El Paso Natural Gas applauds FERC decision on system allocation

HOUSTON, May 30, 2002 — El Paso Natural Gas Co., a subsidiary of El Paso Corp., recently applauded a decision made by the Federal Energy Regulatory Commission (FERC) regarding the natural gas allocation methods on the El Paso Natural Gas pipeline system.

“El Paso fully supports FERC’s efforts to bring a resolution to this customer controversy,” said Patricia A. Shelton, president of El Paso Natural Gas Company.

FERC has been reviewing the capacity allocation procedures set forth in El Paso Natural Gas Company’s approved tariff for the shipment of natural gas. Many customers in areas east of California have shipping contracts with the company known as Full Requirement or FR contracts. These contracts give the FR shippers the right to request daily transportation of natural gas up to their claimed requirements. This, in turn, requires El Paso to allocate its capacity among all its shippers, including contract demand or CD shippers, who have upper contractual limits on the amount of transportation the company is required to provide them.

As a result of recently’s decision, FR shippers will be converted to CD contracts effective November 1, 2002. FERC staff previously had proposed the conversion of FR contracts to CD contracts, a position endorsed by El Paso. El Paso has worked with all its customers in an effort to resolve this issue and offered to increase the capacity on its pipeline system. In recently’s action, El Paso Natural Gas will be required to file an application for such capacity increase.

“We have been supportive of commission intervention in these proceedings to resolve the capacity allocation issue and view recently’s developments as positive,” continued Shelton. “Recently’s decision will put all shippers on equal contractual footing with regard to capacity rights. This decision is designed to retain the current settlement while accommodating changed circumstances on the El Paso system and is not expected to have an adverse economic impact on El Paso. We hope this will be a final chapter in a decades-old dispute among the El Paso Natural Gas Company customers.”

El Paso Corporation is a North America provider of natural gas services. The company has core businesses in natural gas production, gathering and processing, and transmission, as well as liquefied natural gas transport and receiving, petroleum logistics, power generation, and merchant energy services.

El Paso Corporation, integrated across the natural gas value chain, is committed to developing new supplies and technologies to deliver energy to communities around the world. For more information, visit www.elpaso.com .

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