The DD LLC Trustees are required to treat for all purposes whatsoever the member party to the DD LLC Voting Trust Agreement as the beneficial owner of the membership interests of Dan Duncan LLC.  The estate of Mr. Duncan became the sole member party to the DD LLC Voting Trust Agreement upon the death of Mr. Duncan on March 29, 2010.  However, the DD LLC Trustees collectively are the record owners of the Dan Duncan LLC membership interests and possess and are entitled to exercise all rights and powers of absolute ownership thereof and to vote, assent or consent with respect thereto and to take party in and consent to any corporate or members’ actions (except those actions, if any, to which the DD LLC Trustees may not legally consent) and subject to the provisions of the DD LLC Voting Trust Agreement, to receive dividends and distributions on the Dan Duncan LLC membership interests.  Except as otherwise provided in the DD LLC Voting Trust Agreement, all actions taken by the DD LLC Trustees are by majority vote.

The DD LLC Trustees serve in such capacity without compensation, but they are entitled to incur reasonable charges and expenses deemed necessary and proper for administering the DD LLC Voting Trust Agreement and to reimbursement and indemnification.

The DD LLC Voting Trust Agreement will terminate when (i) the descendants of Mr. Duncan, and entities directly or indirectly controlled by or held for the benefit of any such descendant, no longer own any capital stock of EPCO (as defined below); or (ii) upon such earlier date designated by the DD LLC Trustees by an instrument in writing delivered to the member party to the DD LLC Voting Trust Agreement.

On April 27, 2010, the independent co-executors for the estate of Mr. Duncan were appointed by the probate court.  The independent co-executors are Mr. Bachmann, Dr. Cunningham and Ms. Williams, who are the same persons as the current DD LLC Trustees and voting trustees under a separate voting trust agreement relating to a majority of EPCO’s outstanding shares with voting rights (as more fully described below).

References to “EPCO” mean Enterprise Products Company (formerly EPCO, Inc.) and its privately held affiliates.  Prior to Mr. Duncan’s death, we, Enterprise Products Partners, EPO, DEP GP, EPGP, Enterprise GP Holdings and EPE Holdings were affiliates under the common control of Mr. Duncan, since he was the controlling shareholder of EPCO and the controlling member of Dan Duncan LLC.  A majority of the outstanding voting capital stock of EPCO is owned of record by a voting trust formed on April 26, 2006, pursuant to the EPCO Inc. Voting Trust Agreement (the “EPCO Voting Trust Agreement”), among EPCO and Mr. Duncan (as the record owner of a majority of the outstanding voting capital stock of EPCO immediately prior to the entering into of the EPCO Voting Trust Agreement and as the initial sole voting trustee).

Immediately upon Mr. Duncan’s death, voting and dispositive control of such majority of the outstanding voting capital stock of EPCO was transferred pursuant to the EPCO Voting Trust Agreement to three voting trustees (the “EPCO Trustees”).  The current EPCO Trustees are: (i) Ms. Williams, who serves as Chairman of EPCO; (ii) Dr. Cunningham, who serves as a Vice Chairman of EPCO; and (iii) Mr. Bachmann, who serves as the President, CEO and Chief Legal Officer of EPCO.  Ms. Williams, Dr. Cunningham and Mr. Bachmann are also currently directors of EPCO.  The current EPCO Trustees are the

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same as the current DD LLC Trustees, which control Dan Duncan LLC.  The current EPCO Trustees are also the same persons as the individuals appointed on April 27, 2010 as the independent co-executors of the estate of Mr. Duncan.  At June 30, 2010, Dan Duncan LLC and EPCO also beneficially owned approximately 18% and 57%, respectively, of the outstanding units representing limited partner interests of Enterprise GP Holdings.

References to the “DEP I Midstream Businesses” collectively refer to (i) Mont Belvieu Caverns, LLC (“Mont Belvieu Caverns”); (ii) Acadian Gas, LLC (“Acadian Gas”); (iii) Enterprise Lou-Tex Propylene Pipeline L.P. (“Lou-Tex Propylene”), including its general partner; (iv) Sabine Propylene Pipeline L.P. (“Sabine Propylene”), including its general partner; and (v) South Texas NGL Pipelines, LLC (“South Texas NGL”).  We acquired controlling ownership interests in the DEP I Midstream Businesses from EPO effective February 1, 2007 in a drop down transaction (the “DEP I drop down”) in connection with our initial public offering.

 

References to the “DEP II Midstream Businesses” collectively refer to (i) Enterprise GC, L.P. (“Enterprise GC”); (ii) Enterprise Intrastate L.P. (“Enterprise Intrastate”); and (iii) Enterprise Texas Pipeline LLC (“Enterprise Texas”).  We acquired controlling ownership interests in the DEP II Midstream Businesses from EPO on December 8, 2008 in a drop down transaction (the “DEP II drop down”).  Our ownership interests in the DEP II Midstream Businesses are held by Enterprise Holding III, LLC, which is a wholly owned subsidiary of DEP OLP.  Ownership interests in the DEP II Midstream Businesses that were retained by EPO are held by its wholly owned subsidiary, Enterprise GTM Holdings L.P.

 

References to “Evangeline” mean our aggregate 49.51% equity method investment in Evangeline Gas Pipeline Company, L.P. (“EGP”) and Evangeline Gas Corp (“EGC”).

References to “Energy Transfer Equity” mean the business and operations of Energy Transfer Equity, L.P. and its consolidated subsidiaries, which include Energy Transfer Partners, L.P. (“ETP”) and, effective May 26, 2010, Regency Energy Partners LP (“RGNC”).  Energy Transfer Equity is a publicly traded Delaware limited partnership, the common units of which are listed on the NYSE under the ticker symbol “ETE.”  ETP is a publicly traded Delaware limited partnership, the common units of which are listed on the NYSE under the ticker symbol “ETP.”  RGNC is a publicly traded Delaware limited partnership, the common units of which are traded on the NASDAQ stock market under the ticker symbol “RGNC.”  The general partner of Energy Transfer Eq uity is LE GP, LLC. 

References to the “Employee Partnerships” mean EPE Unit L.P. (“EPE Unit I”), EPE Unit II, L.P. (“EPE Unit II”), EPE Unit III, L.P. (“EPE Unit III”), Enterprise Unit L.P. (“Enterprise Unit”) and EPCO Unit L.P. (“EPCO Unit”), collectively, all of which are privately held affiliates of EPCO.

As generally used in the energy industry and in this discussion, the identified terms have the following meanings:

	/d	= per day
	BBtus	= billion British thermal units
	MBPD	= thousand barrels per day
	MMBbls	= million barrels
	MMBtus	= million British thermal units
	MMcf	= million cubic feet
	Bcf	= billion cubic feet

Cautionary Note Regarding Forward-Looking Statements

This discussion contains various forward-looking statements and information that are based on our beliefs and those of our general partner, as well as assumptions made by us and information currently available to us.  When used in this document, words such as “anticipate,” “project,” “expect,” “plan,” “seek,” “goal,” “estimate,” “forecast,” “intend,” “could,” “should,” “will,” “believe,” “may,” “potential” and similar expressions and statements regarding our plans and objectives for future operations, are intended to identify forward-looking statements.  Although we and our general partner

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believe that such expectations reflected in such forward-looking statements are reasonable, neither we nor our general partner can give any assurances that such expectations will prove to be correct.  Such statements are subject to a variety of risks, uncertainties and assumptions as described in more detail in Item 1A “Risk Factors” included in our annual report on Form 10-K for the year ended December 31, 2009, as filed on March 1, 2010 and in Part II, Item 1A of our quarterly report on Form 10-Q for the quarter ended March 31, 2010 and this quarterly report on Form 10-Q.  If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or expected.   ;You should not put undue reliance on any forward-looking statements.  The forward-looking statements in this quarterly report speak only as of the date hereof.  Except as required by federal and state securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or any other reason.

Overview of Business

We are a publicly traded Delaware limited partnership, the common units of which are listed on the NYSE under the ticker symbol “DEP.”  We provide midstream energy servicesto producers and consumers of natural gas, natural gas liquids (“NGLs”), refined products and petrochemicals.  Our assets, located primarily in Texas and Louisiana, include: 11,000 miles of natural gas, NGL and petrochemical pipelines; two NGL fractionation facilities, approximately 18 MMBbls of leased NGL storage capacity; 8.1 Bcf of leased natural gas storage capacity and 34 underground salt dome caverns with over 100 MMBbls of NGL storage capacity.

Our midstream energy operations include: natural gas transportation, gathering, marketing and storage; NGL transportation, fractionation and marketing; NGL and petrochemical products storage; and transportation of petrochemical products.  We have three reportable business segments: (i) NGL Pipelines & Services; (ii) Natural Gas Pipelines & Services; and (iii) Petrochemical Services.  Our business segments reflect the manner in which these businesses are managed and reviewed by the CEO of our general partner.

We are owned 99.3% by our limited partners and 0.7% by our general partner, DEP GP.  At June 30, 2010, EPO owned approximately 58.5% of Duncan Energy Partners’ limited partner interests and 100% of DEP GP.  DEP GP is responsible for managing the business and operations of Duncan Energy Partners. We have no employees.  All of our operating functions and general and administrative support services are provided by employees of EPCO pursuant to an administrative services agreement (or “ASA”) or by other service providers.

Our relationship with EPO is one of our principal business advantages.  Our assets connect to various midstream energy assets of EPO and form integral links within EPO’s value chain of assets.  We believe that the operational significance of our assets to EPO, as well as the alignment of our respective economic interests in these assets, will result in a collaborative effort between us and EPO to promote the operational efficiency of our assets and maximize their value.  See Note 13 of Item 1 of this quarterly report on Form 10-Q for additional information regarding our relationship with Enterprise Products Partners, EPO and EPCO.

DEP I Drop Down

Effective February 1, 2007, EPO contributed to us a 66% controlling equity interest in each of the DEP I Midstream Businesses in a drop down transaction.  EPO retained the remaining 34% noncontrolling equity interest in each of these businesses.  As consideration for these equity interests, we paid $459.5 million in cash and issued 5,351,571 common units to EPO.  The cash portion of this consideration was financed with $198.9 million in borrowings under our $300 million unsecured revolving credit facility (the “Revolving Credit Facility”) and $260.6 million of the $290.5 million of net proceeds from our initial public offering.  The following is a brief description of the assets and operations of the DEP I Midstream Businesses:

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§	Mont Belvieu Caverns owns 34 underground salt dome storage caverns located in Mont Belvieu, Texas, having an NGL and related product storage capacity of approximately 100 MMBbls, and a brine system with approximately 20 MMBbls of above ground storage capacity and related brine production wells.

 

§

Acadian Gas is engaged in the gathering, transportation, storage and marketing of natural gas in south Louisiana, utilizing over 1,000 miles of pipelines having an aggregate throughput capacity of 1.0 Bcf/d.  Acadian Gas also owns a 49.51% equity interest in Evangeline, which owns a 27-mile natural gas pipeline located in southeast Louisiana.

§	Lou-Tex Propylene owns a 263-mile pipeline used to transport chemical-grade propylene from Sorrento, Louisiana to Mont Belvieu, Texas.

§	Sabine Propylene owns a 21-mile pipeline used to transport polymer-grade propylene from Port Arthur, Texas to a pipeline interconnect in Cameron Parish, Louisiana.

§	South Texas NGL owns a 297-mile pipeline system used to transport NGLs from our Shoup and Armstrong NGL fractionation facilities in south Texas to Mont Belvieu, Texas.

DEP II Drop Down

On December 8, 2008, EPO contributed to us the following controlling equity interests in a second drop down transaction: (i) a 66% voting general partner interest in Enterprise GC, (ii) a 51% voting general partner interest in Enterprise Intrastate and (iii) a 51% voting membership interest in Enterprise Texas.  As consideration for these equity interests, we paid $280.5 million in cash and issued 37,333,887 Class B units to EPO (which automatically converted on a one-for-one basis to common units in February 2009).  The cash portion of this consideration was financed with $280.0 million in borrowings under our $300.0 million senior unsecured term loan agreement (the “Term Loan Agreement”) and $0.5 million of net proceeds from an equity offering to EPO.
60; The market value of the Class B units at the time of issuance was approximately $449.5 million.  The following is a brief description of the assets and operations of the DEP II Midstream Businesses:

§

Enterprise GC operates and owns: (i) two NGL fractionation facilities, the Shoup and Armstrong facilities, located in south Texas; (ii) a 1,020-mile NGL pipeline system located in south Texas; and (iii) 1,108 miles of natural gas gathering pipelines located in south and west Texas.  Enterprise GC’s natural gas gathering pipelines include: (i) the 258-mile Big Thicket Gathering System located in southeast Texas; (ii) the 660-mile Waha system located in the Permian Basin of west Texas; and (iii) the 190-mile TPC Offshore gathering system located in south Texas.

