SW Gas

Laird,

Did you meet with SWG on April 27th. Are there any other asset management
targets in the west?

---------------------- Forwarded by Phillip K Allen/HOU/ECT on 04/27/2000
01:53 PM ---------------------------

Jane M Tholt
04/12/2000 08:45 AM
To: Phillip K Allen/HOU/ECT@ECT
cc:
Subject: SW Gas

---------------------- Forwarded by Jane M Tholt/HOU/ECT on 04/12/2000 10:45
AM ---------------------------

Laird Dyer
04/12/2000 08:17 AM
To: Jane M Tholt/HOU/ECT@ECT
cc:
Subject: SW Gas

Janie,

Thanks for the fax on SW Gas.

We are meeting with Larry Black, Bob Armstrong & Ed Zub on April 27th to
discuss asset management. In preparation for that meeting we would like to
gain an understanding of the nature of our business relationship with SW.
Could you, in general terms, describe our sales activities with SW. What are
typical quantities and term on sales? Are there any services we provide?
How much pipeline capacity do we buy or sell to them? Who are your main
contacts at SW Gas?

We will propose to provide a full requirements supply to SW involving our
control of their assets. For this to be attractive to SW, we will probably
have to take on their regulatory risk on gas purchase disallowance with the
commissions. This will be difficult as there is no clear mandate from their
commissions as to what an acceptable portfolio (fixed, indexed, collars....)
should look like. Offering them a guaranteed discount to the 1st of month
index may not be attractive unless we accept their regulatory risk. That
risk may not be acceptable to the desk. I will do some investigation of
their PGA's and see if there is an opportunity.

As to the asset management: do you have any preference on structure? Are
there elements that you would like to see? Any ideas at all would be greatly
appreciated.

Thanks,

Laird