We've recently discovered a new method to calibrate the energy meters at the EOTT meter-read stations. The meters, located at EOTT's natural gas wells, are designed to be read manually throughout the year. However, these manual meter reads have been sporadic, reducing the effectiveness of EOTT's natural gas revenue information. EOTT receives a bill for natural gas delivered to its producers, but it does not know the amount of gas metered to its specific wells. The meter-read stations are equipped with a gas meter attached to a local data-logger that electronically records data about gas metered by the EOTT meter. Based on the flow rates recorded by this data logger, EOTT is able to "build out" its natural gas billing. (This process is more accurate than attempting to convert "wellhead" data into "flow" data, a process which only estimates meters without actually recording and verifying the volumes.) The meter-read stations are installed to reduce both the costs of manual readings as well as the potential for human error. The old method of measuring gas for billing purposes at EOTT meter-read stations began in the field. This required the meter-read station technician to record the quantity of gas pumped from each meter, using a "dummy" gas meter. One meter was permanently affixed to the ground near the gas meter, while the other was left on the gas meter to record gas volume. One meter volume was connected to the inlet and outlet valves on the meter-read station while the other was linked to the flow meter. When the flow meter was read (through the electronic logger) it was noted whether gas was entering the station, leaving the station, or simply was not measured at all. Once meter volume and meter flow were linked, the meter-read station technician could subtract meter volume from meter flow to determine the volume of gas consumed at each meter location. This process was repeated for all meter-read stations. To accurately determine the volume of gas being measured by the meter-read stations, the technician must read the flow meter within a reasonable interval (for example, 30 days) of metering the gas. This ensures that the read of the flow meter is reflective of the volume of gas being used. The process of taking the "dummy" gas meter reading may be as simple as walking to the meter-read station, visually comparing the new and old gas meter readings, and making an estimate of how much gas was pumped through the meter during that time period. However, the meters may be located on different buildings or in different counties and are not always read within this reasonable interval. As a result, the volume of gas used may vary by more than ten percent from month to month. This new method involves creating a virtual or computer meter. This virtual meter will use mathematical modeling to determine the volume of gas used by an individual meter, by integrating the meter flow data that is recorded at the station during the time the gas meter was in use. When this new technique is used, and when it is necessary to add or delete meters, the computer meter simply requires the updated meter-read data (e.g., meter volumes and meter flows) to be reprocessed so that the output data are now reflective of the current usage by the meters. The above-described method uses only a small portion of the meter-read data, providing an extremely accurate determination of the volume of gas used by EOTT's natural gas wells. Our intent in taking this new method to develop a more accurate volume determination is to improve EOTT's billing efficiency and to eliminate the irregularities often created by manual meter reads. Because of the nature of EOTT's gas contracts, it is the intent of the business unit controllers to make this change as quickly as possible. Therefore, EOTT is looking to take this new method out into the field by September 30th. This will allow the business unit controllers to meet the goals set by the accounting and operations department. The EOTT meter-read stations will remain in the field for many years to come. In order for EOTT's natural gas revenue information to remain as accurate as possible, we must work with the existing technology that is in place. Once this method is installed and tested in the field, we will work with the accounting and operations department to verify that this method is producing valuable and reliable data. We will also request their assistance in replicating this method throughout the country. The EOTT meter-read stations have the following benefits: ? Allows daily meter reads to be taken on a daily basis ? Provides access to detailed daily records ? Allows EOTT to use as many locations as are necessary (not limited by distance from a control center) ? Requires no technical expertise in the field (can be read by personnel with only limited training) ? Eliminates the need to check for gas at each meter-read station to ensure the meter is recording accurately If you have any questions, please contact me or Gloria Taylor. Thank you for your continued support. Best Regards, Barbara Clancey X31643 EOTT Energy Corporation P.O. Box 2008 Houston, Texas 77251-2008