, a permanent trustee and a new 	judge were named to handle these proceedings.
	On July 28, 1993, the Partnership reached a settlement with 	Navajo whereby Navajo agreed to dismiss its pending civil 	litigation in New Mexico and withdraw any challenge to the 	direction of flow of the six-inch pipeline, including any such 	challenge in the FERC proceeding. The Partnership agreed to make 	certain cash payments to Navajo over three years and to 	undertake and complete an additional pipeline capacity expansion 	between El Paso and Phoenix if certain events related to volume 	levels and proration of pipeline capacity should occur within 	the next five years.
	During the quarter ended September 30, 1993, the Partnership 	recorded a $12 million provision for litigation costs, which 	reflects the terms of the Navajo settlement as well as 	anticipated legal fees and other costs related to defense and 	ultimate resolution of the FERC proceeding and the remaining 	civil action brought by El Paso and its general partner. It is 	the opinion of management that any additional costs, in excess 	of recorded liabilities, incurred to defend and resolve these 	matters, or any capital expenditures which may be required under 	the terms of the Navajo settlement, will not have a material 	adverse effect on the Partnership's financial condition; 	nevertheless, it is possible that the Partnership's results of 	operations, in particular quarterly or annual periods, could be 	materially affected by the ultimate resolution of these matters.
	Environmental Matters:
	The Partnership is, from time to time, subject to environmental 	clean up and enforcement actions. In particular, the federal 	Comprehensive Environmental Response, Compensation and Liability 	Act ("CERCLA" or "Superfund" law) generally imposes joint and 	several liability for cleanup and enforcement costs, without 	regard to fault or the legality of the original conduct, on 	current or predecessor owners and operators of a site. Since 	August 1991, the Partnership, along with several other 	respondents, has been involved in one cleanup ordered by the 	United States Environmental Protection Agency ("EPA") related to 	ground water contamination in the vicinity of the Partnership's 	storage facilities and truck loading terminal at Sparks, Nevada. 	In addition, the Partnership is also involved in six ground water 	hydrocarbon remediation efforts under administrative orders 	issued by the California Regional Water Quality Control Board at, 	or adjacent to, its facilities at Colton, Concord, Mission 	Valley, Brisbane, San Jose and West Sacramento, California.
	The investigation and remediation at the Sparks terminal is also 	the subject of a lawsuit brought in January 1991 by the Nevada 	Division of Environmental Protection against the respondents to 	the EPA order in the Second Judicial District Court of the State 	of Nevada. This lawsuit was subsequently joined by the County of 	Washoe Health District and the City of Sparks, Nevada and seeks 	unspecified, but potentially significant, damages. The 	Partnership may be required to pay in excess of $100,000 in fines 	arising from these lawsuits. In addition, the Partnership is one 	of the defendants in a number of lawsuits brought by property 	owners seeking unspecified, but potentially significant, damages 	for alleged property value diminishment attributable to soil or 	ground water contamination arising from the defendants' 	operations. To date, no significant progress has been made in any 	of these cases. The Partnership is vigorously defending itself in 	these actions, although it may pursue settlement discussions in 	certain cases to avoid the costs and uncertainties of extended 	litigation.
	During the quarter ended June 30, 1993, the EPA issued a Notice 	of Violations to the Partnership associated with an oxygenate 	blending equipment malfunction at the Partnership's Phoenix 	terminal. The amount and terms of the fines and associated 	costs arising from this Notice of Violations remains under
	discussion with the EPA, however, management believes that the 	total cost to the Partnership will not be material to its results 	of operations or financial condition, but may be in excess of 	$100,000. 	 	Reference is made to Note 6 to the Partnership's consolidated 	financial statements, beginning on page 38 of this Report, for 	further discussion of these matters.
	Other:
	The Partnership is also party to a number of other legal actions 	arising in the ordinary course of business. While the final 	outcome of these legal actions cannot be predicted with 	certainty, it is the opinion of management that none of these 	legal actions, when finally resolved, will have a material 	adverse effect on the Partnership's financial condition. 	
	Item 4.

Item 4. Submission of Matters to a Vote of Security Holders.
	No matters were submitted to a vote of security holders during 	the fourth quarter of 1993. 				 				 				 PART II
	Item 5.

Item 5. Market for Registrant's Common Equity and Related 	Stockholder Matters.
	Information as to the principal markets on which the Registrant's 	Preference Units are traded, the high and low sales prices of 	such Units and distributions declared on such Units for the two 	years ended December 31, 1993, and the approximate number of 	record holders of such Units is set forth in Note 11 to the 	Partnership's consolidated financial statements on page 45 of 	this Report.
	Upon the payment of the cash distribution for the fourth quarter 	of 1993, the period of subordination of the Partnership's Common 	Units to its Preference Units ended. The subordination period, 	which began in December 1988, was a period during which cash 	distributions on the Common Units were subject to the 	preferential rights of the holders of the publicly traded 	Preference Units to receive the minimum quarterly distribution of 	$0.55 per unit. As of January 1, 1994, all differences and 	distinctions between the Preference Units and the Common Units 	were eliminated, as a result of which Common Units will have 	equivalent rights with respect to cash distributions. From and 	after January 1, 1994, the Preference Units will be treated as 	and called Common Units. Notice will be given to holders of 	Preference Units in the near future informing them of the method 	for exchanging their Preference Units for Common Units.
	Item 6.

Item 6. Selected Financial Data.
	The following table sets forth, for the periods and at the dates 	indicated, selected consolidated financial data for the 	Partnership.
					Year Ended December 31, 			 -------------------------------------------- 			 1989 1990 1991 1992 1993 			 -------- -------- -------- -------- -------- 			 	 (in thousands, except per unit data) 	Income Statement Data: 	Total revenues..... $187,945 $192,868 $193,438 $205,025 $219,471 	Operating expenses 	 (excluding 	 depreciation & 	 amortization) (a). 80,608 78,110 80,775 95,340 122,178 	Depreciation & 	 amortization ..... 14,351 15,884 16,834 18,327 18,971 	Operating income... 92,986 98,874 95,829 91,358 78,322 	Interest expense... 35,633 37,327 36,924 36,937 37,086 	Income before 	 cumulative effect 	 of accounting 	 change ........... 59,285 63,560 60,604 54,118 41,616 	Cumulative effect 	 of accounting 	 change (b)........ -- -- -- (16,407) -- 	Net income......... $ 59,285 $ 63,504 $ 60,604 $ 37,711 $ 41,616 								 	Per Unit Data: 	Income before 	 cumulative effect 	 of accounting 	 change............ $ 3.07 $ 3.28 $ 3.10 $ 2.77 $ 2.13 	Cumulative effect 	 of accounting 	 change............ -- -- -- (0.84) -- 	Net income......... 3.07 3.28 3.10 1.93 2.13 	Cash distributions 	 paid.............. 1.778 2.50 2.70 2.80 2.80 	Cash distributions 	 declared.......... 2.30 2.55 2.75 2.80 2.80 	Capital 	 Expenitures....... $ 35,652 $ 29,236 $ 27,715 $ 30,931 $ 21,084 								 	Balance Sheet Data 	 (at year end): 	Properties, plant 	 and equipment, 	 net.............. $583,675 $598,021 $605,461 $618,098 $616,610 	Total assets...... 646,163 665,177 677,480 684,852 696,980 	Long-term debt.... 355,000 355,000 355,000 355,000 355,000 	Total partners' 	 capital.......... 272,977 288,092 296,075 279,010 265,851
	(a) 1993 operating expenses include a $27.0 million provision for 	environmental and litigation costs and 1992 operating expenses 	include a $10.0 million provision for environmental costs.
	(b) Effective January 1, 1992, the Partnership adopted new 	accounting standards for postretirement and postemployment 	benefits (Statements of Financial Accounting Standards Nos. 106 	and 112).
	Item 7.

Item 7. Management's Discussion and Analysis of Financial 	Condition and Results of Operations.
	Results of Operations
	1993 Compared with 1992: 	 	The Partnership reported 1993 net income of $41.6 million, or 	$2.13 per unit, compared to net income of $37.7 million, or $1.93 	per unit, in 1992. Excluding the effects of provisions for 	environmental and litigation costs aggregating $27 million in 	1993 and a $10 million provision for environmental costs in 1992, 	1993 net income would have been $68.1 million, or $3.48 per unit, 	compared to net income of $63.9 million, or $3.27 per unit, 	before the cumulative effect of an accounting change in 1992.
	Total 1993 revenues of $219.5 million were 7% above prior year 	levels. Trunk revenues of $171.8 million were $10.7 million 	higher than in 1992 due to higher volumes, a longer average 	length of haul, a favorable shift of volumes from the East Line 	to the West Line and the full year effect in 1993 of a May 1992 	California intrastate tariff increase. Total volumes transported 	increased 2.9% in 1993, with commercial volumes 3.6% higher, and 	military volumes approximately 10% lower, than in 1992. The 	longer average haul reflects increased deliveries to Arizona and 	Nevada, as well as increased deliveries to Tucson from Los 	Angeles as a result of reduced supply from El Paso refineries in 	1993. The refinery formerly owned by El Paso Refinery, L.P., 	which had been out of service since that company entered 	bankruptcy in October 1992, began operating at a reduced level 	during the third quarter of 1993. Management expects that a 	portion of this refinery's production will continue to be shipped 	to Arizona, resulting in a shift of certain volumes from the West 	Line back to the East Line in 1994. Storage and terminaling 	revenues were $3.2 million higher due to a January 1993 terminal 	services rate increase. Other revenues increased $0.5 million due 	to higher volumes.
	Total 1993 operating expenses of $141.1 million included a $15.0 	million provision to increase the Partnership's existing reserve 	for environmental remediation and investigation costs and a 	$12.0 million provision to reflect anticipated legal fees and 	other costs related to defense and ultimate resolution of certain 	East Line civil litigation as well as a related Federal Energy 	Regulatory Commission ("FERC") proceeding. Total 1992 operating 	expenses of $113.7 million included a $10.0 million provision for 	environmental remediation costs. Excluding the environmental and 	litigation provisions, 1993 operating expenses of $114.1 million 	were $10.5 million, or 10%, higher than in 1992, with higher 	field operating expenses ($5.0 million), general and 	administrative expenses ($3.0 million), power cost ($0.8 	million), facilities costs ($0.7 million) and depreciation and 	amortization ($0.6 million), and a smaller product gain ($0.4 	million) accounting for that increase. The increase in field 	operating expenses is largely attributable to higher major 	maintenance costs due to preventative pipeline repairs associated 	with the Partnership's ongoing internal inspection program and 	flood damage repairs, partially offset by lower environmental 	remediation costs subsequent to recording the $15.0 million
	provision in September 1993. Also contributing to higher field 	operating expenses were $1.5 million in pipeline inspection costs 	associated with the potential conversion of one of the 	Partnership's pipelines to crude oil service, greater usage of 	drag reducing agent to increase capacity on certain lines and 	higher salary costs. The increase in general and administrative 	expense is largely attributable to higher outside legal and 	consulting costs associated with the East Line civil litigation 	and FERC proceeding that were incurred prior to recording the 	$12.0 million litigation provision in September 1993. The 	increase in power cost reflects increased volumes and length of 	haul. The increase in facilities costs primarily resulted from 	higher right of way rentals and property taxes. This increase in 	property taxes and the increase in depreciation and amortization 	expense resulted from the Partnership's expanding capital asset 	and software base. The product gain is within industry 	measurement standards and may vary from period to period.
