High Island Offshore System, L.L.C.

Third Revised Volume No. 1

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Effective Date: 09/01/2006, Docket: RP06-244-001, Status: Effective

Substitute Fourth Revised Sheet No. 105 Substitute Fourth Revised Sheet No. 105 : Effective

Superseding: Third Revised Sheet No. 105

GENERAL TERMS AND CONDITIONS

(Continued)

deliveries to such Shipper if it determines that it may, by doing so,

achieve elimination of the variation.

8.2 Responsibility For Balancing. In addition to delivering and receiving

volumes of gas in conformance with nominations, Shippers are responsible

for conforming their takes at Delivery Points with their deliveries to

HIOS at Receipt Points each day. HIOS has no obligation to deliver for

the account of a Shipper more volumes of gas than HIOS has received for

the account of the Shipper or to accept for the account of the Shipper

more volumes of gas than are being delivered for the account of the

Shipper on any day.

8.3 Monthly Cashout of Imbalances. At the end of each month HIOS shall

calculate the Company Use Variance and each Shipper's imbalance. HIOS

shall permit trading of imbalances and then cashout all remaining

imbalances using the methodology and prices included in this Section 8.

(a) Calculation of Shipper Imbalances. The calculation of the monthly

Shipper imbalances shall depend upon whether there is an

Operational Balancing Agreement in effect at the delivery

point(s). Where an Operational Balancing Agreement is in effect,

monthly Shipper imbalances under an Agreement shall be calculated

each Month by comparing the volumes scheduled for the Month to

actual receipts during that Month. Where an Operational

Balancing Agreement is not in effect, monthly imbalances under an

Agreement shall be calculated each Month by comparing actual

measured volumes delivered during the Month to actual net

measured volumes received (with the appropriate deduction for Gas

Unaccounted For during that Month on the basis of Equivalent

Volumes. Imbalances under all of a Shipper's service agreements

will be netted together and then allocated a Pro-Rata Share of

the CUV to calculate the Shipper's Total Monthly Imbalance

("TMI").

(b) Transportation Charges. Notwithstanding the foregoing, a

transportation charge under the applicable provision of Sheet No.

10 of this Tariff will be assessed for any positive Shipper

imbalance under each Agreement remaining at the end of a month.

(c) Imbalance Trading. The TMI calculated each month shall include

the calculation and derivation of the quantities associated with

the Shipper's imbalances, its allocated CUV, and its TMI.

Supporting workpapers shall be provided to Shippers upon request.

(i) Monthly Trading. To facilitate the trading or offsetting

of Shipper's TMI, HIOS will post on its Internet Website,

on or before the ninth business day of the month, the TMI

of any Shipper that has notified HIOS in writing that the

Shipper elects to have that information posted. Shippers

or their agents may then trade offsetting imbalances with

Shippers, HIOS or their agents until the close of business

on the seventeenth day of the month (Trading Period).

Parties that agree to trade all or part of an imbalance

must notify HIOS in writing on or before the seventeenth

business day of the month through submission of an

Imbalance Trade Confirmation form; otherwise, such trade

shall not be effective. Upon receipt of an Imbalance

Trade Confirmation, HIOS will send an Imbalance Trade

Notification to the trading parties by noon (Central Clock

Time) the next business day. Any Shipper imbalance

remaining after the Trading Period will be cashed out as

described in Section 8.4.