Re: Rogas Line -- USFW Approval

I received the proposed contract for both compensation credits and fees for
EOTT and it's contractors to be put on Kern Water Banks Master Permit.
Compensation credit will cost $62,000.00 with an additional $16,000.00 to add
EOTT to the Master Permit so we are covered for incidental take at NCL. In
order for the pipeline project to get started the following things must
happen.

1. Give the Kern Water Bank a check for $78,000.00. A contractor constructing
a water line adjacent to EOTT's ROW has cleared the habitat. This should
reduce EOTT's disturbance acreage by a small amount, I suggest we go ahead an
purchase the 24 acres so we can get started, if we have any credits left we
can use them on the removal of the existing Rogas pipeline.

2. We need to make a decision on weather we are going to purchase 15.3 acres
of compensation credit from Area for NCL or try to use the existing credits
we received with the purchase of the plant. I have tried to get in contact
with Jeff Single at the Fish and Game to set up a meeting to work out details
of managing the existing credits but have not been able to speak with him. I
believe the process to enable us to use credits we already own will not be
accomplished in time to use on this project. Scott Jones is working with Mark
Poe at Area on what compensation credits from Area will cost. He originally
was quoted $1,850.00 an acre to Area, $400.00 an acre endowment fee to the
Fish and Game and $100.00 an acre for fencing to the Fish and Game. Scott
talked with Gary Fuller and was informed that Mark had previously quoted
$1500.00 an acre to Area. Scott asked Mark about the lower price, he is
checking into it and will get back to Scott. Once we purchase the
compensation credits from Area, Mark will need to notify Cheryl Harding at
KWB and then she will sell EOTT the KWB compensation credits and add EOTT to
the Master Permit. Since the Fish and Wildlife project approval letter stated
she was to be notified of the purchase of credits form Area a letter of
credit will not be acceptable. We also need to provide the letter of approval
for the project from the Fish and Game to Mark Poe. It is my understanding we
have only received verbal approval and have not gotten a hard copy. Randi
McCormick is going to get the letter.

3. We need to provide insurance certificates to West Kern Water as stated in
the encroachment permit before start of construction. Josie Castrejana is
going to provide those.

4. We still do not have the permits for the road bores at State Hwy-43 and
Interstate-5. The state has the permits ready but they want proof we have ROW
with the land owners on either side of the highways. As soon as KWB gives
back the signed recorded agreements I will provide that to Caltrans and then
they will issue the permits. The other missing permit is for the crossing of
the Kern River by-pass channel. Larry is working on that permit, we should
have the permit by the time we reach the channel with the pipelines.

Scott Jones
02/26/2001 02:27 PM

To: Kenny Maltby/Bakersfield/Eott@Eott
cc: Bob Jacobs/Long_Beach/Eott@Eott, Edward Attanasio/Remote/Eott@Eott,
John_Shafer@Enron.com, Larry Campbell/ET&S/Enron@Enron, Louis
Soldano/ET&S/Enron@Enron, Matt Hughes/Houston/Eott@Eott, Molly
Sample/Houston/Eott@Eott, Rich Jolly/ET&S/Enron@Enron, Susan
Ralph/Houston/Eott@Eott
Subject: Re: Rogas Line -- USFW Approval

Kenny,
I will look in Gary's boxes and see if I can find anything.
Thanks,
Scott

Kenny Maltby
02/26/2001 12:55 PM

To: Edward Attanasio/Remote/Eott@Eott
cc: Bob Jacobs/Long_Beach/Eott@Eott, John_Shafer@Enron.com, Larry
Campbell/ET&S/Enron@Enron, Louis Soldano/ET&S/Enron@Enron, Matt
Hughes/Houston/Eott@Eott, Molly Sample/Houston/Eott@Eott, Rich
Jolly/ET&S/Enron@Enron, Scott Jones/Bakersfield/Eott@Eott, Susan
Ralph/Houston/Eott@Eott
Subject: Re: Rogas Line -- USFW Approval

I just spoke with Cheryl Harding about getting the proposed contract for
compensation credits. The NCL credits are for habitat disturbance only not
incidental take. KWB credits which include both are $2000.00 per acre. If we
paid that fee we would be covered but we still would have to buy credits from
NCL. The end result would be EOTT would have 15.3 acres of unused credit in
KWB's bank. Cheryl would like to charge EOTT the difference between NCL
credit and KWB credits. If NCL credits are $1500.00 per acre we would own
KWB $500.00 per acre for being covered under there Master Permit. Cheryl has
a call into Mark Poe for this information and he has not returned her call. I
spoke with Mark this morning about this issue, he said compensation credit
prices had increased and was not sure what he quoted Gary. Mark will verify
and get back to me. Scott if you can find anything in Gary's files about this
that would be great.

