High Island Offshore System, L.L.C.

Third Revised Volume No. 1

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Effective Date: 06/01/2004, Docket: RP04-288-000, Status: Effective

First Revised Sheet No. 223 First Revised Sheet No. 223 : Effective

Superseding: Substitute Original Sheet No. 223

 

NGL BANK AGREEMENT (Continued)

 

2.2 Capitalized terms used but not defined herein shall have the meanings ascribed

to such terms in Transporter's FERC Gas Tariff.

 

2.3 Notwithstanding Section 2.2 above, for purposes of this Agreement a Point of

Receipt is a location where gas is measured to determine Transporter's receipts

from one or more shippers.

 

ARTICLE III - TERM

 

This Agreement shall be effective as of ________________________, and shall remain in

full force and effect for the effective term of a Transportation Agreement between

Transporter and Shipper. In the event that there is more than one Transportation

Agreement between Transporter and Shipper, then this Agreement shall remain in full force

and effect until the termination of the latest of any of such Transportation Agreement.

 

ARTICLE IV - SHIPPER PARTICIPATION

 

4.1 Participation. Shipper agrees to (i) participate in the NGL Bank as a condition

of receiving service on HIOS in accordance with Shipper's Transportation

Agreement, this Agreement and Transporter's FERC Gas Tariff, (ii) participate in

the NGL Bank, either in person or through its agent holding processing rights to

Shipper's gas, with the relevant agency agreement provided to Administrator

prior to said agent's participation in the NGL Bank on behalf of Shipper, (iii)

make settlements in accordance with the provisions of Article V of this

Agreement, and (iv) pay the administrative fees billed by Administrator to

Shipper for administration of the NGL Bank pursuant to Article V of this

Agreement.

 

4.2.a Advisory Group. Administrator shall establish the HIOS NGL Bank

Advisory Group ("Advisory Group") to provide a forum to discuss,

consider and determine material NGL Bank issues if, and when, they

arise, including but not limited to, making adjustments authorized by

this Agreement. In making any adjustments authorized by this Agreement,

the objective of the Advisory Group shall be to ensure that the NGL Bank

functions to mitigate inequities in gas processing economics for all

shippers on HIOS to the extent reasonably practicable and consistent

with the terms of this Agreement. The Advisory Group initially shall

consist of the top seven shippers, or their respective agents, of the

largest volume of gas, expressed in Dekatherms ("Dth"), during the

previous six months ending April 30, 2004. Each such shipper or its

agent shall appoint a single representative to serve on the Advisory

Group. Each shipper or its agent may replace its representative on the

Advisory Group by notice to Administrator. Beginning June 1, 2005, and

annually thereafter, Administrator shall redetermine the top seven

shippers, or their respective agents, for the previous six months ending

April 30 and the membership of the Advisory Group shall be altered

accordingly, if necessary.

 

4.2.b Adjustment Rights. The Advisory Group shall have the right to adjust

the settlement components set forth in Section 5 of this Agreement,

specifically including but not limited to: (1) the NGL component

recovery factors, settlement basis, prices and deductions used to

determine the Theoretical Revenue; (2) the prices, rates and factors

used to determine the Shrinkage Cost; and (3) the prices, rates and

factors used to determine the Fuel Cost.

 

4.2.c Meetings. Administrator will chair the Advisory Group, record,

distribute and maintain minutes of every meeting, and convene meetings

no less often than annually, in person or electronically as needed. The

first such meeting shall be convened during the month of September 2004.

The Advisory Group shall review the items set forth above to perform the

settlement calculations hereunder, and adjust such items as necessary to

be representative of the operating parameters of the downstream Plants.