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                                                                    EXHIBIT 10.O

                             PARTICIPATION AGREEMENT

                                       AND

                                   ASSIGNMENT

                                   RELATING TO

                      CAMERON HIGHWAY OIL PIPELINE COMPANY

                        (A DELAWARE GENERAL PARTNERSHIP)

                           (DATED AS OF JULY 10, 2003)

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                             PARTICIPATION AGREEMENT

                                 AND ASSIGNMENT

         This Participation Agreement and Assignment (including the schedules
and exhibits hereto and as amended, restated, supplemented and otherwise
modified from time to time, being collectively referred to as this "Agreement")
is entered into as of July 10, 2003 (the "Effective Date"), by and between
Valero Energy Corporation ("Valero"), on the one hand, and GulfTerra Energy
Partners, L.P. ("GTM"), Cameron Highway Pipeline I, L.P. ("GTM CHOPS") and Manta
Ray Gathering Company, L.L.C. ("Manta Ray" and, together with GTM and GTM CHOPS,
the "GTM Companies"), on the other. Valero, GTM, GTM CHOPS and Manta Ray are
referred to herein individually as a "Party" and, collectively, as the
"Parties."

                                    RECITALS

A.       On June 20, 2003 (the "CHOPS Formation Date"), GTM CHOPS, together with
         Cameron Highway Pipeline II, L.P. ("Valero CHOPS I") and Cameron
         Highway Pipeline III, L.P. ("Valero CHOPS II"), (each of which is a
         wholly-owned indirect subsidiary of GTM) formed Cameron Highway Oil
         Pipeline Company, a general partnership governed by Delaware law
         ("CHOPS"), in which GTM CHOPS owns a 50% general partner interest (the
         "GTM Partnership Interest"), Valero CHOPS I owns a 25% general partner
         interest and Valero CHOPS II owns a 25% general partner interest (such
         interests owned by Valero CHOPS I and Valero CHOPS II are referred to
         herein as the "Valero Partnership Interest").

B.       Immediately after the formation of CHOPS, GTM and CHOPS entered into
         the Producer Agreements (defined below), under which GTM, directly and
         through Manta Ray, has agreed to design, fabricate, construct, install,
         commission, and operate a crude oil pipeline system connecting various
         designated crude oil receipt points located in the Gulf of Mexico to
         delivery points located in the State of Texas (the "Project").

C.       In addition, after the formation of CHOPS, GTM contributed to CHOPS (on
         behalf of GTM CHOPS, Valero CHOPS I and Valero CHOPS II) certain
         permits, licenses, contracts, contract rights, and physical assets
         relating to the Project, and CHOPS assumed certain obligations relating
         to the Project, pursuant to an Assignment and Assumption Agreement
         dated as of the date hereof (the "Assignment"), which permits,
         licenses, contracts, contract rights and physical assets have an
         estimated aggregate value of $101.6 million as of June 23, 2003.

D.       GTM and its subsidiaries have expended substantial effort and funds in
         developing the Project; however, in order to complete the Project and
         have the oil pipeline system become Fully Operational, significant
         additional funds will be required.

E.       After reviewing bids from multiple third parties to invest in the
         Project and provide additional financial support in order to complete
         the Project, GTM selected Valero's bid to become (through subsidiaries)
         its 50% partner in CHOPS.

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F.       Valero desires to (i) participate in the Project through Valero CHOPS I
         and Valero CHOPS II, (ii) share with the GTM Companies certain risks
         and rewards associated with the Project, and (iii) assist the GTM
         Companies in locating project financing to assist in completion of the
         Project, in each case subject to the terms and conditions set forth in
         this Agreement and in the Partnership Agreement (defined below).

G.       The GTM Companies desire to have Valero (i) participate in the Project
         through Valero CHOPS I and Valero CHOPS II, (ii) share with the GTM
         Companies such risks and rewards and (iii) assist the GTM Companies in
         locating such project financing, in each case subject to the terms and
         conditions set forth in this Agreement and in the Partnership Agreement
         (defined below).

H.       In consideration of the Participation Fee described in Sections 2(a),
         (b), and (c), (1) Valero, by means of transfer to its wholly-owned
         (direct or indirect) subsidiaries, desires to acquire Valero CHOPS I,
         Valero CHOPS II and their general partner, Cameron Highway GP I, L.L.C.
         ("Valero CHOPS GP" and, together with Valero CHOPS I and Valero CHOPS
         II, the "Acquired Companies") and thereby initially to acquire
         indirectly the Valero Partnership Interest and (2) GTM desires to so
         dispose of the Acquired Companies and thereby the Valero Partnership
         Interest.

I.       Concurrent with the execution and delivery hereof, GTM CHOPS, Valero
         CHOPS I and Valero CHOPS II will amend and restate the partnership
         agreement of CHOPS (such partnership agreement (including schedules and
         exhibits thereto), as amended, restated, supplemented and otherwise
         modified from time to time, being collectively referred to as the
         "Partnership Agreement").

J.       Concurrent with the execution and delivery hereof, Manta Ray will enter
         into the Construction Agreement and the Operating Agreement pursuant to
         which Manta Ray will be responsible for the construction and operation
         of the Project.

                                    AGREEMENT

         NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration (the receipt and sufficiency of which are hereby confirmed and
acknowledged), the Parties hereby agree as set forth below. Certain capitalized
terms are defined in Section 8(a). Capitalized terms not defined in such Section
or otherwise defined in this Agreement are used as defined in the Partnership
Agreement.

     1.  Assignment. GTM hereby assigns and transfers to (a) Valero Investments
         a 99% limited partner interest in each of Valero CHOPS I and Valero
         CHOPS II, and (b) VCSC a 100% member interest in Valero CHOPS GP. To
         the extent necessary under the CHOPS partnership agreement, GTM CHOPS
         hereby consents to such assignments and transfers and acknowledges that
         each of Valero CHOPS I and Valero CHOPS II owns a 25% general partner
         interest in CHOPS.

     2.  Participation Fee. In consideration for the assignments and transfers
         set forth in Section 1, Valero will pay (or will cause Valero CHOPS I
         and Valero CHOPS II to pay) to GTM

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         (or its designee) a total of $35 million (the "Participation Fee") in
         the following manner and subject to the following conditions:

                  (a)      By wire transfer of immediately available funds to
         GTM's designated account, Valero will pay (or cause to be paid to) GTM
         $19 million (the "Initial Payment") contemporaneously with the
         execution and delivery of this Agreement;

                  (b)      Valero will pay (or cause to be paid to) GTM an
         additional $5 million (the "Second Payment") within two Business Days
         after the Initial Facilities are Fully Operational (as evidenced by
         notification from the Construction Manager pursuant to Section 9.18 of
         the Construction Agreement); and

                  (c)      Valero will pay (or cause to be paid to) GTM an
         additional $11 million (the "Third Payment") on the earlier of (i)
         December 31, 2006 and (ii) two Business Days after the 30th consecutive
         day that the Project has delivered at least 300,000 barrels of Oil per
         day (in the aggregate) to all delivery points, as evidenced by
         notification from the Operator pursuant to Section 9.15 of the
         Operating Agreement.

     3.  Additional Payments; True-Up Adjustment.

                  (a)      In addition to the Participation Fee, Valero will pay
         (contemporaneously with the execution and delivery of this Agreement by
         wire transfer of immediately available funds to GTM's designated
         account) to GTM $50,835,548.20 (the "Capital Contribution Estimate"),
         which is 50% of the most recent estimate (dated June 23, 2003) of the
         aggregate amount expended by GTM and its subsidiaries with respect to
         CHOPS.

                  (b)      Within 30 days after the date of this Agreement, GTM
         may deliver to Valero a written certificate (the "True-Up
         Certificate"), signed by an officer of GTM, setting forth in reasonable
         detail GTM's calculation of 50% of the actual aggregate amount expended
         by GTM and its subsidiaries through the date of this Agreement and
         contributed to CHOPS (the "GTM Post-Closing Calculation Amount"). If
         GTM does not deliver the True-Up Certificate within such 30-day period,
         then the Capital Contribution Estimate will be deemed to be correct and
         no further payments will be required of Valero under this Section 3(b).
         If GTM timely delivers the True-Up Certificate and the GTM Post-Closing
         Calculation Amount is greater than the Capital Contribution Estimate,
         Valero will pay the difference to GTM within five days after its
         receipt of such certificate. If GTM timely delivers the True-Up
         Certificate and the Capital Contribution Estimate is greater than the
         GTM Post-Closing Calculation Amount, GTM will pay the difference to
         Valero within five days after it delivers such certificate. If Valero,
         in reasonable good faith, believes that the GTM Post-Closing
         Calculation Amount is materially incorrect and delivers notice thereof
         within 60 days after it receives the True-Up Certificate, Valero may
         audit all such records, invoices, agreements, and other information and
         data associated with any CHOPS Agreement in order to verify or refute
         such amount; provided, that Valero provides GTM with no less than five
         (5) days written notice of its intent to conduct such audit which, in
         any case, must be completed within three months after such notice is
         received by GTM; and provided further, that Valero will be responsible
         for all of its own costs associated with any routine audit; and
         provided

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         further, however, that if the audit reduces the GTM Post-Closing
         Calculation Amount by more than $500,000.00, GTM will reimburse Valero
         within five (5) days after receiving the results of such audit for its
         reasonable costs and expenses associated with such audit. Valero will
         make every reasonable effort to conduct any such audit in a manner
         which will result in a minimum of inconvenience to GTM and GTM will
         cooperate in good faith with Valero in any such audit.

     4.  Related Agreements. Concurrent with the execution hereof, the Parties
         shall enter into (or cause their respective Subsidiaries and Affiliates
         to enter into) the following agreements, in the forms mutually
         acceptable to the Parties (together with this Agreement, the "Project
         Agreements"):

                  (a)      the Partnership Agreement to be executed and
         delivered by GTM CHOPS, Valero CHOPS I and Valero CHOPS II;

                  (b)      the Construction Agreement to be entered into by and
         between Manta Ray and CHOPS;

                  (c)      the Operating Agreement to be entered into by and
         between Manta Ray and CHOPS;

                  (d)      the SS 332B Platform Space Agreements (each, a "SS
         332B Platform Agreement") to be entered into by and between (i) Manta
         Ray and CHOPS and (ii) Valero Marketing and Supply Company and CHOPS;

                  (e)      the Capital Contribution Performance Guaranties; and

                  (f)      the Pipeline Connection Agreement (the "Connection
         Agreement") to be entered into by and between CHOPS and Valero Refining
         - Texas, L.P., a wholly-owned, indirect subsidiary of Valero.

     5.  Representations and Warranties of GTM, GTM CHOPS, and Manta Ray. Except
         as otherwise specifically limited or restricted in this Section 5, the
         GTM Companies, jointly and severally, represent and warrant to Valero,
         Valero Investments, and VCSC that each of the following statements is
         true and correct on and as of the Effective Date.

                  (a)      Existence and Good Standing. Each of the GTM
         Companies is duly formed and validly existing and in good standing
         under the Laws of its state or jurisdiction of formation, with power
         and authority to carry on the business in which it is engaged and, as
         the case may be, to enter into and perform its respective obligations
         under each Project Agreement to which it is a party. GTM CHOPS and
         Manta Ray are wholly-owned (direct or indirect) Subsidiaries of GTM.
         Each of Valero CHOPS I and Valero CHOPS II is duly formed and validly
         existing and in good standing under the Laws of the state of Delaware,
         its jurisdiction of formation, with power and authority to own its
         interest in CHOPS and to perform its respective obligations under the
         CHOPS partnership agreement. Valero CHOPS GP is duly formed and validly
         existing and in good standing under the Laws of the state of Delaware,
         its jurisdiction of formation, with power and authority to own the 1%
         general partner interest in each of Valero CHOPS I

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         and Valero CHOPS II. Valero CHOPS GP was formed in Delaware on June 20,
         2003 and each of Valero CHOPS I and Valero CHOPS II were formed in
         Delaware on June 20, 2003.

                  (b)      Authorization. The execution and delivery of each
         Project Agreement, and the consummation of the transactions
         contemplated hereby and thereby, have been duly authorized and approved
         by all requisite partnership, corporate, limited liability company or
         other similar action of each GTM Company that is a party thereto.

                  (c)      No Conflicts. The execution and delivery of each
         Project Agreement by each GTM Company that is a party thereto do not,
         and consummation of the transactions contemplated hereby and thereby
         will not, (i) violate any of the provisions of the organizational
         documents of any of the GTM Companies or the Acquired Companies, (ii)
         contravene, conflict with, or result in a violation or breach of any
         material provision of, or give any Person the right to declare a
         default or exercise any remedy under, or to accelerate the maturity or
         performance of, or to cancel, terminate, or modify any material
         agreement pursuant to which any of the GTM Companies or the Acquired
         Companies or any of their respective property is bound (including the
         Producer Agreements), or (iii) contravene, conflict with, result in a
         violation of, or give any Governmental Authority or other Person the
         right to challenge any of the subject, material transactions or to
         exercise any remedy or obtain any relief under, any applicable Laws.

                  (d)      Enforceability. Each Project Agreement is valid,
         binding and enforceable against each GTM Company that is a party
         thereto in accordance with its terms, subject to bankruptcy,
         moratorium, insolvency and other Laws generally affecting creditors'
         rights and general principles of equity (whether applied in a
         Proceeding in a court of law or equity).

                  (e)      Financial, Schedule and Budget Information. Schedule
         5(e) sets forth the material financial projections, construction
         budget, and construction schedule for the Project as of June 23, 2003
         (which information, to the GTM Companies' Knowledge, has not been
         materially adversely impacted from such date through the date of this
         Agreement). To the Knowledge of the GTM Companies, the information
         described on Schedule 5(e) was prepared by the GTM Companies or their
         representative(s) in good faith based upon assumptions believed by such
         GTM Company to be reasonable at the time provided; provided, that the
         Parties acknowledge that the financial information and construction
         budgets and schedules described on Schedule 5(e) contain estimates of
         future events and occurrences and may not result or occur as estimated.

                  (f)      No Litigation. There is no action, suit,
         investigation, arbitration, grievance or proceeding pending against, or
         to the Knowledge of the GTM Companies threatened against, any of the
         GTM Companies that is reasonably related to the Project and that could
         reasonably be expected, individually or in the aggregate, to result in
         a material adverse effect on (i) the consolidated financial condition,
         operations or business of the GTM Companies (other than the GTM
         Disclosed Matters) or any of the GTM Companies' ability to perform its
         respective obligations (as applicable) under any Project Agreement to
         which it is a party, (ii) CHOPS or (iii) the Project, and to the
         Knowledge of

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         the GTM Companies, there are no existing facts or circumstances
         (including any claims or demands) related to the Project that
         reasonably would be expected to result in any of the foregoing. There
         is no action, suit, investigation, arbitration, grievance or proceeding
         pending against, or to the Knowledge of the GTM Companies threatened
         against, any of the Acquired Companies and there are no existing facts
         or circumstances (including any claims or demands) related to the
         Acquired Companies that reasonably would be expected to result in any
         such action, suit, investigation, arbitration, grievance or proceeding.

                  (g)      No Orders. There are no material orders, judgments,
         injunctions or decrees of any Governmental Authority related to CHOPS
         or the Project and with respect to which any of the GTM Companies or
         CHOPS has been named or is a party or, to the Knowledge of the GTM
         Companies, is reasonably likely to be named a party. There are no
         orders, judgments, injunctions or decrees of any Governmental Authority
         related to the Acquired Companies or with respect to which any of the
         Acquired Companies has been named or is a party or, to the Knowledge of
         the GTM Companies, is reasonably likely to be named a party.

                  (h)      Producer Agreements. Each of the Producer Agreements
         (i) was duly authorized, executed and delivered by GTM and CHOPS to
         which it was a party, and (ii) to the Knowledge of the GTM Companies,
         was authorized, executed and delivered by each Person party thereto
         that is not an Affiliate of GTM. Neither GTM nor CHOPS is in violation
         or breach of any of its material obligations under any Producer
         Agreement in a manner that (A) would entitle any counterparty to such
         Producer Agreement to terminate or materially modify such Producer
         Agreement, or (B) could reasonably be expected to have a material
         adverse effect on the consolidated financial condition, operations, or
         business of the GTM Companies or any of the GTM Companies' ability to
         perform its respective obligations (as applicable) under any Project
         Agreement to which it is a party. Schedule 5(h) includes (1) correct
         and complete copies of the Producer Agreements, and (2) a complete list
         of all of the CHOPS Agreements, which are the only agreements to which
         CHOPS is party or by which any of CHOPS' assets are bound.

                  (i)      No Brokers. There is no investment banker, broker,
         finder or other such intermediary which has been retained by, or is
         authorized to act on behalf of, any GTM Company or Acquired Company
         with respect to the transactions contemplated by the Project
         Agreements.

