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. 181 Original Sheet No. 181 : Effective

FORM OF OPERATIONAL BALANCING AGREEMENT

(Continued)

this paragraph, either party shall have the unilateral right to adjust the actual flow of

gas at the Delivery Point or adjust nominations received and confirmed at this point in

order to correct for any differences.

(3) HIOS will allocate gas quantities which are to be delivered at the Delivery Point

among HIOS' respective Shippers pursuant to the terms of HIOS' F.E.R.C. Gas Tariff. Any

imbalance created when the actual physical flow is different than the allocated volumes

expressed in Dth will represent the "Operational Imbalance".

(4) Estimated operating quantities shall be used on a daily basis, during the current

month, to determine the estimated Operational Imbalance at the Delivery Point, with

physical flow adjustments to be made during the current month as mutually agreed to by

both Parties to adequately control and minimize imbalance levels.

(5) Any Operational Imbalance shall be corrected in a manner mutually agreed to in

writing by both Parties, within a period of time as is mutually agreed to by the Parties.

The ability to correct any Operational Imbalance shall be subject to the availability of

capacity and to the operational conditions that may exist on either Parties' pipeline

system.

(6) In the event that a capacity constraint occurs on either Parties' pipeline system

which results in curtailment of gas quantities through the Delivery Point, the Party on

whose system the constraint has occurred shall determine the reallocation of quantities to

its Shippers. Such change in allocation shall be confirmed in writing pursuant to the

provisions of Paragraph (1) above.

(7) All gas quantities hereunder shall be reported in Dth. Measurement of gas for all

purposes hereunder shall be in accordance with the provisions set forth in HIOS' F.E.R.C.

Gas Tariff.

(8) This Agreement shall be effective _______________ and shall continue until canceled

by either Party upon ten (10) days written notice. Any Operational Imbalance existing

between HIOS and the Interconnecting Pipeline after Agreement termination shall be

corrected within thirty (30) days after the final Operational Imbalance is agreed to in

writing by the Parties, or within such other period of time as may be mutually agreed to

by the Parties.