High Island Offshore System, L.L.C.

Third Revised Volume No. 1

Effective Date: 11/01/2007, Docket: RP08- 55-000, Status: Effective

Eighth Revised Sheet No. 173 Eighth Revised Sheet No. 173 : Effective

Superseding: Seventh Revised Sheet No. 173

GENERAL TERMS AND CONDITIONS

(Continued)

26. Discounting

HIOS and Shipper may agree that a specified discounted rate will apply: (a) to

Rate Schedules IT, FT-1 and FT-2; (b) only if specified quantity levels are

actually achieved under Shipper's service agreement (with higher rates,

charges, and fees applicable to all quantities above those levels, or to all

quantities under Shipper's service agreement if the specified levels are not

achieved); (c) only to natural gas reserves committed by the Shipper pursuant

to the applicable Reserve Commitment Agreement with HIOS in the appropriate

form contained in these General Terms and Conditions; (d) only during specified

time periods; or (e) only to specified Points of Receipt, Points of Delivery,

transportation paths, or defined geographical areas; provided, however, that

any such discounted rates set forth above shall be between the minimum and

maximum rates applicable to the service provided under HIOS' Tariff.

Such forms of discounts shall not be considered a material deviation from HIOS'

pro forma service agreements as a result of such discounts and HIOS shall not

be required to file such agreements with the Commission as a non-conforming

agreement because of such discounts.

In addition, the discount agreement may include a provision that if one rate

component that was at or below the applicable Maximum Rate at the time the

discount agreement was executed subsequently exceeds the applicable Maximum

Rate due to a change in HIOS' Maximum Rates so that such rate component must be

adjusted downward to equal the new applicable Maximum Rate, then other rate

components may be adjusted upward to achieve the agreed overall rate, as long

as none of the resulting rate components exceeds the Maximum Rate applicable to

that rate component. Such changes to rate components shall be applied

prospectively, commencing with the date a Commission Order accepts revised

tariff sheet rates. However, nothing contained herein shall be construed to

alter a refund obligation under applicable law for any period during which

rates that had been charged under a discount agreement exceeded rates that

ultimately are found to be just and reasonable.