                  (j)      Poseidon and Other Offshore Pipeline Opportunities.
         Neither GTM nor any of its Affiliates has any obligation to offer or
         otherwise make available to Poseidon Oil Pipeline Company, L.L.C.
         ("Poseidon") business opportunities with respect to the offshore oil
         pipeline industry ("Opportunities") other than such obligations as are
         set forth in the Poseidon limited liability company agreement, a
         correct and complete copy of which has been delivered to Valero. The
         obligations of GTM and its Subsidiaries to offer or otherwise make
         available to any Person other than Poseidon or CHOPS any Opportunities
         located or to be located in the Gulf of Mexico are set forth on
         Schedule 5(j).

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                  (k)      Sufficiency of Contracts. The CHOPS Agreements
         include all of the assets, contracts, and contract rights of the GTM
         Companies, as well as their respective Affiliates, with respect to the
         Project other than the rights and obligations (i) under this Agreement
         and the Partnership Agreement, (ii) as Construction Manager and
         Operator under the Construction Agreement and the Operating Agreement,
         respectively, (iii) under the applicable SS 332B Platform Agreement,
         (iv) under the applicable Capital Contribution Performance Guaranty,
         (v) under the Assignment, (vi) under the Supplementary Agreement dated
         June 23, 2003 by and among GTM, BP and Mardi Gras Transportation System
         Inc., (vii) under the Supplementary Agreement dated June 23, 2003 by
         and among GTM and BHP and (viii) under the Supplementary Agreement
         dated June 23, 2003 by and among GTM and Unocal.

                  (l)      Permits. Schedule 5(l) sets forth (i) the permits,
         licenses and approvals from Governmental Authorities and rights-of-way
         and other easements or property rights that any of the GTM Companies
         (or one or more of their respective Affiliates) has secured for the
         construction and operation of CHOPS and (ii) to the Knowledge of the
         GTM Companies, all other material permits, licenses and approvals from
         Governmental Authorities and rights-of-way and other easements or
         property rights (A) necessary for the construction and operation of
         CHOPS, as such construction and operation is presently contemplated,
         and (B) the absence of which would materially delay (from the schedule
         attached as Schedule 5(e)) or prevent the Initial Facilities from being
         Fully Operational.

                  (m)      Manta Ray. Manta Ray has or has access to the
         requisite financial ability, skills, experience, personnel,
         qualifications, and capacity to perform, provide, or arrange for each
         of the services to be provided under the Construction Agreement and
         Operating Agreement, and no GTM Company is aware of any facts,
         circumstances, or occurrences that will or would be reasonably likely
         to prevent or inhibit Manta Ray's performance of its obligations under
         the Construction Agreement or the Operating Agreement.

                  (n)      Insolvency. None of the GTM Companies is Insolvent
         and none of the GTM Companies nor any of their respective Subsidiaries
         will become Insolvent as a result of the consummation of the
         transactions contemplated herein. There are no proceedings pending (or,
         to the GTM Companies' Knowledge, threatened) by any creditors of any of
         the GTM Companies or any of their respective Subsidiaries under the
         Bankruptcy Code.

                  (o)      CHOPS Assets. The assets assigned to CHOPS pursuant
         to the Assignment were assigned to CHOPS free of any lien, encumbrance,
         charge, claim, covenant, equitable interest, security interest, right
         of first refusal or other similar restriction, and all such assets are
         free of any such liens, encumbrances, charges, claims, covenants,
         equitable interests, security interests, rights of first refusal or
         other similar restrictions, as of the Effective Date.

                  (p)      Valero Partnership Interest and Acquired Companies.

                           (i)      Immediately prior to the assignment in
                  Section 1, (i) GTM CHOPS, Valero CHOPS I and Valero CHOPS II
                  were the only partners in

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                  CHOPS, (ii) GTM CHOPS owned (beneficially and of record) a 50%
                  Partnership Interest, free and clear of all liens
                  encumbrances, charges, claims, covenants, equitable interests,
                  security interests, rights of first refusal or other similar
                  restrictions and (iii) each of Valero CHOPS I and Valero CHOPS
                  II owned (beneficially and of record) a 25% Partnership
                  Interest, free and clear of all liens encumbrances, charges,
                  claims, covenants, equitable interests, security interests,
                  rights of first refusal or other similar restrictions. GTM has
                  delivered to Valero correct and complete copies of the
                  organizational documents of CHOPS and each Acquired Company as
                  in effect immediately prior to such assignment.

                           (ii)     Immediately prior to the assignment in
                  Section 1, (i) GTM and Valero CHOPS GP were the only partners
                  in either of Valero CHOPS I and Valero CHOPS II, and GTM was
                  the sole member of Valero CHOPS GP, (ii) GTM owned
                  (beneficially and of record) a 99% limited partnership
                  interest in each of Valero CHOPS I and Valero CHOPS II, free
                  and clear of all liens encumbrances, charges, claims,
                  covenants, equitable interests, security interests, rights of
                  first refusal or other similar restrictions, (iii) GTM owned
                  (beneficially and of record) a 100% membership interest in
                  Valero CHOPS GP, free and clear of all liens encumbrances,
                  charges, claims, covenants, equitable interests, security
                  interests, rights of first refusal or other similar
                  restrictions and (iv) Valero CHOPS GP owned (beneficially and
                  of record) a 1% general partnership interest in each of Valero
                  CHOPS I and Valero CHOPS II, free and clear of all liens
                  encumbrances, charges, claims, covenants, equitable interests,
                  security interests, rights of first refusal or other similar
                  restrictions.

                           (iii)    All of the issued and outstanding
                  partnership interests or membership interests, as applicable,
                  of each Acquired Company have been duly authorized, are
                  validly issued, fully paid and (except as otherwise required
                  by the Delaware Limited Liability Company Act and Delaware
                  Revised Uniform Limited Partnership Act) non-assessable, and
                  were issued in compliance with all applicable state and
                  federal Laws. Other than Valero's rights under this Agreement,
                  no Person has any equitable or contractual right of any kind
                  or character to acquire any membership interest, partnership
                  interest or other equity interest in any Acquired Company.
                  There are no agreements of any kind or character with respect
                  to the voting of any of the membership interests or
                  partnership interests, as applicable, of any Acquired Company.

                           (iv)     Other than (A) the 1% general partner
                  interest in each of Valero CHOPS I and Valero CHOPS II owned
                  by Valero CHOPS GP and (B) the Valero Partnership Interest, no
                  Acquired Company (1) owns any equity interest of any kind or
                  character in any Person or (2) owns any assets.

                           (v)      Other than (A) with respect to Valero CHOPS
                  GP, obligations arising solely from (1) its status as general
                  partner of either Valero CHOPS I or Valero CHOPS II or (2) the
                  limited partnership agreement of Valero CHOPS I or Valero
                  CHOPS II and (B) with respect to each of Valero CHOPS I and
                  Valero CHOPS II, obligations arising solely from (1) its
                  status as a general partner of

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                  CHOPS or (2) the partnership agreement of CHOPS, no Acquired
                  Company has any liabilities or obligations of any kind or
                  character and no Acquired Company is party to any contract of
                  any kind or character.

                  (q)      CHOPS Obligations. CHOPS has no obligations or
         liabilities of any kind or character other than (i) obligations under
         the CHOPS Agreements, (ii) obligations under the Construction Agreement
         and the Operating Agreement, (iii) obligations under the Platform Space
         Agreements, and (iv) obligations under the Connection Agreement.

     6.  Representations and Warranties of Valero. Except as otherwise
         specifically limited or restricted in this Section 6, Valero represents
         and warrants to the GTM Companies that each of the following statements
         is true and correct on and as of the Effective Date.

                  (a)      Existence and Good Standing. Each of Valero and the
         Valero Subs is duly formed and validly existing and in good standing
         under the Laws of its state or jurisdiction of formation, with power
         and authority to carry on the business in which it is engaged and, as
         the case may be, to enter into and perform its respective obligations
         under each Project Agreement to which it is a party.

                  (b)      Authorization. The execution and delivery of each
         Project Agreement to which it is party, and the consummation of the
         transactions contemplated hereby and thereby, have been duly authorized
         and approved by all requisite corporate action of Valero.

                  (c)      No Conflicts. The execution and delivery of each
         Project Agreement to which it is party by Valero do not, and
         consummation of the transactions contemplated hereby and thereby will
         not, (i) violate any of the provisions of Valero's (or any Valero
         Sub's) organizational documents, (ii) contravene, conflict with, or
         result in a violation or breach of any material provision of, or give
         any Person the right to declare a default or exercise any remedy under,
         or to accelerate the maturity or performance of, or to cancel,
         terminate, or modify any material agreement pursuant to which Valero,
         any Valero Sub or any of their respective property is bound, or (iii)
         contravene, conflict with, result in a violation of, or give any
         Governmental Authority or other Person the right to challenge any of
         the subject, material transactions or to exercise any remedy or obtain
         any relief under, any applicable Laws.

                  (d)      Enforceability. Each Project Agreement to which it is
         party is valid, binding and enforceable against Valero in accordance
         with its terms, subject to bankruptcy, moratorium, insolvency and other
         Laws generally affecting creditors' rights and general principles of
         equity (whether applied in a Proceeding in a court of law or equity).

                  (e)      No Litigation. There is no action, suit,
         investigation, arbitration, grievance or proceeding pending against, or
         to Valero's Knowledge threatened against, Valero (other than the Valero
         Disclosed Matters) or any Valero Sub that is reasonably related to the
         Project and that could reasonably be expected, individually or in the
         aggregate, to result in a material adverse effect on (i) the
         consolidated financial condition,

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         operations or business of Valero or on its ability to perform its
         obligations (as applicable) under any Project Agreement to which it is
         a party, (ii) CHOPS, or (iii) the Project, and to Valero's Knowledge,
         there are no existing facts or circumstances (including any claims or
         demands) related to the Project that reasonably would be expected to
         result in any of the foregoing.

                  (f)      No Orders. There are no material orders, judgments,
         injunctions or decrees of any Governmental Authority related to CHOPS
         or the Project and with respect to which Valero or any Valero Sub has
         been named or is a party or, to Valero's Knowledge, is reasonably
         likely to be named a party.

                  (g)      No Brokers. There is no investment banker, broker,
         finder or other such intermediary which has been retained by, or is
         authorized to act on behalf of, Valero or any Valero Sub with respect
         to the transactions contemplated by the Project Agreements.

                  (h)      Opportunities. The obligations of Valero and its
         Affiliates to offer or otherwise make available to any Person other
         than CHOPS any Opportunities located or to be located in the Gulf of
         Mexico are set forth on Schedule 6(h).

     7.  Indemnification.

                  (a)      Valero, on one hand, and the GTM Companies, on the
         other, (each being referred to as an "Indemnitor") each will release,
         defend (upon any Indemnitee's request), indemnify and hold harmless the
         other, its successors, assigns, directors, employees, Subsidiaries,
         Affiliates, representatives, and agents (collectively, the
         "Indemnitee"), from and against each and every Loss that results from,
         arises out of, or is attributable in any way to any of the following:

                           (i)      claims with respect to brokers, finders and
                  agents' fees and commissions in connection with the
                  transaction contemplated in this Agreement or the Partnership
                  Agreement asserted by any Person on the basis of any
                  statement, instrument or agreement alleged to have been made
                  by the Indemnitor; or

                           (ii)     subject to Section 7(b), any breach in any
                  material respect of any representation or warranty made by the
                  Indemnitor in this Agreement.

                  (b)      Notwithstanding anything to the contrary in this
         Agreement, no Indemnitor will have any obligation to any Indemnitee
         with respect to Losses as a result of breaches of representations or
         warranties hereunder unless (i) the aggregate amount of Losses suffered
         by all applicable Indemnitees as a result of breaches of
         representations or warranties hereunder exceeds or is reasonably
         expected to exceed $50,000, in which case only the excess will be
         subject to indemnification under this Agreement, and (ii) written
         notice of such Loss, in reasonable detail, is delivered to the
         applicable Indemnitor (in accordance with Section 8(f)) within two
         years after the date on which the Initial Facilities are Fully
         Operational. The Indemnitor will have 30 days from its receipt of such
         a written notice from an applicable Indemnitee asserting a claim for
         indemnification hereunder (a "Claim") either to (a) admit liability for
         such Claim, or (b) dispute the

                                       10

<PAGE>

         Claim. At a minimum, any such written notice will describe in
         reasonable detail the nature of the Claim, an estimate of the amount of
         damages attributable to such Claim and the basis for the request for
         indemnification hereunder. If the Indemnitor receiving such notice of
         Claim (1) does not notify the Indemnitee sending such notice within
         such 30-day period or (2) disputes the Claim by written notice to the
         Indemnitee, the Indemnitee sending such notice of Claim may submit the
         Claim for arbitration in accordance with the arbitration provisions set
         forth in Exhibit D of the Partnership Agreement (as in effect on the
         date hereof). Payment of all amounts owing by an Indemnitor pursuant to
         this Section 7(b) will be made no later than the later of (i) the
         expiration of the 30-day period referenced above or (ii) within 30 days
         after the applicable arbitration decision has become final.

                  (c)      CHOPS Agreement Matters.

                           (i)      Valero. Valero assumes 50% of the
                  obligations of the GTM Companies under the CHOPS Agreements.
                  Valero agrees to contribute to, and to INDEMNIFY, DEFEND (upon
                  request) AND HOLD HARMLESS, the GTM Companies for 50% of all
                  Losses (including any liquidated damages contemplated under
                  the Producer Agreements) incurred by the GTM Companies (A)
                  with respect to any claim made by any Person that is a party
                  to a CHOPS Agreement (other than GTM and its Affiliates) or
                  (B) as required under any CHOPS Agreement; provided, however,
                  that GTM will be solely responsible for, and Valero will have
                  no obligation or responsibility under this Section 7(c)(i)
                  with respect to, any Losses arising out of, resulting from or
                  related to (1) the termination of the Construction Agreement
                  or the Operating Agreement (other than as a result of a breach
                  by CHOPS) or (2) the gross negligence or willful misconduct
                  (which expressly includes any intentional breach of a material
                  obligation contained in the Construction Agreement or the
                  Operating Agreement) by the Construction Manager or the
                  Operator.

                           (ii)     The GTM Companies, jointly and severally,
                  agree to contribute to, and to INDEMNIFY, DEFEND (upon
                  request) AND HOLD HARMLESS, Valero (A) to the extent that
                  Valero suffers more than 50% of all Losses (including any
                  liquidated damages) incurred with respect to any claim made by
                  any Person that is a party to a CHOPS Agreement (other than
                  CHOPS) and (B) as required under any CHOPS Agreement.

     8.  Miscellaneous.

                  (a)      Definitions. The following capitalized terms have the
         following meanings:

                  "Bankruptcy Code" means Title 11 of the United States Code, 11
         U.S.C. Section. 101, et seq., or any successor statutes or laws.

                  "BP" means BP Exploration & Production Inc., a Delaware
         corporation.

                  "BHP" means BHP Billiton Petroleum (Deepwater) Inc.

                                       11

<PAGE>

                  "Capital Contribution Performance Guaranties" means both that
         certain Performance Guaranty Agreement entered into by and between GTM
         CHOPS, as beneficiary, and Valero, as guarantor, concurrently with this
         Agreement (including any schedules, exhibits or attachments thereto),
         and that certain Performance Guaranty Agreement entered into by and
         between Valero CHOPS I and Valero CHOPS II, as beneficiaries, and GTM,
         as guarantor, concurrently with this Agreement (including any
         schedules, exhibits or attachments thereto), in both cases, as amended,
         restated, supplemented or otherwise modified from time to time.

                  "CHOPS Agreements" means the Producer Agreements and
         (including all schedules, exhibits and attachments to each such
         agreement and as each such agreement is amended, restated, supplemented
         or otherwise modified from time to time) each of the agreements,
         purchase orders and work requests listed on Schedule 5(h).

                  "Construction Agreement" means that certain Construction
         Management Agreement initially entered into by and between Manta Ray
         and CHOPS concurrently with this Agreement (including any schedules,
         exhibits or attachments thereto), as amended, restated, supplemented or
         otherwise modified from time to time.

                  "Fully Operational" has the meaning given such term in the
         Construction Agreement.

                  "GTM Disclosed Matters" means the actions, suits and
         proceedings and the environmental and intellectual property matters
         disclosed in (a) GTM's report on Form 10-K for the fiscal year ended
         December 31, 2002 and GTM's report on Form 10-Q for the fiscal period
         ended March 31, 2003, in each case as filed with the Securities and
         Exchange Commission, or (b) otherwise disclosed in writing to Valero
         prior to the execution and delivery of this Agreement.

                  "Insolvent" means (i) a Person is unable to pay their debts or
         other obligations as they become due; or (ii) the sum of a Person's
         debts are in excess of the aggregate fair valuation of such Person's
         assets.

                  "Knowledge" means as follows: an individual will be deemed to
         have "Knowledge" of a particular fact or other matter if such
         individual is aware of such fact or other matter at the time of
         determination after such individual made a reasonable inquiry of each
         of his or her direct reports as to whether any of them possess the
         requisite Knowledge of the subject matter in question. "Knowledge" with
         respect to the GTM Companies shall be limited to the Knowledge of the
         persons listed on Schedule 8 (a) to this Agreement. "Knowledge" with
         respect to Valero shall be limited to the Knowledge of the persons
         listed on Schedule 8 (b) to this Agreement.

