HOUSTON, TEXAS, August 17, 2000-El Paso Energy Corporation (NYSE:EPG) announced today that it formed a strategic affiliation with The Enerplus Group through the purchase of the Enerplus companies responsible for the management of various public and private oil and gas funds. Enerplus is Canada's oldest and largest manager of public and private oil and gas income funds, including the EnerMark Income Fund, the Enerplus Resources Fund, and several private pension resource corporations, with assets under management exceeding $1.0 billion.

The acquisition will be made by a newly formed company that is a subsidiary of EnCap Investments L.L.C., acquired by El Paso Energy in March 1999. EnCap, one of the premier oil and gas institutional fund management firms in the United States, manages more than $600 million in institutional oil and gas investment funds in the United States, as well as Energy Capital Investment Company P.L.C., a publicly traded investment company in the United Kingdom.

"This transaction provides a critical mass of people, assets, and market presence from which EnCap and El Paso will grow their business in Canada," said Ralph Eads, executive vice president of El Paso Energy. "In addition, the combination will improve the competitive strength and growth potential of all the entities managed by the Enerplus Group through the addition of El Paso's financial strength, risk management skills, and experience in a wide range of energy related activities."

Marcel Tremblay, president and chief executive officer of Enerplus, reiterated that the new alliance will provide additional financial strength and synergies to all its managed entities. The Enerplus management team, which also includes Dennis Gieck, chief operating officer and executive vice president, and senior vice presidents Kelly Drader, Karen Genoway, and Eric Tremblay, will continue to manage the public and private entities. In addition, the Board of Directors of each of these entities will remain unchanged.

With over $19 billion in assets, El Paso Energy Corporation provides comprehensive energy solutions through its strategic business units: Tennessee Gas Pipeline Company, El Paso Natural Gas Company, Southern Natural Gas Company, El Paso Merchant Energy Company, El Paso Energy International Company, El Paso Field Services Company, and El Paso Production Company. The company owns North America's largest natural gas pipeline system, both in terms of throughput and miles of pipeline, and has operations in natural gas transmission, merchant energy services, power generation, international project development, gas gathering and processing, and gas and oil production. On May 5, the stockholders of both El Paso Energy and The Coastal Corporation overwhelmingly voted in favor of merging the two organizations. The combined company will have assets of $35 billion and be one of the world's leading integrated energy companies. The merger is expected to close in the fourth quarter of this year, concurrent with the completion of regulatory reviews. Visit El Paso Energy's web site at www.epenergy.com.

This release includes forward-looking statements and projections, made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The company has made every reasonable effort to ensure that the information and assumptions on which these statements and projections are based are current, reasonable, and complete. However, a variety of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this release. While the company makes these statements and projections in good faith, neither the company nor its management can guarantee that the anticipated future results will be achieved. Reference should be made to the company's (and its affiliates') Securities and Exchange Commission filings for additional important factors that may affect actual results.