1168397--3/13/2006--PACIFIC_ENERGY_PARTNERS

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We may not have sufficient cash from operations to pay the minimum quarterly distribution following establishment of cash reserves and after payment of fees and expenses, including payments to our General Partner. A material decline in the volume of crude oil processed by any of the refineries we serve could reduce our ability to make distributions to our unitholders. A material decrease in the production of crude oil from the oil fields served by our pipelines could materially reduce our ability to make distributions to our unitholders. We depend on refineries and petroleum products pipelines owned and operated by others to supply our refined products pipeline and terminals. If the refineries we serve process crude oil from locations to which our pipelines do not directly or indirectly connect, throughput on our crude oil pipelines could materially decline. If new sources of crude oil that are not connected to our pipelines become available to the refineries we serve, throughput on our pipelines could materially decline. Due to our lack of asset diversification, adverse developments in our transportation and storage businesses could reduce our ability to make distributions to our unitholders. Terrorist attacks aimed at our facilities could adversely affect our business. Tariff rate regulation or a successful challenge to our tariff rates may reduce the tariff rates we charge and the amount of cash available for distribution to our unitholders. Our business is subject to federal, state and local laws and regulations that govern the product quality specifications of the petroleum products that we store and transport. Our Canadian operations are subject to the jurisdiction of Canadian federal and provincial regulatory authorities. We may be unsuccessful in competing against existing or future pipelines in the areas in which we currently operate or may operate in the future. We are exposed to the credit risk of our customers in the ordinary course of our business. Our U.S. operations are subject to federal, state and local laws and regulations, including those relating to environmental protection, operations and safety, that could require us to make substantial expenditures. Our Canadian operations are subject to Canadian environmental laws and regulations. Our operations are subject to cross-border regulations. Our operations are subject to operational hazards and unforeseen interruptions for which we may not be adequately insured. Actual costs incurred in connection with the release of crude oil on Line 63 in excess of our total estimated cost could have a material adverse effect on our financial condition, results of operations or cash flows. Any reduction in the capability of, or the allocations to our shippers on, connecting, third-party pipelines could cause a reduction of throughput on our pipelines and could reduce the amount of cash available for distribution to our unitholders. We are dependent on a small number of customers for a substantial portion of our revenue. We are dependent on use of a third-party marine dock for delivery of waterborne products into our storage and distribution facilities in the Los Angeles Basin. Our ability to execute our acquisition or project development strategy may be impaired if we are unable to complete accretive acquisitions or projects on acceptable terms or access new capital to finance these activities. Our results of operations could be adversely affected by changes in currency exchange rates. Cost reimbursements to our General Partner, which are determined in our General Partner's sole discretion, may be substantial and reduce our cash available for distribution to you. Our General Partner's discretion in establishing cash reserves may reduce the amount of cash available for distribution to you. LBP and its affiliates have conflicts of interest with, and limited fiduciary responsibilities to, our unitholders, which may permit them to favor their own interests to your detriment. Our partnership agreement limits our General Partner's fiduciary duties to our unitholders and restricts the remedies available to unitholders for actions taken by our General Partner that might otherwise constitute breaches of fiduciary duty. Even if unitholders are dissatisfied, they cannot easily remove our General Partner, which could lower the trading price of the common units. The control of our General Partner may be transferred to a third party without unitholder consent. We may issue additional units without your approval, which would dilute your ownership interests. Our General Partner may cause us to borrow funds in order to make cash distributions, even if the purpose or effect of the borrowing benefits the general partner or its affiliates. The owner of our General Partner has a substantial amount of debt. A default under such debt could result in a change of control of our General Partner, which would be an event of default under the instruments governing our long-term indebtedness. Our General Partner has a limited right to buy out minority unitholders if it owns more than 80% of the common units, which may require unitholders to sell their common units against their will and at an undesirable time or price. Unitholders' liability may not be limited if a court finds that unitholder action constitutes control of our business. Unitholders may have liability to repay distributions. The IRS could treat us as a corporation for tax purposes, which would substantially reduce any cash available for distribution to our unitholders. A successful IRS contest of the federal income tax positions we take may adversely impact the market for our common units, and the costs of any contest will reduce cash available for distribution to our unitholders and our General Partner. Unitholders may be required to pay taxes on their share of our income from us even if they do not receive any cash distributions from us. Tax gain or loss on disposition of our common units could be different than expected. Tax-exempt entities, regulated investment companies and foreign persons face unique tax issues from owning common units that may result in adverse tax consequences to them. We treat each purchaser of our common units as having the same tax benefits without regard to the common units purchased. The IRS may challenge this treatment, which could adversely affect the value of the common units. Unitholders may be subject to state and local taxes and return filing requirements.

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1168397--3/13/2006--PACIFIC_ENERGY_PARTNERS_LP