TE PRODUCTS PIPELINE CO LP, S-3/A, 1998-01-16

TE PRODUCTS PIPELINE CO LP
S-3/A, 1998-01-16
PIPE LINES (NO NATURAL GAS)

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<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 16, 1998

Registration No. 333-38473
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

--------------

AMENDMENT NO. 4
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

--------------

TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)

DELAWARE 76-0329620
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

2929 ALLEN PARKWAY
P.O. BOX 2521
HOUSTON, TEXAS 77252-2521
(713) 759-3636
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

--------------

JAMES C. RUTH
VICE PRESIDENT AND GENERAL COUNSEL
TEXAS EASTERN PRODUCTS PIPELINE COMPANY
2929 ALLEN PARKWAY
P.O. BOX 2521
HOUSTON, TEXAS 77252-2521
(713) 759-3636
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

--------------

COPY TO:

JOHN A. WATSON JAMES M. PRINCE
FULBRIGHT & JAWORSKI L.L.P. ANDREWS & KURTH L.L.P.
1301 MCKINNEY, SUITE 5100 600 TRAVIS, SUITE 4200
HOUSTON, TEXAS 77010-3095 HOUSTON, TEXAS 77002-3090
(713) 651-5151 (713) 220-4200

--------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
[_]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest investment plans, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]

--------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND
EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

================================================================================

<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED JANUARY 16, 1998

PROSPECTUS
$390,000,000

TE PRODUCTS PIPELINE COMPANY,
LIMITED PARTNERSHIP

[LOGO]
$150,000,000 % SENIOR NOTES DUE 2008
$240,000,000 % SENIOR NOTES DUE 2028

--------------

The % Senior Notes due January 15, 2008 (the "2008 Notes") and the %
Senior Notes due January 15, 2028 (the "2028 Notes") are being issued by TE
Products Pipeline Company, Limited Partnership (the "Partnership"). Interest on
the 2008 Notes and the 2028 Notes (collectively, the "Notes") is payable
semi-annually on January 15 and July 15 of each year, commencing July 15, 1998.
The 2008 Notes will mature on January 15, 2008, and the 2028 Notes will mature
on January 15, 2028. The 2008 Notes may not be redeemed prior to their maturity.
The 2028 Notes may be redeemed at any time after January 15, 2008, at the option
of the Partnership, in whole or in part, on not less than 30 nor more than 60
days' prior written notice, at the redemption prices set forth in this
Prospectus, together with all accrued but unpaid interest, if any, to the date
of redemption. See "Description of Notes--Optional Redemption".

The Notes will be unsecured obligations of the Partnership and will rank
on a parity with all other unsecured and unsubordinated indebtedness of the
Partnership. Upon the sale of the Notes and the application of the proceeds
therefrom as described under "Use of Proceeds", the Partnership will have no
indebtedness for borrowed money ranking senior to or on a parity with the
Notes. However, the indenture governing the Notes does not limit the
Partnership's ability to incur such indebtedness in the future.

Each series of Notes will be represented by one or more global notes
registered in the name of The Depository Trust Company (the "Depositary") or
its nominee. Interests in the global notes will be shown on, and transfers
thereof will be effected only through, records maintained by the Depositary
(with respect to beneficial interests of participants) or by participants or
persons that hold interests through participants (with respect to beneficial
interests of beneficial owners). Except as described in the accompanying
Prospectus, Notes in certificated form will not be issued. See "Description of
the Notes--Book Entry Procedures".

The Partnership is 99% owned by TEPPCO Partners, L.P. ("TEPPCO" or the
"Parent Partnership"). Limited Partnership Units of the Parent Partnership are
traded on the New York Stock Exchange under the symbol "TPP". The Notes have
been approved for listing on the New York Stock Exchange.

--------------

<PAGE> 3
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
===============================================================================
Price to Underwriting Proceeds to
Public(1) Discounts(2) Partnership(1)(3)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per 2008 Note . . . . . . . . % % %
- -------------------------------------------------------------------------------
Per 2028 Note . . . . . . . . % % %
- -------------------------------------------------------------------------------
Total . . . . . . . . . . . . $ $ $
===============================================================================
</TABLE>

(1) Plus accrued interest, if any, from January 27, 1998.

(2) The Partnership has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting".
(3) Before deducting expenses payable by the Partnership estimated at $ .

--------------

The Notes are being offered by the Underwriters, subject to prior sale,
when, as and if issued to and accepted by the Underwriters, subject to certain
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. See "Underwriting". It
is expected that delivery of the Notes will be made through the book-entry
facilities of the Depositary on or about .

--------------

MERRILL LYNCH & CO. GOLDMAN, SACHS & CO.

The date of this Prospectus is January , 1998.

<PAGE> 4

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
NOTES, INCLUDING PURCHASES OF THE NOTES TO STABILIZE THEIR MARKET PRICE AND
PURCHASES OF THE NOTES TO COVER ALL OR SOME OF A SHORT POSITION IN THE NOTES.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

AVAILABLE INFORMATION

The Partnership has filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement on Form S-3 under the Securities
Act of 1933, as amended (the "Securities Act"), for the registration of the
Notes offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in
the Registration Statement, certain items of which are contained in exhibits
to, or incorporated by reference in, the Registration Statement as permitted by
the rules and regulations of the Commission. For further information with
respect to TEPPCO Partners, L.P. (the "Parent Partnership"), the Partnership
and the Notes offered hereby, reference is made to the Registration Statement,
including the exhibits thereto, and financial statements and notes filed as a
part thereof or incorporated by reference therein. Statements made in this
Prospectus concerning the contents of any document referred to herein are not
necessarily complete. With respect to each such document filed with the
Commission as an exhibit to, or incorporated by reference in, the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.

The Parent Partnership is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In
accordance therewith, the Parent Partnership files consolidated reports, proxy
statements and other information with the Commission. Under the rules and
policies of the Commission, it is not expected that the Partnership will file
separate periodic reports under the Exchange Act. Reports, proxy statements
and other information filed by the Parent Partnership may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices located at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511, and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material may be obtained by mail from the Public Reference
Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains a Web site (http://www.sec.gov) that
contains reports, proxy and information statements and other information
regarding the Parent Partnership and the Partnership. In addition, such
material may also be inspected and copied at the offices of the New York Stock
Exchange. Limited Partnership Units issued by the Parent Partnership are listed
on the New York Stock Exchange under the symbol "TPP".

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The following documents have been filed with the Commission and are
incorporated by reference in this Prospectus: (i) the Annual Report on Form 10-K
of the Parent Partnership (File No. 1-10403) for the year ended December 31,
1996 (the "1996 Form 10-K"), filed February 21, 1997, (ii) the Parent
Partnership's Quarterly Report on Form 10-Q for the period ended March 31, 1997,
filed May 6, 1997, (iii) the Parent Partnership's Quarterly Report on Form 10-Q
for the period ended June 30, 1997, filed August 7, 1997; (iv) the Parent
Partnership's Quarterly Report on Form 10-Q for the period ended September 30,
1997, filed November 14, 1997; (v) the Parent Partnership's Current Report on
Form 8-K filed December 22, 1997 and (vi) the Parent Partnership's Current
Report on Form 8-K filed January 16, 1998. All documents filed by the Parent
Partnership pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Prospectus and prior to the termination of the offering
of the Notes registered on the Registration Statement shall be deemed to be
incorporated herein by reference and to be a part hereof from the respective
dates of filing of such documents.

Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein, or in any other subsequently
filed document that also is or is deemed to be incorporated by reference
herein, modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

2
<PAGE> 5

Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered, upon written or oral request. Copies of this
Prospectus, as amended or supplemented from time to time, and any other
documents (or parts of documents) that constitute part of the Prospectus under
Section 10(a) of the Securities Act will also be provided without charge to
each such person, upon written or oral request. Requests should be directed to
the Parent Partnership at 2929 Allen Parkway, P.O. Box 2521, Houston, Texas
77252-2521, Attention: Investor Relations (telephone number: (713) 759-3636).

NO SEPARATE FINANCIAL INFORMATION FOR THE PARTNERSHIP HAS BEEN PROVIDED
OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS BECAUSE: (i) THE PARENT
PARTNERSHIP DOES NOT ITSELF CONDUCT ANY OPERATIONS BUT RATHER ALL OPERATIONS OF
THE PARENT PARTNERSHIP AND ITS SUBSIDIARIES ARE CONDUCTED BY THE PARTNERSHIP;
(ii) THE PARENT PARTNERSHIP HAS NO MATERIAL ASSETS OTHER THAN SUBSTANTIALLY ALL
OF THE OWNERSHIP INTEREST IN THE PARTNERSHIP; AND (iii) ALL OF THE ASSETS AND
LIABILITIES SHOWN IN THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE PARENT
PARTNERSHIP ARE LOCATED AT THE PARTNERSHIP.

SYSTEM MAP

[Map]

3
<PAGE> 6

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto set forth or
incorporated by reference in this Prospectus.

THE PARTNERSHIP

TE Products Pipeline Company, Limited Partnership is a Delaware limited
partnership (the "Partnership") that was formed on March 7, 1990 to own and
operate the refined petroleum products and liquefied petroleum gases ("LPGs")
pipeline business of Texas Eastern Products Pipeline Company, a Delaware
corporation (the "Company" or "General Partner"). The Company, an indirect
wholly owned subsidiary of Duke Energy Corporation ("Duke"), is the general
partner of the Partnership and has an approximate one percent general partner's
interest therein. TEPPCO Partners, L.P. (the "Parent Partnership") is the
limited partner of the Partnership and has an approximate 99% limited partner's
interest therein. The Parent Partnership is a publicly-held master limited
partnership, the Limited Partnership Units ("Units") of which are listed on the
New York Stock Exchange under the symbol "TPP". The Company, as general
partner, performs all management and operating functions required for the
Partnership pursuant to the Agreements of Limited Partnership of the
Partnership and the Parent Partnership (the "Partnership Agreements"). The
Company owns an effective combined two percent general partner's interest in
the Partnership and the Parent Partnership.

The Partnership is one of the largest pipeline common carriers of
refined petroleum products and LPGs in the United States. The Partnership owns
and operates an approximate 4,300-mile pipeline system (together with the
receiving, storage and terminaling facilities mentioned below, the "Pipeline
System" or "Pipeline" or "System") extending from southeast Texas through the
central and midwestern United States to the northeastern United States. The
Pipeline System includes delivery terminals along the Pipeline for outloading
product to other pipelines, tank trucks, rail cars or barges, as well as
substantial storage capacity at Mont Belvieu, Texas, the largest LPGs storage
complex in the United States, and at other locations. The Partnership also owns
two marine receiving terminals, one near Beaumont, Texas, and the other at
Providence, Rhode Island. The Providence terminal is not physically connected
to the Pipeline. As an interstate common carrier, the Pipeline System offers
interstate transportation services, pursuant to tariffs filed with the Federal
Energy Regulatory Commission (the "FERC"), to any shipper of refined petroleum
products and LPGs who requests such services, provided that the shipper and the
products tendered by such shipper for transportation satisfy the conditions and
specifications contained in the applicable tariff. In addition to the revenues
received by the Pipeline System from its interstate tariffs, it also receives
revenues from the shuttling of LPGs between refinery and petrochemical
facilities on the upper Texas Gulf Coast and ancillary transportation, storage
and marketing services at key points along the System. Substantially all the
petroleum products transported and stored in the Pipeline System are owned by
the Partnership's customers. Petroleum products are received at terminals
located principally on the southern end of the Pipeline System, stored,
scheduled into the Pipeline in accordance with customer nominations and shipped
to delivery terminals for ultimate delivery to the final distributor (e.g., gas
stations and retail propane distribution centers) or to other pipelines.
Pipelines are generally the lowest cost method for intermediate and long-haul
overland transportation of petroleum products. The Pipeline System is the only
pipeline that transports LPGs to the Northeast.

The Partnership conducts business and owns properties located in 12
states. Products are transported in liquid form from the upper Texas Gulf Coast
through two parallel underground pipelines that extend to Seymour, Indiana.
From Seymour, segments of the Pipeline System extend to the Chicago, Illinois;
Lima, Ohio; Selkirk, New York; and Philadelphia, Pennsylvania, areas.

4
<PAGE> 7
THE OFFERING

SECURITIES OFFERED. . . $150,000,000 principal amount of % Senior Notes
due 2008 and $240,000,000 principal amount of %
Senior Notes due 2028.

MATURITY DATE. . . . . January 15, 2008 with respect to the 2008 Notes and
January 15, 2028 with respect to the 2028 Notes.

INTEREST PAYMENT Interest on the Notes will be paid semi-annually in
DATES. . . . . . . . . arrears on January 15 and July 15 of each year,
commencing July 15, 1998.

OPTIONAL REDEMPTION. . . The 2008 Notes will not be subject to redemption prior
to their maturity. The 2028 Notes will not be
subject to redemption prior to January 15, 2008.
Thereafter, the 2028 Notes are subject to redemption
upon not less than 30 nor more than 60 days' notice
at the election of the Partnership at the redemption
prices set forth herein, together with accrued
interest to the redemption date. See "Description of
the Notes--Optional Redemption".

RANKING. . . . . . . . The Notes will be unsecured obligations of the
Partnership and will rank on a parity with all
other unsecured and unsubordinated indebtedness
of the Partnership. Upon the sale of the Notes
and the application of the proceeds therefrom as
described under "Use of Proceeds", the
Partnership will have no indebtedness for
borrowed money ranking senior to or on a parity
with the Notes. However, the indenture governing
the Notes does not limit the Partnership's
ability to incur additional indebtedness.

CERTAIN COVENANTS. . . . The indenture governing the Notes will contain
covenants, including, but not limited to,
covenants limiting (i) the creation of liens
securing indebtedness and (ii) sale and leaseback
transactions.

USE OF PROCEEDS. . . . The net proceeds from the sale of the Notes offered
hereby, estimated to be approximately $387
million, will be used to repay the Partnership's
First Mortgage Notes of approximately $327
million, together with substantially all of the
redemption premium thereon, currently estimated at
approximately $63 million. The balance, if any, of
the redemption premium will be paid from available
cash of the Partnership. See "Use of Proceeds".

LISTING. . . . . . . . The Notes have been approved for listing on the New
York Stock Exchange.

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

This Prospectus and the documents incorporated by reference herein
include "forward-looking statements" within the meaning of various provisions
of the Securities Act and the Exchange Act. All statements, other than
statements of historical facts, included in this Prospectus and the documents
incorporated by reference herein that address activities, events or
developments that the Partnership expects or anticipates will or may occur in
the future, including such things as estimated future capital expenditures
(including the amount and nature thereof), business strategy and measures to
implement strategy, competitive strengths, goals, expansion and growth of the
Partnership's business and operations, plans, references to future success,
references to intentions as to future matters and other such matters are
forward-looking statements. These statements are based on certain assumptions
and analyses made by the Partnership in light of its experience and its
perception of historical trends, current conditions and expected future
developments as well as other factors it believes are appropriate under the
circumstances. However, whether

5
<PAGE> 8
actual results and developments will conform with the Partnership's expectations
and predictions is subject to a number of risks and uncertainties, including
general economic, market or business conditions, the opportunities (or lack
thereof) that may be presented to and pursued by the Partnership, competitive
actions by other pipeline companies, changes in laws or regulations, and other
factors, many of which are beyond the control of the Partnership. Consequently,
all of the forward-looking statements made in this Prospectus and the documents
incorporated by reference herein are qualified by these cautionary statements
and there can be no assurance that the actual results or developments
anticipated by the Partnership will be realized or, even if substantially
realized, that they will have the expected consequences to or effects on the
Partnership or its business or operations.