                  "Operating Agreement" means that certain Operation and
         Management Agreement initially entered into by and between Manta Ray
         and the Partnership concurrently with this Agreement (including any
         schedules, exhibits and attachments thereto), as amended, restated,
         supplemented or otherwise modified from time to time.

                                       12

<PAGE>

                  "Producer Agreements" means, including all schedules, exhibits
         and attachments to each such agreement and as each such agreement is
         amended, restated, supplemented or otherwise modified from time to
         time: (i) the Purchase and Sale Agreement dated June 23, 2003 by and
         among BP, CHOPS and GTM; (ii) the Construction Agreement dated June 23,
         2003 by and among BP, Mardi Gras Transportation System Inc., a Delaware
         corporation, and CHOPS; (iii) the Offshore Facilities Interconnection,
         Construction and Operating Agreement dated June 23, 2003 among Caesar
         Oil Pipeline Company, LLC, a Delaware limited liability company, Manta
         Ray, CHOPS and GTM; (iv) the Purchase and Sale Agreement dated June 23,
         2003 by and among BHP and CHOPS; (v) the Purchase and Sale Agreement
         dated June 23, 2003 by and among Unocal and CHOPS; and (vi) the
         Liquidated Damages Letter Agreement dated June 23, 2003 by and between
         GTM and CHOPS.

                  "Unocal" means Unocal Oil Company of California, a California
         corporation.

                  "Valero Disclosed Matters" means the actions, suits and
         proceedings and the environmental and intellectual property matters
         disclosed in (a) Valero's report on Form 10-K for the fiscal year ended
         December 31, 2002 and Valero's report on Form 10-Q for the fiscal
         period ended March 31, 2003, in each case as filed with the Securities
         and Exchange Commission, or (b) otherwise disclosed in writing to GTM
         prior to the execution and delivery of this Agreement.

                  "Valero Investments" means Valero Unit Investments, L.L.C., a
         Delaware limited liability company and wholly-owned, indirect
         subsidiary of Valero.

                  "Valero Subs" means Valero Investments and VCSC.

                  "VSCS" means Valero Corporate Services Company, a Delaware
         corporation and wholly-owned, indirect subsidiary of Valero.

                  (b)      Waiver. Neither action taken (including any
         investigation by or on behalf of any Party) nor inaction pursuant to
         this Agreement, will be deemed to constitute a waiver of compliance
         with any representation, warranty, covenant or agreement contained
         herein by the Party not committing such action or inaction. A waiver by
         any Party of a particular right, including breach of any provision of
         this Agreement, will not operate or be construed as a subsequent waiver
         of that same right or a waiver of any other right.

                  (c)      Counterparts. This Agreement may be executed in
         multiple counterparts, each of which, when executed, will be deemed an
         original, and all of which will constitute but one and the same
         instrument.

                  (d)      Binding Effect. This Agreement will be binding upon
         and inure to the benefit of the Parties and their respective legal
         representatives, successors and assigns.

                  (e)      Governing Law. This Agreement will be construed,
         interpreted, and governed by and according to, the Laws of the State of
         Texas, excluding any conflict or

                                       13

<PAGE>

         choice of Law rules or principles which, if applied, might permit or
         require the application of the Laws of another jurisdiction.

                  (f)      Notices. Except as otherwise expressly provided in
         this Agreement to the contrary, any notice required or permitted to be
         given under this Agreement will be in writing (including telex,
         facsimile, telecopier or similar writing) and sent to the address of
         the Party set forth below, or to such other more recent address of
         which the sending Party actually has received written notice:

         If to any of the GTM Companies, to:

                           [Name of Specified Entity]
                           Attn: President
                           Four Greenway Plaza
                           Houston, Texas 77046
                           Telephone: (832) 676-6152
                           Fax: (832) 676-1665

         With a copy to (if not the original recipient):

                           GulfTerra Energy Partners, L.P.
                           Attn: President
                           Four Greenway Plaza
                           Houston, Texas 77046
                           Telephone: (832) 676-6152
                           Fax: (832) 676-1665

         If to Valero, Valero Investments, or VCSC to:

                           [Name of Specified Entity]
                           c/o Valero Energy Corporation
                           Attn: Executive Vice President, Corporate Development
                           One Valero Place
                           San Antonio, Texas 78212
                           Telephone: (210) 370-2146
                           Fax: (210) 370-2270

         With a copy to (if not the original recipient):

                           Valero Energy Corporation
                           Attn: Vice President, Legal Affairs
                           One Valero Place
                           San Antonio, Texas 78212
                           Fax: (210) 370-5889

                  Each such notice, demand or other communication will be
         effective, if given by registered or certified mail, return receipt
         requested, as of the third day after the date

                                       14

<PAGE>

         indicated on the mailing certificate, or if given by any other means,
         when delivered at the address specified in this Section.

                  (g)      Severability. In the event of a direct conflict
         between the provisions of this Agreement and any applicable Laws, the
         applicable Laws will control. If any provision of this Agreement, or
         the application thereof to any person or circumstance, is held invalid
         or unenforceable to any extent, the remainder of this Agreement and the
         application of that provision to other persons or circumstances will
         not be affected thereby and that provision will be enforced to the
         greatest extent permitted by applicable Laws.

                  (h)      Confidentiality. The Parties agree that this
         Agreement will be maintained in strict and absolute confidence, except
         upon prior written notice and with respect to disclosure: (i) pursuant
         to the sale, disposition or other alienation (directly or indirectly)
         of a Party's rights and interest in and to this Agreement, (ii)
         pursuant to the sale or other disposition (directly or indirectly) of
         all or substantially all of the assets of a Party, (iii) in conjunction
         with a merger, consolidation, share exchange or other form of statutory
         reorganization involving a Party, (iv) to lenders, accountants and
         other representatives of the disclosing Party with a need to know such
         information, (v) as required to make disclosure in compliance with any
         applicable Law, rules or regulations of any applicable securities
         exchange or market or this Agreement and its objectives or (vi) to
         those of a Parties' Affiliates that have a "need to know"; provided
         that the disclosing Party will be liable for any disclosure by the
         receiving Person to the extent such disclosure would not be permitted
         by this Section if made by the disclosing Party.

                  (i)      Construction. The Parties have participated jointly
         in the negotiation and drafting of this Agreement. In the event an
         ambiguity or question of intent or interpretation arises, this
         Agreement will be construed as if drafted jointly by the Parties and no
         presumption or burden of proof will arise favoring or disfavoring any
         Party by virtue of the authorship of any of the provisions of this
         Agreement. Any reference to any federal, state, local, or foreign
         statute or law will be deemed to refer to such statute or law, as
         amended, and also to refer to all rules and regulations promulgated
         thereunder, unless the context requires otherwise. Any reference to a
         Party will also include such Party's permitted successors and assigns.
         The words "including," "includes," and "include" will be deemed to be
         followed by the phrase "without limitation." All personal pronouns used
         in this Agreement, whether used in the masculine, feminine or neuter
         gender, will include all other genders; the singular will include the
         plural, and vice versa. All references herein to Exhibits, Schedules,
         Articles, Sections or subdivisions thereof will refer to the
         corresponding Exhibits, Schedules, Article, Section or subdivision
         thereof of this Agreement unless specific reference is made to such
         exhibits, articles, sections or subdivisions of another document or
         instrument. The terms "herein," "hereby," "hereunder," "hereof,"
         "hereinafter," and other equivalent words refer to this Agreement in
         its entirety and not solely to the particular portion of the Agreement
         in which such word is used.

                                       15

<PAGE>

                  (j)      Conflict. In the event of any conflict or
         inconsistency among the provisions set forth in this Agreement and the
         Partnership Agreement, the provisions set forth in this Agreement will
         prevail.

                  (k)      Permits, etc. To the extent that any of the same are
         in the name of any GTM Company, the GTM Companies will (and will cause
         their Subsidiaries and Affiliates to), as soon as reasonably
         practicable, (i) to the extent transfer is permitted under applicable
         Law, transfer to CHOPS any and all permits, licenses, approvals from
         Governmental Authorities, rights-of-way, easements, real property
         rights and subcontractor warranties for the construction and operation
         of the Project or (ii) otherwise, assist CHOPS to obtain the effective
         benefit of such permits, licenses, approvals, rights-of-way, easements,
         real property rights or subcontractor warranties.

                  (l)      Not a Security. Each party hereto hereby stipulates,
         acknowledges and agrees that the limited partnership interests and
         membership interests transferred hereby are not securities under
         Federal or state law.

                  (m)      Claims; Term of the Agreement. Unless a shorter time
         period is mandated by applicable Law, and subject to the last sentence
         of this Section 8(m), any and all claims or disputes of any kind or
         nature whatsoever with respect to the breach or default, or alleged
         breach or default, of any right, duty, or obligation of any Party that
         is set forth in this Agreement, including any of the liability and
         indemnity obligations, must be served on the Party or Parties who are
         allegedly in breach or default on or before the second anniversary of
         the date that the Third Payment is received by GTM or its designee
         (such second anniversary, the "Claims Deadline"), and any claim or
         dispute in connection with this Agreement that is brought or served
         after the Claims Deadline shall be forever barred and waived by the
         Parties. This Section 8(m) will have no effect on the indemnity
         obligations of Valero or the GTM Companies with respect to the CHOPS
         Agreements under Section 7(c).

           [The remainder of this page is intentionally left blank.]

                                       16

<PAGE>

         Each Party has caused this Agreement to be executed in its name by an
officer thereunto duly authorized as of the date first written above.

                                        VALERO ENERGY CORPORATION

                                        By:    /s/ Michael S. Ciskowski
                                               ---------------------------------
                                        Name:  Michael S. Ciskowski
                                        Title: Executive Vice President

                    Participation Agreement Signature Page 1

<PAGE>

                                        GULFTERRA ENERGY PARTNERS, L.P.

                                        By:    /s/ James H. Lytal
                                               ---------------------------------
                                        Name:  James H. Lytal
                                        Title: President

                                        CAMERON HIGHWAY PIPELINE I, L.P.

                                        By:    /s/ James H. Lytal
                                               ---------------------------------
                                        Name:  James H. Lytal
                                        Title: President

                                        MANTA RAY GATHERING COMPANY , L.L.C.

                                        By:    /s/ James H. Lytal
                                               ---------------------------------
                                        Name:  James H. Lytal
                                        Title: President

                    Participation Agreement Signature Page 2
<PAGE>

                            PARTICIPATION AGREEMENT
                                  SCHEDULE 5(e)

                             PAGE 1 - CURRENT BUDGET

                            SUMMARY OF COST ESTIMATES

<TABLE>
<CAPTION>
                                                  Committed   Expenditures    CHOPS**     Forecast as of      Variance
                                                    Costs        To Date       Budget        6/6/2003       From Budget
                    Sub-Project                      (M$)         (M$)          (M$)           (M$)             (M$)
=======================================================================================================================
<S>                                               <C>         <C>             <C>         <C>               <C>
ONSHORE PIPELINES
   Port Neches Route                                10,756        6,102        47,426         48,457          (1,031)
   Texas City Route                                 17,340        6,693        26,582         27,519            (937)
Total Onshore Pipelines                             28,096       12,795        74,008         75,976          (1,968)
====================================================================================================================
NEAR SHORE PIPELINES
   High Island A5 to West of Sabine                 20,370        9,590        25,696         23,677           2,019
   High Island A5 to Bolivar Peninsula              27,135        5,754        30,293         28,671           1,622
Total Near Shore Pipelines                          47,505       15,344        55,989         52,348           3,641
====================================================================================================================
OFFSHORE PIPELINES
   Garden Banks 72 to High Island A5                86,760       18,400        99,689         92,517           7,172
   Ship Shoal 332 to Garden Banks 72                70,752       38,995        78,850         85,937          (7,087)
Total Offshore Pipelines                           157,512       57,395       178,539        178,454              85
====================================================================================================================
OFFSHORE FACILITIES
   High Island A5                                   25,249        4,031        32,101         32,734            (633)
   Garden Banks 72                                   1,332          428         6,021          6,064             (43)
   Ship Shoal 332                                   44,494       11,235        63,450         64,489          (1,039)
Total Offshore Facilities                           71,075       15,694       101,572        103,287          (1,715)
====================================================================================================================
LINE FILL                                                0            0        28,214         28,214               0
====================================================================================================================
SUBTOTAL BEFORE UNBUDGETED ITEMS                   304,188      101,228       438,322        438,279              43
====================================================================================================================
   CONTINGENCY                                         N/A          N/A        19,665         19,665               0
--------------------------------------------------------------------------------------------------------------------
   PRE-AFE COMMITMENTS                                 325
--------------------------------------------------------------------------------------------------------------------
   UNPOSTED JUNE INVOICES                                         6,340
--------------------------------------------------------------------------------------------------------------------
  REIMBURSIBLE UNBUDGETED COSTS (i.e. NSAI,
   S&W, etc.)                                          443          443             0            443            (443)
====================================================================================================================
         PROJECT TOTAL                             304,956      108,011       457,987        458,387            (400)
====================================================================================================================
</TABLE>

<PAGE>


                            PARTICIPATION AGREEMENT
                                 SCHEDULE 5(e)

                                PAGE 2-SCHEDULE

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
  Activity                                                                  Orig              Early          Early    Percent
     ID                   Description                                        Dur              Start         Finish    Complete
------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>                                               <C>             <C>             <C>       <C>
+Onshore Engineering
------------------------------------------------------------------------------------------------------------------------------
                                                                             83w4c          01MAR02 A       21OCT03      53
------------------------------------------------------------------------------------------------------------------------------
+Offshore Engineering
------------------------------------------------------------------------------------------------------------------------------
                                                                              173w          21MAR00 A       11AUG03      86
------------------------------------------------------------------------------------------------------------------------------
+Facility Engineering
                                                                             09w1c          01JAN02 A       20FEB04      12
------------------------------------------------------------------------------------------------------------------------------
+Onshore Permitting - Port Neches
------------------------------------------------------------------------------------------------------------------------------
                                                                             90w2c          13NOV01 A       21AUG03      92
------------------------------------------------------------------------------------------------------------------------------
+Onshore Permitting - Texas City
                                                                             87w4c          08NOV01 A       30JUL03      94
------------------------------------------------------------------------------------------------------------------------------
+Offshore Permitting
------------------------------------------------------------------------------------------------------------------------------
                                                                             59w3c          15APR02 A       13JUL03      90
------------------------------------------------------------------------------------------------------------------------------
+Facility Permitting - HI A5
------------------------------------------------------------------------------------------------------------------------------
                                                                             77w4c          15FEB02 A       25AUG03      35
------------------------------------------------------------------------------------------------------------------------------
+Facility Permitting - GB72
------------------------------------------------------------------------------------------------------------------------------
                                                                              8w2c          06AUG03         03OCT03       0
------------------------------------------------------------------------------------------------------------------------------
+Facility Permitting - SS332
------------------------------------------------------------------------------------------------------------------------------
                                                                               10w          15JUL03         23SEP03       0
------------------------------------------------------------------------------------------------------------------------------
+Procurement Materials - Onshore
------------------------------------------------------------------------------------------------------------------------------
                                                                             38w3c          16JUN03         17MAR04       0
------------------------------------------------------------------------------------------------------------------------------
+Procurement Contracting Onshore
------------------------------------------------------------------------------------------------------------------------------
                                                                             86w3c          13NOV01 A       29AUG03      80
------------------------------------------------------------------------------------------------------------------------------
+Procurement Materials - Offshore
------------------------------------------------------------------------------------------------------------------------------
                                                                             46w4c          03FEB03 A       02JAN04      17
------------------------------------------------------------------------------------------------------------------------------
+Procurement Materials - Pipe & Coating
------------------------------------------------------------------------------------------------------------------------------
                                                                             07w1c          18FEB02 A       24MAR04      52
------------------------------------------------------------------------------------------------------------------------------
+Procurement Contracting - Offshore
------------------------------------------------------------------------------------------------------------------------------
                                                                             98w1c          27MAR02 A       27FEB04      40
------------------------------------------------------------------------------------------------------------------------------
+Procurement Materials - Facilities
------------------------------------------------------------------------------------------------------------------------------
                                                                             96w2c          03APR02 A       23FEB04      48
------------------------------------------------------------------------------------------------------------------------------
+Procurement Contracting - Facility Fabrication
------------------------------------------------------------------------------------------------------------------------------
                                                                               31w          11OCT02 A       30MAY03      99
------------------------------------------------------------------------------------------------------------------------------
+Procurement Contracting - Facility Installation
------------------------------------------------------------------------------------------------------------------------------
                                                                              113w          08APR02 A       22JUN04       7
------------------------------------------------------------------------------------------------------------------------------
+Onshore Construction - Port Neches
------------------------------------------------------------------------------------------------------------------------------
                                                                               33w          02SEP03         22APR04       0
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<S>                                <C>
------------------------------------------
START DATE                         12NOV01
------------------------------------------
FINISH DATE                        07JUL04
------------------------------------------
DATA DATE                          16MAY03
------------------------------------------
RUN DATE                           09JUN03
------------------------------------------
PAGE NUMBER                        1A
------------------------------------------
</TABLE>

(C)PRIMAVERA SYSTEMS, INC.

