Enron Pipeline Proposal - Indicative Comments ,
 Jason,

The following comments are an indicative response to the questions you asked 
during our phone conversation on Tuesday 4/3.  The following comments are NOT 
an additional pipeline proposal for the Murphy Medusa Project or an addendum 
to Enron's Medusa Pipeline Proposal.  There is insufficient time for Enron to 
obtain management approval of the following comments before Murphy's 
estimated recommendation date of Friday 4/6.  However, given additional time, 
or if awarded an LOI, Enron would work quickly to better define the issues 
discussed herein.
    
AMI Step-down:  As you and I discussed, Enron believes that the expected NPV 
of the risked AMI production volumes are in line with Enron's level of 
un-garranteed risk.  However, Enron would be willing to negotiate an AMI 
tariff step-down after a defined level of AMI production.  Notionally, Enron 
would be willing to consider a 25 percent AMI tariff reduction after 70 
million bbl and 100 million mmBTU of AMI production for the oil and gas 
export lines respectively.            

Abandonment:  The O&M charges proposed in the Pipeline Structure were set to 
partially recoup expected abandonment costs.  If Medusa produces 70MMBOE, 
Enron would expect to have some abandonment liability.  Moreover, Enron's 
actual abandonment costs could be significantly higher than initially 
estimated due to rig availability, inflation or, most importantly, regulatory 
changes.  Secondly, we have assumed no pipeline residual value.  No pipeline 
residual value is a reasonable assumption, given that in the Pipeline 
Structure, Enron would have no influence over the re-deployment of the FPS.  
Moreover, even if the pipelines were sold, the sales price would recognize 
the net value of the pipelines after abandonment.  Thus, there would be no 
double dipping on abandonment costs.

Oil Transportation:  Enron's understanding is that the $0.70/bbl for 
transportation from WD 143 is still a reasonable transportation estimate.  
This transportation cost estimate would be negotiated with Equilon after the 
execution of an LOI.

$30MM CAPEX Scenario:  Per your request, Enron has investigated a scenario 
where Enron would buy the oil and gas export pipelines from Murphy at a fixed 
price of $15MM each at the start of production.  Then, export pipeline 
capacity would be leased to the Venture, Venture Partners and 3rd party 
producers.  Based on a preliminary investigation, the Medusa production 
tariffs would reduce proportionately to the CAPEX.  Therefore, the tariff 
traunches for the oil and gas export pipelines would be:
$0.40 / bbl, $0.33 / bbl and $0.10 /bbl for the oil export pipeline
$0.35 / mmBTU, $0.14 / mmBTU and $0.07 mmBTU for the gas export pipeline

Thank you for the opportunity to bid on the Medusa FPS and export pipelines.  
Please call me if you have any questions concerning the above comments and/or 
Enron's previously submitted Medusa proposals.  

Regards,

Kenneth Loch
713-345-8962
jason.smith@murphyoilcorp.com