	1992 Compared with 1991:
	1992 net income of $54.1 million, before the cumulative effect of 	an accounting change, was $6.5 million, or 11%, lower than in 	1991, primarily due to a $10.0 million provision for 	environmental costs recorded in the third quarter of 1992. 	Excluding the environmental provision, 1992 net income before the 	cumulative effect of the accounting change would have been $63.9 	million, or 5.5%, higher than in 1991.
	Total 1992 revenues of $205.0 million were 6% above prior year 	levels. Trunk revenues of $161.1 million were 4% higher than in 	1991 due to the May 1992 California intrastate tariff increase, 	which generated an additional $4.1 million in revenues, and 	increased volumes and longer average length of haul. Total 	volumes transported increased 0.7% in 1992, with commercial 	volumes 1% higher and military volumes 6% lower than in 1991. 	Long-haul deliveries to Arizona and Nevada improved over prior 	year levels, while short-haul movements in the Los Angeles area 	and between San Francisco Bay area refineries were lower, 	contributing to an overall 2.5% increase in barrel-miles. Total 	California deliveries approximated 1991 levels. During much of 	1992, East Line volumes increased, and West Line volumes 	decreased, as a result of East Line capacity expansions completed 	in late 1991 and 1992 and the shift of Phoenix-bound volumes from 	the West Line to the East Line. Storage and terminaling revenues 	of $34.0 million were 2% higher in 1992 due to increased volumes 	and a military rate increase. Other revenues, of $9.9 million, 	increased about 85% due to new services offered to customers, 	including the vapor handling system at Watson Station and 	detergent additive injection at all California terminals.
	Total operating expenses of $113.7 million were $16.1 million 	higher than in 1991, largely as the result of the $10.0 million 	provision recorded for environmental remediation costs at the 	Partnership's Sparks, Nevada terminal and two facilities in 	California. Excluding that provision, operating expenses would 	have been $6.1 million, or 6%, higher than in 1991, with higher 	field operating expenses ($1.7 million), depreciation and 	amortization ($1.5 million), general and administrative expenses
	($1.2 million), facilities costs ($0.9 million) and a smaller 	product gain ($0.7 million) accounting for that increase. The 	increase in field operating expenses is largely attributable to 	higher environmental compliance and remediation costs, greater 	usage of drag reducing agent to increase East Line capacity, and 	higher salary cost. Depreciation and amortization increased due 	to an expanding capital base, higher composite depreciation rates 	in 1992, and amortization of pipeline system operating software. 	The increase in general and administrative expense is largely 	attributable to the $1.8 million current year accrual resulting 	from the change in accounting for postretirement and 	postemployment benefits effective January 1, 1992, higher outside 	legal costs associated with lawsuits and a FERC proceeding 	initiated by certain East Line shippers in September 1992, and 	higher information services costs, partially offset by lower 	employee health insurance and incentive compensation program 	costs. The increase in facilities costs resulted from higher 	insurance premiums for environmental and related coverage. The 	product gain is within industry measurement standards and may 	vary from period to period. Excluding the environmental provision 	and the current year accrual of $1.8 million associated with the 	accounting change, operating expenses would have been up $4.2 	million, or 4%, over the prior year.
	Other income, net was $2.1 million lower in 1992 due to lower 	market interest rates on short-term investments and a $1.1 	million nonrecurring arbitration award in 1991. Effective January 	1, 1992, the Partnership adopted new accounting standards for 	postretirement and postemployment benefits (Statements of 	Financial Accounting Standards Nos. 106 and 112). As a result, 	1992 net income was reduced by $16.4 million, or $0.84 per unit, 	representing the cumulative effect of the new principle for years 	prior to 1992.
	Financial Condition - Liquidity and Capital Resources
	For the year ended December 31, 1993, cash flow from operations 	before working capital and minority interest adjustments totaled 	$82.8 million, compared to $84.0 million in 1992. Working capital 	cash requirements were $2.2 million in 1993, whereas in 1992 	working capital components provided an additional $2.0 million in 	cash flow, largely due to the maturity of $4.9 million in short- 	term investments in 1992 and due to timing differences in 	collection of accounts receivable and payment of accrued 	obligations. The $81.6 million of net cash provided by operations 	in 1993 was largely used to pay cash distributions of $55.9 	million and fund capital expenditures of $21.1 million, resulting 	in a net increase in cash and cash equivalents of $4.8 million 	for the year. Total cash and cash equivalents of $32.2 million at 	December 31, 1993 included $14.0 million for the fourth quarter 	1993 cash distribution, which was paid in February 1994.
	Since the useful lives of the pipeline system and terminal 	properties are generally long and technological change is 	limited, replacement of facilities is relatively infrequent. The 	principal need for capital, therefore, has been in connection 	with capacity expansions, service enhancements, compliance with 	increasingly stringent environmental and safety regulations and
	installation of Supervisory Control and Data Acquisition 	("SCADA") equipment and related operations systems software.
	For the year ended December 31, 1993, Partnership capital 	expenditures aggregated $21.1 million, of which approximately $5 	million was used for revenue-generating projects, and the balance 	for sustaining projects. The primary revenue-generating project 	was completion of the second phase of an expansion of East Line 	capacity which became operational in August 1992 and increased 	the daily pumping capacity between El Paso, Texas and Tucson, 	Arizona from 67,000 barrels to 95,000 barrels, and increased 	daily capacity from Tucson to Phoenix, Arizona from 25,000 	barrels to 55,000 barrels. 1993 sustaining expenditures were 	primarily in the areas of environmental and safety compliance, 	operating systems software development, replacement of two flood 	damaged river crossings in Arizona, pipeline relocations, 	investments towards reducing or containing power costs, station 	automation and cathodic protection. Environmental and safety 	projects included additions and modifications to storage tanks 	and vapor recovery systems to comply with more stringent 	regulations, oily water handling facilities and fire protection 	improvements. Such expenditures aggregated approximately $5 	million in 1993 and are expected to increase over time in 	response to increasingly rigorous governmental environmental and 	safety standards. Systems software development included the 	application of knowledge-based systems to products movement 	scheduling and enhancements to the SCADA system.
	The planned 1994 capital program aggregates approximately $22 	million, of which approximately $4 million is planned for income- 	enhancing projects, with the balance expected to be invested in 	sustaining projects. The Partnership presently anticipates that 	ongoing capital expenditures will average approximately $25 to 	$30 million per year over the next five years, however additional 	facility improvements, pipeline expansions or acquisitions may be 	pursued under certain circumstances. The Partnership is currently 	investigating the potential conversion of one of its pipelines to 	crude oil service. Should the Partnership proceed with the crude 	line project, in addition to the necessary capital investment, a 	significant portion of the associated expenditures may be 	required to be expensed.
	The Partnership expects that it will generally finance its 	ongoing capital program with internally-generated funds, however 	the Partnership may use borrowed funds or proceeds from 	additional equity offerings to finance a portion of future 	capital expenditures. Future capital expenditures will continue 	to depend on numerous factors, some of which are beyond the 	Partnership's control, including demand for refined petroleum 	products in the pipeline system's market areas, governmental 	regulations and the availability of sufficient funds from 	operations to pay for such expenditures.
	Due to the capital-intensive nature of the Partnership's 	business, inflation generally causes an understatement of 	operating expenses because depreciation is based on the 	historical costs of assets rather than the replacement costs of 	assets.
	Long-term debt at December 31, 1993 and 1992 consisted of 	$355 million of First Mortgage Notes at an average interest rate 	of 10.51% per annum. Principal repayments are required beginning 	December 15, 1994, however, the Partnership intends to refinance 	some or all of this debt as it becomes payable. To facilitate 	such refinancing and provide for additional financial 	flexibility, the Partnership arranged a $60 million multi-year 	term credit facility and a $20 million working capital facility 	with three banks in October 1993. The term facility may be used 	for refinancing a portion of the Partnership's long-term debt and 	capital projects, while the working capital facility replaced a 	$20 million facility originally established in April 1990 and is 	available for general short-term borrowing purposes. To date, 	neither of these facilities have been utilized.
	Other Matters
	Environmental Matters:
	The Partnership's transportation and terminal operations are 	subject to extensive regulation under federal, state and local 	environmental laws concerning, among other things, the 	generation, handling, transportation and disposal of hazardous 	materials, and the Partnership is, from time to time, subject to 	environmental cleanup and enforcement actions. In particular, the 	federal Comprehensive Environmental Response, Compensation and 	Liability Act ("CERCLA" or "Superfund" law) generally imposes 	joint and several liability for cleanup and enforcement costs, 	without regard to fault or the legality of the original conduct, 	on current or predecessor owners and operators of a site. Along 	with several other respondents, the Partnership is presently 	involved in one cleanup ordered by the United States 	Environmental Protection Agency ("EPA") related to ground water 	contamination in the vicinity of the Partnership's storage 	facilities and truck loading terminal at Sparks, Nevada. In 	addition, the Partnership is also involved in six ground water 	hydrocarbon remediation efforts under administrative orders 	issued by the California Regional Water Quality Control Board at, 	or adjacent to, certain of its facilities in California. The 	Partnership is cooperating with the United States military in 	investigating the extent of its responsibility with respect to 	ground water hydrocarbon contamination adjacent to its pump 	station and a major military fuel storage facility at Norwalk, 	California. The Partnership is also cooperating with a request 	from the Arizona Department of Environmental Quality to 	participate in a joint industry investigation of possible ground 	water hydrocarbon contamination in the vicinity of the 	Partnership's terminal at Phoenix. The Partnership is also 	involved in soil and ground water remediation projects, at and 	adjacent to various other terminal and pipeline locations, that 	have not been mandated by government agencies but are conducted 	in the ordinary course of business. In a number of these cleanup 	projects, the Partnership is participating with other entities 	ranging from large integrated petroleum companies to certain less 	financially sound parties.
	During the quarter ended September 30, 1993, the Partnership 	completed a comprehensive re-evaluation of its potential
	liabilities associated with environmental remediation activities 	and, as a result, recorded a $15 million provision to increase 	its existing reserve for environmental remediation costs. This 	provision reflects the estimated cost of completing all 	remediation projects presently known to be required, either by 	government mandate or in the ordinary course of business, as well 	as the cost of performing preliminary environmental 	investigations at several locations, including the investigation 	of potential contamination in the vicinity of the Partnership's 	Phoenix terminal. During the quarter ended September 30, 1992, 	the Partnership recorded a $10 million provision for 	environmental remediation costs at Sparks, Nevada and two sites 	in California. The cash expenditures related to these projects 	are primarily expected to occur over the next five years; 	however, certain remediation projects, including the largest 	project at Sparks, are expected to continue for a period of 	approximately ten years.