§	Enterprise Intrastate operates and owns an undivided 50% interest in the assets comprising the 641-mile Channel natural gas pipeline, which extends from the Agua Dulce Hub in south Texas to Sabine, Texas located on the Texas/Louisiana border.

§

Enterprise Texas owns the 6,560-mile Enterprise Texas natural gas pipeline system, which includes the Sherman Extension, and leases the Wilson natural gas storage facility.  The Enterprise Texas system, along with the Waha, TPC Offshore and Channel pipeline systems, comprise our Texas Intrastate System.

To the extent that the DEP II Midstream Businesses collectively generate cash sufficient to pay distributions to EPO and us, such cash will be distributed first to us (based on an initial defined investment of $730.0 million) and then to EPO in amounts sufficient to generate an aggregate annualized return on their respective investments.  From December 8, 2008 through December 31, 2009, the annualized return was 11.85%.  Effective January 1, 2010, the annualized return increased by 2.0% to 12.087%.  Distributions in excess of these amounts will be distributed 98% to EPO and 2% to us.  Income and loss of the DEP II Midstream Businesses are first allocated to EPO and us based on each entity’s percentage interest of 77.4% and 22.6%, respectively, and then in a manner that in part follows the cash distributions.

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For detailed information regarding EPO’s noncontrolling interest in the DEP I and DEP II Midstream Businesses, see Note 11 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Item 1 of this quarterly report.

Our results of operations for the three and six months ended June 30, 2010 are not necessarily indicative of results expected for the full year.

Supplemental Selected Financial Information of Duncan Energy Partners L.P.

We are providing the following selected financial information to assist investors and other users of our financial statements in understanding the principal sources and uses of cash flows of Duncan Energy Partners L.P. On a standalone basis, Duncan Energy Partners L.P. has no operations apart from its investing activities and indirectly overseeing the management of the DEP I and DEP II Midstream Businesses.

The primary sources of cash flow for Duncan Energy Partners L.P. on a standalone basis are the cash distributions it receives from the DEP I and DEP II Midstream Businesses.  The primary cash requirements of Duncan Energy Partners on a standalone basis are for general and administrative costs, debt service, investments in subsidiaries and distributions to partners.  The amount of cash distributions that Duncan Energy Partners L.P. is able to pay its unitholders may fluctuate based on the level of distributions it receives from its operating subsidiaries.  Factors such as capital contributions, debt service requirements, general and administrative costs, reserves for future distributions and other cash reserves established by the board of directors of our gen eral partner may also affect the distributions Duncan Energy Partners L.P. makes to its unitholders.

For purposes of this presentation, we have provided information pertaining to the DEP I Midstream Businesses apart from those of the DEP II Midstream Businesses.

		For the Three Months								For the Six Months
		Ended June 30,								Ended June 30,
		2010				2009				2010				2009
Selected income statement information:
Equity in income - DEP I Midstream Businesses		$	11.7			$	11.4			$	22.0			$	19.8
Equity in income - DEP II Midstream Businesses		$	15.7			$	15.3			$	30.3			$	30.7
General and administrative costs		$	0.9			$	0.1			$	1.5			$	0.2
Interest expense		$	3.2			$	3.4			$	6.3			$	7.2
Net income attributable to Duncan Energy Partners L.P.		$	23.3			$	23.2			$	44.5			$	43.1
Selected balance sheet information at each period end:
Investments in DEP I Midstream Businesses		$	597.6			$	506.7			$	597.6			$	506.7
Investments in DEP II Midstream Businesses		$	696.0			$	723.5			$	696.0			$	723.5
Total debt principal outstanding		$	537.3			$	466.8			$	537.3			$	466.8
Partners’ equity		$	760.4			$	761.9			$	760.4			$	761.9

The following table presents the amount of distributions paid by the DEP I and DEP II Midstream Businesses to Duncan Energy Partners L.P. with respect to each period:

		For the Three Months								For the Six Months
		Ended June 30,								Ended June 30,
		2010				2009				2010				2009
Distributions paid to Duncan Energy Partners L.P. with respect to each period from:
DEP I Midstream Businesses		$	7.1			$	10.1			$	27.0			$	27.6
DEP II Midstream Businesses		$	22.0			$	21.6			$	44.1			$	43.3

To the extent that the DEP II Midstream Businesses collectively generate cash sufficient to pay distributions to EPO and us, such cash will be distributed first to us (the “Tier I distribution,” based on our $730.0 million aggregate investment) and then to EPO (the “Tier II distribution”), in amounts sufficient to

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generate an annualized return to both owners based on their respective investments.  Distributions in excess of these amounts (the “Tier III distributions”) will be distributed 98% to EPO and 2% to us.  

The annualized return rate from December 8, 2008 through December 31, 2009 was 11.85%, and was determined by EPO and us based on our estimated weighted-average cost of capital at December 8, 2008, plus 1.0%.  The annualized return rate increases by 2.0% on January 1 of each year.  As a result, the annualized return rate for fiscal 2010 is 12.087%.  If we participate in an expansion capital project involving the DEP II Midstream Businesses, we may request an incremental adjustment to the then-applicable annualized return rate to reflect our weighted-average cost of capital associated with such contribution.

The annualized return rate is applied to each party’s aggregate investment (or “Distribution Base”) in the DEP II Midstream Businesses.  To the extent that we and/or EPO make capital contributions to fund expansion capital projects involving the DEP II Midstream Businesses, the Distribution Base of the contributing member will be increased by that member’s capital contribution at the time such contribution is made.  At December 8, 2008 and June 30, 2010, our Distribution Base was $730.0 million.  EPO’s Distribution Base was $452.1 million and $970.1 million at December 8, 2008 and June 30, 2010, respectively.  The increase in EPO’s Distribution Base is the result of its funding 100% of the expansion capital proje cts of the DEP II Midstream Businesses since December 8, 2008.  We have not yet participated in the expansion capital project spending of the DEP II Midstream Businesses, although we may elect to invest in existing or future expansion projects at a later date.

The DEP II Midstream Businesses distributed an aggregate of $24.5 million and $21.6 million for the three months ended June 30, 2010 and 2009, respectively.  For the six months ended June 30, 2010 and 2009, the DEP II Midstream Businesses distributed an aggregate of $62.0 million and $54.2 million, respectively.  Of these amounts, EPO received $2.5 million and $13 thousand for the three months ended June 30, 2010 and 2009, respectively, and $17.9 million and $10.9 million for the six months ended June 30, 2010 and 2009, respectively.

The $22.0 million and $44.1 million received by us from the DEP II Midstream Businesses with respect to the three and six months ended June 30, 2010, respectively, represent approximately one-quarter and one-half, respectively, of the annualized return rate for 2010 of 12.087% multiplied by our Distribution Base of $730.0 million.  As a result, we received our expected Tier I distributions for the periods indicated.  Based on EPO’s Distribution Base, it was entitled to $29.3 million and $55.9 million of Tier II distributions for the three and six months ended June 30, 2010, respectively, of which it received $2.5 million and $17.9 million, respectively.  No Tier III distributions were paid by the DEP II Midstream Businesses with respect to the first si x months of 2010.

Net income (or loss) of the DEP II Midstream Businesses is first allocated to us and EPO based on each entity’s percentage interest of 22.6% and 77.4%, respectively, and then in a manner that in part follows the cash distributions paid by (or contributions made to) each DEP II Midstream Business.  Under our income sharing arrangement with EPO, we are allocated additional income (in excess of our percentage interest) to the extent that the cash distributions we receive (or contributions made) exceed the amount we would have been entitled to receive (or required to fund) based solely on our percentage interest.  This additional earnings allocation to us reduces the amount of income allocated to EPO by an equal amount and may result in EPO being allocated a loss wh en we are allocated income.  Our participation in the expected future increase in cash flow from such projects is limited (beyond our annualized return amount) to 2% of such upside, with EPO receiving 98% of the benefit.

For information regarding the non-cash depreciation, amortization and accretion amounts of the DEP I and DEP II Midstream Businesses on a 100% basis, see Note 17 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Item 1 of this quarterly report.

 

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Significant Recent Developments

The following information highlights specified significant developments since January 1, 2010 through the date of this filing, including (i) information relevant to an understanding of our financial condition, changes in financial condition or results of operations, and (ii) certain unusual or infrequent events or transactions and known trends or uncertainties that have had or that we reasonably expect may have a material impact on our revenues or income from continuing operations.  For a discussion of recent regulatory matters, see Part II – Item 1A “Risk Factors”. 

$200.0 Million Loan Agreement with EPO

On June 1 2010, we entered into a $200.0 million revolving loan agreement with EPO (the “Loan Agreement”).  Proceeds from any borrowings under the Loan Agreement will be used for costs incurred in connection with the Haynesville Extension and for general partnership purposes.  There were no borrowings under the Loan Agreement at June 30, 2010.  See Note 9 under Item 1 of this quarterly report for additional information regarding the Loan Agreement.

Expansion of Shoup and Armstrong Fractionation Facilities

In May 2010, we and Enterprise Products Partners announced plans to expand our jointly owned Shoup and Armstrong fractionation facilities (both of which are part of the DEP II Midstream Businesses).  This expansion project will provide us with the ability to accommodate increased NGL volumes due to increased natural gas production from the Eagle Ford natural gas supply basin.  On June 27, 2010, we completed the modifications to the Shoup facility, which increased its NGL fractionation capacity to 77 MBPD.  Modifications to the infrastructure at the Armstrong facility are planned to increase capacity to more than 20 MBPD and is expected to be completed in the fourth quarter of 2010.  In addition to the increased NGL volumes, the planned upgrades at the Armstrong facility would allow it to process the more liquid-rich natural gas supply that is found in the Eagle Ford natural gas supply basin.  We are not contributing capital to fund this expansion; EPO is contributing 100% of the associated expansion costs.

Haynesville Extension

We have elected to participate in the announced expansion (the “Haynesville Extension”) of the Acadian Gas System, which will extend our Louisiana intrastate natural gas pipeline system into northwest Louisiana and the Haynesville Shale production area.  This expansion project is expected to be completed during the third quarter of 2011.  On June 1, 2010, we entered into the Amended Acadian LLC Agreement with EPO.  This document reflects the agreement between EPO and us regarding funding arrangements for the Haynesville Extension.  We have agreed to fund our 66% share of such costs and EPO has agreed to fund the remaining 34% of such expenditures.  For additional information regarding the Amended Acadian LLC Agreement, see Note 13 of the Notes to Unaudited Condensed Consoli dated Financial Statements included under Item 1 of this quarterly report.

The total expected cost of the Haynesville Extension is approximately $1.55 billion (including capitalized interest).  Our construction in progress amounts at June 30, 2010 include $191.3 million of capital expenditures related to this project.  Based on the current spending forecast for this project, we expect that consolidated capital spending for the Haynesville Extension will approximate $467.0 million for the remainder of 2010.  The majority of this additional spending is expected during the fourth quarter of 2010.

 

Our 66% share of the total expected cost of the Haynesville Extension is estimated at $1.02 billion.  We expect that our 66% share of the capital spending for this project for the remainder of 2010 will approximate $308 million.  See “Liquidity and Capital Resources” under this Item 2 for more information regarding the funding of the Haynesville Extension.

 

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Registration Statements

In February 2010, we filed a registration statement with the Securities Exchange Commission (“SEC”) authorizing the issuance of up to an aggregate 1,000,000 common units in connection with an employee unit purchase plan and a long-term incentive plan that became effective on February 11, 2010.

Results of Operations

We have three reportable business segments: Natural Gas Pipelines & Services; NGL Pipelines & Services and Petrochemical Services.  Our business segments are generally organized and managed according to the type of services rendered (or technologies employed) and products produced and/or sold.

We evaluate segment performance based on the non-GAAP financial measure of gross operating margin.  Gross operating margin (either in total or by individual segment) is an important performance measure of the core profitability of our operations.  This measure forms the basis of our internal financial reporting and is used by management in deciding how to allocate capital resources among business segments.  We believe that investors benefit from having access to the same financial measures that our management uses in evaluating segment results.  The GAAP financial measure most directly comparable to total segment gross operating margin is operating income.  Our non-GAAP financial measure of total segment gross operating margin should not be considered as an alternative to GAAP operating income.

Selected Volumetric Data

The following table presents average throughput and fractionation volumes for our principal pipelines and facilities for the periods indicated.  These statistics are presented in total for each asset (or asset group) irrespective of ownership interest (i.e., on a 100% basis), with the exception of pipeline throughput volumes for Evangeline (a component of the Acadian Gas System).  We report volumes for Evangeline on a net basis to our ownership interest.

