---------------------- Forwarded by Thomas A Martin/HOU/ECT on 03/20/2001 
03:50 PM ---------------------------


Thomas A Martin
10/10/2000 05:27 PM
To: Patrick Wade/HOU/ECT@ECT
cc:  
Subject: HPL Transportation and Storage

Patrick,

I forwarded the information regarding the variable costs of transportation to 
Ed McMichael as you requested.  The storage has no forward value, it was 
included to take advantage of opportunities as they occur.  I want to be 
clear AGAIN about how the transportation transaction should be accrual upside 
and not booked as MTM as our view is that the spreads will compress over time 
and any spread value that exists from the curves today will likely go away or 
be significantly reduced over time .  I thought Lavorado was very clear that 
he did not want to book MTM value against these deals.  Am I missing 
something?


Tom