	Estimates of the Partnership's ultimate liabilities associated 	with environmental remediation activities and related costs are 	particularly difficult to make with certainty due to the number 	of variables involved, including the early stage of 	investigation at certain sites, the lengthy time frames required 	to complete remediation at most locations, the number of parties 	involved, the number of remediation alternatives available, and 	the uncertainty of potential recoveries from third parties. 	Based on the information presently available, it is the opinion 	of management that any such costs, to the extent they exceed 	recorded liabilities, will not have a material adverse effect on 	the Partnership's financial condition; nevertheless, it is 	possible that the Partnership's results of operations in 	particular quarterly or annual periods could be materially 	affected as conditions change or additional information becomes 	available.
	Rate Regulation:
	The Partnership's interstate common carrier pipeline operations 	are subject to rate regulation by the Federal Energy Regulatory 	Commission ("FERC") under a methodology adopted in 1985 for 	establishing allowable rates for liquid petroleum pipelines. The 	methodology is subject to clarification in individual cases and 	leaves many issues for determination on a case-by-case basis. In 	addition, rates may be established under an alternative form of 	"light-handed" rate regulation where it can be demonstrated that 	the carrier lacks significant market power. Intrastate common 	carrier operations in California are also subject to regulation 	by the California Public Utilities Commission ("CPUC"). In 1993, 	tariffs subject to FERC and CPUC regulation each accounted for 	approximately one-half of total transportation revenues.
	The Energy Policy Act of 1992 required the FERC to develop a 	simplified rate-making methodology for oil pipelines by October 	1993, and also established as "just and reasonable" all existing 	pipeline tariffs that had not been under protest for 365 days 	prior to the date the bill was passed. This excluded the 	Partnership's East Line tariffs, which had been challenged in 	September 1992. In October 1993, the FERC issued Order 561 	establishing a new rate-making methodology, to be effective
	January 1995, that would allow for annual indexing of tariffs, 	with the indexing factor based on changes in the Producer Price 	Index minus one percent. The Partnership and other parties 	petitioned for a rehearing of the FERC order because the index 	selected by the FERC does not adequately reflect historical cost 	increases incurred by the industry. The FERC granted the request 	for rehearing for purposes of reconsideration of the index and 	has also issued Notices of Inquiry regarding cost-based rate- 	making under certain conditions, and market-based rates for 	carriers that can demonstrate lack of market power. At the 	present time, it is not possible to predict with certainty what 	final simplified rate-making methodology will be adopted or what 	effect such methodology may have on future Partnership tariffs.
	East Line Litigation and FERC Proceeding:
	Certain of the Partnership's shippers have filed civil suits and 	initiated a FERC proceeding alleging, among other things, that 	the shippers had been damaged by the Partnership's failure to 	fulfill alleged promises to expand the East Line's capacity 	between El Paso, Texas and Phoenix, Arizona to meet shipper 	demand. The FERC proceeding also involves claims, among other 	things, that certain of the Partnership's tariffs and charges on 	the East and West Lines are excessive.
	During the quarter ended September 30, 1993, the Partnership 	recorded a $12 million provision for litigation costs, which 	reflects the terms of settlement of one of the civil actions, as 	well as anticipated legal fees and other costs related to 	defense and ultimate resolution of the FERC proceeding and the 	remaining civil action. Management believes that it has acted 	properly with respect to its expansion of the East Line. 	Management also believes that the Partnership's tariffs are just 	and reasonable and, so long as certain of the underlying 	assumptions and interpretations of rate-making methodology made 	by the Partnership in supporting these tariffs are ruled upon 	favorably, that these tariffs will be upheld should the FERC 	proceeding progress to its completion. However, because of the 	nature of FERC rate-making methodology, it is not possible to 	predict with certainty whether the Partnership's assumptions and 	rate-making approach will be upheld by the FERC and, hence, it 	is impossible to predict the outcome of the FERC proceeding. It 	is the opinion of management that any additional costs, in 	excess of recorded liabilities, incurred to resolve these 	matters, or any capital expenditures for further expansion of 	the East Line, which may be required if certain events occur 	during the next five years, will not have a material adverse 	effect on the Partnership's financial condition; nevertheless, 	it is possible that the Partnership's results of operations, in 	particular quarterly or annual periods, could be materially 	affected by the ultimate resolution of these matters.
	Demand for Refined Petroleum Products:
	Demand for transportation and terminaling services is principally 	a function of product consumption and competition in markets 	served by the pipeline system. Commercial volumes are generally 	dependent upon such factors as prevailing economic conditions, 	demographic changes, transportation and terminaling alternatives
	and, to a lesser degree, product prices. Military volumes are 	dependent upon the level of activity at military bases served by 	the Partnership.
	Partnership management anticipates that commercial deliveries of 	refined petroleum products will continue to gradually increase as 	the economies of those Western states served by the Partnership 	continue to recover from the economic downturn that has been 	apparent since late 1990. Military volumes, which accounted for 	5% of total 1993 volumes, showed improvement over 1992 in the 	fourth quarter, but are not expected to increase over the 	foreseeable future. As of year end 1993, three military bases 	historically served by the Partnership had been closed and 	realignment of certain other bases continues to occur.
	During 1993, the pipeline systems, on average, operated at 	approximately 75% of capacity. While capacity utilization on 	individual system segments generally ranged from 70% to 90% of 	capacity, the lines from the Los Angeles area to San Diego and 	Colton, California operated at full capacity for a portion of the 	year and the line from Rocklin, California to Reno, Nevada was 	prorated for a significant period during the year.
	Overall, volumes have been moderately seasonal, with somewhat 	lower than average volumes being transported during the first and 	fourth quarters of each year, although deliveries to specific 	locations also experience seasonal variations.
	Item 8.


Item 8. Financial Statements and Supplementary Data.
	The Partnership's consolidated financial statements, together 	with the report thereon of Price Waterhouse dated January 28, 	1994, are set forth on pages 29 through 49 of this Report.
	Item 9.

Item 9. Changes in and Disagreements with Accountants on 	Accounting and Financial Disclosure.
	None. 				 			 																					 PART III
	Item 10.



Item 10. Directors and Executive Officers of the Registrant.
	The Registrant has no officers, directors or employees. Set forth 	below is certain information concerning the directors and 	executive officers of the General Partner.
	Edward F. Swift, age 70, is a director of the General Partner, 	Chairman of the Audit Committee and a member of the Compensation 	and Benefits Committee and Committee on Directors. He has been a 	consultant to Lehman Brothers (investment bankers) since 1990 and 	previously had been an advisory director of Shearson Lehman 	Hutton, Inc. (investment banker and broker-dealer) since 1988. 	Mr. Swift is also a director of Santa Fe and Illinois Tool Works, 	Inc.
	Orval M. Adam, age 63, is a director of the General Partner, 	Chairman of the Compensation and Benefits Committee and a member 	of the Audit Committee and Committee on Directors. He retired in 	January 1991 from his position as Senior Vice President and Chief 	Financial Officer of Santa Fe, which he held since April 1988. 	Mr. Adam is also a director of SFP Pipeline Holdings, Inc., the 	sole shareholder of the General Partner.
	Wilford D. Godbold, Jr., age 55, is a director of the General 	Partner and a member of the Audit Committee and Committee on 	Directors. Mr. Godbold has served as President and Chief 	Executive Officer of Zero Corporation (container manufacturer) 	since 1984. Mr. Godbold is also a director of Zero Corporation, 	Pacific Enterprises and Southern California Gas Company.
	Robert D. Krebs, age 51, is a director of the General Partner, 	Chairman of the Committee on Directors and a member of the 	Compensation and Benefits Committee. Mr. Krebs has served as 	Chairman, President and Chief Executive Officer of Santa Fe since 	June 1988 and, previously, served as President and Chief 	Executive Officer of Santa Fe from July 1987. Mr. Krebs is a 	director of Santa Fe and the Atchison, Topeka and Santa Fe Railway Company and is also a	 director of Phelps Dodge Corporation, Northern Trust Corporation,	 Catellus Development Corporation and Santa Fe Energy Resources,	Inc.
	Denis E. Springer, age 48, is a director of the General Partner 	and a member of the Compensation and Benefits Committee and 	Committee on Directors. Mr. Springer has been Senior Vice 	President and Chief Financial Officer of Santa Fe since October 1993. Mr. Springer previously served Santa Fe as Senior Vice President, Treasurer and Chief Financial Officer since January 	1992, Vice President, Treasurer	and Chief Financial Officer since January 1991 and Vice President-Finance from April 1988 to December 1990. Mr. Springer is also a	director of SFP Pipeline Holdings, Inc., the sole shareholder of	the General Partner, and the Atchison, Topeka and Santa Fe Railway Company.
	Irvin Toole, Jr., age 52, is President, Chief Executive Officer 	and Chairman of the Board of Directors of the General Partner. 	From November 1988 until assignment to his present position in 	September 1991, Mr. Toole served as Senior Vice President, 	Treasurer and Chief Financial Officer, and previously as Vice 	President-Administration from February 1986 to November 1988. Mr. 	Toole is also Chairman of the Board of Directors of SFP Pipeline 	Holdings, Inc., the sole shareholder of the General Partner.
	Robert L. Edwards, age 38, is a director of the General Partner 	and has been Senior Vice President, Treasurer and Chief Financial 	Officer of the General Partner since December 1991. Mr. Edwards 	served Santa Fe from July 1990 through November 1991 as Vice 	President-Administration; from March 1989 through June 1990 as 	Vice President-Human Resources and Administration; and from June 	1988 through February 1989 as Assistant Vice President-Executive 	Department. Prior to that, Mr. Edwards held various executive 	positions with the General Partner since May 1985. Mr. Edwards is 	also a director of SFP Pipeline Holdings, Inc., the sole 	shareholder of the General Partner.
	John M. Abboud, age 51, has been Senior Vice President of the 	General Partner since 1985. In his current capacity, Mr. Abboud is responsible for operations, engineering and environmental 	affairs.
	Barry R. Pearl, age 44, has been Senior Vice President of the 	General Partner since January 1992, with responsibility for 	business development, planning and information systems. Mr. Pearl 	previously served as Vice President-Business Development and 	Planning between November 1988 and January 1992 and Vice 	President-Operations between May 1986 and November 1988.
	Lyle B. Boarts, age 50, is Vice President-Human Resources of the 	General Partner. Mr. Boarts joined the General Partner in June 	1986 as the Director of Human Resources and was named to his 	current position in November 1988.
	R. Gregory Cunningham, age 48, was appointed Vice President- 	General Counsel in January 1994. Previously, he served as General 	Counsel of the General Partner since January 1991 and, prior to 	such date, as General Attorney since November 1985.