		For the Three Months								For the Six Months
		Ended June 30,								Ended June 30,
		2010				2009				2010				2009
Natural Gas Pipelines & Services:
Natural gas throughput volumes (BBtus/d)
Texas Intrastate System			3,866				3,982				3,802				4,056
Acadian Gas System:
Transportation volumes			451				445				430				414
Sales volumes (1)			313				317				316				302
Total natural gas throughput volumes			4,630				4,744				4,548				4,772
NGL Pipelines & Services:
NGL throughput volumes (MBPD)
South Texas NGL System - Pipelines			112				106				116				111
NGL fractionation volumes (MBPD)
South Texas NGL System - Fractionators			66				77				74				78
Petrochemical Services:
Propylene throughput volumes (MBPD)
Lou-Tex Propylene Pipeline			24				18				22				15
Sabine Propylene Pipeline			13				10				12				10
Total propylene throughput volumes			37				28				34				25
(1)   Includes average net sales volumes for Evangeline of 23.2 BBtus/d and 54.8 BBtus/d for the three months ended June 30, 2010 and 2009, respectively. For the six months ended June 30, 2010 and 2009, net sales volumes for Evangeline were 29.4 BBtus/d and 45.0 BBtus/day, respectively.

 

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Comparison of Consolidated Results of Operations

The following table summarizes key components of our consolidated income statement for the periods indicated (dollars in millions):

		For the Three Months								For the Six Months
		Ended June 30,								Ended June 30,
		2010				2009				2010				2009
Revenues		$	265.2			$	226.7			$	555.8			$	483.5
Operating costs and expenses			245.1				215.5				512.3				454.9
General and administrative costs			4.8				2.8				9.7				5.6
Equity in income of Evangeline			--				0.3				0.2				0.5
Operating income			15.3				8.7				34.0				23.5
Interest expense			3.2				3.4				6.3				7.2
Provision for income taxes			0.3				0.8				0.2				0.9
Net income			11.8				4.5				27.5				15.5
Net loss (income) attributable to noncontrolling interest:
DEP I Midstream Businesses – Parent			(7.8	)			(3.0	)			(12.5	)			(4.6	)
DEP II Midstream Businesses – Parent			19.3				21.7				29.5				32.2
Net income attributable to Duncan Energy Partners L.P.			23.3				23.2				44.5				43.1

For information regarding noncontrolling interest, see Note 11 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Item 1 of this quarterly report.

Our gross operating margin by business segment and in total is presented as follows for the periods indicated (dollars in millions):

		For the Three Months								For the Six Months
		Ended June 30,								Ended June 30,
		2010				2009				2010				2009
Natural Gas Pipelines & Services		$	37.1			$	30.2			$	79.6			$	69.0
NGL Pipelines & Services			31.6				24.2				58.5				45.0
Petrochemical Services			2.8				2.6				5.2				5.1
Total segment gross operating margin		$	71.5			$	57.0			$	143.3			$	119.1

For a reconciliation of non-GAAP gross operating margin to GAAP operating income and further to GAAP income before income taxes, see “Other Items – Non-GAAP Reconciliations” within this Item 2.  For additional information regarding our business segments, see Note 12 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Item 1 of this quarterly report.

 

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The following table summarizes the contribution to revenues from each business segment (net of eliminations and adjustments) for the periods indicated (dollars in millions):

		For the Three Months								For the Six Months
		Ended June 30,								Ended June 30,
		2010				2009				2010				2009
Natural Gas Pipelines & Services:
Sales of natural gas		$	127.4			$	98.4			$	280.6			$	235.3
Natural gas transportation services			68.2				63.2				139.0				126.4
Natural gas storage services			4.6				4.3				8.5				6.8
Total			200.2				165.9				428.1				368.5
NGL Pipelines & Services:
Sales of NGLs			11.0				8.7				21.0				14.9
Sales of other products			4.5				2.5				8.2				6.3
NGL and petrochemical storage services			28.8				25.6				55.9				49.7
NGL fractionation services			6.4				7.4				14.1				14.8
NGL transportation services			10.3				12.5				20.8				21.2
Other services			0.5				0.8				1.0				1.4
Total			61.5				57.5				121.0				108.3
Petrochemical Services:
Propylene transportation services			3.5				3.3				6.7				6.7
Total consolidated revenues		$	265.2			$	226.7			$	555.8			$	483.5

Comparison of the Three Months Ended June 30, 2010 with the Three Months Ended June 30, 2009

Revenues for the second quarter of 2010 were $265.2 million compared to $226.7 million for the second quarter of 2009.  The $38.5 million quarter-to-quarter increase in consolidated revenues is primarily due to higher energy commodity prices during the second quarter of 2010 relative to the second quarter of 2009.  This factor accounted for a $33.3 million quarter-to-quarter increase in revenues from the sale of natural gas, NGLs and other products.  Natural gas transportation revenues increased $14.5 million quarter-to-quarter due to higher firm capacity reservation fees primarily on the Sherman Extension of our Texas Intrastate System.  This recently constructed asset began earning firm capacity reservation fees during August 2009.  Rev enues from the remainder of our natural gas transportation and storage services decreased $9.2 million quarter-to-quarter primarily due to lower throughput volumes on other segments of the Texas Intrastate System.  Collectively, revenues from all other services we provide to customers decreased $0.1 million quarter-to-quarter primarily due to lower NGL fractionation volumes during the second quarter of 2010 compared to the second quarter of 2009.

Operating costs and expenses were $245.1 million for the second quarter of 2010 versus $215.5 million for the second quarter of 2009, a $29.6 million quarter-to-quarter increase.  The cost of sales of our natural gas and NGL products increased $31.9 million quarter-to-quarter primarily as a result of higher energy commodity prices.  Consolidated operating costs and expenses decreased $4.8 million quarter-to-quarter attributable to operational measurement gains and losses at our Mont Belvieu storage complex.  Such gains and losses are subsequently allocated to EPO through noncontrolling interest.  Collectively, the remainder of our consolidated operating costs and expenses increased $2.5 million quarter-to-quarter primarily due to an increase in dep reciation expense associated with recently completed assets and higher expenses related to the abandonment of certain pipeline laterals on the TPC Offshore gathering system.

Changes in our revenues and operating costs and expenses quarter-to-quarter are due in part to changes in energy commodity prices.  In general, higher energy commodity prices result in an increase in our revenues attributable to the sale of natural gas and NGLs; however, these higher commodity prices also increase the associated cost of sales as purchase prices rise.  The market price of natural gas (as measured at Henry Hub in Louisiana) averaged $4.09 per MMBtu during the second quarter of 2010 versus $3.51 per MMBtu during the second quarter of 2009.  The weighted-average indicative market price for NGLs was $1.11 per gallon during the second quarter of 2010 versus $0.76 per gallon during the second quarter of 2009.  Our determination of the wei ghted-average indicative market price for NGLs is based on U.S. Gulf Coast prices for such products at Mont Belvieu, Texas, which is the primary industry hub for domestic NGL production.

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General and administrative costs increased to $4.8 million for the second quarter of 2010 from $2.8 million for the second quarter of 2009.  The second quarter of 2010 reflects higher employee compensation expenses and includes certain expenses associated with our Haynesville Extension project.  Equity in income of Evangeline decreased $0.3 million quarter-to-quarter.

Operating income for the second quarter of 2010 was $15.3 million compared to $8.7 million for the second quarter of 2009.  Collectively, the changes in revenues, costs and expenses and equity in income of Evangeline described above resulted in the $6.6 million quarter-to-quarter increase in operating income.

Interest expense decreased $0.2 million quarter-to-quarter primarily due to lower average variable interest rates.  Income tax expense accruals for the Texas Margin Tax decreased $0.5 million quarter-to-quarter.

As a result of items noted in the previous paragraphs, net income increased $7.3 million quarter-to-quarter to $11.8 million for the second quarter of 2010 compared to $4.5 million for the second quarter of 2009.

We account for EPO’s share of the net income of the DEP I and DEP II Midstream Businesses as noncontrolling interest, which is an adjustment to net income to arrive at the amount of net income attributable to Duncan Energy Partners L.P.  EPO was attributed $7.8 million of the net income of the DEP I Midstream Businesses for the second quarter of 2010 compared to $3.0 million for the second quarter of 2009.  The quarter-to-quarter increase in EPO’s share of the net income of the DEP I Midstream Businesses is primarily due to improved earnings from these businesses and changes in the amount of operational measurement gains and losses recorded by Mont Belvieu Caverns (EPO is allocated 100% of such gains and losses).  EPO was attributed losses of $19 .3 million and $21.7 million in connection with its ownership interests in the DEP II Midstream Businesses for the second quarters of 2010 and 2009, respectively.  See Note 11 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Item 1 of this quarterly report for information regarding our determination of net income attributable to EPO’s noncontrolling interest.

The following information highlights significant quarter-to-quarter variances in gross operating margin by business segment:

Natural Gas Pipelines & Services.  Gross operating margin from this business segment was $37.1 million for the second quarter of 2010 compared to $30.2 million for the second quarter of 2009, a $6.9 million quarter-to-quarter increase.  Total natural gas throughput volumes were 4,630 BBtus/d for the second quarter of 2010 compared to 4,744 BBtus/d for the second quarter of 2009.  Gross operating margin from our Texas Intrastate System increased $8.2 million quarter-to-quarter.  A $14.5 million quarter-to-quarter increase in firm capacity reservation fee revenues on the Texas Intrastate System was partially offset by the effects of lower throughput volumes.  ; Collectively, gross operating margin for the remainder of the businesses within this segment decreased $1.3 million quarter-to-quarter primarily due to lower natural gas sales margins on our Acadian Gas System.

NGL Pipelines & Services.  Gross operating margin from this business segment was $31.6 million for the second quarter of 2010 compared to $24.2 million for the second quarter of 2009, a $7.4 million quarter-to-quarter increase.  Mont Belvieu Caverns’ recorded operational measurement gains of $3.5 million for the second quarter of 2010 compared to operational measurement losses of $1.3 million for the second quarter of 2009.  Segment gross operating margin increased $2.6 million quarter-to-quarter, excluding operational measurement gains and losses, primarily due to higher storage volumes and fees at our Mont Belvieu storage complex.

Improved results quarter-to-quarter at our Mont Belvieu storage complex were partially offset by the effects of scheduled downtime at our Shoup NGL fractionator for maintenance and facility expansion projects in anticipation of expected increases in NGL fractionation volumes from Eagle Ford shale production.  NGL fractionation volumes decreased to 66 MBPD during the second quarter of 2010 from 77 MBPD during the second quarter of 2009.

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Petrochemical Services.  Gross operating margin from this business segment was $2.8 million for the second quarter of 2010 compared to $2.6 million for the second quarter of 2009.  Petrochemical transportation volumes increased to 37 MBPD during the second quarter of 2010 from 28 MBPD during the second quarter of 2009.  The $0.2 million quarter-to-quarter increase in segment gross operating margin is due to higher transportation volumes, primarily on our Lou-Tex Propylene Pipeline.

Comparison of the Six Months Ended June 30, 2010 with the Six Months Ended June 30, 2009

Revenues for the first six months of 2010 were $555.8 million compared to $483.5 million for the first six months of 2009.  The $72.3 million period-to-period increase in consolidated revenues is primarily due to higher energy commodity prices and sales volumes during the first six months of 2010 relative to the first six months of 2009.  These factors accounted for a $53.3 million period-to-period increase in revenues from the sale of natural gas, NGLs and other products.  Natural gas transportation revenues increased $29.4 million period-to-period due to higher firm capacity reservation fees primarily on the Sherman Extension of our Texas Intrastate System.  Revenues from the remainder of our natural gas transportation and storage services decreased $15.1 million period-to-period primarily due to lower throughput volumes on other segments of the Texas Intrastate System.  Collectively, revenues from all other services we provide to customers increased $4.7 million period-to-period primarily due to higher NGL storage volumes and fees during the first six months of 2010 compared to the first six months of 2009.

Operating costs and expenses were $512.3 million for the first six months of 2010 compared to $454.9 million for the first six months of 2009, a $57.4 million period-to-period increase.  The cost of sales of our natural gas and NGL products increased $50.1 million period-to-period primarily as a result of higher energy commodity prices and sales volumes.  Consolidated operating costs and expenses related to natural gas transportation and storage services increased $4.9 million period-to-period primarily due to incremental operating costs and expenses associated with the Sherman Extension pipeline and higher expenses at our Wilson natural gas storage facility.  Consolidated operating costs and expenses decreased $7.0 million period-to-period attributable to o perational measurement gains and losses at our Mont Belvieu storage complex.  Collectively, the remainder of our consolidated operating costs and expenses increased $9.4 million period-to-period primarily due to an increase in depreciation expense associated with recently completed assets, higher expenses related to the abandonment of certain pipeline laterals on the TPC Offshore gathering system and non-cash asset impairment charges of $1.5 million we recorded during the first quarter of 2010.

