Message-ID: <27286790.1075853191822.JavaMail.evans@thyme>
Date: Wed, 8 Nov 2000 03:12:00 -0800 (PST)
From: randal.maffett@enron.com
To: richard.sanders@enron.com
Subject: WMI Update
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Richard - here's what I've been able to gather over the past day.

the timing of all this w/ WMI goes back to '95-'99
all this relates to the Davis St. project in Oakland
GSF was the operator of the wellfield and the medium Btu processing plant
GSF owned the plant (a compressor and refrigeration unit) and the pipelines 
used to gather the gas
the key person from Ecogas was a guy named Ray Kuroki who was formerly with 
GSF when Ecogas acquired them
prior to Ecogas' acquisition of GSF, the project was losing money so GSF was 
prepared to walk from the site based on their "economic out" in the 
Agreement.  WMI did not want to assume operations so they initiated 
negotiations w/ GSF (Ray) to eliminate the royalty payments in return for GSF 
continuing to operate the wellfield.  WMI was having its own financial 
problems and didn't want the hassle of having to operate a stand alone 
facility.
Ray claims WMI lawyers (in Irvine, CA) had drafted an amendment to their 
contract but it was never executed.  He believes Ecogas has a copy somewhere 
in their files.
While this was occuring, Ecogas acquired GSF and Ray was moved to another 
area and Jerrel Branson and Jon Hall (former CFO of Ecogas) took over.
Everyone I've spoken to does confirm that the royalty payments owed were 
never made, so this claim could have some legitimacy.  I'm trying to find out 
how much?
However, both Ray and Geoff Brown (former GSF who was in charge of ops at 
Davis and now currently VP-Ops for Ecogas) assert that GSF never agreed to be 
responsible for the landfill's compliance with air quality standards (they 
quote Bay Area Rule 34).  Ray and Geoff both stated that GSF was NOT an 
environmental company and would never have agreed to such.  Ray seemed to 
recall that during the negotiations there was some discussion re: language 
whereby GSF would agree to use its "best efforts" to assist WMI in meeting 
its compliance standards but nothing that obligated GSF to be responsible for 
them.
I have skimmed the Agreement (a copy has been sent to you) and found nothing 
that asserts GSF/Ecogas was responsible for any environmental compliance for 
anything other than their assets and their operations.  WMI's claim is based 
upon fugitive emissions (gas seeping out of the ground) and NOT upon 
GSF/Ecogas' failure to operate its plant properly.  Therefore, the 
environmental claim seems to be much less grounded.

I'll see you at 3 pm in my office to discuss.

RANDY