High Island Offshore System, L.L.C.

Third Revised Volume No. 1

 Contents / Previous / Next / Main Tariff Index

Effective Date: 07/01/2005, Docket: RP05-440-000, Status: Effective

First Revised Sheet No. 226 First Revised Sheet No. 226 : Effective

Superseding: Substitute Original Sheet No. 226

NGL BANK AGREEMENT (Continued)

Six cents per million Btu's ($.06/mmBtu) shall be added to the Value of

the Btu's for the commodity rate portion of fuel and shrinkage

transportation cost. Such prices, rates and factors used to determine

the Shrinkage Cost and the Fuel Cost may be adjusted by the Advisory

Group as needed to be representative of the operating parameters of the

downstream Plants.

Example calculations of the NGL Bank settlements are set forth on

Exhibit "A", attached hereto and incorporated herein by reference.

5.1.c If after performing the calculations described in Sections 5.1.a and

5.1.b, the result calculated for a positive volume of ethane is negative,

but the result calculated for a positive volume of propane is positive,

then NGL Bank settlements shall be made using recovery factors,

representative of "ethane rejection" operation by the Plants as follows:

i. Ethane 40%

ii. Propane 90%

iii. Isobutane 100%

iv. Normal butane 100%

v. Natural gasoline 100%

5.1.d Except as provided for by Section 5.2, if after performing the

calculations described in Sections 5.1.a and 5.1.b, the results

calculated for positive volumes of ethane and propane are both negative,

then no NGL Bank settlements will be made on any NGL components for that

month, and only the fee for administrating the NGL Bank will be charged

by the Administrator as described in Section 5.4.

5.1.e In the event that HIOS issues revised statements, any resulting NGL Bank

settlement adjustments will be limited to instances where the absolute

value of such adjustments collectively exceed $20,000.00. In order to

determine the $20,000.00 threshold, all calculations shall be performed

and compared by Administrator, and the administrative fees provided for

in Section 5.4 shall be charged regardless of whether there is a

settlement adjustment or not. Notwithstanding the above, no NGL Bank

settlement adjustments will be made for revised HIOS statements received

more than two (2) years following the month of production.

5.2 Settlement Calculations Under Required Processing Periods. It is understood by

the parties that from time to time processing may occur at the Plants even though

processing margins, as calculated per Sections 5.1.a and 5.1.b above for the NGL

Bank are negative. As such, notwithstanding the provisions of Sections 5.1.c and

5.1.d, during periods when any or all of such plants on the downstream pipelines

connected to HIOS at West Cameron Block 167 are processing some or all of the gas

received from HIOS, if after performing the calculations described in Sections

5.1.a and 5.1.b, the results calculated for positive volumes of ethane and

propane are both negative, then NGL Bank settlements shall be made using recovery

factors representative of "minimal recovery" operation by the Plants as follows:

i. Ethane 25%

ii. Propane 80%

iii. Isobutane 95%

iv. Normal butane 95%

v. Natural gasoline 95%

In all respects other than Plant Recovery factors, settlement shall be

made in accordance with Section 5.1.