Re: Wildhorse Letter

Gerald:

I understand from Merrill you got the info. re. Pruett Gushey (which I don't
know the correct spelling for).

If you haven't already done so, you might want to consider getting some input
from Richard Sanders regarding the Wildhorse situation.

Teresa

Teresa G. Bushman
Enron North America Corp.
1400 Smith Street, EB 3812
Houston, TX 77002
(713) 853-7895
fax (713) 646-3393
teresa.g.bushman@enron.com

----- Forwarded by Teresa G Bushman/HOU/ECT on 07/24/2000 12:09 PM -----

Dan J Bump@ENRON
07/24/2000 10:22 AM

To: Gerald Nemec/HOU/ECT@ECT
cc: Joan Quick/HOU/ECT@ECT, Scott Josey/Corp/Enron@ENRON, Barbara Gray@ECT,
Brian Redmond/HOU/ECT@ECT, Teresa G Bushman/HOU/ECT@ECT
Subject: Re: Wildhorse Letter

Gerald --

I have provided a few coments (redlined) to your draft letter attached below.

However, I wanted to offer the following ideas for discussion with you and
the others listed above as to potential inclusion in the Wildhorse letter:

A. Should we request written notification from Wildhorse related to the
shut-in status of Entrada production? Should we request written notification
related to the recent curtailment of Dakota production? [As we've discussed,
Enogex never requested anything in writing from Wildhorse, so we do not have
any historic documentation of Wildhorse's claims].

B. Should we identify (potential) contractual issues due to the curtailment
of Dakota production; e.g. Sec. 6 detailing the (wellhead) delivery pressure
requirements under this contract, et al? [As we've discussed, the system
pressures have increased due to (initially) gas being re-routed by Wildhorse
over the past two years which has loaded the San Arroyo system, and now the
NWPL quality issues and subsequent Wildhorse curtailments has increased
pressures system-wide. If Wildhorse based their ability to allow these
problems to persist by referring to Sec. 7 "Gas Quality" of the agreement,
what remedies can we request....partial release of Dakota gas?].

Here's the frustration, based on conversations with producers in the area and
the documents we've received from Enogex, Wildhorse has continued to attach
non-pipeline quality spec gas to their system over the past couple years to
increase gathering revenues, yet has not invested any $$$ for processing of
this gas to meet or exceed the specs of downstream pipelines. Then, they use
the downstream pipes as the reason for shutting in all their captive
producers, and have thus far offered no solutions to the system pressure and
quality issues discussed above. Therefore, its critical that this letter
gets to the "right" people within Wildhorse and, if possible, make reference
to some element of timing (e.g., reasonable dispatch, commercially reasonable
manner, etc.).

Thanks.

Dan