Mike Mitcham and I have discussed the relationship of Clean Fuel's short
natural gas position from the production of methanol and the long position of
Transwestern created from fuel retention. We have came to the conclusion
that the two positions are not compatible. Clean Fuel's short position and
gas consumption is directly related to their long methanol position. In order
for Clean Fuels to not speculate and maintain a balanced hedge, a fixed price
for natural gas and methanol is required. Methanol, is a very illiquid market
and can not be hedged for longer than about three months out. Because
Tranwestern has a longer dated position, the two risks can not be efficiently
managed. Another risk associated with incorporating the two positions is the
location differential. Clean Fuels purchases their volumes off of Houston
Pipeline and is priced at a Houston Ship Channel index related price. The
value between the Houston Ship Channel and Transwestern routinely fluctuates,
making the pricing differential of the two positions somewhat difficult to
manage.

As stated before, because of liquidity issues, timing issues, and location
differentials, we feel that the positions can be better managed
individually. If market conditions change in the future, incorporating the
two positions can be revisited. If you need any additional information,
please let me know.