Edward Attanasio
02/26/2001 11:36 AM

To: Kenny Maltby/Bakersfield/Eott@Eott
cc: Bob Jacobs/Long_Beach/Eott@Eott, John_Shafer@Enron.com, Larry
Campbell/ET&S/Enron@Enron, Louis Soldano/ET&S/Enron@Enron, Matt
Hughes/Houston/Eott@Eott, Molly Sample/Houston/Eott@Eott, Rich
Jolly/ET&S/Enron@Enron, Scott Jones/Bakersfield/Eott@Eott, Susan
Ralph/Houston/Eott@Eott
Subject: Re: Rogas Line -- USFW Approval

The only reason we are notifying KWB of the purchase of NCL credits is that
the letter from USFW requires us to.

I don't know what NCL credits are going for these days, but Rick Suderman
might be able to give some insight. (He was privy to some discussions with
Aera about providing them power for the water system at NCL in exchange for a
reduced price for credits.) Check with him.

I believe the insurance certificate is required by the encroachment permit,
is it not? When we first received that permit, I made the request of EOTT
treasury for the certificate; but now that it is an ETS construction project,
the thinking is that the certificate should come from ETS. I do not know the
ETS process for getting one. Perhaps one of the CC-ed ETS folks can provide
some insight as to whether ETS can take care of this, and how.

Thanks.

Kenny Maltby
02/23/01 11:24 AM

To: Edward Attanasio/Remote/Eott@Eott
cc: Bob Jacobs/Long_Beach/Eott@Eott, John_Shafer@Enron.com, Larry
Campbell/ET&S/Enron@Enron, Louis Soldano/ET&S/Enron@Enron, Matt
Hughes/Houston/Eott@Eott, Molly Sample/Houston/Eott@Eott, Rich
Jolly/ET&S/Enron@Enron, Scott Jones/Bakersfield/Eott@Eott, Susan
Ralph/Houston/Eott@Eott
Subject: Re: Rogas Line -- USFW Approval

Cheryl Harding at KWB was reviewing the approval letter from the Fish and
Wildlife Service yesterday and was not ready to provide the proposed contract
for acquisition of compensation acres or agree that a letter of credit would
suffice for NCL credits. She did not understand why she needed to be notified
of the credits being purchased from NCL. Unfortunately she is not in her
office today.

I placed a call to Mark Poe to find out what compensation credits and
administration fees cost are at NCL.
Do you know what they are Ed? This was something else Gary was doing. He has
not returned my call.

Ed we still need to provide insurance certificates to West Kern Water
District before we can start construction, can you help with that?

Edward Attanasio
02/20/2001 05:49 PM

To: Kenny Maltby/Bakersfield/Eott@Eott, Scott Jones/Bakersfield/Eott@Eott
cc: Matt Hughes/Houston/Eott@Eott, Bob Jacobs/Long_Beach/Eott@Eott, Susan
Ralph/Houston/Eott@Eott, Molly Sample/Houston/Eott@Eott, Larry
Campbell/ET&S/Enron@Enron, Rich Jolly/ET&S/Enron@Enron,
John_Shafer@Enron.com, Louis Soldano/ET&S/Enron@Enron
Subject: Rogas Line -- USFW Approval

Randi McCormick just forwarded to me a letter addressed to EOTT, dated
February 14, 2001 from the US Fish and Wildlife Service approving our
project "for participation in the Kern Water Bank Compensation Bank," and
authorizing the Water Bank "to extend their incidental take authority to you
and your entire project under their Master Permit." This is, of course, very
good news.

The letter notes, however, that we still need to purchase compensation
acreage both at North Coles Levee and at the Kern Water Bank. Specifically,
we must do the following: (1) contact Cheryl Harding of Kern Water Bank to
acquire 23.1 acres of compensation credits, and to get included in their
Master Permit; and (2) get Cheryl Harding a letter from the Coles Levee
Ecosystem Preserve (Mark Poe of Aera) stating that we have purchased 15.3
acres of credits for North Coles Levee, or that we have set aside that amount
from credits we have in the past purchased.

While I could make these contacts, I do not believe that would be wise
because -- as Kenny can attest -- our past experience has been that whenever
a lawyer contacts the Water Bank, it prompts them to automatically get their
lawyers involved. And our experience has been that this only slows things
down -- or worse.

My suggestion therefore is that one or both of you gentlemen contact Cheryl
as soon as practical and ask her for (1) proposed contract for acquisition of
23.1 acres of compensation credits and (2) perperwork to include EOTT (and
its contractors) in their Master Permit. She should also be informed that,
while we have not yet purchased the 15.3 acres of NCL credits, we will by the
end of this week have a letter of credit posted as security, as allowed under
our State Take Permit, to cover this amount of acreage. Ask whether a copy
of this LC will suffice for her purposes, or whether we will need to have the
actual acreage purchased.

As this would remove a major impediment to construction of the new lines, it
is important that we move on this will all deliberate speed. Please call me
if you have any questions, or if you would like otherwise to discuss how to
approach this issue. Thanks a lot.

--ETA