High Island Offshore System, L.L.C.

Third Revised Volume No. 1

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Effective Date: 10/01/2007, Docket: RP06-540-004, Status: Effective

Fourth Revised Sheet No. 103 Fourth Revised Sheet No. 103 : Effective

Superseding: Substitute Third Revised Sheet No. 103

GENERAL TERMS AND CONDITIONS

(Continued)

7.15 Operational Balancing Agreements. HIOS recognizes that, despite best

efforts to match deliveries of gas volumes to the designated

interconnecting pipeline at the HIOS delivery point with the gas

volumes allocated to the Shippers' account at the same HIOS delivery

point, imbalances in the aggregate of all Shippers' gas volumes

intended for delivery to the designated interconnecting pipeline may

occur. HIOS may enter into an Operational Balancing Agreement (OBA)

with the interconnecting pipeline at each HIOS delivery point on a

nondiscriminatory basis, the terms and conditions of which will provide

for the resolution of any imbalances. A pro forma OBA is set forth on

Sheet Nos. 180-183 of this Tariff.

Any subsequent provisions that may be entered into pursuant to the

"mutually agreed" to provisions of the pro forma OBA are to be consistent

with the terms of this Tariff.

7.16 Segmentation of Capacity. Any Shipper receiving firm transportation

service under Rate Schedules FT-1 or FT-2 may segment its capacity by

nominating service at any Points of Receipt and Points of Delivery along

the System, provided that: (1) the segmentation nomination is

operationally feasible; (2) the total of the segmentation nominations by

the original Shipper or a combination of Releasing and Replacement

Shippers on any overlapping segment does not exceed the firm entitlements

of the underlying segmented Service Agreement; (3) capacity exists at the

applicable Points of Receipt and Points of Delivery subject to the

segmentation nomination; and (4) all gas transported through Shipper's

use of segmentation opportunities hereunder remains in compliance with

the gas quality and thermal content requirements of this tariff. The

total of segmentation nominations by the original Shipper or a

combination of Releasing and Replacement Shipper(s) may exceed the firm

entitlements of the underlying segmented Service Agreement at a Point of

Receipt or a Point of Delivery provided that any resulting overlap of

contract quantities at a point may consist only of a forwardhaul up to

the firm entitlement(s) and a backhaul up to the firm entitlement(s) to

the same point at the same time. Subject to the limits set forth herein,

Shippers acquiring segmented capacity shall also be permitted to nominate

Secondary Points of Receipt and Secondary Points of Delivery up to

Shipper's Maximum Daily Quantity.

Further, if both the Primary Point of Receipt and Primary Point of

Delivery in the underlying Service Agreement are located downstream of

High Island Block 264 then any segmentation nomination to either a

Receipt or Delivery Point located upstream of High Island Block 264

shall be subject to the applicable Long Haul Rate. For purposes of

determining whether a nominated segmented release is operationally

feasible, HIOS shall take into consideration the availability of

mainline and/or point capacity, the location on HIOS' System of the

nominated segment, and whether or not the nomination is otherwise

consistent with the tariff requirements and scheduling practices for all

of HIOS' services.