FW: Mt. Jesus Condensate

FYI. Just to keep you in the loop. John, will you verify with Charlie that Rick Kile
and Ronnie have the lead on this and that he is not waiting on us for anything. Thanks. Lynn
---------------------- Forwarded by Lynn Blair/ET&S/Enron on 06/24/2001 11:17 AM ---------------------------
From: Charlie Graham/ENRON@enronXgate on 06/19/2001 02:46 PM
To: Rick Kile/ET&S/Enron@ENRON, Ronnie Brickman/ET&S/Enron@ENRON
cc: Randy Rice/ENRON@enronXgate, Lynn Blair/ET&S/Enron@ENRON, Dan Fancler/ENRON@enronXgate, Debbie Moseley/ENRON@enronXgate, Michel Nelson/ENRON@enronXgate

Subject: FW: Mt. Jesus Condensate

FYI
-----Original Message-----
From: Graham, Charlie
Sent: Tuesday, June 19, 2001 2:42 PM
To: Delaine Kurth (E-mail)
Subject: Mt. Jesus Condensate

Delaine,

The Operating Agreement between Northern and KN (now Oneok) entitles Oneok to all condensate and drip liquids removed from any of the Northern pipelines, equipment or facilities upstream of Oneok's Bushton Plant. That agreement also provides that Oneok will be responsible for picking-up, hauling and providing a detailed accounting of such liquids removed. In addition Oneok is to pay Northern for the shrinkage attributable to such condensate and drip. Northern invoices Oneok monthly for a cash reimbursement of the mmbtu's attributable to the condensate removed.

Effective April 2000, Oneok began short paying its invoices. The table below summarizes the amount shorted through April 2001 as $67, 889.36. This short payment reflects Oneok's refusal to reimburse Northern for removal of condensate attributable to the Mount Jesus Drip, lease # 71176. Oneok has indicated to Northern that Oneok's contract hauler contends the liquid removed from Northern's system at this point is water. In spite of evidence provided by Northern to the contrary, Oneok accepts its contractor's contention, apparently pays a disposal fee, and refuses to reimburse Northern for the mmbtu's lost.

This location produced condensate prior to the March 31, 1997 agreement and no change to Northern's pipeline operations that would impact condensation dropout has occurred. Oneok was properly reimbursing Northern prior to April 2000. In addition, the attached analysis of liquid removed from the location on September 20, 2000, demonstrates that hydrocarbon condensate continues to be collected at the drip. Northern must insist that compensation for these BTU's removed from Northern's System be made by Oneok. Your immediate attention to this matter is appreciated.

Thanks

Charlie
(402) 398-7061

Northern Natural Gas Company
Shortpay Analysis
Mt. Jesus Drip

(BBLS * 42) (GAL * .116)
Date Rate BBLS Gallons Mmbtu Amount
Apr-01 $ 4.9474 345.00 14,490.00 1,680.84 $ 8,315.80
Mar-01 $ 4.9851 180.00 7,560.00 876.96 $ 4,371.76
Feb-01 $ 5.5555 200.00 8,400.00 974.40 $ 5,412.96
Jan-01 $ 8.0133 180.00 7,560.00 876.96 $ 7,027.33
Dec-00 $ 8.7182 240.00 10,080.00 1,169.28 $10,194.02
Nov-00 $ 5.2090 205.00 8,610.00 998.76 $ 5,202.54
Oct-00 $ 4.8727 140.00 5,880.00 682.08 $ 3,323.57
Sep-00 $ 4.8503 240.00 10,080.00 1,169.28 $ 5,671.36
Aug-00 $ 4.2166 140.00 5,880.00 682.08 $ 2,876.06
Jul-00 $ 3.8249 140.00 5,880.00 682.08 $ 2,608.89
Jun-00 $ 4.0792 380.00 15,960.00 1,851.36 $ 7,552.07
May-00 $ 3.2884 160.00 6,720.00 779.52 $ 2,563.37
Apr-00 $ 2.8424 200.00 8,400.00 974.40 $ 2,769.63

2,750.00 115,500.00 13,398.00 $67,889.36