<PAGE> 9
SUMMARY FINANCIAL AND OPERATING DATA

The following table sets forth, for the periods and at the dates
indicated, summary consolidated financial and operating data for the
Partnership and the Parent Partnership. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations". The summary
consolidated financial data should be read in conjunction with the Parent
Partnership's consolidated financial statements incorporated by reference in
this Prospectus. There have been no factors (e.g., accounting changes,
business combinations or dispositions of business operations) that materially
affect the comparability of the information reflected in the following table.

No separate financial information for the Partnership has been provided
or incorporated by reference in this Prospectus because: (i) the Parent
Partnership does not itself conduct any operations but rather all operations of
the Parent Partnership and its subsidiaries are conducted by the Partnership;
(ii) the Parent Partnership has no material assets other than substantially all
of the ownership interest in the Partnership; and (iii) all of the assets and
liabilities shown in the consolidated financial statements for the Parent
Partnership are located at the Partnership.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------------- ----------------------
1992 1993 1994 1995 1996 1996 1997
--------- --------- -------- -------- -------- --------- ---------
INCOME STATEMENT DATA (IN THOUSANDS, EXCEPT RATIOS AND TARIFF INFORMATION)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues: (UNAUDITED)
Transportation--Refined Products .... $ 70,041 $ 75,144 $ 89,442 $ 96,190 $ 98,641 $ 74,913 $ 81,020
Transportation--LPGs ................ 61,385 74,270 73,458 70,576 80,219 54,342 52,587
Gain on sale of inventory ........... 2,524 1,848 966 4,115 3,674 3,616 2,247
Mont Belvieu operations ............. 13,144 12,611 12,290 13,570 11,811 8,359 9,385
Other ............................... 19,128 19,761 21,146 19,265 21,680 16,093 16,140
--------- --------- --------- --------- --------- --------- ---------
Total operating revenues .......... 166,222 183,634 197,302 203,716 216,025 157,323 161,379
--------- --------- --------- --------- --------- --------- ---------
Operating, general and administrative .. 75,276 79,469 85,197 96,419 96,541 70,610 71,550
Depreciation and amortization .......... 23,535 23,485 23,063 23,286 23,409 17,805 17,740
Taxes -- other than income taxes ....... 8,417 8,788 9,140 7,519 8,641 6,426 7,191
--------- --------- --------- --------- --------- --------- ---------
Total costs and expenses .......... 107,228 111,742 117,400 127,224 128,591 94,841 96,481
--------- --------- --------- --------- --------- --------- ---------
Operating income .................. 58,994 71,892 79,902 76,492 87,434 62,482 64,898
Interest expense, First Mortgage Notes . (37,288) (36,965) (36,491) (35,844) (34,922) (26,237) (25,339)
Interest capitalized ................... 688 723 415 857 1,388 703 1,186
Other income net ....................... 2,716 1,881 3,189 5,689 5,346 4,290 2,051
--------- --------- --------- --------- --------- --------- ---------
Income before minority interest ... 25,110 37,531 47,015 47,194 59,246 41,238 42,796
Minority interest ...................... (254) (379) (475) (477) (598) (416) (432)
--------- --------- --------- --------- --------- --------- ---------
Income before cumulative effect
of accounting change ............ 24,856 37,152 46,540 46,717 58,648 40,822 42,364
Accounting change, net of
minority interest ................. -- (949) -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income ...................... $ 24,856 $ 36,203 $ 46,540 $ 46,717 $ 58,648 $ 40,822 $ 42,364
========= ========= ========= ========= ========= ========= =========
Net income per Limited Partner
Unit .......................... $ 1.70 $ 2.47 $ 3.13 $ 3.08 $ 3.79 $ 2.64 $ 2.70
Cash distributions declared
per Limited Partner Unit ...... $ 2.20 $ 2.22 $ 2.37 $ 2.65 $ 2.90 $ 2.15 $ 2.30

Consolidated ratios of earnings to
fixed charges ..................... 1.6 2.0 2.2 2.2 2.5(1) 2.4 2.6(1)

CASH FLOW DATA
Net cash provided by operating
activities ........................ $ 54,977 $ 60,989 $ 70,082 $ 78,456 $ 86,121 $ 54,189 $ 51,044
Capital expenditures ................... $ 25,102 $ 16,240 $ 20,826 $ 25,967 $ 51,264 $ 29,424 $ 24,549

</TABLE>

7
<PAGE> 10

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA
Volumes delivered (Bbls):
Refined products ..................... 87,616 90,712 107,271 110,234 115,262 87,187 90,820
LPGs ................................. 34,821 38,813 36,636 38,237 41,640 28,866 29,052
Mont Belvieu operations .............. 28,482 22,035 28,695 30,148 22,522 17,124 20,601
--------- --------- --------- --------- --------- --------- ---------
Total ............................. 150,919 151,560 172,602 178,619 179,424 133,177 140,473
========= ========= ========= ========= ========= ========= =========
Average system tariff per barrel ....... $ 0.90 $ 1.01 $ 0.97 $ 0.96 $ 1.02 $ 0.99 $ 0.97
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------- September 30,
BALANCE SHEET DATA (AT PERIOD END) 1992 1993 1994 1995 1996 1997
-------- --------- --------- --------- --------- -------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Property, plant and equipment--net $ 552,238 $ 543,613 $ 540,577 $ 533,470 $ 561,068 $ 565,339
Total assets ......................... 652,182 655,138 665,331 669,915 671,241 655,225
First Mortgage Notes ................. 361,512 356,512 349,512 339,512 326,512 309,512
Total partners' capital .............. 250,978 257,428 269,599 276,381 290,311 296,647
</TABLE>

- ---------------
(1) Such ratios were 3.0 and 3.0 on a pro forma basis for the year ended
December 31, 1996, and the nine months ended September 30, 1997,
respectively, assuming that the sale of the Notes and the application of
the net proceeds therefrom as described under "Use of Proceeds" occurred
as of January 1, 1996, and adjusted only to give effect to the net
decrease in interest expense resulting therefrom.

<PAGE> 11

THE PARTNERSHIP

The Company, an indirect wholly owned subsidiary of Duke, is the general
partner of the Partnership and has an approximate one percent general partner's
interest therein. TEPPCO is the limited partner of the Partnership and has an
approximate 99% limited partner's interest therein. The Parent Partnership is
a publicly-held master limited partnership, the Units of which are listed on
the New York Stock Exchange under the symbol "TPP". The Company, as general
partner, performs all management and operating functions required for the
Partnership pursuant to the Partnership Agreements. The Company owns an
effective combined two percent general partner's interest in the Partnership
and the Parent Partnership. The Partnership was formed under the laws of the
State of Delaware in 1990. The Partnership's executive offices are located at
2929 Allen Parkway, P.O. Box 2521, Houston, Texas 77252-2521, and its telephone
number is (713) 759-3636.

The following chart depicts the organization relationships among the
Partnership, its partners and Duke:

[Chart]

Although the Company has no intention of doing so, it has the right to
withdraw as the general partner of the Partnership after January 1, 2000. Upon
any such withdrawal, the Parent Partnership may elect to reconstitute and
continue the Partnership with a successor general partner, in which event the
obligations of the Partnership under the Notes and the Indenture will continue
without modification. If the Partnership is not so reconstituted and
continued, the Agreement of Limited Partnership of the Partnership requires
that a liquidator be appointed to wind up the affairs of the Partnership. Such
event would not permit acceleration of the maturities of the Notes by the
holders thereof or require prepayment thereof by the Partnership. In such
event, however, the assets of the Partnership must be applied to pay creditors
of the Partnership, including the holders of the Notes, in the order of
priority provided by law before any distributions may be made to partners of
the Partnership on account of their partnership interests.

<PAGE> 12
USE OF PROCEEDS

The net proceeds from the sale of the Notes offered hereby, estimated to
be approximately $387 million, will be used to repay the Partnership's 9.60%
Series A First Mortgage Notes due March 7, 2000 and the Partnership's 10.20%
Series B First Mortgage Notes due March 7, 2010 (collectively, the "First
Mortgage Notes"), together with substantially all of the redemption premium
therein, currently estimated at approximately $63 million. The balance, if any,
of the redemption premium will be paid from available cash of the Partnership.
The precise amount of the redemption premium will depend upon U.S. Treasury
interest rates in effect on the day prior to the redemption of the First
Mortgage Notes. The closing of the offering of the Notes and the redemption of
the First Mortgage Notes are expected to occur simultaneously. At December 31,
1997, outstanding principal under the Series A Notes and Series B Notes was
approximately $61 million and approximately $266 million, respectively. The
First Mortgage Notes are secured by a mortgage on substantially all of the
property, plant and equipment of the Partnership. The weighted average interest
rate of the First Mortgage Notes at December 31, 1997, was 10.087%.

CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Parent Partnership at September 30, 1997, and as adjusted to give effect to the
sale of the Notes and the application of the net proceeds therefrom, together
with approximately $3 million of Partnership cash, as described under "Use of
Proceeds". This table should be read in conjunction with the consolidated
financial statements of the Parent Partnership and the notes thereto
incorporated by reference in this Prospectus.

<TABLE>
<CAPTION>
September 30, 1997
---------------------
Actual As Adjusted
-------- -----------
(in thousands)
<S> <C> <C>
Cash and cash equivalents ............................. $ 27,731 $ 24,731

Current maturities of First Mortgage Notes ............ 17,000 --
First Mortgage Notes .................................. 309,512 --
2008 Notes ............................................ -- 150,000
2028 Notes ............................................ -- 240,000
Partners' capital:
General partner's interest ..................... 5,311 441
Limited partners' interests .................... 291,336 233,206
</TABLE>

<PAGE> 13
SELECTED FINANCIAL DATA

The following table sets forth, for the periods and at the dates
indicated, selected consolidated financial and operating data for the
Partnership and the Parent Partnership. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations". The selected
consolidated financial data should be read in conjunction with the Parent
Partnership's consolidated financial statements incorporated by reference in
this Prospectus. There have been no factors (e.g., accounting changes,
business combinations or dispositions of business operations) that materially
affect the comparability of the information reflected in the following table.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- -------- --------
INCOME STATEMENT DATA (IN THOUSANDS, EXCEPT RATIOS AND TARIFF INFORMATION)
Revenues: (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Transportation--Refined Products .. $ 70,041 $ 75,144 $ 89,442 $ 96,190 $ 98,641 $ 74,913 $ 81,020
Transportation--LPGs .............. 61,385 74,270 73,458 70,576 80,219 54,342 52,587
Gain on sale of inventory ......... 2,524 1,848 966 4,115 3,674 3,616 2,247
Mont Belvieu operations ........... 13,144 12,611 12,290 13,570 11,811 8,359 9,385
Other ............................. 19,128 19,761 21,146 19,265 21,680 16,093 16,140
--------- --------- --------- --------- --------- --------- ---------
Total operating revenues .......... 166,222 183,634 197,302 203,716 216,025 157,323 161,379
--------- --------- --------- --------- --------- --------- ---------
Operating, general and administrative 75,276 79,469 85,197 96,419 96,541 70,610 71,550
Depreciation and amortization ........ 23,535 23,485 23,063 23,286 23,409 17,805 17,740
Taxes -- other than income taxes ..... 8,417 8,788 9,140 7,519 8,641 6,426 7,191
--------- --------- --------- --------- --------- --------- ---------
Total costs and expenses .......... 107,228 111,742 117,400 127,224 128,591 94,841 96,481
--------- --------- --------- --------- --------- --------- ---------
Operating income .................. 58,994 71,892 79,902 76,492 87,434 62,482 64,898
Interest expense, First Mortgage Notes (37,288) (36,965) (36,491) (35,844) (34,922) (26,237) (25,339)
Interest capitalized ................ 688 723 415 857 1,388 703 1,186
Other income -- net .................. 2,716 1,881 3,189 5,689 5,346 4,290 2,051
--------- --------- --------- --------- --------- --------- ---------
Income before minority interest ..... 25,110 37,531 47,015 47,194 59,246 41,238 42,796
Minority interest .................... (254) (379) (475) (477) (598) (416) (432)
--------- --------- --------- --------- --------- --------- ---------
Income before cumulative effect of
accounting change ................. 24,856 37,152 46,540 46,717 58,648 40,822 42,364
Accounting change, net of minority
interest .......................... -- (949) -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income ........................ $ 24,856 $ 36,203 $ 46,540 $ 46,717 $ 58,648 $ 40,822 $ 42,364
========= ========= ========= ========= ========= ========= =========
Net income per Limited Partner
Unit ............................ $ 1.70 $ 2.47 $ 3.13 $ 3.08 $ 3.79 $ 2.64 $ 2.70
Cash distributions declared per
Limited Partner Unit ............ $ 2.20 $ 2.22 $ 2.37 $ 2.65 $ 2.90 $ 2.15 $ 2.30

Consolidated ratios of earnings to
fixed charges (1) ................. 1.6 2.0 2.2 2.2 2.5(2) 2.4 2.6(2)

Cash Flow Data
Net cash provided by operating
activities ........................ $ 54,977 $ 60,989 $ 70,082 $ 78,456 $ 86,121 $ 54,189 $ 51,044
Capital expenditures ................. $ 25,102 $ 16,240 $ 20,826 $ 25,967 $ 51,264 $ 29,424 $ 24,549
</TABLE>

11
<PAGE> 14
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Data
Volumes delivered (Bbls):
Refined products ................... 87,616 90,712 107,271 110,234 115,262 87,187 90,820
LPGs ............................... 34,821 38,813 36,636 38,237 41,640 28,866 29,052
Mont Belvieu operations ............ 28,482 22,035 28,695 30,148 22,522 17,124 20,601
--------- --------- --------- --------- --------- --------- ---------
Total ............................ 150,919 151,560 172,602 178,619 179,424 133,177 140,473
========= ========= ========= ========= ========= ========= =========
Average system tariff per barrel ..... $ 0.90 $ 1.01 $ 0.97 $ 0.96 $ 1.02 $ 0.99 $ 0.97
========= ========= ========= ========= ========= ========= =========
</TABLE>

<TABLE>
<CAPTION>
December 31,
------------------------------------------------------ September 30,
Balance Sheet Data (at period end) 1992 1993 1994 1995 1996 1997
--------- --------- --------- --------- --------- ------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Property, plant and
equipment--net . . . . . . . . $ 552,238 $ 543,613 $ 540,577 $ 533,470 $ 561,068 $ 565,339
Total assets . . . . . . . . . 652,182 655,138 665,331 669,915 671,241 655,225
First Mortgage Notes . . . . . 361,512 356,512 349,512 339,512 326,512 309,512
Total partners' capital . . . . 250,978 257,428 269,599 276,381 290,311 296,647
</TABLE>

- ---------------
(1) The Parent Partnership's consolidated ratios of earnings to fixed
charges were computed by dividing earnings by fixed charges. For this
purpose, "earnings" consist of income from continuing operations before
income taxes, fixed charges (excluding interest capitalized) and
minority interest expenses of subsidiaries with fixed charges and "fixed
charges" consist of interest and amortization of debt expense, including
the interest portion of rental obligations deemed representative of the
interest factor.
(2) Such ratios were 3.0 and 3.0 on a pro forma basis for the year ended
December 31, 1996, and the nine months ended September 30, 1997,
respectively, assuming that the sale of the Notes and the application of
the net proceeds therefrom as described under "Use of Proceeds" occurred
as of January 1, 1996, and adjusted only to give effect to the net
decrease in interest expense resulting therefrom.

