El Paso Updates Impact of Hurricane Katrina on Operations

El Paso has nearly completed the process of re- staffing and inspecting its production facilities along the Gulf Coast, and, although detailed assessments are not yet available, initial inspections indicate minimal damage to El Paso's production facilities.

The company reports minimal damage to the facilities on ANR pipeline (ANR) and isolated damage to facilities on Tennessee Gas Pipeline (TGP) and Southern Natural Gas (SNG). Limited resources and challenging logistics are hampering efforts to access and fully inspect offshore pipeline facilities at this early stage.

Interstate Natural Gas Pipeline Operations

Approximately 3 Bcf/d was initially shut-in on El Paso's three natural gas pipeline systems in the Gulf of Mexico as a result of Hurricane Katrina. Currently, there are 900 million cubic feet per day (MMcf/d) of restricted volumes on TGP, 550 MMcf/d on SNG, and 400 MMcf/d on ANR Pipeline. On TGP, the Bay Saint Louis compressor station in Mississippi and the Leeville and Port Sulphur stations in Louisiana have sustained water damage as have the Toca and Olga stations on SNG. In a positive development for producers, TGP, which operates the east leg and header sections of the Blue Water Gathering System in the Gulf of Mexico, expects approximately 150 MMcf/d of production to be able to enter the header and flow to the west. The timing of additional volumes becoming available is difficult to predict given the uncertainty of potential repairs on TGP and because producers are still evaluating their platforms upstream of El Paso's pipelines.

Production Operations

As Hurricane Katrina moved into the Gulf, El Paso shut-in approximately 180 million cubic feet equivalent per day (MMcfe/d) of the 205 MMcfe/d that was producing before the storm. The company has inspected 61 of the 77 platforms that it operates, and overall, damage is minimal. The most common problem is damage to heliports. One El Paso platform was destroyed in the storm, but that platform accounted for only 1 MMcfe/d, net to the company. El Paso's production is now nearly 80 MMcfe/d. Because pipelines downstream of El Paso's operations are still assessing the integrity of their systems, the company cannot predict how soon the remaining production will resume.

Midstream Operations

El Paso's south Louisiana gathering and processing assets sustained minimal damage and power interruptions and have returned to operational status. On August 8, 2005, the company announced the sale of these assets and still expects to close the transaction in the fourth quarter.