                                 CAMERON HIGHWAY

<PAGE>


                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(e)

                          PAGE 3 - SCHEDULE (CONTINUED)

<TABLE>
<CAPTION>
Activity                                         Orig           Early       Early     Percent
   ID             Description                    Dur            Start       Finish    Complete
----------------------------------------------------------------------------------------------
<S>               <S>                            <C>          <C>           <C>       <C>
+Onshore Construction - Texas City
----------------------------------------------------------------------------------------------
                                                 52w2c        03MAR03 A     22JUN04       0
----------------------------------------------------------------------------------------------
+Offshore Construction - Coastal Port Neches
----------------------------------------------------------------------------------------------
                                                 42W1c        03MAR03 A     29DEC03      25
----------------------------------------------------------------------------------------------
+Offshore Construction - Coastal Texas City
----------------------------------------------------------------------------------------------
                                                 33W4c        03MAR03 A     28OCT03      17
----------------------------------------------------------------------------------------------
+Offshore Construction - 24"
----------------------------------------------------------------------------------------------
                                                 42W2c        04DEC02 A     02OCT03      28
----------------------------------------------------------------------------------------------
+Offshore Construction - 30"
----------------------------------------------------------------------------------------------
                                                 74W4c        24SEP02 A     11MAR04      31
----------------------------------------------------------------------------------------------
+Offshore Risers, Tie-ins & Testing
----------------------------------------------------------------------------------------------
                                                   46W        26JUN03       19MAY04       0
----------------------------------------------------------------------------------------------
+Facility Construction - HIA5
----------------------------------------------------------------------------------------------
                                                   68W        12MAR03 A     17JUL04      13
----------------------------------------------------------------------------------------------
+Facility Construction - GB72
----------------------------------------------------------------------------------------------
                                                   19W        03OCT03       17FEB04       0
----------------------------------------------------------------------------------------------
+Facility Construction - SS332
----------------------------------------------------------------------------------------------
                                                 68w3c        17FEB03 A     17JUN04      12
----------------------------------------------------------------------------------------------
+Project Closeout
----------------------------------------------------------------------------------------------
                                                     0        16JUN04       16JUN04(*)    0
----------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<S>              <C>
START DATE       12NOV01
FINISH DATE      07JUL04
DATA DATE        16MAY03
RUN DATE         09JUN03
PAGE NUMBER      2A
</TABLE>

  (C) PRIMAVERA SYSTEMS, INC.

                                 CAMERON HIGHWAY
<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(e)

                      PAGE 4 - LIST OF OPERATIONAL REPORTS

Cameron Hwy Monthly Report 001-Jan02 REV1

Cameron Hwy Monthly Report 002-Feb02

Cameron Hwy Monthly Report 003-Mar02

Cameron Hwy Monthly Report 004-Apr02

Cameron Hwy Monthly Report 005-May02

Cameron Hwy Monthly Report 006-Jun02

Cameron Hwy Monthly Report 007-Jul02

Cameron Hwy Monthly Report 008-Aug02

Cameron Hwy Monthly Report 009-Sep02

Cameron Hwy Monthly Report 010-Oct02

Cameron Hwy Monthly Report 011-Nov02

Cameron Hwy Monthly Report 012-Dec02

Cameron Hwy Monthly Report 013-Jan03

Cameron Hwy Monthly Report 014-Feb03

Cameron Hwy Monthly Report 015-Mar03

Cameron Hwy Monthly Report 016-Apr03

Cameron Hwy Monthly Report 017-May03

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(h)
                                     PAGE 1

                             CONSTRUCTION CONTRACTS

<TABLE>
<CAPTION>
Contract #     Date Issued      Contractor               Description of Work            Activity     Resource Type  Contract Amount
------------------------------------------------------------------------------------------------------------------------------------
<S>            <C>          <C>                   <C>                                 <C>            <C>            <C>
                                                                                                                    $
------------------------------------------------------------------------------------------------------------------------------------
    001 Total     Dec-01    Horizon               Environmental Services              Environmental  OPIPE                  306,152
------------------------------------------------------------------------------------------------------------------------------------
    002 Total     Mar-02    Wortech               Port Neches Onshore Survey          Other          Contr                  379,550
------------------------------------------------------------------------------------------------------------------------------------
    003 Total     Apr-02    Horizon               Environmental Services              Environmental  OPIPE                  720,000
------------------------------------------------------------------------------------------------------------------------------------
    004 Total     Jun-02    Thales                Route Survey                        Other          Contr                  288,823
------------------------------------------------------------------------------------------------------------------------------------
    005 Total     Jun-02    General Land Office   ROW Easement - State Land           Land-Rights    Land                   153,361
------------------------------------------------------------------------------------------------------------------------------------
    006 Total     Jul-02    L.J. Capozzoli        Geotechnical Evaluation - PN        Engineering    Contr                  137,000
------------------------------------------------------------------------------------------------------------------------------------
    007 Total     Aug-02    Allseas               Installation of Offshore Pipelines  Construction   Contr               62,906,217
------------------------------------------------------------------------------------------------------------------------------------
    008 Total     Aug-02    Horizon Offshore      Installation of Offshore Pipelines  Construction   Contr               23,741,624
------------------------------------------------------------------------------------------------------------------------------------
    009 Total     Aug-02    L.J. Capozzoli        Geotechnical Evaluation - TC        Engineering    Contr                  148,000
------------------------------------------------------------------------------------------------------------------------------------
EPN-OP-03-006
        Total     Dec-02    Gulf Island           Fabrication of SS332B Jacket        Construction   Plat                10,943,345
------------------------------------------------------------------------------------------------------------------------------------
EPN-OP-03-007
        Total     Dec-02    Dynamic Industries    Fabrication of SS332B Deck          Construction   Deck                10,130,000
------------------------------------------------------------------------------------------------------------------------------------
EPN-OP-03-007
     A1 Total     Jun-03    Dynamic Industries    SS332-A Revisions (Equip Removal)   Construction   Deck                   541,830
------------------------------------------------------------------------------------------------------------------------------------
    011 Total     Dec-02    Dynamic Industries    Fabrication of HIA5C Deck           Construction   Deck                10,130,000
------------------------------------------------------------------------------------------------------------------------------------
    012 Total     Dec-02    Excel Engineering     Design CVA Services                 Engineering    Plat                    25,000
------------------------------------------------------------------------------------------------------------------------------------
    013 Total     Mar-03    Unifab                Fabrication of HI A5C Jacket        Construction   Plat                   500,000
------------------------------------------------------------------------------------------------------------------------------------
    014 Total     Apr-03    Heerema               Installation of SS332B Jacket       Construction   Facil                  250,000
------------------------------------------------------------------------------------------------------------------------------------
    015 Total     Apr-03    Sunland Construction  Galveston Bay Segment               Construction   Contr                8,589,545
------------------------------------------------------------------------------------------------------------------------------------
  008 A Total     Jun-03    Horizon Offshore      Amendment - Added Scope             Construction   Contr                6,416,241
------------------------------------------------------------------------------------------------------------------------------------
  Grand Total                                                                                                       $   136,306,688
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

         -        Letter Agreement dated March 12, 2003 among Atlantis Offshore,
                  LLC, Manta Ray Offshore Gathering Company, L.L.C. and Manta
                  Ray

         -        Premcor Letter Agreement dated April 8, 2003 between The
                  Premcor Refining Group Inc. and Manta Ray

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(h)
                                     PAGE 2

                                  WORK REQUESTS

<TABLE>
<CAPTION>
    Date                                                                                                   Resource    Request
   Issued               Contractor                       Description of Work                Activity         Type      Amount
--------------------------------------------------------------------------------------------------------------------------------
<S>          <C>                                <C>                                    <C>                 <C>       <C>
   May-03             Corrpro Total                  Cathodic Protection design           Engineering       Contr    $    50,000
--------------------------------------------------------------------------------------------------------------------------------
   Oct-02           Fugro/Chance Total                     Geotech Survey                 Engineering        Plat         50,000
--------------------------------------------------------------------------------------------------------------------------------
   Mar-03      Global X-Ray & Testing Total            Non-destructive testing             Inspection       Contr        175,000
--------------------------------------------------------------------------------------------------------------------------------
   Jun-02       Guion, Huff & Assoc Total               Project Mgmt Services          Contract Services    Contr        130,000
--------------------------------------------------------------------------------------------------------------------------------
   Varies        ITI Anti-Corrosion Total              Mill/Coating Inspection             Inspection       Opipe      2,144,500
--------------------------------------------------------------------------------------------------------------------------------
   Varies    J. Connor Consulting, Inc. Total         Worst Case Spill Analysis           Land-Rights       Opipe         15,000
--------------------------------------------------------------------------------------------------------------------------------
   Oct-02         J.Chance Marine Total               Survey - Gal Bay Reroute               Other          Contr         42,000
--------------------------------------------------------------------------------------------------------------------------------
   Varies           John Chance Total                      Survey Services                   Other          Contr        719,700
--------------------------------------------------------------------------------------------------------------------------------
   Jan-03               MMS Total                              Permit                     Land-Rights       Opipe         31,750
--------------------------------------------------------------------------------------------------------------------------------
   Varies            Mustang Total #1              Onshore & Galv Bay Engineering         Engineering       Contr        590,000
--------------------------------------------------------------------------------------------------------------------------------
   Varies      Mustang Engineering Total #2     Facilities Engineering & CM Services      Engineering       Facil      3,080,000
--------------------------------------------------------------------------------------------------------------------------------
   Varies               PCS Total                Project Mgmt Services / Engineering      Engineering       Contr      3,906,901
--------------------------------------------------------------------------------------------------------------------------------
   Jun-02      Petro-Marine/BCI Engr Total             Structural Engineering             Engineering        Plat         60,000
--------------------------------------------------------------------------------------------------------------------------------
   Aug-02       Sunland Construction Total               Road Easement work               Land-Rights        Land         25,000
--------------------------------------------------------------------------------------------------------------------------------
   Apr-02       Thales Geosolutions Total                  Offshore Survey                   Other          Contr        172,998
--------------------------------------------------------------------------------------------------------------------------------
   Varies       Wilcrest Inspection Total                 Survey Inspection                Inspection       Opipe         23,000
--------------------------------------------------------------------------------------------------------------------------------
                       Grand Total                                                                                   $11,215,849
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(h)
                                     PAGE 3

                                PURCHASE ORDERS

<TABLE>
<CAPTION>
             Date                                                                 Alliance       PO
  PO #      Issued             Vendor                      Description              (?)        Amount
---------------------------------------------------------------------------------------------------------
<S>         <C>      <C>                          <C>                             <C>        <C>
006 Total   Jun-02             Welspun                        Pipe                    N      $ 18,570,058
---------------------------------------------------------------------------------------------------------
007 Total   Jun-02              Napa                          Pipe                    N        63,246,891
---------------------------------------------------------------------------------------------------------
008 Total   Jun-02              Stupp                         Pipe                    N        23,774,775
---------------------------------------------------------------------------------------------------------
011 Total   Jul-02          Bayou Coating                 Pipe Coating                N        11,906,517
---------------------------------------------------------------------------------------------------------
                                                    Solar Taurus Gas Turbine
013 Total   Nov-02         Solar Turbines                    Package                  Y        14,028,952
---------------------------------------------------------------------------------------------------------
014 Total   Nov-02         Solar Turbines              Sulzer 6 Stage Pump            Y         1,101,627
---------------------------------------------------------------------------------------------------------
015 Total   Jan-03          Smith Meters                    PD Meters                 N         1,058,636
---------------------------------------------------------------------------------------------------------
016 Total   Jan-03         Cooper Cameron                  Ball Valves                N           167,028
---------------------------------------------------------------------------------------------------------
017 Total   Jan-03          General Valve               Twin Seal Valves              N         1,474,221
---------------------------------------------------------------------------------------------------------
018 Total   Feb-03      Dresser Flow Control              Check Valves                N            28,289
---------------------------------------------------------------------------------------------------------
019 Total   Mar-03      Galvotec Alloys, Inc.      Cathodic Protection Anodes         N         3,872,663
---------------------------------------------------------------------------------------------------------
020 Total   Mar-03      Dresser Flow Control               Ball Valves                Y         1,215,000
---------------------------------------------------------------------------------------------------------
021 Total   Mar-03      Dresser Flow Control            Swing Check Valve             N           359,658
---------------------------------------------------------------------------------------------------------
022 Total   Mar-03      Automatic Power Inc.            Navigational Aids             N            24,890
---------------------------------------------------------------------------------------------------------
023 Total   Mar-03       Spitzer Industries        Closed Drain Vent Scrubber         N            78,605
---------------------------------------------------------------------------------------------------------
024 Total   Apr-03    Sagebrush Pipeline Equip.      Export Oil Pig Launcher          Y           375,237
---------------------------------------------------------------------------------------------------------
025 Total   Apr-03         The Shaw Group                   Pipe Bend                 N           331,340
---------------------------------------------------------------------------------------------------------
026 Total   Apr-03       Spitzer Industries       Closed Drain / Vent Pump Skid       N           232,353
---------------------------------------------------------------------------------------------------------
027 Total   Apr-03          Sisco Service            Misc Pipe and Fittings           N           567,633
---------------------------------------------------------------------------------------------------------
028 Total   Apr-03        Adaptive Controls           Ultrasonic Flow Meter           N           108,789
---------------------------------------------------------------------------------------------------------
                                                    Actuator Package for Ball
029 Total   Apr-03             Shafer                        Valves                   N           104,409
---------------------------------------------------------------------------------------------------------
030 Total   Apr-03   Precision Powered Products          Firewater Pumps              N           560,082
---------------------------------------------------------------------------------------------------------
031 Total   May-03           GAI Tronics           Weatherproof Communications        N            51,066
---------------------------------------------------------------------------------------------------------
032 Total   May-03         Rosemount Inc.             Pressure Transmitters           Y             9,612
---------------------------------------------------------------------------------------------------------
033 Total   May-03          W-Industries                    HPU Skid                  N           465,752
---------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(h)
                                     PAGE 4

                            Purchase Orders continued

<TABLE>
<S>           <C>      <C>                            <C>                                <C>  <C>
----------------------------------------------------------------------------------------------------------
 034 Total    May-03       Alliance Measurement         Meter Skids w/ Control Panels    N       3,188,590
----------------------------------------------------------------------------------------------------------
 035 Total    May-03       Universal Fabricators              DRA Storage Tank           N          34,845
----------------------------------------------------------------------------------------------------------
 036 Total    May-03           Custom Power                      UPS System              N         110,150
----------------------------------------------------------------------------------------------------------
 037 Total    May-03       Tideland Signal Corp          Misc Marine Signal Devices      N          29,410
----------------------------------------------------------------------------------------------------------
 038 Total    May-03          Puffer Sweiven             Control Valves w/ Actuators     N         522,569
----------------------------------------------------------------------------------------------------------
 039 Total    May-03           W-Industries                  Local Control Panel         N          23,700
----------------------------------------------------------------------------------------------------------
 040 Total    May-03       Universal Fabricators      DRA Storage Tank/Sub Cellar Sump   N          71,902
----------------------------------------------------------------------------------------------------------
 041 Total    Jun-03           Wilson Supply                  6" Fuel Gas Pipe           ?         235,592
----------------------------------------------------------------------------------------------------------
 042 Total    Jun-03     Reagan Equipment Company              Generator Sets            N       2,918,458
----------------------------------------------------------------------------------------------------------
 043 Total    Jun-03       Beacon Maritime Inc.            Living Quarters Module        N       1,615,903
----------------------------------------------------------------------------------------------------------
 044 Total    Jun-03   IFS Integrated Flow Solution          DRA Injection Skid          N         251,450
----------------------------------------------------------------------------------------------------------
 045 Total    Jun-03       Severn Trent De Nora             Marine Sewage Grinder        N           4,295
----------------------------------------------------------------------------------------------------------
 046 Total    Jun-03        UMOE Schat-Harding                Survival Capsule           N         114,050
----------------------------------------------------------------------------------------------------------
 047 Total    Jun-03      Tyco Valves & Controls        Pilot Operated Relief Valves     N         102,720
----------------------------------------------------------------------------------------------------------
 048 Total    Jun-03           AF Industries                Paraffin Heater Skid         N         588,459
----------------------------------------------------------------------------------------------------------
 049 Total    Jun-03         Dooley Tackaberry            Hose Reels with Foam Tank      N           8,910
----------------------------------------------------------------------------------------------------------
 051 Total    Jun-03     Tesla Power & Automation               MCC Building             N       1,527,089
----------------------------------------------------------------------------------------------------------
Grand Total                                                                                   $155,062,175
----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