12
<PAGE> 15

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Partnership's operations consist of the transportation, storage and
terminaling of petroleum products. Operations are somewhat seasonal with
higher revenues generally realized during the first and fourth quarters of each
year. Refined products volumes are generally higher during the second and
third quarters because of greater demand for gasolines during the spring and
summer driving seasons. LPGs volumes are generally higher from November
through March due to higher demand in the Northeast for propane, a major fuel
for residential heating.

The Partnership's revenues are derived from the transportation of
refined products and LPGs, the storage and short-haul shuttle transportation of
LPGs at the Mont Belvieu, Texas complex, sale of product inventory and other
ancillary services. Labor and electric power costs comprise the two largest
operating expense items of the Partnership.

The following information is provided to facilitate increased
understanding of the years ended December 31, 1996, 1995 and 1994 and the nine-
month periods ended September 30, 1997 and 1996 consolidated financial
statements and accompanying notes of the Partnership incorporated by reference
in this Prospectus. Material period-to-period variances in the consolidated
statements of income are discussed under "Results of Operations." The
"Financial Condition and Liquidity" section analyzes cash flows and financial
position. Discussion included in "Other Matters" addresses key trends, future
plans and contingencies. Throughout these discussions, management addresses
items that are reasonably likely to materially affect future liquidity or
earnings.

RESULTS OF OPERATIONS

Volume and average tariff information for the years ended December 31,
1996, 1995 and 1994 and the nine-month periods ended September 30, 1997 and
1996 is presented below:

<TABLE>
<CAPTION>
Nine Months Ended
Years Ended December 31, September 30,
------------------------------------- ------------------------
1996 1995 1994 1997 1996
--------- -------- -------- --------- ----------
(in thousands, except tariff information)
<S> <C> <C> <C> <C> <C>
Volumes Delivered (Bbls) (unaudited)
Refined products ........... 115,262 110,234 107,271 90,820 87,187
LPGs ....................... 41,640 38,237 36,636 29,052 28,866
Mont Belvieu operations .... 22,522 30,148 28,695 20,601 17,124
------- ------- ------- ------- -------
Total ............... 179,424 178,619 172,602 140,473 133,177
======= ======= ======= ======= =======
Average Tariff per Barrel
Refined products ........... $ 0.86 $ 0.87 $ 0.83 $ 0.89 $ 0.86
LPGs ....................... 1.93 1.85 2.01 1.81 1.88
Mont Belvieu operations .... 0.17 0.15 0.14 0.14 0.16
Average system tariff
per barrel ... $ 1.02 $ 0.96 $ 0.97 $ 0.97 $ 0.99
</TABLE>

NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH THE NINE MONTHS ENDED
SEPTEMBER 30, 1996

For the nine months ended September 30, 1997, refined products
transportation revenues increased $6.1 million, compared with the corresponding
period in 1996, due to a 4% increase in volumes delivered and a 3% increase in
the refined products average tariff per barrel. The increase in refined
products transportation volumes was attributable to increased feedstock and
blending demand for natural gasoline in the Midwest, the full period impact in
1997 of the pipeline connection at the Little Rock Air Force Base, which was
completed in June 1996, and increased MTBE deliveries at the marine terminal
near Beaumont, Texas. Additionally, higher revenues

13
<PAGE> 16

were generated from the Ark-La-Tex system expansion and the pipeline connection
with Colonial. These increases were partially offset by lower motor fuel and
distillate deliveries due to higher refinery utilization rates in the Midwest
during 1997.

LPGs transportation revenues decreased $1.8 million during the nine
months ended September 30, 1997, compared with the corresponding period in
1996, due to a 4% decrease in the LPGs average tariff per barrel, partially
offset by a 1% increase in LPGs volumes delivered. Long-haul propane
deliveries were lower than the prior year because of warmer winter weather in
the Northeast during the first quarter of 1997. Increased Canadian imports of
propane in the Northeast and butane in the Midwest market areas also resulted
in decreased volumes delivered in 1997. These decreases were partially offset
by stronger demand for butane and isobutane as a refinery feedstock due to the
resumption during the second quarter of 1997 of operations at a Northeast
refinery that was shut down throughout 1996. Increased propane demand along
the upper Texas Gulf Coast resulted in a 33% increase in short-haul propane
deliveries. The 4% decrease in the LPGs average tariff per barrel resulted
from the higher percentage of short-haul propane deliveries during 1997.

Revenues generated from Mont Belvieu operations increased slightly
during the nine months ended September 30, 1997, compared with the
corresponding period in 1996, due primarily to higher terminaling fees on
butane received into the System, increased propane dehydration fees and higher
petrochemical demand for LPGs along the upper Texas Gulf Coast. The decrease
in the Mont Belvieu operations average tariff per barrel for the nine months
ended September 30, 1997, compared with the prior period, was due to a higher
percentage of contract deliveries in 1997, which generally carry lower tariffs.

Gains on the sale of inventory decreased $1.4 million during the nine
months ended September 30, 1997, compared with the corresponding period in
1996, as a result of lower volumes of gasoline being sold during 1997.

During the nine months ended September 30, 1997, other operating
revenues increased slightly due to the factors noted above, being offset by
write downs of product inventory recorded during the second quarter of 1997 and
lower propane imports received at the marine terminal at Providence, Rhode
Island, during the first quarter of 1997.

Costs and expenses increased $1.6 million during the first nine months
of 1997, compared with the same period in 1996, due primarily to a $0.9 million
increase in operating, general and administrative expenses and a $0.8 million
increase in taxes - other than income taxes. The increase in operating,
general and administrative expenses was primarily attributable to
throughput-related expenses and rental expense of the Colonial capacity lease,
partially offset by the insurance settlement during the third quarter of 1997,
lower outside service costs for system maintenance and lower product
measurement losses. The increase in taxes - other than income taxes was due to
higher ad valorem tax assessments in 1997 and the credit for ad valorem taxes
recorded during the third quarter of 1996.

Interest expense decreased during the nine-month period in 1997,
compared with the same period in 1996, due to principal payments on the First
Mortgage Notes of $10.0 million and $13.0 million in March 1996 and 1997,
respectively. Capitalized interest increased $0.5 million during the nine
month-period ended September 30, 1997, compared with the same period in 1996,
as a result of higher construction balances related to capital projects, which
commenced during 1996 and were completed during 1997.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

Net income for the year ended December 31, 1996 increased 25% to $58.6
million, compared with net income of $46.7 million for the year ended December
31, 1995. Net income for 1995 included $7.4 million of charges for the
settlement of certain litigation and remediation costs at the Partnership's
Seymour, Indiana, terminal. Excluding such charges, net income for 1996 would
have increased by $4.5 million, or 8%. The increase in net income for 1996
resulted from a $12.3 million increase in operating revenues, a $0.9 million
decrease in interest expense and a $0.5 million increase in interest
capitalized. These increases for 1996 were partially offset by a $1.4 million
increase in costs and expenses.

14
<PAGE> 17

Operating revenues for the year ended 1996 increased 6% to $216.0
million from $203.7 million for the year ended 1995. This $12.3 million
increase resulted from a $9.6 million increase in LPGs transportation revenues,
a $2.5 million increase in refined products transportation revenues and a $2.4
million increase in other operating revenues. These increases were partially
offset by a $1.8 million decrease in revenues generated from Mont Belvieu
operations and a $0.4 million decrease in product inventory sales.

Refined products transportation revenues increased $2.5 million for the
year ended December 31, 1996, compared with the prior year, as a result of the
5% increase in volumes delivered. Jet fuel deliveries increased to 20.7
million barrels ("MMBbls") due to the completion of the pipeline connection to
the United States Air Force Base near Little Rock, Arkansas, in June 1996, as
well as higher demand from commercial airlines in the Midwest. Motor fuel
deliveries also increased during 1996 as a result of higher demand in the
Central and Midwest market areas. These increases were partially offset by
lower deliveries of methyl tertiary butyl ether ("MTBE"), reformulated gasoline
and gasoline blendstocks in the Chicago area, coupled with lower feedstock
demand along the upper Texas Gulf Coast.

LPGs transportation revenues increased $9.6 million, or 14%, for the
year ended December 31, 1996, compared with the prior year, due to the 9%
increase in volumes delivered and the 4% increase in the LPGs average tariff
per barrel. Propane deliveries increased to a record 35.2 MMBbls as a result
of colder winter weather during the first and second quarters of 1996, lower
inventory supplies and favorable price differentials. The increase in propane
deliveries was partially offset by a 2.8 MMBbls decrease in butane deliveries
attributable to increased Canadian supply imported into the Midwest, higher
Gulf Coast prices and the shut-down of a refinery in the Northeast that was
supplied by the Pipeline System. This refinery resumed operations in the
second quarter of 1997. The 4% increase in the LPGs average tariff per barrel
during 1996 resulted from increased long-haul propane deliveries in the upper
Midwest and Northeast, coupled with lower deliveries along the upper Texas Gulf
Coast.

Revenues generated from Mont Belvieu operations decreased $1.8 million
during 1996, compared with the prior year, due to decreased storage revenue and
lower terminaling fees on butane received into the System. Additionally,
shuttle deliveries decreased 25% from the prior year due primarily to low
butane and propane inventory supplies and lower petrochemical demand for
propane along the upper Texas Gulf Coast. The Mont Belvieu operations average
tariff per barrel for shuttle deliveries increased to $0.17 per barrel in 1996,
due to a lower percentage of contract deliveries, which generally carry lower
tariffs.

Gains on the sale of inventory decreased $0.4 million during 1996,
compared with the prior year, as a result of lower volumes of product sold in
1996.

Other operating revenues increased $2.4 million during the year ended
December 31, 1996, compared with 1995, due to higher propane imports at the
Partnership's marine terminal at Providence, Rhode Island, increased LPGs
terminaling fees and increased revenues resulting from greater volumes marketed
between customers at the Mont Belvieu complex.

Costs and expenses increased $1.4 million during the year ended December
31, 1996, compared with the prior year, due primarily to a $1.1 million
increase in taxes--other than income taxes, and a $0.1 million increase in
operating, general and administrative expenses. The increase in taxes--other
than income, was attributable to a $0.9 million adjustment recorded during 1995
related to the reclassification of the Partnership as a non-utility for Ohio
property taxes. Operating, general and administrative expenses increased in
1996 as a result of higher throughput-related expenses including higher
mainline power costs, increased usage of propane odorant and gasoline
additives, and expenses for external barges utilized during the fourth quarter
of 1996. Additionally, expenses were higher during 1996 due to increased
System maintenance, coupled with increased labor and benefits costs. These
increases were largely offset by $7.4 million of charges during 1995 related to
the settlement of certain claims and environmental remediation costs at the
Partnership's Seymour, Indiana, terminal.

15
<PAGE> 18
Interest expense decreased $0.9 million during the year ended December
31, 1996, compared with 1995, due to the $10.0 million principal payment on the
First Mortgage Notes in March 1996. Interest capitalized increased $0.5
million over the prior year as a result of increased capital spending during
1996.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

Net income for the year ended December 31, 1995 totaled $46.7 million,
compared with net income of $46.5 million for the year ended December 31, 1994.
Net income for 1995 included $7.4 million of charges for the settlement of
certain litigation and remediation costs at the Partnership's Seymour, Indiana,
terminal. Excluding the charges, net income would have been $54.1 million, a
16% increase from 1994.

Operating revenues for the year ended 1995 increased 3% to $203.7
million from $197.3 million for the year ended 1994. This $6.4 million
increase resulted from a $6.8 million increase in refined products
transportation revenues, a $3.1 million increase in product inventory sales and
a $1.3 million increase in revenues generated from Mont Belvieu operations.
These increases were partially offset by a $2.9 million decrease in LPGs
transportation revenues and a $1.9 million decrease in other operating
revenues.

The $6.8 million, or 8%, increase in refined products transportation
revenues for the year ended December 31, 1995, compared with the prior year,
was due primarily to increased deliveries of jet fuel, MTBE and natural
gasoline, partially offset by lower deliveries of motor fuel. The increase in
jet fuel deliveries resulted from higher demand at airports served by the
Partnership as well as the full year impact of the completion of a pipeline
connection to the George Bush Intercontinental Airport, Houston, in July 1994.
Deliveries of MTBE increased during 1995 due primarily to contract deliveries
to the Midwest, which commenced during the first quarter of 1995, and increased
short-haul deliveries resulting from the completion of a vapor recovery unit at
the Partnership's marine terminal near Beaumont, Texas. The increase in
natural gasoline deliveries was attributable to increased demand for use as a
feedstock in the refining process as well as new supply contracts with Midwest
refiners. The decrease in motor fuel deliveries was primarily due to higher
local supply in the Partnership's Midwest market area. The increase in the
average System tariff per barrel was primarily due to the general rate
increase, averaging 4%, for refined products effective December 1, 1994.

The $2.9 million decrease in LPGs transportation revenues for the year
ended December 31, 1995, compared with the prior year, resulted from a $5.6
million decrease in propane transportation revenue, partially offset by a $2.7
million increase in butane transportation revenue. Propane transportation
revenue decreased 9% from 1994 due primarily to warmer than normal weather in
the upper Midwest and Northeast during the first quarter of 1995, partially
offset by a return of colder weather in these regions during the fourth quarter
of 1995. The increase in butane revenue resulted primarily from higher demand
for use in gasoline blending and favorable price differentials in the Midwest.
The increase in total LPGs volumes delivered was primarily attributable to
higher petrochemical demand for propane along the upper Texas Gulf Coast and
higher mainline butane volumes. The increase in propane deliveries along the
upper Texas Gulf Coast and lower long-haul propane deliveries resulted in a
lower LPGs average tariff per barrel during 1995.

Revenues generated from Mont Belvieu operations increased during 1995,
compared with the prior year, as a result of increased demand for shuttle
deliveries of propane and butane along the upper Texas Gulf Coast, coupled with
increased receipt charges on butane received for storage.

Other operating revenues decreased $1.9 million during the year ended
December 31, 1995, compared with 1994, due to lower propane imports at the
Partnership's marine terminal at Providence, Rhode Island, lower receipts of
gasoline at the Partnership's marine terminal near Beaumont, Texas, and lower
revenue generated from MTBE storage services. These decreases were partially
offset by higher revenue earned from terminaling operations along the Pipeline
System.

The increase in gain on sale of product inventory for the year ended
December 31, 1995, compared with the prior year, was due to higher volumes of
product inventory sold, coupled with higher margins.

16
<PAGE> 19
Costs and expenses increased $9.8 million during the year ended December
31, 1995, compared with the prior year, due primarily to a $11.2 million
increase in operating, general and administrative expenses, partially offset by
a $1.6 million decrease in taxes--other than income taxes. Operating, general
and administrative expenses included $7.4 million of charges related to the
settlement of certain claims and environmental remediation costs at the
Partnership's Seymour, Indiana, terminal during 1995. The additional increase
in operating, general and administrative expenses was due primarily to higher
outside services related to increased maintenance projects and environmental
remediation activities at certain Partnership facilities, higher premiums for
insurance and increased volume-related power costs, partially offset by lower
external leased storage costs. The decrease in taxes--other than income taxes
resulted from lower property taxes due primarily to a reclassification of the
Partnership as a non-utility in Ohio.

Interest expense decreased during the year ended December 31, 1995,
compared with 1994, due to the $7.0 million principal payment on the First
Mortgage Notes in March 1995.

Other income increased during the year ended December 31, 1995, compared
with the 1994, primarily from higher interest income earned on investments.