Changes in our revenues and operating costs and expenses period-to-period are explained in part by changes in energy commodity prices.  The Henry Hub market price of natural gas averaged $4.70 per MMBtu during the first six months of 2010 versus $4.21 per MMBtu during the first six months of 2009.  The weighted-average indicative market price for NGLs was $1.17 per gallon during the first six months of 2010 versus $0.71 per gallon during the first six months of 2009.

General and administrative costs increased $4.1 million period-to-period to $9.7 million for the first six months of 2010 from $5.6 million for the first six months of 2009.  The first six months of 2010 reflects higher employee compensation expenses and includes certain expenses associated with our Haynesville Extension project.  Equity in income of Evangeline decreased $0.3 million period-to-period.

Operating income for the first six months of 2010 was $34.0 million compared to $23.5 million for the first six months of 2009.  Collectively, the changes in revenues, costs and expenses and equity in income of Evangeline described above resulted in the $10.5 million period-to-period increase in operating income.

Interest expense decreased $0.9 million period-to-period primarily due to lower average variable interest rates.  Income tax expense accruals for the Texas Margin Tax decreased $0.7 million period-to-period.

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As a result of items noted in the previous paragraphs, net income increased $12.0 million period-to-period to $27.5 million for the first six months of 2010 compared to $15.5 million for the first six months of 2009.

EPO was attributed $12.5 million of the net income of the DEP I Midstream Businesses for the first six months of 2010 compared to $4.6 million for the first six months of 2009.  The period-to-period increase in EPO’s share of the net income of the DEP I Midstream Businesses is primarily due to improved earnings from these businesses and changes in the amount of operational measurement gains and losses recorded by Mont Belvieu Caverns (EPO is allocated 100% of such gains and losses).  EPO was attributed losses of $29.5 million and $32.2 million in connection with its ownership interests in the DEP II Midstream Businesses for the first six months of 2010 and 2009, respectively.

The following information highlights significant period-to-period variances in gross operating margin by business segment:

Natural Gas Pipelines & Services.  Gross operating margin from this business segment was $79.6 million for the first six months of 2010 compared to $69.0 million for the first six months of 2009, a $10.6 million period-to-period increase.  Total natural gas throughput volumes were 4,548 BBtus/d for the first six months of 2010 compared to 4,772 BBtus/d for the first six months of 2009.  Gross operating margin from our Texas Intrastate System increased $10.3 million period-to-period.  A $29.4 million period-to-period increase in firm capacity reservation fee revenues on the Texas Intrastate System was partially offset by the effects of lower throughput volumes.& #160; Collectively, gross operating margin for the remainder of the businesses within this segment increased $0.3 million period-to-period primarily due to higher firm storage reservation fees at our Wilson natural gas storage facility.

NGL Pipelines & Services.  Gross operating margin from this business segment was $58.5 million for the first six months of 2010 compared to $45.0 million for the first six months of 2009, a $13.5 million period-to-period increase.  Mont Belvieu Caverns’ recorded operational measurement gains of $4.4 million for the first six months of 2010 compared to operational measurement losses of $2.6 million for the first six months of 2009.  Segment gross operating margin increased $6.5 million period-to-period, excluding operational measurement gains and losses, primarily due to higher storage volumes and fees at our Mont Belvieu storage complex.

Petrochemical Services.  Gross operating margin from this business segment was $5.2 million for the first six months of 2010 compared to $5.1 million for the first six months of 2009.  Petrochemical transportation volumes increased to 34 MBPD during the first six months of 2010 from 25 MBPD during the first six months of 2009.  A period-to-period increase in gross operating margin from the Lou-Tex Propylene Pipeline as a result of increased transportation volumes was partially offset by lower gross operating margin on the Sabine Propylene Pipeline.

Liquidity and Capital Resources

Our primary cash requirements, in addition to normal operating expenses and debt service, are for working capital, capital expenditures, business combinations and distributions to our partners.  We expect to fund our short-term needs for such items as operating expenses and sustaining capital expenditures with operating cash flows and borrowings under our Revolving Credit Facility.  Capital expenditures for long-term needs resulting from business expansion projects and acquisitions, including our share of the Haynesville Extension project described below under “– Capital Expenditures,” are expected to be funded by a variety of sources (either separately or in combination) including operating cash flows, borrowings under credit facilities, cash contri butions from our Parent, the issuance of additional equity and debt securities and proceeds from divestitures of ownership interests in assets to affiliates or third parties.  We expect to fund cash distributions to partners primarily with operating cash flows.  Our debt service requirements are expected to be funded by operating cash flows and/or refinancing arrangements.

As a result of our election to fund 66% of the Haynesville Extension project costs, we are evaluating several funding scenarios.  We believe, based on preliminary discussions with lenders, that the

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borrowing capacity under our existing $300 million Revolving Credit Facility could potentially be replaced with a new $900 million multi-year credit facility.  In the interim, until the completion of a new or amended credit facility, we entered into a $200 million revolving Loan Agreement with EPO.  Proceeds under the Loan Agreement will be used for costs incurred in connection with the Haynesville Extension and for general partnership purposes.  For information regarding the Loan Agreement, see Note 9 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Item 1 of this quarterly report.  Amounts borrowed under the Loan Agreement must be repaid by September 28, 2010.  If our long-term refinancing efforts are delayed, we expect to expand the credit cap acity and/or extend the maturity dates of any amounts borrowed under the EPO Loan Agreement to meet our liquidity and capital resource needs.

At June 30, 2010, we had approximately $259.6 million of liquidity, which includes amounts available under our revolving credit facilities, including the $200.0 million Loan Agreement with EPO.  At June 30, 2010, our total debt balance was $537.3 million, which includes $255.0 million outstanding under our Revolving Credit Facility and the $282.3 million under our Term Loan Agreement.  No borrowings were made under the Loan Agreement with EPO as of June 30, 2010.  Our bank loan agreements require us to maintain certain financial and other customary covenants.  We were in compliance with the financial covenants of our loan agreements at June 30, 2010.

It is our belief that we will continue to have adequate liquidity and capital resources to fund future recurring operating and investing activities.

Registration Statements

We may issue equity or debt securities to assist in meeting our liquidity and capital spending requirements.  We have a universal shelf registration statement on file with the Securities and Exchange Commission (the “SEC”) that allows us to issue up to an aggregate $1 billion in debt and equity securities for general partnership purposes.  After taking into account previous issuances of securities made under this registration statement, we can issue approximately $856.4 million of additional securities under this registration statement in the future.

We also have a registration statement on file with the SEC authorizing the issuance of up to an aggregate 2,000,000 common units in connection with the DRIP.  The DRIP gives unitholders of record and beneficial owners of our common units the ability to increase the number of our common units they own through voluntarily reinvesting their quarterly cash distributions into the purchase of additional common units.  Plan participants may purchase our common units at a discount ranging from 0% to 5% (currently set at 5%), which will be set from time to time by us.  We issued 21,906 common units in connection with the DRIP for the six months ended June 30, 2010, which generated proceeds of $0.5 million from plan participants.

In February 2010, we filed a registration statement with the SEC authorizing the issuance of up to an aggregate 1,000,000 common units in connection with an employee unit purchase plan and a long-term incentive plan.  These plans became effective on February 11, 2010.  For the six months ended June 30, 2010, we issued 6,348 common units in connection with the 2010 Plan and 11,017 common units in connection with the EUPP.  The EUPP generated proceeds of $0.3 million from plan participants.

 

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Consolidated Cash Flows from Operating, Investing and Financing Activities

The following table summarizes our consolidated cash flows from operating, investing and financing activities for the periods indicated (dollars in millions).  For information regarding the individual components of our cash flow amounts, see the Unaudited Condensed Statements of Consolidated Cash Flows.

		For the Six Months
		Ended June 30,
		2010				2009
Net cash flows provided by operating activities		$	106.5			$	82.4
Cash used in investing activities			290.9				223.2
Cash provided by financing activities			201.8				144.2

Comparison of Six Months ended June 30, 2010 with Six Months ended June 30, 2009

The following information highlights the significant period-to-period variances in our consolidated cash flow amounts:

Operating activities.  Net cash flows provided by operating activities were $106.5 million for the six months ended June 30, 2010 compared to $82.4 million for the six months ended June 30, 2009.  The change in operating cash flow is primarily due to a $24.2 million increase in period-to-period gross operating margin.

Investing activities.  Cash used in investing activities was $290.9 million for the six months ended June 30, 2010 compared to $223.2 million for the six months ended June 30, 2009.  The $67.7 million increase is primarily due to a $115.1 million increase in net capital expenditures as a result of our expansion projects, such as the Haynesville Extension and those on our Texas Intrastate System.  This increase was offset by a $45.6 million cash inflow in January 2010 attributable to EPO’s repayment of a temporary cash advance made in December 2009 and a $1.9 million increase in proceeds from asset sales and related transactions.

Financing activities.  Cash provided by financing activities was $201.8 million for the six months ended June 30, 2010 compared to $144.2 million for the six months ended June 30, 2009.  The period-to-period increase of $57.6 million is primarily due to (i) net borrowings of $80.0 million for the current period compared to net repayments of $17.5 million in the prio r period associated with our Revolving Credit Facility, (ii) a $13.8 million period-to-period increase in distributions to our unitholders and general partner resulting from increases in our distribution rates, (iii) an $11.1 million period-to-period increase in distributions to EPO (as noncontrolling interest) and (iv) a $15.9 million period-to-period decrease in contributions from EPO (as noncontrolling interest) primarily due to a $45.8 million period-to-period decrease in contributions from EPO related to capital expenditures on the DEP II Midstream Businesses and for general working capital purposes partially offset by a $30.9 million increase in contributions from EPO related to the Haynesville Extension made during the second quarter of 2010.

 

In June 2009, we completed a common unit offering of 8,000,000 units that generated net proceeds of approximately $123.2 million after underwriting discounts and other expenses.  Of this amount, $122.9 million was used to repurchase an equal number of our common units from EPO.  The repurchased common units were subsequently cancelled.

 

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Capital Expenditures

Part of our business strategy involves expansion through business combinations and growth capital projects. The following table summarizes our consolidated capital spending for property, plant and equipment for the periods indicated (dollars in millions):

		For the Six Months
		Ended June 30,
		2010				2009
DEP I Midstream Businesses:
Expansion capital spending (1)		$	160.7			$	18.1
Sustaining capital expenditures (2)			9.2				6.6
DEP II Midstream Businesses:
Expansion capital spending (3)			144.5				185.2
Sustaining capital expenditures (2)			28.9				16.4
Total capital spending		$	343.3			$	226.3
(1)   EPO funded 100% of expansion capital spending for 2009. In 2010, we elected to participate in the Haynesville Extension project with EPO in accordance with our respective ownership interests in Acadian Gas. (2)   Sustaining capital expenditures are capital expenditures (as defined by U.S. GAAP) resulting from improvements to and major renewals of existing assets. Such expenditures serve to maintain existing operations but do not generate additional revenues. Sustaining capital expenditures reduce the amount of cash distributions paid to Duncan Energy Partners and EPO as owners of these businesses. (3)   EPO funded 100% of expansion capital spending for the periods presented.

The majority of our capital spending during the six months ended June 30, 2010 and 2009 was attributable to ongoing expansions of the Acadian Gas System and the Texas Intrastate System, including the Haynesville Extension, Eagle Ford and Trinity River Lateral projects.

Based on information currently available, we estimate our consolidated capital spending for property, plant and equipment for the remainder of 2010 will approximate $623 million, which includes estimated expenditures of approximately $600 million for growth capital projects (including $467.0 million for the Haynesville Extension) and approximately $23 million for sustaining capital expenditures.  Our forecast of capital expenditures is based on current announced growth plans.

With respect to growth capital spending, EPO has historically funded the majority of such project costs under agreements executed in connection with the DEP I and DEP II drop down transactions.  See Notes 11 and 13 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Item 1 of this quarterly report for information regarding EPO’s funding of certain growth capital spending.

 

For information regarding expansion capital funding arrangements with EPO for the Haynesville Extension on Acadian Gas, see “Significant Relationships and Agreements with EPO – Amended Acadian LLC Agreement” under Note 13 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Item 1 within this quarterly report.  For information regarding the expansion capital funding arrangements of the DEP II Midstream Businesses, see “Significant Relationships and Agreements with EPO - Company and Limited Partnership Agreements - DEP II Midstream Businesses” under Note 13 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Item 1 within this quarterly report.

