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. 180 Original Sheet No. 180 : Effective

FORM OF OPERATIONAL BALANCING AGREEMENT

WHEREAS, High Island Offshore System, L.L.C.'s (HIOS) pipeline facilities and

______________'s (Interconnecting Pipeline) facilities directly interconnect at the

HIOS delivery point in WC Block 167 [in WC Block 330] (Delivery Point);

WHEREAS, HIOS has entered into one or more transportation agreements whereby HIOS

transports gas which its Shippers desire to be delivered at the Delivery Point;

WHEREAS, from time to time, total gas quantities tendered by HIOS at the Delivery

Point are either greater than or lesser than the aggregate of all Shippers' allocated

quantities intended for delivery at the Delivery Point, resulting in inadvertent over-or

under-deliveries relative to allocated quantities;

NOW THEREFORE, HIOS and ________________ ("The Parties") agree that such over-or

under-deliveries at the Delivery Point be treated in the following manner:

(1) Prior to the first day of each month, the Parties shall confirm in writing the

nominations received from each Shipper and how these gas quantities are to be allocated

each day of the month among those Shippers for whom the Parties are delivering or

receiving the gas. Any changes to such confirmed nominations shall be effective only if

agreed to in writing by both Parties. Such written communication shall be substantially

in the form set out on the attached Exhibit 1 or in any other form mutually agreeable to

the Parties. By the tenth (10) business day of the month, HIOS shall furnish the

Interconnecting Pipeline with a signed summary of the agreed-upon allocations for the

Shippers for the previous month. Interconnecting Pipeline shall sign and return a copy of

such monthly allocation summary evidencing Interconnecting Pipeline's concurrence.

(2) The Parties intend that the gas quantities actually delivered and received each day

at the Delivery Point will equal gas quantities transported by HIOS and allocated in

accordance with the terms and conditions of HIOS' F.E.R.C. Gas Tariff and agree to make

all reasonable efforts on a daily basis to maintain the actual quantity flowing through

the Delivery Point at a level equal to the allocated quantities. Daily variances in

actual gas flow from the allocated quantities shall not exceed five percent (5%) of the

daily allocated transportation quantities with the total monthly variance from the

allocated quantity not to exceed five percent (5%) of the total gas quantity allocated to

flow for that month. If the imbalance under this Agreement exceeds the variances set

forth in