How much sweet gas is in the line?

 -----Original Message-----
From: 	Hyatt, Kevin  
Sent:	Wednesday, February 27, 2002 10:21 AM
To:	Gadd, Eric
Subject:	RE: TW lateral pipe sale

Economics:  Pioneer has offered $2mm for pipe that has a current book value of $533,000.  Replacement value of the pipe is roughly $26.8mm.

Potential Buyers: Sid Richardson has previously expressed an interest in the lateral.  Other area gathering companies include Duke, El Paso, and Western Gas Resources.  I've contacted Kim Watson about getting Richardson engaged.  I'll use the TW marketing Team to make contacts at the other companies.  

Pioneer has executed the confidentiality agreement.  I'm in the process of assembling easement and maintenance records.

If you'd like to get together this week and go through a process analysis for this transaction, let me know when would be a good time.

kh

 -----Original Message-----
From: 	Gadd, Eric  
Sent:	Friday, February 15, 2002 1:47 PM
To:	Hyatt, Kevin
Subject:	RE: TW lateral pipe sale

I'm out of town on Wednesday.  I'd like to see the economics and risks outlined before this getting too far down the road with Pioneer.  Are there any other prospective buyers?

 -----Original Message-----
From: 	Hyatt, Kevin  
Sent:	Friday, February 15, 2002 11:32 AM
To:	Gadd, Eric
Subject:	TW lateral pipe sale

TW currently owns a section of pipe called the Gomez lateral located south of TW's West Texas #2 compressor station.  The lateral is approximately 35 miles long and is a 20-inch diameter pipeline.

The Gomez lateral is currently not in service and is filled with sweet gas.  Per Field Operations personnel, the last time the line was used was October 31, 2000.  

Pioneer Gas Pipeline is an intratstate gathering and transmission company.  Pioneer has expressed a written interest in acquiring the lateral from TW for $2 million.  Current book value on the line is ______________ .

TW could file with FERC for abandonment of the pipe (and sale) under the existing blanket authority if:
	1) no IT gas has flowed for the 12 months prior to effective date of the sale or;
	2) no FT shipper has a firm receipt or delivery point on the lateral for the 12 months prior...If an FT shipper does have a valid contract on the lateral, then we would need to get the shipper to amend his contract to effectuate the sale.


Items to Verify:
 1) Identify any entity currently having firm receipt or delivery rights on the Gomez lateral
 2) Determine volume of gas in pipe and associated value for sale (field ops is checking)


Opportunities for TW:
By Pioneer puchasing and integrating the lateral into their system, they can effectuate incremental supply deliveries into TW.  This would reduce the amount of gas necessary for TW to transport south of WT-2 (via displacement) and make more supply available for deliveries going west.

A lunch has been scheduled with Phil Allard from Pioneer on Wednesday 2/20 if you would like to attend.