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

Second Revised Sheet No. 110 Second Revised Sheet No. 110 : Superseded

Superseding: First Revised Sheet No. 110

U-T OFFSHORE SYSTEM

FORM OF OPERATIONAL BALANCING AGREEMENT

WHEREAS, U-T Offshore System's (U-TOS) pipeline facilities and _____________________'s

Interconnecting Pipeline) facilities directly interconnect at the U-TOS delivery point at

Johnson's Bayou, Cameron Parish, Louisiana (Delivery Point);

WHEREAS, U-TOS has entered into one or more transportation agreements whereby U-TOS

transports gas which its Shippers desire to be delivered at the Delivery Point;

WHEREAS, from time to time, total gas quantities tendered by U-TOS at the Delivery

Point are either greater than or lesser than the aggregate of all Shippers' allocated

quantities intended for delivery at the Delivery Point, resulting in inadvertent over- or

under-deliveries relative to allocated quantities;

NOW THEREFORE, U-TOS and ____________________________ "The Parties") agree that such

over-or under-deliveries at the Delivery Point be treated in the following manner:

(1) Prior to the first day of each month, the Parties shall confirm in writing the

nominations received by each Shipper and how these gas quantities are to be allocated each

day of the month among those Shippers for whom the Parties are delivering or receiving the

gas. Any changes to such confirmed nominations shall be effective only if agreed to in

writing by both Parties. Such written communication shall be substantially in the form set

out on the attached Exhibit 1 or in any other form mutually agreeable to the Parties. By the

tenth (10) business day of the month, U-TOS shall furnish the Interconnecting Pipeline with

a signed summary of the agreed-upon allocations for the Shippers for the previous month.

Interconnecting Pipeline shall sign and return a copy of such monthly allocation summary

evidencing Interconnecting Pipeline's concurrence.

(2) The Parties intend that the gas quantities actually delivered and received each

day that the Delivery Point will equal gas quantities transported by U-TOS and allocated in

accordance with the terms and conditions of U-TOS' F.E.R.C. Gas Tariff and agree to make all

reasonable efforts on a daily basis to maintain the actual quantity flowing through the

Delivery Point at a level equal to the allocated quantities. Daily variances in actual gas

flow from the allocated transportation quantities shall not exceed five percent (5%) of the

daily allocated transportation quantities with the total monthly variance from the allocated

quantity not to exceed five percent (5%) of the total gas quantity allocated to flow for that

month. If the imbalance under this Agreement exceeds the variances set forth in 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) U-TOS will allocate gas quantities which are to be delivered at the Delivery Point

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

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

expressed in Dth, will be 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) 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.