TW and Caithness met in Denver this week for the first face-to-face meeting 
between the parties.  The purpose of the meeting was to review the status of 
the Caithness Big Sandy Project and to establish the next steps for moving 
the project forward.

Caithness Corporation
Caithness Corp. is a privately held company based in New York with a variety 
of business interests.  The company is essentially a financial vehicle for 
private investors.  Their energy segment currently owns 1,200 MW of 
generation through renewable assets in California (geothermal at Coso, wind 
in Tehachapi and Palm Springs) and a gas fired plant in South Carolina 
jointly-owned by Florida Power & Light.

Big Sandy Project
The Big Sandy Project is a proposed power plant to be located near Wickieup, 
Arizona.  The project would be built in two phases- first phase would be 550 
MW, with a gas load of approx. 80,000 MMBtu/d, and phase 2 would add another 
170 MW for a total of 720 MW with a gas load of 120,000 MMBtu/d.

The proposed location of the plant is approximately 40 miles south of 
Transwestern's pipeline.  The take-off point on Transwestern would be at/near 
valve station #1008, approximately 15 miles downstream of compressor Station 
#1.  The current estimate includes an alignment that follows Arizona state 
highway 93 south to a location 2 miles southeast of Wickieup in the S/W 4 of 
Section 5, T15N, R12W, Mohave County, Arizona.  There is a 500 KV 
transmission line owned by WAPA that crosses the property.  This line is one 
of the principal electric transmission systems in the Southwest and extends 
from the Phoenix area to the Mead substation near Boulder City, NV.  I've 
included a WAPA map below which indicates this line.  Also, on the site is a 
water pipeline owned by the Cyprus Amax Bagdad mine.  Water for the plant 
will come from an encapusulated water table through deep wells.  They have 
currently dug the first two test wells, each capable of 500 cfm.  The power 
plant will require approximately 3,500 cfm of water.  In addition to the 
wells, the plant has several thousand-acre feet of water rights to surface 
water from the Big Sandy River.  The project may also purchase water from the 
Cyprus Bagdad water pipeline.

The chief geological feature of this area is the Big Sandy River and 
associated wash.  The highway 93 roadbed follows along the river.  The area 
includes rolling hills and is principally desert terrain, with some limited 
agricultural and ranching interests.  Wickieup is a very small town with an 
estimated population of 200.

Project Schedule
Gas Turbine(s) ordered Westinghouse-Seimens  May 2000
Submit Environmental Impact Statement (EIS)  August 2000
Arrange financing     December 2000
EIS approval      March 2001
Construction begins     April 2001
Testing begins      July 2002
Commercial Operation     November 2002

There are two lead agencies for purposes of the project's EIS- the Bureau of 
Land Management (BLM Kingman office) and the Western Area Power 
Administration (WAPA).  There is only one endangered/threatened species known 
to be present in the area.

Lateral Pipeline Alignment
The most critical path item is the alignment of the lateral pipeline.  The 
alignment (lateral pipeline route) must be included in the EIS to be filed 
next month.  Caithness has spoken preliminarily with the Arizona Department 
of Transportation (ADOT) and the agency is amenable to granting an easement 
for the pipeline.  The problem appears to be in the limited amount of right 
of way available.  Measured from the shoulder to the fenceline, there is only 
a 70 ft. right of way available for construction.  Typically, pipelines 
require a 100 ft. temporary construction easement and 50 ft. of permanent 
right of way.  Preliminary discussions indicate another problem with this 
alignment may be the roadway's routing within the wash of the riverbed.

If the highway 93 corridor is unsuitable for the pipeline, the second 
alternative appears to be running the pipeline down the adjacent N/S section 
line.  The problem with this approach is that as the line nears the site, the 
routing would have to contend with the river bed and wash areas, possibly 
necessitating deep burial and anchoring.  The other route would involve 
following along the WAPA electric transmission corridor.  The only issue 
there, aside from whether WAPA would permit the pipeline encroachment, is 
whether there are safety and/or corrosion concerns associated with a high 
pressure gas line located under a high voltage transmission system.

Other Preliminary Project Issues
There are other fundamental issues to address.  The original concept was to 
interconnect the proposed Transwestern lateral with El Paso's northern 
mainline and the yet-to-be-constructed Questar Southern Trails Pipeline, both 
of which lay adjacent to Transwestern's mainline.  Transwestern's original 
estimate to construct a 16" lateral pipeline and meter station ($20.3MM) was 
based on the following specifications:

120 MMcf/d
450 psig delivery pressure,
900 psig inlet pressure

The meeting resulted in a revised set of specifications that now include a 
higher 550 psig minimum delivery pressure (new technology Westinghouse 
turbines).  In addition, our understanding is that EPNG's system operates at 
a pressure 100-150 psig lower than Transwestern's.  In order to accommodate 
EPNG deliveries and to account for the new higher minimum pressure, the 
design will likely change to a 20" pipeline.

Next Steps (responsible party/department)
 Task      Date Due Party/Dept. 
Pipeline Alignment
1. Estimate to plot lateral pipeline route.     8/4  Matthews/Chanley
2. Engineering services agreement    8/4  Scott/Fawcett
3. Final alignment sheets.    8/25  Matthews/Chanley

Misc. Items
1.   Confidentiality Agreement   7/24  Scott/Fawcett
2. Data items to Caithness
 -  Form 567     7/26  Matthews
 -  Gallup FERC filing (flow diagram)  7/26  Scott
 -  Sta. 1 and Needles flow/pressure data  7/28  Matthews
 -  Outage reports/maintenance schedules 7/28  Matthews

Engineering/Design
1.   Original estimate (16" line) to Caithness  7/24  Matthews
2.  Revised specifications to Transwestern  7/28  Caithness (T.P.)
3.   Revised estimate (20" line) to Caithness    8/4  Matthews/Chanley 

Other Issues
Several key issues need to be addressed concurrently with the pipeline 
alignment and engineering activities:

 Task      Date Due Party/Dept. 
Deal Structuring
1. Financing/cost amortization     9/8  Fawcett/Hayslett
/Centilli/Goodrow
2. Research interconnect policy (EPNG)    8/4  Scott/Regulatory
3. Research 7(c) application requirements  8/11  Scott/Regulatory
4. Rates      9/22  Scott/Regulatory
/Centilli
5. Research open season requirements  8/18  Scott/Regulatory

The above list is certainly not meant to be all-inclusive and a kick-off 
meeting to discuss the project schedule will be put together shortly.  In the 
meantime, if you have any questions regarding this project, please let me 
know.  Also, please feel free to forward this memo to anyone I've 
inadvertently left off the distribution.  Thanks.