                            PARTICIPATION AGREEMENT
                                 SCHEDULE 5(h)
                                     PAGE 5

                             SHORT FORM AGREEMENTS

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
 Date Issued            Contractor                       Description of Work             Activity    Resource Type    Request Amount
------------------------------------------------------------------------------------------------------------------------------------
<S>           <C>                             <C>                                       <C>          <C>              <C>
    Aug-02          Petro-Marine Total               SS332 Superdeck Evaluation         Engineering      Contr          $   10,000
------------------------------------------------------------------------------------------------------------------------------------
    Dec-03      Gullet & Associates Total           Centerline, ROW & TOPO Survey          Other         Contr             140,000
------------------------------------------------------------------------------------------------------------------------------------
    Jan-03            Subsea 7 Total                         ROV Survey                construction      Contr             150,000
------------------------------------------------------------------------------------------------------------------------------------
    Jan-03          Petro-Marine Total                  SS332 Platform Design           Engineering      Plat              850,000
------------------------------------------------------------------------------------------------------------------------------------
    Jan-03      Gullet & Associates Total           Centerline, ROW & TOPO Survey          Other         Contr              62,000
------------------------------------------------------------------------------------------------------------------------------------
    Jan-03             WISco Total              Inspection of structural fabrication    Inspection       Contr             150,000
------------------------------------------------------------------------------------------------------------------------------------
    Jan-03           Scandpower Total                     Analytical Report             Engineering      Contr              35,000
------------------------------------------------------------------------------------------------------------------------------------
    Mar-03          Petro-Marine Total                  Verification Services           Engineering      Plat              138,000
------------------------------------------------------------------------------------------------------------------------------------
    Apr-03    Pelican State Inspection Total       Inspection of SS332 B Platform       Inspection       Contr              90,000
------------------------------------------------------------------------------------------------------------------------------------
    Mar-03      Offshore Consultants Total             Site manager for HI A5C          Inspection       Contr              50,000
------------------------------------------------------------------------------------------------------------------------------------
    Apr-03      J. Connor Consulting Total     Develop MMS Permit App's for Facilities  Engineering      Contr                   -
------------------------------------------------------------------------------------------------------------------------------------
    Apr-03            Integra Total               Provide Chief Inspection Services     Inspection       Contr              60,000
------------------------------------------------------------------------------------------------------------------------------------
    Apr-03              QIC Total                  Anode Manufacturing and Loadout      Inspection       Contr              50,000
------------------------------------------------------------------------------------------------------------------------------------
    May-03      Jardine & Associates Total    Provide Base Case and Sensitivity models  Engineering      Contr              29,800
------------------------------------------------------------------------------------------------------------------------------------
                       Grand Total                                                                                      $1,814,800
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 2

<TABLE>
<S>              <C>                           <C>                <C>                    <C>   <C>  <C>
-----------------------------------------------------------------------------------------------------------------------------------
II) Port Neches                                                   Port Neches Extension
-----------------------------------------------------------------------------------------------------------------------------------
       7         National Pollutant Discharge    United States    January 2003-Rec'd           X    Permit required for (1) onshore
                 Elimination System ("NPDES")    Environmental           Agency                      discharge of hydrostatic test
                            Permit             Protection Agency    Acknowledgement                     waters and (2) offshore
                                               ("EPA") Region 6    letter. June 2003                 discharge of hydrostatic test
                                                                    -Permit will be                   waters to state territorial
                                                                   valid, June 2003 -                           waters.
                                                                   Submit request for
                                                                  Permit coverage for
                                                                        Onshore
                                                                    Construction of
                                                                   mainline. Nov 2003 -
                                                                  Permit will be valid.
-----------------------------------------------------------------------------------------------------------------------------------
       8         General Permit No. GMG290000    EPA Region 6       Notice of Intent           X     Discharge of hydrostatic test
                                                                     ("NOI") to be                    waters to offshore federal
                                                                   submitted by June                  waters to be authorized by
                                                                         2003.                         existing general permit.
-----------------------------------------------------------------------------------------------------------------------------------
       9              NPDES Storm Water          EPA Region 6     NOI to be submitted          X    NOI must be submitted prior to
                 Construction General Permit                       September 2003 for               horizontal directional drilling
                                                                  "Offshore and HDD"                ("HDD") and  general pipe trench
                                                                  disturbing more than              construction in uplands.
                                                                  5 acres. June 2003 -
                                                                  Submitted NOI to EPA

-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 3

<TABLE>
<S>  <C>                           <C>                     <C>                      <C>   <C>       <C>
------------------------------------------------------------------------------------------------------------------------------------
10        NPDES Storm Water             EPA Region 6       NOI to be submitted            X          NOI must be submitted prior to
     Construction General Permit                            September 2003 for                       horizontal directional drilling
                                                           "Onshore work"                            ("HDD") and general pipe trench
                                                           disturbing more than 5                    construction in uplands.
                                                           acres. Sept 2003 -
                                                           Submit NOI to EPA


------------------------------------------------------------------------------------------------------------------------------------
11  Individual Permit for Project           USACE             Permit #22712               X           Permit required for pipeline
    Construction (Application No.                          issued to Manta Ray                      construction and HDD in beaches,
                22712)                                       Gathering Co. on                          bays, wetlands, uplands and
                                                             January 9, 2003.                        offshore state/federal waters.
                                                                Feb 2003 -
                                                            Submitted request
                                                                for permit
                                                             modification for
                                                              Lucas Reroute.
                                                                  Expect
                                                             Authorization in
                                                                June 2003.
------------------------------------------------------------------------------------------------------------------------------------
12    Threatened and Endangered    United States Fish and    Permit issued to       X                 Permit required for pipeline
          Species Clearance           Wildlife Service     Manta Ray Gathering                      construction and HDD in beaches,
                                          ("USFWS")         Co. on January 9,                          bays, wetlands, uplands and
                                                                  2003.                              offshore state/federal waters.
------------------------------------------------------------------------------------------------------------------------------------
13    Threatened and Endangered        National Marine       Permit issued to       X                 Permit required for pipeline
          Species Clearance           Fisheries Service    Manta Ray Gathering                      construction and HDD in beaches,
                                          ("NMFS")          Co. on January 9,                          bays, wetlands, uplands and
                                                                  2003.                              offshore state/federal waters.
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 4

<TABLE>
<S>  <C>                             <C>                    <C>                            <C> <C>  <C>
-------------------------------------------------------------------------------- ---------------------------------------------------
14   Air Emission Registration and    Texas Commission on   Application to be                    X       Assumes that detailed
           Certification for         Environmental Quality  submitted by [+/-                         information on aboveground
         Permit-by-Rule ("PBR")            ("TCEQ")          90 days prior to                         valves, fittings and other
                                                              construction --                           sources of fugitive air
                                                             August 30 filing                       emissions is available by June
                                                               for onshore                                     30, 2003.
                                                              installations]
-------------------------------------------------------------------------------- ---------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
                                                            Port Neches Extension Con't:
-------------------------------------------------------------------------------- ---------------------------------------------------
15     Temporary Water Diversion      TCEQ (Two separate    Application to be              X          Permit required for withdrawal
                 Permit              submittals -- one for  submitted by March                        of state surface waters for
                                     "offshore work -- HDD   30, 2003 [+/- 90                         hydrostatic pressure tests.
                                     in Mar 2003; and the     days prior to
                                      other for "onshore      construction]
                                     work" in Aug 2003)     Permit rec'd April
                                                                  2003.
-------------------------------------------------------------------------------- ---------------------------------------------------
16       Hydrostatic Test Water         Texas Railroad      Application to be              X         Permit required for (1) onshore
            Discharge Permit        Commission ("RRC")(Two  submitted by March                       discharge of hydrostatic test
                                     separate submittals --  30, 2003 [+/- 90                           waters and (2) offshore
                                    one for "offshore work    days prior to                          discharge of hydrostatic test
                                    -- HDD in Mar 2003; and  construction] -                          waters to state territorial
                                    the other for "onshore  Rec'd permit April                                  waters.
                                      work" in Aug 2003)           2003
-------------------------------------------------------------------------------- ---------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 5

<TABLE>
<S>  <C>                             <C>                  <C>                    <C>    <C>   <C>
------------------------------------------------------------------------------------------------------------------------------
17     Section 401 Water Quality             RRC            Permit issued to     X              Permit required for pipeline
             Certification                                Manta Ray Gathering                 construction and HDD in beaches,
                                                           Co. on December 2,                    bays, wetlands, uplands and
                                                                 2002.                             offshore state waters.
------------------------------------------------------------------------------------------------------------------------------
18      Coastal Zone Management              RRC            Permit issued to     X              Permit required for pipeline
       Consistency Determination                          Manta Ray Gathering                 construction and HDD in beaches,
                                                           Co. on December 2,                    bays, wetlands, uplands and
                                                                 2002.                             offshore state waters.
------------------------------------------------------------------------------------------------------------------------------
19   Easement for State-Owned Lands  Texas General Land     Permit issued to     X              Permit required for pipeline
                                       Office ("GLO")     Manta Ray Gathering                 construction and HDD in beaches,
                                                            Co. on July 24,                      bays, wetlands, uplands and
                                                              2002. Misc.                          offshore state waters.
                                                           Easement #20020077
------------------------------------------------------------------------------------------------------------------------------
20        State Threatened and         Texas Parks and      Permit issued to     X              Permit required for pipeline
      Endangered Species Clearance   Wildlife Department  Manta Ray Gathering                 construction and HDD in beaches,
                                          ("TPWD")         Co. on January 9,                     bays, wetlands, uplands and
                                                                 2003.                             offshore state waters.
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 6

<TABLE>
<S>  <C>                       <C>                     <C>                    <C>   <C>       <C>
-------------------------------------------------------------------------------------------------------------------------------
21   State Lands Use Easement          TPWD                Application              X           Permit required for pipeline
                                                        submitted December                      construction Onshore. Permit
                                                        21, 2002 but TPWD                     not required until November 2003.
                                                       has made additional
                                                            mitigation
                                                        requests; Project
                                                        team continuing to
                                                       negotiate with TPWD.
-------------------------------------------------------------------------------------------------------------------------------
22   Terrestrial Construction  Texas State Historic      Permit issued to     X                 Permit required for pipeline
                                Preservation Office    Manta Ray Gathering                    construction and HDD in beaches,
                                     ("SHPO")          Co. on May 13, 2002.                      bays, wetlands, uplands and
                                                                                                   offshore state waters.
-------------------------------------------------------------------------------------------------------------------------------
23     Marine Construction             SHPO              Permit issued to     X                 Permit required for pipeline
                                                       Manta Ray Gathering                    construction and HDD in beaches,
                                                       Co. on May 29, 2002.                      bays, wetlands, uplands and
                                                                                                   offshore state waters.
-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 7

<TABLE>
<S>              <C>                           <C>                <C>                     <C>  <C>  <C>
------------------------------------------------------------------------------------------------------------------------------------
III) Texas City                                                   Texas City Extension
------------------------------------------------------------------------------------------------------------------------------------
       24        National Pollutant Discharge    United States        Application         X         Permit required for (1) onshore
                 Elimination System ("NPDES")    Environmental    submitted to EPA on                discharge of hydrostatic test
                            Permit             Protection Agency   December 23, 2002                    waters and (2) offshore
                                               ("EPA") Region 6    for "Offshore work                discharge of hydrostatic test
                                                                   including HDD and                  waters to state territorial
                                                                     Galveston Bay                              waters.
                                                                   work. Permit valid
                                                                     in June 2003.
------------------------------------------------------------------------------------------------------------------------------------
       25        General Permit No. GMG290000    EPA Region 6       Notice of Intent            X    Discharge of hydrostatic test
                                                                     ("NOI") to be                    waters to offshore federal
                                                                  submitted June 2003.                waters to be authorized by
                                                                                                       existing general permit.
------------------------------------------------------------------------------------------------------------------------------------
       26             NPDES Storm Water          EPA Region 6     NOI to be submitted           X   NOI must be submitted prior to
                 Construction General Permit                       during latter part               horizontal directional drilling
                                                                      of 2003 for                   ("HDD") and general pipe trench
                                                                     "Onshore work"                    construction in uplands.
                                                                    disturbing more
                                                                   than 5 acres. NOI
                                                                  submitted June 2003.
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 8

<TABLE>
<S> <C>                            <C>    <C>                         <C>     <C>    <C>
---------------------------------------------------------------------------------------------------------------------
27  Individual Permit for Project  USACE      Application                     X        Permit required for pipeline
             Construction                  Submitted November                        construction and HDD in beaches,
                                            21, 2002. Public                            bays, wetlands, uplands and
                                             notice period                            offshore state/federal waters.
                                             closed Feb 10,                            USACE to share responses with
                                             2003. Comments                           commenting agencies and either
                                          received on Feb 10,                         (1) issue permit or (2) request
                                            were similar to                              meeting with CHOPS team.
                                           comments received                              Resolution expected by
                                             on Port Neches                                  late-March 2003.
                                             USACE permit.
                                            Response letter
                                           submitted 7 March
                                             2003. Redieved
                                           Permit # 22929 May
                                                 2003.
---------------------------------------------------------------------------------------------------------------------
28    Threatened and Endangered    USFWS      Application             X                Permit required for pipeline
          Species Clearance                submitted November                        construction and HDD in beaches,
                                           21, 2002. Comment                            bays, wetlands, uplands and
                                           Letter received on                         offshore state/federal waters.
                                              10 Feb 2003.
                                            Response letter
                                            submitted 7 Mar
                                              2003. Rec'd
                                          Clearance May 2003.
---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 9

<TABLE>
<S> <C>                            <C>                   <C>                             <C>   <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
                                                         Texas City Extension Con't:
------------------------------------------------------------------------------------------------------------------------------------
29    Threatened and Endangered            NMFS             Application                  X         Permit required for pipeline
          Species Clearance                              submitted November                        construction and HDD in beaches,
                                                         21, 2002. Comment                            bays, wetlands, uplands and
                                                         Letter received on                         offshore state/federal waters.
                                                            10 Feb 2003.
                                                          Response letter
                                                          submitted 7 Mar
                                                          2003. May 2003 -
                                                          Rec'd Clearance.
------------------------------------------------------------------------------------------------------------------------------------
30  Air Emission Registration and          TCEQ          Application to be                     X         Assumes that detailed
          Certification for                               submitted by Aug                            information on aboveground
        Permit-by-Rule ("PBR")                              30, 2003 for                              valves, fittings and other
                                                           onshore work.                                sources of fugitive air
                                                                                                    emissions is available by June
                                                                                                               30, 2003
------------------------------------------------------------------------------------------------------------------------------------
31    Temporary Water Diversion     TCEQ (Two separate   Application to be              X             Permit required for withdrawal
                Permit             submittals -- one for submitted by March                           of state surface waters for
                                   "offshore work -- HDD  30, 2003 [+/- 90                            hydrostatic pressure tests.
                                   in Mar 2003; and the    days prior to
                                    other for "onshore   construction] April
                                    work" in Aug 2003)      2003 -Permit
                                                              approved
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 10

<TABLE>
<S>   <C>                             <C>                      <C>                  <C>    <C>    <C>
----------------------------------------------------------------------------------------------------------------------------------
32        Hydrostatic Test Water          Texas Railroad        Application to be   X              Permit required for (1) onshore
             Discharge Permit         Commission ("RRC")(Two    submitted by March                  discharge of hydrostatic test
                                       separate submittals --    30, 2003 [+/- 90                      waters and (2) offshore
                                      one for "offshore work      days prior to                     discharge of hydrostatic test
                                      -- HDD in Mar 2003; and  construction] April                   waters to state territorial
                                      the other for "onshore       2003 -Permit                                waters.
                                        work" in Aug 2003)           approved
----------------------------------------------------------------------------------------------------------------------------------
33      Section 401 Water Quality               RRC                Application      X               Permit required for pipeline
              Certification                                     Submitted November                construction and HDD in beaches,
                                                                21, 2002. Response                   bays, wetlands, uplands and
                                                                letter submitted 7                     offshore state waters.
                                                                   March 2003.
                                                                 December 2002 -
                                                                   Cert. Rec'd
----------------------------------------------------------------------------------------------------------------------------------
34       Coastal Zone Management                RRC                Application      X               Permit required for pipeline
        Consistency Determination                               Submitted November                construction and HDD in beaches,
                                                                21, 2002. Response                   bays, wetlands, uplands and
                                                                letter submitted 7                     offshore state waters.
                                                                   March 2003.
                                                                 December 2002 -
                                                                   Cert. Rec'd
----------------------------------------------------------------------------------------------------------------------------------
35    T-4 Pipeline Operator's Permit            RRC             Request for permit  X
                                                               submitted Feb 2003.
                                                                   Add'l info.
                                                                  Submitted and
                                                                Permit received
                                                                  April 2003.
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 11

<TABLE>
<S>       <C>                                 <C>        <C>                     <C>   <C>   <C>
-----------------------------------------------------------------------------------------------------------------------------
36        Easement for State-Owned Lands      GLO           GLO has given        X             Permit required for pipeline
                                                         verbal approval and                 construction and HDD in beaches,
                                                         written approval is                    bays, wetlands, uplands and
                                                          expected March 30,                      offshore state waters.
                                                             2003. Rec'd
                                                          Easement #20030031
                                                             March 2003.
-----------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 12

