Engage Energy Canada L.P. Guarantee

In furtherance of the message which I left for you, please find attached a
copy of a replacement guarantee for your review.

As you are aware, Enron is currently in the process of amending a number of
guarantees with respect to various Engage Energy entities. Under the
project, the
US$25 million guarantee provided to Enron Corp. and its subsidiaries to
guarantee the obligations of Engage Energy Canada L.P. and Engage Energy US
L.P. ,as provided by The Coastal Corp. (the "Existing Guarantee"), is to be
replaced with a number of guarantees which are segmented by the Engage Energy
entities and the type of contract (i.e. physical v. financial).

As part of this project, Russell Diamond has provided Enron Canada Corp. with
revised credit terms for dealing with Engage Energy Canada, L.P. under which
Westcoast Gas Inc. is to provide a US$20million guarantee of the obligations
of Engage Energy Canada L.P. under the existing master physical gas
purchase/sale agreement between the Engage Energy Canada L.P. and Enron
Canada Corp. (the "ECC Physical Master") as well as the master physical gas
purchase/sale agreement between Engage Energy Canada L.P. and Enron North
America Corp. (the "ENA Physical Master"). Russell had allocated US$15
million of the replacement guarantee to the ECC Physical Master and
US$5million to the ENA Physical Master.

Due to other inadequacies in the ECC Physical Master, we have prepared an
"Amended and Restated" ECC Physical Master which includes a number of
significant terms in addition to referring to the replacement guarantee
(which we are quite eager to have Engage execute). As a result, I have
prepared a draft of replacement guarantee (to be received from Westcoast Gas
Inc.) to accompany the Amended and Restated ECC Physical Master. However, to
ensure that the replacement guarantee meets your requirements, I am looking
for your input. Please find attached a copy of the draft replacement
guarantee as blacklined to indicate the changes which have been made to the
Enron Canada Corp. standard guarantee to incorporate the obligations owing to
Enron North America Corp. As you will see, there are a few bullets for which
I require your assistance in completing (i.e. date the of ENA Physical Master
and the appropriate contact information for notices).

When you get the opportunity, could you please review the blacklined
replacement guarantee? Once again, we are quite eager to send out the
Amended and Restated ECC Physical Master.

Thanks for your help.

Mark Powell ((403) 974-6708)

Note to Russell: Russell, you were going to confirm for me that the existing
Enron Corp. guarantee delivered to Engage Energy Canada L.P. and Engage
Energy US L.P. to secure the obligations of Enron Canada Corp., Enron North
America Corp. and Enron Power Marketing, Inc. (in the amount of $35 million)
dated June 1, 1998 is NOT to be replaced. Has there been any progress on
this front?