Enterprise Products Partners L.P.

SEC Filings

10-Q
GULFTERRA ENERGY PARTNERS L P filed this Form 10-Q on 08/09/2004
Entire Document
 
<PAGE>
 
     In August 2002, we acquired the Big Thicket assets, which consist of the
Vidor plant, the Silsbee compressor station and the Big Thicket gathering system
located in east Texas, for approximately $11 million from BP America Production
Company (BP). Pursuant to the purchase agreement, we have identified
environmental conditions that we are working with BP and appropriate regulatory
agencies to address. BP has agreed to indemnify us for exposure resulting from
activities related to the ownership or operation of these facilities prior to
our purchase (i) for a period of three years for non-environmental claims and
(ii) until one year following the completion of any environmental remediation
for environmental claims. Following expiration of these indemnity periods, we
are obligated to indemnify BP for environmental or non-environmental claims. We,
along with BP and various other defendants, have been named in the following two
lawsuits for claims based on activities occurring prior to our purchase of these
facilities.
 
     Christopher Beverly and Gretchen Beverly, individually and on behalf of the
estate of John Beverly v. GulfTerra GC, L.P., et. al.  In June 2003, the
plaintiffs sued us in state district court in Hardin County, Texas, requesting
unspecified monetary damages. The plaintiffs are the parents of John Christopher
Beverly, a two year old child who died on April 15, 2002, allegedly as the
result of his exposure to arsenic, benzene and other harmful chemicals in the
water supply. Plaintiffs allege that several defendants are responsible for that
contamination, including us and BP. Our connection to the occurrences that are
the basis for this suit appears to be our August 2002 purchase of certain assets
from BP, including a facility in Hardin County, Texas known as the Silsbee
compressor station. Under the terms of the indemnity provisions in the Purchase
and Sale Agreement between us and BP, we requested that BP indemnify us for any
exposure. BP has agreed to indemnify us in this matter.
 
     Melissa Duvail, et. al., v. GulfTerra GC, L.P., et. al.  In June 2003,
seventy-four residents of Hardin County, Texas, sued us and others in state
district court in Hardin County, Texas, requesting unspecified monetary damages.
The plaintiffs allege that they have been exposed to hazardous chemicals,
including arsenic and benzene, through their water supply, and that the
defendants are responsible for that exposure. As with the Beverly case, our
connection with the occurrences that are the basis of this suit appears to be
our August 2002 purchase of certain assets from BP, including a facility known
as the Silsbee compressor station, which is located in Hardin County, Texas.
Under the terms of the indemnity provisions in the Purchase and Sale Agreement
between us and BP. BP has agreed to indemnify us for this matter.
 
     Commodity Futures Trading Commission Investigation.  In April 2004, we
elected to voluntarily cooperate with the Commodity Futures Trading Commission
(CFTC) in connection with the CFTC's industry-wide investigation of activities
affecting the price of natural gas in the fall of 2003. Specifically, the CFTC
requested companies to provide information, on behalf of themselves and their
affiliates, relating to storage reports provided to the Energy Information
Administration for the period of October 2003 through December 2003. We are
cooperating fully with the CFTC's investigation and have provided requested
information for the relevant time period regarding our storage operations at our
Petal and Wilson fields.
 
     In connection with our April 2002 acquisition of the EPN Holding assets,
subsidiaries of El Paso Corporation have agreed to indemnify us against all
obligations related to existing legal matters at the acquisition date, including
the legal matters involving Leapartners, L.P. discussed below.
 
     During 2000, Leapartners, L.P. filed a suit against El Paso Field Services
and others in the District Court of Loving County, Texas, alleging a breach of
contract to gather and process natural gas in areas of western Texas related to
an asset now owned by GulfTerra Holding. In May 2001, the court ruled in favor
of Leapartners and entered a judgment against El Paso Field Services of
approximately $10 million. El Paso Field Services filed an appeal with the
Eighth Court of Appeals in El Paso, Texas. On August 15, 2003 the Court of
Appeals reversed the lower court's calculation of post judgment interest but
otherwise affirmed the judgment. A petition for review by the Texas Supreme
Court was filed, and the Supreme Court has requested full briefing of the
issues.
 
                                        21