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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D. C. 20549

                                   FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001

                                       OR

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                        COMMISSION FILE NUMBER: 1-14569

                      PLAINS ALL AMERICAN PIPELINE, L.P.

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

             DELAWARE                                          76-0582150
   (STATE OR OTHER JURISDICTION OF                          (I.R.S. EMPLOYER
   INCORPORATION OR ORGANIZATION)                          IDENTIFICATION NO.)

                          333 CLAY STREET, SUITE 2900
                              HOUSTON, TEXAS 77002
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                                   (ZIP CODE)

                                 (713) 646-4100
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes  X    No
                                       ---      ---

At November 14, 2001, there were outstanding 31,915,939 Common Units, 1,307,190
Class B Common Units and 10,029,619 Subordinated Units.

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              PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
                               TABLE OF CONTENTS

                                                                      PAGE
                                                                      ----
PART I. FINANCIAL INFORMATION

CONSOLIDATED FINANCIAL STATEMENTS:

Consolidated Balance Sheets:
  September 30, 2001 and December 31, 2000..........................    3
Consolidated Statements of Operations:
  For the three and nine months ended September 30, 2001 and 2000...    4
Consolidated Statements of Cash Flows:
  For the nine months ended September 30, 2001 and 2000.............    5
Consolidated Statement of Partners' Capital:
  For the nine months ended September 30, 2001......................    6

Notes to Consolidated Financial Statements..........................    7

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
  CONDITION AND RESULTS OF OPERATIONS...............................   16

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
  MARKET RISKS......................................................   24

PART II. OTHER INFORMATION..........................................   26

                                       2

              PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT UNIT DATA)

                                                                       September 30,       December 31,
                                                                            2001               2000
                                                                      ---------------    ---------------
                                                                        (unaudited)
                                                                                    
                                               ASSETS
CURRENT ASSETS
Cash and cash equivalents                                              $       3,864      $       3,426
Accounts receivable and other current assets                                 543,464            347,698
Inventory                                                                     85,980             46,780
                                                                      ---------------    ---------------
Total current assets                                                         633,308            397,904
                                                                      ---------------    ---------------
PROPERTY AND EQUIPMENT                                                       632,164            467,619
Less allowance for depreciation and amortization                             (42,256)           (26,974)
                                                                      ---------------    ---------------
                                                                             589,908            440,645
                                                                      ---------------    ---------------
OTHER ASSETS
Pipeline linefill                                                             44,674             34,312
Other, net                                                                    31,203             12,940
                                                                      ---------------    ---------------
                                                                       $   1,299,093      $     885,801
                                                                      ===============    ===============
                          LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES

Accounts payable and other current liabilities                         $     493,613      $     328,542
Due to affiliates                                                             17,272             20,951
Short-term debt and current portion of long-term debt                         60,400              1,300
                                                                      ---------------    ---------------
Total current liabilities                                                    571,285            350,793

LONG-TERM LIABILITIES

Bank debt                                                                    434,540            320,000
Other long-term liabilities and deferred credits                               1,017              1,009
                                                                      ---------------    ---------------
Total liabilities                                                          1,006,842            671,802
                                                                      ---------------    ---------------
COMMITMENTS AND CONTINGENCIES (NOTE 10)

PARTNERS' CAPITAL

Common unitholders (27,015,939 and 23,049,239 units outstanding
at September 30, 2001 and December 31, 2000 respectively)                   296,294             217,073
Class B common unitholders (1,307,190 units outstanding)                     20,002              21,042
Subordinated unitholders (10,029,619 units outstanding)                     (35,296)            (27,316)
General partner                                                               11,251              3,200
                                                                      ---------------    ---------------
Total partners' capital                                                      292,251            213,999
                                                                      ---------------    ---------------
                                                                       $   1,299,093      $     885,801
                                                                      ===============    ===============

                See notes to consolidated financial statements.

                                       3

              PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER UNIT DATA)
                                  (UNAUDITED)

                                                          THREE MONTHS ENDED               NINE MONTHS ENDED
                                                              SEPTEMBER 30,                   SEPTEMBER 30,
                                                      ---------------------------     ---------------------------
                                                          2001           2000             2001           2000
                                                      -----------     -----------     -----------     -----------
                                                                                          
REVENUES                                              $ 2,191,310     $ 1,555,863     $ 5,298,051     $ 5,040,204

COST OF SALES AND OPERATIONS                            2,151,666       1,523,303       5,189,288       4,938,318
UNAUTHORIZED TRADING LOSSES
AND RELATED EXPENSES                                            -           6,600               -           6,600
                                                      -----------     -----------     -----------     -----------
Gross Margin                                               39,644          25,960         108,763          95,286

EXPENSES

General and administrative                                 10,297           9,911          34,327          26,486
Depreciation and amortization                               6,402           5,349          17,575          20,148
                                                      -----------     -----------     -----------     -----------
Total expenses                                             16,699          15,260          51,902          46,634
                                                      -----------     -----------     -----------     -----------
OPERATING INCOME                                           22,945          10,700          56,861          48,652

Interest expense                                           (7,775)         (6,478)        (22,482)        (18,518)
Related party interest expense                                  -               -               -          (3,268)
Gain on sale of assets                                          -               -               -          48,188
Interest and other income (expense)                            (9)            294             356          10,825
                                                      -----------     -----------     -----------     -----------

Income before extraordinary item and cumulative
  effect of accounting change                              15,161           4,516          34,735          85,879
Extraordinary item                                              -               -               -         (15,147)
Cumulative effect of accounting change (Note 3)                 -               -             508               -

NET INCOME                                            $    15,161     $     4,516     $    35,243     $    70,732
                                                      ===========     ===========     ===========     ===========
NET INCOME - LIMITED PARTNERS                         $    14,536     $     4,359     $    34,019     $    69,185
                                                      ===========     ===========     ===========     ===========
NET INCOME - GENERAL PARTNER                          $       625     $       157     $     1,224     $     1,547
                                                      ===========     ===========     ===========     ===========
BASIC AND DILUTED NET INCOME
 PER LIMITED PARTNER UNIT
 Income before extraordinary item and
  cumulative effect of accounting change              $      0.38     $      0.13     $      0.93     $      2.45
 Extraordinary item                                             -               -               -           (0.44)
 Cumulative effect of accounting change                         -               -            0.01               -
                                                      -----------     -----------     -----------     -----------
 Net income                                           $      0.38     $      0.13     $      0.94     $      2.01
                                                      ===========     ===========     ===========     ===========
WEIGHTED AVERAGE UNITS
 OUTSTANDING                                               38,353          34,386          36,156          34,386
                                                      ===========     ===========     ===========     ===========

                See notes to consolidated financial statements.

                                       4

              PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (IN THOUSANDS)
                                  (UNAUDITED)

                                                                          Nine Months Ended
                                                                             September 30,
                                                                      --------------------------
                                                                          2001         2000
                                                                       -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES
                                                                               
Net income                                                            $    35,243    $    70,732
Items not affecting cash flows
  from operating activities:
    Depreciation and amortization                                          17,575         20,148
    Gain on the sale of assets                                                  -        (48,188)
    Cumulative effect of accounting change                                   (508)             -
    Change in derivative fair value                                          (712)             -
    Other noncash items                                                     5,583          6,843
Change in assets and liabilities, net of assets acquired and
 liabilities assumed:
    Accounts receivable and other current assets                         (189,394)        95,284
    Inventory                                                              (8,037)        12,539
    Pipeline linefill                                                           -        (13,397)
    Due to affiliates                                                      (3,679)             -
    Accounts payable and other current liabilities                        149,408       (143,451)
    Other long-term liabilities and deferred credits                            -         (8,000)
                                                                      -----------    -----------
Net cash provided by (used in) operating activities                         5,479         (7,490)
                                                                      -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES

Cash paid in connection with acquisitions (Note 5)                       (209,264)             -
Additions to property and equipment and other assets                      (13,804)        (7,487)
Proceeds from sales of assets                                               1,808        223,859
                                                                      -----------    -----------
Net cash provided by (used in) investing activities                      (221,260)       216,372
                                                                      -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES

Advances (to) from affiliates                                                   -        (18,790)
Proceeds from long-term debt                                            1,655,475        794,800
Proceeds from short-term debt                                             258,655         47,750
Payment of subordinated debt - general partner                                  -       (114,000)
Principal payments of long-term debt                                   (1,537,935)      (812,900)
Principal payments of short-term debt                                    (202,555)      (106,469)
Costs incurred in connection with financing arrangements                  (10,649)        (6,500)
Proceeds from issuance of units                                           106,209              -
Distributions to unitholders                                              (52,981)       (43,269)
                                                                      -----------    -----------
Net cash provided by (used in) financing activities                       216,219       (259,378)
                                                                      -----------    -----------
Net increase (decrease) in cash and cash equivalents                          438        (50,496)
Cash and cash equivalents, beginning of period                              3,426         53,768
                                                                      -----------    -----------
Cash and cash equivalents, end of period                              $     3,864    $     3,272
                                                                      ===========    ===========

                See notes to consolidated financial statements.

                                       5

              PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
                                (IN THOUSANDS)
                                  (UNAUDITED)

                                                                                                                        TOTAL
                                                              CLASS B                                      GENERAL     PARTNERS'
                                     COMMON UNITS           COMMON UNITS         SUBORDINATED UNITS        PARTNER      CAPITAL
                               ---------------------    --------------------    ---------------------     ---------   ----------
                                 UNITS       AMOUNT       UNITS      AMOUNT       UNITS       AMOUNT        AMOUNT      AMOUNT
                               ---------    --------    ---------   --------    ---------    --------     ---------   ----------
                                                                                              
Balance at December 31, 2000      23,049    $217,073        1,307   $ 21,042       10,030    $(27,316)   $   3,200   $  213,999

Issuance of units                  3,967      98,606            -          -            -           -        2,879      101,485

Noncash compensation expense           -           -            -          -            -           -        5,741        5,741

Distributions                          -     (35,116)           -     (1,879)           -     (14,418)      (1,568)     (52,981)

Other comprehensive income             -      (7,668)           -       (385)           -      (2,958)        (225)     (11,236)

Net income                             -      23,399            -      1,224            -       9,396        1,224       35,243
                               ---------    --------    ---------   --------    ---------    --------     ---------   ---------
Balance at September 30, 2001     27,016    $296,294        1,307   $ 20,002       10,030    $(35,296)    $ 11,251    $ 292,251
                               =========    ========    =========   ========    =========    ========     =========   =========

                See notes to consolidated financial statements.

                                       6

              PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

NOTE 1 -- ORGANIZATION AND ACCOUNTING POLICIES

  We are a Delaware limited partnership that was formed in September of 1998 to
acquire and operate the midstream crude oil business and assets of Plains
Resources Inc. and its wholly owned subsidiaries. On November 23, 1998, we
completed our initial public offering and the transactions whereby we became the
successor to the business of the midstream subsidiaries of Plains Resources. Our
operations are conducted through Plains Marketing, L.P., All American Pipeline,
L.P. and Plains Marketing Canada, L.P.  The terms "Plains All American" and the
"Partnership" herein refer to Plains All American Pipeline, L.P. and its
affiliated operating partnerships.  We are engaged in interstate and intrastate
transportation, marketing, and terminalling of crude oil.  Our operations are
conducted primarily in Texas, California, Oklahoma, Louisiana, the Gulf of
Mexico and the Canadian Provinces of Alberta and Saskatchewan.

  The accompanying financial statements and related notes present our
consolidated financial position as of September 30, 2001 and December 31, 2000;
the results of our operations for the three and nine months ended September 30,
2001 and 2000; cash flows for the nine months ended September 30, 2001 and 2000;
and changes in partners' capital for the nine months ended September 30, 2001.
The financial statements have been prepared in accordance with the instructions
to interim reporting as prescribed by the Securities and Exchange Commission
("SEC"). All adjustments, consisting only of normal recurring adjustments that
in the opinion of management were necessary for a fair statement of the results
for the interim periods, have been reflected. All significant intercompany
transactions have been eliminated. Certain reclassifications have been made to
prior period amounts to conform with current period presentation. The results of
operations for the three and nine months ended September 30, 2001 should not be
taken as indicative of the results to be expected for the full year. The interim
financial statements should be read in conjunction with our consolidated
financial statements and notes thereto presented in our 2000 Annual Report on
Form 10-K.

NOTE 2 -- EQUITY OFFERINGS

  On October 31, 2001, we completed a public offering of 4,500,000 common units.
Net cash proceeds from the offering, including our general partner's
proportionate contribution, were approximately $116 million. On November 13,
2001, the underwriters in the offering exercised their overallotment option and
purchased an additional 400,000 units for net cash proceeds of approximately
$10.8 million. This offering is in addition to the 3,966,700 units issued in May
and June, 2001 which resulted in net proceeds of $100.7 million, including our
general partner's proportionate contribution. Proceeds from both offerings were
used to repay borrowings under our revolving credit facility, a portion of which
was used to finance our Canadian acquisitions (see Note 5).

NOTE 3 -- DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

  On January 1, 2001, we adopted Statement of Financial Accounting Standards
("SFAS") No. 133 "Accounting for Derivative Instruments and Hedging Activities"
as amended by SFAS 137 and SFAS 138.  Under SFAS 133, all derivative instruments
are recorded on the balance sheet at fair value.  If the derivative does not
qualify as a hedge or is not designated as a hedge, the gain or loss on the
derivative is recognized currently in earnings. To qualify for hedge accounting,
the derivative must qualify either as a fair value hedge, cash flow hedge or
foreign currency hedge. With respect to fair value hedges, gains or losses for
both the hedge and the hedged item are taken directly to earnings in the current
period. Thus, earnings are impacted by the net change between the hedge and the
underlying hedged transaction. With respect to cash flow hedges, gains or losses
are deferred in accumulated Other Comprehensive Income ("OCI"), a component of
Partners' Capital, to the extent the hedge is effective (discussed further
below). Foreign currency hedges may be treated as either fair value hedges or
cash flow hedges, depending on the specific characteristics of the hedge. As of
September 30, 2001 our hedges consisted only of cash flow hedges or foreign
currency hedges treated as cash flow hedges, and the remaining discussion
relates exclusively to these types of hedges.

  The relationship between the hedging instrument and the hedged item must be
highly effective in achieving the offset of changes in cash flows attributable
to the hedged risk both at the inception of the contract and on an ongoing
basis.  Hedge accounting is discontinued prospectively when a hedge instrument
becomes ineffective. Gains and losses deferred in OCI related to cash flow
hedges that become ineffective remain unchanged until the related product is
delivered.  If it is determined that it is probable that a hedged forecasted
transaction will not occur, deferred gains or losses on the hedging instrument
are recognized in earnings immediately.

                                       7

  Gains and losses on hedging instruments related to OCI and adjustments to
carrying amounts on hedged volumes are included in revenues in the period that
the related volumes are delivered.  Gains and losses of hedging instruments
that represent hedge ineffectiveness are included in earnings in the period in
which they occur.

  We utilize various derivative instruments, for purposes other than trading, to
hedge our exposure to price fluctuations on crude oil in storage and expected
purchases, sales and transportation of crude oil. The derivative instruments
consist primarily of futures and option contracts traded on the New York
Mercantile Exchange. We also utilize interest rate collars and interest rate
swaps to manage the interest rate exposure on our long-term debt and foreign
currency hedges to manage exchange rate exposure.

  On January 1, 2001, in accordance with the transition provisions of SFAS 133,
we recorded a loss of $8.3 million in OCI, representing the cumulative effect of
an accounting change to recognize, at fair value, all cash flow derivatives.  We
also recorded a noncash gain of $0.5 million in earnings as a cumulative effect
adjustment.

  At September 30, 2001, an $11.1 million unrealized loss was recorded to OCI
together with related assets and liabilities of $7.3 million and $17.7 million,
respectively. Earnings included a noncash gain of $0.8 million related to the
ineffective portion of our cash flow hedges, as well as certain derivative
contracts that did not qualify as hedges relating to our Canadian businesses due
to a low correlation between the futures contract and hedged item.  Our hedge-
related assets and liabilities are included in other current assets and other
current liabilities in the balance sheet.

  As of September 30, 2001, the total amount of deferred net losses on
derivative instruments recorded in OCI are expected to be reclassified to
earnings during the next twelve-month period. The following table sets forth our
open crude oil hedge positions at September 30, 2001. These are futures hedges
and thus have offsetting physical exposures to the extent they are effective.

                                 2001                    2002
                               ---------   ---------------------------------
                                4th Qtr     1st Qtr     2nd Qtr     3rd Qtr
                               ---------   ---------   ---------   ---------
       Volume (bbls)
         Short positions       1,302,000        -           -           -
         Long positions             -      2,760,000     213,000        -
       Average price ($/bbl)      $26.94      $27.37      $28.46        -

  At September 30, 2001, we had arrangements to protect interest rate
fluctuations on a portion of our outstanding debt for an aggregate notional
amount of $275.0 million. These instruments are based on LIBOR rates.
Approximately $125 million notional amount is comprised of an interest rate
collar that provides for a floor of 6.1% and a ceiling of 8.0% with an
expiration date of August 2002. The remaining $150 million notional amount
consists of interest rate swaps with an average LIBOR rate of approximately
3.8%. These swaps expire with respect to $100 million in September, 2003, and
the remainder in March, 2004.

  During the third quarter of 2001, gains of $4.5 million were relieved from OCI
and the fair value of open positions decreased $0.7 million. Additionally,
certain derivative positions were terminated prior to maturity.  As such, a
$11.1 million loss related to all positions (open and closed hedges) was
recorded in OCI at September 30, 2001.

  We formally document all relationships between hedging instruments and hedged
items, as well as our risk management objectives and strategy for undertaking
the hedge. Hedge effectiveness is measured on a quarterly basis. This process
includes specific identification of the hedging instrument and the hedge
transaction, the nature of the risk being hedged and how the hedging
instrument's effectiveness will be assessed.  Both at the inception of the hedge
and on an ongoing basis, we assess whether the derivatives that are used in
hedging transactions are highly effective in offsetting changes in cash flows of
hedged items. No amounts were excluded from the computation of hedge
effectiveness.

NOTE 4 - COMPREHENSIVE INCOME

  Comprehensive income includes net income and certain items recorded directly
to Partners' Capital and classified as OCI.  Following the adoption of SFAS 133,
we recorded a charge to OCI of $8.3 million related to the change in fair value
of

                                       8

certain derivative financial instruments that qualified for cash flow hedge
accounting.  The following table reflects comprehensive income for the nine
months ended September 30, 2001 (in thousands):

   Total Comprehensive Income at January 1, 2001                $      -

     Cumulative effect of change in accounting principle            (8,337)
     Reclassification adjustment for settled contracts               2,315
     Changes in fair value of open hedging positions                (5,056)
     Currency translation adjustment                                  (158)
                                                                ----------

   Other Comprehensive Income at September 30, 2001                (11,236)

     Net income for the nine months ended September 30, 2001        35,243
                                                                ----------

   Total Comprehensive Income at September 30, 2001             $   24,007
                                                                ==========

NOTE 5 -- ACQUISITIONS

 Murphy Oil Company Ltd. Midstream Operations

  In May 2001, we closed the acquisition of substantially all of the Canadian
crude oil pipeline, gathering, storage and terminalling assets of Murphy Oil
Company Ltd. for approximately $161 million in cash ("the Murphy Acquisition"),
including financing and transaction costs. Financing for the acquisition was
provided through borrowings under our bank credit facilities. The purchase
included $6.5 million for excess inventory in the pipeline systems. The
principal assets acquired include approximately 450 miles of crude oil and
condensate transmission mainlines (including dual lines on which condensate is
shipped for blending purposes and blended crude is shipped in the opposite
direction) and associated gathering and lateral lines, approximately 1.1 million
barrels of crude oil storage and terminalling capacity located primarily in
Kerrobert, Saskatchewan, approximately 254,000 barrels of pipeline linefill and
tank inventories, an inactive 108-mile mainline system and 121 trailers used
primarily for crude oil transportation. We have reactivated the 108-mile
mainline system and began shipping volumes in May of 2001.

  Murphy agreed to continue to transport production from fields previously
delivering crude oil to these pipeline systems, under a long-term contract. The
current volume under the contract is approximately 11,000 barrels per day. The
pipeline systems currently transport approximately 225,000 barrels per day of
light, medium and heavy crudes, as well as condensate.

  The Murphy Acquisition has been accounted for using the purchase method of
accounting and the purchase price was allocated in accordance with Accounting
Principles Board Opinion No. 16, Business Combinations, ("APB 16"). The purchase
price allocation, which is preliminary and will likely have further refinements
made to it, is as follows (in thousands):

   Crude oil pipeline, gathering and terminal assets      $150,182
   Pipeline linefill                                         7,602
   Net working capital items                                 1,953
   Other property and equipment                                487
   Other assets, including debt issue costs                    360
                                                        ----------
   Total                                                  $160,584
                                                        ==========

 CANPET Energy Group Inc.

  In July 2001, we acquired the assets of CANPET Energy Group Inc. ("CANPET"), a
Calgary-based Canadian crude oil and liquefied petroleum gas marketing company,
for approximately $42.0 million plus excess inventory at the closing date of
approximately $25 million. Approximately $24.0 million of the purchase price
plus the excess inventory was paid in cash at closing, and the remainder, which
is subject to certain performance standards, will be paid in common units in
April 2004 if such standards are met.  CANPET activities include gathering
approximately 75,000 barrels per day of crude oil and

                                       9

marketing an average of approximately 26,000 barrels per day of natural gas
liquids. Tangible assets acquired include a crude oil handling facility, a
130,000-barrel tank facility and working capital of approximately $8.6 million.
Financing for the acquisition was provided through borrowings under our bank
credit facility.

