High Island Offshore System, L.L.C.

Third Revised Volume No. 1

Effective Date: 04/07/1999, Docket: GT99- 17-000, Status: Effective

Original Sheet No. 121 Original Sheet No. 121 : Effective

GENERAL TERMS AND CONDITIONS

(Continued)

shall execute a Transportation Agreement with the

Existing Shipper that contains the reservation

charge, transaction term, and other acceptable

provisions of its matching bid. If, following

exercise of the Existing Shipper's right of first

refusal, the capacity that remains available is

greater than the capacity requested in the highest

Qualified Bid, then capacity shall be awarded to

such highest bid. The same procedure shall be

followed for the Qualified Bid with the next

highest Net Present Value. Such awards of

available capacity shall continue until the award

of capacity to a Qualified Bid with the next

highest Net Present Value would cause the remaining

available capacity to be exceeded. HIOS shall

execute a Transportation Agreement with any

Qualified Bidder that is awarded capacity,

containing the reservation charge, transaction

term, and other acceptable provisions of

its Qualified Bid.

16.10 Continuation of Service Under Existing Agreement. Upon

completion of the posting, competitive bidding, and the

right of first refusal procedures of this Section 16, if

there is remaining capacity under the existing

Transportation Agreement between HIOS and the Existing

Shipper, and HIOS and the Existing Shipper have not

otherwise agreed on the terms for continued firm service

that are different than the terms in the existing

Transportation Agreement, and neither HIOS nor the Existing

Shipper has given notice, or subsequently gives notice, of

termination of the existing Transportation Agreement

pursuant to the terms of that Agreement, then the existing

Agreement shall continue to apply to the remaining capacity

from year to year, in accordance with its terms, provided,

however, if no bids were received for the capacity under the

existing Transportation Agreement, then the Existing

Shipper, upon its written agreement to pay the maximum

reservation charge, may retain such capacity for such

additional fixed period as it designates and, at the