FINANCIAL CONDITION AND LIQUIDITY

Net cash from operations totaled $51.0 million for the nine-month period
ended September 30, 1997, compared with $54.2 million for the corresponding
period in 1996. The decrease resulted from a $4.6 million increase in working
capital uses of cash, partially offset by a $1.5 million increase in income
before charges for depreciation and amortization. The increase in working
capital uses of cash resulted primarily from a receivable related to insurance
claims settled in September 1997, lower trade accounts receivable balances
during 1997 and lower inventory sales during 1997, which were partially offset
by lower cash payments for accrued expenses during 1997. Additionally, net
cash from operations for the nine months ended September 30, 1997 and 1996
reflect semi-annual interest payments related to the First Mortgage Notes of
$33.6 million and $34.7 million, respectively.

Cash flows used in investing activities during the first nine months of
1997 included $24.5 million of capital expenditures and $3.9 million of
additional cash investments, partially offset by $18.0 million from investment
maturities, $1.0 million of insurance proceeds related to the replacement value
of a 20-inch diameter auxiliary pipeline at the Red River in central Louisiana,
which was damaged in 1994 and subsequently removed from service and $1.4
million from the proceeds of the sale of the Arkansas City terminal. Cash
flows used in investing activities during the first nine months of 1996
included $29.4 million of capital expenditures and additional investments of
$14.4 million, partially offset by matured investments of $10.9 million.
Capital expenditures are expected to total approximately $34 million for the
full year of 1997. The Partnership revises capital spending periodically in
response to changes in cash flows and operations. Interest income earned on
all investments is included in cash from operations.

The Partnership paid cash distributions of $36.3 million during the nine
months ended September 30, 1997. Additionally, on October 17, 1997, the
Partnership declared a cash distribution of $0.80 per Unit for the three months
ended September 30, 1997. The third quarter cash distribution was paid on
November 7, 1997 to Unitholders of record on October 31, 1997.

The First Mortgage Notes, which are secured by a mortgage on
substantially all property, plant and equipment of the Partnership, require
annual principal payments through March 2010. Interest is payable
semi-annually on March 7 and September 7. Cash and cash equivalents were
reduced by the $13.0 million principal payment related to the First Mortgage
Notes on March 7, 1997. At September 30, 1997, the current maturities of the
First Mortgage Notes were $17.0 million. The note agreement relating to the
First Mortgage Notes limits the amount of cash distributions that can be made
by TE Products Pipeline Company, Limited Partnership to TEPPCO Partners, L.P.

17
<PAGE> 20

The Partnership routinely invests excess cash in liquid investments as
part of its cash management program. Investments of cash in discounted
commercial paper and Eurodollar time deposits with original maturities at date
of purchase of 90 days or less are included in cash and cash equivalents.
Short-term investments of cash consist of investment-grade corporate notes with
maturities during 1997. Long-term investments are comprised of
investment-grade corporate notes with varying maturities between 1998 and 2001.
Interest income earned on all investments is included in cash from operations.
Cash flows from investing activities included proceeds from investments of
$18.6 million, $69.0 million and $23.8 million for each of the years ended
1996, 1995 and 1994, respectively. Cash flows from investing activities also
included additional investments of $14.4 million, $62.4 million and $65.5
million for each of the years ended 1996, 1995 and 1994, respectively. Cash
balances related to the investment of cash and proceeds from the investment of
cash were $65.0 million, $74.9 million and $70.3 million for the years ended
December 31, 1996, 1995 and 1994, respectively. The increase in cash
investments in 1995 was in anticipation of an increase in capital expenditures
which were incurred in 1996 and were funded by proceeds from investments.
Capital expenditures were $51.3 million, $26.0 million and $20.8 million for
the years ended December 31, 1996, 1995, and 1994, respectively.

Capital expenditures totaled $51.3 million for the year ended December
31, 1996, compared with capital expenditures of $26.0 million for the year
ended December 31, 1995. The increase in 1996 reflects higher spending for
revenue-generating projects that included the replacement of approximately 54
miles of an 8-inch diameter line with a 10-inch diameter line between
Shreveport, Louisiana, and El Dorado, Arkansas; pipeline modifications to
increase mainline capacity by 50,000 barrels per day between El Dorado and
Seymour, Indiana; and the completion of facilities required to deliver jet fuel
to the United States Air Force Base near Little Rock, Arkansas, which became
operational in June 1996. Capital expenditures for 1994 totaled $20.8 million.
Capital expenditures for System integrity projects and for sustaining existing
operations totaled $12.1 million, $16.1 million and $11.9 million for each of
the years ended 1996, 1995 and 1994, respectively.

The Partnership estimates that capital expenditures for 1997 will be
approximately $34.0 million. Approximately $11.7 million is expected to used
for revenue-generating projects including $8.1 million to be used to complete
the capacity expansion between Shreveport and El Dorado as well as the mainline
expansion to serve the Midwest market area. An additional $2.2 million is
projected to be spent to connect the Pipeline System to Colonial Pipeline
Company's pipeline at Beaumont, Texas. The remaining capital expenditures
during 1997 will primarily be used for life-cycle replacements and to upgrade
current facilities. The Partnership revises capital spending periodically in
response to changes in cash flows and operations.

During 1995 and 1994, the Partnership received $9.8 million and $0.2
million, respectively, in insurance proceeds related to the failure of a LPGs
storage cavern in Ohio during April 1993. Pursuant to the agreements relating
to the First Mortgage Notes, these proceeds were held in a trust account and
were invested in discounted commercial paper. The proceeds and interest income
were released by the trustee during August 1996 after storage and capacity
modifications were completed along the Pipeline System to replace the reduced
storage capacity of the failed storage cavern in Ohio.

In connection with the formation of the Parent Partnership in 1990, the
Company received 1,250,000 DPIs, which represent an effective 8.45% limited
partner interest in the Parent Partnership. Effective April 1, 1994, the DPIs
began participating in distributions of cash and allocations of profit and loss
because Available Cash (constituting Cash From Operations) for the preceding
two successive quarters was sufficient to distribute not less than the Minimum
Quarterly Distribution ($0.55 per Unit) with respect to all Units outstanding
at the applicable record date plus the DPIs. The DPIs began receiving cash
distributions effective with the quarterly payment on May 13, 1994.

OTHER MATTERS

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<PAGE> 21
Moreover, it is possible that other developments, such as increasingly strict
environmental laws and regulations and enforcement policies thereunder, and
claims for damages to property or persons resulting from the operations of the
Pipeline System, could result in substantial costs and liabilities to the
Partnership. The Partnership does not anticipate that changes in environmental
laws and regulations will have a material adverse effect on its financial
position, operations or cash flows in the near term.

The Partnership and the Indiana Department of Environmental Management
("IDEM") have entered into an Agreed Order that will ultimately result in a
remediation program for any on-site and off-site environmental groundwater
contamination attributable to the Partnership's operations at the Seymour,
Indiana, terminal. As part of the Agreed Order, the Partnership has completed
the remedial investigation sampling for groundwater contamination. In November
1997, IDEM approved the final remedial investigation report for the Seymour
terminal. The Partnership is currently negotiating with IDEM the clean-up
levels to be attained at the Seymour terminal. In the opinion of the Company,
the completion of the remediation program to be proposed by the Partnership, if
such program is approved by IDEM, will not have a material adverse impact on
the Partnership.

During June 1997, the Partnership filed rate increases on selective
refined products tariffs and LPGs tariffs, averaging 1.7%. These rate
increases became effective July 1, 1997 without suspension or refund
obligation.

The Partnership periodically enters into futures contracts to hedge its
exposure to price risk on product inventory transactions. Recognized gains and
losses related to futures contracts which qualify as hedges are recognized in
income when the related inventory transactions are completed. Gains and losses
related to futures contracts, which have been insignificant, are reported as a
component of product inventory in the consolidated balance sheet until
recognized as income. At December 31, 1996, September 30, 1997, and the date
of this Prospectus, there were no outstanding futures contracts.

Effective January 1, 1996, the Partnership adopted Statement of
Financial Accounting Standards ("SFAS") 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of," with no impact
to the Partnership's consolidated financial statements. Assets were grouped
and evaluated based on the ability to identify their respective cash flows.

In October 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS 123, "Accounting for Stock-Based Compensation." This standard addresses the
timing and measurement of stock-based compensation expense. The Partnership has
elected to retain the approach of Accounting Principles Board Opinion ("APB")
No. 25, "Accounting for Stock issued to Employees," (the intrinsic value method)
for recognizing stock-based expense in the consolidated financial statements.
The Partnership adopted SFAS 123 in 1996 with respect to the disclosure
requirements set forth therein for companies retaining the intrinsic value
approach of APB No. 25. See Note 10 of the Notes to Consolidated Financial
Statements of the Parent Partnership incorporated by reference in this
Prospectus.

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<PAGE> 22
BUSINESS AND PROPERTIES

GENERAL

The Partnership is one of the largest pipeline common carriers of
refined petroleum products and LPGs in the United States. The Partnership owns
and operates an approximate 4,300-mile pipeline system extending from southeast
Texas through the central and midwestern United States to the northeastern
United States. The Pipeline System includes delivery terminals along the
Pipeline for outloading product to other pipelines, tank trucks, rail cars or
barges, as well as substantial storage capacity at Mont Belvieu, Texas, the
largest LPGs storage complex in the United States, and at other locations. The
Partnership also owns two marine receiving terminals, one near Beaumont, Texas,
and the other at Providence, Rhode Island. The Providence terminal is not
physically connected to the Pipeline. As an interstate common carrier, the
Pipeline System offers interstate transportation services, pursuant to tariffs
filed with the FERC, to any shipper of refined petroleum products and LPGs who
requests such services, provided that the shipper and the products tendered by
such shipper for transportation satisfy the conditions and specifications
contained in the applicable tariff. In addition to the revenues received by
the Pipeline System from its interstate tariffs, it also receives revenues from
the shuttling of LPGs between refinery and petrochemical facilities on the
upper Texas Gulf Coast and ancillary transportation, storage and marketing
services at key points along the System. Substantially all the petroleum
products transported and stored in the Pipeline System are owned by the
Partnership's customers. Petroleum products are received at terminals located
principally on the southern end of the Pipeline System, stored, scheduled into
the Pipeline in accordance with customer nominations and shipped to delivery
terminals for ultimate delivery to the final distributor (e.g., gas stations
and retail propane distribution centers) or to other pipelines. Pipelines are
generally the lowest cost method for intermediate and long-haul overland
transportation of petroleum products. The Pipeline System is the only pipeline
that transports LPGs to the Northeast.

The Partnership's business depends in large part on (i) the level of
demand for refined petroleum products and LPGs in the geographic locations
served by it and (ii) the ability and willingness of customers having access to
the Pipeline System to supply such demand by deliveries through the System.
The Partnership cannot predict the impact of future fuel conservation measures,
alternate fuel requirements, governmental regulation, technological advances in
fuel economy and energy-generation devices, all of which could reduce the
demand for refined petroleum products and LPGs in the areas served by the
Partnership.

OPERATIONS

The Partnership conducts business and owns properties located in 12
states. Products are transported in liquid form from the upper Texas Gulf
Coast through two parallel underground pipelines that extend to Seymour,
Indiana. From Seymour, segments of the Pipeline System extend to the Chicago,
Illinois; Lima, Ohio; Selkirk, New York; and Philadelphia, Pennsylvania, areas.
The Pipeline System east of Todhunter, Ohio, is dedicated solely to LPGs
transportation and storage services.

The Pipeline System includes 30 storage facilities with an aggregate
storage capacity of 13 MMBbls of refined petroleum products and 38 MMBbls of
LPGs, including storage capacity leased to outside parties, as well as 20
product delivery terminals. In addition, the Pipeline System makes deliveries
to terminals and storage facilities owned by third parties.

PIPELINE SYSTEM

The Pipeline System is comprised of a 20-inch diameter line extending in
a generally northeasterly direction from Baytown, Texas (located approximately
30 miles east of Houston), to a point in southwest Ohio near Lebanon and
Todhunter. A second line, which also originates at Baytown, is 16 inches in
diameter until it reaches Beaumont, Texas, at which point it reduces to a
14-inch diameter line. This second line extends along the same path as the
20-inch diameter line to the Pipeline System's terminal in El Dorado, Arkansas,
before continuing as a 16-inch diameter line to Seymour, Indiana. The Pipeline
System also has smaller diameter lines that extend laterally from El Dorado to
Helena and Arkansas City, Arkansas, from Tyler, Texas, to El Dorado and from
McRae,

20
<PAGE> 23
Arkansas, to West Memphis, Arkansas. The lines from El Dorado to Helena and
Arkansas City have 10-inch diameters. The line from Tyler to El Dorado varies
in diameter from 8 inches to 10 inches. The line from McRae to West Memphis
has a 12-inch diameter. The Pipeline System also includes a 14-inch diameter
line from Seymour, Indiana, to Chicago, Illinois, and a 10-inch diameter line
running from Lebanon to Lima, Ohio. This 10-inch diameter pipeline connects to
the Buckeye Pipe Line Company system that serves, among others, markets in
Michigan and eastern Ohio. Also, the Pipeline System has a 6-inch diameter
pipeline connection to the Greater Cincinnati/Northern Kentucky International
Airport and a 8-inch diameter pipeline connection to the George Bush
Intercontinental Airport, Houston. In addition, there are numerous smaller
diameter lines associated with the gathering and distribution system.

The Pipeline System continues eastward from Todhunter, Ohio, to
Greensburg, Pennsylvania, at which point it branches into two segments, one
ending in Selkirk, New York (near Albany), and the other ending at Marcus Hook,
Pennsylvania (near Philadelphia). The Pipeline east of Todhunter and ending in
Selkirk is an 8-inch diameter line, whereas the line starting at Greensburg and
ending at Marcus Hook varies in diameter from 6 inches to 8 inches. East of
Todhunter, Ohio, the Partnership transports only LPGs through the Pipeline.

The Pipeline System has been constructed and is in general compliance
with applicable federal, state and local laws and regulations, and accepted
industry standards and practices. The Partnership performs regular maintenance
on all the facilities of the Pipeline System and has an ongoing process of
inspecting segments of the Pipeline System and making repairs and replacements
when necessary or appropriate. In addition, the Partnership conducts periodic
air patrols of the Pipeline System to monitor pipeline integrity and
third-party right of way encroachments.

TITLE TO PROPERTIES

The Partnership believes it has satisfactory title to all of its assets.
Although such properties are subject to liabilities in certain cases, such as
customary interests generally contracted in connection with acquisition of the
properties, liens for taxes not yet due, easements, restrictions, and other
minor encumbrances, the Partnership believes none of such burdens materially
detracts from the value of such properties or from the Partnership's interest
therein or will materially interfere with their use in the operation of the
Partnership's business. Substantially all of the property, plant and equipment
of the Partnership is subject to a mortgage securing the First Mortgage Notes.
Such mortgage will be released upon the repayment of the First Mortgage Notes
with the proceeds of the offering made hereby.

MAJOR BUSINESS SECTOR MARKETS

The Pipeline System's major operations are the transportation, storage
and terminaling of refined petroleum products and LPGs along its mainline
system, and the storage and short-haul transportation of LPGs associated with
its Mont Belvieu operations. Product deliveries on a regional basis over the
last three years were as follows:

21
<PAGE> 24

<TABLE>
<CAPTION>
Product Deliveries (MMBbls)
Years Ended December 31,
----------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Refined Products Transportation:
Central(1) . . . . . . . . . . . . . . . . . . . . 66.9 60.6 56.2
Midwest(2) . . . . . . . . . . . . . . . . . . . . 28.7 29.3 26.1

Ohio and Kentucky . . . . . . . . . . . . . . . . . 19.7 20.3 25.0
----- ----- -----
Subtotal . . . . . . . . . . . . . . . . . . 115.3 110.2 107.3
----- ----- -----
LPGs Mainline Transportation:
Central, Midwest and Kentucky(1)(2) . . . . . . . . 24.6 23.3 20.0
Ohio and Northeast(3) . . . . . . . . . . . . . . . 17.0 15.0 16.6
----- ----- -----
Subtotal . . . . . . . . . . . . . . . . . . 41.6 38.3 36.6
----- ----- -----

Mont Belvieu Operations:
LPGs . . . . . . . . . . . . . . . . . . . . . . . 22.5 30.1 28.7
----- ----- -----
Total Product Deliveries . . . . . . . . . . 179.4 178.6 172.6
===== ===== =====
</TABLE>

- ----------------
(1) Arkansas, Louisiana, Missouri and Texas.
(2) Illinois and Indiana.
(3) New York and Pennsylvania.