At June 30, 2010, we had approximately $449.4 million in outstanding purchase commitments that relate to our capital spending for property, plant and equipment.  These commitments primarily relate to expansion projects on our Texas Intrastate System and the Haynesville Extension.

Pipeline Integrity Costs

Our NGL, petrochemical and natural gas pipelines are subject to pipeline safety programs administered by the U.S. Department of Transportation.  This federal agency has issued safety regulations

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containing requirements for the development of integrity management programs for hazardous liquid pipelines (which include NGL and petrochemical pipelines) and natural gas pipelines.  In general, these regulations require companies to assess the condition of their pipelines in certain high consequence areas (as defined by the regulation) and to perform any necessary repairs.

The following table summarizes our pipeline integrity costs for the periods indicated (dollars in millions):

		For the Three Months								For the Six Months
		Ended June 30,								Ended June 30,
		2010				2009				2010				2009
Expensed		$	4.1			$	5.1			$	5.9			$	8.5
Capitalized			2.0				3.9				2.9				8.6
Total		$	6.1			$	9.0			$	8.8			$	17.1

We expect the costs of our pipeline integrity program, irrespective of whether such costs are capitalized or expensed, to approximate $25.7 million for the remainder of 2010.

Critical Accounting Policies and Estimates

A summary of the significant accounting policies we have adopted and followed in the preparation of our consolidated financial statements is included in our 2009 Form 10-K/A.  Certain of these accounting policies require the use of estimates.  As more fully described therein, the following estimates, in our opinion, are subjective in nature, require the exercise of judgment and involve complex analysis: depreciation methods and estimated useful lives of property, plant and equipment; measuring recoverability of long-lived assets and equity method investments; amortization methods and estimated useful lives of qualifying intangible assets; methods we employ to measure the fair value of goodwill; revenue recognition policies and use of estimates for revenues and expense s; reserves for environmental matters; and natural gas imbalances. These estimates are based on our current knowledge and understanding of the underlying facts and circumstances and may change as a result of actions we take in the future.  Changes in these estimates will occur as a result of the passage of time and the occurrence of future events.  Subsequent changes in these estimates may have a significant impact on our financial position, results of operations and cash flows.

 

Other Items

Contractual Obligations

With the exception of routine fluctuations in the balance of our Revolving Credit Facility and short-term payment obligations relating to capital projects initiated by us, there have been no significant changes in our contractual obligations since those reported in our 2009 Form 10-K/A.  See “Liquidity and Capital Resources – Capital Expenditures” within this Item 2 for more information related to our capital expenditures.

Insurance Matters

We participate as a named insured in EPCO’s insurance program, which provides us with property damage, business interruption and other coverages, the scope and amounts of which we believe are customary and sufficient for the nature and extent of our operations.  We recently completed our annual insurance policy renewal process.  For additional information regarding insurance matters, see Note 16 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Item 1 of this quarterly report.

Non-GAAP Reconciliations

A reconciliation of our measurement of total non-GAAP segment gross operating margin to

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GAAP operating income and further to income before provision for income taxes for the periods indicated (dollars in millions):

 

		For the Three Months								For the Six Months
		Ended June 30,								Ended June 30,
		2010				2009				2010				2009
Total non-GAAP segment gross operating margin		$	71.5			$	57.0			$	143.3			$	119.1
Adjustments to reconcile total non-GAAP segment
gross operating margin to GAAP net income:
Depreciation, amortization and accretion in   operating costs and expenses			(51.5	)			(45.7	)			(99.1	)			(90.3	)
Non-cash impairment charge			--				--				(1.5	)			--
Gain on asset sales and related transactions in  operating costs and expenses			0.1				0.2				1.0				0.3
General and administrative costs			(4.8	)			(2.8	)			(9.7	)			(5.6	)
GAAP operating income			15.3				8.7				34.0				23.5
Other expense, net			(3.2	)			(3.4	)			(6.3	)			(7.1	)
Income before provision for income taxes		$	12.1			$	5.3			$	27.7			$	16.4

Off-Balance Sheet Arrangements

There have been no significant changes with regards to our off-balance sheet arrangements since those reported in our 2009 Form 10-K/A.

Recent Accounting Developments

In November 2008, the SEC released a proposed roadmap regarding the potential use by U.S. issuers of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”).  IFRS consist of accounting standards published by the International Accounting Standards Board (“IASB”), which is based in London, England.  In February 2010, the SEC expressed its continuing support for a single set of high-quality globally accepted accounting standards and established a general work plan that sets forth areas and factors the SEC will consider before requiring domestic public companies to transition to IFRS.  Currently, the Financial Accounting Standards Board (or “FASB,” based in Norwalk, Connecticut) a nd the IASB are working both individually and jointly on a number of accounting standard convergence projects that, if finalized in 2011, would bring about a significant shift in the accounting and financial reporting landscape.  These projects include a broad range of topics such as financial statement presentation, accounting for leases, revenue recognition, financial instruments, consolidations and fair value measurements. 

The SEC will make a determination in 2011 regarding the mandatory adoption of IFRS with the expectation that any decision to adopt IFRS would allow U.S. issuers four to five years to transition from current U.S. GAAP.  We continue to monitor developments in the potential implementation of IFRS and the ongoing convergence projects of the FASB and IASB.  We will evaluate the impact that any definitive accounting guidance may have on our financial statements once this information is finalized by the appropriate standard setting organizations, including the SEC.

Regulatory Matters

Certain scientific studies have suggested that emissions of certain gases, commonly referred to as “greenhouse gases” and including carbon dioxide (which is a component of, and a product of combustion of, natural gas) and methane (which is a component of natural gas), may be contributing to global climate change and ocean acidification.  On June 26, 2009, the U.S. House of Representatives passed the American Clean Energy and Security Act of 2009 (“ACESA”) which, if it were to become law, would establish an economy-wide cap-and-trade program intended to reduce the emissions of greenhouse gases by the United States and would require most significant domestic sources of greenho use gas emissions to obtain greenhouse gas emission “allowances” corresponding to their annual emissions of greenhouse gases.  The U.S. Senate has also begun consideration of various legislative proposals for controlling and reducing emissions of greenhouse gases in the United States.  In addition, on December 7, 2009, the U.S.

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Environmental Protection Agency (“EPA”) announced its finding that emissions of greenhouse gases from motor vehicles caused or contributed to climate change and presented an endangerment to human health and the environment.  These findings by EPA were the basis for motor vehicle greenhouse gas emissions standards promulgated on May 7, 2010, and may allow the agency to proceed with the adoption and implementation of additional regulations that would restrict emissions of greenhouse gases from industrial sources under existing provisions of the federal Clean Air Act.  On May 13, 2010, EPA issued a final rule setting forth a timetable for extension of its Prevention of Significant Deterioration regulatory program, applicable in certain circumstances to new and modified industrial source of air emissions, to include consideration of greenhouse gas emissions.  EPA has also received petitions requesting that the agency further expand regulation of greenhouse gas emissions from industrial sources, which, over time, may lead to additional requirements.  On April 12, 2010, EPA proposed new rules that would require the mandatory reporting of greenhouse gas emissions by pipeline operators and operators of natural gas processing and storage facilities.  These rules supplement disclosures and reporting required by EPA in its October 30, 2009 mandatory greenhouse gas reporting rule.  Any laws or regulations that may be adopted to restrict or reduce emissions of greenhouse gases, or that establish new reporting requirements, would likely require us to incur increased operating costs, and may have an adverse effect on our financial position, results of operations and cash flows.

Related Party Transactions

For information regarding our related party transactions, see Note 13 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Item 1 of this quarterly report.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

In the course of our normal business operations, we are exposed to certain risks, including changes in interest rates and commodity prices.  In order to manage risks associated with certain identifiable and anticipated transactions, we use derivative instruments.  Derivatives are financial instruments whose fair value is determined by changes in a specified benchmark such as interest rates, commodity prices or currency values.  Typical derivative instruments include physical forward agreements, futures contracts, floating-to-fixed swaps, basis swaps and options contracts.  Substantially all of our derivatives are used for non-trading activities.  See Note 4 of the Notes to Unaudited Condensed Financial Statements included under Item 1 of this quarterly report for additional information regarding our derivative instruments and hedging activities.

Our exposures to market risk have not changed materially since those reported under Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” included in our 2009 Form 10-K/A.

Interest Rate Derivative Instruments

We utilize interest rate swaps to manage our exposure to changes in the interest rates charged on borrowings under our Revolving Credit Facility.  This strategy is a component in controlling our cost of capital associated with such borrowings.

The following table shows the effect of hypothetical price movements (a sensitivity analysis) on the estimated fair value (“FV”) of our interest rate swap portfolio (dollars in millions).

		Resulting		Portfolio FV at
Scenario		Classification		June 30, 2010				July 20, 2010
FV assuming no change in underlying interest rates		Liability		$	1.8			$	1.8
FV assuming 10% increase in underlying interest rates		Liability			1.8				1.8
FV assuming 10% decrease in underlying interest rates		Liability			1.8				1.8

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Commodity Derivative Instruments

The price of natural gas fluctuates in response to changes in supply and demand, market conditions, and a variety of additional factors that are beyond our control.  In order to manage the price risk associated with certain exposures, we enter into commodity derivative instruments such as physical forward agreements, futures contracts, fixed-for-float swaps and basis swaps.  

We assess the risk of our commodity derivative instrument portfolio using a sensitivity analysis model.  The sensitivity analysis applied to this portfolio measures the potential income or loss (i.e., the change in fair value of the portfolio) based upon a hypothetical 10% movement in the underlying quoted market prices of the commodity derivative instruments outstanding at the date indicated within the following table.

The following table presents the effect of hypothetical price movements (a sensitivity analysis) on the estimated fair value of this portfolio at the dates presented (dollars in millions).

		Resulting		Portfolio FV at
Scenario		Classification		June 30, 2010				July 20, 2010
FV assuming no change in underlying commodity prices		Asset		$	*			$	--
FV assuming 10% increase in underlying commodity prices		Asset			*				--
FV assuming 10% decrease in underlying commodity prices		Asset			*				--
* Amount is negligible.

Item 4.  Controls and Procedures.

As of the end of the period covered by this quarterly report, our management carried out an evaluation, with the participation of our general partner’s CEO (our principal executive officer) and our general partner’s chief financial officer (our principal financial officer) (the “CFO”), of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934.  Based on that evaluation, as of the end of the period covered by this report, the CEO and CFO concluded:

(i)

that our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure; and

(ii)	that our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during the second quarter of 2010, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The certifications of our general partner’s CEO and CFO required under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 have been included as exhibits to this quarterly report.

 

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PART II.  OTHER INFORMATION.

Item 1.  Legal Proceedings.

For information regarding legal proceedings, see Part I, Item 1, Financial Statements, Note 15, “Commitments and Contingencies – Litigation,” of the Notes to Unaudited Condensed Consolidated Financial Statements included in this quarterly report, which is incorporated herein by reference.

Item 1A.  Risk Factors.

Security holders and potential investors in our securities should carefully consider the risk factors set forth in our 2009 annual report on Form 10-K as filed on March 1, 2010 and below, in addition to other information in such annual report and in this quarterly report on Form 10-Q.  We have identified these risk factors as important factors that could cause our actual results to differ materially from those contained in any written or oral forward-looking statements made by us or on our behalf.

The death of Dan L. Duncan represents the loss of a key member of our senior management team.

Although the remainder of our senior management team remains in place and succession planning regarding control of our general partner exists, we cannot predict at this time the effect of the loss of Mr. Duncan and cannot provide any assurances that his loss will not have any effect on our business, results of operations or cash flows.

Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays incurred by customers in the production of natural gas, including from the developing shale plays.  A decline in drilling of new wells and related servicing activities caused by these initiatives could adversely affect our financial position, results of operations and cash flows.