  The Canpet Acquisition has been accounted for using the purchase method of
accounting and the purchase price was allocated in accordance with SFAS 141 (see
Note 9). The purchase price allocation, which is preliminary and will likely
have further refinements made to it, is as follows (in thousands):

       Inventory                                        $28,895
       Other assets, including debt issue costs          11,078
       Pipeline linefill                                  4,144
       Crude oil gathering and terminal assets            4,061
       Other property and equipment                         502
                                                      ---------
       Total                                            $48,680
                                                      =========

 Pro Forma Results for the Murphy and Canpet Acquisitions

  The following unaudited pro forma data is presented to show pro forma
revenues, net income and basic and diluted net income per limited partner unit
for the Partnership as if the Murphy and Canpet acquisitions and the issuance of
3,966,700 units in May and June, 2001 had occurred on January 1, 2000 (in
thousands):

                                                        NINE MONTHS
                                                     ENDED SEPTEMBER 30,
                                                  -------------------------
                                                        2001          2000
                                                  -----------   -----------

 Revenues                                         $ 6,071,353   $ 6,454,750
                                                  ===========   ===========

 Income before extraordinary item
  and cumulative effect of
  accounting change                               $    47,848   $    94,631
                                                  ===========   ===========

 Net income                                       $    48,356   $    79,484
                                                  ===========   ===========
 Basic and diluted income before extraordinary
  item and cumulative effect of accounting
  change per limited partner unit                 $      1.28   $      2.69
                                                  ===========   ===========
 Basic and diluted net income
  per limited partner unit                        $      1.29   $      2.26
                                                  ===========   ===========

NOTE 6 -- CREDIT AGREEMENTS

  In September 2001, we amended and expanded our existing credit facilities to
include a six-year, $200 million term B loan. In connection with the amendment,
we reduced the revolving portion of the facilities by $50 million. Our credit
facilities currently consist of:

    .  a $780.0 million senior secured revolving credit and term loan facility,
       which is secured by substantially all of our assets. The facility
       consists of a $450.0 million domestic revolving facility (reflecting the
       $50 million reduction in such facility in connection with the September
       amendment), with a $10.0 million letter of credit sublimit, a $30.0
       million Canadian revolving facility (with a $5.0 million letter of credit
       sublimit), a $100.0 million term loan and a $200.0 million term B loan.
       The facility matures, as to the aggregate $480.0 million domestic and
       Canadian revolver portions, in April, 2005, as to the $100.0 million term
       portion, in May, 2006, and, as to the $200.0 million term B loan portion,
       September, 2007. On the revolver portions, no principal is scheduled for
       payment prior to maturity; however, if we issue privately-placed or
       public debt, the net proceeds of such debt must be used to repay then-
       outstanding loans under the

                                       10

       domestic revolver, and with the repayment and depending on the face
       amount of such indebtedness, the domestic revolver commitment will be
       reduced by a dollar amount equal to 40% to 50% of the face amount of such
       indebtedness, less the $50 million reduction in the revolver commitment
       in September 2001. The $100 million term loan portion of this facility
       has four scheduled annual payments of principal, commencing May 4, 2002,
       in the respective amounts of 1%, 7%, 8% and 8% of the original term
       principal amount, with the remaining principal balance scheduled for
       payment on the stated maturity date of May 5, 2006. If any part of the
       term portion is prepaid prior to its first anniversary, a 1% premium will
       be due on that portion. The $200 million term B loan has 1% payable
       yearly commencing on September 21, 2002, with the remaining principal
       balance scheduled for payment on the stated maturity date of September
       26, 2007. The term B loan may be prepaid without penalty. The revolving
       credit and term loan facility bears interest at our option at either the
       base rate, as defined, plus an applicable margin, or LIBOR plus an
       applicable margin, and further, the Canadian revolver may effectively
       bear interest based upon bankers' acceptance rates. We incur a commitment
       fee on the unused portion of the revolver portion of this credit
       facility.

    .  a $200.0 million senior secured letter of credit and borrowing facility,
       the purpose of which is to provide standby letters of credit to support
       the purchase and exchange of crude oil and other specified petroleum
       products for resale and borrowings to finance crude oil inventory and
       other specified petroleum products that have been hedged against future
       price risk. The letter of credit facility is secured by substantially all
       of our assets and has a sublimit for cash borrowings of $100.0 million to
       purchase crude oil and other petroleum products that have been hedged
       against future price risk and to fund margin requirements under NYMEX
       contracts used to facilitate our hedging activities. The letter of credit
       facility expires in April, 2004. Aggregate availability under the letter
       of credit facility for direct borrowings and letters of credit is limited
       to a borrowing base that is determined monthly based on certain of our
       current assets and current liabilities, primarily inventory and accounts
       receivable and accounts payable related to the purchase and sale of crude
       oil and other specified petroleum products.

  Our credit facilities prohibit distributions on, or purchases or redemptions
of, units if any default or event of default is continuing. In addition, the
agreements contain various covenants limiting our ability to, among other
things:

    .  incur indebtedness;
    .  grant liens;
    .  sell assets;
    .  make investments;
    .  engage in transactions with affiliates;
    .  enter into prohibited contracts; and
    .  enter into a merger or consolidation.

  Our credit facilities treat a change of control as an event of default and
also require us to maintain:

    .  a current ratio (as defined) of 1.0 to 1.0;
    .  a debt coverage ratio which is not greater than 4.50 to 1 through June
       29, 2002, 4.25 to 1.0 from June 30, 2002 through December 30, 2002 and
       4.0 to 1.0 thereafter;
    .  an interest coverage ratio which is not less than 2.75 to 1.0; and
    .  a debt to capital ratio of not greater than 0.70 to 1.0 prior to December
       31, 2002 and 0.65 to 1.0 thereafter.

  A default under our credit facilities would permit the lenders to accelerate
the maturity of the outstanding debt and to foreclose on the assets securing the
credit facilities. As long as we are in compliance with our commercial credit
agreements, they do not restrict our ability to make distributions of "available
cash" as defined in our partnership agreement. We are currently in compliance
with the covenants contained in our credit agreements.

NOTE 7 -- DISTRIBUTIONS

  On February 14, 2001, we paid a cash distribution of $0.4625 per unit on our
outstanding common units, Class B units and subordinated units. The distribution
was paid to unitholders of record on February 2, 2001 for the period October 1,
2000 through December 31, 2000. The total distribution paid was approximately
$16.3 million, with approximately $7.5 million paid to our public unitholders
and the remainder paid to our prior general partner for its limited partner,
general partner and incentive distribution interests. The distribution was in
excess of the minimum quarterly distribution specified in the Partnership
Agreement.

                                       11

  On May 15, 2001, we paid a cash distribution of $0.475 per unit on our
outstanding common units, Class B units and subordinated units. The distribution
was paid to unitholders of record on May 3, 2001 for the period January 1, 2001
through March 31, 2001. The total distribution paid was approximately $16.8
million, with approximately $7.7 million paid to our public unitholders and the
remainder to our prior general partner for its limited partner, general partner
and incentive distribution interests.

  On August 14, 2001, we paid a cash distribution of $0.50 per unit on our
outstanding common units, Class B units and subordinated units. The distribution
was paid to unitholders of record on August 3, 2001, for the period April 1,
2001 through June 30, 2001.  The total distribution paid was approximately $19.9
million, with approximately $13.5 million paid to our common unitholders, $0.7
million to our Class B common unitholders, $5.0 million to our subordinated
unitholders (including approximately $0.2 million to our general partner), and
the remainder to our general partner for its general partner and incentive
distribution interests.

  On October 18, 2001, we declared a cash distribution of $0.5125 per unit on
our outstanding common units, Class B units and subordinated units. The
distribution is payable on November 14, 2001 to holders of record on November 2,
2001.  The total distribution to be paid is approximately $22.9 million, with
approximately $16.2 million to be paid to our common unitholders, $0.7 million
to our Class B common unitholders, $5.1 million to our subordinated unitholders
(including approximately $0.2 million to our general partner), and the remainder
to be paid to our general partner for its general partner and incentive
distribution interests.

NOTE 8 -- OPERATING SEGMENTS

  Our operations consist of two operating segments: (1) Pipeline Operations -
engages in interstate and intrastate crude oil pipeline transportation and
related merchant activities; (2) Gathering, Marketing, Terminalling and Storage
Operations - engages in purchases and resales of crude oil at various points
along the distribution chain and the leasing of terminalling and storage
facilities.

                                                                    GATHERING,
                                                                    MARKETING,
                                                                   TERMINALLING,
(IN THOUSANDS) (UNAUDITED)                            PIPELINE       & STORAGE        TOTAL
- -----------------------------------------------------------------------------------------------
THREE MONTHS ENDED SEPTEMBER 30, 2001
                                                                         
Revenues:
  External Customers                                  $ 88,829     $   2,102,481     $2,191,310
  Intersegment  (a)                                      4,491               873          5,364
  Other revenue (expense)                                    -                (9)            (9)
                                                    -----------   --------------   -------------
    Total revenues of reportable segments             $ 93,320     $   2,103,345     $2,196,665
                                                    ===========   ==============   =============
Segment gross margin (b)                              $ 16,089     $      23,555     $   39,644
Segment gross profit (c)                                13,971            15,376         29,347
Income allocated to reportable segments (d)              5,460             9,701         15,161
Noncash compensation expense                               n/a               n/a              -
                                                    -----------   --------------   -------------
Income before extraordinary item and cumulative
 effect of accounting change                               n/a               n/a     $   15,161
                                                    ===========   ==============   =============
Total assets                                          $450,047     $     849,046     $1,299,093
- -----------------------------------------------------------------------------------------------
THREE MONTHS ENDED SEPTEMBER 30, 2000
Revenues:
  External Customers                                  $ 93,226     $   1,462,637     $1,555,863
  Intersegment  (a)                                      4,752                 -          4,752
  Other revenue (expense)                                   (6)              300            294
                                                    -----------   --------------   -------------
    Total revenues of reportable segments             $ 97,972     $   1,462,937     $1,560,909
                                                    ===========   ==============   =============
Segment gross margin (b)                              $ 11,886     $      14,074     $   25,960
Segment gross profit (c)                                11,865             6,322         18,187
Income (loss) allocated to reportable segments (d)      10,396            (3,742)         6,654
Noncash compensation expense                               n/a               n/a          2,138
                                                    -----------   --------------   -------------
Income before extraordinary item and cumulative
 effect of accounting change                               n/a               n/a     $    4,516
                                                    ===========   ==============   =============
Total assets                                          $319,211     $     567,630     $  886,841
- ------------------------------------------------------------------------------------------------
                                                                    Table continued on following page

                                       12

                                                                    GATHERING,
                                                                    MARKETING,
                                                                   TERMINALLING,
(IN THOUSANDS) (UNAUDITED)                            PIPELINE       & STORAGE        TOTAL
- -----------------------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2001
                                                                         
Revenues:
  External Customers                                $268,682      $    5,029,369    $5,298,051
  Intersegment  (a)                                   12,966               2,118        15,084
  Other revenue                                            -                 356           356
                                                    -----------   --------------   -------------
    Total revenues of reportable segments           $281,648      $    5,031,843    $5,313,491
                                                    ===========   ==============   =============
Segment gross margin (b)                            $ 48,247      $       60,516    $  108,763
Segment gross profit (c)                              44,639              35,538        80,177
Income allocated to reportable segments (d)           26,439              14,037        40,476
Noncash compensation expense                             n/a                 n/a         5,741
                                                    -----------   --------------   -------------
Income before extraordinary item and cumulative
 effect of accounting change                             n/a                 n/a    $   34,735
                                                    ===========   ==============   =============
Total assets                                        $450,047      $      849,046    $1,299,093
- -----------------------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2000
Revenues:
  External Customers                                $379,806      $    4,660,398    $5,040,204
  Intersegment  (a)                                   65,250                   -        65,250
  Other revenue                                        9,673               1,152        10,825
                                                    -----------   --------------   -------------
    Total revenues of reportable segments           $454,729      $    4,661,550    $5,116,279
                                                    ===========   ==============   =============
Gain on sale of assets                              $ 48,188      $            -    $   48,188
Segment gross margin (b)                              37,802              57,484        95,286
Segment gross profit (c)                              36,158              34,911        71,069
Income allocated to reportable segments (d)           83,503               4,645        88,148
Noncash compensation expense                             n/a                 n/a         2,269
                                                    -----------   --------------   -------------
Income before extraordinary item and cumulative
effect of accounting change                              n/a                 n/a    $   85,879
                                                    ===========   ==============   =============
Total assets                                        $319,211      $      567,630    $  886,841
- -----------------------------------------------------------------------------------------------

a)  Intersegment sales were conducted on an arm's length basis.
b)  Gross margin is calculated as revenues less cost of sales and operations
    expenses.
c)  Gross profit is calculated as revenues less costs of sales and operations
    expenses and general and administrative expenses, excluding noncash
    compensation expense.
d)  Excludes noncash compensation expense, as it is not allocated to the
    reportable segments.

NOTE 9 -- ACCOUNTING PRONOUNCEMENTS

  In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards No. 141 "Business Combinations"
("SFAS 141") and No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142").
SFAS 141 requires all business combinations initiated after June 30, 2001, to be
accounted for under the purchase method.  For all business combinations for
which the date of acquisition is after June 30, 2001 (including the Canpet
acquisition, see Note 5), this Standard also establishes specific criteria for
the recognition of intangible assets separately from goodwill and requires
unallocated negative goodwill to be written off immediately as an extraordinary
gain, rather than deferred and amortized.  SFAS 142 changes the accounting for
goodwill and other intangible assets after an acquisition.  The most significant
changes made by SFAS 142 are:  1) goodwill and intangible assets with indefinite
lives will no longer be amortized; 2) goodwill and intangible assets with
indefinite lives must be tested for impairment at least annually; and 3) the
amortization period for intangible assets with finite lives will no longer be
limited to forty years. We believe that the adoption of this Standard will not
have a material effect on either our financial position, results of operations,
or cash flows.

  We will account for all future business combinations under SFAS 141.
Effective January 1, 2002, we will adopt SFAS 142, as required.  At that time,
amortization will cease on the unamortized portion of the goodwill arising from
the Scurlock acquisition.

                                       13

  In June 2001, the FASB also issued SFAS 143 "Asset Retirement Obligations".
SFAS 143 establishes accounting requirements for retirement obligations
associated with tangible long-lived assets, including (1) the timing of the
liability recognition, (2) initial measurement of the liability, (3) allocation
of asset retirement cost to expense, (4) subsequent measurement of the liability
and (5) financial statement disclosures.  SFAS 143 requires that an asset
retirement cost should be capitalized as part of the cost of the related long-
lived asset and subsequently allocated to expense using a systematic and
rational method.  We will adopt the statement effective January 1, 2003, as
required.  The transition adjustment resulting from the adoption of SFAS 143
will be reported as a cumulative effect of a change in accounting principle.  At
this time, we cannot reasonably estimate the effect of the adoption of this
statement on either our financial position, results of operations, or cash
flows.

  In August 2001, the FASB approved SFAS No. 144, "Accounting for Impairment or
Disposal of Long-Lived Assets". SFAS 144 establishes a single accounting model
for long-lived assets to be disposed of by sale and provides additional
implementation guidance for assets to be held and used and assets to be disposed
of other than by sale. At this time, we cannot reasonably estimate the effect of
the adoption of this statement on either our financial position, results of
operations, or cash flows. We will adopt the Statement effective January 1,
2002.

NOTE 10 -- CONTINGENCIES

  During 1997, the All American Pipeline experienced a leak in a segment of its
pipeline in California that resulted in an estimated 12,000 barrels of crude oil
being released into the soil. Immediate action was taken to repair the pipeline
leak, contain the spill and to recover the released crude oil. We have expended
approximately $400,000 to date in connection with this spill.  We do not expect
additional costs related to this site to exceed $350,000, although we can
provide no assurances in that regard.

  Prior to being acquired by our predecessor in 1996, the Ingleside Terminal
experienced releases of refined petroleum products into the soil and groundwater
underlying the site due to activities on the property. We are undertaking a
voluntary state-administered remediation of the contamination on the property.
We have spent approximately $145,000 to date in investigating the contamination
at this site. We do not anticipate the total additional costs related to this
site to exceed $250,000, although no assurance can be given that the actual cost
could not exceed such estimate.

 Litigation

  Texas Securities Litigation. On November 29, 1999, a class action lawsuit was
filed in the United States District Court for the Southern District of Texas
entitled Di Giacomo v. Plains All American Pipeline, L.P., et al. The suit
alleged that Plains All American and certain of the officers and directors of
Plains All American Inc. (our general partner at the time) violated federal
securities laws, primarily in connection with unauthorized trading by a former
employee. An additional nineteen cases were filed in the Southern District of
Texas, some of which name Plains All American Inc. and Plains Resources as
additional defendants. All of the federal securities claims have been
consolidated into two actions. The first consolidated action is that filed by
purchasers of Plains Resources' common stock and options, and is captioned
Koplovitz v. Plains Resources Inc., et al. The second consolidated action is
that filed by purchasers of our common units, and is captioned Di Giacomo v.
Plains All American Pipeline, L.P., et al. Plaintiffs alleged that the
defendants were liable for securities fraud violations under Rule 10b-5 and
Section 20(a) of the Securities Exchange Act of 1934 and for making false
registration statements under Sections 11 and 15 of the Securities Act of 1933.

  We and Plains Resources reached an agreement with representatives for the
plaintiffs for the settlement of all of the class actions, and in January 2001,
we deposited approximately $30.0 million under the terms of the settlement
agreement into an escrow account on behalf of the class. The total cost of the
settlement to us and Plains Resources, including interest and expenses and after
insurance reimbursements, was $14.9 million. Of that amount, $1.0 million was
allocated to Plains Resources by agreement between special independent
committees of the board of directors of Plains All American Inc. and the board
of directors of Plains Resources. The settlement is subject to final approval by
the court. The settlement agreement does not affect the Texas Derivative
Litigation and Delaware Derivative Litigation described below.

  Delaware Derivative Litigation. On December 3, 1999, two derivative lawsuits
were filed in the Delaware Chancery Court, New Castle County, entitled Susser v.
Plains All American Inc., et al and Senderowitz v. Plains All American Inc., et
al. These suits, and three others which were filed in Delaware subsequently,
named Plains All American Inc., its directors and certain of its officers as
defendants, and allege that the defendants breached the fiduciary duties that
they owed to Plains All American Pipeline, L.P. and its unitholders by failing
to monitor properly the activities of its employees. The court has consolidated
all of the cases under the caption In Re Plains All American Inc. Shareholders
Litigation, and has designated the

                                       14

complaint filed in Susser v. Plains All American Inc. as the complaint in the
consolidated action. A motion to dismiss was filed on behalf of the defendants
on August 11, 2000.

  The plaintiffs in the Delaware derivative litigation seek that the defendants

  .  account for all losses and damages allegedly sustained by Plains All
     American from the unauthorized trading losses;

  .  establish and maintain effective internal controls ensuring that our
     affiliates and persons responsible for our affairs do not engage in
     wrongful practices detrimental to Plains All American;

  .  pay for the plaintiffs' costs and expenses in the litigation, including
     reasonable attorneys' fees, accountants' fees and experts' fees, and

  .  provide the plaintiffs any additional relief as may be just and proper
     under the circumstances.

  We have reached an agreement in principle with the plaintiffs, subject to
approval by the Delaware court, to settle the Delaware litigation for
approximately $1.1 million.

  Texas Derivative Litigation. On July 11, 2000, a derivative lawsuit was filed
in the United States District Court of the Southern District of Texas entitled
Fernandes v. Plains All American Inc., et al, naming Plains All American Inc.,
its directors and certain of its officers as defendants. This lawsuit contains
the same claims and seeks the same relief as the Delaware derivative litigation,
described above. A motion to dismiss was filed on behalf of the defendants on
August 14, 2000.

  We intend to vigorously defend the claims made in the Texas derivative
litigation. We believe that Delaware court approval of the settlement of the
Delaware derivative litigation will effectively preclude prosecution of the
Texas derivative litigation. However, there can be no assurance that we will be
successful in our defense or that this lawsuit will not have a material adverse
effect on our financial condition, results of operations or cash flows.

  We, in the ordinary course of business, are a claimant and/or a defendant in
various other legal proceedings. Management does not believe that the outcome of
these other legal proceedings, individually and in the aggregate, will have a
materially adverse effect on our financial condition, results of operations or
cash flows.

                                       15

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

OVERVIEW

  We are a Delaware limited partnership that was formed in September of 1998 to
acquire and operate the midstream crude oil business and assets of Plains
Resources Inc. and its wholly owned subsidiaries. On November 23, 1998, we
completed our initial public offering and the transactions whereby we became the
successor to the business of the midstream subsidiaries of Plains Resources. Our
operations are conducted through Plains Marketing, L.P., All American Pipeline,
L.P. and Plains Marketing Canada, L.P. We are engaged in interstate and
intrastate transportation, marketing, and terminalling of crude oil. Our
operations are conducted primarily in Texas, California, Oklahoma, Louisiana,
the Gulf of Mexico and the Canadian Provinces of Alberta and Saskatchewan.

  Pipeline Operations. Our activities from pipeline operations generally consist
of transporting third-party volumes of crude oil for a tariff and merchant
activities designed to capture price differentials between the cost to purchase
and transport crude oil to a sales point and the price received for such crude
oil at the sales point. Tariffs on our pipeline systems vary by receipt point
and delivery point. The gross margin generated by our tariff activities depends
on the volumes transported on the pipeline and the level of the tariff charged,
as well as the fixed and variable costs of operating the pipeline. Our ability
to generate a profit on margin activities is not tied to the absolute level of
crude oil prices but is generated by the difference between an index-related
price paid and other costs incurred in the purchase of crude oil and an index-
related price at which we sell crude oil. We are well positioned to take
advantage of these price differentials due to our ability to move purchased
volumes on our pipeline systems. We combine reporting of gross margin for tariff
activities and margin activities due to the sharing of fixed costs between the
two activities.

  Terminalling and Storage Activities and Gathering and Marketing Activities.
Gross margin from terminalling and storage activities is dependent on the
throughput volume of crude oil stored and the level of fees generated at our
terminalling and storage facilities. Gross margin from our gathering and
marketing activities is dependent on our ability to sell crude oil at a price in
excess of our aggregate cost. These operations are not directly affected by the
absolute level of crude oil prices, but are affected by overall levels of supply
and demand for crude oil and fluctuations in market related indices.

RECENT EVENTS

  Murphy Oil Company Ltd. Midstream Operations. In May 2001, we closed the
acquisition of substantially all of the Canadian crude oil pipeline, gathering,
storage and terminalling assets of Murphy Oil Company Ltd. for approximately
$161 million in cash (the "Murphy Acquisition"), including financing and
transaction costs.  The purchase included $6.5 million for excess inventory in
the pipeline systems.  The principal assets acquired included approximately 450
miles of crude oil and condensate transmission mainlines (including dual lines
on which condensate is shipped for blending purposes and blended crude is
shipped in the opposite direction) and associated gathering and lateral lines,
approximately 1.1 million barrels of crude oil storage and terminalling capacity
located primarily in Kerrobert, Saskatchewan, approximately 254,000 barrels of
linefill and tank inventories, an inactive 108-mile mainline system and 121
trailers used primarily for crude oil transportation. We have reactivated the
108-mile mainline system and began shipping volumes in May of 2001.

  Murphy agreed to continue to transport production from fields currently
delivering crude oil to these pipeline systems, under a long-term contract. The
current volume under the contract is approximately 11,000 barrels per day. The
pipeline systems currently transport approximately 225,000 barrels per day of
light, medium and heavy crudes, as well as condensate.

