2001 MTBE ,
 Rod,
FYI - Here is Ted Robinson's (ENA) assessment of MTBE's situation for 2001.  
Sounds a lot like 2000.  Our 2001 Plan is based on an average margin of $0.23 
for MTBE.
---------------------- Forwarded by Kerry Roper/GPGFIN/Enron on 12/06/2000 
03:06 PM ---------------------------


Michael Mitcham
12/06/2000 11:27 AM
To: James Prentice/GPGFIN/Enron@ENRON, Kerry Roper/GPGFIN/Enron@ENRON
cc:  

Subject: 2001 MTBE

Here is Ted's assessment. He does not mention Lubrizol value . I will call 
Ted for an update on Lubrizol.  
---------------------- Forwarded by Michael Mitcham/GPGFIN/Enron on 
12/06/2000 11:09 AM ---------------------------


Ted Robinson@ECT
12/06/2000 10:23 AM
To: Michael Mitcham/GPGFIN/Enron@ENRON
cc:  

Subject: 2001 MTBE

Per our discussion, I have talked with Adam on butanes for Q2/Q3 of 2001 and 
put a guess at next years MTBE.  Adam feels the strip for butane would run 
around 58 cpg or so.  Nat gas is on fire right now and looking at the screen 
is around 5.25 for that timeframe, which would put methanol around 60cpg.  
Elliott says that even with the run up on gas, methanol has yet to respond.  
Maybe it moves up if MTBE turns around and we see some demand come in, but 
for now it has stalled.

During Q2/Q3 2000, MTBE was extremely volatile, ranging from 8cpg  to 65cpg 
over merc gasoline ( with an average of 33cpg).  Several factors contributed 
to this swing, including strong demand in Europe and the US due to  tighter 
gasoline specs in both regions.  These specs remain and to that extend, many 
of the factors that contributed to last summer's run up will be in place in 
2001.   As we close in on 2003, US demand should decrease as refiners, 
especially on the West Coast, gear toward a phaseout of the product.  MTBE 
usage will remain in place in 2001 however as all contract users (refiners) 
are out for bids on product for the full year and Europe goes through a 
second round of tightening gasoline specifications. 

 Gasoline is currently around 77cpg for the Q2/Q3 strip.  I don't think that 
20-25 cpg as an average over gasoline is an unreasonable assumption on which 
to  base future Q2/Q3  economics.  With butane at 58cpg  and methanol at 
60cpg, this would yield an MTBE price of 97cpg and a margin over feed cost of 
19-24cpg.  Q1 and Q4 will more than likely be somewhat lower, but provide 
ample margins in Feb/Mar as well as Sep/Oct .

Hopefully this helps.  If you have any further questions, give me a call.

Ted
rod.hayslett@enron.com