ANCILLARY AGREEMENT (this Agreement), dated as of October 29, 2004, by and among PPS Holding Company, a Delaware corporation (Seller), LB Pacific, LP, a Delaware limited partnership (Buyer), The Anschutz Corporation, a Kansas corporation (TAC), Pacific Energy Partners, L.P., a Delaware limited partnership (Pacific LP), and Pacific Energy GP, Inc., a Delaware corporation (Pacific GP).

WHEREAS, Pacific LP is a publicly-traded master limited partnership engaged principally in the business of owning and operating crude oil transportation, marine terminal and storage assets (the Business);

WHEREAS, Seller currently owns in the aggregate all of the issued and outstanding shares of common stock of Pacific GP (the Pacific GP Shares);

WHEREAS, Pacific GP owns a 2% general partner interest in Pacific LP, and all of the incentive distribution rights with respect to Pacific LP;

WHEREAS, TAC owns 10,465,000 subordinated units representing subordinated limited partner interests in Pacific LP (the Subordinated Units);

WHEREAS, between the date hereof and the Closing Date (as hereinafter defined), Pacific GP will be converted into a Delaware limited liability company (the membership interests into which the Pacific GP Shares will be converted are hereinafter referred to as the Pacific GP Interests);

WHEREAS, Seller, Buyer and TAC have entered into that certain Purchase and Sale Agreement dated as of the date hereof (the Purchase Agreement) pursuant to which Seller agrees to sell all of the Pacific GP Interests and TAC agrees to sell all of the Subordinated Units to Buyer, and Buyer agrees to acquire all of the Pacific GP Interests and Subordinated Units from Seller and TAC; and

WHEREAS, pursuant to the terms and conditions of this Agreement, the Parties desire to agree to (i) certain transition services to be provided by Seller to Pacific LP, (ii) non-compete agreements to be provided by Seller, TAC and Buyer, and (iii) cost sharing arrangements with respect to certain costs and expenses that may be incurred by the Pacific Energy Entities (as hereinafter defined) in connection with the transactions contemplated by the Purchase Agreement (the Transactions).

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements hereinafter set forth, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions. As used in this Agreement, the following terms have the meanings specified in this Section 1.1.

(1) Affiliate has the meaning set forth in Rule 12b-2 promulgated under the Exchange Act.

(2) Closing Date shall mean the date upon which the parties consummate the sale to Buyer of the Pacific GP Interests and the Subordinated Units as contemplated in the Purchase Agreement.

(3) Commercially Reasonable Efforts means efforts which are designed to enable a Party, directly or indirectly, to satisfy a condition to, or otherwise assist in the consummation of, the transactions contemplated by this Agreement and which do not require the performing Party to expend any funds or assume liabilities other than expenditures and liabilities which are customary and reasonable in nature and amount in the context of the transactions contemplated by this Agreement; provided, however, under no circumstances shall Seller or TAC be obligated to remove a member of the board of directors of Pacific GP in order to satisfy using its Commercially Reasonable Efforts pursuant to this Agreement.

(4) Confidentiality Agreement means the Confidentiality Agreement between Pacific LP and Lehman Brothers Merchant Banking Associates III L.P., a Delaware limited partnership, dated October 20, 2004.

(5) Exchange Act means the Securities Exchange Act of 1934, as amended.

(6) Governmental Authority means any federal, state, local or other governmental, regulatory or administrative agency, commission, department, board, or other governmental subdivision, court, tribunal, arbitrating body or other governmental authority.

(7) Pacific Energy Entities means Pacific GP, Pacific LP and the Pacific Subsidiaries, collectively.

(8) Pacific Subsidiaries means the entities listed on Schedule 1 hereto.

(9) Partnership Credit Facilities means the Credit Agreement between RPC Acquisition Company, as borrower and Royal Bank of Canada, Bank of America, N.A. Canada Branch, Bank of Montreal, The Bank of Nova Scotia, BNP Paribas (Canada), Congress Financial Corporation (Canada) and Union Bank of California, N.A., Canada Branch, as lenders and Royal Bank of Canada as agent of the lenders dated May 11, 2004, as amended, and the Credit Agreement between Pacific Energy Group LLC, as borrower, Pacific LP, as guarantor, and Fleet National Bank, as administrative agent, U.S. Bank National Association, as syndication agent, Fortis Capital Corp., and the Bank of Nova Scotia as co-documentation agents and Fleet

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