  CANPET Energy Group Inc.  In July 2001, we acquired the assets of CANPET
Energy Group Inc. ("CANPET") a Calgary based Canadian crude oil and liquefied
petroleum gas marketing company, for approximately $42.0 million plus excess
inventory at the closing date of approximately $25 million.  Approximately $24.0
million of the purchase price plus the excess inventory was paid in cash at
closing and the remainder, which is subject to certain performance standards,
will be paid in common units in April, 2004, if such standards are met.  CANPET
activities include gathering approximately 75,000 barrels per day of crude oil
and marketing approximately 26,000 barrels per day of natural gas liquids.
Tangible assets acquired included a crude oil handling facility, a 130,000-
barrel tank facility and working capital of approximately $8.6 million.
Financing for the acquisition was provided through borrowings under our bank
credit facility.

                                       16

RESULTS OF OPERATIONS

 Three Months Ended September 30, 2001 and 2000

  For the three months ended September 30, 2001, we reported net income of $15.2
million on total revenue of $2.2 billion compared to net income for the same
period in 2000 of $4.5 million on total revenues of $1.6 billion. The results
for the three months ended September 30, 2000 included the following unusual
items:

     .  $6.6 million charge for litigation costs related to the unauthorized
        trading losses, and
     .  $2.1 million of noncash compensation expense.

  Excluding the items noted above, we would have reported net income of $13.3
million for the three months ended September 30, 2000.

  The following table sets forth our operating results for the periods indicated
and includes the impact of the items discussed above (in thousands):

                                           THREE MONTHS ENDED
                                              September 30,
                                         ----------------------
                                            2001          2000
                                         ----------    ---------

Operating Results:
 Revenues                                $2,191,310     $1,555,863
                                         ==========     ==========
 Gross margin:
  Pipeline                               $   16,089     $   11,886
  Gathering and marketing
   and terminalling and storage              23,555         20,674
  Unauthorized trading losses                     -         (6,600)
                                         ----------     ----------
     Total                                   39,644         25,960

 General and administrative expense         (10,297)        (9,911)
                                         ----------     ----------
 Gross profit                            $   29,347     $   16,049
                                         ==========     ==========
 Net income                              $   15,161     $    4,516
                                         ==========     ==========
AVERAGE DAILY VOLUMES (MBBLS/DAY):
 Pipeline Activities:
  All American
   Tariff activities                             68             76
   Margin activities                             53             55
  Canada                                        225              -
  Other                                         113            100
                                         ----------     ----------
     Total                                      459            231
                                         ==========     ==========
 Lease gathering                                391            258
 Bulk purchases                                  55             28
                                         ----------     ----------
  Total                                         446            286
                                         ==========     ==========
 Terminal throughput                             97             81
                                         ==========     ==========
 Storage leased to third parties,
  monthly average volumes                     2,672          1,687
                                         ==========     ==========

  Revenues. Revenues increased to $2.2 billion for the third quarter of 2001
compared to the 2000 third quarter amount of $1.6 billion.  The increase is
primarily attributable to our Canadian acquisitions.

  Cost of Sales and Operations. Cost of sales and operations increased to $2.1
billion in the third quarter of 2001 compared to $1.5 billion in the same
quarter of 2000. The increase is primarily due to our Canadian acquisitions and
an increase in fuel and power expenses.

                                       17

  General and Administrative. General and administrative expenses were $10.3
million for the quarter ended September 30, 2001, compared to $9.9 million for
the third quarter in 2000. The increase in 2001 is primarily due to our Canadian
acquisitions as well as additional salary expenses related to the reorganization
of our general partner.

  Depreciation and Amortization. Depreciation and amortization expense was $6.4
million for the quarter ended September 30, 2001, compared to $5.3 million for
the third quarter of 2000. The increase is a result of our Canadian
acquisitions.

  Interest expense. Interest expense was $7.8 million for the quarter ended
September 30, 2001, compared to $6.5 million for the third quarter in 2000.  An
increased average debt balance in the current quarter, primarily due to our
Canadian acquisitions, was partially offset by lower interest rates.

  Unauthorized trading losses.  In the third quarter of 2000, we recognized a
$6.6 million charge, in addition to prior accruals, for litigation expenses
related to the unauthorized trading losses.

  Noncash compensation expense. We recognized noncash compensation expense of
$2.1 million in the third quarter of 2000 related to the probable vesting of
partnership units granted by our general partner to certain officers and key
employees of our general partner and its affiliates.

 Segment Results

  Pipeline Operations. Gross margin from pipeline operations was $16.1 million
for the quarter ended September 30, 2001 compared to $11.9 million for the prior
year quarter. The majority of the increase is attributable to our recently
acquired Canadian operations as well as an increase in tariffs and volumes
shipped on our domestic pipelines. Because of increased fuel and power costs in
2001, we expect the tariff on the All American Pipeline to increase effective
January 1, 2002, although we can make no assurance in that regard.

  Average daily pipeline volumes totaled 459,000 barrels per day and 231,000
barrels per day for the third quarter of 2001 and 2000, respectively. The volume
increase is primarily due to our Canadian acquisitions. Tariff volumes on
domestic pipelines increased a net 5,000 barrels per day. Volumes on the
Scurlock and West Texas Gathering systems increased 13,000 barrels per day to
113,000 barrels per day from 100,000 barrels per day.  Volumes on the All
American Pipeline decreased approximately 8,000 barrels per day.  Despite this
decrease, revenues from the All American Pipeline volumes have remained
approximately flat due to a tariff increase that was effective at the beginning
of 2001.

  Gathering and Marketing Activities and Terminalling and Storage Activities.
Gross margin from gathering, marketing, terminalling, and storage was adversely
impacted by market conditions during the third quarter and higher operating
costs, including fuel and power expenses. Despite this, gross margin from
gathering, marketing, terminalling and storage activities was approximately
$23.5 million for the quarter ended September 30, 2001, a 14% increase as
compared to $20.7 million in the prior year quarter (excluding the unauthorized
trading losses). This increase is primarily due to our Canadian acquisitions, as
well as increased storage and throughput at our Cushing Terminal.

  Lease gathering volumes increased to approximately 391,000 barrels per day in
the current year period from an average of 258,000 barrels per day in the third
quarter of 2000. Bulk purchase volumes increased from approximately 28,000
barrels per day in the 2000 third quarter to approximately 55,000 barrels per
day in the current year period.  Our Canadian acquisitions accounted for 110,000
barrels per day and 34,000 barrels per day of the increase in lease gathered and
bulk volumes, respectively.

  Terminal throughput, which includes both our Cushing and Ingleside terminals,
increased to 97,200 barrels per day from 81,400 barrels per day in the third
quarter of last year.  Storage leased to third parties increased to 2.7 million
barrels compared to 1.7 million barrels in the previous year's quarter.

 Nine Months Ended September 30, 2001 and 2000

  For the nine months ended September 30, 2001, we reported net income of $35.2
million on total revenue of $5.3 billion, compared to net income for the same
period in 2000 of $70.7 million on total revenues of $5.0 billion. The results
for the nine months ended September 30, 2001 and 2000 include the following
unusual items:

  2001
     .  a $6.1 million charge associated with the vesting of phantom partnership
        units primarily as a result of the change in our general partner in
        June, 2001. Approximately $5.7 million of the charge

                                       18

        (included in general and administrative expenses) was noncash and was
        satisfied by units owned by our former general partner. This portion of
        the charge had no impact on equity or the number of outstanding units as
        it was offset by a deemed capital contribution by our former general
        partner and the units were satisfied by units owned by our former
        general partner, and

     .  a $0.5 million cumulative effect gain as a result of the adoption of
        Statement of Financial Accounting Standards No. 133, "Accounting for
        Derivative Instruments and Hedging Activities" ("SFAS 133").

  2000
     .  a $28.1 million gain on the sale of crude oil linefill;
     .  a $20.1 million gain on the sale of the segment of the All American
        Pipeline that extends from Emidio, California, to McCamey, Texas;
     .  $9.7 million of previously deferred gains on interest rate swap
        terminations recognized due to the early extinguishment of debt;
     .  an extraordinary loss of $15.1 million related to the early
        extinguishment of debt;
     .  $6.6 million charge for litigation related to the unauthorized trading
        losses;
     .  amortization of $4.6 million of debt issue costs associated with
        facilities put in place during the fourth quarter of 1999, and
     .  $2.3 million of noncash compensation expense.

  Excluding the items noted above, we would have reported net income of $40.8
million and $41.4 million for the nine months ended September 30, 2001 and 2000,
respectively.

  The following table sets forth our operating results for the periods indicated
and includes the impact of the items discussed above (in thousands):

                                             NINE MONTHS ENDED
                                                SEPTEMBER 30,
                                            -------------------
                                            2001           2000
                                            ----           ----

OPERATING RESULTS:
Revenues                                 $5,298,051     $5,040,204
                                         ==========     ==========
Gross margin:
 Pipeline                                $   48,247     $   37,802
 Gathering and marketing
  and terminalling and storage               60,516         64,084
 Unauthorized trading losses                      -         (6,600)
                                         ----------     ----------
   Total                                    108,763         95,286

General and administrative expense          (34,327)       (26,486)
                                         ----------     ----------
Gross profit                             $   74,436     $   68,800
                                         ==========     ==========
Net income                               $   35,243     $   70,732
                                         ==========     ==========

                                           Table continued on following page

                                       19

                                        NINE MONTHS ENDED
                                           SEPTEMBER 30,
                                        -----------------
                                         2001       2000
                                        ------     ------

AVERAGE DAILY VOLUMES (MBBLS/DAY):
 Pipeline Activities:
  All American
   Tariff activities                         68      74
   Margin activities                         58      57
 Canada (a)                                 217       -
 Other                                      128     106
                                          -----   -----
    Total                                   471     237
                                          =====   =====
 Lease gathering (a)                        359     259
 Bulk purchases                              49      28
                                          -----   -----
    Total                                   408     287
                                          =====   =====
 Terminal throughput                        103      64
                                          =====   =====
 Storage leased to third parties,
  monthly average volumes                 2,337   1,489
                                          =====   =====

______________

a)  Reflects the calculation of barrels per day applicable to our Canadian
    acquisitions as of the effective dates of those transactions.

  Revenues. Revenues increased to $5.3 billion from $5.0 billion in the first
nine months of 2000. The increase is primarily due to our Canadian acquisitions,
which was partially offset by lower crude oil prices.

  Cost of Sales and Operations. Cost of sales and operations increased to $5.2
billion from $4.9 billion in the first nine months of 2000. The increase is
primarily due to the reasons discussed above under "Revenues".

  General and Administrative. General and administrative expenses were $34.3
million for the nine months ended September 30, 2001, compared to $26.5 million
for the same period in 2000. The increase in 2001 is primarily due to the
Canadian acquisitions and a $6.1 million charge attributable to the vesting of
phantom partnership units in the second quarter as a result of the change in our
general partner in June, 2001.  Approximately $5.7 million of the charge was
noncash and was satisfied by units owned by our former general partner.  This
portion of the charge had no impact on partners' capital or the number of
outstanding units as it was offset by a deemed capital contribution by our
former general partner.  Approximately $2.3 million of similar charges were
reported in the nine month period of 2000.

  Depreciation and Amortization. Depreciation and amortization expense was $17.6
million for the nine months ended September 30, 2001, compared to $20.1 million
for the first nine months of 2000. The decrease is primarily due to the
increased amortization of debt issue costs in the 2000 period associated with
facilities put in place during the fourth quarter of 1999 as a result of the
unauthorized trading losses.  Approximately $3.8 million of depreciation and
amortization in the current year period is attributable to our Canadian
acquisitions.

  Interest expense. Interest expense was $22.5 million for the nine months ended
September 30, 2001, compared to $21.8 million for the same period in 2000. The
increase is primarily due to a higher average debt balance in 2001 resulting
from our acquisitions.

  Unauthorized trading losses. In the third quarter of 2000, we recognized a
$6.6 million charge, in addition to prior accruals, for litigation expenses
related to the unauthorized trading losses.

  Gain on sale of linefill. We initiated the sale of 5.2 million barrels of
crude oil linefill from the All American Pipeline in November 1999. The sale was
completed in March 2000. We recognized a gain of $28.1 million in connection
with the sale of the linefill in the first quarter of 2000.

  Gain on sale of pipeline segment. On March 24, 2000, we completed the sale of
the segment of the All American Pipeline that extends from Emidio, California to
McCamey, Texas to a unit of El Paso Energy Corporation for

                                       20

proceeds of approximately $124.0 million, which are net of associated
transaction costs and estimated costs to remove certain equipment. We recognized
a total gain of $20.1 million in connection with the sale in the first quarter
of 2000.

  Early extinguishment of debt. During the nine months ended September 30, 2000,
we recognized extraordinary losses, consisting primarily of unamortized debt
issue costs, totaling $15.1 million related to the permanent reduction of the
All American Pipeline, L.P. term loan facility and the refinancing of our credit
facilities. In addition, interest and other income for the nine months ended
September 30, 2000, includes $9.7 million of previously deferred gains from
terminated interest rate swaps as a result of the debt extinguishments.

  Cumulative effect of accounting change. During the first quarter of 2001, we
recognized a $0.5 million cumulative effect gain as a result of the adoption of
SFAS 133 effective January 1, 2001.

 Segment Results

  Pipeline Operations. Gross margin from pipeline operations was $48.2 million
for the nine months ended September 30, 2001 compared to $37.8 million for the
prior year period. The majority of the increase is attributable to our recently
acquired Canadian operations.

  Average daily pipeline volumes totaled 471,000 barrels per day and 237,000
barrels per day for the first nine months of 2001 and 2000, respectively. Our
Canadian acquisitions contributed 217,000 barrels per day of the increase.
Canadian volumes are included from the effective date of the acquisition, which
was April 1, 2001.  All American's tariff volumes attributable to offshore
California production were approximately 68,000 barrels per day for the nine
months ended September 30, 2001 compared to 74,000 barrels per day in the prior
year period, with the associated revenues remaining relatively flat due to the
tariff increase that was effective January 1, 2001. Tariff volumes shipped on
the Scurlock and West Texas gathering systems averaged 127,000 barrels per day
and 106,000 barrels per day during the first nine months of 2001 and 2000,
respectively.

  Gathering and Marketing Activities and Terminalling and Storage Activities.
Gross margin from gathering, marketing, terminalling and storage activities was
approximately $60.5 million for the nine months ended September 30, 2001
compared to $64.1 million (excluding the unauthorized trading losses) in the
prior year period.  Despite an increase in margin due to our Canadian
operations, total margin decreased due to adverse market conditions and higher
operating costs, including increased fuel and power costs.

  Lease gathering volumes increased from an average of 259,000 barrels per day
for the first nine months of 2000 to approximately 359,000 barrels per day for
the 2001 period due to our Canadian acquisitions, which contributed
approximately 75,000 barrels per day.  Canadian volumes are included from the
effective dates of the Murphy and Canpet acquisitions.  Bulk purchase volumes
increased from approximately 28,000 barrels per day for the first nine months of
2000 to approximately 49,000 barrels per day in the current year period, also
due to the Canadian acquisitions.  Terminal throughput, which includes both our
Cushing and Ingleside terminals, was 103,000 and 64,000 barrels per day for the
nine months ended September 30, 2001 and 2000, respectively. Storage leased to
third parties was 2.3 million barrels per month and 1.5 million barrels per
month for the same periods, respectively.

LIQUIDITY AND CAPITAL RESOURCES

 Credit Agreements

  In September 2001, we amended and expanded our existing credit facilities to
include a six-year, $200 million term B loan. In connection with the amendment,
we reduced the revolving portion of the facilities by $50 million. Our credit
facilities currently consist of a $200 million senior secured letter of credit
and borrowing facility, and a $780.0 million senior secured revolving credit and
term loan facility, each of which is secured by substantially all of our assets.
The revolving credit and term loan facility consists of a $450.0 million
domestic revolving facility (with a $10.0 million letter of credit sublimit), a
$30.0 million Canadian revolving facility (with a $5.0 million letter of credit
sublimit), a $100.0 million term loan, and a $200.0 million term B loan. The
facility matures, as to the aggregate $480.0 million domestic and Canadian
revolver portions, in April, 2005, as to the $100.0 million term portion, in
May, 2006 and as to the $200.0 million term B loan in September 2007. For a
complete discussion of our credit facilities, see Note 6 to the Consolidated
Financial Statements.

 Equity Offerings

  On October 31, 2001, we completed a public offering of 4,500,000 common units.
Net cash proceeds from the offering, including our general partner's
proportionate contribution, were approximately $116 million. On November 13,
2001, the underwriters in the offering exercised their overallotment option and
purchased an additional 400,000 units for net cash proceeds of approximately
$10.8 million. This offering is in addition to the 3,966,700 units issued in May
and June 2001 which resulted in net proceeds of $100.7 million, including our
general partner's proportionate contribution. Proceeds from both offerings were
used to repay borrowings under our revolving credit facility, a portion of which
was used to finance our Canadian acquisitions (see Note 5 to the Consolidated
Financial Statements).

 Liquidity

  Cash generated from operations, credit facilities, and equity offerings are
our primary sources of liquidity. At September 30, 2001, we had working capital
of approximately $62.0 million. On November 7, 2001, PAA had approximately $350
million

                                       21

outstanding under its $780 million of credit facilities (excluding the
letter of credit and borrowing facility).  Accordingly, our liquidity under our
credit facilities is $430 million, subject to covenants contained in the
agreement.

  We believe that we have sufficient liquid assets, cash from operations and
borrowing capacity under our credit agreements to meet our financial
commitments, debt service obligations, contingencies and anticipated capital
expenditures.

Cash Flows

                                           NINE MONTHS ENDED
                                               SEPTEMBER 30,
                                           -----------------
(IN MILLIONS) (UNAUDITED)                   2001       2000
- ------------------------------------------------------------
Cash provided by (used in):
Operating activities                       $   5.5    $  (7.5)
Investing activities                        (221.3)     216.4
Financing activities                         216.2     (259.4)
- -------------------------------------------------------------

  Operating Activities. Net cash provided by operating activities for the first
nine months of 2001 includes the effect of our normal operations, Canadian
acquisitions and Contango inventory transactions.

  Investing Activities. Net cash used for investing activities for the first
nine months of 2001 included approximately $209 million for the Canadian
acquisitions which occurred in the second and third quarters.

  Financing activities. Net cash provided by financing activities for the first
nine months of 2001 resulted from our credit facilities that were used to
finance the Murphy and Canpet acquisitions and the issuance of additional units
which raised approximately $100.7 million of equity capital.   Proceeds from the
equity offering were used to repay indebtedness under the credit facilities.

 Contingencies

  Following our announcement in November 1999 of our losses resulting from
unauthorized trading by a former employee, numerous class action lawsuits were
filed in the United States District Court of the Southern District of Texas
against us, certain of the officers and directors of Plains All American Inc.
(our general partner at the time) and in some of these cases, our former general
partner and Plains Resources Inc., alleging violations of the federal securities
laws.  In addition, derivative lawsuits were filed in the Delaware Chancery
Court and the United States District Court of the Southern District of Texas
against our former general partner, its directors and certain of its officers
alleging the defendants breached the fiduciary duties owed to us and our
unitholders by failing to monitor properly the activities of our traders.  The
class actions and the Delaware derivative suits have been settled, subject to
court approval.  See Part II, Item 1 - "Legal Proceedings".

  We may experience future releases of crude oil into the environment from our
pipeline and storage operations, or discover releases that were previously
unidentified.  Although we maintain an extensive inspection program designed to
prevent and, as applicable, to detect and address such releases promptly,
damages and liabilities incurred due to any future environmental releases from
our assets may substantially affect our business.

ACCOUNTING PRONOUNCEMENTS

  In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards No. 141 "Business Combinations"
("SFAS 141") and No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142").
SFAS 141 requires all business combinations initiated after June 30, 2001
(including the Canpet acquisition, see Note 5), to be accounted for under the
purchase method.  For all business combinations for which the date of
acquisition is after June 30, 2001, this Standard also establishes specific
criteria for the recognition of intangible assets separately from goodwill and
requires unallocated negative goodwill to be written off immediately as an
extraordinary gain, rather than deferred and amortized.  SFAS 142 changes the
accounting for goodwill and other intangible assets after an acquisition.  The
most significant changes made by SFAS 142 are:  1) goodwill and intangible
assets with indefinite lives will no longer be amortized; 2) goodwill and
intangible assets with indefinite lives must be tested for impairment at least
annually; and 3) the amortization period for intangible assets with finite lives
will no longer be limited to forty years.  We believe that

                                       22

the adoption of this Standard will not have a material effect on either our
financial position, results of operations, or cash flows.

  We will account for all future business combinations under SFAS 141.
Effective January 1, 2002, we will adopt SFAS 142, as required.  At that time,
amortization will cease on the unamortized portion of the goodwill arising from
the Scurlock acquisition.

  In June 2001, the FASB also issued SFAS 143 "Asset Retirement Obligations".
SFAS 143 establishes accounting requirements for retirement obligations
associated with tangible long-lived assets, including (1) the timing of the
liability recognition, (2) initial measurement of the liability, (3) allocation
of asset retirement cost to expense, (4) subsequent measurement of the liability
and (5) financial statement disclosures.  SFAS 143 requires that an asset
retirement cost should be capitalized as part of the cost of the related long-
lived asset and subsequently allocated to expense using a systematic and
rational method.  We will adopt the statement effective January 1, 2003, as
required.  The transition adjustment resulting from the adoption of SFAS 143
will be reported as a cumulative effect of a change in accounting principle.  At
this time, we cannot reasonably estimate the effect of the adoption of this
statement on either our financial position, results of operations, or cash
flows.

  In August 2001, the FASB approved SFAS No. 144, "Accounting for Impairment or
Disposal of Long-Lived Assets".  SAFS 144 establishes a single accounting model
for long-lived assets to be disposed of by sale and provides additional
implementation guidance for assets to be held and used and assets to be disposed
of other than by sale. At this time, we cannot reasonably estimate the effect of
the adoption of this Statement on either our financial position, results of
operations, or cash flows. We will adopt the Statement effective January 1,
2002.

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

  All statements, other than statements of historical fact, included in this
report are forward-looking statements, including, but not limited to, statements
identified by the words "anticipate," "believe," "estimate," "expect,"
"plan," "intend" and "forecast" and similar expressions and statements
regarding our business strategy, plans and objectives of our management for
future operations. These statements reflect our current views and those of our
general partner with respect to future events, based on what we believe are
reasonable assumptions. These statements, however, are subject to certain risks,
uncertainties and assumptions, including, but not limited to:

  .  the availability of adequate supplies of and demand for crude oil in the
     areas in which we operate;
  .  the impact of crude oil price fluctuations;
  .  successful third-party drilling efforts and completion of announced oil-
     sands project;
  .  the effects of competition;
  .  the success of our risk management activities;
  .  the availability of favorable acquisition or combination opportunities;
  .  successful integration and future performance of recently acquired assets;
  .  our ability to receive credit on satisfactory terms;
  .  unanticipated shortages or cost increases of power supplies, materials or
     labor;
  .  the impact of current and future laws and governmental regulations and
     rate-setting;
  .  weather interference with business operations or project construction;
  .  environmental liabilities not covered by indemnity or insurance, and
  .  general economic, market or business conditions.

