I obtained a copy of a letter sent to Gary Fuller from the Department of
Fish and Game on November 3, 2000. In the letter the Fish and Game agreed
EOTT has 41 Acres of conservation credits based on Arco Western Energy's
sale of the North Coles Levee fractionator plant and premises to Koch Oil
and Gas, and Koch's subsequent sale of the plant and premises to EOTT
ENERGY.

In the letter the following limitations and clarifications were listed:

Because the conservation credits may be used for mitigation of EOTT
impacts, or sold by EOTT to third parties for their own mitigation needs,
EOTT must affirm that it will conform to the Department's  standards for
sale of conservation credits as well as management of the credit lands.

These obligations are already implied by the chain of Koch's and then
EOTT's acquisitions  of the North Coles Levee fractionator plant. EOTT and
Department representatives will need to meet to discuss these details and
determine the most efficient means to implement these conditions.

Key provision of the obligations that attend using the conservation credits
include Department approval of third-party sales;  minimum endowment
requirements for all credit sales; management and monitoring of habitat
conditions; and additional mitigation for disturbance to dedicated habitat.

Habitat continuity and small animal movement between the North Coles
fractionator plant site and the remainder of Coles Levee Ecosystem Preserve
must be provided in order to maintain viability of the habitat within
EOTT's holdings.

 Although it appears we do have the credits for NCL, I do not know if Gary
ever met with the Fish and Game to discuss the details or means to
implement the conditions for use of the conservation credits. With the
project set to start we may have to purchase the 15.3 acres of credit from
Area.



                    John
                    Shafer@ENRON         To:     Kenny 
Maltby/Bakersfield/Eott@Eott, Scott
                                         Jones/Bakersfield/Eott@Eott
                    02/21/2001           cc:     Matt_Hughes@eott.com,
                    05:50 AM             Bob_Jacobs@eott.com, 
Molly_Sample@eott.com,
                                         Larry_Campbell%Enron@EOTT.COM,
                                         Rich_Jolly%Enron@EOTT.COM, Lawrence
                                         Clayton/Houston/Eott@Eott, Dana
                                         Gibbs/Houston/Eott@Eott, Louis
                                         Soldano/Enron@EnronXGate, William
                                         Kendrick/OTS/Enron@ENRON, Edward
                                         Attanasio/Remote/Eott@Eott, Phil
                                         Lowry/OTS/Enron@ENRON
                                         Subject:     Re: Rogas Line -- USFW 
Approval
                                         (Document link: Kenny Maltby)




Kenny and Scott,

I agree with Ed's note concerning the need to move expeditiously in the
purchase of compensation acreage noted by the US Fish and Wildlife Service
(Service) in there approval letter.  This in indeed "good news" and EOTT
must move ahead to fulfill its obligation as per the MOU and Incidental
Take Permit.  By copy of this email, I am asking Larry Campbell to work
with both of you to assist in the proper fulfillment of EOTT's obligation
as promptly as possible.

It is also my understanding, from what research I have been able to do,
that EOTT does have approximately 14 to 15 acres of credit at the North
Coles Levee Preserve.  You should verify the exact credit number and
furnish the Service with such verification.  That is acreage EOTT will not
have to purchase in satisfying the obligation of the permit.

Keep me posted as you move forward on this issue.  John Shafer





Edward_Attanasio@eott.com on 02/20/2001 07:49:31 PM

To:   Kenny_Maltby@eott.com, Scott_Jones@eott.com
cc:   Matt_Hughes@eott.com, Bob_Jacobs@eott.com, Susan_Ralph@eott.com,
      Molly_Sample@eott.com, Larry_Campbell%Enron@EOTT.COM,
      Rich_Jolly%Enron@EOTT.COM, John_Shafer@Enron.com,
      Louis_Soldano%Enron@EOTT.COM

Subject:  Rogas Line -- USFW Approval


     Randi McCormick just forwarded to me a letter addressed to EOTT, dated
February 14, 2001  from the US Fish and Wildlife Service approving our
project "for participation in the Kern Water Bank Compensation Bank," and
authorizing the Water Bank "to extend their incidental take authority to
you and your entire project under their Master Permit."  This is, of
course, very good news.

     The letter notes, however, that we still need to purchase compensation
acreage both at North Coles Levee and at the Kern Water Bank.
Specifically, we must do the following:  (1) contact Cheryl Harding of Kern
Water Bank to acquire 23.1 acres of compensation credits, and to get
included in their Master Permit; and (2) get Cheryl Harding a letter from
the Coles Levee Ecosystem Preserve (Mark Poe of Aera) stating that we have
purchased 15.3 acres of credits for North Coles Levee, or that we have set
aside that amount from credits we have in the past purchased.

     While I could make these contacts, I do not believe that would be wise
because -- as Kenny can attest -- our past experience has been that
whenever a lawyer contacts the Water Bank, it prompts them to automatically
get their lawyers involved.  And our experience has been that this only
slows things down -- or worse.

     My suggestion therefore is that one or both of you gentlemen contact
Cheryl as soon as practical and ask her for (1) proposed contract for
acquisition of 23.1 acres of compensation credits and (2) perperwork to
include EOTT (and its contractors) in their Master Permit.  She should also
be informed that, while we have not yet purchased the 15.3 acres of NCL
credits, we will by the end of this week have a letter of credit posted as
security, as allowed under our State Take Permit, to cover this amount of
acreage.  Ask whether a copy of this LC will suffice for her purposes, or
whether we will need to have the actual acreage purchased.

     As this would remove a major impediment to construction of the new
lines, it is important that we move on this will all deliberate speed.
Please call me if you have any questions, or if you would like otherwise to
discuss how to approach this issue.  Thanks a lot.

                          --ETA