fyi...
---------------------- Forwarded by Karen Denne/Corp/Enron on 05/04/2001 
07:34 PM ---------------------------
From: Gina Taylor/ENRON@enronXgate on 05/02/2001 02:52 PM
To: Karen Denne/Corp/Enron@ENRON
cc:  

Subject: FW:  Kinder Morgan And Calpine Announce Plans to Develop New Natural 
Gas Pipeline to California

fyi....

Gina


 -----Original Message-----
From:  Corman, Shelley  
Sent: Wednesday, May 02, 2001 2:40 PM
To: McCarty, Danny; Harris, Steven; Hyatt, Kevin; January, Steven; Blair, 
Lynn; Taylor, Gina; Fossum, Drew; Miller, Mary Kay
Cc: Horton, Stanley
Subject:  Kinder Morgan And Calpine Announce Plans to Develop New Natural Gas 
Pipeline to California


FYI

Wednesday May 2, 2:11 pm Eastern Time

Press Release
SOURCE: Kinder Morgan Energy Partners, L.P. and Calpine Corporation

Kinder Morgan and Calpine Announce Plans to Develop New Natural Gas Pipeline 
To California

Sonoran Accepts Binding Bid for 400,000 Dekatherms/day

HOUSTON, May 2 /PRNewswire/ -- Kinder Morgan Energy Partners, L.P. (NYSE: KMP 
- news) and national independent power company Calpine Corporation (NYSE: CPN 
- news) today announced plans to jointly develop the Sonoran Pipeline, 
subject to a successful open season and all other approvals. As proposed, the 
Sonoran Pipeline will be a 1,160-mile, high-pressure interstate natural gas 
pipeline from the San Juan Basin in northern New Mexico to markets in 
California. The project will provide much needed natural gas transportation 
capacity to California to serve rapidly growing electric generation demand. 
In addition, producers will be able to move more natural gas from the San 
Juan Basin through the Sonoran Pipeline. This will benefit California 
consumers, as access to these abundant natural gas supplies has been 
constrained due to a lack of pipeline infrastructure.

The interstate pipeline will be evaluated and developed in two phases, which 
will be subject to the jurisdiction of the Federal Energy Regulatory 
Commission (FERC). The first phase will run from the San Juan Basin to the 
California border, with the second phase extending from the California border 
to the San Francisco Bay area. The first phase of the pipeline is expected to 
be completed in the summer of 2003.

``This exciting project will enable us to grow our core business and extend 
our natural gas transportation service into new markets,'' said Richard D. 
Kinder, chairman and CEO of KMP. ``We don't currently transport natural gas 
into California, but we do own and operate the largest independent products 
pipeline on the West Coast, headquartered in Orange, Calif. We will utilize 
our expertise as a major natural gas pipeline operator and transporter to 
build the Sonoran Pipeline, and we look forward to expanding our relationship 
with Calpine, one of the leading power plant developers in America.''

According to Pete Cartwright, chairman, president and CEO of Calpine, the 
project will serve several important purposes for Calpine. ``The Sonoran 
Pipeline will help ensure a diverse supply of natural gas in California. With 
our existing plants in California, and our plans to bring on line an 
additional 9,000 megawatts of capacity, it is essential that we have a 
dependable, competitively priced source of natural gas. This important new 
pipeline will allow us to better control our costs in the California market 
to help lower energy prices and build needed generation. This project is a 
great example of two energy companies joining forces and utilizing their 
complementary strengths to provide real solutions to California's energy 
crisis.''

The project is expected to be developed in two phases.

Phase One:

Phase One will consist of approximately 460 miles of 36-inch, high- pressure 
natural gas interstate pipeline originating from interconnects with 
TransColorado Gas Transmission Company, Transwestern Pipeline Company and 
various points at the Blanco Hub in San Juan County, N.M. near the Colorado- 
New Mexico state line; thus providing access to the major producing basins in 
the western U.S. The pipeline will continue westward with delivery points on 
the California/Arizona border near Needles with a 20-mile, 24-inch lateral to 
Topock. The pipeline will initially transport up to 750,000 dekatherms (Dth) 
of natural gas per day and can be economically expanded with compression to 
transport up to 1.0 million Dth per day. A binding ``open season'' will be 
held this month and potential shippers will be given the opportunity to 
commit to firm capacity on the new line. Given sufficient shipper support in 
the open season, Sonoran Pipeline, LLC (Sonoran) proposes an in-service date 
in the summer of 2003. The estimated cost of phase one of the project is 
approximately $624 million. The open season will seek at a minimum, 20-year 
term commitments at a fixed transport rate of $0.39 per Dth for firm 
transportation. Sonoran proposes to charge shippers actual fuel on Phase One 
via a fuel tracker. Fuel is estimated at 1.3 percent. Sonoran has already 
received an acceptable binding bid from Calpine Energy Services, L.P. for 
400,000 Dth per day.

