Enron Mail

Subject:Your Question on HMS
Date:Mon, 6 Nov 2000 04:38:00 -0800 (PST)

Dr. Lay:

As you know, Enron owns a minority interest in Hanover Compressor Corp. On
several ocassions, Mel Klein of GKH has discussed the possibility that Enron
purchase GKH's interest in Hanover. This is an option that ENA has not
recommended to date, as I understand that at current prices we are more of a
seller than a buyer. Jeff Donahue is responsible for this investment and can
answer any specific questions.

In respect to HMS, Enron and Hanover established Hanover Measurement
Services (HMS) as a joint venture to provide pipeline measurement services.
HMS is structured as an (Enron:Hanover) 49:51 equity and 50:50 control
partnership. Enron and Hanover each have 2 representatives on the Board.

Enron (through Houston Pipe Line) invested $2.5MM of initial capital in HMS
and entered into a measurement service contract with HMS. HMS has also
entered into a service contract with Kinder Morgan and is seeking to enter
into similar contracts with other pipelines.

Potential HMS Topics of Discussion

1. Enron is in the processing of selling HPL - the service contract between
HPL and HMS will be assigned to the purchaser of HPL.

2. Enron will retain its interest in HMS, but we are open to both Enron and
Hanover selling a portion of our equity to a new pipeline/producer customer.