	William M. White, age 48, has served as Vice President- 	Engineering of the General Partner, with responsibility for 	engineering and construction, since January 1993. Mr. White 	previously was Manager-Northern District from May 1986 through 	December 1992.
	Burnell H. DeVos III, age 40, has served as Controller and 	Secretary of the General Partner since January 1993. Mr. DeVos 	was Assistant Controller of the General Partner from May 1989 	through December 1992 and, previously, was Controller of a Los 	Angeles law firm from February 1989 through May 1989, and a 	Senior Audit Manager at Price Waterhouse through February 1989.
	Patrick L. Avery, age 41, has served as Vice President- 	Environmental and Safety of the General Partner since October 	1993. Mr. Avery was Corporate Environmental Manager at Amerada 	Hess Corporation from October 1992 to October 1993. Previously, 	he held various positions at ARCO Products Company since 1982, 	including Director-California Government Relations and 	Environmental Health and Safety Manager at ARCO's Los Angeles 	refinery.
	Messrs. Krebs, Springer and Edwards each filed a delinquent Form 	3, "Initial Statement of Beneficial Ownership of Securities," 	during 1993. In addition, neither Mr. White nor Mr. Avery filed a 	Form 3 upon appointment to his present position and each has, 	therefore, filed a delinquent Form 3 in 1994. In February 1994, 	Mr. Edwards filed a delinquent Form 4 in connection with one transaction.
	Item 11.

Item 11. Executive Compensation.
	The directors, officers and employees of the General Partner 	receive no direct compensation from the Partnership for their 	services to the Partnership. The Partnership reimburses the 	General Partner for all direct costs incurred in managing the
	Partnership and all indirect costs (principally salaries and 	other general and administrative costs) allocable to the 	Partnership.
	Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and 	Management.
	(a) Security Ownership of Certain Beneficial Owners
	To the best of the General Partner's knowledge, the following 	persons are the only persons who are beneficial owners of more 	than five percent of the Registrant's equity securities:
								 Percent 	Title of Class Name and Address Amount of Class 	-------------- ------------------------- --------- -------- 	Common Units Santa Fe Pacific 			 Pipelines, Inc. 8,148,148 100% 	 		888 South Figueroa Street 		 	Los Angeles, CA 90017
	(b) Security Ownership of Management
	As of March 1, 1994, Units beneficially held by all directors and 	officers as a group represent less than 1% of the Partnership's 	outstanding Units.
	Item 13.

Item 13. Certain Relationships and Related Transactions.
	The Registrant and the Operating Partnership are managed by the 	General Partner pursuant to the Amended and Restated Agreement of 	Limited Partnership of the Partnership (the "Partnership 	Agreement"), and the Amended and Restated Agreement of Limited 	Partnership of the Operating Partnership (the "Operating 	Partnership Agreement").
	Under the Partnership Agreement and Operating Partnership 	Agreement, the General Partner and certain related parties are 	entitled to reimbursement of all direct and indirect costs and 	expenses related to the business activities of the Partnership 	and the Operating Partnership. These costs and expenses include 	compensation and benefits payable to officers and employees of 	the General Partner, payroll taxes, corporate office building 	rentals, general and administrative costs, and legal and other 	professional services fees. These costs to the Partnership 	totaled $43.0 million, $37.1 million and $35.8 million in 1993, 	1992 and 1991, respectively.
	The Partnership Agreement provides for incentive distribution 	payments to the General Partner out of the Partnership's 	"Available Cash" (as defined in the Partnership Agreement) which 	increase as quarterly distributions to Unitholders exceed certain 	specified targets. The incremental incentive distributions 	payable to the General Partner are 8%, 18% and 28% of all 	distributions of Available Cash that exceed, respectively, $0.60, 	$0.65 and $0.70 per Unit. Such incentive distributions aggregated 	$1.2 million in 1993 and in 1992 and $0.8 million in 1991.
	Item 14.

Item 14. Exhibits, Financial Statement Schedules, and Reports on 	Form 8-K.
	(a) The following documents are filed as a part of this report:
	 (1) Financial Statements and 	 (2) Financial Statement Schedules: See Index to Financial 									Statements on page 28 for financial statements and financial 									statement schedules filed as a part of this Report.
	 (3) Exhibits: The following exhibits are filed as a part of this 									Report. With the exception of Exhibits 21 and 24, all 	 									exhibits listed herein are incorporated by reference, with 									the location of the exhibit in the Registrant's previous 									filing indicated parenthetically.
	Exhibit 	Number Description 	------- ----------------------------------------------------------- 	 3.1 Amended and Restated Agreement of Limited Partnership of 		 the Registrant, dated as of December 19, 1988. (1988 Form 		 10-K - Exhibit 3.1) 	 3.2 Amended and Restated Agreement of Limited Partnership of 		 the Operating Partnership, dated as of December 19, 1988. 		 (1988 Form 10-K - Exhibit 3.2) 	 3.3 Certificate of Limited Partnership of the Registrant, dated 		 as of August 23, 1988. (1988 Form 10-K - Exhibit 3.3) 	 3.4 Certificate of Limited Partnership of the Operating 		 Partnership, dated as of August 23, 1988. (1988 Form 10-K 		 - Exhibit 3.5) 	 3.5 Assumption Agreement between the Registrant and Santa Fe 	 Pacific Pipelines, Inc., dated as of December 7, 1989. 		 (1989 Form 10-K - Exhibit 3.4) 	 3.6 Amendment No. 1 to Amended and Restated Agreement of 		 Limited Partnership of the Registrant, dated as of December 		 7, 1989. (1989 Form 10-K - Exhibit 3.2) 	 3.7 Certificate of Amendment to Certificate of Limited 		 Partnership of the Registrant, dated as of December 7, 		 1989. (1989 Form 10-K - Exhibit 3.3) 	 3.8 Amendment No. 1 to Amended and Restated Agreement of 		 Limited Partnership of the Operating Partnership, dated as 		 of December 7, 1989. (1989 Form 10-K - Exhibit 3.5) 	 3.9 Certificate of Amendment to Certificate of Limited 		 Partnership of the Operating Partnership, dated as of 		 December 7, 1989. (1989 Form 10-K - Exhibit 3.6) 	 3.10 Amendment No. 2 to Amended and Restated Agreement of 		 Limited Partnership of the Operating Partnership, dated as 		 of January 24, 1990. (1989 Form 10-K - Exhibit 3.8) 	 3.11 Certificate of Amendment No. 2 to Certificate of Limited 	 	 Partnership of the Operating Partnership, dated as of 	 	 January 30, 1990. (1989 Form 10-K - Exhibit 3.9) 	 4.1 Form of Deposit Agreement between the Registrant, American 	 	 Stock Transfer & Trust Company and the General Partner, as 		 attorney-in-fact for holders of units and depositary 	 	 receipts. (Form S-1 Registration Statement No. 33-24395 		 - Exhibit 4.1) 	 	 	
	 4.2 First Mortgage Note Agreement, dated December 8, 1988 		 							(a conformed composite of 54 separate note agreements, 		 						 identical except for signatures). (1988 Form 10-K - Exhibit 	 	 4.2) 	 4.3 Deed of Trust, Security Agreement and Fixture Filing, dated 		 December 8, 1988, between the Operating Partnership, the 		 General Partner, Chicago Title Insurance Company and 	 	 Security Pacific National Bank. (1988 Form 10-K - Exhibit 		 4.3) 	 4.4 Trust Agreement, dated December 19, 1988, between the 	 	 Operating Partnership, the General Partner and Security 	 Pacific National Bank. (1988 Form 10-K - Exhibit 4.4) 	 4.5 The Operating Partnership has established a $60 million 		 term credit facility with three banks, dated as of October 		 14, 1993. As the maximum allowable borrowings under this 		 facility do not exceed 10% of the Registrant's total 	 	 assets, this instrument is not filed as an exhibit to this 	 	 Report, however, the Registrant hereby agrees to furnish a 		 copy of such instrument to the Security and Exchange 		 Commission upon request.
	 21 Subsidiaries of the Registrant* 	 24 Powers of attorney*
	 * Filed herewith.
	(b) Reports on Form 8-K filed during the quarter ended December 31, 	 1993: None 				 				 																						 SIGNATURES
	Santa Fe Pacific Pipeline Partners, L.P., pursuant to the 	requirements of Section 13 or 15(d) of the Securities Exchange 	Act of 1934, has duly caused this Report to be signed on its 	behalf by the undersigned, thereunto duly authorized.
			 SANTA FE PACIFIC PIPELINE PARTNERS, L.P. 					 (Registrant) 			 By: Santa Fe Pacific Pipelines, Inc., as 				 General Partner
	Dated: March 25, By: /s/ IRVIN TOOLE, JR. 		1994 -------------------------------------- 					 Irvin Toole, Jr. 				 Chairman, President and Chief 				 Executive Officer
	Pursuant to the requirements of the Securities Exchange Act of 	1934, this Report has been signed below by the following persons 	on behalf of the Registrant and in the capacities with Santa Fe 	Pacific Pipelines, Inc., as General Partner, and on the date 	indicated. 					 	 Signature Title 	 ----------------------------- ------------------------- 						 Chairman, President and 					 	Chief Executive Officer 		/s/ IRVIN TOOLE, JR. (Principal Executive 	 ----------------------------- Officer) 		 Irvin Toole, Jr. and Director 						 					 	Senior Vice President, 						 Treasurer 						 and Chief Financial 						 	Officer 	 /s/ ROBERT L. EDWARDS (Principal Financial 	 ----------------------------- Officer) 		 Robert L. Edwards and Director 						 	 /s/ BURNELL H. DEVOS III Controller and 	 ----------------------------- Secretary 		Burnell H. DeVos III (Principal Accounting 						 Officer) 					 		 EDWARD F. SWIFT* 	 ----------------------------- 		 Edward F. Swift Director 						 		 ORVAL M. ADAM* 	 ----------------------------- 		 Orval M. Adam Director 						 	 WILFORD D. GODBOLD, JR.* 	 ----------------------------- 	 Wilford D. Godbold, Jr. Director 					 		 ROBERT D. KREBS* 	 ----------------------------- 		 Robert D. Krebs Director 					 	 	 DENIS E. SPRINGER* 	 ----------------------------- 		 Denis E. Springer Director 					 						 	*By: /s/ ROBERT L. EDWARDS Senior Vice President, 	 ----------------------------- Treasurer 		 Robert L. Edwards, and Chief Financial 		 attorney in fact Officer 						 	Dated: March 25, 1994 		
SANTA FE PACIFIC PIPELINE PARTNERS, L.P. 				 				 				 				 Page 								 --------
Financial Statements:
Report of Independent Accountants................................ 29 Consolidated Balance Sheet as of December 31, 1993 and 1992 ..... 30 Consolidated Statement of Income for the three years ended December 31, 1993....................... 31 Consolidated Statement of Cash Flows for the three years ended December 31, 1993....................... 32 Consolidated Statement of Partners' Capital for the three years ended December 31, 1993....................... 33 Notes to Consolidated Financial Statements....................... 34 								
Financial Statement Schedules for the three years ended December 31, 1993:
V - Property, Plant and Equipment............................... 47 VI - Accumulated Depreciation, Depletion and Amortization 	 of Property, Plant and Equipment......................... 48 X - Supplementary Income Statement Information.................. 49 								 All other schedules have been omitted because they are not applicable or the required information is presented in the financial statements or notes thereto.
