U-T Offshore System, L.L.C.

Third Revised Volume No. 1

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Effective Date: 06/01/1997, Docket: RP97-146-001, Status: Effective

First Revised Sheet No. 48 First Revised Sheet No. 48 : Superseded

Superseding: Original Sheet No. 48

GENERAL TERMS AND CONDITIONS

(Continued)

7.8 Scheduling of Transportation and Allocation of Capacity. For each day, U-TOS

will schedule receipts and deliveries of gas on the basis of: (1)

transportation nominations and timely notices of changes made by Shippers or

Shipper's Nominating Agent, which U-TOS is hereby authorized to rely upon in its

schedule; (2) transportation capacity available on U-TOS' system and portions

thereof in light of such nominations and requests; (3) proposed points of

receipt and of delivery; and (4) overall operating conditions from time to time.

U-TOS shall schedule the receipts and deliveries of gas of each Shipper, on each

day, in sequence, from highest to lowest priority, as follows: (1) first, among

U-TOS' firm Rate Schedules T and FT transportation customers, up to each such

customer's Currently Effective Contract Demand or Maximum Daily Quantity, as

applicable; (2) second, according to Section 3 of Rate Schedule I for eligible

shippers having executed a Transportation Agreement for Rate Schedule I service

entitlements prior to April 1, 1989; and (3) third, among U-TOS' Interruptible

Rate Schedule IT transportation customers, up to each such customer's currently

effective Maximum Daily Quantity, as applicable, and all overrun service. In

the event that nominations received in sequencing category (1) exceed the

capacity available to that sequencing category, then the available capacity

shall be allocated pro rata based on nominations. In the event that nominations

received in either sequencing category (2) or (3) above exceed the capacity

available to that individual sequencing category, then the available capacity

shall be allocated within the sequencing category as follows: first, on the

basis of the price paid to U-TOS for the service being nominated, with the

nominated service paying the highest price receiving the highest priority; and

if insufficient capacity still remains, then on the basis of the date of the

service agreement underlying the nomination, with the nomination under the

service agreement having the oldest date receiving the highest priority,

provided that, in the event of a tie in service agreement dates, then pro rata

among the tieing service agreements based on the nominations received under each

of the tieing agreements.

7.9 Receipt Point Priority.

(a) Scheduling of transportation at Primary Points of Receipt shall be in

accordance with subsection 7.8 of this Section 7.

(b) A Shipper under the T or FT Rate Schedule may nominate and schedule

receipts at Secondary Points of Receipt, subject to the priority rights of

T or FT Shippers using such receipt points as Primary Points of Receipt.

Accordingly, the use by a T or FT Shipper of a Secondary Point of Receipt

is interruptible if and to the extent required to serve the T or FT

Shipper for which such receipt point is a Primary Point of Receipt. A

Shipper under the T or FT Rate Schedule, using Secondary Points of

Receipt, shall have a priority over all interruptible Shippers'

utilization of such receipt points.

shall, as provided in subsection 7.9(b) above, be entitled to priority

over interruptible Shippers, but may displace the interruptible Shipper(s)

only after providing one (1) business day's notice.

(d) Utilization of Secondary Points of Receipt by a Shipper under the T or FT

Rate Schedule shall not cause any diminution of such Shipper's entitlement

to firm service at Shipper's Primary Points of Receipt.