  If one or more of these risks or uncertainties materialize, or if underlying
assumptions prove incorrect, actual results may vary materially from the results
anticipated in the forward-looking statements. Except as required by applicable
securities laws, we do not intend to update these forward-looking statements and
information.

                                       23

          QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT  MARKET RISKS

  We are exposed to various market risks, including volatility in crude oil
commodity prices and interest rates. To manage such exposure, we monitor our
inventory levels and our expectations of future commodity prices and interest
rates when making decisions with respect to risk management. We do not enter
into derivative transactions for speculative trading purposes that would expose
us to price risk. Substantially all of our derivative contracts are exchanged or
traded with major financial institutions and the risk of credit loss is
considered remote.

  On January 1, 2001, we adopted SFAS 133 "Accounting for Derivative Instruments
and Hedging Activities" as amended by SFAS 137 and SFAS 138.  Under SFAS 133,
all derivative instruments are recorded on the balance sheet at fair value.  If
the derivative does not qualify as a hedge or is not designated as a hedge, the
gain or loss on the derivative is recognized currently in earnings. To qualify
for hedge accounting, the derivative must qualify either as a fair value hedge,
cash flow hedge or foreign currency hedge. With respect to fair value hedges,
gains or losses for both the hedge and the hedged item are taken directly to
earnings in the current period. Thus, earnings are impacted by the net change
between the hedge and the underlying hedged transaction. With respect to cash
flow hedges, gains or losses are deferred in accumulated Other Comprehensive
Income ("OCI"), a component of Partners' Capital, to the extent the hedge is
effective (discussed further below). Foreign currency hedges may be treated as
either fair value hedges or cash flow hedges, depending on the specific
characteristics of the hedge. As of September 30, 2001 our hedges consisted
only of cash flow hedges or foreign currency hedges treated as cash flow
hedges, and the remaining discussion relates exclusively to these types of
hedges.

  We utilize various derivative instruments, for purposes other than trading, to
hedge our exposure to price fluctuations on crude in storage and expected
purchases, sales and transportation of crude oil. The derivative instruments
consist primarily of futures and option contracts traded on the New York
Mercantile Exchange. We also utilize interest rate collars and interest rate
swaps to manage the interest rate exposure on our long-term debt and foreign
currency hedges to manage exchange rate exposure.

  At September 30, 2001, an $11.1 million unrealized loss was recorded to OCI
together with related assets and liabilities of $7.3 million and $17.7 million,
respectively. Earnings included a noncash gain of $0.8 million related to the
ineffective portion of our cash flow hedges as well as certain derivative
contracts that did not qualify as hedges relating to our Canadian businesses due
to a low correlation between the futures contract and hedged item.  Our hedge-
related assets and liabilities are included in other current assets and other
current liabilities in the balance sheet.

  As of September 30, 2001, the total amount of deferred net losses on
derivative instruments recorded in OCI are expected to be reclassified to
earnings during the next twelve-month period. The following table sets forth our
open crude oil hedge positions at September 30, 2001. These are futures
hedges and thus have offsetting physical exposures to the extent they are
effective.

                               2001                      2002
                               ----         -----------------------------
                              4th Qtr        1st Qtr    2nd Qtr  3rd Qtr
                              ---------     -----------------------------
        Volume (bbls)
          Short position      1,302,000           -          -       -
          Long position             -       2,760,000    213,000     -
        Average price ($/bbl)    $26.94        $27.37     $28.46     -

  At September 30, 2001, we had arrangements to protect interest rate
fluctuations on a portion of our outstanding debt for an aggregate notional
amount of $275.0 million. These instruments are based on LIBOR rates.
Approximately $125 million notional amount  is comprised of an interest rate
collar, which provides for a floor of 6.1% and a ceiling of 8.0% with an
expiration date of August 2002. The remaining $150 million notional amount
consists of interest rate swaps with an average LIBOR rate of approximately
3.8%.  These swaps expire with respect to $100 million in September, 2003, and
the remainder in March, 2004.

  We formally document all relationships between hedging instruments and hedged
items, as well as our risk management objectives and strategy for undertaking
the hedge. Hedge effectiveness is measured on a quarterly basis. This process
includes specific identification of the hedging instrument and the hedge
transaction, the nature of the risk being hedged and how the hedging
instrument's effectiveness will be assessed.  Both at the inception of the hedge
and on an ongoing basis, we

                                       24

assess whether the derivatives that are used in hedging transactions are highly
effective in offsetting changes in cash flows of hedged items. No amounts were
excluded from the computation of hedge effectiveness.

                                       25

                           PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

  Texas Securities Litigation. On November 29, 1999, a class action lawsuit was
filed in the United States District Court for the Southern District of Texas
entitled Di Giacomo v. Plains All American Pipeline, L.P., et al. The suit
alleged that Plains All American and certain of the officers and directors of
Plains All American Inc. (our general partner at the time) violated federal
securities laws, primarily in connection with unauthorized trading by a former
employee. An additional nineteen cases were filed in the Southern District of
Texas, some of which name Plains All American Inc. and Plains Resources as
additional defendants. All of the federal securities claims have been
consolidated into two actions. The first consolidated action is that filed by
purchasers of Plains Resources' common stock and options, and is captioned
Koplovitz v. Plains Resources Inc., et al. The second consolidated action is
that filed by purchasers of our common units, and is captioned Di Giacomo v.
Plains All American Pipeline, L.P., et al. Plaintiffs alleged that the
defendants were liable for securities fraud violations under Rule 10b-5 and
Section 20(a) of the Securities Exchange Act of 1934 and for making false
registration statements under Sections 11 and 15 of the Securities Act of 1933.

  We and Plains Resources reached an agreement with representatives for the
plaintiffs for the settlement of all of the class actions, and in January 2001,
we deposited approximately $30.0 million under the terms of the settlement
agreement into an escrow account on behalf of the class. The total cost of the
settlement to us and Plains Resources, including interest and expenses and after
insurance reimbursements, was $14.9 million. Of that amount, $1.0 million was
allocated to Plains Resources by agreement between special independent
committees of the board of directors of Plains All American Inc. and the board
of directors of Plains Resources. The settlement is subject to final approval by
the court. The settlement agreement does not affect the Texas Derivative
Litigation and Delaware Derivative Litigation described below.

  Delaware Derivative Litigation. On December 3, 1999, two derivative lawsuits
were filed in the Delaware Chancery Court, New Castle County, entitled Susser v.
Plains All American Inc., et al and Senderowitz v. Plains All American Inc., et
al. These suits, and three others which were filed in Delaware subsequently,
named Plains All American Inc., its directors and certain of its officers as
defendants, and allege that the defendants breached the fiduciary duties that
they owed to Plains All American Pipeline, L.P. and its unitholders by failing
to monitor properly the activities of its employees. The court has consolidated
all of the cases under the caption In Re Plains All American Inc. Shareholders
Litigation, and has designated the complaint filed in Susser v. Plains All
American Inc. as the complaint in the consolidated action. A motion to dismiss
was filed on behalf of the defendants on August 11, 2000.

  The plaintiffs in the Delaware derivative litigation seek that the defendants:

  .  account for all losses and damages allegedly sustained by Plains All
     American from the unauthorized trading losses;
  .  establish and maintain effective internal controls ensuring that our
     affiliates and persons responsible for our affairs do not engage in
     wrongful practices detrimental to Plains All American;
  .  pay for the plaintiffs' costs and expenses in the litigation, including
     reasonable attorneys' fees, accountants' fees and experts' fees; and
  .  provide the plaintiffs any additional relief as may be just and proper
     under the circumstances.

  We have reached an agreement in principle with the plaintiffs, subject to
approval by the Delaware court, to settle the Delaware litigation for
approximately $1.1 million.

  Texas Derivative Litigation. On July 11, 2000, a derivative lawsuit was filed
in the United States District Court of the Southern District of Texas entitled
Fernandes v. Plains All American Inc., et al, naming Plains All American Inc.,
its directors and certain of its officers as defendants. This lawsuit contains
the same claims and seeks the same relief as the Delaware derivative litigation,
described above. A motion to dismiss was filed on behalf of the defendants on
August 14, 2000.

  We intend to vigorously defend the claims made in the Texas derivative
litigation. We believe that Delaware court approval of the settlement of the
Delaware derivative litigation will effectively preclude prosecution of the
Texas derivative litigation. However, there can be no assurance that we will be
successful in our defense or that this lawsuit will not have a material adverse
effect on our financial position or results of operation.

                                       26

  We, in the ordinary course of business, are a claimant and/or a defendant in
various other legal proceedings. Management does not believe that the outcome of
these other legal proceedings, individually and in the aggregate, will have a
materially adverse effect on our financial condition, results of operations or
cash flows.

ITEMS 2, 3, 4 & 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

 A.  Exhibits

     10.1  - Third Amendment to Amended and Restated Credit Agreement
             (Revolving Credit Facility) dated as of the 6th day of September,
             2001, among Plains Marketing, L.P., All American Pipeline, L.P. and
             Plains All American Pipeline, L.P. and Fleet National Bank and
             certain other lenders.

     10.2  - Third Amendment to Amended and Restated Credit Agreement (Letter of
             Credit and Hedged Inventory Facility) dated as of the 6th day of
             September, 2001, among Plains Marketing, L.P., All American
             Pipeline, L.P. and Plains All American Pipeline, L.P. and Fleet
             National Bank and certain other lenders.

     10.3  - Amended and Restated Employment Agreement made as of the 30th day
             of June, 2001, between Plains All American GP LLC and Greg L
             Armstrong.

     10.4  - Amended and Restated Employment Agreement made as of the 30th day
             of June, 2001, between Plains All American GP LLC and Harry N
             Pefanis.

 B.  Reports on Form 8-K

     A Current Report on Form 8-K was filed on October 26, 2001 in connection
     with the execution of an underwriting agreement with Salomon Smith Barney
     Inc., in connection with the sale by the Partnership of 4,500,000 common
     units of the Partnership.

     A Current Report on Form 8-K/A was filed on October 25, 2001 amending the
     Partnership's Form 8-K dated June 22, 2001 in connection with the pro forma
     financial statements for the Partnership.

     A Current Report on Form 8-K was filed on October 23, 2001 in connection
     with the announcement of a $0.0125 per unit increase over the previous
     quarter's distribution.

     A Current Report on Form 8-K was filed September 27, 2001, in connection
     with a new six-year $200 Million Term Loan.

     A Current Report on Form 8-K was filed on August 27, 2001, relating to the
     amendments to the Partnership's and the operating limited partnership's
     partnership agreements and the restated financial statements of the
     Partnership and balance sheet for Plains AAP, L.P.

                                       27

                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned and thereunto duly authorized.

                                    PLAINS ALL AMERICAN PIPELINE, L.P.

                                    By:  PLAINS AAP, L.P.
                                    Its General Partner

                                    By:  PLAINS ALL AMERICAN GP LLC
                                    Its General Partner

Date:  November 14, 2001            By: /s/ PHILLIP D. KRAMER
                                        ______________________________________
                                        Phillip D. Kramer, Executive
                                        Vice President and Chief Financial
                                         Officer

                                       28

                                                                    EXHIBIT 10.1

                   AMENDED AND RESTATED EMPLOYMENT AGREEMENT
                   -----------------------------------------

        AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement"), made as of the
30th day of June, 2001 (the "Effective Date"), between Plains All American GP
LLC, a Delaware limited liability company (the "Company"), and Greg L. Armstrong
("Employee").

                             W I T N E S S E T H:
                             --------------------

        WHEREAS, Plains Resources Inc. ("Plains Resources") and the Employee
entered into that certain Employment Agreement dated as of March 1, 1993 (as
amended by Board resolutions dated May 23, 1996, the "Original Agreement");

        WHEREAS, on May 8, 2001, Plains All American Inc. assumed all
obligations under the Original Agreement;

        WHEREAS, the Company desires to assume all obligations under the
Original Agreement; and

        WHEREAS, the Company and the Employee desire to amend and restate the
Original Agreement in accordance with the terms set forth herein.

        NOW THEREFORE, in consideration of the premises and mutual covenants and
agreements contained herein and in the Original Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company hereby agrees to assume all of the obligations under
the Original Agreement and the Company and the Employee do hereby agree as
follows:

        1.  Employment and Term of Employment.  The Company hereby employs the
            ----------------------------------
Employee, and the Employee hereby agrees to serve the Company, on the terms and
conditions set forth herein.  Subject to the provisions of Sections 7 and 8, the
term of this Agreement shall be for an initial period of three years from the
date hereof. The term of this Agreement shall automatically be extended by one
year on the first anniversary of the Effective Date and again for successive
one-year periods on each anniversary of the Effective Date thereafter; provided;
                                                                       --------
that the Employee has not received (during the period not more than 90 days
prior to nor less than 60 days prior to the relevant anniversary date) notice
from the Chairman of the Compensation Committee that the Board of Directors has
determined not to extend the term hereof (the initial three-year period and any
extensions hereunder being hereinafter referred to as the "Term").

        2.  Position and Duties.  The Employee shall serve as the Chairman and
            --------------------
Chief Executive Officer of the Company, reporting only to the Board of Directors
of the Company, and shall have supervision and control over and responsibility
for, the general management and operation of the Company, and shall have such
other powers and duties as may from time to time

be prescribed by the Board of Directors, provided that such duties are
consistent with the Employee's position. The Employee shall at all times
hereunder remain a director of the Company. The Employee shall, during the Term
of this Agreement, devote such of his entire working time, attention, energies
and business efforts to his duties and responsibilities as Chairman and Chief
Executive Officer of the Company as are reasonably necessary to carry out the
duties and responsibilities generally appertaining to those offices. The
Employee shall not, during the Term of this Agreement, engage in any other
material business activity (regardless of whether such business activity is
pursued for gain, profit or other pecuniary advantage) without the prior written
approval of the Compensation Committee of the Board of Directors of the Company
(which approval shall not be unreasonably withheld). Nothing in this Section 2
shall be deemed to restrict the Employee from investing his personal assets as a
passive investor in the publicly traded securities of other companies.

        3.  Place of Performance.  Subject to such business travel from time to
            ---------------------
time as may be reasonably required in the discharge of his duties and
responsibilities as Chairman and Chief Executive Officer, the Employee shall
perform his obligations hereunder at the Company's principal place of business
in Houston, Texas.

        4.  Compensation.
            -------------

            (a)  Base Salary.  Subject to the provisions of Section 7 and 8,
                 ------------
during the period of Employee's employment hereunder, the Company shall pay
Employee an aggregate base salary at an annual rate which shall be determined
from time to time by the Board of Directors of the Company or its Compensation
Committee.  Employee's initial base salary as of the date hereof, shall be
$330,000 per annum.  Such initial base salary as the same may be increased from
time to time as provided herein shall be hereinafter referred to as the "Base
Salary".  The Base Salary shall be paid in equal installments pursuant to the
Company's customary payroll policies in force at the time of payment (but in no
event less frequently than semi-monthly), less required payroll deductions.  The
Base Salary shall be reviewed in January of each year and may be increased as of
each January 1st to reflect Employee's performance and contribution, such
increases, if any, to be in such amounts as the Board of Directors or any
Committee shall determine is reasonable.  During the Term of this Agreement,
Employee's Base Salary shall not be reduced below its then-current rate unless
the Board of Directors of the Company shall implement across-the-board salary
reductions for all executive officers of the Company, in which event the
Employee's Base Salary shall not, without his consent, be reduced to an amount
which is less than the greater of (i) $280,500 or (ii) 85% of the Base Salary in
effect immediately prior to such reduction.  In addition to Base Salary, the
Employee shall be entitled to receive such incentive compensation payments as
the Board of Directors or its Compensation Committee may determine.

            (b)  Expenses.  During the Term of his employment hereunder, the
                 ---------
Employee shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him (in accordance with the policies and procedures
established by the Company) in performing services hereunder.

                                      -2-

            (c)  Fringe Benefits.  The Employee shall be entitled to participate
                 ----------------
in or receive benefits under any pension plan, profit-sharing plan, savings
plan, stock option plan, life insurance, health-and-accident plan or arrangement
made available by the Company to its executives and key management employees,
subject to and on a basis consistent with the terms, conditions, and overall
administration of such plans and arrangements.  The Employee shall be entitled
to prompt payment or reimbursement by the Company for monthly dues and Company-
related charges at such social club or clubs where the Employee is a member and
at such additional social clubs as may be approved during the Term of this
Agreement by the Compensation Committee of the Board of Directors of the
Company.  Except for proceeds from key-man life insurance purchased and
maintained by the Company for the purpose, among others, of funding its
obligations to the Employee or his estate under Section 8, nothing paid to the
Employee under any plan or arrangement presently in effect or made available in
the future shall be deemed to be in lieu of compensation to the Employee
hereunder.

            (d)  Working Facilities.  Company shall furnish Employee with a
                 -------------------
private office, secretary and such other facilities and services suitable to his
position and adequate for the performance of his duties.

            (e)  Vacations. The Employee shall be entitled to the number of paid
                 ----------
vacation days in each calendar year determined by the Company from time to time
for its senior executive officers, but not less than 15 business days in any
calendar year (prorated in any calendar year during which the Employee is
employed hereunder for less than the entire such year in accordance with the
number of days in such calendar year during which he is so employed).  All such
vacation days shall accumulate from calendar year to calendar year during the
Term of this Agreement (or any predecessor or successor contracts) in the event
that the Employee shall be unable to utilize the full allotment to which he may
become entitled in any calendar year.  The Employee shall also be entitled to
all other paid holidays given by the Company to its senior executive officers.

        5.  Offices.  The Employee agrees to serve without additional
            --------
compensation, if elected or appointed thereto, in one or more offices or as a
director of any of the Company's subsidiaries, provided, however, that the
Employee shall not be required to serve as an officer or director of any
subsidiary if such service would expose him to adverse financial consequences.

        6.  Confidential Information; Unauthorized Disclosure.  During the
            --------------------------------------------------
period of his employment hereunder and for the period ending five years
following the termination of employment, the Employee shall not, without the
written consent of the Board of Directors or a person authorized thereby,
disclose to any person, other than an employee of the Company or a person to
whom disclosure is reasonably necessary or appropriate in connection with the
performance by the Employee of his duties as an executive of the Company, any
confidential information obtained by him while in the employ of the Company with
respect to the Company's business, including but not limited to technology,
know-how, processes, maps, geological and

                                      -3-

geophysical data, and other proprietary information, the disclosure of which he
knows or should know will be damaging to the Company; provided however, that
confidential information shall not include any information known generally to
the public (other than as a result of unauthorized disclosure by the Employee),
any information of a type not otherwise considered confidential by persons
engaged in the same business or a business similar to that conducted by the
Company, or any information which the Employee may be required to disclose by
any applicable law, order, or judicial or administrative proceeding.

        7.  Termination.
            ------------

            (a)  Death.  The Employee's employment hereunder shall terminate
                 ------
upon his death.

            (b)  Disability. If, as a result of the Employee's incapacity due to
                 -----------
physical or mental illness, the Employee shall have been absent from his duties
hereunder on a full time basis for twelve consecutive months, and, within 30
days after Notice of Termination is given, shall not have returned to the
performance of his duties hereunder on a full-time basis, the Company may
terminate the Employee's employment hereunder.

            (c)  Cause.  The Company may terminate the Employee's employment
                 ------
hereunder for Cause.  For the purposes of this Agreement, the Company shall have
"Cause" to terminate the Employee's employment hereunder only upon (i) the
willful engaging by the Employee in gross misconduct, or (ii) the nonappealable
conviction of the Employee of a felony involving moral turpitude.  For purposes
of this paragraph, no act, or failure to act, on the Employee's part shall be
considered "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his act or omission was in the best
interest of the Company or otherwise likely to result in no material injury
thereto.  Notwithstanding the foregoing, the Employee shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to the Employee a copy of a resolution, duly adopted by the affirmative vote of
the Board of Directors at a meeting duly called and held for the purpose (after
reasonable notice to the Employee and an opportunity for him, together with his
counsel, to be heard before the Board of Directors), finding that in the good
faith opinion of the Board of Directors, the Employee was guilty of conduct set
forth above in clause (i) or (ii) and specifying the particulars thereof in
detail.

            (d)  Termination by the Employee.  The Employee may terminate his
                 ----------------------------
employment hereunder (i) for Good Reason, provided that a Notice of Termination
shall have been given by the Employee to the Company within 90 days following
the occurrence of the event constituting such Good Reason, (ii) if his health
should become impaired to an extent that makes the continued performance of his
duties hereunder hazardous to his physical or mental health or his life, or
(iii) at any time by giving three months' written notice to the Company of his
intention to terminate.  For purposes of this Agreement, "Good Reason" shall
mean the occurrence of any of the following circumstances:  (A) any removal of
the Employee from, or any failure to re-elect the Employee to, the positions
indicated in Section 2 hereof, except in connection with

                                      -4-

termination of the Employee's employment for Cause, or (B) a reduction in the
Employee's rate of Base Salary other than as permitted by Section 4(a), a
material reduction in the Employee's fringe benefits, or any other material
failure by the Company to comply with Section 4 hereof, or (C) failure of the
Company to obtain the express assumption of and the agreement to perform this
Agreement by any successor as contemplated in Section 9 hereof, or (D) a Change
in Control of the Company. A "Change in Control of the Company" shall
conclusively be deemed to have occurred on the date when (i) any person (other
than Plains Resources Inc. or its wholly owned subsidiaries), including any
partnership, limited partnership, syndicate or other group deemed a "person" for
purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended, becomes the beneficial owner, directly or indirectly, of 50% or more of
the membership interest in the Company or (ii) the persons who own membership
interests in the Company on the date hereof cease to beneficially own, directly
or indirectly, more than 50% of the membership interest in the Company.

          (e)  Notice of Termination.  Any termination by the Company pursuant
               ----------------------
to subsection (b) or (c) above or by the Employee pursuant to subsection (d)
above shall be communicated by written Notice of Termination to the other party
hereto.  For purposes of the Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Employee's employment under
the provision so indicated.

          (f)  Date of Termination.  The "Date of Termination" shall mean (i) if
               --------------------
the Employee's employment is terminated by his death, the date of his death,
(ii) if the Employee's employment is terminated pursuant to subsection (b)
above, 30 days after Notice of Termination is given (provided that the Employee
shall not have returned to the performance of his duties on a full-time basis
during such 30-day period), (iii) if the Employee's employment is terminated
pursuant to subsection (c) or (d)(iii) above, the date specified in the Notice
of Termination, and (iv) if the Employee's employment is terminated for any
other reason, the date on which a Notice of Termination is given.