Phase Two:

Phase Two will be an extension of Phase One and consist of approximately 590 
miles of 36-inch and 42-inch high-pressure interstate natural gas pipeline 
continuing from Needles on the California border to points within California, 
terminating near Antioch in Contra Costa County. Depending on shipper 
interest, Phase Two will transport from 1.0 to 1.5 million Dth of natural gas 
per day. A non-binding ``open season'' will be held on Phase Two simultaneous 
with the Phase One open season, and potential shippers will be given the 
opportunity to express their interest in obtaining firm capacity to 
California delivery points. Sonoran has already received a non-binding bid 
from Calpine Energy Services, L.P. for 500,000 Dth per day for Phase Two. The 
estimated cost of Phase Two is approximately $1.1 billion.

The pipeline could connect with several gas pipelines, utilities and 
suppliers, such as Kern River, Mojave, Elk Hills, Pacific Gas and Electric 
Company, Southern California Gas and numerous gas-fired power plants, 
including Calpine's, along its route. Additionally, Sonoran would consider 
other potential connections in accordance with shipper requests.

After finalizing precedent agreements, in which shippers make binding 
contractual commitments to capacity on the line, Sonoran Pipeline will file 
an application for approval of the project with the FERC. Sonoran expects to 
utilize existing right-of-way corridors as much as possible to minimize 
potential environmental impact. Shippers seeking additional information on 
the project should contact Vice President Scott Parker at (630) 691-3689 or 
Project Director Ron Happach at (630) 691-3622.

Based in San Jose, Calif., Calpine Corporation is dedicated to providing 
customers with reliable and competitively priced electricity. Calpine is 
focused on clean, efficient, natural gas-fired generation and is the world's 
largest producer of renewable geothermal energy. Calpine has launched the 
largest power development program in North America. To date, the company has 
approximately 31,200 megawatts of base load capacity and 6,800 megawatts of 
peaking capacity in operation, under construction, and in announced 
development in 28 states and Canada. The company was founded in 1984 and is 
publicly traded on the New York Stock Exchange under the symbol CPN. For more 
information about Calpine, visit its website at www.calpine.com.

Kinder Morgan Energy Partners, L. P. is the nation's largest pipeline master 
limited partnership with an enterprise value of more than $7 billion. It owns 
and operates one of the largest product pipeline and terminal systems in the 
country. In addition, it is a major transporter of natural gas, operating 
more than 10,000 miles of pipeline; is the nation's leading provider of CO2 
for use in enhanced oil recovery projects; and is one of the largest 
operators of bulk terminals, with 29 terminals which transload 40 million 
tons of coal, petroleum coke and other products annually. The general partner 
of KMP is owned by Kinder Morgan, Inc. (NYSE: KMI - news), one of the largest 
midstream energy companies in America, operating more than 30,000 miles of 
natural gas and product pipelines. KMI also has significant retail 
distribution, electric generation and terminal assets. Combined, the two 
companies have an enterprise value of approximately $17 billion.

This news release includes forward-looking statements within the meaning of 
Section 27A of the Securities Act of 1933 and Section 21E of the Securities 
Exchange Act of 1934. Although Kinder Morgan believes that its expectations 
are based on reasonable assumptions, it can give no assurance that such 
assumptions will materialize. Important factors that could cause actual 
results to differ materially from those in the forward-looking statements 
herein are enumerated in Kinder Morgan's Form 10-K and 10-Q as filed with the 
Securities and Exchange Commission.

This news release discusses certain matters that may be considered 
``forward-looking'' statements within the meaning of Section 27A of the 
Securities Act of 1933, as amended, and Section 21E of the Securities 
Exchange Act of 1934, as amended, including statements regarding the intent, 
belief or current expectations of Calpine Corporation (``the Company'') and 
its management. You are cautioned that any such forward-looking statements 
are not guarantees of future performance and involve a number of risks and 
uncertainties that could materially affect actual results such as, but not 
limited to, (i) changes in government laws and regulations, (ii) the results 
of proceedings before regulatory bodies or courts with jurisdiction over the 
project, (iii) commercial operations of the project that may be delayed or 
prevented because of various development and construction risks such as the 
inability to obtain financing and the necessary permits to operate, the 
acquisition of rights-of-way, or the failure of third party contractors to 
perform their contractual obligations, (iv) cost estimates are preliminary 
and actual costs may be higher than estimated, which could adversely affect 
the return on investment, (v) other market responses of competitors, (vi) 
future demand for natural gas in the markets the pipeline proposes to serve, 
(vii) the risks associated with engineering, designing and installing 
pipeline parts and components, or (viii) delivery and performance risks 
associated with pipeline parts and components attributable to production, 
quality control, suppliers and transportation. You are also referred to the 
other risks identified from time to time in the Company's reports and 
registration statements filed with the Securities and Exchange Commission.

SOURCE: Kinder Morgan Energy Partners, L.P. and Calpine Corporation