Storage Monetization Update

I spoke with Chuck Shoneman and Randy Rich (another partner at Bracewell also working on the case) yesterday regarding their estimate of time and cost to prepare a memo responding to the questions in the presentation. Upon further reflection, Chuck thinks that, in order for the law firm to provide a useful and informative document, the memo must be pipeline specific. He thinks that he can prepare the memo within the time frame discussed (aiming for end of July 4 week but no later than mid-July), for about $30,000 (plus costs, estimated to be about $5,000). However, in order to meet this time frame, they will need some upfront information. Specifically:

1. Based on the three pipelines we discussed, they would like to get the FERC case docket numbers where FERC issued certificates for the particular storage facilities being considered. Because these pipelines have many storage fields, it will save a lot of time and money to have these docket numbers up front. The pipelines should have this information available. If we cannot narrow down the facilities that we're looking at, the law firm's response memo will not be as useful and they may not be able to meet our timing requests.

2. Additionally, the law firm would like to have all of the settlements and side agreements that the pipelines have entered into with its customers regarding the storage facilities at issue. The law firm's analysis will be impacted by these agreements, and obtaining the settlements from public records would be time consuming and costly, and side agreements are not publicly filed.

In order to access this information, it will be most efficient if our regulatory people meet with the pipelines' regulatory people to obtain the exact information that we need for the analysis. Please let us know if this is doable.

One last point, Chuck asked if we would know by Monday whether we want to engage the firm for the work. I told him we won't know before Wednesday, and he said that is fine, but the longer we wait to engage the firm, the further we push the date out for when the firm will get us a final product. Just something to keep in mind.

Also, Donna's computer is broken and she cannot send emails, so she asked me to send this message about her follow up discussion with Henry May: Henry May estimates that his firm can do the work for approximately $30,000. However, he is making no promises about the result, and Donna got the impression that, even after we spend $30,000 for his analysis, his end result may be that we cannot do the deal. Henry did mention, however, that a partner of his worked on a financing deal for Enron regarding Bamel Storage. Robert Neustadter is looking into that transaction further.

Thanks

Sarah