I am writing you to inform you of an incident that occurred at the NCL
FRACTIONATOR this week. I would like to go into detail on what occurred to
ensure that everyone has a good understanding of what kind of employee is
involved and the potential for further intentional acts like this from this
disgruntled employee. I would like to have some feedback on this to ensure
that we take the necessary means to ensure that we cover all of the basis.

On Wednesday 1/31/01 we had a PSV go off on one of our process vessels due
to a plant upset. I was notified that the incident was minimal with no
spill or Hydrocarbon release which exceeded the reportable quantity. I
quickly drove to the sight and investigated the incident, I found the
information to be true. There was no detectable hydrocarbon, only a small
amount of rust on the ground which was ejected from the inside of the
emergency stack. I notified the head plant operator & requested an incident
report to be filled out, which he has since delivered to me. I checked the
stack chart and noticed only a small release. At this point I felt that
there was no reason to call in a breakdown to the APCD because we had
neither exceeded the reportable quantity, and the equipment did as it was
designed breaking no rules. I then assigned a clean up crew and an employee
to inspect the PSV's and ensure the proper operation of the equipment
involved. All was cleaned up and the equipment serviced properly, and I am
currently going over the incident report with our safety coordinator.

During the clean up on the day of the incident I was approached by our
Utility Operator Clark Layshot who was on during the incident. Clark was
very upset and was pointing the finger at Mark Stringer who was the Head
Operator on duty. Clark said that the PSV had gone off for an hour and had
released over 5000 gallons of NGL. I new this to be untrue for many
reasons, for one I responded quickly enough that the liquid would still
have been there on the ground, the chart showed exactly the time of
starting and stopping of the release which was just a matter of minutes, I
also new because I was on the phone with the others involved on my drive
out to the plant. I listened to Clarks remarks and let him know that I was
investigating the incident and the discussion was ended.

The following day while I was giving a operational tour to Eugene Ogorman,
I was confronted once more by Clark who said he needed to speak to me
immediately, so I excused myself and met with Clark. Clark said that I
could either have 5 hours or 2 weeks, I asked Clark what he meant and he
said that he was giving his notice. I then asked him why when he became
extremely hostile and said in many words that he was very unhappy! He told
me that everyone was liars, that ENRON was a horrible company, that the
facility was going to blow up and how he was going to kick some of the
employees asses. This went on for a while with numerous other extremely
intense encounters. I then notified my boss, Rick Suderman who in turn made
the appropriate calls.

Today we were the recipients of an incident investigation performed by the
SJVU APCD. We were met by Mike Oldershaw of the APCD who typically does our
compliance testing. Mike informed us that his office was notified of an
incident which released for 48 hours NGL through our west emergency stack.
They were also told that the ground was saturated with hydrocarbon and
insinuated that EOTT/ETS operations was trying to hide this.

Myself and Rick Suderman accompanied Mike through the complete
investigation which included inspection of the release sight, inspection of
the operator logs, inspection of the stack flow charts, and an emission
inspection of the components involved. Mike expressed to us that who ever
called in was disgruntled and obviously fabricated a story to try and
create problems for the company. We went over the permit for the usage of
the emergency stack and all agreed that we were not in violation. Mike was
not sure if a breakdown needed to be reported, so he agreed to call us with
the final outcome of this investigation once he discussed it with his boss.

I am happy to say that after all of this Mike Oldershaw called me back and
said that he had talked to his boss and they both agree that we followed
the rules and none were broken. Mike said that we were in compliance and
there would be no NOTICE OF VIOLATION, the equipment did as it was designed
and the operations group worked well in controlling and isolating the
situation. Mike said that he feels very good about what EOTT and ETS is
doing and the approach that we are taking to ensure compliance. I have
since notified Larry Campbell who informed me to call John steenberg and to
send an email to all of you.

If there are any questions please contact me, thanks for all of your help,
Scott