                                      -5-

        8.  Compensation Upon Termination or During Disability.
            ---------------------------------------------------

            (a)  If the Employee's employment shall be terminated by reason of
his death, the Company shall pay to such person as the Employee shall designate
in a notice filed with the Company, or, if no such person shall be designated,
to his estate as a lump sum death benefit, an amount equal to (i) the sum of (A)
the highest annual rate at which his Base Salary hereunder was paid prior to the
date of death plus (B) the highest annual bonus paid or payable for any of the
three years prior to the date of death, multiplied by (ii) the lesser of (A) two
or (B) the number of days remaining in the Term of this Agreement divided by
360. So long as the Employee is employed hereunder, subject to availability at a
cost which does not reflect any abnormal health or other risks, the Company
shall purchase and maintain insurance on the life of the Employee with death
benefits thereunder payable to the Employee's designated beneficiary or estate
which are at least equal to the death benefit provided for in the preceding
sentence. Such death benefit shall be exclusive of and in addition to any
payments the Employee's widow, beneficiaries or estate may be entitled to
receive pursuant to any pension or employee benefit plan maintained by the
Company for its executive officers generally.

            (b)  During any period that the Employee fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness, the
Employee shall continue to receive his full Base Salary at the rate in effect
prior to the date of such incapacity until the Date of Termination if the
Employee's employment is terminated pursuant to Section 7(b) hereof.

            (c)  If the Employee's employment shall be terminated for Cause as
provided in Section 7(c) hereof, the Company shall pay the Employee his full
Base Salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given and the Company shall have no further payment
obligations to the Employee under this Agreement.

            (d)  If the Company shall terminate the Employee's employment other
than pursuant to Sections 7(a), 7(b) or 7(c) hereof or if the Employee shall
terminate his employment pursuant to Section 7(d)(i) or 7(d)(ii) hereof, then

                 (i)  the Company shall pay the Employee his full Base Salary
plus any accumulated vacation pay through the Date of Termination at the rate in
effect at the time Notice of Termination is given; and

                                      -6-

                 (ii) in lieu of any further payments to the Employee for
periods subsequent to the Date of Termination, the Company shall make a
severance payment to the Employee not later than the tenth business day
following the Date of Termination, in a lump sum amount equal to (A) the sum of
(x) the highest annual rate at which his Base Salary hereunder was paid prior to
the Date of Termination plus (y) the highest annual bonus paid or payable for
any of the three years prior to the Date of Termination, multiplied by (B) the
lesser of (x) two or (y) the number of days remaining in the Term of this
Agreement divided by 360; provided, however, that if the Employee shall
terminate his employment upon a Change in Control of the Company pursuant to
clause (D) of Section 7(d)(i), then such lump sum amount shall equal three times
the aggregate of (x) the highest annual rate at which the Employee's Base Salary
was paid prior to Date of Termination plus (y) the highest amount of any annual
bonus paid or payable to the Employee during the three years prior to the Date
of Termination.

The Employee shall not be required to mitigate the amount of any payment
provided for in this Section 8 by seeking other employment or otherwise.

            (e)  If the Employee terminates this Agreement pursuant to Section
7(d)(iii) hereof, the Employee shall receive his full Base Salary through the
Date of Termination including any accrued vacation days at the rate then in
effect and the Company shall have no further payment obligations to the Employee
under this Agreement.

            (f) Unless the Employee is terminated for Cause or the Employee's
employment is terminated pursuant to Section 7(a) or 7(d)(iii) hereof, the
Employee shall be entitled to continue to participate, for a period which is the
lesser of two years from the Date of Termination or the remaining Term of this
Agreement, in such health-and-accident plan or arrangement as is made available
by the Company to its executive officers generally.  The Employee shall not be
entitled to participate in any other employee benefit plan or arrangement of the
Company following the Date of Termination except as expressly provided by the
terms of any such plan.

            (g) The Company will reimburse the Employee for the Federal excise
tax, if any, which is due pursuant to Section 4999 of the Internal Revenue Code
of 1986, as amended, on the compensation payments (but not this reimbursement
payment) described in this Agreement.

        9.  Successors; Binding Agreement.
            ------------------------------

            (a)  The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance reasonably satisfactory to the Employee, to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform if no such succession had taken
place.  Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Employee to compensation from the Company in the same amount
and on the same terms as he would be entitled to

                                      -7-

hereunder if he had terminated his employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which executes and delivers
the agreement provided for in this Section 9 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.

            (b)  This Agreement and all rights of the Employee hereunder shall
inure to the benefit of and be enforceable by the Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.  If the Employee should die while any amounts would still
be payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Employee's devisee, legatee, or other designee or, if
there be no such designee, to the Employee's estate.

        10. Indemnification.  The Company shall, to the fullest extent
            ----------------
permitted by law, indemnify and hold harmless the Employee against any loss,
liability, claim, damage and expense, including the cost of defense, incurred in
the course of the Employee's employment hereunder.  The Company's liability
hereunder shall be reduced by the amount of insurance proceeds paid to or on
behalf of the Employee with respect to an event giving rise to indemnification
hereunder.  This indemnification shall survive the death or other termination of
employment of the Employee and the termination of this Agreement.  Any legal
fees incurred by the Employee in the enforcement of this or any other provision
of this Agreement shall be promptly reimbursed by the Company as the same are
incurred.

        11. Survival.  The provisions of Sections 6, 8, and 10 shall survive the
            ---------
termination of employment of the Employee. In addition, all obligations of the
Company to make payments hereunder shall survive any termination of this
Agreement.

        12. Notice.  For the purpose of this Agreement, notices and all other
            -------
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
parties at their addresses set forth below, or to such other addresses as either
party may have furnished to the other in writing in accordance herewith except
that notices of change of address shall be effective only upon receipt.

             If to the Company:

             Plains All American GP LLC
             333 Clay Street
             Houston, Texas 77002
             Attention: General Counsel

                                      -8-

             If to the Employee:

             Greg L. Armstrong
             3230 Rustic Villa Dr.
             Kingwood, Texas 77345

        13.  Miscellaneous.  No provisions of this Agreement may be modified,
             --------------
waived or discharged unless such waiver, modification or discharge is agreed to
in writing. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Texas. Any vote or
other action hereunder by the Board of Directors of the Company shall be taken
without the participation of the Employee, and such vote or action shall be
taken by a majority of the directors, other than the employee, then in office.

        14.  Entire Agreement.  This Agreement contains the entire understanding
             -----------------
of the parties in respect of its subject matter and supersedes all prior oral
and written agreements and understandings between the parties with respect to
such subject matter and supersedes all subsequent agreements or understandings
between the parties with respect to all employee benefit plans and arrangements
in effect on the date hereof or hereafter adopted to the extent that such plans
or arrangements conflict with the terms of this Agreement.

        15.  Validity.  The invalidity or unenforceability of any provision or
             ---------
provisions of this Agreement shall not affect the validity or enforceability of
any provision of this Agreement, which shall remain in full force and effect.

        16.  Headings.  The headings contained in this Agreement are for
             ---------
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.

                                      -9-

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                                 PLAINS ALL AMERICAN GP LLC

                                 By:  /s/ Tim Moore
                                      -----------------------------------
                                         Tim Moore
                                 Title:  Vice President
                                      -----------------------------------

                                 GREG L. ARMSTRONG

                                 /s/ Greg L. Armstrong
                                 ----------------------------------------
                                 Employee

                                      -10-

                                                                    EXHIBIT 10.2

                   AMENDED AND RESTATED EMPLOYMENT AGREEMENT
                   -----------------------------------------

        EMPLOYMENT AGREEMENT ("Agreement"), made as of the 30/th/ day of June,
2001 (the "Effective Date"), between Plains All American GP LLC, a Delaware
limited liability company (the "Company"), and Harry N. Pefanis ("Employee").

                             W I T N E S S E T H:
                             --------------------

        WHEREAS, Plains Resources Inc. ("Plains Resources") and the Employee
entered into that certain Employment Agreement dated as of November 23, 1998;

        WHEREAS, on May 8, 2001, Plains All American Inc. assumed all
obligations under the Original Agreement;

        WHEREAS, the Company desires to assume all obligations under the
Original Agreement; and

        WHEREAS, the Company and the Employee desire to amend and restate the
Original Agreement in accordance with the terms set forth herein.

        NOW THEREFORE, in consideration of the premises and mutual covenants and
agreements contained herein and in the Original Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company hereby agrees to assume all of the obligations under
the Original Agreement and the Company and the Employee do hereby agree as
follows:

        1.  Employment and Term of Employment.  The Company hereby employs the
            ----------------------------------
Employee, and the Employee hereby agrees to serve the Company, on the terms and
conditions set forth herein.  Subject to the provisions of Sections 7 and 8, the
term of this Agreement shall be for an initial period of three years from the
date hereof.  The term of this Agreement shall automatically be extended by one
year on the first anniversary of the Effective Date and again for successive
one-year periods on each anniversary of the Effective Date thereafter; provided,
that the Employee has not received (during the period not more than 90 days
prior to nor less than 60 days prior to the relevant anniversary date) notice
from the Chairman of the Board that the Board of Directors has determined not to
extend the term hereof (the initial three-year period and any extensions
hereunder being hereinafter referred to as the "Term").

                                      -1-

        2.  Position and Duties.  The Employee shall serve as the President and
            --------------------
Chief Operating Officer of the Company, shall report to the Chief Executive
Officer of the Company, and shall have supervision and control over and
responsibility for the overall operations of the Company, with such other powers
and duties as may from time to time be prescribed by the Chief Executive Officer
of the Company, provided that such duties are consistent with the Employee's
position.  The Employee shall, during the term of this Agreement, devote such of
his entire working time, attention, energies and business efforts to his duties
and responsibilities as President and Chief Operating Officer of the Company as
are reasonably necessary to carry out the duties and responsibilities generally
appertaining to those offices.  The Employee shall not, during the term of this
Agreement, engage in any other material business activity (regardless of whether
such business activity is pursued for gain, profit or other pecuniary advantage)
without the prior written approval of the Chief Executive Officer of the Company
(which approval shall not be unreasonably withheld).  Nothing in this Section 2
shall be deemed to restrict the Employee from investing his personal assets as a
passive investor in the publicly traded securities of other companies.

        3.  Place of Performance.  Subject to such business travel from time to
            ---------------------
time as may be reasonably required in the discharge of his duties and
responsibilities as President and Chief Operating Officer, the Employee shall
perform his obligations hereunder at the Company's principal place of business
in Houston, Texas.

        4.  Compensation.
            -------------

            (a)  Base Salary.  Subject to the provisions of Section 7 and 8,
                 ------------
during the period of Employee's employment hereunder, the Company shall pay
Employee an aggregate base salary at an annual rate which shall be determined
from time to time by the Board of Directors of the Company or its Compensation
Committee.  Employee's initial base salary as of the date hereof, shall be
$235,000 per annum.  Such initial base salary as the same may be increased from
time to time as provided herein shall be hereinafter referred to as the "Base
Salary".  The Base Salary shall be paid in equal installments pursuant to the
Company's customary payroll policies in force at the time of payment (but in no
event less frequently than semi-monthly), less required payroll deductions.  The
Base Salary shall be reviewed in January of each year and may be increased as of
each January 1st to reflect Employee's performance and contribution, such
increases, if any, to be in such amounts as the Board of Directors or any
Committee shall determine is reasonable.  During the term of this Agreement,
Employee's Base Salary shall not be reduced below its then-current rate unless
the Board of Directors of the Company shall implement across-the-board salary
reductions for all executive officers of the Company, in which event the
Employee's Base Salary shall not, without his consent, be reduced to an amount
which is less than the greater of (i) $200,000 or (ii) 85% of the Base Salary in
effect immediately prior to such reduction.  In addition to Base Salary, the
Employee shall be entitled to receive such incentive compensation payments as
the Board of Directors or its Compensation Committee may determine, including an
annual bonus.

                                      -2-

            (b)  Expenses.  During the term of his employment hereunder, the
                 ---------
Employee shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him (in accordance with the policies and procedures
established by the Company) in performing services hereunder.

            (c)  Fringe Benefits.  The Employee shall be entitled to participate
                 ----------------
in or receive benefits under any pension plan, profit-sharing plan, savings
plan, stock option plan, life insurance, health-and-accident plan or arrangement
made available by the Company to its executives and key management employees,
subject to and on a basis consistent with the terms, conditions, and overall
administration of such plans and arrangements.  The Employee shall be entitled
to prompt payment or reimbursement by the Company for monthly dues and Company-
related charges at such social club or clubs where the Employee is a member and
at such additional social clubs as may be approved during the term of this
Agreement by the Chairman of the Board of Directors of the Company.  Except for
proceeds from key-man life insurance purchased and maintained by the Company for
the purpose, among others, of funding its obligations to the Employee or his
estate under Section 8, nothing paid to the Employee under any plan or
arrangement presently in effect or made available in the future shall be deemed
to be in lieu of compensation to the Employee hereunder.

            (d)  Working Facilities.  Company shall furnish Employee with a
                 -------------------
private office, secretary and such other facilities and services suitable to his
position and adequate for the performance of his duties.

            (e)  Vacations. The Employee shall be entitled to the number of paid
                 ----------
vacation days in each calendar year determined by the Company from time to time
for its senior executive officers, but not less than 15 business days in any
calendar year (prorated in any calendar year during which the Employee is
employed hereunder for less than the entire such year in accordance with the
number of days in such calendar year during which he is so employed).  All such
vacation days shall accumulate from calendar year to calendar year during the
Term of this Agreement (or any predecessor or successor contracts or
arrangements) in the event that the Employee shall be unable to utilize the full
allotment to which he may become entitled in any calendar year.  The Employee
shall also be entitled to all other paid holidays given by the Company to its
senior executive officers.

        5.  Offices.  The Employee agrees to serve without additional
            --------
compensation, if elected or appointed thereto, in one or more offices or as a
director of any of the Company's subsidiaries, provided, however, that the
Employee shall not be required to serve as an officer or director of any
subsidiary if such service would expose him to adverse financial consequences.

        6.  Confidential Information; Unauthorized Disclosure.  During the
            --------------------------------------------------
period of his employment hereunder and for the period ending one year following
the termination of

                                      -3-

employment, the Employee shall not, without the written consent of the Board of
Directors or a person authorized thereby, disclose to any person, other than an
employee of the Company or a person to whom disclosure is reasonably necessary
or appropriate in connection with the performance by the Employee of his duties
as an executive of the Company, any confidential information obtained by him
while in the employ of the Company with respect to the Company's business,
including but not limited to technology, know-how, processes, pipeline
terminalling and marketing customers practices, or operations, and other
proprietary information, the disclosure of which he knows or should know will be
damaging to the Company; provided however, that confidential information shall
not include any information known generally to the public (other than as a
result of unauthorized disclosure by the Employee), any information of a type
not otherwise considered confidential by persons engaged in the same business or
a business similar to that conducted by the Company, or any information which
the Employee may be required to disclose by any applicable law, order, or
judicial or administrative proceeding.

        7.  Termination.
            ------------

             (a)  Death.  The Employee's employment hereunder shall terminate
                  ------
upon his death.

             (b)  Disability. If, as a result of the Employee's incapacity due
                  -----------
to physical or mental illness, the Employee shall have been absent from his
duties hereunder on a full time basis for twelve consecutive months, and, within
30 days after Notice of Termination is given, shall not have returned to the
performance of his duties hereunder on a full-time basis, the Company may
terminate the Employee's employment hereunder.

             (c)  Cause.  The Company may terminate the Employee's employment
                  ------
hereunder for Cause.  For the purposes of this Agreement, the Company shall have
"Cause" to terminate the Employee's employment hereunder only upon (i) the
willful engaging by the Employee in gross misconduct, or (ii) the nonappealable
conviction of the Employee of a felony involving moral turpitude.  For purposes
of this paragraph, no act, or failure to act, on the Employee's part shall be
considered "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his act or omission was in the best
interest of the Company or otherwise likely to result in no material injury
thereto.  Notwithstanding the foregoing, the Employee shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to the Employee a copy of a resolution, duly adopted by the affirmative vote of
the Board of Directors at a meeting duly called and held for the purpose (after
reasonable notice to the Employee and an opportunity for him, together with his
counsel, to be heard before the Board of Directors), finding that in the good
faith opinion of the Board of Directors, the Employee was guilty of conduct set
forth above in clause (i) or (ii) and specifying the particulars thereof in
detail.

                                      -4-

            (d)  Termination by the Employee.  The Employee may terminate his
                 ----------------------------
employment hereunder (i) for Good Reason, provided that a Notice of Termination
shall have been given by the Employee to the Company within 90 days following
the occurrence of the event constituting such Good Reason, (ii) if his health
should become impaired to an extent that makes the continued performance of his
duties hereunder hazardous to his physical or mental health or his life, or
(iii) at any time by giving three months' written notice to the Company of his
intention to terminate.  For purposes of this Agreement, "Good Reason" shall
mean the occurrence of any of the following circumstances:  (A) any removal of
the Employee from, or any failure to re-elect the Employee to, the positions
indicated in Section 2 hereof, except in connection with termination of the
Employee's employment for Cause, or (B) a reduction in the Employee's rate of
Base Salary other than as permitted by Section 4(a), a material reduction in the
Employee's fringe benefits, or any other material failure by the Company to
comply with Section 4 hereof, or (C) failure of the Company to obtain the
express assumption of and the agreement to perform this Agreement by any
successor as contemplated in Section 9 hereof, or (D) a Change in Control of the
Company.  A "Change in Control of the Company" shall conclusively be deemed to
have occurred on the date when (i) any person (other than Plains Resources Inc.
or its wholly owned subsidiaries), including any partnership, limited
partnership, syndicate or other group deemed a "person" for purposes of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, becomes the
beneficial owner, directly or indirectly, of 50% or more of the membership
interest in the Company or (ii) the persons who own membership interests in the
Company on the date hereof cease to beneficially own, directly or indirectly,
more than 50% of the membership interest in the Company.

            (e)  Notice of Termination.  Any termination by the Company pursuant
                 ----------------------
to subsection (b) or (c) above or by the Employee pursuant to subsection (d)
above shall be communicated by written Notice of Termination to the other party
hereto.  For purposes of the Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Employee's employment under
the provision so indicated.

            (f)  Date of Termination. The "Date of Termination" shall mean (i)
                 --------------------
if the Employee's employment is terminated by his death, the date of his death,
(ii) if the Employee's employment is terminated pursuant to subsection (b)
above, 30 days after Notice of Termination is given (provided that the Employee
shall not have returned to the performance of his duties on a full-time basis
during such 30-day period), (iii) if the Employee's employment is terminated
pursuant to subsection (c) or (d)(iii) above, the date specified in the Notice
of Termination, and (iv) if the Employee's employment is terminated for any
other reason, the date on which a Notice of Termination is given.

                                      -5-

        8.  Compensation Upon Termination or During Disability.
            ---------------------------------------------------

            (a)  If the Employee's employment shall be terminated by reason of
his death, the Company shall pay to such person as the Employee shall designate
in a notice filed with the Company, or, if no such person shall be designated,
to his estate as a lump sum death benefit, an amount equal to (i) the sum of (A)
the highest annual rate at which his Base Salary hereunder was paid prior to the
date of death plus (B) the highest annual bonus paid or payable for any of the
three years prior to the date of death, multiplied by (ii) the lesser of (A) two
or (B) the number of days remaining in the Term of this Agreement divided by
360. So long as the Employee is employed hereunder, subject to availability at a
cost which does not reflect any abnormal health or other risks, the Company
shall purchase and maintain insurance on the life of the Employee with death
benefits thereunder payable to the Employee's designated beneficiary or estate
which are at least equal to the death benefit provided for in the preceding
sentence. Such death benefit shall be exclusive of and in addition to any
payments the Employee's widow, beneficiaries or estate may be entitled to
receive pursuant to any pension or employee benefit plan maintained by the
Company for its executive officers generally.

            (b)  During any period that the Employee fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness, the
Employee shall continue to receive his full Base Salary at the rate in effect
prior to the date of such incapacity until the Date of Termination if the
Employee's employment is terminated pursuant to Section 7(b) hereof.

            (c)  If the Employee's employment shall be terminated for Cause as
provided in Section 7(c) hereof, the Company shall pay the Employee his full
Base Salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given and the Company shall have no further payment
obligations to the Employee under this Agreement.

            (d)  If the Company shall terminate the Employee's employment other
than pursuant to Sections 7(a), 7(b) or 7(c) hereof or if the Employee shall
terminate his employment pursuant to Section 7(d)(i) or 7(d)(ii) hereof, then

                 (i)  the Company shall pay the Employee his full Base Salary
plus any accumulated vacation pay through the Date of Termination at the rate in
effect at the time Notice of Termination is given; and

                                      -6-

                 (ii) in lieu of any further payments to the Employee for
periods subsequent to the Date of Termination, the Company shall make a
severance payment to the Employee not later than the tenth business day
following the Date of Termination, in a lump sum amount equal to (A) the sum of
(x) the highest annual rate at which his Base Salary hereunder was paid prior to
the Date of Termination plus (y) the highest annual bonus paid or payable for
any of the three years prior to the Date of Termination, multiplied by (B) the
lesser of (x) two or (y) the number of days remaining in the Term of this
Agreement divided by 360; provided, however, that if the Employee shall
terminate his employment upon a Change in Control of the Company pursuant to
clause (D) of Section 7(d)(i), then such lump sum amount shall equal three times
the aggregate of (x) the highest annual rate at which the Employee's Base Salary
was paid prior to Date of Termination plus (y) the highest amount of any annual
bonus paid or payable to the Employee during the three years prior to the Date
of Termination.

The Employee shall not be required to mitigate the amount of any payment
provided for in this Section 8 by seeking other employment or otherwise.

            (e)  If the Employee terminates this Agreement pursuant to Section
7(d)(iii) hereof, the Employee shall receive his full Base Salary through the
Date of Termination including any accrued vacation days at the rate then in
effect and the Company shall have no further payment obligations to the Employee
under this Agreement.

            (f)  Unless the Employee is terminated for Cause or the Employee's
employment is terminated pursuant to Section 7(a) or 7(d)(iii) hereof, the
Employee shall be entitled to continue to participate, for a period which is the
lesser of two years from the Date of Termination or the remaining Term of this
Agreement, in such health-and-accident plan or arrangement as is made available
by the Company to its executive officers generally.  The Employee shall not be
entitled to participate in any other employee benefit plan or arrangement of the
Company following the Date of Termination except as expressly provided by the
terms of any such plan.

            (g)  The Company will reimburse the Employee for the Federal excise
tax, if any, which is due pursuant to Section 4999 of the Internal Revenue Code
of 1986, as amended, on the compensation payments (but not this reimbursement
payment) described in this Agreement.

