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Enron Mail |
Steve,
I have forwarded to you a copy of Exhibit "A". ANP will initially own the pipe and meter downstream of the interconnect valve with HPL. The meter will be located at the ANP facility. Thier intent is to gift us the pipeline after Nick builds this line and if they get financing as per their current expectations. We have had discussions with them regarding income tax gross up and methods of gifting. They will keep ownership of the meter after gifting. Obviously, we can elect to not take ownership of the pipe if that is our choice. The plant will build and own three independent interconnecting pipelines. The first is to connect HPL, a second independent line will be built to connect Tejas and the third independent lateral is to connect MidCon. The ANP fuel design is that each lateral pipeline will independently feed two of the six combustion turbines. This is a European fuel design that they are using at their Midlothian Plant located near Dallas. The Midlothian Plant commenced operations this summer. We believe that the turbine supplier, ABB, is requiring this design. None of the pipes will be interconnected in the plant upstream of the metering. Nick will also build the other two laterals. Under Article 5 we limit Chambers ability to tap or otherwise modify the HPL connecting lateral. This will protect the integrity of our delivery in case they do not gift the pipeline. Regarding operatorship of the meter, we have had numerous discussions with ANP. Lack of operatorship of the meter is a deal killer for them. I have reviewed this position with James, Ed and Brad. The fact that we have made ANP aware that we will insist upon stringent requirements within our transportation and commodity contracts regarding how they can take gas from HPL, the group is comfortable that we can handle deliveries to ANP in a manner that limits our exposure to abuse. We will also see, in our control room, the status of the delivery. Once Chambers gifts (or otherwise transfers the line to HPL) several sections of the interconnect will be modified. A key modification will be the location of the custody transfer point. Currently it is the flange off of the interconnect valve. This is for liability purposes. Afterward gifting, it will be the meter located in the plant. Let me know if you have other concerns. Thanks, Greg Brazaitis
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