Today's strong gas prices have opened a new window of opportunity for a 
pipeline to move Wyoming gas into the Ventura market and downstream.   
Currently, Trailblazer is conducting an open season to expand its facilities 
for service between Wyoming and Gage County, Nebraska.   A number of our 
contacts in the Powder River (including ENA) are making decisions on 
Trailblazer capacity right now.    When we invested in the Bighorn gas 
gathering project in December of 1999 we viewed a connection between Bighorn 
and Northern Border Pipeline (250miles) as a strategic advantage to be 
exploited in the future.   Strong gas prices and the ramp of Powder River 
production are accelerating the feasibility of making a pipeline out of the 
Northern Powder River Basin a reality. 

While connecting the Powder River Basin to NBPL using an intrastate pipeline 
through Montana remains a real possibility, it also carries with it the 
negative baggage of NBPL being fully contracted through 2003 (and possibly 
beyond) with Canadian gas and a potential for Alaskan gas.  In the short term 
this presents us with some problems getting shippers to sign up for transport 
on the new Montana intrastate.

I would like you to think about the following concept .   A new interstate 
pipeline named "NBP-Dakota" extending from the Recluse, Wyoming area to 
Ventura, Iowa and going into service in November of 2003.   A tentative 
design and cost would be 24" diameter, 1435 MAOP, 480 miles, with capex of 
approximately $270 million.  Initial flow would be 300 mmcfd with expansion 
capability up to 490 mmcfd and an initial rate of just under 50 cents per mcf 
Recluse to Ventura.   At today's Ventura price of $4.22 this could leave 
Powder River producers a margin of more than $2.00 an mcf.   Using  August, 
1999,  Ventura pricing of $2.64  the margin would be 64 cents.  If we can 
build the pipeline at the cost  projected,  (NPNG has used Fort Union's 
actual construction costs for a 24 inch, 1440psi system - Enron Engineering 
would not even be in the same cost universe) "NBP Dakota" would be more 
competitive than sending the gas to NBPL via the Montana intrastate.  I am of 
the opinion that future looping the Trailblazer system would come in as 3rd 
place to the other 2 routes.  NBP Dakota would need to get started with an 
open season this fall to allow for a 2003 in-service date.  

THE QUESTION

I need your opinion about using "NBP Dakota" for this opportunity rather than 
feeding more gas into NBPL in the northern Montana area.  Strategically, are 
we willing to let NBPL carry the possible risk of decontracting after 2003 
without  support from the Powder River Basin ?  For what it may be worth,  I 
believe NBPL can handle that risk successfully without the Powder River 
volumes.   I need to know your views on this as the Montana intrastate topic 
is coming up for discussion at the  Bighorn Management Committee meeting 
later this summer.