			REPORT OF INDEPENDENT ACCOUNTANTS
	To the Partners of Santa Fe Pacific Pipeline Partners, L.P.
	In our opinion, the consolidated financial statements listed in 	the index appearing on page 28 present fairly, in all material 	respects, the financial position of Santa Fe Pacific Pipeline 	Partners, L.P. and its majority-owned operating partnership at 	December 31, 1993 and 1992, and the results of their operations 	and their cash flows for each of the three years in the period 	ended December 31, 1993, in conformity with generally accepted 	accounting principles. These financial statements are the 	responsibility of the Partnership's management; our 	responsibility is to express an opinion on these financial 	statements based on our audits. We conducted our audits of these 	statements in accordance with generally accepted auditing 	standards which require that we plan and perform the audit to 	obtain reasonable assurance about whether the financial 	statements are free of material misstatement. An audit includes 	examining, on a test basis, evidence supporting the amounts and 	disclosures in the financial statements, assessing the accounting 	principles used and significant estimates made by management, and 	evaluating the overall financial statement presentation. We 	believe that our audits provide a reasonable basis for the 	opinion expressed above.
	Note 2 to the consolidated financial statements includes a 	description of a change in the method of accounting for 	postretirement and postemployment benefits effective January 1, 	1992.
	PRICE WATERHOUSE
	Los Angeles, California 	January 28, 1994 		 		 		
		 SANTA FE PACIFIC PIPELINE PARTNERS, L.P. 				 			 CONSOLIDATED BALANCE SHEET
				(In thousands) 							 December 31, 						 ---------------------- 						 1993 1992 						 --------- --------- 			 	A S S E T S Current assets Cash and cash equivalents.................... $ 32,162 $ 27,356 Accounts receivable, net .................... 32,787 28,151 Other current assets......................... 2,801 2,882 						 --------- --------- 	 Total current assets.................... 67,750 58,389 						 --------- --------- Properties, plant and equipment .................. 683,082 668,397 Less accumulated depreciation ............... 66,472 50,299 						 --------- --------- 	 Net properties, plant and equipment .... 616,610 618,098 Other assets...................................... 12,620 8,365 						 --------- --------- 	 Total assets............................ $ 696,980 $ 684,852 						 ========= =========
			 LIABILITIES AND PARTNERS' CAPITAL Current liabilities Accounts payable............................. $ 2,403 $ 2,994 Accrued liabilities.......................... 33,235 18,599 						 --------- --------- 	 Total current liabilities............... 35,638 21,593 						 Long-term debt ................................... 355,000 355,000 Other long-term liabilities ...................... 39,283 27,763 						 --------- --------- 	 Total liabilities ...................... 429,921 404,356 						 --------- --------- Minority interest ................................ 1,208 1,486 						 --------- --------- Commitments and contingencies (Note 6)............ 				 --------- --------- Partners' capital General Partner ............................. 1,208 1,486 Common Unitholder............................ 52,454 57,936 Preference Unitholders ...................... 212,189 219,588 						 --------- --------- 	 Total partners' capital ................ 265,851 279,010 						 --------- --------- 	 Total liabilities and partners' capital $ 696,980 $ 684,852 						 ========= =========
	 See Notes to Consolidated Financial Statements. 		 		 		 		 		 		
		 SANTA FE PACIFIC PIPELINE PARTNERS, L.P.
			CONSOLIDATED STATEMENT OF INCOME
		 (In thousands, except per unit amounts)
						 Year ended December 31, 					 	 -------------------------- 						 1993 1992 1991 						 -------- -------- -------- Operating revenues Trunk revenues............................. $171,848 $161,116 $154,800 Storage and terminaling revenues........... 37,213 34,020 33,314 Other revenues............................. 10,410 9,889 5,324 						 -------- -------- -------- 	 Total operating revenues.............. 219,471 205,025 193,438 						 -------- -------- -------- Operating expenses Field operating expenses................... 36,325 31,331 29,680 General and administrative expenses........ 22,378 19,420 18,178 Facilities costs........................... 19,555 18,876 18,000 Depreciation and amortization.............. 18,971 18,327 16,834 Power cost................................. 18,940 18,116 17,975 Provisions for environmental and litigation costs (Note 6) ........... 27,000 10,000 -- Product (gains) losses..................... (2,020) (2,403) (3,058) 						 -------- -------- -------- 	 Total operating expenses.............. 141,149 113,667 97,609 						 -------- -------- -------- Operating income................................ 78,322 91,358 95,829
Interest expense................................ 37,086 36,937 36,924 Other income, net............................... 1,262 843 2,899 						 -------- -------- -------- Net income before minority interest and cumulative effect of accounting change.... 42,498 55,264 61,804 Less minority interest ........................ (882) (1,146) (1,200) 						 -------- -------- -------- Net income before cumulative effect of accounting change ........................... 41,616 54,118 60,604
Cumulative effect of change in accounting for postretirement and postemployment benefits, net of minority interest ........... -- 16,407 -- 						 -------- -------- -------- Net income ..................................... $ 41,616 $ 37,711 $ 60,604 						 ======== ======== ======== Income per Unit: Before cumulative effect of accounting change .. $ 2.13 $ 2.77 $ 3.10 Cumulative effect of accounting change ......... -- (0.84) -- 						 -------- -------- -------- Net income ..................................... $ 2.13 $ 1.93 $ 3.10 					 	 ======== ======== ======== Operating expenses reflected above include the following expenses incurred by, and reimbursed to, the General Partner (Note 7) .. $ 43,025 $ 37,065 $ 35,810 ======== ======== ========
See Notes to Consolidated Financial Statements.
		 SANTA FE PACIFIC PIPELINE PARTNERS, L.P. 		 		 CONSOLIDATED STATEMENT OF CASH FLOWS 		 			 (In thousands)
						 Year ended December 31, 					 ------------------------------- 					 	 1993 1992 1991 					 --------- --------- ---------
Cash flows from operating activities: Net income ............................... $ 41,616 $ 37,711 $ 60,604 					 --------- --------- --------- Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization .......... 18,971 18,327 16,834 Cumulative effect of change in accounting principle .............. -- 16,407 -- Provisions for environmental and litigation costs ................ 27,000 10,000 -- Environmental and litigation costs paid (4,275) (275) -- Other, net ............................. (464) 1,825 -- Minority interest in net income ........ 882 1,146 1,200 Changes in-- Accounts receivable .................. (4,636) (820) (1,281) Accounts payable and 	accrued liabilities ................ 2,375 (2,689) 4,041 Other current assets.................. 81 5,460 3,475 					 --------- --------- --------- 	 Total adjustments................... 39,934 49,381 24,269 					 --------- --------- --------- 	Net cash provided by 	 operating activities............. 81,550 87,092 84,873 					 --------- --------- --------- Cash flows from investing activities: Capital expenditures ..................... (21,084) (30,931) (27,715) Other .................................... 276 487 1,041 					 --------- --------- --------- 	Net cash used by 	 investing activities............. (20,808) (30,444) (26,674)
Cash flows from financing activities: Distributions to partners and minority interest ................. (55,936) (55,936) (53,542) 					 --------- --------- --------- Increase in cash and cash equivalents ...... 4,806 712 4,657
Cash and cash equivalents-- Beginning of year ........................ 27,356 26,644 21,987 					 --------- --------- --------- End of year .............................. $ 32,162 $ 27,356 $ 26,644 					 ========= ========= =========
Interest paid............................... $ 37,326 $ 37,326 $ 37,326 					 ========= ========= =========
	 See Notes to Consolidated Financial Statements. 		
		 SANTA FE PACIFIC PIPELINE PARTNERS, L.P.
		 CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
				 (In thousands)
				 General Common Preference 				 Partner Unitholder Unitholders Total 				 -------- --------- --------- --------- Partners' capital at December 31, 1990 ............ $ 1,569 $ 61,765 $224,758 $288,092
1991 net income ................... 1,200 25,278 34,126 60,604 1991 cash distributions ........... (921) (22,000) (29,700) (52,621) 				 -------- --------- -------- --------- Partners' capital at December 31, 1991 ............ 1,848 65,043 229,184 296,075
1992 net income before cumulative effect of accounting change ..... 1,146 22,542 30,430 54,118 Cumulative effect of accounting change ............... (347) (6,834) (9,226) (16,407) 1992 cash distributions ........... (1,161) (22,815) (30,800) (54,776) 				 -------- --------- -------- --------- Partners' capital at December 31, 1992 ............ 1,486 57,936 219,588 279,010
1993 net income ................... 882 17,333 23,401 41,616 1993 cash distributions ........... (1,160) (22,815) (30,800) (54,775) 				 -------- --------- -------- --------- Partners' capital at December 31, 1993 ............ $ 1,208 $ 52,454 $212,189 $265,851 				 ======== ======== ======== =========
		 See Notes to Consolidated Financial Statements.
		 SANTA FE PACIFIC PIPELINE PARTNERS, L.P. 		 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	Organization and Basis of Accounting
	The accompanying consolidated financial statements include the 	accounts of Santa Fe Pacific Pipeline Partners, L.P. (the 	"Trading Partnership") and SFPP, L.P., (the "Operating 	Partnership"), collectively referred to as the "Partnership", on 	a consolidated basis. The Trading Partnership is a publicly 	traded limited partnership organized under the laws of the state 	of Delaware in 1988 which owns a 99% limited partnership interest 	in the Operating Partnership, through which the Partnership 	conducts all its operations. The Operating Partnership was 	acquired by the Trading Partnership in December 1988 and is 	engaged in the transportation of refined petroleum products and 	related services. The Operating Partnership is managed by its 	general partner, Santa Fe Pacific Pipelines, Inc. (the "General 	Partner"), which, by virtue of this 1% general partner interest, 	represents the minority interest in the Partnership's 	consolidated financial statements. The General Partner, which is 	a wholly owned indirect subsidiary of Santa Fe Pacific 	Corporation ("Santa Fe"), also holds the 1% general partner 	interest in the Trading Partnership and, therefore, in total, 	holds a 2% general partner interest in the Partnership on a 	consolidated basis. In addition, the General Partner owns 	approximately 42% of the limited partner interests in the Trading 	Partnership ("common units"). Public ownership represented by the 	preference units is approximately 56%.
	Revenue Recognition
	Substantially all revenues are derived from pipeline 	transportation and storage and terminaling charges and are 	recognized in income upon delivery. Other revenues, primarily 	incidental service charges and tank and land rentals, are 	recognized as earned.
