Message-ID: <4273489.1075844953270.JavaMail.evans@thyme>
Date: Wed, 19 Jul 2000 23:40:00 -0700 (PDT)
From: steve.duffy@enron.com
To: dana.gibbs@enron.com, bob.jacobs@enron.com, edward.attanasio@enron.com, 
	susan.ralph@enron.com, cutty.cunningham@enron.com, 
	gary.fuller@enron.com
Subject: Oxy Deal
Cc: maryellen.hall@enron.com, joe.richards@enron.com, stanley.horton@enron.com
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We hope to get the documents for this deal signed up within the next several 
days.  Once these documents are executed, our biggest challenge will be to 
accomplish all of the "physical" things 
(permitting/approvals/construction,etc.) that will be necessary for us to 
perform on this deal.  While we have every expectation that we will be able 
to accomplish these things, our Bakersfield gas plant is in a very sensitive 
environmental location, and we must acknowledge that there is always the 
chance that we will not be able to get all required approvals, etc. from all 
applicable authorities.  We have built strong "outs" into our agreements with 
Oxy to protect us against this possibility (we won't be liable to them if we 
can't perform because we can't get the needed permits/approvals), but we all 
need to recognize that there is at least some degree of economic loss (in the 
form of sunk costs) that we will suffer if this deal does not go through.

I believe that Enron's financial group has okayed this deal (Joe, please 
confirm), and that we have spent about $1.5 million on this project to date.  
Also, it is my understanding that we will be spending about $250.000 on this 
deal per week as we move forward.  My understanding is that approximately 
half of what we have already spent is on supplies/pipe/materials that would 
be sellable/reusable if this deal does not ultimately make it for the reasons 
stated above. I do not know the percentage of future expenses that would be 
"salvageable."

In any case, this deal is a great opportunity for our West Coast segment, and 
our mindset is that we WILL be successful in completing all 
construction/permitting needed to perform with Oxy.  We want to begin 
performing with Oxy as soon as possible, and to do this, we are 
building/spending/constructing while, at the same time, nailing down all 
needed approvals. Thanks.  SWD