        9.  Successors; Binding Agreement.
            ------------------------------

            (a)  The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance reasonably satisfactory to the Employee, to expressly assume
and agree to perform this Agreement in the same manner and to

                                      -7-

the same extent that the Company would be required to perform if no such
succession had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Employee to compensation from the Company in the
same amount and on the same terms as he would be entitled to hereunder if he had
terminated his employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which executes and delivers the
agreement provided for in this Section 9 or which otherwise becomes bound by all
the terms and provisions of this Agreement by operation of law.

            (b)  This Agreement and all rights of the Employee hereunder shall
inure to the benefit of and be enforceable by the Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.  If the Employee should die while any amounts would still
be payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Employee's devisee, legatee, or other designee or, if
there be no such designee, to the Employee's estate.

        10. Indemnification.  The Company shall, to the fullest extent
            ----------------
permitted by law, indemnify and hold harmless the Employee against any loss,
liability, claim, damage and expense, including the cost of defense, incurred in
the course of the Employee's employment hereunder. The Company's liability
hereunder shall be reduced by the amount of insurance proceeds paid to or on
behalf of the Employee with respect to an event giving rise to indemnification
hereunder. This indemnification shall survive the death or other termination of
employment of the Employee and the termination of this Agreement. Any legal fees
incurred by the Employee in the enforcement of this or any other provision of
this Agreement shall be promptly reimbursed by the Company as the same are
incurred.

        11. Survival.  The provisions of Sections 6, 8, and 10 shall survive the
            ---------
termination of employment of the Employee. In addition, all obligations of the
Company to make payments hereunder shall survive any termination of this
Agreement.

        12. Notice.  For the purpose of this Agreement, notices and all other
            -------
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
parties at their addresses set forth below, or to such other addresses as either
party may have furnished to the other in writing in accordance herewith except
that notices of change of address shall be effective only upon receipt.

                                      -8-

                If to the Company:

                Plains All American GP LLC
                333 Clay Street
                Houston, Texas 77002
                Attention:  General Counsel

                If to the Employee:

                Harry N. Pefanis
                4103 University Blvd.
                Houston, TX 77005

        13.  Miscellaneous.  No provisions of this Agreement may be modified,
             --------------
waived or discharged unless such waiver, modification or discharge is agreed to
in writing.  No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.  The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Texas.

        14.  Entire Agreement.  This Agreement contains the entire understanding
             -----------------
of the parties in respect of its subject matter and supersedes all prior oral
and written agreements and understandings between the parties with respect to
such subject matter and supersedes all subsequent agreements or understandings
between the parties with respect to all employee benefit plans and arrangements
in effect on the date hereof or hereafter adopted to the extent that such plans
or arrangements conflict with the terms of this Agreement.

        15.  Validity.  The invalidity or unenforceability of any provision or
             ---------
provisions of this Agreement shall not affect the validity or enforceability of
any provision of this Agreement, which shall remain in full force and effect.

        16.  Headings.  The headings contained in this Agreement are for
             ---------
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.

                                      -9-

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                                 PLAINS ALL AMERICAN GP LLC

                                 By:   /s/ Tim Moore
                                      ------------------------------------
                                 Name:  Tim Moore

                                 Title: Vice President
                                      ------------------------------------

                                 HARRY N. PEFANIS

                                 /s/ Harry N. Pefanis
                                 ------------------------------------------
                                 Employee

                                      -10-

                                                                    EXHIBIT 10.3

           THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
                          [Revolving Credit Facility]

     THIS THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT [Revolving
Credit Facility] (this "Amendment") dated as of the 6th day of September, 2001,
by and among PLAINS MARKETING, L.P. ("US Borrower"), ALL AMERICAN PIPELINE, L.P.
and PLAINS ALL AMERICAN PIPELINE, L.P., as guarantors, FLEET NATIONAL BANK, as
Administrative Agent, THE TORONTO-DOMINION BANK, as Canadian Agent, PMC (NOVA
SCOTIA) COMPANY ("Term Borrower"), PLAINS MARKETING CANADA, L.P. ("Canadian
Revolver Borrower"), and the Lenders party hereto.

                             W I T N E S S E T H:

     WHEREAS, US Borrower, All American, Plains MLP, Administrative Agent,
Canadian Agent, Term Borrower, Canadian Revolver Borrower and Lenders entered
into that certain Amended and Restated Credit Agreement [Revolving Credit
Facility] dated as of May 4, 2001 (as amended, supplemented, or restated to the
date hereof, the "Original Agreement") for the purposes and consideration
therein expressed, pursuant to which Lenders became obligated to make and made
loans to US Borrower, Term Borrower and Canadian Revolver Borrower as therein
provided; and

     WHEREAS, US Borrower, All American, Plains MLP, Administrative Agent,
Canadian Agent, Term Borrower, Canadian Revolver Borrower and Lenders desire to
amend the Original Agreement for the purposes described herein;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Original Agreement, in consideration
of the loans which may hereafter be made by Lenders to US Borrower, Term
Borrower and Canadian Revolver Borrower, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto do hereby agree as follows:

                   ARTICLE I. -- Definitions and References

     (S) 1.1.  Terms Defined in the Original Agreement.  Unless the context
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in
this Amendment.

     (S) 1.2.  Other Defined Terms.  Unless the context otherwise requires,
the following terms when used in this Amendment shall have the meanings assigned
to them in this (s)(s) 1.2.8

                  "Amendment" means this Third Amendment to Amended and
     Restated Credit Agreement [Revolving Credit Facility].

                  "Amendment Documents" means this Amendment.

                  "Credit Agreement" means the Original Agreement as amended
     hereby.

                                       1

                           ARTICLE II. -- Amendments

    (S) 2.1.   Definitions.

    (a) The table set forth in the definition of "Applicable Leverage Level" set
forth in Section 1.1 of the Original Agreement is hereby amended in its entirety
to read as follows:

      Applicable
    Leverage Level                   Leverage Ratio

        Level I           greater than or equal to 4.50 to 1.0

        Level II          greater than or equal to 4.25 to 1.0
                               but less than 4.50 to 1.0

        Level III         greater than or equal to 4.00 to 1.0
                               but less than 4.25 to 1.0

        Level IV          greater than or equal to 3.50 to 1.0
                               but less than 4.00 to 1.0

        Level V           greater than or equal to 3.00 to 1.0
                               but less than 3.50 to 1.0

        Level VI            greater than or equal to 2.25 to
                             1.0 but less than 3.00 to 1.0

        Level VII                less than 2.25 to 1.0

     (b) The following defined terms set forth in Section 1.1 of the Original
Agreement are hereby amended in their entirety to read as follows:

          "Base Rate Loan" means any US Base Rate Loan, Term Base Rate Loan,
     Term-B Base Rate Loan, or Canadian Revolver Prime Rate Loan.

          "Borrowing" means a borrowing of new Loans of a single Type pursuant
     to Section 2A.2 or 2B.2 or a Continuation or Conversion of existing Loans
     into a single Type (and, in the case of LIBOR Loans, with the same Interest
     Period) pursuant to Section 2A.3, 2B.3, 2C.2, or 2D.2 or the acceptance or
     purchase by Canadian Revolver Lenders of Bankers' Acceptances issued by
     Canadian Revolver Borrower under Section 2B.8.

          "Commitment" means the sum of (a) the Canadian Revolver Commitment,
     plus (b) the US Commitment, plus (c) the outstanding principal balance of
     the Term Notes, plus (d) the outstanding principal balance of the Term-B
     Notes, in each case as of the time of determination.

          "Continue", "Continuation" and "Continued" shall refer to (i) the
     continuation pursuant to Section 2A.3, 2C.2, or 2D.2 hereof of a LIBOR Loan
     as a LIBOR Loan from one Interest Period to the next Interest Period and
     (ii) a rollover of a Banker's Acceptance at maturity.

                                       2

          "Continuation/Conversion Notice" means a written or telephonic
     request, or a written confirmation, made by a Borrower which meets the
     requirements of Section 2A.3, 2B.3, 2C.2, or 2D.2.

          "Convert, "Conversion" and "Convert" refers to (i) a conversion
     pursuant to Section 2A.3 of one Type of US Loan into another Type of US
     Loan, (ii) a conversion pursuant to Section 2B.3 of one Type of Canadian
     Revolver Advance into another Type of Canadian Revolver Advance, (iii) a
     conversion pursuant to Section 2C.2 of one Type of Term Loan into another
     Type of Term Loan, and (iv) a conversion pursuant to Section 2D.2 of one
     Type of Term-B Loan into another Type of Term-B Loan.

          "Default Rate" means, at the time in question, two percent (2%) per
     annum plus:

          (a) the US LIBOR Rate plus (i) the US LIBOR Rate Margin then in effect
     for each US LIBOR Loan (up to the end of the applicable Interest Period),
     (ii) the Term LIBOR Rate Margin then in effect for each Term LIBOR Loan (up
     to the end of the applicable Interest Period), or (iii) the Term-B LIBOR
     Rate Margin then in effect for each Term-B LIBOR Loan (up to the end of the
     applicable Interest Period),

          (b) the US Base Rate plus (i) the US Base Rate Margin then in effect
     for each US Base Rate Loan, (ii) the Term Base Rate Margin then in effect
     for each Term Base Rate Loan, or (iii) the Term-B Base Rate Margin then in
     effect for each Term-B Base Rate Loan, or

          (c) the Canadian Revolver Prime Rate plus the Canadian Revolver Prime
     Rate Margin for each Canadian Revolver Prime Rate Loan;

     provided, however, the Default Rate shall never exceed the Highest Lawful
     Rate.

          "Guarantors" means Plains MLP and all of its Subsidiaries, other than
     3794865 Canada Ltd. (including All American but excluding US Borrower with
     respect to the US Commitment and the Term-B Loan, Term Borrower with
     respect to the Term Loan, and Canadian Revolver Borrower with respect to
     the Canadian Obligations) and any other Person who has guaranteed some or
     all of the Obligations and who has been accepted by Administrative Agent as
     a Guarantor or any Subsidiary of Plains MLP which now or hereafter executes
     and delivers a guaranty to Administrative Agent pursuant to Section 6.17.

          "Interest Period" means, with respect to each particular LIBOR Loan in
     a Borrowing, the period specified in the Borrowing Notice or
     Continuation/Conversion Notice applicable thereto, beginning on and
     including the date specified in such Borrowing Notice or
     Continuation/Conversion Notice (which must be a Business Day), and ending
     one, two, three, six or twelve months (if twelve months is available for
     each Lender) thereafter, as US Borrower, Term Borrower, or Canadian
     Revolver Borrower may elect in such notice; provided that:  (a) any
     Interest Period which would otherwise end on a day which is not a Business
     Day shall be extended to the next succeeding Business Day unless such
     Business Day falls in another calendar month, in which case such Interest
     Period shall end on the next preceding Business Day; (b) any Interest
     Period

                                       3

     which begins on the last Business Day in a calendar month (or on a day for
     which there is no numerically corresponding day in the calendar month at
     the end of such Interest Period) shall end on the last Business Day in a
     calendar month; and (c) notwithstanding the foregoing, no Interest Period
     may be selected for (i) a US Loan that would end after the US Maturity
     Date, (ii) a Term Loan that would end after the Term Loan Maturity Date, or
     (iii) a Term-B Loan that would end after the Term-B Loan Maturity Date.

          "Lender Commitment" means, with respect to a Lender, the sum of (a)
     the greater of (i) such Lender's Canadian Revolver Commitment, and (ii)
     such Lender's portion of the Canadian Facility Usage, plus (b) the greater
     of (i) such Lender's US Commitment and (ii) such Lender's US Facility
     Usage, plus (c) the outstanding principal balance of such Lender's Term
     Note, plus (d) the outstanding principal balance of such Lender's Term-B
     Note, in each case as of the time of determination.

          "Lenders" means, collectively, the US Lenders, the Term Lenders, the
     Term-B Lenders, and the Canadian Revolver Lenders.

          "Loans" means, collectively, the Term Loans, the Canadian Revolver
     Advances, the US Loans, and the Term-B Loans.

          "Notes" means, collectively, the Term Notes, the Term-B Notes, the
     Canadian Revolver Notes, and the US Notes.

          "Percentage Share" means:

               (a) with respect to US Loans and US Lenders, the percentage shown
          as each US Lender's "US Percentage Share" on the Lender Schedule,

               (b) with respect to Term Loans and Term Lenders, the percentage
          shown as each Term Lender's "Term Percentage Share" on the Lender
          Schedule,

               (c) with respect to Term-B Loans and Term-B Lenders, the
          percentage shown as each Term-B Lender's "Term-B Percentage Share" on
          the Lender Schedule, and

               (d) with respect to Canadian Revolver Advances and Canadian
          Revolver Lenders, the percentage shown as each Canadian Revolver
          Lender's "Canadian Revolver Percentage Share" on the Lender Schedule.
          "Permitted Investments" means:

          (a) Cash Equivalents,

          (b) Investments described in the Disclosure Schedule,

          (c) Investments by Plains MLP or any of its Subsidiaries in any Wholly
     Owned Subsidiary of Plains MLP which is a Borrower or a Guarantor,

                                       4

          (d) Investments in publicly traded units of master limited
     partnerships whose dividends are "qualifying income" as such term is
     defined in Section 7704 of the Code (provided, the amount of any such
     Investments under this clause (d) minus any amounts received on such
     Investments (excluding dividends thereon) shall not at any time exceed the
     Dollar Equivalent of $5,000,000), and

          (e) Permitted Acquisitions.

          "Type" means, with respect to any Loans, the characterization of such
     Loans as US Base Rate Loans, Term Base Rate Loans, Term-B Base Rate Loans,
     Canadian Revolver Prime Rate Loans, US LIBOR Loans, Term LIBOR Loans, Term-
     B LIBOR Loans or BAs.

          "US Base Rate Loan" means a US Loan which does not bear interest at a
     rate based upon the US LIBOR Rate.

          "US Commitment" means (a) prior to the date on which Term-B Lenders
     make the Term-B Loans, $500,000,000, and (b) on and after the date on which
     Term-B Lenders make the Term-B Loans, an amount equal to (i) $500,000,000,
     minus (ii) twenty-five percent (25%) of the original aggregate amount of
     such Term-B Loans.  Each US Lender's US Commitment shall be the amount set
     forth on the Lender Schedule.

          "US LIBOR Rate" means, as applicable to any US LIBOR Loan, Term LIBOR
     Loan or Term-B LIBOR Loan within a Borrowing and with respect to the
     related Interest Period therefor, the rate per annum (rounded upwards, if
     necessary, to the nearest 1/100 of 1%) as determined on the basis of
     offered rates for deposits in Dollars, for a period of time comparable to
     such Interest Period which appears on Telerate Page 3750 (or any successor
     page) as of 11:00 a.m. London time on the day that is two Business Days
     preceding the first day of such US LIBOR Loan, Term LIBOR Loan or Term-B
     LIBOR Loan; provided, however, if the rate described above does not appear
     on the Telerate system on any applicable interest determination date, the
     US LIBOR Rate shall be the rate (rounded upwards as described above, if
     necessary) for deposits in dollars for a period substantially equal to such
     Interest Period on the Reuters Page "LIBOR" (or such other page as may
     replace the LIBOR Page on that service for the purpose of displaying such
     rates), as of 11:00 a.m. (London time), on the date that is two Business
     Days prior to the beginning of such Interest Period; provided, however, if
     more than one rate is specified on Reuters Screen LIBOR Page, the
     applicable rate shall be the arithmetic mean of all such rates (rounded
     upwards, if necessary, to the nearest 1/1000 of 1%).  If both the Telerate
     and Reuters system are unavailable, then the US LIBOR Rate for that date
     will be determined on the basis of the offered rates for deposits in
     Dollars for a period of time comparable to such Interest Period which are
     offered by four major banks in the London interbank market at approximately
     11:00 a.m. London time, on the day that is two (2) Business Days preceding
     the first day of such US LIBOR Loan, Term LIBOR Loan or Term-B LIBOR Loan
     as selected by Administrative Agent.  The principal London office of each
     of the four major London banks will be requested to provide a quotation of
     its Dollar deposit offered rate.  If at least two such quotations are
     provided, the rate for that date will be the arithmetic mean of the
     quotations.  If fewer than two quotations are provided as requested, the
     rate for that date will be determined on the basis of the rates quoted for
     loans in Dollars to leading European banks for a period of time comparable
     to

                                       5

     such Interest Period offered by major banks in New York City at
     approximately 11:00 a.m. New York City time, on the day that is two
     Business Days preceding the first day of such US LIBOR Loan, Term LIBOR
     Loan or Term-B LIBOR Loan. In the event that Administrative Agent is unable
     to obtain any such quotation as provided above, it will be deemed that the
     US LIBOR Rate pursuant to such US LIBOR Loan, Term LIBOR Loan or Term-B
     LIBOR Loan cannot be determined. In the event that the Board of Governors
     of the Federal Reserve System shall impose a Reserve Percentage with
     respect to LIBOR deposits of any Lender, then for any period during which
     such Reserve Percentage shall apply, the US LIBOR Rate shall be equal to
     the amount determined above divided by an amount equal to 1 minus the
     Reserve Percentage. "Reserve Percentage" means the maximum aggregate
     reserve requirement (including all basic, supplemental, marginal, special,
     emergency and other reserves) which is imposed on member banks of the
     Federal Reserve System against "Euro-currency Liabilities" as defined in
     Regulation D. Without limiting the effect of the foregoing, the Reserve
     Percentage shall reflect any other reserves required to be maintained by
     such member banks with respect to (a) any category of liabilities which
     includes deposits by reference to which the US LIBOR Rate is to be
     determined, or (b) any category of extensions of credit or other assets
     which include US LIBOR Loans, Term LIBOR Loans or Term-B LIBOR Loans. The
     US LIBOR Rate for any US LIBOR Loan, Term LIBOR Loan or Term-B LIBOR Loan
     shall change whenever the Reserve Percentage changes.

          "US Obligations" means all Liabilities from time to time owing by any
     Restricted Person to any Lender Party under or pursuant to any of the US
     Notes, including all US LC Obligations owing thereunder, the Term Notes, or
     the Term-B Notes, or under or pursuant to any guaranty of the obligations
     of US Borrower or Term Borrower under the Loan Documents, or under or
     pursuant to any Security Document which secures the payment and performance
     of such Liabilities.  "US Obligation" means any part of the US Obligations.

     (c) The following definitions are hereby added to Section 1.1 of the
Original Agreement in appropriate alphabetical order:

          "Term-B Base Rate Loan" means a Term-B Loan which does not bear
     interest at a rate based upon the US LIBOR Rate.

          "Term-B Base Rate Margin" means, on any day, the percent per annum set
     forth on the Pricing Grid as the "Term-B Base Rate Margin" based on the
     Applicable Leverage Level in effect on such date.  Changes in the
     applicable Term-B Base Rate Margin will occur automatically without prior
     notice as changes in the Applicable Leverage Level occur.  Administrative
     Agent will give notice promptly to US Borrower and Term-B Lenders of
     changes in the Term-B Base Rate Margin.

          "Term-B Lenders" means each signatory hereto designated as a Term-B
     Lender, and the successors and each permitted assign of each such party as
     holder of a Term-B Note.

          "Term-B LIBOR Loan" means a Term-B Loan that bears interest at a rate
     based upon the US LIBOR Rate.

                                       6

          "Term-B LIBOR Rate Margin" means, on any day, the percent per annum
     set forth on the Pricing Grid as the "Term-B LIBOR Rate Margin" based on
     the Applicable Leverage Level in effect on such date.  Changes in the
     applicable Term-B LIBOR Rate Margin will occur automatically without prior
     notice as changes in the Applicable Leverage Level occur.  Administrative
     Agent will give notice promptly to US Borrower and Term-B Lenders of
     changes in the Term-B LIBOR Rate Margin.

          "Term-B Loan" has the meaning given such term in Section 2D.1 hereof.

          "Term-B Loan Maturity Date" means September 21, 2007.

          "Term-B Notes"  has the meaning given such term in Section 2D.1
hereof.

     (S) 2.2. Article IID. The Original Agreement is hereby amended by adding
thereto the following Article IID:

                          ARTICLE IID - Term-B Loans

                  Section 2D.1. Term-B Loans.  Subject to the terms and
     conditions hereof, each Term-B Lender agrees to make one (1) advance to US
     Borrower (herein called such Lender's "Term-B Loan") upon US Borrower's
     request on or before September 30, 2001, provided that (a) such Term-B Loan
     by each Term-B Lender does not exceed such Term-B Lender's Term-B Loan
     amount set forth on the Lender Schedule and (b) the aggregate amount of all
     Term-B Loans does not exceed $250,000,000. Portions of each Term-B Lender's
     Term-B Loan may from time to time be designated as a Term-B Base Rate Loan
     or Term-B LIBOR Loan as provided herein. The obligation of US Borrower to
     repay to each Term-B Lender the amount of the Term-B Loan made by such
     Term-B Lender to US Borrower, together with interest accruing in connection
     therewith, shall be evidenced by a single promissory note (herein called
     such Term-B Lender's "Term-B Note") made by US Borrower payable to the
     order of such Term-B Lender in the form of Exhibit A-4 with appropriate
     insertions. The amount of principal owing on any Term-B Lender's Term-B
     Note at any given time shall be the amount of such Term-B Lender's Term-B
     Loan minus all payments of principal theretofore received by such Term-B
     Lender on such Term-B Note. Interest on each Term-B Note shall accrue and
     be due and payable as provided herein and therein. Each Term-B Note shall
     be due and payable as provided herein and therein, and shall be due and
     payable in full on the Term-B Loan Maturity Date. No portion of any Term-B
     Loan which has been repaid may be reborrowed. US Borrower may have no more
     than three Borrowings of Term-B LIBOR Loans outstanding at any time. All
     payments of principal and interest on the Term-B Loans shall be made in
     Dollars. All Term-B Loans shall be advanced to US Borrower in Dollars.