<TABLE>
<S>         <C>                           <C>         <C>                            <C>    <C>    <C>
-----------------------------------------------------------------------------------------------------------------------------------
                                                        Texas City Extension Con't:
-----------------------------------------------------------------------------------------------------------------------------------
37              State Threatened and      TPWD            Application                X             Permit required for pipeline
            Endangered Species Clearance               submitted November                          construction and HDD in beaches,
                                                       21, 2002. Comment                              bays, wetlands, uplands and
                                                       Letter received on                               offshore state waters.
                                                          10 Feb 2003.
                                                        Response letter
                                                        submitted 7 Mar
                                                        2003. May 2003 -
                                                        Rec'd Clearance.
-----------------------------------------------------------------------------------------------------------------------------------
38            Terrestrial Construction    SHPO         Clearance received            X             Permit required for pipeline
                                                      on 27 November 2002                          construction and HDD in beaches,
                                                                                                      bays, wetlands, uplands and
                                                                                                        offshore state waters.
-----------------------------------------------------------------------------------------------------------------------------------
39              Marine Construction       SHPO         Clearance received             X            Permit required for pipeline
                                                      on 17 September 2002                         construction and HDD in beaches,
                                                                                                      bays, wetlands, uplands and
                                                                                                        offshore state waters.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 13

                               (Non-environmental)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                            PERMIT                     AUTHORIZING AGENCY        SECURED  PENDING                COMMENTS
------------------------------------------------------------------------------------------------------------------------------------
<S>              <C>                             <C>                             <C>      <C>      <C>
II) TEXAS CITY                                                          TEXAS CTY EXTENSION
------------------------------------------------------------------------------------------------------------------------------------
      1          Pipeline Permit and Digging/          City of Texas City                  X       2 Application submittals: Phase 1
                     Excavation Permit for                                                         application submittal for June 03
                  Construction and Operation                                                        HDDs. Phase 2 submittal for fall
                  within city limits and for                                                               2003 construction.
                      crossing city ROWs
------------------------------------------------------------------------------------------------------------------------------------
      2         Permit to construct & operate a         Galveston County                   X          Crossing Butterfly Lane on
                pipeline within County ROWs at                                                      Bolivar Peninsula and Hurricane
                   roads and hurricane levy                                                                levy in Texas City.
                          crossings..
------------------------------------------------------------------------------------------------------------------------------------
      3         Utility Permit for State Right   Tx Dept. of Transportation (TX            X        Permit application will require
                        of Way Crossing                       DOT)                                     correspondence on Corps of
                                                                                                    Engineers letterhead indicating
                                                                                                         clearance for wetland
                                                                                                       considerations at highway
                                                                                                               crossings.
------------------------------------------------------------------------------------------------------------------------------------
      4            Application For Permit To      Railroad Commission of Texas     X               Received T-4 permit 23 April
                  Operate a Pipeline In Texas                                                               2003. No. 06604
------------------------------------------------------------------------------------------------------------------------------------
      5             New Construction Report       Railroad Commission of Texas     X                 PS-48 form submitted with T-4
                                                                                                   application and logged in by RRC.
                                                                                                        Tracking # 03NC055. Per
                                                                                                   conversation with Kathy Arnold on
                                                                                                    9 May 2003, construction of
                                                                                                        Cameron Hwy WILL NOT be
                                                                                                   monitored by RRC because it is
                                                                                                   interstate pipeline. Therefore,
                                                                                                       PS-48 not really required
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 14

                          (Port Neches ROW begins here)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
         Description        Apparent Owner    Rods,     Rods    Pending    Easement/         Contact                Notes
                                              Apprx  Completed           Permit date      Information
----------------------------------------------------------------------------------------------------------------------------------
<S>   <C>                <C>                  <C>    <C>        <C>      <C>            <C>              <C>
 1      H.A. FITZHUGH    MANTA RAY remaining   87        0       87       2003006341        Donald        Publication time period
                              interests                                                    McElwain           has ended. Plat
                                                                                                               furnished to
----------------------------------------------------------------------------------------------------------------------------------
      TO BE PARTITIONED   WILLIAM L. PARKER,                                             4675 McArthur    attorney depicting the
                            JR. 3/8 OF 1/2                                               Ct suite 700    requested Parker property
----------------------------------------------------------------------------------------------------------------------------------
                            (AKA KEYSTONE)                                                 New Port              partition.
                                                                                          Beach,Calif
                                                                                         (802)453-2648
----------------------------------------------------------------------------------------------------------------------------------
                                                                          2003006343          Ms.        Hearing re-scheduled for
                                                                                             Bohn              6/18-10:30 am
                                                                                         (770)971-2607
----------------------------------------------------------------------------------------------------------------------------------
                                                                                          4701 Karls       attorney called 6/10
                                                                                          Gate Drive       with this information
----------------------------------------------------------------------------------------------------------------------------------
                                                                                         Marietta, GA
                                                                                             30068
----------------------------------------------------------------------------------------------------------------------------------
                                                                           PENDING          Parker
                                                                                         (321)632-6193
----------------------------------------------------------------------------------------------------------------------------------
                                                                          PARTITION     P.O. Box 561023
----------------------------------------------------------------------------------------------------------------------------------
                                                                                        Rockledge, FLA
                                                                                             32956
----------------------------------------------------------------------------------------------------------------------------------
                                                                          2003004906    Louisa McElwain
----------------------------------------------------------------------------------------------------------------------------------
                                                                          1/30/2003        Box 1610       Amy McElwain McCoubray
----------------------------------------------------------------------------------------------------------------------------------
                                                                                        Santa Cruz, NM     8304 Critenden Street
                                                                                             07567
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Philadelphia, PA 19118
                                                                                                              (215) 248-9666
----------------------------------------------------------------------------------------------------------------------------------
1a      40'x50' valve                                                                                           2003006342
       site on property
       above-mentioned
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 15

<TABLE>
<S> <C>           <C>                    <C>  <C>          <C>            <C>           <C>               <C>
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
1c  B. F. HOWARD     UMPHREY LIMITED     n/a    verbal                     7/18/2002       The Umphrey    Permanent Road Easement
                   PARTNERSHIP 1/2 INT.                                                  Family Limited    on existing shell road
                                                                                           Partnership             30' in
------------------------------------------------------------------------------------------------------------------------------------
                   DR. G. BRUCE HEALEY        Dr. Healey                  #2002032605     P.O. Box 4905    width length 952+-(see
                         1/2 INT                                                                              file for survey)
                                                                                                              Document revised
------------------------------------------------------------------------------------------------------------------------------------
                    NOTE REPAIRS TO BE        followed by                                   Beaumont,        Compensation-road
                       MADE TO ROAD                                                        Texas 77704     repairs have been made
------------------------------------------------------------------------------------------------------------------------------------
                  IN JUNE 2003 level at         letter                                    (409)835-6000     Gate combination-0434
                      2nd gated area
------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Dr. G. Bruce       Leesee-High Island
                                                                                             Healey              Production
------------------------------------------------------------------------------------------------------------------------------------
                                                                                            3770 Park     Rex Fuller (806)765-9230
                                                                                          Place Avenue
------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Port Arthur,     P.O. Box 2454 Lubbock,
                                                                                           Texas 77642           Texas 79408
------------------------------------------------------------------------------------------------------------------------------------
                                                                                         (409)983-2801-           COMPLETED
                                                                                             PRIVATE
                                                                                             NUMBER
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
1d   A. ROGERS     STATE OF TEXAS PARKS  n/a    verbal                     11/13/2002      Attention:     Permanent Road Easement
                       AND WILDLIFE                                                       Todd Imboden     on existing shell road
                                                                                                                   30' in
------------------------------------------------------------------------------------------------------------------------------------
                        DEPARTMENT            T. IMBODEN                  #2002044190    P. O. Box 1066    width length 151+-(see
                                                                                                              file for survey)
                                                                                                             Document executed
------------------------------------------------------------------------------------------------------------------------------------
                                              followed by                                 Sabine Pass,
                                                                                                          -
                                                                                           Texas 77655
------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Jack                COMPLETED
                                                                                           Baur-Austin
                                                                                             office
------------------------------------------------------------------------------------------------------------------------------------
                                                                                           4200 Smith
                                                                                                          -
                                                                                           School Road
------------------------------------------------------------------------------------------------------------------------------------
                                                letter                                      Austin, TX
                                                                                               78744
                                                                                           (512)589-4897
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 16

<TABLE>
<S>   <C>                <C>                   <C>     <C>     <C>     <C>            <C>              <C>
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
2       F.C.McREYNOLDS   HELENA E. STRICKLAND    3.09    3.09  0         7/29/2002                              COMPLETED
---------------------------------------------------------------------------------------------------------------------------------
                                                                       #2002032604
---------------------------------------------------------------------------------------------------------------------------------
3        R.W. RUSSELL    HELENA E. STRICKLAND   57.36   57.36  0         7/29/2002          4313
                                                                                      41st-Lubbock,Tx
---------------------------------------------------------------------------------------------------------------------------------
                                                                       #2002032604     (806)793-0931
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
4     ROBERT W. RUSSELL     STATE OF TEXAS          7       0  7                            TXDOT
                             [HIGHWAY 87]
---------------------------------------------------------------------------------------------------------------------------------
                                                                                       Walter Crook
---------------------------------------------------------------------------------------------------------------------------------
                                                                                      P. O. Box 3468
---------------------------------------------------------------------------------------------------------------------------------
                                                                                         Beaumont,
                                                                                        Texas 77704
---------------------------------------------------------------------------------------------------------------------------------
                                                                                       (409)892-7311
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
5     ROBERT W. RUSSELL  LABELLE PROPERTIES,   242.25  242.25  0         10/17/2002    P. O. Box 3111           COMPLETED
                                 LTD.                                                  Bmt. Tx 77704
---------------------------------------------------------------------------------------------------------------------------------
                         WILLIAM ARTHUR ROANE                          #2002044191       Craig J.          Copy of recorded
                              LAND TRUST                                                 Sherlock      document to owners 11/26
                                                                                        (President)
---------------------------------------------------------------------------------------------------------------------------------
                         BEN C. HEBERT HEIRS                                           (409)832-7736
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
6         E.L. MOORE     LABELLE PROPERTIES,      4.7     4.7  0
                                        LTD
---------------------------------------------------------------------------------------------------------------------------------
      WILLIAM ARTHUR
      ROANE LAND TRUST
---------------------------------------------------------------------------------------------------------------------------------
        BEN C. HEBERT
           HEIRS
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 17

<TABLE>
<S>   <C>              <C>                     <C>          <C>           <C>        <C>       <C>        <C>
--------------------------------------------------------------------------------------------------------------------
7      URI HOLBROOK    LABELLE PROPERTIES,     342.97       342.97        0
                               LTD
--------------------------------------------------------------------------------------------------------------------
                       WILLIAM ARTHUR ROANE
                            LAND TRUST
--------------------------------------------------------------------------------------------------------------------
                       BEN C. HEBERT HEIRS
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
8     C.E. BROUSSARD,   LABELLE PROPERTIES,    192.06       192.06       0
        ET AL, TR.             LTD.
--------------------------------------------------------------------------------------------------------------------
                       WILLIAM ARTHUR ROANE
                            LAND TRUST
--------------------------------------------------------------------------------------------------------------------
                       BEN C. HEBERT HEIRS
--------------------------------------------------------------------------------------------------------------------
8A                                              24.91        24.91        0
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
8D                                             136.59       136.59        0
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
9     DAVID BURRELL    LABELLE PROPERTIES,     196.04       196.04        0
                               LTD
--------------------------------------------------------------------------------------------------------------------
                       WILLIAM ARTHUR ROANE
                            LAND TRUST
--------------------------------------------------------------------------------------------------------------------
                       BEN C. HEBERT HEIRS
--------------------------------------------------------------------------------------------------------------------
10    JOHN McGAFFEY    LABELLE PROPERTIES,      27.24        27.24        0
                               ETC.
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
11     SARAH GLENN     LABELLE PROPERTIES,     145.29       145.29        0
                               LTD
--------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 18

<TABLE>
<S>  <C>                 <C>                      <C>       <C>       <C>  <C>          <C>               <C>
------------------------------------------------------------------------------------------------------------------------------------
                          WILLIAM ARTHUR ROANE
                               LAND TRUST
------------------------------------------------------------------------------------------------------------------------------------
                          BEN C. HEBERT HEIRS
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
12    PEDRO delaGARZA     LABELLE PROPERTIES,     533.53    533.53    0
                                  LTD
------------------------------------------------------------------------------------------------------------------------------------
                          WILLIAM ARTHUR ROANE
                               LAND TRUST
------------------------------------------------------------------------------------------------------------------------------------
                          BEN C. HEBERT HEIRS
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
12B   DENNIS GAHAGAN,                                                                                          TEMPORARY ROAD
         DIVISION A                                                                                         PERMIT-Form approved
------------------------------------------------------------------------------------------------------------------------------------
13D      WEST OF BACK     LABELLE PROPERTIES,       n/a       n/a          10/17/2002    Certificate of           COMPLETED
         RIDGE ROAD               LTD                                                    Insurance with    10/17/02-Labelle group
                                                                                            Doornbos
------------------------------------------------------------------------------------------------------------------------------------
       WILL BE ACQ>BY     WILLIAM ARTHUR ROANE                              1/13/2003        named as         1/13/2003-Doornbos
       TEMPORARY ROAD          LAND TRUST                                                  additional
           PERMIT                                                                            insured
------------------------------------------------------------------------------------------------------------------------------------
           NO ROD         BEN C. HEBERT HEIRS                                               delivered     26 months only-doc. Will
     FIGURE-ACCESS ONLY                                                                      1/17/03           not be recorded
------------------------------------------------------------------------------------------------------------------------------------
                         C. DOORNBOS, JR. HEIRS
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
      BACKRIDGE ROAD                                                                    COUNTY ENGINEER     PERMIT-HANDLED BY C.
                                                                                                                 SOUTHERLAND
------------------------------------------------------------------------------------------------------------------------------------
     (awaiting permit                                                                    JOSE PASTRANA      In Precinct 3-Waymon
       response TXDOT)                                                                                              Hallmark

------------------------------------------------------------------------------------------------------------------------------------
                                                                                             1149         525 Lakeshore Drive-Port
                                                                                         Pearl-Bmt. TX        Arthur, TX 77640
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                (409)983-8300
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 19

<TABLE>
----------------------------------------------------------------------------------------------------------------------
<S>  <C>              <C>                 <C>     <C>     <C>  <C>          <C>              <C>
13   PEDRO delaGARZA     SEMPRA ENERGY     33.33   33.33   0    10/21/2002  Sempra Contact-    Request to fence any
                      PRODUCTION COMPANY                                     Sarah Williams   above-ground structures
----------------------------------------------------------------------------------------------------------------------
13B                                       162.53  162.53   0   #2002042815    8235 Douglas       Copy of recorded
                                                                             Ave-suite 525   document mailed to Sempra
----------------------------------------------------------------------------------------------------------------------
                                                                               Dallas, Tx          COMPLETED
                                                                            75225 (214)706-
                                                                                 0420
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
     PEDRO delaGARZA     TEXAS PARKS &      27      0                        J. D. Murphy
                      WILDLIFE DEPARTMENT                                      Wildlife
                                                                              Management
----------------------------------------------------------------------------------------------------------------------
                                                                            2710 Highway 73
----------------------------------------------------------------------------------------------------------------------
                                                                             Port Arthur,    Call Jim Southerland at
                                                                             Texas 77640          Parks before
----------------------------------------------------------------------------------------------------------------------
15     N. COLEMAN        SEMPRA ENERGY    608.95  608.95   0                 Jim Sutherlin            entry
                      PRODUCTION COMPANY                                     (409)736-2551
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
16    P.B. O'CONNER      SEMPRA ENERGY     30.65   30.65   0
                      PRODUCTION COMPANY
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
17    JOHN BENNETT       SEMPRA ENERGY     65.8    65.8    0
                      PRODUCTION COMPANY
----------------------------------------------------------------------------------------------------------------------
17C                                        5.71    5.71    0
----------------------------------------------------------------------------------------------------------------------
17E                                       390.08  390.08   0
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
WW    JOHN BENNETT       TEXAS PARK &       13      0      13                      -            Investigating TPWD
       [SCHULTZ]           WILDLIFE                                                           request and additional
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 20

<TABLE>
---------------------------------------------------------------------------------------------------------------------
<S>  <C>              <C>                 <C>     <C>     <C>  <C>            <C>                <C>
         PERMIT            DEPARTMENT                                                                   survey
---------------------------------------------------------------------------------------------------------------------
                                                                                      -          wetland requirements
---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------
19   T & N O RR SEC.     SEMPRA ENERGY     83.14   83.14   0
           123        PRODUCTION COMPANY
---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------
20     M. BROUSSARD       THE PREMCOR     832.59  832.59   0                       Premcor          MEMORANDUM OF
                        REFINING GROUP,                                           Refinery       UNDERSTANDING SIGNED
                              INC.
---------------------------------------------------------------------------------------------------------------------
                        CHEVRON TR 38-C                                          P.O. Box 909    WITH PREMCOR 4/28/03
---------------------------------------------------------------------------------------------------------------------
       M. BROUSSARD       THE PREMCOR                                           Port Arthur,
                        REFINING GROUP,                                          Texas 77641
                              INC.
---------------------------------------------------------------------------------------------------------------------
20B    (VALVE SITE)       (REFINERY)                                            Micky Landry-
       12' x 33.50'                                                            Business Analyst
       (.009 acres)
--------------------------------------------------------------------------------------------------------------------
                                                                                (409)985-1626
---------------------------------------------------------------------------------------------------------------------