	The Partnership's interstate common carrier pipeline operations 	are subject to rate regulation by the Federal Energy Regulatory 	Commission ("FERC") under a "trended original cost methodology" 	adopted in 1985 for establishing a petroleum products pipeline's 	tariffs. The methodology is subject to clarification and 	reconsideration in individual cases and leaves many issues for 	determination on a case-by-case basis.
	Properties, Plant and Equipment
	Properties are stated at cost and include capitalized interest on 	borrowed funds. Additions and replacements are capitalized. 	Expenditures for maintenance and repairs are charged to income. 	Upon sale or retirement of depreciable properties, cost less 	salvage is charged to accumulated depreciation.
	
	Properties are depreciated on a straight-line basis over the 	estimated service lives of the related assets. Rates for the 	Partnership's interstate pipeline properties are prescribed by 	the FERC. The Partnership's intrastate pipeline properties and 	its terminal properties are depreciated using similar rates. The 	following annual rates were used in computing depreciation:
	 Rights-of-way.......... ............................... 2.60% 	 Line pipe, fittings and pipeline construction. 2.22% to 2.60% 	 Buildings and field equipment................. 2.95% to 4.00% 	 Storage tanks and delivery facilities......... 3.10% to 3.20% 	 Vehicles, office and communications equipment 3.00% to 15.70%
	Income Per Unit
	Income per unit is computed based upon net income of the 	Partnership less an allocation of income to the general partner 	of the Trading Partnership in accordance with the partnership 	agreement, and is based upon 19,148,148 partnership units, 	comprising 11,000,000 preference and 8,148,148 common units. The 	quarterly allocation of net income to the general partner of the 	Trading Partnership (which is always equivalent to the minority 	interest in net income) is based on its percentage of cash 	distributions from Available Cash at the end of each quarter (see 	Note 10). The general partner of the Trading Partnership was 	allocated 2.07%, 2.07% and 1.94% of net income before minority 	interest for 1993, 1992 and 1991, respectively.
	Cash Equivalents and Short Term Investments
	The Partnership considers all highly liquid investments with a 	maturity of three months or less when purchased to be cash 	equivalents.
	Income Tax
	For federal and state income tax purposes, the Partnership is not 	a taxable entity. Accordingly, the taxable income or loss 	resulting from the operations of the Partnership is ultimately 	includable in the federal and state income tax returns of the 	general and limited partners, and may vary substantially from the 	income or loss reported for financial reporting purposes.
	NOTE 2 - 1992 CHANGE IN METHOD OF ACCOUNTING FOR POSTRETIREMENT 		 AND POSTEMPLOYMENT BENEFITS
	During the fourth quarter of 1992, the General Partner and the 	Partnership adopted Statement of Financial Accounting Standards 	("FAS") No. 106, "Employers' Accounting for Postretirement 	Benefits Other Than Pensions", and FAS No. 112, "Employers' 	Accounting for Postemployment Benefits", retroactive to January 	1, 1992. FAS No. 106 requires that an actuarial method be used to 	accrue the expected cost of postretirement health care and other 	benefits over employees' years of service. FAS No. 112 relates to 	benefits provided to former or inactive employees after 	employment but before retirement and requires recognition of 	these benefits if they are vested and payment is probable and 	reasonably estimable. Prior to 1992, the costs of postretirement
	and postemployment benefits were generally expensed when paid. 	For the Partnership, the cumulative effect of the accounting 	change attributable to years prior to 1992 was to decrease 1992 	net income by $16,407,000, net of minority interest of $347,000. 	The impact of FAS No. 106 comprised approximately 95% of the 	change. Additionally, 1992 general and administrative expenses 	were approximately $1,825,000 higher as a result of the change in 	accounting for these costs.
	 	NOTE 3 - DETAIL OF SELECTED BALANCE SHEET ACCOUNTS
						 December 31, 						 ------------------ 						 1993 1992 						 -------- -------- 						 (in thousands) 	 Accounts receivable: 	 Trade accounts receivable............. $22,587 $18,654 	 Recollectible construction and 	 maintenance expenditures other...... 10,200 9,497 						 -------- -------- 						 $32,787 $28,151 						 ======== ======== 	 Accrued liabilities: 	 East Line litigation costs............ $ 6,570 $ -- 	 Environmental remediation costs....... 6,270 1,170 	 Military product loss reserve......... 5,111 3,873 	 Property taxes........................ 3,210 1,924 	 Capital expenditures and 	 major maintenance................... 2,685 2,763 	 Interest.............................. 1,709 1,709 	 Postretirement and postemployment 	 benefits............................ 800 500 	 Insurance premiums and claims......... 656 3,389 	 Other................................. 6,224 3,271 						 -------- -------- 						 $33,235 $18,599 						 ======== ======== 	 Other long-term liabilities: 	 Postretirement and postemployment 	 benefits............................ $19,403 $18,938 	 Environmental remediation costs....... 16,880 8,825 	 East Line litigation costs............ 3,000 -- 						 -------- -------- 						 $39,283 $27,763 						 ======== ========
	NOTE 4 - PROPERTIES
	Properties, plant and equipment consist of the following:
						 December 31, 						 -------------------- 						 1993 1992 		 				 --------- --------- 						 (in thousands) 	 Land.................................... $ 55,545 $ 56,680 	 Rights-of-way........................... 12,601 12,522 	 Line pipe, fittings and pipeline 	 construction.......................... 287,008 283,848 	 Buildings and equipment................. 162,412 152,284 	 Storage tanks and delivery facilities... 144,678 140,293 	 Construction in progress................ 20,838 22,770 						 --------- --------- 						 683,082 668,397 	 Less accumulated depreciation........... 66,472 50,299 						 --------- --------- 						 $616,610 $618,098 						 ========= ========= 						 	Depreciation expense aggregated $16,921,000, $16,148,000 and 	$14,974,000 in 1993, 1992 and 1991, respectively.
	NOTE 5 - LONG-TERM DEBT
	Long-term debt consists of the following First Mortgage Notes 	(the "Notes") at December 31, 1993 and 1992 (in thousands):
		 Series A 9.85% due December 1994..... $ 11,000 	 	Series B 10.00% due December 1995..... 17,000 	 	Series C 10.05% due December 1996..... 22,000 		 Series D 10.15% due December 1997..... 28,500 	 	Series E 10.25% due December 1998..... 32,500 		 Series F 10.70% due December 1999 			 through 2004.................. 244,000 							 -------- 							 $355,000 							 ========
	The Partnership intends to refinance the Series A Notes on a 	long-term basis upon their maturity and, therefore, has included 	them in long-term debt at December 31, 1993. The Series F Notes 	become payable in annual installments ranging from $31.5 million 	in 1999 to the final payment of $49.5 million in December 2004. 	The Notes may also be prepaid beginning in 1999 in full or in 	part at a price equal to par plus, in certain circumstances, a 	premium.
	The Notes are secured by mortgages on substantially all of the 	properties of the Partnership ("the Mortgaged Property"). The 	Notes contain covenants specifying certain limitations on the 	Partnership's operations including the amount of additional debt 	or equity that may be issued, cash distributions, investments and 	property dispositions. Management does not believe such 	limitations will adversely affect the Partnership's ability to
	fund its operations or planned capital expenditures.
	The fair value of the Partnership's long-term debt is 	approximately $450 million at December 31, 1993. Such estimate 	represents the present value of interest and principal payments 	on the Notes discounted at present market yields, and assumes the 	Series F Notes will be prepaid in full in 1999 at par plus a 	premium.
	Interest on the Notes is payable semiannually in June and 	December. Interest capitalized during the years 1993, 1992 and 	1991 aggregated $598,000, $760,000 and $756,000, respectively.
	The Partnership arranged a $60 million multi-year term credit 	facility and a $20 million working capital facility with three 	banks in October 1993. The term facility may be used for 	refinancing a portion of the Partnership's long-term debt and 	capital projects, and may be utilized on a revolving basis 	through October 1997, with any outstanding balance at that time 	converted to a three-year amortizing term loan. Borrowings under 	this facility would also be secured by the Mortgaged Property and 	would generally be subject to the same terms and conditions of 	the First Mortgage Notes. The working capital facility replaced a 	$20 million facility originally established in April 1990, and is 	subject to annual renewal. Advances under this credit line can be 	used for general Partnership purposes and would be secured by 	certain of the Partnership's accounts receivable. This facility 	may not be utilized for a 45-day period, the designation of such 	period to be at the Partnership's discretion, during each year, 	and is also subject to other reasonable and customary terms and 	conditions. Both facilities provide for certain interest rate 	options. To date, neither of these facilities have been utilized.
	NOTE 6 - COMMITMENTS AND CONTINGENCIES
	East Line Litigation and FERC Proceeding 	 	Certain of the Partnership's shippers have filed civil suits and 	initiated a Federal Energy Regulatory Commission ("FERC") 	proceeding alleging, among other things, that the shippers had 	been damaged by the Partnership's failure to fulfill alleged 	promises to expand the East Line's capacity between El Paso, 	Texas and Phoenix, Arizona to meet shipper demand. The FERC 	proceeding also involves claims, among other things, that certain 	of the Partnership's tariffs and charges on its East and West 	Lines are excessive.
	In July 1993, the Partnership reached a settlement with one of 	these shippers, Navajo Refining Company ("Navajo"), whereby 	Navajo agreed to dismiss its pending civil litigation in New 	Mexico and withdraw any challenge to the direction of flow of 	the Partnership's six-inch pipeline between Phoenix and Tucson, 	Arizona, including any such challenge in the FERC proceeding. 	The Partnership agreed to make certain cash payments to Navajo 	over three years and to undertake and complete an additional 	pipeline capacity expansion between El Paso, Texas and Phoenix 	if certain events related to volume levels and proration of 	pipeline capacity should occur within the next five years.
	During the quarter ended September 30, 1993, the Partnership 	recorded a $12 million provision for litigation costs, which 	reflects the terms of the Navajo settlement as well as 	anticipated legal fees and other costs related to defense and 	ultimate resolution of the FERC proceeding and the remaining 	civil action brought by El Paso Refinery, L.P. and its general 	partner. Management believes that it has acted properly with 	respect to expansion of the East Line and the direction of flow 	of the six-inch pipeline from Phoenix to Tucson. Management also 	believes that the Partnership's tariffs are just and reasonable 	and, if certain of the underlying assumptions and 	interpretations of rate-making methodology made by the 	Partnership in supporting these tariffs are ruled upon 	favorably, that these tariffs will be upheld should the FERC 	proceeding progress to its completion. However, because of the 	nature of FERC rate-making methodology, it is not possible to 	predict with certainty whether the Partnership's assumptions and 	rate-making approach will be upheld by the FERC and, hence, it 	is impossible to predict the outcome of the FERC proceeding. It 	is the opinion of management that any additional costs, in 	excess of recorded liabilities, incurred to defend and resolve 	these matters, or any capital expenditures which may be required 	under the terms of the Navajo settlement, will not have a 	material adverse effect on the Partnership's financial 	condition; nevertheless, it is possible that the Partnership's 	results of operations, in particular quarterly or annual 	periods, could be materially affected by the ultimate resolution 	of these matters.