                  Section 2D.2.  Continuations and Conversions of Existing
     Term-B Loans. US Borrower may make the following elections with respect to
     outstanding Term-B Loans (1) to Convert, in whole or part, any Type of
     Term-B Loan to any other Type of Term-B Loan, provided that any such
     Conversion of any Term-B LIBOR Loan must be made on the last day of the
     Interest Period applicable thereto; and (2) to Continue, in whole or in
     part, Term-B LIBOR Loans beyond the expiration of such Interest Period by
     designating a new Interest Period to take effect at the time of such
     expiration. In making such

                                       7

     elections, US Borrower may combine existing Term-B Loans made pursuant
     to separate Borrowings into one new Borrowing or divide existing Term-B
     Loans made pursuant to one Borrowing into separate new Borrowings, provided
     that US Borrower may have no more than three Borrowings of Term-B LIBOR
     Loans outstanding at any time.  To make any such election, US Borrower must
     give to Administrative Agent written notice (or telephonic notice promptly
     confirmed in writing) of any such Conversion or Continuation of existing
     Term-B Loans, with a separate notice given for each new Borrowing.  Each
     such notice constitutes a "Continuation/Conversion Notice" hereunder and
     must:

          (a) specify the existing Term-B Loans which are to be Continued or
     Converted;

          (b) specify (i) the aggregate amount of any Borrowing of Term-B Base
     Rate Loans into which such existing Term-B Loans are to be Continued or
     Converted and the date on which such Continuation or Conversion is to
     occur, or (ii) the aggregate amount of any Borrowing of Term-B LIBOR Loans
     into which such existing Term-B Loans are to be Continued or Converted, the
     date on which such Continuation or Conversion is to occur (which shall be
     the first day of the Interest Period which is to apply to such Term-B LIBOR
     Loans), and the length of the applicable Interest Period; and

          (c) be received by Administrative Agent not later than 11:00 a.m.,
     Boston, Massachusetts time, on (i) the day on which any such Continuation
     or Conversion to Term-B Base Rate Loans is to occur, or (ii) the third
     Business Day preceding the day on which any such Continuation or Conversion
     to Term-B LIBOR Loans is to occur.

     Each such written request or confirmation must be made in the form and
     substance of the "Continuation/Conversion Notice" attached hereto as
     Exhibit C-4, duly completed.  Each such telephonic request shall be deemed
     a representation, warranty, acknowledgment and agreement by US Borrower as
     to the matters which are required to be set out in such written
     confirmation.  Upon receipt of any such Continuation/Conversion Notice,
     Administrative Agent shall give each Term-B Lender prompt notice of the
     terms thereof.  Each Continuation/Conversion Notice shall be irrevocable
     and binding on US Borrower.  During the continuance of any Default, US
     Borrower may not make any election to Convert existing Term-B Loans into
     LIBOR Loans or Continue existing LIBOR Loans made under this Agreement as
     LIBOR Loans beyond the last day of the respective and corresponding
     Interest Period.  If (due to the existence of a Default or for any other
     reason) US Borrower fails to timely and properly give any
     Continuation/Conversion Notice with respect to a Borrowing of existing
     LIBOR Loans at least three days prior to the end of the Interest Period
     applicable thereto, such LIBOR Loans (to the extent not prepaid at the end
     of such Interest Period) shall automatically be Converted into Term-B Base
     Rate Loans at the end of such Interest Period.   No new funds shall be
     repaid by US Borrower or advanced by any Term-B Lender in connection with
     any Continuation or Conversion of existing Term-B Loans pursuant to this
     section, and no such Continuation or Conversion shall be deemed to be a new
     advance of funds for any purpose; such Continuations and Conversions merely
     constitute a change in terms of already outstanding Term-B Loans and the
     interest rate applicable thereto.

          Section 2D.3.   Repayments.

                                       8

          (a) Scheduled Repayments of Principal.  US Borrower shall repay the
     principal of the Term-B Loans as follows:   (i) a principal payment in an
     amount equal to one percent of the original principal amount of the Term-B
     Loans shall be due and payable on September 21 of each year, commencing
     September 21, 2002, and (ii) the outstanding principal balance shall be due
     on the Term-B Loan Maturity Date.

          (b) Interest Rates.  Each Term-B Loan shall bear interest as follows:
     (i) unless the Default Rate shall apply, (A) each Term-B Base Rate Loan
     shall bear interest on each day outstanding at the US Base Rate plus the
     Term-B Base Rate Margin in effect on such day, and (B) each Term-B LIBOR
     Loan shall bear interest on each day during the related Interest Period at
     the related US LIBOR Rate plus the Term-B LIBOR Rate Margin in effect on
     such day, and (ii) during a Default Rate Period, all Term-B Loans shall
     bear interest on each day outstanding at the applicable Default Rate.   If
     an Event of Default based upon Section 8.1(a), Section 8.1(b) or, with
     respect to US Borrower, based upon Section 8.1(i)(i), (i)(ii) or (i)(iii)
     exists and the Term-B Loans are not bearing interest at the Default Rate,
     the past due principal and past due interest shall bear interest on each
     day outstanding at the applicable Default Rate.  The interest rate shall
     change whenever the applicable US Base Rate, the US LIBOR Rate, Term-B Base
     Rate Margin, or the Term-B LIBOR Rate Margin changes.  In no event shall
     the interest rate on any Term-B Loan exceed the Highest Lawful Rate.

          (c) Optional Prepayments.  US Borrower may, upon three Business Days'
     notice, as to Term-B LIBOR Loans, or one Business Day's notice, as to Term-
     B Base Rate Loans, to Administrative Agent (and Administrative Agent will
     promptly give notice to the other Term-B Lenders) from time to time and
     without premium or penalty prepay the Term-B Loans, in whole or in part, so
     long as the aggregate amounts of all partial prepayments of principal on
     the Term-B Loans equals $5,000,000 or any higher integral multiple of
     $1,000,000.  Each prepayment of principal of a Term-B LIBOR Loan under this
     subsection shall be accompanied by all interest then accrued and unpaid on
     the principal so prepaid.  Any principal or interest prepaid pursuant to
     this subsection shall be in addition to, and not in lieu of, all payments
     otherwise required to be paid under the Loan Documents at the time of such
     prepayment.

          Section 2D.4.  Use of Proceeds.    US Borrower shall use all Term-B
     Loans to provide working capital for operations and for other general
     business purposes, including acquisitions and refinancing Obligations, but
     not to pay distributions to partners of Restricted Persons. In no event
     shall the funds from any Term-B Loan be used directly or indirectly by any
     Person for personal, family, household or agricultural purposes or for the
     purpose, whether immediate, incidental or ultimate, of purchasing,
     acquiring or carrying any "margin stock" (as such term is defined in
     Regulation U promulgated by the Board of Governors of the Federal Reserve
     System) or to extend credit to others directly or indirectly for the
     purpose of purchasing or carrying any such margin stock.  US Borrower
     represents and warrants that it is not engaged principally, or as one of
     its important activities, in the business of extending credit to others for
     the purpose of purchasing or carrying such margin stock.

     (S) 2.3. General Payment Procedures.  Administrative Agent hereby agrees
with each Lender that it shall distribute and apply money pursuant to Section
3.1(b) and (c) and Section 3.9 promptly.

                                       9

     (S) 2.4. Indebtedness. Clause (5) of Section 7.1(g) of the Original
Agreement is hereby amended in its entirety to read as follows:

     (5) upon the receipt of net proceeds from the original issuance of such
     Indebtedness, the US Commitment shall be reduced by an amount (the
     "Commitment Reduction Amount") equal to (A) forty percent (40%) of the face
     amount of such Indebtedness, if the aggregate face amount is less than
     $350,000,000, or (B) fifty percent (50%) of the face amount of such
     Indebtedness, if the aggregate face amount of such Indebtedness is equal to
     or greater than $350,000,000; provided, however, such Commitment Reduction
     Amount shall be reduced by an amount equal to twenty-five percent (25%) of
     the aggregate original principal amount of the Term-B Loans;

     (S) 2.5. Debt to Capital Ratio. Section 7.14 of the Original Agreement is
hereby amended in its entirety to read as follows:

                  Section 7.14.  Debt to Capital Ratio.  The ratio of (a) all
     Consolidated Funded Indebtedness to (b) the sum of Consolidated Funded
     Indebtedness plus Consolidated Net Worth will never be greater than:

                  (i)  prior to December 31, 2002, 0.70 to 1.0 at any time; and

                  (ii) from and after December 31, 2002, 0.65 to 1.0 at any
     time.

     (S) 2.6. Open Position. The reference to "$5,000,000" set forth in Section
7.15(a)(iii) of the Original Agreement is hereby amended to refer instead to
"$12,500,000".

     (S) 2.7. Assignments and Pledges by Term Lenders and Term-B Lenders. The
reference to "Affiliate" in the first sentence of Section 10.(c) is hereby
amended to refer instead to "affiliate".

     The last sentence of Section 10.5(c)(i) of the Original Agreement is hereby
amended in its entirety to read as follows:

     In the case of an assignment by a Term Lender or Term-B Lender of less than
     all of its respective Term Loan or Term-B Loan, after such assignment is
     made, the Term Loan Percentage Share of each of the assignee Term Lender
     and the assignor Term Lender shall equal or exceed 1% or the Term-B Loan
     Percentage Share of each of the assignee Term-B Lender and the assignee
     Term-B Lender shall equal or exceed 0.5% (provided that such minimum Term
     Loan Percentage Share or Term-B Loan Percentage Share shall not be required
     in connection with any assignment by any Lender to any fund that invests in
     loans and is managed by such Lender, any affiliate of such Lender, the same
     fund manager, or any affiliate of the same fund manager).

     The proviso set forth in the first sentence of Section 10.5(c)(ii) of the
Original Agreement is hereby amended in its entirety to read as follows:

     provided, no such processing fee shall be payable in connection with any
     assignment of any Term Loan or Term-B Loan (or portion thereof) by a Lender
     to any fund that invests in loans and is managed by such Lender, any
     affiliate of such Lender, the same fund manager, or any affiliate of the
     same fund manager.

                                       10

     Section 10.5(d) of the Original Agreement is hereby amended by adding a new
sentence at the end thereof, to read as follows:

     In addition, any Term Lender or Term-B Lender may at any time, without
     consent of US Borrower, Term Borrower or Administrative Agent, pledge all
     or any portion of its Term Loan or Term-B Loan, as the case may be, to any
     trustee or holder (or other representative of such holder) (for purpose of
     this Section 10.5(d), each such trustee, holder or representative is
     referred to as a "pledgee") of obligations owed, or debt securities issued
     by, such Term Lender or Term-B Lender, as security for such obligations or
     debt securities; provided that (i) the agreement between such Lender and
     such pledgee at all times provides that such pledge does not give such
     pledgee any right to vote as a Lender or any other direct claims or rights
     against any Person other than such pledging Term Lender or Term-B Lender,
     as applicable, and imposes no obligations on the part of any of US
     Borrower, Term Borrower or Administrative Agent, (ii) no such pledge (or
     enforcement thereof) shall release any such pledging Term Lender or Term-B
     Lender from its obligations under any of the Loan Documents or permit or
     authorize any Person to become a Lender unless it has complied with Section
     10.5(c), and (iii) all related costs, fees and expenses in connection with
     any such pledge shall be for the sole account of such pledging Term Lender
     or Term-B Lender.

     The reference to "subject to the following additional conditions:" set
forth in the first sentence of Section 10.5(g) is amended to refer instead to
"subject to the following additional conditions (x), (y) and (z), with respect
to assignments pursuant to clause (i) above, and subject to the following
additional conditions (y) and (z) with respect to assignments pursuant to clause
(ii) above:".

     (S) 2.8.  Exhibits and Schedules.

     (a) The Lender Schedule attached as Schedule 1 to the Original Agreement is
hereby replaced in its entirety with Schedule 1 attached hereto.

     (b) The Pricing Grid attached as Schedule 5 to the Original Agreement is
hereby replaced in its entirety with Schedule 5 attached hereto.

     (c) The Original Agreement is hereby amended by adding thereto the form of
Term Note and form of Term-B Continuation/Conversion Notice attached as Exhibits
A-4 and B-3 attached hereto.

     (S) 2.9. US Commitment Reduction. Upon the making of the Term-B Loans, the
US Commitment shall be permanently reduced by an amount equal to twenty-five
percent (25%) of the original aggregate amount of such Term-B Loans.

                  ARTICLE III. -- Conditions of Effectiveness

     (S) 3.1. Amendment Effective Date. This Amendment shall become effective as
of the date first written above, when and only when

                                       11

          (i)  Administrative Agent shall have received, at Administrative
     Agent's office (A) a counterpart of this Amendment executed and delivered
     by US Borrower, Term Borrower, Canadian Revolver Borrower, Plains MLP, All
     American and Majority Lenders which are parties to the Original Agreement,
     and consented to by each Guarantor, (B) a contemporaneous amendment to the
     Marketing Credit Agreement, amending (I) certain restrictions on the
     incurrence of Indebtedness by Restricted Persons so as to permit the Term-B
     Loans, (II) certain financial covenants on the same terms and conditions
     set forth herein, and (III) various other provisions therein consistent
     with the amendments set forth herein, in form and substance acceptable to
     Administrative Agent, executed and delivered by such Persons so as to make
     such amendment effective;

          (ii) (A) In consideration hereof, US Borrower shall have paid to
     Administrative Agent for the account of each Lender, other than Term-B
     Lenders, executing and delivering this Amendment an amendment fee in
     immediately available funds equal to one-twentieth of one percent (0.05%)
     of each such Lender's Commitment; provided, with respect to any such
     Lender's US Commitment, such fee shall be based upon the US Commitment as
     reduced pursuant to Section 2.8 hereof, and (B) US Borrower shall have paid
     all other fees required to be paid to Administrative Agent or any Lender
     pursuant to any Loan Documents, including fees and expenses of Thompson &
     Knight LLP, counsel to Administrative Agent; and

          (iii)  Administrative Agent shall have additionally received all of
     the following documents, each document (unless otherwise indicated) being
     dated the date of receipt thereof by Administrative Agent, duly authorized,
     executed and delivered, and in form and substance satisfactory to
     Administrative Agent:

               (A)   Officer's Certificate.  A certificate of a duly authorized
          officer of General Partner, to the effect that all of the
          representations and warranties set forth in Article IV hereof are true
          and correct at and as of the date thereof, and

               (B)   Supporting Documents.  Such supporting documents as
          Administrative Agent may reasonably request.

     Section 3.2.  Term-B Loans; Documents to be Delivered.  No Term-B Lender
shall have any obligation to make its Term-B Loan, unless Administrative Agent
shall have received all of the following, at Administrative Agent's office in
Boston, Massachusetts, duly executed and delivered and in form, substance and
date satisfactory to Administrative Agent:

          (a) This Amendment executed and delivered by Term-B Lenders.

          (b) Each Term-B Note.

          (c) Amendments to each Mortgage listed on the Security Schedule, and
     such other amendments to the Security Documents as Administrative Agent may
     request Restricted Persons to deliver relating thereto.

          (d) Certain certificates including:

                                       12

               (i)   An "Omnibus Certificate" of the secretary and of the
          president of General Partner, which shall contain the names and
          signatures of the officers of General Partner authorized to execute
          Loan Documents and which shall certify to the truth, correctness and
          completeness of the following exhibits attached thereto:   a copy of
          resolutions duly adopted by the Board of Directors of General Partner
          and in full force and effect at the time this Agreement is entered
          into, authorizing the execution of this Agreement and the other Loan
          Documents delivered or to be delivered in connection herewith and the
          consummation of the transactions contemplated herein and therein,  a
          copy of the charter documents of each Restricted Person and all
          amendments thereto, certified by the appropriate official of such
          Restricted Person's jurisdiction of organization, and  a copy of any
          bylaws or agreement of limited partnership of each Restricted Person;

               (ii)  A certificate of the president and of the chief financial
          officer of the general partner of US Borrower and All American,
          regarding satisfaction of Section 4.2 of the Credit Agreement and a
          certificate of the chief financial officer of the general partner of
          General Partner reflecting pro forma compliance with each event
          specified in Sections 7.11 through 7.14, inclusive;

               (iii) A solvency certificate from each of US Borrower, Term
          Borrower, and Canadian Revolver Borrower and each Guarantor, with
          attached pro forma balance sheet for such Person giving effect to the
          Term-B Loans.

          (e)  A certificate (or certificates) of the due formation, valid
     existence and good standing of each Restricted Person in its respective
     jurisdiction of organization, issued by the appropriate authorities of such
     jurisdiction, and certificates of each Restricted Person's good standing
     and due qualification to do business, issued by appropriate officials in
     any jurisdictions in which such Restricted Person owns property subject to
     Security Documents.

          (f)  Documents similar to those specified in subsections (d)(i) and
     (e) of this section with respect to each Guarantor.

          (g)  A favorable opinion of Tim Moore, Esq., General Counsel for
     Restricted Persons, substantially in the form set forth in Exhibit E-1,
     Fulbright & Jaworski L.L.P., special Texas and New York counsel to
     Restricted Persons, substantially in the form set forth in Exhibit E-2,
     Bennett Jones LLP, special Canadian Counsel for Restricted Persons,
     substantially in the form set forth in Exhibit E-3, and local counsel for
     the state of California satisfactory to Administrative Agent.

          (h)  Payment of all commitment, facility, agency and other fees
     required to be paid to any Lender pursuant to any Loan Documents or any
     commitment agreement heretofore entered into.

                 ARTICLE IV. -- Representations and Warranties

     (S) 4.1. Representations and Warranties of Plains MLP and Borrowers. In
order to induce Administrative Agent and Lenders to enter into this Amendment,
Plains MLP and Borrowers represent and warrant to Administrative Agent and each
Lender that:

                                       13

          (a) The representations and warranties contained in Article V of the
     Original Agreement are true and correct at and as of the time of the
     effectiveness hereof, except to the extent that such representation and
     warranty was made as of a specific date.

          (b) Each Restricted Person is duly authorized to execute and deliver
     this Amendment and each other Amendment Document, to the extent a party
     thereto, and each Borrower is and will continue to be duly authorized to
     borrow and perform its obligations under the Credit Agreement.  Each
     Restricted Person has duly taken all action necessary to authorize the
     execution and delivery of this Amendment and each other Amendment Document,
     to the extent a party thereto, and to authorize the performance of their
     respective obligations hereunder.

          (c) The execution and delivery by each Restricted Person of this
     Amendment and each other Amendment Document, to the extent a party thereto,
     the performance by each Restricted Person of its respective obligations
     hereunder and thereunder, and the consummation of the transactions
     contemplated hereby and thereby, do not and will not conflict with any
     provision of any Law or of the organizational documents of any Restricted
     Person, or of any material agreement, judgment, license, order or permit
     applicable to or binding upon any Restricted Person, or result in the
     creation of any Lien upon any assets or properties of any Restricted
     Person, except in favor of Administrative Agent or Canadian Agent for the
     benefit of Lenders and other Permitted Liens.  Except for those which have
     been duly obtained, no consent, approval, authorization or order of any
     Tribunal or third party is required in connection with the execution and
     delivery by any Restricted Person of this Amendment or any other Amendment
     Document, or to consummate the transactions contemplated hereby and
     thereby.

          (d) When duly executed and delivered, each of this Amendment and each
     other Amendment Document, and each of the Loan Documents, as amended hereby
     and thereby, will be a legal and binding instrument and agreement of each
     Restricted Person to the extent a party thereto, enforceable in accordance
     with its terms, (subject, as to enforcement of remedies, to applicable
     bankruptcy, insolvency and similar laws applicable to creditors' rights
     generally).

                          ARTICLE V. -- Miscellaneous

     (S) 5.1. Ratification of Agreements. The Original Agreement, as hereby
amended, is hereby ratified and confirmed in all respects. The Loan Documents
(including but not limited to each Guaranty), as they may be amended or affected
by this Amendment or any other Amendment Document, are hereby ratified and
confirmed in all respects by each Restricted Person to the extent a party
thereto. Any reference to the Credit Agreement in any Loan Document shall be
deemed to refer to this Amendment also. The execution, delivery and
effectiveness of this Amendment and the other Amendment Documents shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of Administrative Agent, Canadian Agent or any Lender under the Credit
Agreement or any other Loan Document nor constitute a waiver of any provision of
the Credit Agreement or any other Loan Document.

     (S) 5.2. Ratification of Security Documents. Restricted Persons,
Administrative Agent, and Lenders each acknowledge and agree that any and all
indebtedness, liabilities or obligations, including without limitation the Term-
B Loans, arising under or in connection with the LC

                                       14

Obligations or the Notes, including without limitation the Term-B Notes, are
Obligations and are secured indebtedness under, are guarantied by, and are
secured by, each and every Security Document to which any Restricted Person is a
party. Each Restricted Person hereby re-pledges, re-grants and re-assigns a
security interest in and lien on every asset of the such Restricted Person
described as Collateral in any Security Document and re-guarantees all
Obligations under the Credit Agreement.

     (S) 5.3.  Ratification of Intercreditor Agreement.  Each Lender hereby
acknowledges and confirms that all Obligations under the Credit Agreement, as
amended hereby, and the "Obligations" under the Marketing Credit Agreement, as
amended on the date hereof, shall be and shall remain subject to the terms and
entitled to the benefits of the Intercreditor Agreement.

     (S) 5.4.  Survival of Agreements.  All representations, warranties,
covenants and agreements of the Restricted Persons herein shall survive the
execution and delivery of this Amendment and the performance hereof, including
without limitation the making or granting of each Loan, and shall further
survive until all of the Obligations under the Credit Agreement are paid in
full. All statements and agreements contained in any certificate or instrument
delivered by any Restricted Person hereunder or under the Credit Agreement to
Administrative Agent, Canadian Agent or any Lender shall be deemed to constitute
representations and warranties by, or agreements and covenants of, such
Restricted Person under this Amendment and under the Credit Agreement.

     (S) 5.5.  Loan Documents.  This Amendment and each other Amendment
Document is a Loan Document, and all provisions in the Credit Agreement
pertaining to Loan Documents apply hereto.

     (S) 5.6.  GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA IN ALL RESPECTS, INCLUDING
CONSTRUCTION, VALIDITY AND PERFORMANCE.

     (S) 5.7.  Counterparts.  This Amendment may be separately executed in
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to constitute one and the same
Amendment.

                                       15

     IN WITNESS WHEREOF, this Amendment is executed as of the date first above
written.

US BORROWER:                  PLAINS MARKETING, L.P.

                              By:  Plains Marketing GP Inc., General Partner

                              By:   /s/ Phil Kramer
                                 --------------------------------------
                                    Phil Kramer, Exec. Vice President

GUARANTORS:                   ALL AMERICAN PIPELINE, L.P.

                              By:  Plains Marketing GP Inc., General Partner

                              By:/s/ Phil Kramer
                                 --------------------------------------
                                    Phil Kramer, Exec. Vice President

                              PLAINS ALL AMERICAN PIPELINE, L.P.

                              By:  Plains AAP, L.P., General Partner

                              By:  Plains All American LLC, General Partner

                              By:   /s/ Phil Kramer
                                 --------------------------------------
                                    Phil Kramer, Exec. Vice President

CANADIAN REVOLVER
BORROWER:                     PLAINS MARKETING CANADA, L.P.,

                              By:  PMC (Nova Scotia) Company,
                                    General Partner

                              By:   /s/ Phil Kramer
                                 --------------------------------------
                                    Phil Kramer, Exec. Vice Pres.