The mix of products delivered varies seasonally, with gasoline demand
generally stronger in the spring and summer months and LPGs demand generally
stronger in the fall and winter months. Weather and economic conditions in the
geographic areas served by the Pipeline System also affect the demand for and
the mix of the products delivered.

Refined products and LPGs deliveries over the last three years were as
follows:

<TABLE>
<CAPTION>
Product Deliveries (MMBbls)
Years Ended December 31,
--------------------------
1996 1995 1994
------ ------ -------
<S> <C> <C> <C>
Refined Products Transportation:
Gasoline . . . . . . . . . . . . . . . . . . . . . 65.4 64.1 67.3
Jet Fuels . . . . . . . . . . . . . . . . . . . . . 20.7 18.1 14.9
Middle Distillates (1) . . . . . . . . . . . . . . 23.2 22.4 23.3
MTBE/Toluene . . . . . . . . . . . . . . . . . . . 6.0 5.6 1.8
----- ----- -----
Subtotal . . . . . . . . . . . . . . . . . . 115.3 110.2 107.3
----- ----- -----

LPGs Mainline Transportation:
Propane . . . . . . . . . . . . . . . . . . . . . . 35.2 29.1 28.9
Butanes . . . . . . . . . . . . . . . . . . . . . . 6.4 9.2 7.7
----- ----- -----
Subtotal . . . . . . . . . . . . . . . . . . 41.6 38.3 36.6
----- ----- -----
Mont Belvieu Operations:
LPGs . . . . . . . . . . . . . . . . . . . . . . . 22.5 30.1 28.7
----- ----- -----
Total Product Deliveries . . . . . . . . . . 179.4 178.6 172.6
===== ==== =====
</TABLE>

- ---------------
(1) Primarily diesel fuel, heating oil and other middle distillates.

22
<PAGE> 25

Refined Petroleum Products Transportation. The Pipeline System
transports refined petroleum products from the upper Texas Gulf Coast, eastern
Texas and southern Arkansas to the Central and Midwest regions of the United
States with deliveries in Texas, Louisiana, Arkansas, Missouri, Illinois,
Kentucky, Indiana and Ohio. At these points, refined petroleum products are
delivered to Partnership-owned terminals, connecting pipelines and
customer-owned terminals. The volume of refined petroleum products transported
by the Pipeline System is directly affected by the demand for such products in
the geographic regions the System serves. Such market demand varies based upon
the different end uses to which the refined products deliveries are applied.
Demand for gasoline, which accounts for a substantial portion of the volume of
refined products transported through the Pipeline System, depends upon price,
prevailing economic conditions and demographic changes in the markets served.
Demand for refined products used in agricultural operations is affected by
weather conditions, government policy and crop prices. Demand for jet fuel
depends upon prevailing economic conditions and military usage.

Effective January 1, 1995, the Clean Air Act Amendments of 1990 mandated
the use of reformulated gasolines in nine metropolitan areas of the United
States, including the Houston and Chicago areas served by the System. A
portion of the reformulated and oxygenated gasolines includes MTBE as a major
blending component. The Partnership has invested in modifications to the
System needed to allow the Partnership to achieve increased revenues from the
transportation and storage of MTBE as well as other blending components used in
the production of reformulated gasolines.

LPGs Mainline Transportation. The Pipeline System transports LPGs from
the upper Texas Gulf Coast to the Central, Midwest and Northeast regions of the
United States. The Pipeline System east of Todhunter, Ohio, is devoted solely
to the transportation of LPGs. Since LPGs demand is generally stronger in the
winter months, the Pipeline System often operates near capacity during such
time. Propane deliveries are generally sensitive to the weather and meaningful
year-to-year variations have occurred and will likely continue to occur.

The Partnership's ability to serve markets in the Northeast is enhanced
by its propane import terminal at Providence, Rhode Island. This facility
includes a 400,000-barrel refrigerated storage tank along with ship unloading
and truck loading facilities. Although the terminal is operated by the
Partnership, the utilization of the terminal is committed by contract to a
major propane marketer through May 2001.

Mont Belvieu LPGs Storage and Pipeline Shuttle. A key aspect of the
Pipeline System's LPGs business is its storage and pipeline asset base in the
Mont Belvieu, Texas, complex serving the fractionation, refining and
petrochemical industries. The complex is the largest of its kind in the United
States and provides substantial capacity and flexibility in the transportation,
terminaling and storage of natural gas liquids, LPGs and olefins.

The Partnership has 33 MMBbls of LPGs storage capacity, including
storage capacity leased to outside parties, at the Mont Belvieu complex. The
Partnership's Mont Belvieu short-haul transportation shuttle system, consisting
of a complex system of pipelines and interconnects, ties Mont Belvieu to
virtually every refinery and petrochemical facility on the upper Texas Gulf
Coast.

Product Sales and Other. The Partnership also derives revenue from the
sale of product inventory, terminaling activities and other ancillary services
associated with the transportation and storage of refined petroleum products
and LPGs.

CUSTOMERS

The Pipeline System's customers for the transportation of refined
petroleum products include major integrated oil companies, independent oil
companies and wholesalers. End markets for these deliveries are primarily (i)
retail service stations, (ii) truckstops, (iii) agricultural enterprises, (iv)
refineries (for MTBE and other blendstocks), and (v) military and commercial
jet fuel users.

Propane shippers include wholesalers and retailers who, in turn, sell to
commercial, industrial, agricultural and residential heating customers, as well
as utilities who use propane as a fuel source. Refineries constitute the

23
<PAGE> 26
Partnership's major customers for butane and isobutane, which are used as a
blendstock for gasolines and as a feedstock for alkylation units, respectively.

At December 31, 1996, the Pipeline System had approximately 165
customers. Transportation revenues (and percentage of total revenues)
attributable to the top 10 shippers were $81 million (38%), $77 million (38%),
and $74 million (37%) for the years ended December 31, 1996, 1995 and 1994,
respectively. During 1996 and 1995, no single customer accounted for greater
than 10% of total revenues. During 1994, billings to Marathon Oil Company, a
major integrated oil company, accounted for approximately 10% of the
Partnership's total revenues. Loss of a business relationship with a
significant customer could have an adverse affect on the consolidated financial
position and results of operations of the Partnership.

COMPETITION

The Pipeline System conducts operations without the benefit of exclusive
franchises from government entities. Interstate common carrier transportation
services are provided through the System pursuant to tariffs filed with the
FERC.

Because pipelines are generally the lowest cost method for intermediate
and long-haul overland movement of refined petroleum products and LPGs, the
Pipeline System's most significant competitors (other than indigenous
production in its markets) are pipelines in the areas where the Pipeline System
delivers products. Competition among common carrier pipelines is based
primarily on transportation charges, quality of customer service and proximity
to end users. The General Partner believes the Partnership is competitive with
other pipelines serving the same markets; however, comparison of different
pipelines is difficult due to varying product mix and operations.

Trucks, barges and railroads competitively deliver products in some of
the areas served by the Pipeline System. Trucking costs, however, render that
mode of transportation less competitive for longer hauls or larger volumes.
Barge fees for the transportation of refined products are generally lower than
the Partnership's tariffs. The Partnership faces competition from rail
movements of LPGs in several geographic areas. The most significant area is
the Northeast, where rail movements of propane from Sarnia, Canada, compete
with propane moved on the Pipeline System.

CAPITAL EXPENDITURES

Capital expenditures by the Partnership were $51.3 million for the year
ended December 31, 1996. This amount includes capitalized interest of $1.4
million. Approximately $37.8 million was used for revenue-generating projects
and $12.1 million for System integrity projects and for sustaining existing
operations. Revenue-generating projects included $18.7 million of expenditures
to provide additional capacity from a refinery near Shreveport, Louisiana,
which included the replacement of approximately 54 miles of an 8-inch diameter
line with a 10-inch diameter line between Shreveport and El Dorado, Arkansas.
Revenue-generating projects also included $11.9 million of spending to increase
mainline capacity by 50,000 barrels per day between El Dorado and Seymour,
Indiana. An additional $4.3 million of 1996 spending was used to complete
facilities required to deliver jet fuel to the United States Air Force Base
near Little Rock, Arkansas, which became operational in June 1996.

24
<PAGE> 27
REGULATION

The Partnership's interstate common carrier pipeline operations are
subject to rate regulation by the FERC under the Interstate Commerce Act
("ICA"), the Energy Policy Act of 1992 ("Act") and rules and orders promulgated
pursuant thereto. FERC regulation requires that interstate oil pipeline rates
be posted publicly and that these rates be "just and reasonable" and
nondiscriminatory.

Rates of interstate oil pipeline companies, like the Partnership, are
currently regulated by FERC primarily through an index methodology, whereby a
pipeline is allowed to change its rates based on the change from year-to-year
in the Producer Price Index for finished goods less 1% ("PPI Index"). In the
alternative, interstate oil pipeline companies may elect to support rate
filings by using a cost-of-service methodology, competitive market showings or
agreements between shippers and the oil pipeline company that the rate is
acceptable. With one immaterial exception, the Partnership has used the index
methodology since the adoption thereof in 1995 and intends to continue using
such methodology in the future.

In a June 1995 decision, the FERC disallowed the inclusion of imputed
income taxes in the cost-of-service tariff filing of Lakehead Pipeline Company,
Limited Partnership ("Lakehead"), an unrelated oil pipeline limited partnership.
The FERC's decision held that Lakehead was entitled to include an income tax
allowance in its cost-of-service for income attributable to corporate partners
but not on income attributable to individual partners. In 1996, Lakehead
reached an agreement with its shippers on all contested rates and withdrew its
appeal of the June 1995 decision. In another FERC proceeding, SFPP, L.P., the
Administrative Law Judge in the Initial Decision Concerning Rates, Terms and
Conditions of Service, and Other Matters, followed the Commission's decision in
Lakehead and held that SFPP may claim an income tax allowance with respect to
income attributable to SFPP, Inc.'s general partnership interest and income
attributable to corporations holding publicly traded limited partnership
interests, but not for income attributable to non-corporate limited partners,
both individuals and other entities. The decision also disallowed the income
tax allowance attributable to SFPP, Inc.'s limited partnership interest under
facts peculiar to the way SFPP held its limited partnership interests. Neither
the FERC's decision in Lakehead nor the Administrative Law Judge's initial
decision in SFPP, L.P. affects the Partnership's current rates and rate
structure because the Partnership uses the index methodology to support its
rates and intends to continue to do so. However, the Lakehead and SFPP
precedents might become relevant to the Partnership should it (i) elect in the
future to use the cost-of-service methodology or (ii) be required to use such
methodology to defend its indexed rates against a shipper protest alleging that
an indexed rate increase substantially exceeds actual cost increases. Should
such circumstances arise, there can be no assurance with respect to the effect
of such precedents on the Partnership's rates in view of the uncertainties
involved in this issue.

ENVIRONMENTAL MATTERS

The operations of the Partnership are subject to federal, state and
local laws and regulations relating to protection of the environment. Although
the Partnership believes the operations of the Pipeline System are in material
compliance with applicable environmental regulations, risks of significant
costs and liabilities are inherent in pipeline operations, and there can be no
assurance that significant costs and liabilities will not be incurred.
Moreover, it is possible that other developments, such as increasingly strict
environmental laws and regulations and enforcement policies thereunder, and
claims for damages to property or persons resulting from the operations of the
Pipeline System, could result in substantial costs and liabilities to the
Partnership.

Water. The Federal Water Pollution Control Act of 1972, as renamed and
amended as the Clean Water Act ("CWA"), imposes strict controls against the
discharge of oil and its derivatives into navigable waters. The CWA provides
penalties for any discharges of petroleum products in reportable quantities and
imposes substantial potential liability for the costs of removing an oil or
hazardous substance spill. State laws for the control of water pollution also
provide varying civil and criminal penalties and liabilities in the case of a
release of petroleum or its derivatives in surface waters or into the
groundwater. Spill prevention control and countermeasure requirements of
federal laws require appropriate containment berms and similar structures to
help prevent the contamination of navigable waters in the event of a petroleum
tank spill, rupture or leak.

25
<PAGE> 28
Contamination resulting from spills or release of refined petroleum
products is an inherent risk within the petroleum pipeline industry. To the
extent that groundwater contamination requiring remediation exists along the
Pipeline System as a result of past operations, the Partnership believes any
such contamination could be controlled or remedied without having a material
adverse effect on the financial condition of the Partnership, but such costs
are site specific, and there can be no assurance that the effect will not be
material in the aggregate.

The primary federal law for oil spill liability is the Oil Pollution Act
of 1990 ("OPA"), which addresses three principal areas of oil pollution --
prevention, containment and cleanup, and liability. It applies to vessels,
offshore platforms, and onshore facilities, including terminals, pipelines and
transfer facilities. In order to handle, store or transport oil, shore
facilities were required to file oil spill response plans with the appropriate
agency being either the United States Coast Guard, the United States Department
of Transportation Office of Pipeline Safety ("OPS") or the Environmental
Protection Agency ("EPA"). Numerous states have enacted laws similar to OPA.
Under OPA and similar state laws, responsible parties for a regulated facility
from which oil is discharged may be liable for removal costs and natural
resources damages. The General Partner believes that the Partnership is in
material compliance with regulations pursuant to OPA and similar state laws.

The EPA has adopted regulations that require the Partnership to have
permits in order to discharge certain storm water run-off. Storm water
discharge permits may also be required by certain states in which the
Partnership operates. Such permits may require the Partnership to monitor and
sample the effluent. The General Partner believes that the Partnership is in
material compliance with effluent limitations at existing facilities.

Air Emissions. The operations of the Partnership are subject to the
federal Clean Air Act and comparable state and local statutes. The Clean Air
Act Amendments of 1990 (the "Clean Air Act") will require most industrial
operations in the United States to incur future capital expenditures in order
to meet the air emission control standards that are to be developed and
implemented by the EPA and state environmental agencies during the next decade.
Pursuant to the Clean Air Act, any Partnership facilities that emit volatile
organic compounds or nitrogen oxides and are located in ozone non-attainment
areas will face increasingly stringent regulations, including requirements that
certain sources install the reasonably available control technology. The EPA
is also required to promulgate new regulations governing the emissions of
hazardous air pollutants. Some of the Partnership's facilities are included
within the categories of hazardous air pollutant sources which will be affected
by these regulations. The Partnership does not anticipate that changes
currently required by the Clean Air Act hazardous air pollutant regulations
will have a material adverse effect on the Partnership.

The Clean Air Act also introduced the new concept of federal operating
permits for major sources of air emissions. Under this program, one federal
operating permit (a "Title V" permit) will be issued. The permit will act as
an umbrella that includes all other federal, state and local preconstruction
and/or operating permit provisions, emission standards, grandfathered rates,
and recordkeeping, reporting, and monitoring requirements in a single document.
The federal operating permit will be the tool that the public and regulatory
agencies use to review and enforce a site's compliance with all aspects of
clean air regulation at the federal, state and local level. The Partnership
expects approximately ten of its facilities to apply for and obtain these
federal operating permits in the next two years.

