Re: FM

Per my conversation with Lynn and Steve on Friday night, we have claimed
force majeure for any gas shut ins that actually happened for the 1st. (I'm
not sure how extensive that actually turned out to be). Does that have any
financial consequences or other consequences for us? For example, on TW,
certain force majeure situations can force us to refund demand charges,
right? NN's tariff doesn't have a similar mechanism, but we may have common
law exposure. We may need to revisit the Jan 1-4 period when we talk
tomorrow or Wed. This would really make Continental and possibly others mad,
but at worst, we could put out a revised notice saying that the shut-ins for
the 1st -4th were not FM. Any thoughts? DF

Lynn Blair
12/31/2000 03:16 PM
To: Drew Fossum/ET&S/Enron@ENRON
cc: Steven January/ET&S/Enron@ENRON, Mary Kay Miller/ET&S/Enron@ENRON, Mary
Darveaux/ET&S/Enron@ENRON, Dari Dornan/ET&S/Enron@ENRON, Michel
Nelson/ET&S/Enron@ENRON, Charlie Graham/ET&S/Enron@ENRON, Stephen
Herber/ET&S/Enron@ENRON, Lynn Blair/ET&S/Enron@ENRON

Subject: Re: FM

Just an update, I notified Continental that we will not consider the
compressor shutins made this morning as
Force Majeur. They (Melissa Master) did not seem to be too surprised. She
does understand
if we go back down on the 4th or 5th we will not mark any of the compressor
with Force Majeure.
Thanks for your input. Lynn

Drew Fossum
12/29/2000 11:58 PM
To: Lynn Blair/ET&S/Enron@ENRON, Steven January/ET&S/Enron@ENRON
cc: Mary Kay Miller/ET&S/Enron@ENRON, Mary Darveaux/ET&S/Enron@ENRON, Dari
Dornan/ET&S/Enron@ENRON, Michel Nelson/ET&S/Enron@ENRON, Charlie
Graham/ET&S/Enron@ENRON, Stephen Herber/ET&S/Enron@ENRON

Subject: 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