TERM BORROWER:                PMC (NOVA SCOTIA) COMPANY

                              By:   /s/ Phil Kramer
                                 --------------------------------------
                                    Phil Kramer, Exec. Vice Pres.

                                       16

LENDER PARTIES:               FLEET NATIONAL BANK,
                              Administrative Agent, LC Issuer and Lender

                              By:
                                 --------------------------------------
                                    Terrence Ronan, Managing Director

                              FIRST UNION NATIONAL BANK, Lender

                              By:
                                 --------------------------------------
                                    Robert R. Wetteroff, Sr. Vice Pres.

                              BANK OF AMERICA, N.A., Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              BANK ONE, NA (MAIN OFFICE CHICAGO),
                              Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              FORTIS CAPITAL CORP., Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              U.S. BANK NATIONAL ASSOCIATION, Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              BANK OF SCOTLAND, Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                                       17

                              WELLS FARGO BANK (TEXAS),
                              NATIONAL ASSOCIATION, Lender

                             By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              THE BANK OF NOVA SCOTIA, Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              CREDIT AGRICOLE INDOSUEZ, Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              TORONTO DOMINION (TEXAS), INC., Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              SOUTHWEST BANK OF TEXAS, N.A., Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              UNION BANK OF CALIFORNIA, N.A., Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                                       18

                              COMERICA BANK-TEXAS, Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              BNP PARIBAS, Lender

                              By:
                                 --------------------------------------
                                   Name:
                                   Title:

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              HELLER FINANCIAL, INC., Lender

                              By:
                                 --------------------------------------
                                   Name:
                                   Title:

                              THE TORONTO-DOMINION BANK,
                              Canadian Administration Agent

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              THE TORONTO-DOMINION BANK, Lender

                              By:

                                 --------------------------------------
                                    Name:
                                    Title:

                              BANK OF AMERICA CANADA, Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                                       19

                              BNP PARIBAS (CANADA), Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              By:

                                 --------------------------------------
                                    Name:
                                    Title:

                              HELLER FINANCIAL CANADA, LTD., Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              PILGRIM PRIME RATE TRUST
                              PILGRIM SENIOR INCOME FUND
                              ML CLO XX PILGRIM AMERICA (CAYMAN)
                               LTD.
                              PILGRIM CLO 1999 - 1 LTD.
                              SEQUILS - PILGRIM I, LTD.
                              PILGRIM AMERICA HIGH INCOME
                               INVESTMENTS LTD.
                              ML CLO XII PILGRIM AMERICA (CAYMAN)
                               LTD., each a Lender
                              By:  ING Pilgrim Investments, LLC,
                                    as its investment manager

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              MORGAN STANLEY DEAN WITTER PRIME
                               INCOME TRUST, Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                                       20

                              FLAGSHIP CLO-2001-1, Lender
                              By:  Flagship Capital Management, Inc.

                              By:
                                 --------------------------------------
                                    Title:

                              FLAGSHIP CLO II, Lender

                              By:
                                 --------------------------------------
                                    Title:

                              ARCHIMEDES FUNDING IV (CAYMAN), LTD.
                              NEMEAN CLO, LTD., each a Lender
                              By:  ING Capital Advisors LLC,
                                    as Investment Manager

                              By:
                                 --------------------------------------
                                    Title:

                              ALLSTATE LIFE INSURANCE COMPANY
                              AIMCO CDO SERIES 2000-A, each a Lender

                              By:
                                 --------------------------------------
                                    Name:

                              By:
                                 --------------------------------------
                                    Name:
                              Its Authorized Signatories

                              TYLER TRADING, INC., Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              FIDELITY ADVISOR SERIES II: FIDELITY
                              ADVISOR FLOATING RATE HIGH INCOME FUND VARIABLE
                              INSURANCE PRODUCTS FUND II:
                              ASSET MANAGER PORTFOLIO, each a Lender

                              By:
                                 --------------------------------------
                                    Title:

                                       21

                              TRYON CLO LTD. 2000-I
                              ELC (CAYMAN) LTD. 1999-II
                              APEX (IDM) CDO I, LTD., each a Lender

                              By:
                                 --------------------------------------
                                    Title:

                              EMERALD ORCHARD LIMITED, Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                                       22

TERM-B LENDERS:               FLEET NATIONAL BANK, Term-B Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              KZH ING-1 LLC, Term-B Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              KZH ING-3 LLC, Term-B Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              THE SUMITOMO TRUST & BANKING CO.,
                              LTD. NEW YORK BRANCH

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              TORONTO DOMINION (TEXAS), INC.

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                                       23

                              KZH CNC LLC, Term-B Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              KZH WATERSIDE LLC, Term-B Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              KZH PONDVIEW LLC, Term-B Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                                       24

                              KZH HIGHLAND-2 LLC, Term-B Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                              KZH PAMCO LLC, Term-B Lender

                              By:
                                 --------------------------------------
                                    Name:
                                    Title:

                                       25

                                 CONSENT AND AGREEMENT

     The undersigned hereby consents to the provisions of this Amendment and the
transactions contemplated herein and hereby (i) acknowledges and agrees that any
and all indebtedness, liabilities or obligations, including without limitation
the Term-B Loans, arising under or in connection with the Notes, including
without limitation the Term-B Notes, are Obligations and are secured
indebtedness under, and are secured by, each and every Security Document to
which it is a party, (ii) re-pledges, re-grants and re-assigns a security
interest in and lien on all of its assets described as collateral in any
Security Document, (iii) ratifies and confirms its Guaranty dated May 4, 2001
made by it for the benefit of Administrative Agent and Lenders, and (iv)
expressly acknowledges and agrees that the undersigned guarantees all
indebtedness, liabilities and obligations, including without limitation the
Term-B Loans, arising under or in connection with any and all Notes, including
without limitation the Term-B Notes, pursuant to the terms of such Guaranty, and
agrees that its obligations and covenants thereunder are unimpaired hereby and
shall remain in full force and effect.

                              PLAINS MARKETING CANADA LLC

                              By:  Plains Marketing, L.P., its sole member

                                    By:  Plains Marketing GP Inc.,
                                         its general partner

                                    By:   /s/ Phil Kramer
                                       ------------------------------------
                                         Phil Kramer, Exec. Vice President

                                                                    EXHIBIT 10.4

           THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
               [Letter of Credit and Hedged Inventory Facility]

     THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT [Letter of Credit
and Hedged Inventory Facility] (this "Amendment") dated as of the 6th day of
September, 2001, by and among PLAINS MARKETING, L.P. ("Borrower"), ALL AMERICAN
PIPELINE, L.P. and PLAINS ALL AMERICAN PIPELINE, L.P., as guarantors, FLEET
NATIONAL BANK, as Administrative Agent, and the Lenders party hereto.

                             W I T N E S S E T H:

     WHEREAS, Borrower, All American, Plains MLP, Administrative Agent and
Lenders entered into that certain Amended and Restated Credit Agreement [Letter
of Credit and Hedged Inventory Facility] dated as of May 4, 2001 (as amended,
supplemented, or restated to the date hereof, the "Original Agreement") for the
purposes and consideration therein expressed, pursuant to which Lenders became
obligated to make and made loans to Borrower as therein provided; and

     WHEREAS, Borrower, All American, Plains MLP, Administrative Agent and
Lenders desire to amend the Original Agreement for the purposes described
herein;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Original Agreement, in consideration
of the loans which may hereafter be made by Lenders to Borrower, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:

                   ARTICLE I. -- Definitions and References

     (S) 1.1.  Terms Defined in the Original Agreement.  Unless the context
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in
this Amendment.

     (S) 1.2.  Other Defined Terms.  Unless the context otherwise requires,
the following terms when used in this Amendment shall have the meanings assigned
to them in this (S) 1.2.

                  "Amendment" means this Third Amendment to Amended and
            Restated Credit Agreement [Letter of Credit and Hedged Inventory
            Facility].

                  "Amendment Documents" means this Amendment.

                  "Credit Agreement" means the Original Agreement as amended
            hereby.

                                       1

                           ARTICLE II. -- Amendments

     (S) 2.1.  Definitions.    The table set forth in the definition of
"Applicable Leverage Level" in Section 1.1 of the Original Agreement is hereby
amended in its entirety to read as follows:

         Applicable
       Leverage Level                   Leverage Ratio
       --------------                   ----------------

           Level I             greater than or equal to 4.50 to 1.0

           Level II            greater than or equal to 4.25 to 1.0
                                  but less than 4.50 to 1.0

           Level III           greater than or equal to 4.00 to 1.0
                                  but less than 4.25 to 1.0

           Level IV            greater than or equal to 3.50 to 1.0
                                    but less than 4.00 to 1.0

           Level V             greater than or equal to 3.00 to 1.0
                                    but less than 3.50 to 1.0

           Level VI            greater than or equal to 2.25 to 1.0
                                    but less than 3.00 to 1.0

           Level VII                 less than 2.25 to 1.0

     All references to "Level VIII" (and all corresponding data) in the tables
set forth in the definitions of "Base Rate Margin", "Commitment Fee Rate",
"Letter of Credit Fee Rate" and "LIBOR Rate Margin" in Section 1.1 of the
Original Agreement are hereby deleted.

     The definition of "Permitted Investments" set forth in Section 1.1 of the
Original Agreement is hereby amended in its entirety to read as follows:

          "Permitted Investments" means:

          (a) Cash Equivalents,

          (b) Investments described in the Disclosure Schedule,

          (c) Investments by Plains MLP or any of its Subsidiaries in any Wholly
     Owned Subsidiary of Plains MLP which is either Borrower or a Guarantor,

          (d) Investments in publicly traded units of master limited
     partnerships whose dividends are "qualifying income" as such term is
     defined in Section 7704 of the Code (provided, the amount of any such
     Investments under this clause (d) minus any amounts received on such
     Investments (excluding dividends thereon) shall not at any time exceed the
     Dollar Equivalent of $5,000,000), and

                                       2

          (e) Permitted Acquisitions.

     (S)  2.2. Indebtedness.  The reference to "$630,000,000" set forth in
Section 7.1(e) of the Original Agreement is hereby amended to refer instead to
"$830,000,000", and clause (5) of Section 7.1(g) of the Original Agreement is
hereby amended in its entirety to read as follows:

     (5) upon the receipt of net proceeds from the original issuance of such
     Indebtedness, the US Commitment (as defined in the Revolver Agreement)
     under the Revolver Agreement shall be reduced (as provided in the Revolver
     Agreement) by an amount equal to (A) forty percent (40%) of the face amount
     of such Indebtedness, if the aggregate face amount is less than
     $350,000,000, or (B) fifty percent (50%) of the face amount of such
     Indebtedness, if the aggregate face amount of such Indebtedness is equal to
     or greater than $350,000,000; excluding from such reduction amount an
     amount equal to twenty-five percent (25%) of the aggregate original
     principal amount of the Term-B Loans (as defined in the Revolver
     Agreement);

     (S) 2.3.   Debt to Capital Ratio.  Section 7.14 of the Original
Agreement is hereby amended in its entirety to read as follows:

          Section 7.14.  Debt to Capital Ratio.  The ratio of (a) all
     Consolidated Funded Indebtedness to (b) the sum of Consolidated Funded
     Indebtedness plus Consolidated Net Worth will never be greater than:

          (i)  prior to December 31, 2002, 0.70 to 1.0 at any time; and

          (ii) from and after December 31, 2002, 0.65 to 1.0 at any time."

     (S) 2.4. Open Position.  The reference to "$5,000,000" set forth in
Section 7.15(a)(iii) of the Original Agreement is hereby amended to refer
instead to "$12,500,000".

                  ARTICLE III. -- Conditions of Effectiveness

     (S) 3.1.  Effective Date. This Amendment shall become effective as of
the date first written above, when and only when:

          (i)   Administrative Agent shall have received, at Administrative
     Agent's office (A) a counterpart of this Amendment executed and delivered
     by Borrower, Plains MLP, All American and Majority Lenders, and (B) a
     contemporaneous amendment to the Revolver Agreement, amending (I) certain
     financial covenants on the same terms and conditions set forth herein, and
     (II) various other provisions therein consistent with the amendments set
     forth herein, in form and substance acceptable to Administrative Agent,
     executed and delivered by such Persons so as to make such amendment
     effective,

          (ii)  in consideration hereof, Borrower shall have paid to
     Administrative Agent for the account of each Lender executing and
     delivering this Amendment an amendment fee

                                       3

     in immediately available funds equal to one-twentieth of one percent
     (0.05%) of each such Lender's Percentage Share of the Maximum Facility
     Amount; and

          (iii) Administrative Agent shall have additionally received all of the
     following documents, each document (unless otherwise indicated) being dated
     the date of receipt thereof by Administrative Agent, duly authorized,
     executed and delivered, and in form and substance satisfactory to
     Administrative Agent:

               (A) Officer's Certificate.  A certificate of a duly authorized
          officer of General Partner, to the effect that all of the
          representations and warranties set forth in Article IV hereof are true
          and correct at and as of the date thereof, and

               (B) Supporting Documents.  Such supporting documents as
          Administrative Agent may reasonably request.

                 ARTICLE IV. -- Representations and Warranties

     (S) 4.1.  Representations and Warranties of Plains MLP and Borrowers.
In order to induce Administrative Agent and Lenders to enter into this
Amendment, Plains MLP and Borrowers represent and warrant to Administrative
Agent and each Lender that:

                  (a) The representations and warranties contained in
     Article V of the Original Agreement are true and correct at and as of the
     time of the effectiveness hereof, except to the extent that such
     representation and warranty was made as of a specific date.

                  (b) Each Restricted Person is duly authorized to execute and
     deliver this Amendment and each other Amendment Document, to the extent a
     party thereto, and each Borrower is and will continue to be duly authorized
     to borrow and perform its obligations under the Credit Agreement. Each
     Restricted Person has duly taken all action necessary to authorize the
     execution and delivery of this Amendment and each other Amendment Document,
     to the extent a party thereto, and to authorize the performance of their
     respective obligations hereunder.

                  (c) The execution and delivery by each Restricted Person of
     this Amendment and each other Amendment Document, to the extent a party
     thereto, the performance by each Restricted Person of its respective
     obligations hereunder and thereunder, and the consummation of the
     transactions contemplated hereby and thereby, do not and will not conflict
     with any provision of any Law or of the organizational documents of any
     Restricted Person, or of any material agreement, judgment, license, order
     or permit applicable to or binding upon any Restricted Person, or result in
     the creation of any Lien upon any assets or properties of any Restricted
     Person, except in favor of Administrative Agent for the benefit of Lenders
     and other Permitted Liens. Except for those which have been duly obtained,
     no consent, approval, authorization or order of any Tribunal or third party
     is required in connection with the execution and delivery by any Restricted
     Person of this Amendment or any other Amendment Document, or to consummate
     the transactions contemplated hereby and thereby.

                                       4

                  (d) When duly executed and delivered, each of this Amendment
     and each other Amendment Document, and each of the Loan Documents, as
     amended hereby and thereby, will be a legal and binding instrument and
     agreement of each Restricted Person to the extent a party thereto,
     enforceable in accordance with its terms, (subject, as to enforcement of
     remedies, to applicable bankruptcy, insolvency and similar laws applicable
     to creditors' rights generally).

                          ARTICLE V. -- Miscellaneous

     (S) 5.1.  Ratification of Agreements.  The Original Agreement, as hereby
amended, is hereby ratified and confirmed in all respects.  The Loan Documents
(including but not limited to each Guaranty), as they may be amended or affected
by this Amendment or any other Amendment Document, are hereby ratified and
confirmed in all respects by each Restricted Person to the extent a party
thereto.  Any reference to the Credit Agreement in any Loan Document shall be
deemed to refer to this Amendment also.   The execution, delivery and
effectiveness of this Amendment and the other Amendment Documents shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of Administrative Agent or any Lender under the Credit Agreement or any
other Loan Document nor constitute a waiver of any provision of the Credit
Agreement or any other Loan Document.

     (S) 5.2.  Ratification of Security Documents.  Restricted Persons,
Administrative Agent, and Lenders each acknowledge and agree that any and all
indebtedness, liabilities or obligations arising under or in connection with the
LC Obligations or the Notes are Obligations and are secured indebtedness under,
are guarantied by, and are secured by, each and every Security Document to which
any Restricted Person is a party.  Each Restricted Person hereby re-pledges, re-
grants and re-assigns a security interest in and lien on every asset of the such
Restricted Person described as Collateral in any Security Document and re-
guarantees all Obligations under the Credit Agreement.

     (S) 5.3.  Ratification of Intercreditor Agreement.  Each Lender hereby
acknowledges and confirms that all Obligations under the Credit Agreement, as
amended hereby, and the "Obligations" under the Marketing Credit Agreement, as
amended on the date hereof, shall be and shall remain subject to the terms and
entitled to the benefits of the Intercreditor Agreement.

     (S) 5.4.  Survival of Agreements.  All representations, warranties,
covenants and agreements of the Restricted Persons herein shall survive the
execution and delivery of this Amendment and the performance hereof, including
without limitation the making or granting of each Loan, and shall further
survive until all of the Obligations under the Credit Agreement are paid in
full. All statements and agreements contained in any certificate or instrument
delivered by any Restricted Person hereunder or under the Credit Agreement to
Administrative Agent or any Lender shall be deemed to constitute representations
and warranties by, or agreements and covenants of, such Restricted Person under
this Amendment and under the Credit Agreement.

     (S) 5.5.  Loan Documents.  This Amendment and each other Amendment
Document is a Loan Document, and all provisions in the Credit Agreement
pertaining to Loan Documents apply hereto.

                                       5

     (S) 5.6.  GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA IN ALL RESPECTS, INCLUDING
CONSTRUCTION, VALIDITY AND PERFORMANCE.

     (S) 5.7.  Counterparts.  This Amendment may be separately executed in
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to constitute one and the same
Amendment.

     IN WITNESS WHEREOF, this Amendment is executed as of the date first above
written.

BORROWER:                     PLAINS MARKETING, L.P.

                              By:  Plains Marketing GP Inc., General Partner

                              By:   /s/ Phil Kramer
                                 ------------------
                                    Phil Kramer, Exec. Vice President

GUARANTORS:                   ALL AMERICAN PIPELINE, L.P.

                              By:  Plains Marketing GP Inc., General Partner

                              By:   /s/ Phil Kramer
                                 ------------------
                                    Phil Kramer, Exec. Vice President

                              PLAINS ALL AMERICAN PIPELINE, L.P.

                              By:  Plains AAP, L.P., General Partner

                              By:  Plains All American LLC, General Partner

                              By:   /s/ Phil Kramer
                                 ------------------
                                    Phil Kramer, Exec. Vice President

                                       6

LENDER PARTIES:               FLEET NATIONAL BANK,
                              Administrative Agent, LC Issuer and Lender

                              By:     /s/ Terrence Ronan
                                   ---------------------
                                    Terrence Ronan, Managing Director

                              FIRST UNION NATIONAL BANK, Lender

                              By:
                                   ---------------------------------------
                                    Robert R. Wetteroff, Sr. Vice Pres.

                              BANK OF AMERICA, N.A., Lender

                              By:
                                   ---------------------------------------
                                    Name:
                                    Title:

                              BANK ONE, NA (MAIN OFFICE CHICAGO),
                              Lender

                              By:
                                   ---------------------------------------
                                    Name:
                                    Title:

                              FORTIS CAPITAL CORP., Lender

                              By:
                                   ---------------------------------------
                                    Name:
                                    Title:

                              By:
                                   ---------------------------------------
                                    Name:
                                    Title:

                              U.S. BANK NATIONAL ASSOCIATION, Lender

                              By:
                                   ---------------------------------------
                                    Name:
                                    Title:

                              BANK OF SCOTLAND, Lender

                              By:
                                   ---------------------------------------
                                    Name:
                                    Title:

                                       7

                              WELLS FARGO BANK (TEXAS),
                              NATIONAL ASSOCIATION, Lender

                              By:
                                   ---------------------------------------
                                    Name:
                                    Title:

                              THE BANK OF NOVA SCOTIA, Lender

                              By:
                                   ---------------------------------------
                                    Name:
                                    Title:

                              CREDIT AGRICOLE INDOSUEZ, Lender

                              By:
                                   ---------------------------------------
                                    Name:
                                    Title:

                              By:
                                   ---------------------------------------
                                    Name:
                                    Title:

                              TORONTO DOMINION (TEXAS), INC., Lender

                              By:
                                   ---------------------------------------
                                    Name:
                                    Title:

                              SOUTHWEST BANK OF TEXAS, N.A., Lender

                              By:
                                   ---------------------------------------
                                    Name:
                                    Title:

                              UNION BANK OF CALIFORNIA, N.A., Lender

                              By:
                                   ---------------------------------------
                                    Name:
                                    Title:

                                       8

                              COMERICA BANK-TEXAS, Lender

                              By:
                                   ---------------------------------------
                                    Name:
                                    Title:

                              BNP PARIBAS, Lender

                              By:
                                   ---------------------------------------
                                    Name:
                                    Title:

                              By:
                                   ---------------------------------------
                                    Name:
                                    Title:

                              GUARANTY BANK, Lender

                              By:
                                   ---------------------------------------
                                    Name:
                                    Title:

                              SIEMENS FINANCIAL SERVICES INC., Lender

                              By:
                                   ---------------------------------------
                                    Name:
                                    Title:

                                       9

                             CONSENT AND AGREEMENT

     Each of the undersigned hereby consents to the provisions of this Amendment
and the transactions contemplated herein and hereby (i) acknowledges and agrees
that any and all indebtedness, liabilities or obligations arising under or in
connection with the Notes are Obligations and are secured indebtedness under,
and are secured by, each and every Security Document to which it is a party,
(ii) re-pledges, re-grants and re-assigns a security interest in and lien on all
of its assets described as collateral in any Security Document, (iii) ratifies
and confirms its Guaranty dated May 4, 2001 made by it for the benefit of
Administrative Agent and Lenders, and (iv) expressly acknowledges and agrees
that the undersigned guarantees all indebtedness, liabilities and obligations
arising under or in connection with any and all Notes pursuant to the terms of
such Guaranty, and agrees that its obligations and covenants thereunder are
unimpaired hereby and shall remain in full force and effect.

                              PLAINS MARKETING CANADA LLC

                              By:  Plains Marketing, L.P., its sole member

                                    By:  Plains Marketing GP Inc.,
                                         its general partner

                                    By:   /s/ Phil Kramer
                                       -------------------------------------
                                         Phil Kramer, Exec. Vice President

                              PMC (NOVA SCOTIA) COMPANY

                              By:   /s/ Phil Kramer
                                 -------------------------------------------
                                    Phil Kramer, Exec. Vice President

                              PLAINS MARKETING CANADA, L.P.

                              By:  PMC (Nova Scotia) Company,
                                   General Partner

                              By:  Phil Kramer
                                 ------------------------------------------
                                    Phil Kramer, Exec. Vice President

                                       10