Message-ID: <23692867.1075842237778.JavaMail.evans@thyme>
Date: Mon, 26 Mar 2001 08:34:00 -0800 (PST)
From: phil.demoes@enron.com
To: dan.hyvl@enron.com
Subject: EL PASO MERCHANT ENERGY - Elba Island Transaction
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Dan,

What is your opinion?  I do not think El Paso could bind Enron.
---------------------- Forwarded by Phil DeMoes/Corp/Enron on 03/26/2001 
04:33 PM ---------------------------

Les Webber @ ENRON_DEVELOPMENT

03/26/2001 04:16 PM
To: Phil DeMoes/Corp/Enron@ENRON, Frank W Vickers/NA/Enron@Enron
cc:  

Subject: EL PASO MERCHANT ENERGY - Elba Island Transaction

fyi.

Let's explore this before we try to include any language in the Southern 
agreement.


Les
---------------------- Forwarded by Les Webber/ENRON_DEVELOPMENT on 
03/26/2001 04:22 PM ---------------------------

Les Webber

03/26/2001 03:52 PM
To: Daniel R Rogers/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Dominic 
Carolan/Enron@EnronXGate
cc: masseye@arentfox.com 

Subject: EL PASO MERCHANT ENERGY - Elba Island Transaction


	

Gentlemen:

The following provision is contained in Enron's binding Term Sheet dated 
October 13, 1999 with El Paso Merchant Energy:


"If Enron Americas nominates gas for transportation on the SNG pipeline 
system, (i) Enron Americas or an affiliate thereof must have subscribed 
(directly from SNG) to firm transportation on the SNG system for a term not 
less than the lesser of ten (10) years or the then-remaining term of the 
Agreement, (ii) the Elba Island Facility must be, and remain during the 
duration of such firm transportation, the primary receipt point for such firm 
transportation, and (iii) such firm transportation (in MMBtu per day) shall 
be for a quantity equal to the quantity of gas (in MMBtu per day) nominated 
in the Redelivery Notice to be redelivered to Enron Americas on the SNG 
system ((i), (ii) and (iii) collectively, the "Firm Transportation 
Requirement")."


Aside from the different possible interpretations of the language: "If Enron 
Americas nominates gas for transportation on the SNG pipeline system ...", I 
would like to understand your opinion on the ability of El Paso Merchant 
Energy to bind Enron to enter into an agreement with a party who is not a 
party to the agreement.  Is this legally enforceable?  After all, Southern 
Natural Gas does not have a similar obligation.

If it were to be legally binding, under what terms and conditions would Enron 
be obligated to enter into such agreement?  I am thinking in particular of 
the fact that Southern Natural Gas has received authorization from the FERC 
to enter into transportation arrangements at negotiated rates.  If we were to 
locate a customer that could be accessed by means of a bypass pipeline at a 
lower effective cost than the Southern Natural Gas full rate, would we be 
entitled to hold out for a discounted rate with Southern Natural Gas?


Please call me with any questions you have as you proceed to develop your 
response.


Regards.
Les