OFFSHORE OIL PIPELINES

The partnership owns interests in over 800 miles of offshore crude oil pipeline systems in the Gulf of Mexico. In addition to being strategically located in the vicinity of some of the most prolific oil-producing regions in the Gulf of Mexico, Enterprise's oil pipeline systems are parallel to and connect with key segments of some of its natural gas pipeline systems and offshore platforms, which contain separation and handling facilities. This distinguishes Enterprise from its competitors by allowing it to provide some producing properties with a unique single point of contact through which they may access a wide range of midstream services and assets.

Typically, our crude oil pipelines receive oil from offshore production facilities or other pipelines and deliver the oil to either onshore locations or to other interconnecting offshore pipelines. In general, our oil pipeline systems generate revenue based on related purchase and sale agreements which together provide an implicit fee per unit of volume (typically in barrels) received. As a result, the partnership is not exposed to direct commodity price risk. A substantial portion of the revenues generated by our oil pipeline systems are attributed to production from reserves that have been committed under life-of-reserve dedications.

Our most significant investment in offshore oil pipelines is a 50% interest in the Cameron Highway Oil Pipeline System. An affiliate of Valero Energy Corporation is our joint partner in this approximately $500 million pipeline. This has been a very successful project for our partnership with projected reserves and initial production from anchor fields exceeding our expectations.

This 390-mile pipeline has the capacity to move up to 600 MBPD of crude oil from fields in the central and western Gulf of Mexico to refineries on the Texas Gulf Coast. Its wide loop westward across the Gulf to the larger market in Texas makes Cameron Highway an attractive pipeline for new deepwater developments in this area.

Cameron Highway is supported by life-of-reserve dedications with BP, BHP Billiton and Unocal for their production from the Holstein, Mad Dog and Atlantis fields in the Southern Green Canyon area and with Kerr McGee for its production from the Constitution and Ticonderoga fields. Additionally, Cameron Highway has contracted with Shell for the movement of its 50% share of crude oil production from the Holstein field. The Holstein field began producing in December 2004, and first production from the Mad Dog field began in January 2005. Production from the Atlantis, Constitution and Ticonderoga fields is expected to begin in 2006.