Solid Waste. The Partnership generates hazardous and non-hazardous
solid wastes that are subject to requirements of the federal Resource
Conservation and Recovery Act ("RCRA") and comparable state statutes.
Amendments to RCRA have required the EPA to promulgate regulations banning the
land disposal of all hazardous wastes unless the wastes meet certain treatment
standards or the land-disposal method meets certain waste containment criteria.
In 1990, the EPA issued the Toxicity Characteristic Leaching Procedure, which
substantially expanded the number of materials defined as hazardous waste.
Certain wastewater and other wastes generated from the Partnership's business
activities previously classified as nonhazardous are now classified as
hazardous due to the presence of dissolved aromatic compounds. The Partnership
has utilized waste minimization and recycling processes and has installed
pre-treatment facilities to reduce the volume of its hazardous waste. The
Partnership is currently permitted to utilize five regional on-site waste water
treatment facilities. Operating expenses of these facilities have not had a
material adverse effect on the financial position or results of operations of
the Partnership.

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<PAGE> 29
Superfund. The Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), also known as "Superfund," imposes liability, without
regard to fault or the legality of the original act, on certain classes of
persons who contributed to the release of a "hazardous substance" into the
environment. These persons include the owner or operator of a facility and
companies that disposed or arranged for the disposal of the hazardous
substances found at a facility. CERCLA also authorizes the EPA and, in some
instances, third parties to take actions in response to threats to the public
health or the environment and to seek to recover from the responsible classes
of persons the costs they incur. In the course of its ordinary operations, the
Pipeline System generates wastes that may fall within CERCLA's definition of a
"hazardous substance." Should a disposal facility previously used by the
Partnership require clean up in the future, the Partnership may be responsible
under CERCLA for all or part of the costs required to clean up sites at which
such wastes have been disposed.

Other Environmental Proceedings. The Partnership and the Indiana
Department of Environmental Management have entered into an Agreed Order that
will ultimately result in a remediation program for any on-site and off-site
environmental problems attributable to the Partnership's operations at the
Seymour, Indiana, terminal. As part of the Agreed Order, the Partnership has
completed the remedial investigation sampling for groundwater contamination and
has submitted to IDEM the final remedial investigation report for the Seymour
terminal. The Partnership estimates that the costs of the remediation program
to be proposed by the Partnership for the Seymour terminal will not exceed the
amount accrued therefor (approximately $2.0 million at September 30, 1997). In
the opinion of the General Partner, the completion of the remediation program
to be proposed by the Partnership, if such program is approved by IDEM, will
not have a material adverse impact on the Partnership.

The Partnership received a compliance order from the Louisiana
Department of Environmental Quality ("DEQ") during 1994 relative to potential
environmental contamination at the Partnership's Arcadia, Louisiana facility,
which may be attributable to the operations of the Partnership and surrounding
petroleum terminals of other companies. The Partnership has finalized a
negotiated Compliance Order with DEQ that will allow the Partnership to
continue with a remediation plan similar to the one previously agreed to by DEQ
and implemented by the Company. In the opinion of the General Partner, the
completion of the remediation program being proposed by the Partnership will
not have a future material adverse impact on the Partnership.

SAFETY REGULATION

The Partnership is subject to regulation by the United States Department
of Transportation ("DOT") under the Hazardous Liquid Pipeline Safety Act of
1979 ("HLPSA") and comparable state statutes relating to the design,
installation, testing, construction, operation, replacement and management of
its pipeline facilities. HLPSA covers petroleum and petroleum products and
requires any entity that owns or operates pipeline facilities to comply with
such regulations, to permit access to and copying of records and to make
certain reports and provide information as required by the Secretary of
Transportation. The Partnership believes it is in material compliance with
HLPSA requirements.

The Partnership is also subject to the requirements of the federal
Occupational Safety and Health Act ("OSHA") and comparable state statutes. The
Partnership believes it is in material compliance with OSHA and state
requirements, including general industry standards, recordkeeping requirements
and monitoring of occupational exposure to benzene.

The OSHA hazard communication standard, the EPA community right-to-know
regulations under Title III of the federal Superfund Amendment and
Reauthorization Act, and comparable state statutes require the Partnership to
organize and disclose information about the hazardous materials used in its
operations. Certain parts of this information must be reported to employees,
state and local governmental authorities, and local citizens upon request. In
general, the Partnership expects to increase its expenditures during the next
decade to comply with higher industry and regulatory safety standards such as
those described above. Such expenditures cannot be accurately estimated at
this time, although the General Partner does not believe that they will have a
future material adverse impact on the Partnership.

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<PAGE> 30
The Partnership is subject to OSHA Process Safety Management ("PSM")
regulations which are designed to prevent or minimize the consequences of
catastrophic releases of toxic, reactive, flammable, or explosive chemicals.
These regulations apply to any process which involves a chemical at or above
the specified thresholds; or any process which involves a flammable liquid or
gas, as defined in the regulations, stored on site in one location, in a
quantity of 10,000 pounds or more. The Partnership utilizes certain covered
processes and maintains storage of LPG in pressurized tanks, caverns and wells
in excess of 10,000 pounds at various locations. Flammable liquids stored in
atmospheric tanks below their normal boiling point without benefit of chilling
or refrigeration are exempt. The Partnership believes it is in material
compliance with the PSM regulations.

LITIGATION

The Partnership has been, in the ordinary course of business, a
defendant in various lawsuits and a party to various other legal proceedings,
some of which are covered in whole or in part by insurance. The General
Partner believes that the outcome of such lawsuits and other proceedings will
not individually or in the aggregate have a material adverse effect on the
Partnership's financial condition, operations or cash flows. See
"--Environmental Matters--Other Environmental Proceedings."

EMPLOYEES

The Partnership does not have any employees, officers or directors. The
General Partner is responsible for the management of the Partnership. As of
December 31, 1996, the General Partner had 516 employees.

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<PAGE> 31
DESCRIPTION OF THE NOTES

The Notes are to be issued under an indenture to be dated as of January
27, 1998 (the "Indenture") between the Partnership and The Bank of New York,
as trustee (the "Trustee"), a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The following
summaries of certain provisions of the Indenture do not purport to be complete,
and are subject, and are qualified in their entirety by reference, to all of the
provisions of the Indenture, including the definitions therein of certain terms.

GENERAL

The Notes will be issued under the Indenture in two series which are
limited in the following aggregate principal amounts: $150,000,000 of 2008 Notes
and $240,000,000 of 2028 Notes. The 2008 Notes will mature on January 15, 2008.
The 2028 Notes will mature on January 15, 2028. The Notes will bear interest at
the rate per annum shown on the front cover of this Prospectus from January 27,
1998 or from the most recent Interest Payment Date to which interest has been
paid or provided for, payable semi-annually on January 15 and July 15 of each
year, commencing January 15, 1998, to the Person in whose name the Note (or any
predecessor Note) is registered at the close of business on the preceding
December 31 or June 30, as the case may be. The Notes will not be subject to any
sinking fund, but the 2028 Notes are subject to redemption at the option of the
Partnership.

The Notes and any future debt securities issued under the Indenture will
be unsecured obligations of the Partnership and will rank on a parity with all
other unsecured and unsubordinated indebtedness of the Partnership. The
Indenture does not limit the aggregate principal amount of debt securities that
may be issued thereunder and provides that debt securities may be issued
thereunder from time to time in one or more additional series. The Indenture
does not limit the Partnership's ability to incur additional indebtedness.

OPTIONAL REDEMPTION

The 2008 Notes will not be subject to redemption prior to their maturity.

The 2028 Notes will not be subject to redemption prior to January 15,
2008. Thereafter, the 2028 Notes are subject to redemption upon not less than
30 nor more than 60 days' notice by mail, at any time, in whole or in part, at
the election of the Partnership at the following Redemption Prices (expressed in
percentages of the principal amount) if redeemed during the 12 months beginning
January 15 of the years indicated:

<TABLE>
<CAPTION>
Redemption Redemption
Year Price Year Price
-------------- ------------ -------------- ------------
<S> <C> <S> <C>
2008 . . . . % 2013 . . . . %
2009 . . . . % 2014 . . . . %
2010 . . . . % 2015 . . . . %
2011 . . . . % 2016 . . . . %
2012 . . . . % 2017 . . . . %
</TABLE>

<PAGE> 32
and thereafter at 100% of the principal amount, together in each case with
accrued interest to the Redemption Date.

BOOK ENTRY PROCEDURES

Upon issuance, all Notes of a series will be represented by one or more
fully registered global notes in the aggregate principal amount of such series
of Notes (whether one or more, and with respect to each series of Notes, the
"Global Notes"). Each such Global Note will be deposited with, or on behalf
of, The Depository Trust Company, as Depositary, and registered in the name of
the Depositary or a nominee thereof. The Depositary will maintain the Notes in
denominations of $1,000 and integral multiples thereof through its book-entry
facilities. Unless and until it is exchanged in whole or in part for Notes of
the related series in definitive form, no Global Note may be transferred except
as a whole by the Depositary to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary.

Ownership of beneficial interests in Notes of each series will be
limited to Persons that have accounts with the Depositary ("Participants") or
Persons that may hold interests through Participants. Upon the issuance of the
Global Note representing the Notes of a related series, the Depositary will
credit, on its book-entry registration and transfer system, the Participants'
accounts with the respective principal amounts of such Notes beneficially owned
by such Participants. Ownership of beneficial interests in such Global Note
will be shown on, and the transfer of such ownership interests will be effected
only through, records maintained by the Depositary or its nominee (with respect
to interests of Participants) and on the records of Participants (with respect
to interests of persons holding through Participants). The laws of some states
may require that certain purchasers of securities take physical delivery of
such securities in definitive form. Such limits and such laws may impair the
ability to own, transfer or pledge beneficial interests in Global Notes.

So long as the Depositary, or its nominee, is the registered owner of a
Global Note, the Depositary or its nominee, as the case may be, will be
considered the sole owner or Holder of the series of Notes represented by such
Global Note for all purposes under the Indenture. Except as provided below,
owners of beneficial interests in a Global Note will not be entitled to have
the Notes represented by such Global Notes registered in their names, will not
receive or be entitled to receive physical delivery of such Notes in definitive
form and will not be considered the owners or Holders thereof under the
Indenture. Accordingly, each Person owning a beneficial interest in a Global
Note must rely on the procedures of the Depositary and, if such Person is not a
Participant, on the procedures of the Participant through which such Person
owns its interest, to exercise any rights of a Holder under the Indenture. The
Partnership understands that under existing industry practices, in the event
that the Partnership requests any actions of Holders or that an owner of a
beneficial interest in such a Global Note desires to give or take any action
which a Holder is entitled to give or take under the Indenture, the Depositary
would authorize the Participants holding the relevant beneficial interests to
give or take such action, and such Participants would authorize beneficial
owners owning through such Participants to give or take such action or would
otherwise act upon the instructions of beneficial owners holding through them.

Payment of principal of, premium, if any, and interest on, Notes
registered in the name of the Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the Holder of the Global
Notes representing such Notes. None of the Partnership, the Trustee or any
other agent of the Partnership or agent of the Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests or for supervising
or reviewing any records relating to such beneficial ownership interests. The
Partnership expects that the Depositary, upon receipt of any payment of
principal or interest in respect of a Global Note, will credit the accounts of
the Participants with payment in amounts proportionate to their respective
beneficial interests in such Global Note as shown on the records of the
Depositary. The Partnership also expects that payments by Participants to
owners of beneficial interests in a Global Note will be governed by standing
customer instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name,"and will be the responsibility of such Participants.

The Depositary has advised the Partnership as follows: The Depositary is
a limited-purpose trust company organized under the Banking Law of the State of
New York, a member of the Federal Reserve System, a "clearing

30
<PAGE> 33
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. The Depositary was created to hold securities of its
Participants and to facilitate the clearance and settlement transactions among
its Participants in such securities through electronic book-entry changes in
accounts of the Participants, thereby eliminating the need for physical
movement of securities certificates. The Participants include securities
brokers and dealers (including the Underwriters), banks, trust companies,
clearing corporations, and certain other organizations, some of whom (and/or
their representatives) own the Depositary. Access to the Depositary's book-
entry system is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. Persons who are not Participants
may beneficially own securities held by the Depositary only through
Participants.

If (x) the Depositary is at any time unwilling or unable to continue as
Depositary or the Depositary ceases to be a clearing agency registered under
the Exchange Act and a successor Depositary registered as a clearing agency
under the Exchange Act is not appointed by the Partnership in 90 days, (y) the
Partnership, at its option, executes and delivers to the Trustee a Partnership
Order to the effect that the Global Notes shall be transferable and
exchangeable or (z) an Event of Default has occurred and is continuing with
respect to any series of the Notes, then upon notification to the Trustee, the
Global Notes (or in the case of the circumstances described in the preceding
clause (z), the Global Notes representing the series of Notes as to which an
Event of Default has occurred and is continuing) will, upon surrender thereof
by the Depositary, be transferable or exchangeable for Notes in definitive form
of like tenor and of an equal aggregate principal amount, in denominations of
$1,000 and integral multiples thereof. Such definitive Notes shall be
registered in such name or names, and issued to such Person or Persons, in each
case as the Depositary shall identify to the Trustee as the beneficial owners
of the related Notes. It is expected that such instructions may be based upon
directions received by the Depositary from Participants with respect to
ownership of beneficial interests in such Global Notes. None of the
Partnership, the Trustee or any other agent of the Partnership or agent of the
Trustee will have any liability for any delay by the Depositary in identifying
the beneficial owners of the Notes, and each such Person may conclusively rely
on and shall be protected in relying on, instruction from the Depositary for
all purposes (including with respect to registration and delivery, and the
respective principal amount, of the Notes to be issued).

SAME-DAY SETTLEMENT AND PAYMENT

Settlement for the Notes will be made in immediately available funds.
So long as the Notes are subject to the Depositary's book-entry system, the
Notes will trade in the Depositary's Same-Day Funds Settlement System until
maturity, and therefore the Depositary will require that secondary trading
activity be settled in immediately available funds. No assurance can be given
as to the effect, if any, of settlement in immediately available funds on
trading activity in the Notes.

LIMITATION ON LIENS

The Indenture will provide that the Partnership will not, and will not
permit any of its Subsidiaries to, create, assume or incur any Lien on any
Principal Property to secure any Debt of the Partnership or any other Person
(other than the Notes issued thereunder) without effectively providing that the
Notes shall be secured equally and ratably with, or prior to, such Debt so long
as such Debt shall be secured. There is, however, excluded from the foregoing
restriction the following: (a) Permitted Liens; (b) any Lien on any (i)
property or assets created at the time of the acquisition of such property or
assets by the Partnership or any of its Subsidiaries, or within one year after
such time, to secure all or part of the purchase price for such property or
assets or Debt incurred to finance such purchase price, whether such Debt was
incurred prior to, at the time of, or within one year of, such acquisition, or
(ii) property to secure all or part of the cost of the development,
construction, repair or improvement thereon or to secure Debt incurred prior
to, at the time of, or within one year after, the completion of such
development, construction, repair or improvement or the commencement of full
operations thereof (whichever is later) to provide funds for any such purpose;
(c) any Lien on any current assets that secures current liabilities or Debt of
the Partnership or its Subsidiaries; (d) (i) any Lien on any property or assets
existing thereon at the time of acquisition thereof by the Partnership or any
of its Subsidiaries (whether or not the obligations secured thereby are assumed
by the Partnership or any of its Subsidiaries), or (ii) the assumption by the
Partnership or any of its

31
<PAGE> 34
Subsidiaries of obligations secured by any Lien existing at the time of
acquisition by the Partnership or any of its Subsidiaries of the property or
assets subject to such Lien or at the time of the acquisition of the Person
which owns such property or assets, or (iii) any Lien on any property or assets
of a Person existing thereon at the time (1) such Person becomes a Subsidiary
of the Partnership, (2) such Person is merged into, or consolidated with, the
Partnership or any of its Subsidiaries or (3) of a sale, lease or other
disposition of the properties of a Person (or division thereof) as an entirety
or substantially as an entirety to the Partnership or any of its Subsidiaries;
(e) any Lien on any property or assets of the Partnership or any of its
Subsidiaries in existence on the date of the Indenture or created pursuant to
an "after-acquired property" clause or similar term in existence on the date of
the Indenture or the terms of any mortgage, pledge agreement, security
agreement or similar agreement or instrument in existence on the date of the
Indenture; (f) any Lien arising by reason of any attachment, judgment, decree
or order of any governmental or court authority, so long as any proceeding
initiated to review such attachment, judgment, decree or order shall not have
been terminated or the period within which such proceeding may be initiated
shall not expire, or such attachment, judgment, decree or order shall otherwise
be effectively stayed; and (g) any extension, renewal, refinancing, refunding
or replacement (or successive extensions, renewals, refinancings, refundings or
replacements) of any Lien, in whole or part, that is referred to in clauses (a)
through (f) (inclusive) above, or any Debt secured thereby.

