High Island Offshore System, L.L.C.

Third Revised Volume No. 1

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

First Revised Sheet No. 224 First Revised Sheet No. 224 : Effective

Superseding: Substitute Original Sheet No. 224






In addition, Administrator shall convene a meeting at any time when

requested, in writing, by two or more of the Advisory Group members,

said meeting to occur within sixty (60) Days of receiving the written

request. Prior to convening any meeting of the Advisory Group,

Administrator shall give each Advisory Group member thirty (30) Days

prior written notice of the meeting and its purpose.


Resolution of issues brought forward to the Advisory Group will be by simple

majority vote of the respective representatives of the then shippers or agents

in the Advisory Group, with each representative having a single vote.

Administrator does not have a vote. No fewer than five members of the

Advisory Group must vote, whether in person or electronically, in order to

resolve any issue. Administrator, Shipper and Transporter acknowledge that

(1) neither the Advisory Group nor Transporter are granted any authority by

this Agreement to alter the operating parameters of any downstream Plant and

(2) any agreement between Shipper or its agent and a downstream Plant shall

not be modified by any provision of this Agreement.




5.1 Settlement Calculations. The NGL Bank settlement calculations to be performed by

the Administrator shall involve a process that is intended to approximate the

difference between the monthly theoretical gross processing margin for each

Shipper's gas stream and the processing margin for the HIOS commingled gas

stream. For purposes of this Agreement, such difference in the monthly

theoretical gross processing margin, which may be either positive or negative,

shall be calculated as follows:


5.1.a The difference between a shipper's processing revenue for theoretical

processing of its gas composition at its Point of Receipt versus the

composition of the HIOS commingled stream shall be calculated by first

subtracting the weighted average GPM of each NGL component for all of the

various Points of Receipt on HIOS from such shipper's GPM of each NGL

component at the Point of Receipt. Such GPM difference for each NGL

component, whether positive or negative, shall be multiplied by the

representative NGL component recovery factors below and multiplied by the

shipper's monthly volume of gas in Mcf to calculate a representative

difference in NGL component volumes in gallons that would be available to

the shipper after theoretical processing ("Theoretical NGL Recovery").

Such factors shall be representative of the Plants that process gas

delivered from HIOS to various downstream pipelines that, in turn, deliver

gas to the Plants. For purposes of this Agreement except as provided for

by Section 5.2, the representative recovery factors shall be as follows:


i. Ethane 65%

ii. Propane 96%

iii. Isobutane 100%

iv. Normal butane 100%

v. Natural gasoline 100%


The Theoretical NGL Recovery for each NGL component shall then be

multiplied by the representative Plant settlement basis and the

representative sales price for each NGL component to yield the difference

in the shipper's theoretical revenue ("Theoretical Revenue") for each NGL

component. For purposes of this Agreement, the representative Plant

settlement basis shall be eighty five percent (85%).