 

Proposals have been introduced in the U.S. Congress to regulate hydraulic fracturing operations and related injection of fracturing fluids and propping agents used in fracturing fluids by the oil and natural gas industry under the federal Safe Drinking Water Act (“SDWA”) and to require the disclosure of chemicals used in the hydraulic fracturing process under the SDWA, Emergency Planning and Community Right-to-Know Act (“EPCRA”), or other authority.  Hydraulic fracturing is an important and commonly used process in the completion of unconventional oil and natural gas wells in shale, coalbed and tight sand formations.  Sponsors of these bills, which are currently being considered in the legislative process, including in the H ouse Energy and Commerce Committee and the Senate Environmental and Public Works Committee, have asserted that chemicals used in the fracturing process could adversely affect drinking water supplies and otherwise cause adverse environmental impacts.  The Chairman of the House Energy and Commerce Committee has initiated an investigation of the potential impacts of hydraulic fracturing, which has involved seeking information about fracturing activities and chemicals from certain companies in the oil and gas sector.  In addition, in March 2010, the U.S. EPA announced its intention to conduct a comprehensive research study on the potential adverse impacts that hydraulic fracturing may have on water quality and public health.  Increased regulation and attention given to the hydraulic fracturing process could lead to greater opposition, including litigation, to oil and gas production activities using hydraulic fracturing techniques.  Additional legislation or regulation coul d also lead to operational delays or increased operating costs in the production of natural gas, including from the developing shale plays, incurred by our customers or could make it more difficult to perform hydraulic fracturing.  If these legislative and regulatory initiatives cause a material decrease in the drilling of new wells and related well servicing activities, our profitability could be materially impacted.

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The adoption and implementation of new statutory and regulatory requirements for derivative transactions could have an adverse impact on our ability to hedge risks associated with our business and increase the working capital requirements to conduct these activities.

 

The United States Congress has passed, and the President has signed into law, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”). The Act provides for new statutory and regulatory requirements for derivative transactions, including oil and gas hedging transactions. Certain transactions will be required to be cleared on exchanges, and cash collateral will be required for these transactions.  The Act provides for a potential exception from these clearing and cash collateral requirements for commercial end-users and it includes a number of defined terms that will be used in determining how this exception applies to particular derivative transactions and to th e parties to those transactions.  The Act requires the Commodities Futures and Trading Commission (the “CFTC”) to promulgate rules to define these terms in detail, but we do not know the definitions that the CFTC will actually promulgate or how these definitions will apply to us.

 

We enter into natural gas derivative contracts from time to time with respect to a portion of our expected natural gas processing and storage activities (including for the benefit of our customers or our purchases of natural gas held-for-sale to third parties) in connection with these products in order to hedge against commodity price uncertainty and enhance the predictability of cash flows from these activities. Depending on the rules and definitions adopted by the CFTC, we might in the future be required to provide cash collateral for our commodities hedging transactions.  Posting of cash collateral could cause liquidity issues for us by reducing our ability to use our cash for capit al expenditures or other partnership purposes. A requirement to post cash collateral could therefore significantly reduce our ability to execute strategic hedges to reduce commodity price uncertainty and thus protect cash flows.  We are at risk unless and until the CFTC adopts rules and definitions that confirm that companies such as ourselves are not required to post cash collateral for our derivative hedging contracts. In addition, even if we ourselves are not required to post cash collateral for our derivative contracts, the banks and other derivatives dealers who are our contractual counterparties will be required to comply with the Act’s new requirements, and the costs of their compliance will likely be passed on to customers such as ourselves, thus decreasing the benefits to us of hedging transactions and reducing our profitability.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3.  Defaults Upon Senior Securities.

None.

Item 4.  (Removed and Reserved).

Item 5.  Other Information.

None.

Item 6.  Exhibits.

Exhibit Number	Exhibit*
3.1	Certificate of Limited Partnership of Duncan Energy Partners L.P. (incorporated by reference

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	to Exhibit 3.1 to Form S-1 Registration Statement (Reg. No. 333-138371) filed November 2, 2006).
3.2	Amended and Restated Agreement of Limited Partnership of Duncan Energy Partners L.P., dated February 5, 2007 (incorporated by reference to Exhibit 3.1 to Form 8-K filed February 5, 2007).
3.3	Amendment No. 1 to the Amended and Restated Agreement of Limited Partnership of Duncan Energy Partners L.P. dated December 27, 2007 (incorporated by reference to Exhibit 3.1 to Form 8-K/A filed January 3, 2008).
3.4	Amendment No. 2 to the Amended and Restated Agreement of Limited Partnership of Duncan Energy Partners L.P. dated November 6, 2008 (incorporated by reference to Exhibit 3.4 to Form 10-Q filed November 10, 2008).

3.5	Third Amendment to the Amended and Restated Agreement of Limited Partnership of Duncan Energy Partners L.P., dated December 8, 2008 (incorporated by reference to Exhibit 3.1 to Form 8-K filed December 8, 2008).
3.6	Fourth Amendment to the Amended and Restated Agreement of Limited Partnership of Duncan Energy Partners L.P. dated June 15, 2009 (incorporated by reference to Exhibit 3.1 to Form 8-K filed June 15, 2009).
3.7	Certificate of Formation of DEP Holdings, LLC (incorporated by reference to Exhibit 3.3 to Form S-1 Registration Statement (Reg. No. 333-138371) filed November 2, 2006).
3.8	Second Amended and Restated Limited Liability Company Agreement of DEP Holdings, LLC, dated May 3, 2007 (incorporated by reference to Exhibit 3.4 to Form 10-Q filed May 4, 2007).
3.9	First Amendment to the Second Amended and Restated Limited Liability Company Agreement of DEP Holdings, LLC dated November 6, 2008 (incorporated by reference to Exhibit 3.8 to Form 10-Q filed November 10, 2008).
3.10	Certificate of Formation of DEP OLPGP, LLC (incorporated by reference to Exhibit 3.5 to Form S-1 Registration Statement (Reg. No. 333-138371) filed November 2, 2006).
3.11	Amended and Restated Limited Liability Company Agreement of DEP OLPGP, LLC, dated January 19, 2007 (incorporated by reference to Exhibit 3.6 to Amendment No. 3 to Form S-1 Registration Statement (Reg. No. 333-138371) filed January 22, 2007).
3.12	Certificate of Limited Partnership of DEP Operating Partnership, L.P. (incorporated by reference to Exhibit 3.7 to Form S-1 Registration Statement (Reg. No. 333-138371) filed November 2, 2006).
3.13	Agreement of Limited Partnership of DEP Operating Partnership, L.P., dated September 29, 2006 (incorporated by reference to Exhibit 3.8 to Amendment No. 1 to Form S-1 Registration Statement (Reg. No. 333-138371) filed December 15, 2006).
10.1***	Amendment to Form of Option Grant Award under the Amended and Restated 2008 Enterprise Products Long-Term Incentive Plan for awards issued before February 23, 2010, (incorporated by reference to Exhibit 10.9 to Form 10-Q filed by Enterprise Products Partners L.P. on August 9, 2010).
10.2***	Amendment to Form of Option Grant Award under the Amended and Restated 2008 Enterprise Products Long-Term Incentive Plan for awards issued before August 5, 2010 (incorporated by reference to Exhibit 10.10 to Form 10-Q filed by Enterprise Products Partners L.P. on August 9, 2010).
10.3***	Form of Option Grant Award under the Amended and Restated 2008 Enterprise Products Long-Term Incentive Plan (incorporated by reference to Exhibit 10.11 to Form 10-Q filed by Enterprise Products Partners L.P. on August 9, 2010).
10.4***	Amendment to Form of Employee Restricted Unit Grant Award under the Amended and Restated 2008 Enterprise Products Long-Term Incentive Plan for awards issued before August 5, 2010 (incorporated by reference to Exhibit 10.12 to Form 10-Q filed by Enterprise Products Partners L.P. on August 9, 2010).
10.5***	Form of Employee Restricted Unit Grant Award under the Amended and Restated 2008 Enterprise Products Long-Term Incentive Plan (incorporated by reference to Exhibit 10.13 to Form 10-Q filed by Enterprise Products Partners L.P. on August 9, 2010).
10.6***	Amendment to Form of Option Grant Award under the Enterprise Products 1998 Long-Term Incentive Plan for awards issued before February 23, 2010 (incorporated by reference to Exhibit 10.1 to Form 10-Q filed by Enterprise Products Partners L.P. on August 9, 2010).

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10.7***	Amendment to Form of Option Grant Award under the Enterprise Products 1998 Long-Term Incentive Plan for awards issued before August 5, 2010 (incorporated by reference to Exhibit 10.2 to Form 10-Q filed by Enterprise Products Partners L.P. on August 9, 2010).
10.8***	Form of Option Grant Award under the Enterprise Products 1998 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to Form 10-Q filed by Enterprise Products Partners L.P. on August 9, 2010).
10.9***	Amendment to Form of Employee Restricted Unit Grant Award under the Enterprise Products 1998 Long-Term Incentive Plan for awards issued before August 5, 2010 (incorporated by reference to Exhibit 10.4 to Form 10-Q filed by Enterprise Products Partners L.P. on August 9, 2010).

10.10***	Form of Employee Restricted Unit Grant Award under the Enterprise Products 1998 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.5 to Form 10-Q filed by Enterprise Products Partners L.P. on August 9, 2010).
10.11***	Form of Option Grant Award under the Enterprise Products Company 2005 EPE Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to Form 10-Q filed by Enterprise GP Holdings L.P. on August 9, 2010).
10.12***	Form of Employee Restricted Unit Grant Award under the Enterprise Products Company 2005 EPE Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to Form 10-Q filed by Enterprise GP Holdings L.P. on August 9, 2010).
10.13***	Form of Phantom Unit Grant Award under the Enterprise Products Company 2005 EPE Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to Form 10-Q filed by Enterprise GP Holdings L.P. on August 9, 2010).
10.14*** #	Form of Option Grant Award under the 2010 Duncan Energy Partners L.P. Long-Term Incentive Plan.
10.15*** #	Form of Employee Restricted Unit Grant Award under the 2010 Duncan Energy Partners L.P. Long-Term Incentive Plan.
10.16	Second Amended and Restated Limited Liability Company Agreement of Acadian Gas, LLC, dated June 1, 2010 (incorporated by reference to Exhibit 10.01 to Form 8-K filed June 3, 2010).
10.17	Loan Agreement, dated June 1, 2010, between Enterprise Products Operating LLC, as lender, and Duncan Energy Partners L.P., as borrower (incorporated by reference to Exhibit 10.02 to Form 8-K filed June 3, 2010).
31.1#	Sarbanes-Oxley Section 302 certification of W. Randall Fowler for Duncan Energy Partners L.P. for the June 30, 2010 quarterly report on Form 10-Q.
31.2#	Sarbanes-Oxley Section 302 certification of Bryan F. Bulawa for Duncan Energy Partners L.P. for the June 30, 2010 quarterly report on Form 10-Q.
32.1#	Section 1350 certification of W. Randall Fowler for the June 30, 2010 quarterly report on Form 10-Q.
32.2#	Section 1350 certification of Bryan F. Bulawa for the June 30, 2010 quarterly report on Form 10-Q.

*	With respect to exhibits incorporated by reference to Exchange Act filings, the Commission file numbers for Enterprise Products Partners L.P. and Enterprise GP Holdings L.P. are 1-14323 and 1-32610, respectively.
***	Identifies management contract and compensatory plan arrangements.
#	Filed with this report.

 

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on August 9, 2010.

					DUNCAN ENERGY PARTNERS L.P.
					(A Delaware Limited Partnership)
					By:    DEP Holdings, LLC, as General Partner
					By:             /s/ Michael J. Knesek
					Name:  Michael J. Knesek
					Title:    Senior Vice President, Controller              and Principal Accounting Officer              of the General Partner

 

 

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Exhibit Index

Exhibit No.		Description
	10.14	Form of Option Grant Award under the 2010 Duncan Energy Partners L.P. Long-Term Incentive Plan.
	10.15	Form of Employee Restricted Unit Grant Award under the 2010 Duncan Energy Partners L.P. Long-Term Incentive Plan.
	31.1	Sarbanes-Oxley Section 302 certification of W. Randall Fowler for Duncan Energy Partners L.P. for the June 30, 2010 quarterly report on Form 10-Q.
	31.2	Sarbanes-Oxley Section 302 certification of Bryan F. Bulawa for Duncan Energy Partners L.P. for the June 30, 2010 quarterly report on Form 10-Q.
	32.1	Section 1350 certification of W. Randall Fowler for the June 30, 2010 quarterly report on Form 10-Q.
	32.2	Section 1350 certification of Bryan F. Bulawa for the June 30, 2010 quarterly report on Form 10-Q.

 

 

 

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Exhibit 10.14

 

Option Grant under the

2010 Duncan Energy Partners L.P. Long-Term Incentive Plan

 

 

Date of Grant:
Name of Optionee:
Option Exercise Price per Common Unit:
Number of Options Granted       (One Option equals the Right to       Purchase One Common Unit):
Option Grant Number:

 

Enterprise Products Company (formerly EPCO, Inc.) (the “Company”) is pleased to inform you that you have been granted options (the “Options”) under the 2010 Duncan Energy Partners L.P. Long-Term Incentive Plan (the “Plan”) to purchase units representing limited partner interests (“Common Units”) of Duncan Energy Partners L.P. (the “Partnership”) as follows:

 

 

1.            You are hereby granted the number of Options to acquire a Common Unit set forth above, each such Option having the option exercise price set forth above.

