WESTERN GAS ASKS KATY ISD TO CONSIDER APPROVING LEASES:

Western Gas Resources Storage, Inc.

12200 N. Pecos Street

Suite 230

Denver, Colorado

80234-3439

(303) 452-5603

Sent by FAX:   Hayes  (713) 391-3432

                       Thompson  (713)  391-4514

March 26, 1993

Dr.  Hugh Hayes

Superintendent, Katy ISD

6301 South Stadium Lane

Katy, TX 77494

Mr. Stanley Thompson

P. O. Box 575

Katy, TX 77492

RE:  Oil and Gas Lease and Lease of Subsurface

        Katy Natural Gas Storage Project

        Fort Bend County, Texas

Dear Dr. Hayes and Mr. Thompson:

Western requests that the Katy ISD please consider approving the referenced leases at your April board meeting.  As stated in the February 17 letters, total consideration is $3,437.60 ($500.00 for the Lease of the Subsurface and $2,937.60 for the Oil and Gas Lease). If the district wishes to discuss any changes to the agreements as presented, I am willing and available to meet.

Also, please note that although it is not included in the total stated consideration, Western hereby offers to the district (as we have to numerous owners recently) a payment of $1,500.00 per tract (total of $3000.00) as a "litigation avoidance" payment.

At this time, all of the interests (both surface and mineral) within the reservoir outline have been leased, condemned, or scheduled for condemnation.

Facility construction is proceeding on schedule.  If you or any board members would like to visit the site, please contact Jim Junkins or Steve Weinhold at 395-7050.

Western regrets that our project has been accompanied by misunderstanding, controversy and (in some cases) hostility.  We also regret that the benefits of the project are not yet appreciated.  We are convinced that, after the facility is in full operation, its benefits will become obvious and early concerns will be seen to be unfounded.

Some of our employees have already moved into the district.  They, as do all of us at Western, look forward to a long and harmonious relationship with the district.  I can be reached at 1-800-933-5603.  I look forward to hearing from you.

Sincerely,

David H. Sander

Sr. Landman

xc:  Mr. Ken Leach