Enterprise Products Partners L.P.

SEC Filings

GULFTERRA ENERGY PARTNERS L P filed this Form 10-Q on 08/09/2004
Entire Document
  Other Matters
     Pipeline Inventory Purchase.  In June 2004, we executed an agreement with
EPNG, a subsidiary of El Paso Corporation, for the purchase of certain parts and
materials inventory. We paid approximately $2.1 million for the items purchased
and this inventory is included on our balance sheet as of June 30, 2004, in
other current assets.
     Petal.  In September 2003, Petal entered into a nonbinding letter of intent
with Southern Natural Gas Company, a subsidiary of El Paso Corporation,
regarding the proposed development and sale of a natural gas storage cavern, and
the proposed sale of an undivided interest in the Petal pipeline and other
facilities related to that natural gas storage cavern. The new storage cavern
would be located at our storage complex near Hattiesburg, Mississippi. In June
2004, Petal and Southern Natural Gas Company terminated their letter of intent
and Petal announced that it would hold a nonbinding open season to determine
market interest for up to 5.0 Bcf of firm natural gas storage capacity, and up
to 500,000 MMBtu/d of firm transportation on the Petal pipeline, all available
in the third quarter of 2007.
     Copper Eagle.  In August 2003, Arizona Gas Storage, L.L.C., along with its
50 percent partner APACS Holdings L.L.C., sold their interest in Copper Eagle
Gas Storage L.L.C. to EPNG. Copper Eagle Gas Storage is developing a natural gas
storage project located outside of Phoenix, Arizona. Arizona Gas Storage, L.L.C.
is an indirect 60 percent owned subsidiary of us and 40 percent owned by
IntraGas US, a Gaz de France North American subsidiary. APACS Holdings L.L.C. is
a wholly owned subsidiary of Pinnacle West Energy, a subsidiary of Pinnacle West
Capital Corporation. Under the original agreement, we have the right to receive
$6.2 million of the sale proceeds, including a note receivable for $4.9 million
to be paid quarterly beginning on January 1, 2004, and ending with a final
payment on October 1, 2004. In April 2004, Arizona Gas Storage, L.L.C., APACS
Holdings, L.L.C. and EPNG agreed to modify the payment schedule related to the
Copper Eagle purchase, and the new payment terms are expected to be finalized
during the third quarter of 2004. As of June 30, 2004, we have received
principal payments totaling $1.3 million and interest payments totaling $45
thousand from EPNG related to the note receivable.
     Indemnifications.  In addition to the related party transactions discussed
above, pursuant to the terms of many of the purchase and sale agreements we have
entered into with various entities controlled directly or indirectly by El Paso
Corporation, we have been indemnified for potential future liabilities, expenses
and capital requirements above a negotiated threshold. Specifically, an indirect
subsidiary of El Paso Corporation has agreed to indemnify us for specific
litigation matters to the extent the ultimate resolution of these matters
results in judgments against us. For a further discussion of these matters see
Note 9, Commitments and Contingencies, Legal Proceedings. Some of our agreements
obligate certain indirect subsidiaries of El Paso Corporation to pay for capital
costs related to maintaining assets which were acquired by us, if such costs
exceed negotiated thresholds. We have not made any claims during the six months
ended June 30, 2004 or 2003. However, for the full year of 2003, we made claims
for approximately $5 million of costs incurred during the year ended December
31, 2003, as costs exceeded the established thresholds for 2003.
     Wilson Storage Operating Lease Commitment.  In connection with our April
2002 purchase of the EPN Holding assets from subsidiaries of El Paso
Corporation, we obtained a long-term operating lease commitment related to the
Wilson natural gas storage facility, which is operated by one of our direct
subsidiaries. From the acquisition date until the second quarter of 2004, El
Paso Corporation guaranteed our direct subsidiary's payment and performance
under this commitment. In the second quarter of 2004, El Paso Corporation was
released from the guarantee and, thus, we now are solely liable for our direct
subsidiary's payment and performance under this operating lease agreement.