OFFSHORE NATURAL GAS PIPELINES

Enterprise owns or has an interest in approximately 1,150 miles of offshore natural gas pipelines that provide gathering and transmission services for natural gas developments located in the Gulf of Mexico, primarily offshore Louisiana and Texas. These systems receive natural gas from production facilities and other pipelines through system interconnects and transport the natural gas to our processing plants and pipelines, as well as other downstream natural gas processing plants and pipelines that serve markets throughout the eastern half of the United States.

In general, these pipelines generate revenue based on transportation fees charged per unit of volume (typically in MMBtus) transported. These agreements tend to be long-term in nature, often involving life-of-reserve commitments with firm and interruptible fees. Our offshore natural gas pipeline systems do not take title to the natural gas volumes they transport; rather, the shipper retains title and the associated commodity price risk.

During 2004 we announced two offshore natural gas pipeline projects that are currently under construction - the Constitution and Independence Trail natural gas pipelines.

In July 2004, GulfTerra entered into a definitive agreement to construct, own and operate a natural gas pipeline to provide production gathering services for Kerr-McGee's Constitution field. The new 32-mile, 16-inch natural gas pipeline will have a transport capacity of up to 200 MMcf/d and will originate at the Constitution field in 5,300 feet of water and connect to our existing Anaconda Gathering System. The new pipeline is expected to begin transporting natural gas in the first half of 2006.

In November 2004, Enterprise executed agreements to provide transportation services to BP, BHP, Devon, Anadarko, Dominion and Spinnaker for their gas production from numerous leases in the Mississippi Canyon, Atwater Valley, Lloyd Ridge and DeSoto Canyon areas. Enterprise will construct a 134-mile, 24-inch diameter gas pipeline called Independence Trail, which will connect a 105-foot deep draft, semi-submersible platform located in 8,000 feet of water in the Mississippi Canyon Block 920 to Tennessee Gas Pipeline in the West Delta area. The Hub platform, called Independence Hub, will also be constructed by Enterprise. Independence Hub and Independence Trail will have the capability to handle 850 MMcf/d of natual gas. First production is expected in 2007.