Octane Enhancement

Enterprise owns a state of the art gasoline additive production facility that has recently been modified to produce isoOctane, a motor gasoline octane enhancement additive derived from isobutane.. This facility is owned through Belvieu Environmental Fuels (BEF) and is located in the Company's Mont Belvieu complex.

Prior to 2005, BEF primarily produced MTBE, the production of which was primarily driven by oxygenated fuel programs enacted under the federal Clean Air Act Amendments of 1990. In recent years MTBE has been detected in water supplies, and as a result of environmental concerns, several states have enacted legislation to ban or significantly limit the use of MTBE in motor gasoline within their jurisdictions. Federal legislation has also been drafted to ban MTBE and replace it with renewable fuels such as ethanol.

In light of these developments, we expect isoOctane to be in demand by refiners to replace the amount of octane that is lost as a result of MTBE being eliminated as a motor gasoline blendstock. Our project to convert the MTBE production facility to isoOctane production was completed in May 2005 and our facility is now capable of producing 12 MBPD of isoOctane.