This afternoon I met with Kurt Lindahl and Jody Crook (Global Energy Markets) 
concerning a proposal to bring LNG into California.

The project consists of converting an oil tanker into a floating vaporization 
facility, anchoring it off the coast of California and constructing a subsea 
pipeline to bring the gas onshore.  The facility would have a daily unloading 
rate of 500,000 mmbtu/d.  Approximately 172,000 mmbtu/d would go directly to 
market, with the remainder being injected into utility storage facilities for 
ultimate withdrawal prior to arrival of a new shipment of LNG.  The goal is 
to baseload a market of 172,000 mmbtu/d.

The project would have a start-up date in early 2003.  While other proposals 
are being considered to bring LNG into California, the Enron proposal is 
unique in that it is considering onshore gas storage vs offshore LNG 
storage.  Retrofitting the oil tanker takes approximately 18 months.  
Constructing an offshore LNG storage facility would take 3 years -  providing 
Enron a competitive advantage with respect to timing.   To protect this 
competitive advantage during the development stage of the project, it has 
been requested that this particular aspect  be kept confidential as long as 
possible.

Kurt and Jody have meetings scheduled next week in California with at least 
two utilities to discuss operational and tariff considerations associated 
with the utilities' providing storage service.  I am providing analysis of 
SoCalGas's storage tariff and have been requested to review  ts reflection in 
the economic modeling of the project.  Other regulatory support I assume 
would be required with respect to FERC and or CPUC authorizations.

Jeff, is this something that can be woven into the overall California 
Solutions proposal, and, how would this fit into the discussions currently 
ongoing with respect to adequacy of the California gas delivery 
infrastucture.  As this proposal would deliver gas closer to market (as 
oppossed to gas coming from the west) some savings in term of capital and 
fuel could be realized.

Kurt has offered to provide a more detailed briefing of the proposal at our 
request.