1. Texas Gas Origination 2001 Tactical Plan
Enron North America
Texas Gas Origination Tactical Plan
July 2001

2. Tactical Plan Overview
ENA Orientation
Tactical Plan Overview
Re-staff Texas gas origination team:
Leverage existing internal resources with knowledge of TX
Leverage internal knowledge of structured transactions
Re-fill the deal pipeline:
Mid-market deals to establish information flow
Energy and asset management deals to obtain a market position
Develop a flexible/decentralized gas network of commodity, transport and storage positions
Develop a track record to demonstrate Enron’s “asset-neutral” value proposition
Work with producers, customers, and regulators to increase price transparency and transport liquidity
Participant Guide

3. Networks, Upstream Services, ECR
ENA Orientation
Resource Plan
Define customers and products – work closely with ERCOT Orig., Upstream Services, ECR, and Networks:
Transactional: Trading and mid-market activities
Structural: Structured commodity/capacity transactions
Services: EOL, Producer One, and other fee based activities
ERCOT Power Orig.
Texas Gas Orig.
Power Utilities & IPPS
D. Tingleaf
Industrial Users & Gas LDCs
Intl/Ext. Hire
Pipelines & Storage Cos.
J. Schwieger
Producers & Gatherers
Internal Hire
Transactional Products
Trading & mid-marketing gas/power
Trading & mid-marketing of transport & storage
Trading & mid-marketing of gas
Structured Products
Gas supply, power offtake, generation, energy/asset mgmt, capital
Gas supply, power offtake , generation, energy/ asset mgmt., capital,
Transport and storage capacity purchases and capacity mgmt.
Offtake, risk mgmt., asset mgmt., capital
Service Products
EOL, Networks
EOL, Upstream Services, Networks
EOL, Upstream Services, ECR
Texas Gas Orig.
Networks, Upstream Services, ECR
Participant Guide

4. Establish team and assign coverage responsibility:
ENA Orientation
Resource Plan
Establish team and assign coverage responsibility:
Each customer segment will have a lead “coordinator” and each customer will have a dedicated account manager
Develop analytical competence in each market segment
Coordination with power origination and service products groups to transfer product knowledge between customer segments
Participant Guide

5. Secure access to commodity positions:
ENA Orientation
Producers/Gatherers
Secure access to commodity positions:
Target smaller gathering companies or producers with limited marketing resources (once 3 month HPL non-compete period expires).
Target producers with limited physical access to markets.
Bundle products to aggregate supply dedicated to Enron:
Work with Networks, Producer Services, and ECR to aggregate supplies
Investigate ways to use 3rd party funds to own gathering assets and provide Enron with marketing rights
Biggest impediments/issues:
Ability to transport gas from wellhead to pooling points
Ability to process wellhead gas for delivery to pipelines
Initial targets to pursue:
Conoco – Extensive production in S. Texas; owns some firm transport on 3rd party pipes; possibly ally for developing transport trading market
Mitchell Gas Holdings – Extensive production/gathering system north of Houston – limited access to Ship Channel market
Sulphur River Gathering – Production in N. Texas with limited pipeline position
Participant Guide

6. Pipelines & Storage Operators
ENA Orientation
Pipelines & Storage Operators
Obtain access to transport/storage capacity between supply and market areas:
Convince pipelines/storage operators to market capacity via EOL.
Contract for transport/storage capacity that we can trade around.
Purchase/structure capacity that can be re-marketed via EOL.
Biggest impediments/issues:
Resistance to unbundle transportation from commodity products
Resistance to use EOL vs. “competing platforms” being developed to trade capacity (e.g., ICE, Williams).
Initial targets to pursue:
MidCon (KN): provide MidCon with a physical HSC market
El Paso (Valero, Channel): Valero competes directly with HPL (50% JV partner) to sell capacity on the A/S line – may be open to using EOL to market this capacity
Duke Energy Field Services – has significant production that it now sells to Duke Energy or markets at pooling points; potential for Enron to add value by providing trading/marketing expertise or EOL services
Participant Guide

7. Biggest impediments/issues:
ENA Orientation
Gas LDCs
Position Enron as an “asset neutral” alternative to pipeline marketing affiliates:
Demonstrate how Enron can add value through energy outsourcing or supply management deals.
Position EOL as a way for LDCs to rate Enron’s performance vs. market.
Potential opportunities for “Peoples Energy” structures where LDCs bring assets and Enron brings trading expertise.
Biggest impediments/issues:
Many LDCs currently wrapped up in term supply agreements
LDCs are conservative buyers – limited incentive to increase profitability.
Initial targets to pursue:
NET secured Corpus supply contract and has limited ability to source swing volumes
City Public Service may be interested in Enron as a fuel manager.
Work with Texas Railroad Commission and PUC to institute incentive-based rate making.
Participant Guide