 

2.            The Options shall become fully vested (exercisable) on the earlier of (i) the date that is four years after the Date of Grant set forth above (the “Vesting Date”) and (ii) a Qualifying Termination (as defined below).

 

“Qualifying Termination” means

 

(a)           your status as an employee of the Company or any of the Company Affiliates (as defined below) (collectively, the “Affiliated Group”) is terminated due to your (i) death or (ii) receiving long-term disability benefits under the applicable Affiliated Group member’s long-term disability plan, provided such disability qualifies as a “disability” under Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”); or

 

(b)           your employment with any Affiliated Group member is terminated due to your retirement on or after (1) reaching age 62, (2) having 10 or more years of credited service as an employee of one or more Affiliated Group member(s), (3) executing a Retirement Agreement and Release (in such form as the Company may approve from time to time) and (4) otherwise complying with any related retirement policies of the Affiliated Group member in effect at the time of the effective date of your retirement; or

 

(c)           your termination of employment by any Affiliated Group member (or its successor) and each of its Affiliates within one year after a Change of Control (as defined below) and (1) such termination of employment was initiated by the Affiliated Group member (or its successor) other than upon or after the occurrence of a Termination for Cause or (2) if such termination of employment was initiated by you, is upon or after the occurrence of a Termination for Good Reason; provided, however, that you terminate your employment with any Affiliated Group member (or any successor) and its Affiliates within 120 days following the date on which you have actual notice of the event that gives rise to the Termination for Good Reason.

 

“Change of Control” means Duncan shall cease, directly or indirectly, to control the General Partner (including for purposes of clarification, and without limitation, by control that may be deemed to exist based on (i) the facts that cause Duncan’s deemed control of the General Partner to exist as of the date of this Agreement (which existing control is hereby recognized and agreed) or (ii) Duncan’s direct or indirect power to exercise a controlling influence over either the management or policies of the General Partner (as control and power are construed and

 

 

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used under rules and regulations promulgated by the U.S. Securities and Exchange Commission, including any presumptions used thereunder relating to control).

 

“Company Affiliate” means and includes (i) EPCO Holdings, Inc., (ii) Enterprise Products GP, LLC, (iii) Enterprise Products OLPGP, Inc., (iv) Enterprise Products Partners L.P. (“EPD”), (v) EPE Holdings LLC, (vi) Enterprise GP Holdings L.P. (“EPE”), (vii) Enterprise Products Operating LLC, (viii) DEP Holdings LLC, (ix) Duncan Energy Partners L.P. (“DEP”), (x) the respective subsidiaries or affiliates of any of the foregoing entities, (xi) any other entity (A) which is controlled, directly or indirectly, individually, collectively or in any combination, by the Company or any of the foregoing entities or (B) in which any of the Company or any of the foregoing entities has a direct or indirect ownership interest, (xii) any other entity (a) whic h is controlled, directly or indirectly, by the Estate of Dan L. Duncan, Deceased, his spouse, his descendants or any trusts for any of their respective benefit, individually, collectively or in any combination, or (b) in which any of them has a direct or indirect ownership interest and (xiii) any predecessors, subsidiaries, related entities, officers, directors, shareholders, parent companies, agents, attorneys, employees, successors, or assigns of any of the foregoing.

 

“Duncan” means, collectively, individually or any combination, Dan L. Duncan, his wife, descendants, heirs and/or legatees and/or distributees of Dan L. Duncan’s estate, and/or trusts (including, without limitation, one or more voting trusts) established for the benefit of his wife, descendants, heirs and/or legatees and/or distributees.

 

“Termination for Cause” means the occurrence of any of the following events:

 

(a)           the commission by you of a material act of willful misconduct including, but not limited to, the willful violation of any material law, rule, regulation of a governmental entity or cease and desist order applicable to you or any Affiliated Group member (or its successor) (other than a law, rule or regulation relating to a minor traffic violation or similar offense), or an act which constitutes a breach by you of a fiduciary duty owed to any Affiliated Group member (or its successor); or

 

(b)           the commission by you of an act of dishonesty relating to the performance of your duties, habitual unexcused absence(s) from work, willful failure to perform duties in any material respect (other than any such failure resulting from your incapacity due to physical or mental illness or disability), or gross negligence in the performance of duties resulting in material damage or injury to any Affiliated Group member (or its successor), its reputation or goodwill (provided, however, that in the event of your willful failure to perform duties in any material respect, you shall be provided with written notice of such event and shall be provided with a reasonable opportunity, in no event more than 30 days, to cure such failure to perform your duties); or

 

(c)           any felony conviction of you or any conviction of you involving dishonesty, fraud or breach of trust (other than for a minor traffic violation or similar offense), whether or not in the line of duty.

 

“Termination for Good Reason” means any nonconsensual (a) material reduction in your authority, duties or responsibilities; (b) reduction in your compensation by more than 20 percent from the compensation (excluding Awards pursuant to the Plan or other equity-based compensation) paid by any Affiliated Group member (or its successor) during the completed fiscal year prior to the Change of Control; or (c) change caused by any Affiliated Group member (or its successor) in your office location of more than 50 miles from its location on the date of the Change of Control.

 

3.         Subject to the further provisions of this Agreement and the Plan, the Options, to the extent vested, may be exercised (in whole or in part or in two or more successive parts) during your employment with the Company and the Company Affiliates only during a calendar month during which the Partnership either (a) pays a cash distribution to holders of its Common Units or (b) is required to make adjustments to capital accounts upon the issuance of additional Common Units (a “Qualified Month”) in the first (1st) calendar year following the year in which the Vesting Date occurs (and the Option will expire at the end of such year if it is not so exercised).  In the event your employment with the Company and the Company Affiliates is terminated prior to the Vesting Date for any reason other than a Qualifying Termination, the Options shall automatically and immediately be forfeited and cancelled unexercised on the date of such termination of employment. For purposes of this Option grant award, the

 

 

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term “year” shall mean a period comprised of 365 (or 366, as appropriate) days beginning on a day of a calendar year and ending on the day immediately preceding the corresponding day of the next calendar year. For example, if the Date of Grant of an Option grant award is May 20, 2010, one year after the Date of Grant would be May 20, 2011, the Vesting Date would be May 20, 2014 (assuming no earlier Qualifying Termination) and the calendar year in which the Options could be exercised (except as described in Sections 7 and 8 hereof) would be 2015.

 

4.         To the extent vested and subject to the procedures set forth in Addendum No. 2, the Options may be exercised by submitting the “Options Transaction Clearance Request and Tax Withholding Election” (“Transaction Request”) with respect to such exercise which references the Option Grant Number set forth above and the number of Options (or Common Units relating thereto) which are being exercised. Such Transaction Request shall be delivered or mailed to the Company at its corporate offices in Houston, Texas, as follows:

 

Mailing Address: Enterprise Products Company, P.O. Box 4324, Houston, Texas 77210-4324, Attention: Sr. Vice President, Human Resources.

 

Delivery Address: Enterprise Products Company, 1100 Louisiana, 10th Floor, Houston, Texas 77002, Attention: Sr. Vice President, Human Resources

 

An election to exercise shall be made in accordance with Addendum No. 2 and shall be irrevocable. If you are an employee of the Company or a Company Affiliate and such exercise occurs other than in a Qualified Month, it shall be deemed exercised in the next Qualified Month.

 

5.         No exercise shall be effective until you have made arrangements acceptable to the Company and in accordance with the Plan to satisfy the aggregate Exercise Price and all applicable tax withholding requirements of the Company, if any, with respect to such exercise.

 

6.         None of the Options are transferable (by operation of law or otherwise) by you, other than by will or the laws of descent and distribution. If, in the event of your divorce, legal separation or other dissolution of your marriage, your former spouse is awarded ownership of, or an interest in, all or part of the Options granted hereby to you (the “Awarded Options”), (i) to the extent the Awarded Options are not fully vested, the Awarded Options shall automatically and immediately be forfeited and cancelled unexercised as of the original date of the award thereof and (ii) to the extent the Awarded Options are fully vested, the Company, in its sole discretion, may at any time thereafter, during the period in which the Awarded Options are exercisable under the terms of the domestic relations order providing for the assignment, cancel the Awarded Options by delivering to such former spouse Common Units having an aggregate Fair Market Value on the payment date equal to the excess of the aggregate Fair Market Value of the Common Units subject to the Awarded Options over their aggregate Exercise Price.

 

7.         In the event you terminate employment with the Company and the Company Affiliates for any reason (which termination is a “separation from service” under Section 409A of the Internal Revenue Code) other than a Qualifying Termination, the Options, if fully vested, may be exercised by you (or, in the event of your death, by the person to whom your rights shall pass by will or the laws of the descent and distribution (“Beneficiary”)) only during the Qualified Month next following your employment termination date.  If you cease to be an “active, full-time employee”, as determined by the Company in its sole discretion, without regard as to how your status is treated by the Company for any of i ts other compensation or benefit plans or programs, you will be deemed to have terminated employment with the Company and the Company Affiliates for purposes of this Agreement.

 

8.         In the event of a Qualifying Termination or an “unforeseeable emergency” (as defined in Section 409A) which is approved by the Company, the vested portion of the Options may be exercised by you only during the Qualified Month next following such event. Notwithstanding the above, in the event such Qualifying Termination is due to your death, the vested portion of the Options may be exercised by your Beneficiary only during the second Qualified Month next following such event.

 

9.         Nothing in this Agreement or in the Plan shall confer any right on you to continue employment with any member of the Affiliated Group or restrict the Company or the Company Affiliates from terminating your

 

 

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employment at any time. Unless you have a separate written employment agreement with an Affiliated Group member, you are, and shall continue to be, an “at will” employee.

 

10.         Notwithstanding any other provision of this Agreement, the Options shall not be exercisable, and neither the Company nor the Partnership shall be obligated to deliver to you any Common Units, if counsel to the Company determines such exercise or delivery, as the case may be, would violate any law or regulation of any governmental authority or agreement between the Company or the Partnership and any national securities exchange upon which the Common Units are listed or any policy of the Company or any Company Affiliate.

 

11.           Notwithstanding any other provision of this Agreement, if you give notice of exercise within a “quiet period,” as provided in Addendum No. 1 hereto, the timing of the delivery of Common Units pursuant to your exercise shall be governed by the terms of Addendum No. 1. Further, neither the Company nor the Partnership shall have any liability to you for any loss you may suffer (whether by a decrease in the value of the Common Units, failure or inability to receive Partnership distributions or otherwise) from any delay by the Company or the Part nership in delivering to you Common Units in connection with the whole or partial exercise by you of the Options.

 

12.         These Options are subject to the terms of the Plan, which is hereby incorporated by reference as if set forth in its entirety herein, including, without limitation, the ability of the Company, in its discretion, to accelerate the termination of the Option and to amend your Option grant award without your approval. In the event of a conflict between the terms of this Agreement and the Plan, the Plan shall be the controlling document. Capitalized terms that are used, but are not defined, in this Option grant award have the respective meanings provided for in the Plan. The Plan, as in effect on the Date of Grant, is attached hereto as Exhibit A.

 

	Enterprise Products Company
	(formerly EPCO, Inc.)

                                                                       

 

 

Senior Vice President, Human Resources

                                                                  

 

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Exhibit 10.15

Restricted Unit Grant

under the

2010 Duncan Energy Partners L.P. Long-Term Incentive Plan

 

Date of Grant:

 

Name of Grantee:

 

Number of Units Granted:

 

Restricted Unit Grant Number:

 

Enterprise Products Company (formerly EPCO, Inc.) (the “Company”) is pleased to inform you that you have been granted the number of Restricted Units set forth above under the 2010 Duncan Energy Partners L.P. Long-Term Incentive Plan (the “Plan”). A Restricted Unit is a Common Unit of Duncan Energy Partners L.P. (the “Partnership”) that is subject to the forfeiture and non-transferability provisions set forth below in this Agreement (the “Restrictions”). The terms of the grant are as follows:

 

1.           The Restricted Units granted by this Restricted Unit Grant (such granted Restricted Units being herein referred to, individually, as a “Restricted Unit” and, collectively or in any combination, as the “Restricted Units”) shall become fully vested, i.e., not restricted, in accordance with the schedule set forth in the table below (the dates in such table being referred to as “Vesting Dates”); provided however, that (notwithstanding the foregoing) one hundred percent (100%) of any Restricted Units that have not previously vested shall vest on the first day of the first Qualified Month (as defined in Section 4 below) after the occurrence of a Qualifying Termination (as defined in Section 4 below).