	Environmental
	The Partnership's transportation and terminal operations are 	subject to extensive regulation under federal, state and local 	environmental laws concerning, among other things, the 	generation, handling, transportation and disposal of hazardous 	materials and the Partnership is, from time to time, subject to 	environmental cleanup and enforcement actions. In particular, the 	federal Comprehensive Environmental Response, Compensation and 	Liability Act ("CERCLA" or "Superfund" law) generally imposes 	joint and several liability for cleanup and enforcement costs, 	without regard to fault or the legality of the original conduct, 	on current or predecessor owners and operators of a site. Along 	with several other respondents, the Partnership is presently 	involved in one cleanup ordered by the United States 	Environmental Protection Agency ("EPA") related to ground water 	contamination in the vicinity of the Partnership's storage 	facilities and truck loading terminal at Sparks, Nevada. In 	addition, the Partnership is also involved in six ground water 	hydrocarbon remediation efforts under administrative orders 	issued by the California Regional Water Quality Control Board at, 	or adjacent to, its facilities at Colton, Concord, Mission 	Valley, Brisbane, San Jose and West Sacramento, California. In 	April 1993, the Partnership was notified that the United States 	military expects the Partnership to participate in the 	remediation of ground water hydrocarbon contamination in the 	vicinity of the Partnership's pump station at Norwalk, 	California, which is adjacent to a major military fuel storage 	facility. The Partnership is currently investigating the extent 	of its responsibility for the contamination. The Partnership is
	cooperating with a request from the Arizona Department of 	Environmental Quality to participate in a joint industry 	investigation of possible ground water hydrocarbon contamination 	in the vicinity of the Partnership's terminal at Phoenix. The 	Partnership is also involved in soil and ground water remediation 	projects at and adjacent to various other terminal and pipeline 	locations, that have not been mandated by government agencies but 	are conducted in the ordinary course of business. In a number of 	these cleanup projects, the Partnership is participating with 	other entities ranging from large integrated petroleum companies 	to certain less financially sound parties.
	During the quarter ended September 30, 1993, the Partnership 	completed a comprehensive re-evaluation of its potential 	liabilities associated with environmental remediation activities 	and, as a result, recorded a $15 million provision to increase 	its existing reserve for environmental remediation costs. This 	provision reflects the estimated cost of completing all 	remediation projects presently known to be required, either by 	government mandate or in the ordinary course of business, as well 	as the cost of performing preliminary environmental 	investigations at several locations, including the investigation 	of potential contamination in the vicinity of the Partnership's 	Phoenix terminal. During the quarter ended September 30, 1992, 	the Partnership recorded a $10 million provision for 	environmental remediation costs at Sparks, Nevada and two sites 	in California. The cash expenditures related to these projects 	are primarily expected to occur over the next five years; 	however, certain remediation projects, including the largest 	project at Sparks, are expected to continue for a period of 	approximately ten years.
	Estimates of the Partnership's ultimate liabilities associated 	with environmental remediation activities and related costs are 	particularly difficult to make with certainty due to the number 	of variables involved, including the early stage of 	investigation at certain sites, the lengthy time frames required 	to complete remediation at most locations, the number of parties 	involved, the number of remediation alternatives available, and 	the uncertainty of potential recoveries from third parties. 	Based on the information presently available, it is the opinion 	of management that any such costs, to the extent they exceed 	recorded liabilities, will not have a material adverse effect on 	the Partnership's financial condition; nevertheless, it is 	possible that the Partnership's results of operations in 	particular quarterly or annual periods could be materially 	affected as conditions change or additional information becomes 	available.
	Other Claims and Litigation 	 	The Partnership is also party to a number of other legal actions 	arising in the ordinary course of business. While the final 	outcome of these other legal actions cannot be predicted with 	certainty, it is the opinion of management that none of these 	other legal actions, when finally resolved, will have a material 	adverse effect on the consolidated financial condition of the 	Partnership; nevertheless, it is possible that the Partnership's 	results of operations, in particular quarterly or annual
	periods, could be materially affected by the ultimate resolution 	of these matters.
	Lease Commitments
	The General Partner leases space in an office building and 	certain computer equipment, the rent on which is charged to the 	Partnership. The General Partner's total lease commitments not 	subject to cancellation at December 31, 1993 are as follows: 	$2,135,000 in 1994, $2,105,000 in 1995 and $1,330,000 in 1996.
	The Partnership also leases certain rights-of-way and land under 	agreements that can be canceled at any time should they not be 	required for operations. The annual payments associated with 	these leases aggregated approximately $5 million in 1993, however 	a substantial portion of this amount is subject to renegotiation 	effective January 1, 1994. While the lessor has requested a 	significant increase in the annual lease payment for 1994 and 	future years, it is not presently possible to predict the annual 	rent associated with these leases which will be established 	either through negotiation or arbitration. Rental expense for all 	operating leases was $7,130,000, $6,600,000 and $7,000,000 for 	the years 1993, 1992 and 1991, respectively.
	NOTE 7 - RELATED PARTY TRANSACTIONS
	The Partnership has no employees and is managed by the General 	Partner. Under certain partnership and management agreements, the 	General Partner and Santa Fe or its subsidiaries are entitled to 	reimbursement of all direct and indirect costs related to the 	business activities of the Partnership. These expenses, which are 	included in field operating and general and administrative 	expenses in the Partnership's statement of income, totaled $43.0 	million, $37.1 million and $35.8 million for the years 1993, 1992 	and 1991, respectively, and include compensation and benefits 	payable to officers and employees of the General Partner, payroll 	taxes, corporate office building rentals, general and 	administrative costs, tax information and reporting costs and 	legal and other professional services fees.
	NOTE 8 - PENSION AND POSTRETIREMENT PLANS
	The General Partner is included with certain other affiliates in 	the trusteed non-contributory Santa Fe Pacific Retirement Plan 	("the Plan") which fully complies with ERISA requirements. The 	Plan covers substantially all officers and employees of Santa Fe 	and its subsidiaries not covered by collective bargaining 	agreements. Benefits payable under the Plan are based on years of 	service and compensation during the sixty highest paid 	consecutive months of service during the ten years immediately 	preceding retirement. Santa Fe's funding policy is to contribute 	annually at a rate not less than the ERISA minimum, and not more 	than the maximum amount deductible for income tax purposes. Since 	the General Partner is included with certain other affiliates, 	detailed Plan information for the General Partner is not 	available in all cases, however, as of September 30, 1993, the 	fair value of Plan assets allocated to employees associated with
	the Partnership's operations was $51.4 million, and the actuarial 	present value of projected Plan obligations, discounted at 7.0%, 	was $47.5 million. The expected return on the market value of 	Plan assets was 9.75% and compensation levels were assumed to 	increase at 4.0% per year. Primarily as a result of the excess of 	Plan assets over liabilities, pension income of $435,000, 	$605,000 and $290,000 was recognized in 1993, 1992 and 1991, 	respectively.
	In addition to the defined benefit pension plan, salaried 	employees who have attained age 55 and who have rendered 10 years 	of service are eligible for both medical benefits and life 	insurance coverage during retirement. The retiree medical plan is 	contributory and provides benefits to retirees, their covered 	dependents and beneficiaries. Retiree contributions are adjusted 	annually. The plan also contains fixed deductibles, coinsurance 	and out-of-pocket limitations. The life insurance plan is non- 	contributory and covers retirees only.
	The Partnership adopted FAS No. 106 effective January 1, 1992 	(see Note 2). Net periodic postretirement benefit cost in 1993 	and 1992 was $1,557,000 and $2,231,000, respectively, and 	included the following components (in thousands):
							 Life Insurance 				 Medical Plan Plan 				 ----------------- ----------------- 				 1993 1992 1993 1992 				 ------- ------- ------- ------- 	Service cost............... $ 553 $ 718 $ 37 $ 26 	Interest cost.............. 1,066 1,275 213 212 	Amortization of prior 	 service credit........... (312) -- -- -- 				 ------- ------- ------- ------- 	Net periodic postretirement 	 benefit cost............. $1,307 $1,993 $ 250 $ 238 				 ======= ======= ======= =======
	Prior to 1992, the costs of these benefits were generally 	recognized when paid and were $430,000 in 1991.
	The Partnership's policy is to fund benefits payable under the 	medical and life insurance plans as due. The following table 	shows the reconciliation of the plans' obligations to amounts 	accrued at December 31, 1993 and 1992 (in thousands):
							 Life Insurance 				 	Medical Plan Plan 				 ----------------- ----------------- 				 	1993 1992 1993 1992 				 -------- -------- -------- -------- 	Accumulated postretirement 	 benefit obligation: 	Retirees.................... $ 5,253 $ 4,252 $ 2,086 $ 1,985 	Fully eligible active 	 plan participants......... 1,148 753 -- -- 	Other active plan 	participants................ 9,199 7,124 648 576 				 -------- -------- -------- -------- 				 15,600 12,129 2,734 2,561 	Unrecognized prior 	 service credit............ 3,763 4,075 -- -- 	Unrecognized net gain (loss) (2,249) 46 (243) (42) 				 -------- -------- -------- -------- 	Accrued postretirement 	 liability................. $17,114 $16,250 $ 2,491 $ 2,519 				 ======== ======== ======== ======== 				 	The unrecognized prior service credit, which is the result of a 	plan amendment effective January 1, 1993, will be amortized 	straight-line over the average future service to full eligibility 	of the active population. For 1994, the assumed health care cost 	trend rate for managed care medical costs is 11.5% and is assumed 	to decrease gradually to 5% by 2006 and remain constant 	thereafter. For medical costs not in managed care, the assumed 	health care cost trend is 14% in 1994 and is assumed to decrease 	gradually to 6.5% by 2006 and remain constant thereafter. The 	health care cost trend rate assumption has a significant effect 	on the amounts reported. For example, increasing the assumed 	health care cost trend rates by one percentage point in each year 	would increase the accumulated postretirement benefit obligation 	for the medical plan by $2.9 million and the aggregate of the 	service and interest components of net periodic postretirement 	benefit cost recognized in 1993 by $330,000. In 1993, the assumed 	health care cost trend rate for managed care medical costs was 	12% and was assumed to decrease gradually to 5.5% by 2006 and 	remain constant thereafter. For medical costs not in managed 	care, the assumed health care cost trend was 15% in 1993 and was 	assumed to decrease gradually to 6.5% by 2006 and remain constant 	thereafter. The weighted-average discount rate assumed in 	determining the accumulated postretirement benefit obligation was 	7% and 8.5% in 1993 and 1992, respectively. The assumed weighted- 	average salary increase was 4.0% and 5.5% in 1993 and 1992, 	respectively.