8. Biggest impediments/issues:
ENA Orientation
Industrial Customers
Provide sophisticated end-users with unbundled services; Provide smaller end-users with energy mgmt.
Differentiate ourselves from pipelines by unbundling products.
Position EOL as a tool to increase liquidity and price transparency
Focus on cross selling / bundling gas and power services (total energy management).
Overcome resistance to using Enron to supply gas without having HPL as a physical transport hedge
Biggest impediments/issues:
Physical access to customer through 3rd party pipelines
Demonstrate that we can provide a secure gas supply
Initial targets to pursue:
Highly competitive, multi-connected customers: Dow Chemical, Exxon-Mobil, Dupont, Shell – focus on market making for these purchasers
Smaller less competitive players: Formosa, Air Liquide, Solvay, Javelina – focus on providing total energy management services (power/gas) for these customers
Participant Guide

9. Biggest impediments/issues:
ENA Orientation
Power Utilities / IPPs
Provide energy management services to smaller utilities/IPPs with limited marketing resources; Provide market liquidity to larger utilities and IPPS:
Position EOL as a tool to increase liquidity and price transparency for sophisticated gas purchasers.
Position Enron to provide total energy management services.
Work with utilities/IPPs to increase gas delivery options through contract transport or new interconnects
Develop mid-market business with IPPs as long term gas contracts end.
Biggest impediments/issues:
IPPs are looking for term deals to enable project finance; IPPs want Enron to participate in power offtake at favorable rates
Utilities are looking for secure supply; requires Enron to first establish its contractual transport, storage and commodity network.
Initial targets to pursue:
Highly competitive multi-connected IPPs: Texas Indep Energy, SkyGen, Sweeney, Constellation/Pace, Donohue Paper
IPPs with limited connections: ANP, Coastal/FPL, Tractabel
Participant Guide

10. Target Industrials, IPPs and Utilities
ENA Orientation
Target Industrials, IPPs and Utilities
Participant Guide

11. Biggest impediments/issues:
ENA Orientation
Network Development
Develop a flexible network of commodity, transport, and storage positions to serve customers concerned about supply and/or offtake reliability:
Acquire control or access to pipeline capacity to serve demand.
Acquire storage capacity to serve swing markets – IPPs and others
Establish direct access to both suppliers and end-use customers
Position Enron to take advantage of expected increase in price volatility and basis tightening:
Increase flexibility by being able to layoff contract positions
Minimize capital invested in hard assets to increase ROCE
Biggest impediments/issues:
Establishing a capacity position without significant capital investment
Forcing the industry to unbundle transportation and commodity products.
Participant Guide

12. Initial targets to pursue:
ENA Orientation
Network Development
Integrate EOL into Texas market to get access to power and gas information; Key points of presence:
Trading Hubs – King Ranch, Katy, Carthage
Supply Zones – Agua Dulce, Thompsonville
Market Areas – Houston Ship Channel, Beaumont
Intrastate Transportation – HPL, Midcon/KN, Tejas, El Paso, Oasis
Biggest impediment/issue: resistance of pipelines to price unbundling; Competition to EOL from other platforms
Initial targets to pursue:
Joint presentations w/ Networks to customers and the Texas Railroad Commission to push for unbundled services:
Consolidate market constituents who are pushing for enhanced price transparency and market liquidity
Position EOL as a tool to increase liquidity and price transparency
Re-enforce implementation of Code of Conduct for intrastate pipelines
Aggressively pricing of EOL service offering to develop a track record and force industry to unbundle
Participant Guide

13. Establish origination team:
ENA Orientation
Summary
Establish origination team:
Leverage internal knowledge of Texas market and structured products
Get quality origination resources who can complete energy/asset management deals
Define and develop products – force market changes:
Transport and storage products – unbundled from delivered gas.
Commodity risk management products – bundled or unbundled.
Outsourcing and asset management products
Service products
Overcome resistance to dealing with Enron without HPL
Establish and demonstrate the ability to link serve suppliers and end users in Texas without ownership of physical assets
Show benefits of being an “asset-neutral” service provider
Get contractual access to strategic capacity positions
Build customer relationships on market expertise:
Demonstrate how Enron can “create and share” value with customers
Distinguish Enron from other marketers, traders, transporters in Texas
Develop a “non-HPL” track record
Participant Guide