Notwithstanding the foregoing, under the Indenture, the Partnership may,
and may permit any of its Subsidiaries to, create, assume or incur any Lien
upon any Principal Property to secure any Debt of the Partnership or any Person
(other than the Notes) that is not excepted by clauses (a) through (g)
(inclusive) above without securing the Notes, provided that, after giving
effect to the creation, assumption or incurrence of such Lien and Debt, and the
application of proceeds of such Debt, if any, received by the Partnership or
any of its Subsidiaries as a result thereof, the aggregate principal amount of
all Debt then outstanding secured by such Lien and all similar Liens, together
with all net sale proceeds from Sale-Leaseback Transactions (excluding Sale-
Leaseback Transactions permitted by clauses (a) through (d) (inclusive) of the
first paragraph of the covenant below entitled "Limitation on Sale-Leaseback
Transactions") would not exceed 10% of Consolidated Net Tangible Assets.

LIMITATION ON SALE-LEASEBACK TRANSACTIONS

The Indenture will provide that the Partnership will not, nor will it
permit any of its Subsidiaries to, engage in a Sale-Leaseback Transaction,
unless: (a) such Sale-Leaseback Transaction occurs within one year from the
date of completion of the acquisition of the Principal Property subject thereto
or the date of the completion of construction, development or substantial
repair or improvement, or commencement of full operations, on such Principal
Property, whichever is later; (b) the Sale-Leaseback Transaction involves a
lease for a period, including renewals, of not more than three years; (c) the
Partnership or such Subsidiary would be entitled to incur Debt secured by a
Lien on Principal Property subject thereto in a principal amount equal to or
exceeding the net sale proceeds from such Sale-Leaseback Transaction without
equally and ratably securing the Notes pursuant to the above covenant entitled
"Limitation on Liens"; or (d) the Partnership or such Subsidiary, within a one-
year period after such Sale-Leaseback Transaction, applies or causes to be
applied an amount not less than the net sale proceeds from such Sale-Leaseback
Transaction to (i) the prepayment, repayment, reduction or retirement of any
pari passu Funded Debt or Debt of the Partnership or any of its Subsidiaries,
or (ii) the expenditure or expenditures for Principal Property used or to be
used in the ordinary course of business of the Partnership or any of its
Subsidiaries.

Notwithstanding the foregoing, under the Indenture, the Partnership may,
and may permit each of its Subsidiaries to, effect any Sale-Leaseback
Transaction that is not excepted by clauses (a) through (d) (inclusive) of the
above paragraph, provided that, after giving effect thereto and the application
of proceeds, if any, received by the Partnership or any its Subsidiaries as a
result thereof, the net sale proceeds from such Sale-Leaseback Transaction,
together with the aggregate principal amount of all Debt then outstanding (other
than the Notes) secured by Liens upon Principal Property not excepted by clauses
(a) through (g) (inclusive) of the above covenant entitled "Limitation on
Liens", would not exceed 10% of the Consolidated Net Tangible Assets.

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<PAGE> 35
CERTAIN DEFINITIONS

The Indenture will define the following terms as follows:

"Consolidated Net Tangible Assets" means, at any date of determination,
the total amount of assets after deducting therefrom (a) all current
liabilities (excluding (i) any current liabilities that by their terms are
extendable or renewable at the option of the obligor thereon to a time more
than 12 months after the time as of which the amount thereof is being computed,
and (ii) current maturities of long-term debt), and (b) the value (net of any
applicable reserves) of all goodwill, trade names, trademarks, patents or other
like intangible assets, all as set forth, or on a pro forma basis would be set
forth, in the consolidated balance sheet of the Partnership and its
Subsidiaries.

"Debt" means (without duplication) all liabilities for borrowed money,
and any guarantee therefor.

"Funded Debt" means Debt maturing one year or more from the date of the
creation thereof, Debt directly or indirectly renewable or extendible, at the
option of the debtor, by its terms or by the terms of the instrument or
agreement relating thereto, to a date one year or more from the date of the
creation thereof, and Debt under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of one year or
more.

"Lien" means, as to any entity, any mortgage, lien, pledge, security
interest or other encumbrance in or on, or adverse interest or title of any
vendor, lessor, lender or other secured party to or of the entity under
conditional sale or other title retention agreement or capital lease with
respect to, any property or asset of the entity.

"Permitted Liens" means: (a) Liens upon rights-of-way for pipeline
purposes; (b) any statutory or governmental Lien or Lien arising by operation
of law, or any mechanics', repairmen's, materialmen's, suppliers', carriers',
landlords', warehousemen's or similar Lien incurred in the ordinary course of
business which is not yet due or which is being contested in good faith by
appropriate proceedings and any undetermined Lien which is incidental to
construction, development, improvement or repair; (c) the right reserved to, or
vested in, any municipality or public authority by the terms of any right,
power, franchise, grant, license, permit or by any provision of law, to
purchase or recapture or to designate a purchaser of, any property; (d) Liens
of taxes and assessments which are (i) for the then current year, (ii) not at
the time delinquent, or (iii) delinquent but the validity of which is being
contested at the time by the Partnership or any of its Subsidiaries in good
faith; (e) Liens of, or to secure performance of, leases; (f) any Lien upon, or
deposits of, any assets in favor of any surety company or clerk of court for
the purpose of obtaining indemnity or stay of judicial proceedings; (g) any
Lien upon property or assets acquired or sold by the Partnership or any of its
Subsidiaries resulting from the exercise of any rights arising out of defaults
on receivables; (h) any Lien incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance, temporary
disability, social security, retiree health or similar laws or regulations or
to secure obligations imposed by statute or governmental regulations; (i) any
Lien in favor of the Partnership or any of its Subsidiaries; (j) any Lien in
favor of the United States of America or any State thereof, or any department,
agency or instrumentality or political subdivision of the United States of
America or any State thereof, to secure partial, progress, advance or other
payments pursuant to any contract or statute or to secure any Debt incurred by
the Partnership or any of its Subsidiaries for the purpose of financing all or
any part of the purchase price of, or the cost of constructing, developing,
repairing or improving, the property or assets subject to such Lien; or (k) any
Lien securing industrial development, pollution control or similar revenue
bonds.

"Person" means (a) any form of business entity, association, grouping,
trust or other form now or hereafter permitted by the laws of any State of the
United States of America or utilized by businesses in the conduct of their
activities and (b) a natural person, as the context may require.

"Principal Property" means, whether owned or leased on the date of the
Indenture or thereafter acquired, (a) pipeline assets of the Partnership or its
Subsidiaries, including any related facilities employed in the transportation,
distribution, storage or marketing of refined petroleum products or liquefied
petroleum gases, that are located in the United States of America or any
territory or political subdivision thereof, and (b) any processing or
manufacturing plant or terminal owned or leased by the Partnership or any of
its Subsidiaries that is located in

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<PAGE> 36
the United States of America or any territory or political subdivision thereof
except, in the case of either of the foregoing clauses (a) or (b), (i) any such
assets consisting of inventories, furniture, office fixtures and equipment
(including data processing equipment), vehicles and equipment used on, or
useful with, vehicles, and (ii) any such assets, plant or terminal which, in
the opinion of the Company's Board of Directors, is not material in relation to
the activities of the Partnership or of the Partnership and its Subsidiaries,
taken as a whole.

"Sale-Leaseback Transaction" means the sale or transfer by the
Partnership or any of its Subsidiaries of any Principal Property to a Person
(other than the Partnership or any of its Subsidiaries) and the taking back by
the Partnership or any of its Subsidiaries, as the case may be, of a lease of
such Principal Property.

"Subsidiary" means, as to a Person, any other Person as to which it has
the sole and absolute right to liquidate and terminate and upon such
liquidation and termination, it has the right to receive, after accommodation
for legitimate debts and similar obligations of such Person, at least 50% of
its assets.

CONSOLIDATION, MERGER AND SALE OF ASSETS

The Partnership may consolidate with or merge into, or convey, transfer
or lease its properties and assets substantially as an entirety to, any Person,
provided that (i) the Partnership is the continuing entity or if the
Partnership is not the continuing entity, the continuing entity must be a
Person organized and validly existing under the laws of a domestic jurisdiction
and must assume the Partnership's obligations on the Notes and under the
Indenture, and (ii) after giving effect to the transaction no Event of Default,
and no event which, after notice or lapse of time or both, would become an
Event of Default, shall exist.

EVENTS OF DEFAULT

Each of the following will constitute an Event of Default under the
Indenture with respect to the Notes of any series thereunder: (a) failure to pay
principal of or any premium on any Note when due; (b) failure to pay any
interest on any Note when due, continued for 30 days; (c) failure to perform any
other covenant of the Partnership in the Notes or Indenture, continued for 60
days after written notice has been given by the Trustee, or the Holders of at
least 25% in principal amount of all series of the then outstanding Notes, as
provided in the Indenture; and (d) certain events in bankruptcy, insolvency or
reorganization of the Partnership.

If an Event of Default (other than an Event of Default described in
clause (d) above) with respect to any of the Notes of any series at the time
outstanding shall occur and be continuing, either the Trustee or the Holders of
at least 25% of the then outstanding Notes (together as a single class) by
notice to the Partnership as provided in the Indenture may declare the principal
amount of all affected series of the Notes to be due and payable immediately. If
an Event of Default described in clause (d) above shall occur, the principal
amount of all the then outstanding Notes will automatically, and without any
action by the Trustee or any Holder, become immediately due and payable. After
any acceleration, but before a judgment or decree for the payment of the money
due has been obtained by the Trustee, the Holders of a majority in aggregate
principal amount of the then outstanding Notes (together as a single class), by
written notice to the Trustee, may rescind and annul such acceleration and its
consequences if all Events of Default with respect to such series of Notes,
other than the non-payment of accelerated principal, have been cured or waived
as provided in the Indenture. For information as to waiver of defaults, see
"Modification and Waiver".

Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders of the Notes,
unless such Holders of the Notes shall have offered to the Trustee reasonable
indemnity. Subject to such provisions for the indemnification of the Trustee,
the Holders of a majority in aggregate principal amount of the then outstanding
Notes (together as a single class) will have the right to
direct the time, method and place of conducting any proceeding for any

34
<PAGE> 37
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee with respect to such Notes.

No Holder of any Note of any series will have any right to institute any
proceeding with respect to the Indenture, or for the appointment of a receiver
or a trustee, or for any other remedy thereunder, unless (i) such Holder has
previously given to the Trustee written notice of a continuing Event of Default
with respect to the Notes of that series, (ii) the Holders of at least 25% in
aggregate principal amount of the then outstanding Notes (together as a single
class) have made written request, and such Holder or Holders have offered
reasonable indemnity, to the Trustee to institute such proceeding in respect to
such Event of Default as trustee and (iii) the Trustee has failed to institute
such proceeding, and has not received from the Holders of a majority in
aggregate principal amount of the then outstanding Notes (together as a single
class) a direction inconsistent with such request, within 60 days after such
notice, request and offer. However, such limitations do not apply to any
proceeding which is instituted by a Holder of a Note for the enforcement of
payment of the principal of or interest on such Note on or after the applicable
due date specified in such Note.

The Partnership will be required to furnish to the Trustee annually a
statement by certain of its officers as to whether or not the Partnership, to
their knowledge, is in default in the performance or observance of any of the
terms, provisions and conditions of the Indenture and, if so, specifying all
such known defaults.

MODIFICATION AND WAIVER

Modifications and amendments of the Indenture may be made by the
Partnership and the Trustee with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (together as a single class);
provided, however, that no such modification or amendment may, without the
consent of the Holder of each Note affected thereby, (a) change the Stated
Maturity of the principal of, or any installment of principal of or interest on,
any such Note, (b) reduce the principal amount of, or any interest on, any such
Note, (c) reduce the amount of principal of any such Note payable upon
acceleration of the Maturity thereof, (d) change the place or currency of
payment of principal of, or interest on, any such Note, (e) impair the right to
institute suit for the enforcement of any payment on or with respect to any such
Note, (f) reduce the percentage in principal amount of such Note, the consent of
whose Holders is required for modification or amendment of the Indenture, (g)
reduce the percentage in principal amount of such Note necessary for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults or (h) modify such provisions with respect to modification and waiver.

The Holders of a majority in principal amount of the then outstanding
Notes (together as a single class) may waive compliance by the Partnership with
certain restrictive provisions of the Indenture or waive any past default under
the Indenture, except a continuing default in the payment of principal of or
interest on such Notes and covenants and provisions of the Indenture that under
the proviso in the preceding paragraph cannot be amended without the consent of
the Holder of each Note affected thereby.

The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Notes of any affected series (together as a
single class) have given or taken any direction, notice, consent, waiver or
other action under the Indenture as of any date, certain Notes, including those
that have been defeased and discharged as described under "--Satisfaction and
Discharge; Defeasance--Defeasance and Discharge" will not be deemed to be
outstanding.

Except in certain limited circumstances, the Partnership will be entitled
to set any day as a record date for the purpose of determining the Holders of
Notes of a series entitled to give or take any direction, notice, consent,
waiver or other action under the Indenture, in the manner and subject to the
limitations provided in the Indenture. In certain limited circumstances, the
Trustee also will be entitled to set a record date for action by Holders of
Notes of a series. If a record date is set for any action to be taken by
Holders of the Notes of a series, such action may be taken only by persons who
are Holders of such Notes on the record date. To be effective, such action must
be taken by Holders of the requisite principal amount of the Notes (together as
a single class) within a specified period following the record date. For any
particular record date, this period will be 180 days or such

35
<PAGE> 38
shorter period as may be specified by the Partnership (or the Trustee, if it
sets the record date), and may be shortened or lengthened (but not beyond 180
days) from time to time.

SATISFACTION AND DISCHARGE; DEFEASANCE

Satisfaction and Discharge. The Indenture will provide that the
Partnership may satisfy and discharge certain obligations to Holders of Notes
of any series which have not already been delivered to the Trustee for
cancellation and which have either become due and payable or are by their terms
due and payable within one year or are to be called for redemption within one
year by (a) depositing or causing to be deposited with the Trustee funds in an
amount sufficient to pay the principal and any premium and interest to the date
of such deposit (in case of Notes of such series which have become due and
payable) or to the Stated Maturity or any applicable redemption date, as the
case may be, (b) paying or causing to be paid all other sums payable under the
Indenture with respect to such Notes, and (c) delivering to the Trustee an
Officer's Certificate relating to such satisfaction and discharge.