20C    M. BROUSSARD     THE PREMCOR
                       REFINING GROUP,
                             INC.
---------------------------------------------------------------------------------------------------------------------
         (ROAD
      EASEMENT-26')
       (.094 acres)
---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------
WW     M. BROUSSARD      U.S A. [GIWW]      86      86     0     CONSENT                          PERMIT-CORPS OF
                                                                                                       ENGINEERS
---------------------------------------------------------------------------------------------------------------------
                          INTERCOASTAL                         DAW64-9-02-69
                      WATERWAY-Placement
                            area #9
---------------------------------------------------------------------------------------------------------------------
                                                               dtd. 12/30/02
---------------------------------------------------------------------------------------------------------------------
20D   M. BROUSSARD       THE PREMCOR       incl      0
                       REFINING GROUP,
---------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 21

<TABLE>
---------------------------------------------------------------------------------------------------------------------
<S>  <C>            <C>                  <C>     <C>     <C>  <C>           <C>               <C>
                           INC.
---------------------------------------------------------------------------------------------------------------------
20F   (VALVE SITE)    CHEVRON TR 38-D
      12'x 33.50'
     (.009 acres)
---------------------------------------------------------------------------------------------------------------------
20G      (ROAD
     EASEMENT-26')
      (.089 acres)
---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------
22    T & N O SEC.      THE PREMCOR       incl     0
          121         REFINING GROUP,
                            INC.
---------------------------------------------------------------------------------------------------------------------
                      CHEVRON TR 52 &
                         20-C, 20-D
---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------
23                    DD # 7-SEAWALL       12      0      12                                  PERMIT-Ralph Mitchell
                                                                                                   (409)985-4369
---------------------------------------------------------------------------------------------------------------------
                                                                                                  P.O.Box 3244
---------------------------------------------------------------------------------------------------------------------
                                                                                                Port Arthur, Texas
                                                                                                       77640
---------------------------------------------------------------------------------------------------------------------
WW   TAYLORS BAYOU     STATE OF TEXAS      24      0      24
                      [TAYLORS BAYOU]
---------------------------------------------------------------------------------------------------------------------
                     (Natural Stream)
---------------------------------------------------------------------------------------------------------------------
24    B.C. ARTHUR        THE PREMCOR      incl     0
                       REFINING GROUP
---------------------------------------------------------------------------------------------------------------------
                    PALCO, 4-R; CHEVRON   incl     0
                         TRACT 46-D
---------------------------------------------------------------------------------------------------------------------
                                                                                                      PERMIT
---------------------------------------------------------------------------------------------------------------------
100   B.C. ARTHUR     [UNION PACIFIC     915.19  915.19   0   ENCROACHMENT     1416 Dodge       Minimum Depth req.
                       RAILROAD CO.]                                             Street       4.5' must be 50' from
---------------------------------------------------------------------------------------------------------------------
       PALCO 4-R,                                              AGREEMENT       Omaha, Neb.       existing crossing
      RR CORRIDOR                                                                 68179              locations
---------------------------------------------------------------------------------------------------------------------
                                                              NOT RECORDED   (402)997-3600     Agmt signed 4/29/2003
                                                                            James A. Anthony
---------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 22

<TABLE>
-----------------------------------------------------------------------------------------------------------
<S>  <C>            <C>                <C>    <C>   <C>       <C>         <C>             <C>
                                                                           Joan Preble      ENCROACHMENT
                                                                                              AGREEMENT
-----------------------------------------------------------------------------------------------------------
                                                                          (402) 997-3536
-----------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------
      PALCO 4-R/5R     Subject to:
-----------------------------------------------------------------------------------------------------------
 WW    PALCO 5-R    DRAINAGE DISTRICT    9      0      9                                  PERMIT SEE TR #23
                    NO. 7 [ALLIGATOR
                         BAYOU]
-----------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------
                                                                                                PERMIT
-----------------------------------------------------------------------------------------------------------
100    BBB&C RR      [UNION PACIFIC    incl   incl
                      RAILROAD CO.]
-----------------------------------------------------------------------------------------------------------
      PALCO 6-R
-----------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------
100    BBB&C RR      [UNION PACIFIC    incl   incl                                              PERMIT
                     RAILROAD CO.]
-----------------------------------------------------------------------------------------------------------
      PALCO, 7-Q,
       7-R, 8-Q
-----------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------
100     W. KYLE      [UNION PACIFIC    incl   incl                                              PERMIT
                      RAILROAD CO.]
-----------------------------------------------------------------------------------------------------------
     PALCO 9Q, 10Q   [UNION PACIFIC
                      RAILROAD CO.]
-----------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------
100  W. KYLE/PALCO   [UNION PACIFIC    INCL.  INCL
       10-P, 11-P     RAILROAD CO.]
-----------------------------------------------------------------------------------------------------------
                       Subject to:
-----------------------------------------------------------------------------------------------------------
RD    PALCO, 9-Q      STATE OF TEXAS    27     0       27
-----------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 23

<TABLE>
-------------------------------------------------------------------------------------------------------------------
<S>         <C>           <C>                  <C>     <C>     <C>   <C>      <C>              <C>
                            [HWY 73]
-------------------------------------------------------------------------------------------------------------------
                                                                                                  MEMORANDUM OF
                                                                                               UNDERSTANDING SIGNED
-------------------------------------------------------------------------------------------------------------------
 ENTERING                                      2139.7  2139.7   0                              WITH PREMCOR 4/28/03
 PREMCOR
 CORRIDOR
    -
 ADJACENT
 TO UNION
PACIFIC RR
-------------------------------------------------------------------------------------------------------------------
                                                                                                      PERMIT
-------------------------------------------------------------------------------------------------------------------
   101       PALCO, 9-P   60 TH STREET ( City                                   City of Port      Alignment sheets
                               of P.A.)                                            Arthur       approved by McMahon
-------------------------------------------------------------------------------------------------------------------
              W. KYLE                            3       0      3              Public Works     per C. Southerland
                                                                                 Director
-------------------------------------------------------------------------------------------------------------------
                                                                              Leslie McMahon
-------------------------------------------------------------------------------------------------------------------
                                                                              P. O. Box 1089
-------------------------------------------------------------------------------------------------------------------
   102        W. KYLE      GULF CANAL(LNVA)      5       0      5             (409)983-8180
-------------------------------------------------------------------------------------------------------------------
                                                                                                      PERMIT
-------------------------------------------------------------------------------------------------------------------
                                                                               Bill Jewell-LNVA
                                                                                (409)892-4011
-------------------------------------------------------------------------------------------------------------------
                                                                                  7850 Eastex
                                                                                  Fwy-Bmt. TX
                                                                                     77706
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
   103       W.KYLE             PREMCOR         incl     0                    Added due to re-
                                                                                    route
-------------------------------------------------------------------------------------------------------------------
            BCRR section   (actual property)    incl     0
            384 and 392
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
   104       W. KYLE       61 ST STREET (City    3       0      3                                     PERMIT
                                of P.A.)
-------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 24

<TABLE>
-------------------------------------------------------------------------------------------------------------------
<S>    <C>             <C>                  <C>     <C>     <C>  <C>          <C>            <C>
                                                                                                 SEE TRACT #101
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
 105
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
 106       BBB&C         PUMP STATION RD      5       0      5                  DD#7 Ralph          PERMIT
                        DITCH (DITCH DD7)
                                                                                 Mitchell
-------------------------------------------------------------------------------------------------------------------
         BLOCK 12,      (East Port Acres                                      (409)985-4369      SEE TRACT #23
          RANGE P           ditch)
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
 107      MONTROSE      DORSEY STREET 60'     3       0      3                 City of P.A.         PERMIT
          ADDITION        (City of P.A.)
-------------------------------------------------------------------------------------------------------------------
                                                                                                 SEE TRACT #101
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
107.1     MONTROSE     LABELLE PROPERTIES   179.44  179.44   0                                  Sherlock signed
       ADDITION/PALCO                                                                        5/30-awaiting Roane
                                                                                                    sign off
-------------------------------------------------------------------------------------------------------------------
                          WILLIAM ROANE                                                        fed-ex to Roane for
                                                                                                    signature
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
 108      MONTROSE       CHARLES SASSINE     69.24   69.24   0   2003021837                      SASSINE CLOSED
       ADDITION/PALCO     1/2 interest
-------------------------------------------------------------------------------------------------------------------
                       BESHARA ENTERPRISES                       filed6/5/03                     BESHARA CLOSED
                          1/2 interest
-------------------------------------------------------------------------------------------------------------------
                                                                 2003022369                    copy of documents
                                                                                                 sent to owners
-------------------------------------------------------------------------------------------------------------------
 109                     FM 365 (TXDOT)       7       0      7   filed6/9/03
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
109.1                     GALLIER CANAL       3       0      3                                       PERMIT
                             (LNVA)
-------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 25

<TABLE>
---------------------------------------------------------------------------------------------------------
<S>  <C>             <C>                 <C>  <C>  <C>  <C>        <C>              <C>
                                                                                        SEE TRACT #102
---------------------------------------------------------------------------------------------------------
110   PORT ARTHUR     JEFFERSON COUNTY    60   0    60                DD#7 Ralph           PERMIT
      LAND CO. SUB.   DRAINAGE DISTRICT                                Mitchell
---------------------------------------------------------------------------------------------------------
                        NO. 7 (part of                              (409)985-4369       SEE TRACT #23
                      Hurricane Levee)
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
111    T & N O #6       PORT ARTHUR       18   0    18                  Bill               PERMIT
                        CANAL(LNVA)                                  Jewell-LNVA
                                                                    (409)892-4011
---------------------------------------------------------------------------------------------------------
                                                                     7850 Eastex       SEE TRACT #102
                                                                       Freeway
---------------------------------------------------------------------------------------------------------
112    T & N O #9       VITERBO ROAD      4    0    4               Bmt. TX 77706
                     (Jefferson County)
---------------------------------------------------------------------------------------------------------
      PALCO, 15-N,
       16-N, 17-N
---------------------------------------------------------------------------------------------------------
                                                                     Jefferson             PERMIT
                                                                   County Engineer
---------------------------------------------------------------------------------------------------------
                                                                    Jose Pastrana           -
---------------------------------------------------------------------------------------------------------
                                                                    1149 Pearl-5th          -
                                                                        floor
---------------------------------------------------------------------------------------------------------
                                                                   Beaumont, Texas          -
                                                                       77701
---------------------------------------------------------------------------------------------------------
                                                                   (409)835-8584
---------------------------------------------------------------------------------------------------------
113                   DD#7 (lateral #2)   3    0    3              County Engineer
---------------------------------------------------------------------------------------------------------
                       (SMALL DITCH)                                                      PERMIT
---------------------------------------------------------------------------------------------------------
                                                                                       SEE TRACT #23
---------------------------------------------------------------------------------------------------------
         PALCO
---------------------------------------------------------------------------------------------------------
114     LOTS 1 &2,    JEFFERSON COUNTY    85   85   0                               COMMISSIONERS MEETING
     TRACT 1, LOT 3                                                                        6/02/03
        TRACT 2
---------------------------------------------------------------------------------------------------------
        BLOCK 18m     (OLD MATERIALS                                                     APPROVED AT
                            AREA)                                                     MEETING-AWAITING
                                                                                           CHECK
---------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 26

<TABLE>
--------------------------------------------------------------------------------------------------------------
<S>    <C>            <C>                  <C>     <C>  <C>     <C>      <C>             <C>
--------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------
                        PRIVATE RDWY TO      2      0     2
                          U.S. INTEC
--------------------------------------------------------------------------------------------------------------
 115     T & N O #3     OWNER PREMCOR-BY                                    License
                            LICENSE                                        agreement
                                                                          between prior
                                                                             owner
--------------------------------------------------------------------------------------------------------------
           RD                                                             and Premcor-     PREMCOR SIGN OFF
                                                                            Premcor             REQUIRED
                                                                         has authority
--------------------------------------------------------------------------------------------------------------
 116                     SOUTH GARDEN        4      0     4
                        ROAD(Jefferson
                            County)
--------------------------------------------------------------------------------------------------------------
                                                                                                PERMIT
--------------------------------------------------------------------------------------------------------------
116.1   T & N O #3    RODAIR GULLEY(DD#7)    5      0     5                                  SEE TRACT #112
--------------------------------------------------------------------------------------------------------------
                         Natural Stream                                                         PERMIT
--------------------------------------------------------------------------------------------------------------
                                                                                             SEE TRACT #23
--------------------------------------------------------------------------------------------------------------
 117    T & N O #3      12th STREET (50'     3      0     3
                             ROW)
--------------------------------------------------------------------------------------------------------------
                      Portion adjacent to                                                   GATE COMBINATION
                      RR owned by PREMCOR                                                     #8091 (TATE)
--------------------------------------------------------------------------------------------------------------
                                                                                           Theron Tate Rt. 4
                                                                                            Box234-Bmt Tx 04
--------------------------------------------------------------------------------------------------------------
                                                                                            resides east of
                                                                                         Premcor ownership of
                                                                                                  12th
--------------------------------------------------------------------------------------------------------------
                                                                                          St.-may need temp.
                                                                                              workspace
--------------------------------------------------------------------------------------------------------------
                                                                                         (409)781-2600-AT THIS
                                                                                            TIME NONE NEEDED
--------------------------------------------------------------------------------------------------------------
 118   D. CUNNINGHAM      GULF STATES      120.47   0   120.47           P. O. Box 2951
                         UTILITIES CO.
--------------------------------------------------------------------------------------------------------------
         Fee strip                                                        Beaumont, TX    MET WITH DOUG BABIN
                                                                             77704       5-7-03, REQUIRES NEW
--------------------------------------------------------------------------------------------------------------
                                                                          (409)654-2303    Doug meeting with
                                                                           Doug Babin    Jack 6/11 to discuss
--------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 27

<TABLE>
--------------------------------------------------------------------------------------------------------------
<S>  <C>            <C>                  <C>    <C>  <C>    <C>        <C>               <C>
                                                                        Jim Cornelius-   construction concerns
                                                                        assigned this
                                                                           project
--------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------
120                    UNNAMED COUNTY      3     0     3                                     NOT DEDICATED
                           ROADWAY-                                                      ROAD-NOTHING REQUIRED
                      construction rd
                            only
--------------------------------------------------------------------------------------------------------------
                     to prison area-no                                                      WILL BE PART OF
                    permit required-per                                                         PREMCOR
                            sam
--------------------------------------------------------------------------------------------------------------
121   WM. SIGLER      MCFADDIN CANAL       5     0     5
                          (LNVA)
--------------------------------------------------------------------------------------------------------------
                      AKA GARNER CANAL                                                          PERMIT
--------------------------------------------------------------------------------------------------------------
                                                                                            SEE TRACT #102
-------------------------------------------------------------------------------------------------------------
122   WM. SIGLER      JOHN'S GULLEY        5     0     5                                        PERMIT
                          (DD#7)
--------------------------------------------------------------------------------------------------------------
          WW                                                                                SEE TRACT #23
--------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------
123  D. CUNNINGHAM     TXDOT 3514 (To     26     0    26                                        PERMIT
                        Prison area)
--------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------
                     (423' WIDTH AT RR                                                       SEE TRACT #4
                            ROW)
--------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------
124  D. CUNNINGHAM      OIL TANKING      16.42   0   16.42                Meeting set      MET WITH MR. SAYS
                     BEAUMONT PARTNERS,                                with ROW and BD          4/30/03
                            L.P.                                              to
--------------------------------------------------------------------------------------------------------------
                                                                         discuss tap-
                                                                          documents
                                                                         changed to
--------------------------------------------------------------------------------------------------------------
                                                                         reflect 20'
                                                                           easement
                                                                        instead of 30
--------------------------------------------------------------------------------------------------------------
                                                                           meeting
                                                                          scheduled
                                                                           6/12/03
--------------------------------------------------------------------------------------------------------------
125  D. CUNNINGHAM     PREMCOR/LUCAS     incl    0                     Premcor pipeline
                          STATION                                        office (Lucas
--------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 28

