LETTER TO FORT BEND ECONOMIC DEVELOPMENT COUNCIL FROM WESTERN:

                Western Gas Resources Storage, Inc. 

VIA FACSIMILE

August 21, 1992

Mr. Herb Appel, President

Greater Fort Bend Economic Development Council

One Fluor Drive

Sugar Land, Texas 77478

RE:  Memorandum dated August 10, 1992

       Factors Used in Developing Economic Impact Statement 

Dear Herb:

The following information responds to the items set out in your August 10 memorandum.

1.  The value of land and existing improvements is $600,050.  The only current improvements on the property are wells and related equipment.

2.  The value of proposed improvements is approximately $50,690,000; being approximately $38 million for the compressor station, pipeline system and wells, plus an estimated $12,690,000 for the pad gas (which is injected to bring the reservoir up to a good working pressure).  For your information, the compressor station costs include approximately $350,000 for landscaping.

3.  For economic valuation, we use 30 years as the minimum productive life.  Actually it will be much longer.

4.  There are no current jobs at the site, with the exception of a part-time contract pumper for the existing wells.  That work will be handled by our permanent facility employees.

5.  Approximately 17 new jobs will be created, including three supervisory or management positions and one secretarial position.  The other employees will be technicians, operators and mechanics.

6. The annual payroll will be approximately $500,000, not including benefits, bonuses and profit sharing.

7.  I assume that virtually all employees will live in or near the area.  Some may live there now.  We don't tell our employees where to live, but most people like to live near work.

8.  In addition to the amount set out in Item 2, we will be subject to an inventory tax on working gas.  That gas, plus capital costs not reflected in Item 2, could bring the total valuation up to approximately $67,000,000, resulting in annual local taxes of $1,882,700, based on the following:

Entity                                         Rate                       Amount

Fort Bend County                      0.59                        $395,300

Katy ISD                                    0.79                        $529,300

CED                                          0.78                        $522,600

FB MUD 37                             **0.65                        $435,500

**(Note:  The current MUD 37 rate is actually 1.30, but we expect our impact will be to cut it in half.)

9.  See item 8.

10.  I know of no specific costs that will be incurred by the county for Western's facilities.  Electric and telephone lines are on the main road. Under the auspices of MUD 37, and at no cost to the County, Western will be constructing a water line from the MUD's well to Western's facility.  Our operation and our 17 employees (even if none currently live in the area) won't require additional roads, schools, police or fire protection.  If additional fire or response training is required (which will be determined as we develop our emergency response plan in conjunction with the various local agencies), we will fund that training.

11.  The only population growth would be employees and their families who are not already residents of area.

12.  The only public improvements I am aware of, if applicable, are the landscaping (valued at approximately $350,000) and the water line (undetermined value at this time).

13.  Western's facility will not compete with existing businesses.

14.  During the construction phase, there will be opportunities for local construction personnel and firms.  Afterwards, there will be routine purchases for the facility, plus the domestic purchases of Western's employees.

15.  We do not anticipate that Western's operation will attract other businesses.

16.  There is no zoning ordinance in the area.  We will be compatible with the Major Thoroughfare Plan, as evidenced by the recent approval by the Houston Planning and Zoning Commission, and with other future development.

17.  The project is environmentally compatible.  It will be quiet and attractive, and the two toxicologists testifying at the Texas Air Control Board hearing stated that it would have no harmful effect on humans, animals, vegetation or property.  Western's facility will have no negative impact on the quality of life for anyone.

I hope this information is useful.  Please let me know if I can provide additional details.

Sincerely,

David H. Sander

Senior Landman