	NOTE 9 - OPERATING REVENUE FROM MAJOR CUSTOMERS
	Operating revenues received from three major petroleum companies 	each exceeded 10% of total 1993 revenues and, individually, 	account for 16.9%, 12.9% and 10.2% of total operating revenues. 	In 1992, these same customers accounted for 17.1%, 13.7% and 	10.8% of total operating revenues and, in 1991, they accounted 	for 16.0%, 13.1% and 10.9% of total operating revenues.
	NOTE 10 - CASH DISTRIBUTIONS
	The Partnership makes quarterly cash distributions of 	substantially all of its available cash, generally defined as 	consolidated cash receipts less consolidated cash expenditures 	and such retentions for working capital, anticipated capital 	expenditures and contingencies as the General Partner deems 	appropriate or as are required by the terms of the Notes. 	Distributions are made 98% to the common and preference 	unitholders (the "unitholders") and 2% to the General Partner, 	subject to the payment of incentive distributions to the General 	Partner which increase as quarterly distributions to unitholders 	exceed certain specified target levels. The incremental incentive 	distributions payable to the General Partner are 8%, 18% and 28% 	of all quarterly distributions of available cash that exceed, 	respectively, $0.60, $0.65 and $0.70 per common and preference 	unit. Such incentive distributions aggregated $1,202,000 in 1993 	and in 1992 and $770,000 in 1991.
	Cash distributions declared for the four quarters ended 	December 31, 1993, 1992 and 1991 aggregated $2.80, $2.80 and 	$2.75 per unit, respectively. In January 1994 the Partnership 	announced a fourth quarter 1993 distribution of $0.70 per common 	and preference unit, payable in February 1994.
	Prior to December 31, 1993, in the event that there was not 	sufficient available cash to pay the minimum distribution of 	$0.55 per unit to all unitholders at the end of a quarter, 	preference unitholders were entitled to receive the minimum 	quarterly distribution, plus any arrearages, prior to any 	distribution of available cash to the common unitholders. With 	the Partnership having met certain financial criteria, this 	subordination period ended on December 31, 1993, and all units 	will henceforth have equivalent rights with respect to cash 	distributions and shall be called common units. Since the 	formation of the Partnership in December 1988, there has been no 	arrearage of cash distributions.
	NOTE 11 - SUMMARIZED QUARTERLY OPERATING RESULTS 		 AND PREFERENCE UNIT INFORMATION (UNAUDITED)
	Quarterly results of operations are summarized below: 							 				 First Second Third Fourth 				 Quarter Quarter Quarter Quarter 				 -------- -------- -------- -------- 		 (In thousands, except per unit amounts)
	1993: 	 	Net revenues................. $49,674 $57,222 $56,778 $55,797 	Operating income............. 21,758 29,150 1,478 25,936 	Net income (loss)............ 12,516 19,674 (7,326) 16,752 	 	Income (loss) per unit....... $ 0.64 $ 1.01 $ (0.37) $ 0.86
	1992: 	 	Net revenues................. $47,153 $52,752 $53,382 $51,738 	Operating income............. 21,823 27,606 16,700 25,229 	Net income before cumulative 	 effect of accounting change 12,639 18,380 7,369 15,730 	Net income (loss)............ (3,768) 18,380 7,369 15,730 	 	Income per unit before 	 cumulative effect of 	 accounting change.......... $ 0.65 $ 0.94 $ 0.38 $ 0.80 	Income (loss) per unit....... (0.19) 0.94 0.38 0.80
	Notes: Third quarter 1993 included a $27.0 million provision for 	environmental and litigation costs and third quarter 1992 	included a $10.0 million provision for environmental costs. First 	quarter 1992 included the $16.4 million cumulative effect of an 	accounting change. The sum of net income (loss) per unit for the 	four quarters of 1993 does not equal net income per unit for the 	full year due to the effect of rounding differences.
	Santa Fe Pacific Pipeline Partners, L.P. units are traded on the 	New York Stock Exchange, under the symbol SFL. The quarterly 	price range per unit and cash distributions declared per unit for 	1993 and 1992 are summarized below: 							 					 High Low Cash 					 Unit Unit Distributions 					 Price Price Declared 				 ------ ------ ------------- 	1993: 	 	Fourth Quarter.................... 39-7/8 36-3/8 $0.70 	Third Quarter..................... 40 36-3/8 0.70 	Second Quarter.................... 40-3/4 36-3/8 0.70 	First Quarter..................... 39-3/4 35-3/4 0.70
	1992:
	Fourth Quarter.................... 39-1/4 33-1/4 $0.70 	Third Quarter..................... 39-3/4 34-3/8 0.70 	Second Quarter.................... 35-3/8 30-3/4 0.70 	First Quarter..................... 36-5/8 31-3/4 0.70
	As of January 31, 1994, there were approximately 18,000 holders 	of Partnership units.
							 							 							 							 							 							 							 							 							 							 							 							 							 							 							 							 							 							 							 							 							 							 							 							 							 							 							 							 							 							 							 							
							 SCHEDULE V 		 SANTA FE PACIFIC PIPELINE PARTNERS, L.P. 			 PROPERTY, PLANT AND EQUIPMENT 				 (In thousands) 				 Year ended December 31, 1993 		 	 ----------------------------------------------------- 			 Balance at Balance 			 beginning Additions Other at end 			 of year at cost Retirements changes(a) of year 			 --------- --------- --------- --------- --------- Land.................... $ 56,680 $ 321 $ (1,456) $ -- $ 55,545 Rights-of-way........... 12,522 79 -- -- 12,601 Line pipe, fittings and pipeline construction. 283,848 3,178 (7) (13) 287,008 Buildings and equipment. 152,284 10,040 (481) 569 162,412 Storage tanks and delivery facilities... 140,293 5,245 (84) (776) 144,678 Construction in progress 22,770 2,221 -- (4,153) 20,838 		 	 --------- --------- --------- --------- --------- 		 	 $668,397 $ 21,084 $ (2,028) $ (4,371) $683,082 			 ========= ========= ========= ========= ========= 				 Year ended December 31, 1992 		 	 ----------------------------------------------------- 			 Balance at Balance 		 	 beginning Additions Other at end 			 of year at cost Retirements changes(a) of year 			 --------- --------- --------- --------- --------- Land.................... $ 56,655 $ 25 $ -- $ -- $ 56,680 Rights-of-way........... 11,875 210 -- 437 12,522 Line pipe, fittings and pipeline construction. 278,803 8,388 (83) (3,260) 283,848 Buildings and equipment. 135,733 14,824 (1,864) 3,591 152,284 Storage tanks and delivery facilities... 132,252 9,921 (594) (1,286) 140,293 Construction in progress 27,138 (2,437) -- (1,931) 22,770 			 --------- --------- --------- --------- --------- 		 	 $642,456 $ 30,931 $ (2,541) $ (2,449) $668,397 		 	 ========= ========= ========= ========= ========= 				 Year ended December 31, 1991 		 	 ----------------------------------------------------- 			 Balance at Balance 			 beginning Additions Other at end 		 	 of year at cost Retirements changes(a) of year 		 	 --------- --------- --------- --------- --------- Land.................... $ 56,653 $ 2 $ -- $ -- $ 56,655 Rights-of-way........... 11,646 37 -- 192 11,875 Line pipe, fittings and pipeline construction. 278,501 633 (156) (175) 278,803 Buildings and equipment. 127,749 8,195 (266) 55 135,733 Storage tanks and delivery facilities... 122,904 11,049 (977) (724) 132,252 Construction in progress 23,983 7,799 -- (4,644) 27,138 			 --------- --------- --------- --------- --------- 			 $621,436 $ 27,715 $ (1,399) $ (5,296) $642,456 			 ========= ========= ========= ========= ========= (a)Other changes in "Construction in progress" primarily reflect the reclass- ification of certain software costs to the "Other assets" caption of the Partnership's consolidated balance sheet and reclassifications of certain properties between categories upon final valuation for rate-making purposes.
		 					 SCHEDULE VI 		 SANTA FE PACIFIC PIPELINE PARTNERS, L.P. 		 ACCUMULATED DEPRECIATION, DEPLETION AND 		 AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT 				(In thousands)
				 Year ended December 31, 1993 			 ----------------------------------------------------- 			 Balance at Balance 			 beginning Additions Other at end 			 of year at cost Retirements changes of year 			 --------- --------- --------- --------- --------- Rights-of-way........... $ 1,071 $ 326 $ -- $ -- $ 1,397 Line pipe, fittings and pipeline construction. 25,858 6,807 (7) (13) 32,645 Buildings and equipment. 11,907 5,483 (481) (16) 16,893 Storage tanks and delivery facilities... 11,463 4,305 (83) (148) 15,537 			 --------- --------- --------- --------- --------- 			 $ 50,299 $ 16,921 $ (571) $ (177) $ 66,472 		 	 ========= ========= ========= ========= ========= 				 				 Year ended December 31, 1992 			 ----------------------------------------------------- 			 Balance at Balance 			 beginning Additions Other at end 			 of year at cost Retirements changes of year 			 --------- --------- --------- --------- --------- Rights-of-way........... $ 752 $ 319 $ -- $ -- $ 1,071 Line pipe, fittings and pipeline construction. 19,391 6,683 (83) (133) 25,858 Buildings and equipment. 8,885 5,026 (1,864) (140) 11,907 Storage tanks and delivery facilities... 7,967 4,120 (594) (30) 11,463 		 	 --------- --------- --------- --------- --------- 			 $ 36,995 $ 16,148 $ (2,541) $ (303) $ 50,299 			 ========= ========= ========= ========= ========= 				 				 Year ended December 31, 1991 		 	 ----------------------------------------------------- 			 Balance at Balance 			 beginning Additions Other at end 			 of year at cost Retirements changes of year 			 --------- --------- --------- --------- --------- Rights-of-way........... $ 491 $ 261 $ -- $ -- $ 752 Line pipe, fittings and pipeline construction. 12,983 6,714 (156) (150) 19,391 Buildings and equipment. 4,863 4,364 (266) (76) 8,885 Storage tanks and delivery facilities... 5,078 3,635 (977) 231 7,967 	 		 --------- --------- --------- --------- --------- 			 $ 23,415 $ 14,974 $ (1,399) $ 5 $ 36,995 			 ========= ========= ========= ========= =========
							 SCHEDULE X 		 SANTA FE PACIFIC PIPELINE PARTNERS, L.P. 		 SUPPLEMENTARY INCOME STATEMENT INFORMATION 			 (In thousands)
The following have been charged to expense:
						 Year ended December 31, 					 ------------------------------- 						 1993 1992 1991 					 -------- -------- -------
1. Maintenance and repairs ................ $24,000(a) $20,320(a) $ 9,385 2. Depreciation and amortization of intangible assets, preoperating costs and similar deferrals ............ 2,050 2,180 2,215 3. Taxes, other than payroll and income taxes ........................... 12,350 12,175 10,865
(a) These amounts include provisions for environmental costs of $15 million and $10 million in 1993 and 1992, respectively.