Pacific Interstate Offshore Company

Second Revised Volume No. 1

Effective Date: 01/01/1994, Docket: RS92- 73-001, Status: Effective

Original Sheet No. 50 Original Sheet No. 50 : Effective

GENERAL TERMS AND CONDITIONS (cont'd)

15. RIGHT OF FIRST REFUSAL (cont'd)

15.2 In the event a Shipper does not elect termination,

Transporter will commence open bidding 120 days

prior to the Service Agreement expiration. The bid

period will be 30 days. The Shipper will have 30

days from the close of the bid period to match the

highest bid(s). Transporter will announce the

winning bid(s) within 30 days after the close of the

match period. If the original Shipper matches the

highest bid(s), the capacity is awarded to the

original Shipper. If the original Shipper does not

match the highest bids, the original Shipper's bid

shall be rejected. If there is more than one

winning bid, Transporter shall award capacity on a

pro rata basis. New Shippers must execute a firm

transportation service agreement with Transporter

prior to service commencement.

15.3 Bids shall be evaluated on the net present value

incorporating price and term. The price shall be

the rate Shippers are willing to pay up to the

maximum authorized rate. The maximum term shall be

20 years.

15.4 If there are no other competing bids, the rate and

terms of continuing service is to be negotiated

between the existing Shipper and Transporter. In

addition, in this instance, if the existing Shipper

agrees to pay the maximum authorized rate, the

existing Shipper may determine the term it desires

and Transporter must extend its contract to the

existing capacity holder accordingly.

15.5 Shippers who terminate their service agreements in

accordance with the terms of Section 15 herein are

not liable for any reservation charges or other

charges applicable to the new Shipper contracting

for this capacity.