Message-ID: <6365600.1075842447437.JavaMail.evans@thyme> Date: Thu, 30 Nov 2000 00:21:00 -0800 (PST) From: steven.harris@enron.com To: drew.fossum@enron.com Subject: Re: TW Fuel Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven Harris X-To: Drew Fossum X-cc: X-bcc: X-Folder: \Drew_Fossum_Dec2000_June2001_1\Notes Folders\All documents X-Origin: FOSSUM-D X-FileName: dfossum.nsf Thanks for the encouraging words. Your support of TW throughout the year has been tremendous and I have let Danny and Stan know that. Thanks for all your help. Steve Drew Fossum 11/29/2000 04:40 PM To: Steven Harris/ET&S/Enron@ENRON, Kevin Hyatt/ET&S/Enron@Enron, TK Lohman/ET&S/Enron@ENRON, Julia White/ET&S/Enron@ENRON, Steven January/ET&S/Enron@ENRON cc: Danny McCarty/ET&S/Enron@Enron, Dave Neubauer/ET&S/Enron@ENRON, Kent Miller/ET&S/Enron@ENRON, Mary Kay Miller/ET&S/Enron@ENRON, Susan Scott/ET&S/Enron@ENRON, Glen Hass/ET&S/Enron@ENRON, Maria Pavlou/ET&S/Enron@ENRON Subject: Re: TW Fuel First, congratulations to all five of you and the others on your staffs who were involved for working together to get the excess line pack deal done today. As I understand it, TK was able to sell 10,000 MMBtu at the Cal Border for something like $15 thanks to your efforts. This thing went from Dave and Kent's idea to you guys' execution in about two days, even with a (slight) delay due to my panic attack on whether we can make downstream sales. Great job! Second, I think TK, Kevin, Maria and Glen and I have come up with a workable set of guidelines on when similar deals can be done in the future. The key, as I expressed in the attached email, is that the sales be driven by a legitimate operational basis. If Gas Control verifies that we have excess line pack at a location and that making the sale helps get line pack to optimal levels, such sales are appropriate. Gas Control should also verify that the operational basis for the sale can be documented if the need ever arises. Today's deal is a great example of that as we actually communicated to outside parties that we anticipated some pressure management issues. If there are ever any questions about when such deals are appropriate, or about how to document the operational basis, please give me, Susan, or Maria a call. Again, great job! DF From: Drew Fossum 11/27/2000 06:01 PM To: Steven Harris/ET&S/Enron@Enron, Dave Neubauer/ET&S/Enron@ENRON, Kent Miller/ET&S/Enron@ENRON, Mary Kay Miller/ET&S/Enron@ENRON cc: Susan Scott/ET&S/Enron@ENRON Subject: TW Fuel This morning I raised a concern regarding TW's sale of excess fuel at downstream points. Here's the problem: the tariff requires shippers to tender fuel to us at their receipt points. With rare exceptions, those receipt points are not at the Cal. border. Order 636 mandates that pipelines unbundle transportation from storage. It also requires that pipelines that make gas sales do so at the furthest upstream point on their pipeline. That latter requirement means that if a pipe buys gas at point "x", it should resell the gas at point "x" and not haul the gas to point "y" and then sell it there as a delivered (i.e., bundled) product. My concern this morning was that our receipt of fuel gas in the San Juan or Permian and shipment of that gas to the Cal. border for sale arguably violates the unbundling requirement (because the Cal. border sale is a bundled combination of the sale and the transportation of the gas to the downstream location) or the "furthest upstream point" requirement or both. Susan and my recollection was that when ECS wanted to receive the Gallup fuel deliveries at a point other than Permian pool, we made them sign a transport contract to move the gas to where they wanted it. I haven't confirmed that recollection but I am recalling that we told Courtney that we couldn't just move our fuel gas around whereever we wanted it--we needed someone to pay us to transport it. Irrespective of what we did with ECS, I think the following is the correct way to look at this situation: We receive fuel at the shippers' receipt points. Once we receive it, however, it is no longer "fuel." It becomes line pack until it is burned. Line pack moves around based on a lot of reasons, including shipper imbalances, etc. It also, obviously, has to move to the compressors where it is burned as fuel. It is our job to manage line pack, and that means we buy line pack at locations where we are short, and sell it at locations where we are long. If we end up long at the Cal. border from time to time, we should sell excess line pack to get line pack back to optimal levels. I wouldn't want to get into a pattern where we are consistently buying line pack in the San Juan and Permian and selling line pack at the Cal. border, but thats not what we are talking about here. I can't think of anything in the tariff or otherwise that is inconsistent with this interpretation of our authority as operator of the pipeline. MKM--OK with you? DF