High Island Offshore System, L.L.C.

Third Revised Volume No. 1

Effective Date: 10/01/2002, Docket: RP02-434-001, Status: Effective

First Revised Sheet No. 148 First Revised Sheet No. 148 : Effective

Superseding: Original Sheet No. 148

GENERAL TERMS AND CONDITIONS

(Continued)

to pay all of the amount of any bill for gas delivered under

the executed Transportation Agreement when such amount is

due. Once terminated, capacity and all applicable charges

shall revert to the Releasing Shipper. All payments received

from a Replacement Shipper shall first be applied to the

reservation charge due for the transportation service and

then to any reservation surcharge, including late charges

related solely to such reservation charges, then to any

penalty due, then to usage charges, and last to late charges

not related to any reservation charges due.

If the Transportation Agreement between HIOS and the

Replacement Shipper specifies a reservation charge for the

released capacity that is higher than the reservation charge

specified in the underlying Transportation Agreement with

HIOS and the Releasing Shipper, then any revenues that HIOS

collects from the Replacement Shipper that are based on the

difference between the specified reservation charges which

remain after payment of the items specified in the last

sentence of the immediately preceding paragraph shall be

credited to the Releasing Shipper.

17.13 Conversion between Monthly and Daily Reservation Rates. Converting a

daily rate to a monthly rate is accomplished by multiplying the daily

rate times the number of days in the rate period, dividing the result by

the number of months in the rate period, taking the remainder out to 5

decimal places, and rounding up or down to HIOS' specified decimal place.