Defeasance and Discharge. The Indenture will provide that the
Partnership will be discharged from all its indebtedness and obligations with
respect to Notes of any series (except for certain obligations to exchange or
register the transfer of such outstanding Notes of such series, to replace
stolen, lost or mutilated outstanding Notes of such series, to maintain paying
agencies and to hold moneys for payment in trust) upon the deposit in trust for
the benefit of the Holders of such outstanding Notes of such series of money or
U.S. Government Obligations, or both, which, through the payment of principal
and interest in respect thereof in accordance with their terms, will provide
money in an amount sufficient to pay the principal of and interest on such
outstanding Notes of such series at Maturity in accordance with the terms of
the Indenture and such outstanding Notes of such series. Such defeasance or
discharge may occur only if, among other things, the Partnership has delivered
to the Trustee an Opinion of Counsel to the effect that the Partnership has
received from, or there has been published by, the United States Internal
Revenue Service a ruling, or there has been a change in tax law, in either case
to the effect that Holders of such outstanding Notes of such series will not
recognize gain or loss for federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to federal income tax on
the same amount, in the same manner and at the same times as would have been
the case if such deposit, defeasance and discharge were not to occur.

Defeasance of Certain Covenants. The Indenture will provide that the
Partnership may, with respect to Notes of any series omit to comply with
certain restrictive covenants, including the covenants described under
"Limitation on Liens", "Limitation on Sale-Leaseback Transactions" and
"Consolidation, Merger and Sale of Assets", in which event certain Events of
Default, which are described above in clause (c) (with respect to such
respective covenants) under "Events of Default", will no longer constitute
Events of Default with respect to such Notes of the series affected thereby.
The Partnership, in order to exercise such option to defease such covenants,
will be required to deposit, in trust for the benefit of the Holders of such
outstanding Notes of such series, money or U.S. Government Obligations, or
both, which, through the payment of principal and interest in respect thereof
in accordance with their terms, will provide money in an amount sufficient to
pay the principal of and interest on such Notes at Maturity in accordance with
the terms of the Indenture and such outstanding Notes of such series. The
Partnership will also be required, among other things, to deliver to the
Trustee an Opinion of Counsel to the effect that Holders of such outstanding
Notes of such series will not recognize gain or loss for federal income tax
purposes as a result of such deposit and defeasance of certain obligations and
will be subject to federal income tax on the same amount, in the same manner
and at the same times as would have been the case if such deposit and
defeasance were not to occur.

If subsequent to the completion of a defeasance of certain covenants as
described in the immediately preceding paragraph, such outstanding Notes of an
affected series are declared due and payable because of the occurrence of any
remaining Event of Default, the amount of money and U.S. Government Obligations
so deposited in trust would be sufficient to pay amounts due on such Notes at
Maturity but may not be sufficient to pay amounts due on such Notes upon any
acceleration resulting from such Event of Default. In such case, the
Partnership would remain liable for such payments.

36
<PAGE> 39
NON-RECOURSE TO COMPANY AND THE PARENT PARTNERSHIP; NO PERSONAL LIABILITY OF
OFFICERS, DIRECTORS, EMPLOYEES, STOCKHOLDERS OR UNITHOLDERS

The Indenture will provide that obligations of the Partnership under the
Indenture and the Notes will be non-recourse to the Company and the Parent
Partnership and their respective Affiliates (other than the Partnership), and
payable only out of cash flow and assets of the Partnership. The Trustee, and
each Holder of a Note by its acceptance thereof, will be deemed to have agreed
in the Indenture that (a) neither the Company nor its assets nor the Parent
Partnership nor its assets (nor any of their respective Affiliates other than
the Partnership, nor their respective assets) shall be liable for any of the
obligations of the Partnership under the Indenture or the Notes, and (b) no
director, officer, employee, stockholder or unitholder, as such, of the
Partnership, the Trustee, the Company, the Parent Partnership or any Affiliate
of any of the foregoing entities shall have any personal liability in respect of
the obligations of the Partnership under the Indenture or the Notes by reason of
his, her or its status; provided, however, that the Company shall be liable by
operation of law as general partner of the Partnership for up to $40,000,000 of
payment obligations in respect of the 2008 Notes.

NOTICES

Notices to Holders of the Notes will be given by mail to the addresses
of such Holders as they may appear in the Security Register.

TITLE

The Partnership, the Trustee and any agent of the Partnership or the
Trustee may treat the Person in whose name a Note is registered as the absolute
owner thereof (whether or not the Notes may be overdue) for the purpose of
making payment and for all other purposes.

GOVERNING LAW

The Indenture and the Notes will be governed by, and construed in
accordance with, the law of the State of New York.

37
<PAGE> 40
UNDERWRITING

Subject to the terms and conditions set forth in a purchase agreement
(the "Purchase Agreement") among the Partnership and Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Goldman, Sachs & Co. (the "Underwriters"), the
Partnership has agreed to sell to the Underwriters, and the Underwriters have
severally agreed to purchase, the respective principal amounts of the Notes set
forth after their names below. The Purchase Agreement provides that the
obligations of the Underwriters are subject to certain conditions precedent and
that the Underwriters will be obligated to purchase all of the Notes if any are
purchased.

<TABLE>
<CAPTION>
Principal Amount Principal Amount
Underwriter of 2008 Notes of 2028 Notes
----------- ---------------- ----------------
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . . . $ $
Goldman, Sachs & Co. . . . .. . . . . . . . . . . . . .
------------ ------------
$150,000,000 $240,000,000
Total . . . . . . . . . . . . . . . . . . . ============ ============
</TABLE>

The Underwriters have advised the Partnership that they propose initially
to offer the Notes to the public at the public offering prices set forth on the
cover page of this Prospectus, and to certain dealers at such price less a
concession not in excess of % and % of the principal amount of
the 2008 Notes and 2028 Notes, respectively. The Underwriters may allow, and
such dealers may reallow, discounts not in excess of % and % of
the principal amount of the 2008 Notes and 2028 Notes, respectively, to certain
other dealers. After the initial public offering, the public offering price,
concession and discount may be changed.

The Notes have been approved for listing on the New York Stock
Exchange. The Notes are a new issue of securities with no established trading
market. No assurance can be given as to the trading market for the Notes.

In order to facilitate the offering of the Notes the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price
of the Notes.

Until the distribution of the Notes is completed, rules of the
Commission may limit the ability of the Underwriters and certain selling group
members to bid for and purchase the Notes. As an exception to these rules, the
Underwriters are permitted to engage in certain transactions that stabilize the
price of the Notes. Such transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the Notes. If the
Underwriters create a short position in the Notes in connection with the
offering, i.e., if they sell more Notes than are set forth on the cover page of
this Prospectus, the Underwriters may reduce that short position by purchasing
Notes in the open market. In general, purchases of a security for the purpose
of stabilization or to reduce a short position could cause the price of the
security to be higher than it might be in the absence of such purchases.

Neither the Partnership nor any of the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of the Notes. In
addition, neither the Partnership nor any of the Underwriters makes any
representation that the Underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.

The Partnership has agreed to indemnify the Underwriters against certain
liabilities (including reimbursements to the Underwriters for certain fees and
expenses of their counsel), including civil liabilities under the Securities
Act of 1933, as amended, or to contribute to payments the Underwriters may be
required to make in respect of such liabilities. In the ordinary course of
their respective businesses, the Underwriters or their affiliates have
performed, and may in the future perform, investment banking services or other
financial services for Duke and its affiliated companies.

<PAGE> 41
LEGAL MATTERS

The validity of the Notes will be passed upon for the Partnership by
Fulbright & Jaworski L.L.P., Houston, Texas. Certain legal matters will be
passed upon for the Underwriters by Andrews & Kurth L.L.P., Houston, Texas.

EXPERTS

The consolidated financial statements of TEPPCO Partners, L.P. as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, and the consolidated balance sheet of Texas Eastern
Products Pipeline Company as of December 31, 1996, incorporated by reference
herein and elsewhere in the registration statement, have been incorporated by
reference herein and in the registration statement in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.

<PAGE> 42
================================================================================

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN
THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE PARTNERSHIP SINCE THE DATE
HEREOF, OR THAT INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

-----------------------------

<TABLE>
<CAPTION>
TABLE OF CONTENTS

PAGE
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain
Information by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
System Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Management's Discussion and Analysis
of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Business and Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Description of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>

================================================================================

$390,000,000

[logo]

TE PRODUCTS PIPELINE
COMPANY, LIMITED
PARTNERSHIP

$150,000,000 % Senior Notes Due 2008
$240,000,000 % Senior Notes Due 2028

------------

PROSPECTUS

------------
Merrill Lynch & Co.
Goldman, Sachs & Co.

January ,1998

================================================================================
<PAGE> 43
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following sets forth the estimated expenses and costs (other than
underwriting discounts and commissions) expected to be incurred in connection
with the issuance and distribution of the securities registered hereby:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee . . . . . . . . . . . . . . . . $ 118,182
Printing and engraving costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,000
Accounting fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000
Registrar and trustee fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,818
---------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 400,000
===============
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Each partnership agreement provides that the Parent Partnership or the
Partnership, as the case may be, will indemnify (to the fullest extent
permitted by applicable law) certain persons (each, an "Indemnitee") from and
against any and all losses, claims, damage, liabilities (joint or several),
expenses (including, without limitation, legal fees and expenses), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
Indemnitee in connection with any claim, demand, action, suit or proceeding to
which the Indemnitee is or was an actual or threatened party and which relates
to the partnership agreement of the Parent Partnership or the Partnership or
the property, business, affairs or management of the Parent Partnership or the
Partnership. This indemnity is available only if the Indemnitee acted in good
faith, in a manner which such Indemnitee believed to be in or not opposed to
the best interests of the Partnership and, with respect to any criminal
proceeding, had no reasonable cause to believe its conduct was unlawful.
Indemnitees include the General Partner, any Departing Partner, any affiliate
of the General Partner or any Departing Partner, any person who is or was a
director, officer, employee or agent of the General Partner or any Departing
Partner or any affiliate of either, or any person who is or was serving at the
request of the General Partner, any Departing Partner, or any such affiliate as
a director, officer, partner, trustee, employee or agent of another person.
Expenses subject to indemnity will be paid by the applicable partnership to the
Indemnitee in advance, subject to receipt of an undertaking by or on behalf of
the Indemnitee to repay such amount if it is ultimately determined by a court
of competent jurisdiction that the Indemnitee is not entitled to
indemnification. The Parent Partnership will, to the extent commercially
reasonable, purchase and maintain insurance on behalf of the Indemnitees,
whether or not the applicable partnership would have the power to indemnify
such Indemnitees against liability under the applicable partnership agreement.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

*1.1 -- Form of Purchase Agreement.
4.1 -- Form of Agreement of Limited Partnership of the
Partnership (filed as Exhibit 10.1 to the Parent
Partnership's Registration Statement on Form S-3 (Reg.
No. 33-32203) and incorporated by reference herein).
4.2 -- Certificate of Limited Partnership of the Partnership
(filed as Exhibit 10.2 to the Parent Partnership's
Registration Statement on Form S-1 (Reg. No. 33-32203)
and incorporated by reference herein).
*4.3 -- Form of Indenture, dated as of ________, 1998, between
the Partnership and The Bank of New York, as Trustee.
*4.4 -- Form of Notes (included in Exhibit 4.3).

II-1

<PAGE> 44

*5.1 -- Opinion of Fulbright & Jaworski L.L.P.

*12.1 -- Computation of Ratio of Earnings to Fixed Charges.

*23.1 -- Consent of Independent Accountants.

*23.2 -- Consent of Counsel (the consent of Fulbright &
Jaworski L.L.P. to the use of their opinion as an
exhibit to the Registration Statement and the reference
to their firm in this Registration Statement is
contained in their opinion filed as Exhibit 5.1 hereto).
24.1 -- Powers of Attorney (included on page II-5 of this
Registration Statement as originally filed).
*25.1 -- Form T-1 Statement of Eligibility of the Trustee.
_________
* Previously filed

(b) Financial Statement Schedules

Not applicable.

ITEM 17. UNDERTAKINGS

I. The undersigned registrant hereby undertakes:

A. To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement.

1. To include any prospectus required by Section
10(a)(3) of the Securities Act;

2. To reflect in the Prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
and

3. To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in this Registration Statement;

provided, however, that paragraphs I.A.1 and I.A.2 above do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
B. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

C. For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed
as part of this Registration Statement in reliance upon Rule
430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared
effective.

D. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.

II-2

<PAGE> 45
II. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Exchange Act that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

III. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the provisions
described in Item 15 above, or otherwise, the Registrant has been
advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.

II-3
<PAGE> 46
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on the 16th day of January, 1998.

TE PRODUCTS PIPELINE COMPANY, LIMITED
PARTNERSHIP, by Texas Eastern Products
Pipeline Company, as General Partner

By: WILLIAM L. THACKER
William L. Thacker
Chairman of the Board, President,
Chief Executive Officer and Director

II-4
<PAGE> 47

<TABLE>
<CAPTION>
Position with the
Signature General Partner Date
------------------------------------------------- --------------------------- ----------------------
<S> <C> <C>
WILLIAM L. THACKER Chairman of the Board, January 16, 1998
William L. Thacker President and Director
(Chief Executive Officer)

CHARLES H. LEONARD Senior Vice President, January 16, 1998
Charles H. Leonard Chief Financial Officer and
Treasurer
(Principal Financial and
Accounting Officer)

JAMES T. HACKETT* Director January 16, 1998
James T. Hackett

PAUL M. ANDERSON* Vice Chairman of the Board January 16, 1998
Paul M. Anderson and Director

CARL D. CLAY* Director January 16, 1998
Carl D. Clay

DERRILL CODY* Director January 16, 1998
Derrill Cody

JOHN P. DESBARRES* Director January 16, 1998
John P. DesBarres

Director January 16, 1998
Ruth G. Shaw

Director January 16, 1998
Milton Carroll

JIM W. MOGG* Director January 16, 1998
Jim W. Mogg

By: CHARLES H. LEONARD
Charles H. Leonard,
its attorney-in-fact
</TABLE>

II-5
<PAGE> 48
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibits
--------
<S> <C>
*1.1 -- Form of Purchase Agreement.
4.1 -- Form of Agreement of Limited Partnership of the
Partnership (filed as Exhibit 10.1 to the Parent
Partnership's Registration Statement on Form S-3 (Reg.
No. 33-32203) and incorporated by reference herein).
4.2 -- Certificate of Limited Partnership of the Partnership
(filed as Exhibit 10.2 to the Parent Partnership's
Registration Statement on Form S-1 (Reg. No. 33-32203)
and incorporated by reference herein).
*4.3 -- Form of Indenture, dated as of ________, 1998, between
the Partnership and The Bank of New York, as Trustee.
*4.4 -- Form of Notes (included in Exhibit 4.3).
*5.1 -- Opinion of Fulbright & Jaworski L.L.P.
*12.1 -- Computation of Ratio of Earnings to Fixed Charges.
*23.1 -- Consent of Independent Accountants.
*23.2 -- Consent of Counsel (the consent of Fulbright &
Jaworski L.L.P. to the use of their opinion as an
exhibit to the Registration Statement and the reference
to their firm in this Registration Statement is
contained in their opinion filed as Exhibit 5.1 hereto).
24.1 -- Powers of Attorney (included on page II-5 of this
Registration Statement as originally filed).
*25.1 -- Form T-1 Statement of Eligibility of the Trustee.
</TABLE>

_________
* Previously filed
** Filed herewith.