 

Vesting Dates:	Restricted Units Originally Granted
	Under this Grant Being Vested:
[Description of Vesting Date(s)]	[Description of number of units being vested on Vesting Date(s)]

 

In the event your status as an employee of the Company or any of the Company Affiliates (as defined in Section 4 below) (collectively, the “Affiliated Group”) is terminated prior to a particular Vesting Date for any reason other than a Qualifying Termination, the Restricted Units that have not yet vested as of such Vesting Date shall automatically and immediately be forfeited and cancelled without payment on the date of such termination.

 

2.           The Restricted Units will be evidenced, at the sole option and in the sole discretion of the Partnership, either (i) in book-entry form in your name in the Common Unit register of the Partnership maintained by the Partnership’s transfer agent or (ii) a unit certificate issued in your name. You shall have voting rights and shall be entitled to receive all distributions made by the Partnership on such Restricted Units free and clear of any Restrictions. If the Restricted Units are evidenced by a certificate, the certificate shall bear the following legend:

 

The Units evidenced by this certificate have been issued pursuant to an agreement made as of [________] 20[__], a copy of which is attached hereto and incorporated herein, between the Company and the registered holder of the Units, and are subject to forfeiture to the Company under certain circumstances described in such agreement. The sale, assignment, pledge or other transfer of the shares of Units evidenced by this certificate is prohibited under the terms and conditions of such agreement, and such Units may not be sold, assigned, pledged or otherwise transferred except as provided in such agreement.

 

 

1

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The Company may cause the certificate to be delivered upon issuance to the Secretary of the Company as a depository for safekeeping until the forfeiture occurs or the Restrictions lapse pursuant to the terms of this Agreement. Upon request of the Company, you shall deliver to the Company a unit power, endorsed in blank, relating to the Restricted Units then subject to the Restrictions. Upon any lapse of the Restrictions without forfeiture, the Company shall, upon your request, cause a certificate or certificates to be issued without legend in your name evidencing the Restricted Units that have vested.

 

3.           None of the Restricted Units are transferable (by operation of law or otherwise) by you, other than by will or the laws of descent and distribution. If, in the event of your divorce, legal separation or other dissolution of your marriage, your former spouse is awarded ownership of, or an interest in, all or part of any Restricted Units granted hereby to you that have not yet vested (the “Awarded Restricted Units”), the Awarded Restricted Units shall automatically and immediately be forfeited and cancelled without payment on such date.

 

4.           As used herein, the following capitalized terms have the following meanings:

 

“Company Affiliate” means and includes (i) EPCO Holdings, Inc., (ii) Enterprise Products GP, LLC, (iii) Enterprise Products OLPGP, Inc., (iv) Enterprise Products Partners L.P. (“EPD”), (v) EPE Holdings LLC, (vi) Enterprise GP Holdings L.P. (“EPE”), (vii) Enterprise Products Operating LLC, (viii) DEP Holdings LLC, (ix) Duncan Energy Partners L.P. (“DEP”), (x) the respective subsidiaries or affiliates of any of the foregoing entities, (xi) any other entity (A) which is controlled, directly or indirectly, individually, collectively or in any combination, by the Company or any of the foregoing entities or (B) in which any of the Company or any of the foregoing entities has a direct or indirect ownership interest, (xii) any other entity (a) which is controlled, directly or indirectly, by the Estate of Dan L. Duncan, Deceased, his spouse, his descendants or any trusts for any of their respective benefit, individually, collectively or in any combination, or (b) in which any of them has a direct or indirect ownership interest and (xiii) any predecessors, subsidiaries, related entities, officers, directors, shareholders, parent companies, agents, attorneys, employees, successors, or assigns of any of the foregoing.

 

“Qualified Month” means a calendar month during which the Partnership either (a) pays a cash distribution to holders of its Common Units or (b) is required to make adjustments to capital accounts upon the issuance of additional Common Units.

 

“Qualifying Termination” means:

 

(a)           your status as an employee of any Affiliated Group member is terminated due to your (i) death or (ii) receiving long-term disability benefits under the applicable Affiliated Group member’s long-term disability plan, provided such disability qualifies as a “disability” under Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”); or

 

(b)           your employment with any Affiliated Group member is terminated due to your retirement on or after (1) reaching age 62, (2) having 10 or more years of credited service as an employee of one or more Affiliated Group member(s), (3) executing a Retirement Agreement and Release (in such form as the Company may approve from time to time) and (4) otherwise complying with any related retirement policies of the Affiliated Group member in effect at the time of the effective date of your retirement; or

 

(c)           your termination of employment by any Affiliated Group member (or its successor) and each of its Affiliates within one year after a Change of Control (as defined below) and (1) such termination of employment was initiated by the Affiliated Group member (or its successor) other than upon or after the occurrence of a Termination for Cause or (2) if such termination of employment was initiated by you, is upon or after the occurrence of a Termination for Good Reason; provided, however, that you terminate your employment with any Affiliated Group member (or any successor) and its Affiliates within 120 days following the date on which you have actual notice of the event that gives rise to the Termination for Good Reason.

 

 

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“Change of Control” means Duncan shall cease, directly or indirectly, to control the General Partner (including for purposes of clarification, and without limitation, by control that may be deemed to exist based on (i) the facts that cause Duncan’s deemed control of the General Partner to exist as of the date of this Agreement (which existing control is hereby recognized and agreed) or (ii) Duncan’s direct or indirect power to exercise a controlling influence over either the management or policies of the General Partner (as control and power are construed and used under rules and regulations promulgated by the U.S. Securities and Exchange Commission, including any presumptions used thereunder relating to control).

 

“Duncan” means, collectively, individually or any combination, Dan L. Duncan, his wife, descendants, heirs and/or legatees and/or distributees of Dan L. Duncan’s estate, and/or trusts (including, without limitation, one or more voting trusts) established for the benefit of his wife, descendants, heirs and/or legatees and/or distributees.

 

“Termination for Cause” means the occurrence of any of the following events:

 

(a)           the commission by you of a material act of willful misconduct including, but not limited to, the willful violation of any material law, rule, regulation of a governmental entity or cease and desist order applicable to you or any Affiliated Group member (or its successor) (other than a law, rule or regulation relating to a minor traffic violation or similar offense), or an act which constitutes a breach by you of a fiduciary duty owed to any Affiliated Group member (or its successor); or

 

(b)           the commission by you of an act of dishonesty relating to the performance of your duties, habitual unexcused absence(s) from work, willful failure to perform duties in any material respect (other than any such failure resulting from your incapacity due to physical or mental illness or disability), or gross negligence in the performance of duties resulting in material damage or injury to any Affiliated Group member (or its successor), its reputation or goodwill (provided, however, that in the event of your willful failure to perform duties in any material respect, you shall be provided with written notice of such event and shall be provided with a reasonable opportunity, in no event more than 30 days, to cure such failure to perform your duties); or

 

(c)           any felony conviction of you or any conviction of you involving dishonesty, fraud or breach of trust (other than for a minor traffic violation or similar offense), whether or not in the line of duty.

 

“Termination for Good Reason” means any nonconsensual (a) material reduction in your authority, duties or responsibilities; (b) reduction in your compensation by more than 20 percent from the compensation (excluding Awards pursuant to the Plan or other equity-based compensation) paid by any Affiliated Group member (or its successor) during the completed fiscal year prior to the Change of Control; or (c) change caused by any Affiliated Group member (or its successor) in your office location of more than 50 miles from its location on the date of the Change of Control.

 

5.           Nothing in this Agreement or in the Plan shall confer any right on you to continue employment with any member of the Affiliated Group or restrict the Company or the Company Affiliates from terminating your employment at any time. Employment with a Company Affiliate shall be deemed to be employment with the Company for purposes of the Plan. Unless you have a separate written employment agreement with an Affiliated Group member, you are, and shall continue to be, an “at will” employee.

 

6.           To the extent that the grant or vesting of a Restricted Unit results in the receipt of compensation by you with respect to which the Company or a Company Affiliate has a tax withholding obligation pursuant to applicable law, unless you make other arrangements that are acceptable to the Company or such Company Affiliate, you must deliver to the Company or the Company Affiliate such amount of money as the Company or the Company Affiliate may require to meet its tax withholding obligations under such applicable law. No issuance of an unrestricted Common Unit shall be made pursuant

 

 

3

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to this Agreement until you have paid or made arrangements approved by the applicable member of the Affiliated Group to satisfy in full any applicable tax withholding obligations pursuant to applicable law. For purposes of this paragraph, unless you make other arrangements or are subsequently notified to the contrary, applicable member of the Affiliated Group will satisfy your obligations with respect to any applicable tax withholding by withholding from the issuance under this Agreement a number of vested Common Units having a then-fair-market value equal to such tax withholding obligations, based on the closing price per Common Unit as reported on the New York Stock Exchange (or other principal stock exchange on which the Common Units are then listed) on the date of vesting. The Committee has determined that it intends that the Plan meet the requirements of Rule 16b-3 under the Exchange Act and that the transactions of the type specified in Rule 16b-3 by non-employee directors and by officers of the Company (whether or not they are directors) pursuant to the Plan, including the foregoing net settlement procedure, will be exempt from the operation of Section 16(b) of the Exchange Act.

 

7.           Notwithstanding any other provision of this Agreement, neither the Company nor the Partnership shall be obligated to deliver to you any unrestricted Common Units if counsel to the Company determines such delivery would violate any law or regulation of any governmental authority or agreement between the Company or the Partnership and any national securities exchange upon which the Common Units are listed or any policy of the Company or any Company Affiliate.

 

8.           These Restricted Units are subject to the terms of the Plan, which is hereby incorporated by reference as if set forth in its entirety herein, including, without limitation, the ability of the Company, in its discretion, to amend your Restricted Unit award without your approval. In the event of a conflict between the terms of this Agreement and the Plan, the Plan shall be the controlling document. Capitalized terms that are used, but are not defined, in this Option grant award have the respective meanings provided for in the Plan. The Plan, as in effect on the Date of Grant, is attached hereto as Exhibit A.

 

	Enterprise Products Company
	(formerly EPCO, Inc.)
	___________________________________
	Senior Vice President, Human Resources

 

 

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EXHIBIT 31.1

CERTIFICATIONS

I, W. Randall Fowler, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Duncan Energy Partners L.P.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:   August 9, 2010

	/s/ W. Randall Fowler
	Name:	W. Randall Fowler
	Title:	Chief Executive Officer of DEP Holdings, LLC, the General Partner of Duncan Energy Partners L.P.

 

 

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EXHIBIT 31.2

CERTIFICATIONS

I, Bryan F. Bulawa, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Duncan Energy Partners L.P.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:   August 9, 2010

	/s/ Bryan F. Bulawa
	Name:	Bryan F. Bulawa
	Title:	Chief Financial Officer of DEP Holdings, LLC, the General Partner of Duncan Energy Partners L.P.

 

 

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EXHIBIT 32.1

SARBANES-OXLEY SECTION 906 CERTIFICATION

CERTIFICATION OF W. RANDALL FOWLER, CHIEF EXECUTIVE OFFICER

OF DEP HOLDINGS, LLC, THE GENERAL PARTNER OF

DUNCAN ENERGY PARTNERS L.P.

In connection with this quarterly report of Duncan Energy Partners L.P. (the “Registrant”) on Form 10-Q for the quarterly period ended June 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, W. Randall Fowler, Chief Executive Officer of DEP Holdings, LLC, the General Partner of the Registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ W. Randall Fowler
Name:	W. Randall Fowler
Title:	Chief Executive Officer of DEP Holdings, LLC,
	the General Partner of Duncan Energy Partners L.P.

Date:      August 9, 2010

 

 

 

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EXHIBIT 32.2

SARBANES-OXLEY SECTION 906 CERTIFICATION

CERTIFICATION OF BRYAN F. BULAWA, CHIEF FINANCIAL OFFICER

OF DEP HOLDINGS, LLC, THE GENERAL PARTNER OF

DUNCAN ENERGY PARTNERS L.P.

In connection with this quarterly report of Duncan Energy Partners L.P. (the “Registrant”) on Form 10-Q for the quarterly period ended June 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Bryan F. Bulawa, Chief Financial Officer of DEP Holdings, LLC, the General Partner of the Registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ Bryan F. Bulawa                                                                                                                              &# 160;
Name:	Bryan F. Bulawa
Title:	Chief Financial Officer of DEP Holdings, LLC
	the General Partner of Duncan Energy Partners L.P.

Date:                      August 9, 2010

 

 

 

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