Enron's Gas Pipeline Group owns interests in four interstate pipelines, operates 32,000 miles of pipelines in 21 states and transports 15 percent of U.S. natural gas. Returns are strong and stable from the group, which produces consistent earnings and cash flow. In 1999 the group had income before interest and taxes (IBIT) of $380 million, or 19 percent of Enron's overall IBIT. Natural gas pipelines and their storage facilities are a key component of Enron's energy strategy.

		TRANSWESTERN PIPELINE
		Traditional gas transportation offers little flexibility to customers.
		ENRON ASKS WHY?
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The Gas Pipeline Group is benefiting from the nation's growing demand for natural gas. Domestic gas consumption is expected to increase to almost 30 trillion cubic feet (Tcf) per year by 2010 from almost 23 Tcf at present. Much of that consumption is driven by the use of natural gas to fuel new electricity generation. Unlike industrial users, generators require more flexibility and choices in gas delivery. To meet the new demands of the market, we are expanding all systems to transport more gas to more users, and providing those users with more flexible choices.

Perhaps more than any other pipeline operator, Enron's Gas Pipeline Group helps customers respond to shifting gas markets. Value-added products and services beyond transportation allow us to leverage our assets, build a knowledge-based business and keep our pipelines fully subscribed and running at capacity in the face of increased competition. We also operate with one of the lowest cost structures in the industry, which gives us a distinct advantage over competitors.

The expansion of our systems has been facilitated by Enron's regulatory, engineering and construction skills, which allow us to speed implementation. The Gas Pipeline Group continues to be recognized for its superior environmental record. For the third year running, we won the Environmental Protection Agency's Star Program Transmission Partner of the Year award, the only gas transmission company to receive the award since its inception in 1997.

The Gas Pipeline Group operates four interstate pipelines that move approximately 9.2 billion cubic feet (Bcf) of gas daily:

Northern Natural Gas

Northern Natural Gas is the largest system, with 16,463 miles of pipeline running from Texas to the Great Lakes, serving the upper Midwest. Deliveries averaged 3.8 Bcf per day in 1999. Since 1995, the system has increased market capacity by 10 percent.

With the proliferation of power plant development in its market, Northern Natural Gas is responding to the distinct needs of this new customer. Northern also continues to work with its Midwest-based customers to actively pursue and connect increased load requirements in this growing market by offering competitive transportation and storage products that connect these markets to a variety of alternative suppliers.

Transwestern Pipeline

Transwestern's 2,487 miles of pipe have bi-directional capability, allowing customers to direct gas to the best markets. Originating in the San Juan Basin, Transwestern can move gas east to Texas or west to the California border. Daily delivery averaged 1.5 Bcf in 1999.

In January 2000 Transwestern's Gallup expansion project was approved by the Federal Energy Regulatory Commission (FERC). The addition of one compressor station near Gallup, New Mexico, and two coolers at the La Plata and Blanco Hub will increase capacity to the California border by 140 million cubic feet per day (MMcf/d).

Florida Gas Transmission

Florida Gas Transmission, the sole interstate natural gas pipeline serving peninsular Florida, is the fastest growing system in North America. With a surge in state population and demand for gas-fired electric generation, Florida Gas Transmission is working on two major expansions. Phase IV will consist of pipe and compression to extend its network to southwest Florida and add capacity of nearly 200 MMcf/d. This project is scheduled to be in service by mid-2001. The proposed Phase V expansion, once completed, will add approximately 400 MMcf/d of capacity and has an in-service date of 2002. The proposal was filed in December with FERC.

The 4,795-mile pipeline had average daily capacity of 1.5 Bcf in 1999.

Northern Border Pipeline

Northern Border Pipeline runs from the U.S./Canadian border in Montana to Illinois, transporting approximately 23 percent of all Canadian gas imports to the U.S. The pipeline measures 1,214 miles and averaged daily deliveries of 2.4 Bcf in 1999. The Chicago Project expansion was put in service at the end of 1998. By interconnecting with multiple pipeline systems, this link fundamentally changed North American markets by establishing a new relationship between Canadian and NYMEX gas prices. Northern Border has proposed a second expansion, Project 2000, to connect to Northern Indiana Public Service Company and its industrial customer base in the Midwest.