FM

Some additional thoughts on the force majeure issue--i.e., are we cutting off
shippers' supply due to force majeure?

1. If the gas at the point is out of spec on water, the answer is clearly
no. We're shutting in that supply due to our termination of a waiver of the
tariff quality spec., not due to force majeure. We have the discretion to
grant or terminate waivers of the tariff in our discretion as prudent
operators and so long as we don't discriminate. If that gas is out of spec
on any of the specific items listed in the "Quality" section of the tariff
(Sec. 44? 47? I can't remember which but its one of those) then the answer
is the same.

2. If the gas is being shut in because of heavier hydrocarbons, I think the
answer is the same as above if there is risk of those heavier hydrocarbons
falling out as liquids. I'm remembering the catch all section of the Quality
paragraph as prohibiting "dirt, gums, and other impurities that would
interfere with the operation of compressors, blah blah" or something to that
effect. That catch all seems to me to include liquids. IF the c6 and
heavier is going to form hydrates and fall out as liquids, then the people
delivering those heavies to us are delivering out of spec gas--therefore no
force majeure. I read Eric's very scientific email and I think the punch
line was that the heavy hydrocarbons may fall out as liquids--right? The
thing I can't remember is whether the Quality section has specific max.
limits on the individual heavier hydrocarbons. If so, and if the shippers
are within those limits, my theory based on the catch all language doesn't
work as good.

3. If we think we need to claim force majeure, we have a problem, because we
could have bought our way out of this situation for a nickel. Generally, an
event isn't force majeure if it is purely economic.

I'll think about this some more tomorrow and give you guys a call. DF