<TABLE>
---------------------------------------------------------------------------------------------------------------------------------
<S>          <C>              <C>                  <C>     <C>     <C>     <C>            <C>               <C>
                                                                                            Terminal)
--------------------------------------------------------------------------------------------------------------------------------
                                and surrounding
                                    property
--------------------------------------------------------------------------------------------------------------------------------
                                                    incl     0
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
 FOLLOWING
  PREMCOR
 EASEMENT
FROM LUCAS
  STATION
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
   126        D. CUNNINGHAM       OIL TANKING       194      0      194                     Main-15602          SEE #124
                              BEAUMONT PARTNERS,                                           Jacintoport
                                      L.P.                                                    Blvd.
--------------------------------------------------------------------------------------------------------------------------------
                                                                                            Houston, Tx        Local: Andre'
                                                                                               77015           Says-Manager
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                           6275 Highway 347 Bmt
                                                                                                                 Tx 77708
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                           835-5381 fax 833-0464
--------------------------------------------------------------------------------------------------------------------------------
   126.1      D. CUNNINGHAM   JOHNS GULLEY BRANCH     5                                                     CALL BEFORE ENTRY-
                                     (DD7)                                                                     LOCK ALL GATES
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
   127        D.CUNNINGHAM    TEXAS DEPARTMENT OF  336.69    0     336.69                 Nanette Ramsey   APPRAISAL REC'D 5-7-
                                    CRIMINAL                                                                 03, FED EX 5-8-03
--------------------------------------------------------------------------------------------------------------------------------
               T AND NO RR          JUSTICE                                                 2405 Avenue     Environmental scope
                                                                                             I-suite E        received to be
                                                                                                            attached with offer
--------------------------------------------------------------------------------------------------------------------------------
              P. HUMPHRIES                                                                Huntsville, TX        letter. Next
                                                                                               77340         Commission meeting
                                                                                                                 7/10/2004.
--------------------------------------------------------------------------------------------------------------------------------
                                                                                          (936)437-5471    Met requirements-they
                                                                                                           do not need any addn
                                                                                                                   info.
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 29

<TABLE>
------------------------------------------------------------------------------------------------------------------
<S>     <C>              <C>                  <C>   <C>   <C>  <C>        <C>               <C>
                                                                            PRISON INFO>    Allen Wallace-Warden
                                                                                              Al Price 724-6388
------------------------------------------------------------------------------------------------------------------
                                                                                               Joe Smith-Warden
                                                                                                 Gist-727-8400
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
                                                                                               D. Doughty-Warden
                                                                                                Stiles 722-5255
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
 127.1     T & NO RR      JEFFERSON COUNTY     70    70     0              County Engineer     See Tract #114
------------------------------------------------------------------------------------------------------------------
                                                                                              Approved 6/02/03 at
                                                                                              Commissioner Court
                                                                                                    meeting
------------------------------------------------------------------------------------------------------------------
                                                                                             waiting on check ande
                                                                                               executed document
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
 128    WILLIAM CARROLL     RODAIR GULLEY      5     0     5                                  PERMIT SEE TR #23
                              Branch (DD#7)
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
         P. HUMPHRIES    TEXAS DEPARTMENT OF  incl  incl                                        SEE TRACT #127
                              CRIMINAL
------------------------------------------------------------------------------------------------------------------
                              JUSTICE
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
 129        WILLIAM       HIGHWAY 69(TXDOT)    18    0     18
            CARROLL
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
 130       T & NO RR       CALDWELL COMPANY   124    0    124               Shaheen L.        TRUSTEES MET ON
                                TRUST                                     Farah-V.P./Trust         5/12/03
                                                                              officer
------------------------------------------------------------------------------------------------------------------
        WILLIAM CARROLL    (HIBERNIA BANK                                  P.O. Box 3928     Revisions to document
                             TRUST DEPT)                                                      forwarded to Jamey
------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 30

<TABLE>
----------------------------------------------------------------------------------------------------------------------------------
<S>  <C>              <C>                  <C>    <C>        <C>     <C>             <C>                <C>
         CARROLL           TRUST DEPT)                                                                     forwarded to Jamey
----------------------------------------------------------------------------------------------------------------------------------
                                                                                     Bmt. Tx 77704          for approval on
                                                                                     (409)880-1424      5/29/03-waiting on reply
----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------
131  WILLIAM CARROLL    JEFFERSON COUNTY   26.14  26.14       0       #2003022370    Tom McDonald-Gen.     CLOSED-COPY OF DOCUMENT
                         WATER DISTRICT                                                     Mgr.                   MAILED
----------------------------------------------------------------------------------------------------------------------------------
                       NO. 10-WATER TMT.                             filed 6/9/2003   3707 Central        TO JCWD#10 on 6/10/03
                            FACILITY                                                      Blvd
----------------------------------------------------------------------------------------------------------------------------------
                                                                                      Nederland, TX
                                                                                       77627 (409)
                                                                                        722-6922
----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------
132  WILLIAM CARROLL  OUTPOST DEVELOPMENT,  5.81     0       5.81                     James Kerr            Do not drive down
                              LTD                                                                         roadway that is under
----------------------------------------------------------------------------------------------------------------------------------
                          (JAMES KERR)                                                5245 N Twin         construction during
                                                                                       City Hwy.           inclement weather
----------------------------------------------------------------------------------------------------------------------------------
                                                                                      Nederland, TX        Roadway is north of
                                                                                     (409) 727-8279         pipeline location
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Final document dropped
                                                                                                        by attorney 6/4-awaiting
----------------------------------------------------------------------------------------------------------------------------------
133  WILLIAM CARROLL  DD #7 Ditch(Rhodair                                                                  signed document-ck
                         Gulley Branch)                                                                       requested 6/4
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                            Waiting on Lien
                                                                                                         subordination-Hibernia
                                                                                                                  Bank
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Have not received check
                                                                                                           from El Paso to close
----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 31

<TABLE>
---------------------------------------------------------------------------------------------------------------------------------
<S>          <C>              <C>                     <C>     <C>     <C>    <C>            <C>                   <C>
    134      WILLIAM CARROLL  TERRA NOVA DEVELOPMENT  116.57  116.57    0     #2003022371          Ann             CLOSED-COPY OF
                                                                                            Blackwell(developer   DOCUMENT MAILED
                                                                                                /owner)
---------------------------------------------------------------------------------------------------------------------------------
                                 (ANN BLACKWELL)                             filed 6/9/03    P.O. Box 1343        TO MS. BLACKWELL
                                                                                                                       6/10/03
---------------------------------------------------------------------------------------------------------------------------------
                                                                                             Nederland, Tx
                                                                                                 77627
                                                                                               721-5011
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
    135      WILLIAM CARROLL  GULF STATES FEE STRIP    16.19     0    16.19
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

                                                        2       0      2
---------------------------------------------------------------------------------------------------------------------------------
    136                        JEFFERSONCOUNTY ROAD                                                                  ACCORDING TO
                                  EASEMENT (40')                                                                       SURVEYOR
                                                                                                                      INCLUDED IN
---------------------------------------------------------------------------------------------------------------------------------
                                 PALCO DEDICATED-                                                                     GSU ROW
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
RE-ENTERING                                            82.7    82.7     0                                           MEMORANDUM OF
PREMCOR FEE                                                                                                         UNDERSTANDING
 OWNERSHIP                                                                                                              SIGNED
 CORRIDOR
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     WITH PREMCOR
                                                                                                                        4/28/03
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 32
<TABLE>
-----------------------------------------------------------------------------------------------------------------------------
<S>           <C>              <C>               <C>   <C>       <C>   <C>         <C>              <C>
 ENTERING
 HIGHLAND
SUBDIVISION
-----------------------------------------------------------------------------------------------------------------------------
   TO BE
  DRILLED
-----------------------------------------------------------------------------------------------------------------------------
   137                             LESTER        7.91  7.91      0     2003017975  1620 Tallowood   Document recorded 5-9-03
                               CHAMPAGNE ET UX
-----------------------------------------------------------------------------------------------------------------------------
              HIGHLAND NORTH                                                       Nederland, Tx
              ESTATES UNIT 5                                                           77627
                  PH 2
-----------------------------------------------------------------------------------------------------------------------------
              LOT 2, BLOCK 7                                                       (home) 722-5836  Inspection req. 30 days
                                                                                                    prior to const-3yrs after
-----------------------------------------------------------------------------------------------------------------------------
   138                         TALLOWOOD LANE     3     0        3                                  PERMIT-COUNTY SEE TRACT
                                (60' COUNTY)                                                                  #112
-----------------------------------------------------------------------------------------------------------------------------
              HIGHLAND NORTH
              ESTATES UNIT 5
                  PH 2
-----------------------------------------------------------------------------------------------------------------------------
                                                                       200301796    1615 Tallowood  Document recorded 5-9-03
-----------------------------------------------------------------------------------------------------------------------------
   139                          FRANCIS KOTZUR   7.96  7.96      0                  Nederland, Tx   Will require inspections
                                    ET UX                                              77627        30 days prior to const.
-----------------------------------------------------------------------------------------------------------------------------
              HIGHLAND NORTH                                                           (home)          3 yrs. After const.
              ESTATES UNIT 5                                                        729-7317 work
                  PH 2                                                              800-235-7822
-----------------------------------------------------------------------------------------------------------------------------
              LOT 10, BLOCK 7                                                                          Pending recording
-----------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------
   140                         C. DELORD ET UX   7.92  7.92      0     2003017974   1614 Braxton    Document recorded 5-9-03
                                                                                       Circle
-----------------------------------------------------------------------------------------------------------------------------
              HIGHLAND NORTH                                                        Nederland, Tx
              ESTATES UNIT 5                                                            77627
                  PH 2
-----------------------------------------------------------------------------------------------------------------------------
              LOT 11, BLOCK 7                                                         722-0359
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                    Will require inspections
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 33

<TABLE>
---------------------------------------------------------------------------------------------------------------------------------
<S>        <C>               <C>                <C>    <C>        <C>      <C>           <C>             <C>
                                                                                                         30 days prior to const.
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                         3 yrs. After const.
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
  141                          BRAXTON CIRCLE    3      0           3                                    PERMIT-COUNTY SEE TRACT
                                (60' COUNTY)                                                                       #112
---------------------------------------------------------------------------------------------------------------------------------
            HIGHLAND NORTH
            ESTATES UNIT 5
               PH 2
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
  142                        JOHN WAGNER ET UX  38.5   38.5          0      2003017977   1609 Braxton           Complete
                                                                                           Circle
---------------------------------------------------------------------------------------------------------------------------------
            HIGHLAND NORTH                                                 filed 5/9/03  Nederland, Tx   Will require inspections
            ESTATES UNIT 5                                                                   77627        30 days prior to const.
                PH 2
---------------------------------------------------------------------------------------------------------------------------------
            LOT 15, BLOCK 7                                                                722-6199         3 yrs. After const.
---------------------------------------------------------------------------------------------------------------------------------
            LOT 14, BLOCK
            7-tr 1 .397 ac
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
  143                        PORT ARTHUR CANAL   7      0           7
                                (120' ROW)
---------------------------------------------------------------------------------------------------------------------------------
           WILLIAM CARROLL       (LNVA)
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
  144                          GSU FEE STRIP    11.91   0         11.91                                         SEE #118
                                (100' ROW)
---------------------------------------------------------------------------------------------------------------------------------
           WILLIAM CARROLL
---------------------------------------------------------------------------------------------------------------------------------
                              CENTAL BOULEVARD   4      0           4
                               DITCH (DD7)
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
           WILLIAM CARROLL                                                                               DD7 controlled estimated
                                                                                                                    60'
---------------------------------------------------------------------------------------------------------------------------------
ENTERING                                                                                                   PERMIT SEE TRACT #23
PREMCOR
CORRIDOR
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 34

<TABLE>
---------------------------------------------------------------------------------------------------------------------------
<S>  <C>                 <C>                   <C>    <C>     <C>  <C>            <C>              <C>
145                            CENTRAL          5      0       5                                   PERMIT-COUNTY SEE TRACT
                          BOULEVARD(COUNTY)                                                                  #112
---------------------------------------------------------------------------------------------------------------------------
      WILLIAM CARROLL
---------------------------------------------------------------------------------------------------------------------------
146                           CALIFORNIA        5      0       5                                   PERMIT-COUNTY SEE TRACT
                          BOULEVARD(COUNTY)                                                                  #112
---------------------------------------------------------------------------------------------------------------------------
      WILLIAM CARROLL
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
147                      JOE DAUGHTRY, ET UX
---------------------------------------------------------------------------------------------------------------------------
           PALCO          Fireworks Store on   52.17  52.17    0   #2003020174    2565 Twin City     Agmt. Signed 5/19/03
                               property                                                Hwy.            recorded 5/27/03
---------------------------------------------------------------------------------------------------------------------------
      Pt of Lot 4, Blk                                             filed 6/5/03    Nederland,Tx
     19, Range F, Pt of                                                           Cell- 504-1973
---------------------------------------------------------------------------------------------------------------------------
        Lot 1,Blk 19                                                                 727-3080
          Range G
---------------------------------------------------------------------------------------------------------------------------
                                                                                     721-6448       Delivered check 5/22/03
                                                                                    h727-6580
---------------------------------------------------------------------------------------------------------------------------
                                                                                                   Add to DOC. Do not Block
                                                                                                      drive 12/26/03thru
                                                                                                            1/02/04
---------------------------------------------------------------------------------------------------------------------------
148                                                                                                  (New fireworks store)
                                                                                                        also 6/24-7/4.
---------------------------------------------------------------------------------------------------------------------------
      WILLIAM CARROLL     HIGHWAY 347(TXDOT)   12      0      12
---------------------------------------------------------------------------------------------------------------------------
                                                                                                      PERMIT-SEE TRACT 4
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
149                      KANSAS CITY SOUTHERN   6      0       6                     Tim Huya           PERMIT required
                                  RR
---------------------------------------------------------------------------------------------------------------------------
      WILLIAM CARROLL                                                              5800 N. Main
                                                                                      Street
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 35

<TABLE>
---------------------------------------------------------------------------------------------------------------------------
<S>     <C>              <C>                    <C>      <C>    <C>     <C>       <C>             <C>
                                                                                    Fort Worth,
                                                                                    Texas 76179
---------------------------------------------------------------------------------------------------------------------------
                                                                                   (817-352-2902
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
66       A. J. STEWART     CITY OF NEDERLAND       5        5     0                                 Council approved and
                                                                                                    signed 6/9/03-will pick
---------------------------------------------------------------------------------------------------------------------------
                                                                                                        check requested
                                                                                                    6/04-document forwarded
                                                                                                              for
---------------------------------------------------------------------------------------------------------------------------
                                                                                                      Manta Ray signature
                                                                                                    6/10/03-still awaiting
                                                                                                             check
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
65                       SUN PIPE LINE COMPANY                                       W.L.Crisp
---------------------------------------------------------------------------------------------------------------------------
65A     WILLIAM CARROLL                                                              Hwy 347N
---------------------------------------------------------------------------------------------------------------------------
                                                                                    Nederland,
                                                                                    Texas 77627
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
65B      A. J. STEWART
---------------------------------------------------------------------------------------------------------------------------
65C         KUTCHER        VALVE SITE 75x150                                                         PER D. FERER BUSINESS
                                                                                                          DEVELOPMENT
---------------------------------------------------------------------------------------------------------------------------
          O. MONTEE                             197.59      0   197.59                             WILL HANDLE NEGOTIATIONS
---------------------------------------------------------------------------------------------------------------------------
          J. TURNER
---------------------------------------------------------------------------------------------------------------------------
67                        UNION OIL COMPANY OF                                       Ronald L.       PER D. FERER BUSINESS
                               CALIFORNIA                                              James              DEVELOPMENT
---------------------------------------------------------------------------------------------------------------------------
67A       JIM TURNER     VALVE SITE 75'X 200'                                     P. O. Box 237   WILL HANDLE NEGOTIATIONS
---------------------------------------------------------------------------------------------------------------------------
          JIM TURNER     UNION OIL COMPANY OF            incl                     Nederland, Tx
                               CALIFORNIA                                          (409)724-3311
---------------------------------------------------------------------------------------------------------------------------
        JOHN C. KUTCHER
---------------------------------------------------------------------------------------------------------------------------
                          UNION OIL COMPANY OF           incl
                               CALIFORNIA
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 36

<TABLE>
---------------------------------------------------------------------------------------------------------------------------
<S>       <C>             <C>                    <C>     <C>     <C>     <C>       <C>               <C>
                          CALIFORNIA
---------------------------------------------------------------------------------------------------------------------------
          OTTO RUFF
---------------------------------------------------------------------------------------------------------------------------
                          UNION OIL COMPANY OF   219.1   0       219.1
                              CALIFORNIA
---------------------------------------------------------------------------------------------------------------------------
          O. MONTREE
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 37

                          (Texas City ROW begins here)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
             CAMERON HIGHWAY OIL PIPELINE
                  SYSTEM-Texas City
---------------------------------------------
                                                 Rods,      Rods    Pending   Easement/        Contact
Tract#      Description        Apparent Owner    Apprx    Complete           Permit date     Information              Notes
-----------------------------------------------------------------------------------------------------------------------------------
<S>      <C>                <C>                  <C>      <C>       <C>      <C>            <C>               <C>
         PORT BOLIVAR ROUTE
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
  1      A. Van Nordstrom   Andrew Johnson, Jr.  103.26    103.26      0       4/5/2003     P.O. Box 174             COMPLETE
-----------------------------------------------------------------------------------------------------------------------------------
                                                                             #2003026386        Port           Temporary workspace
                                                                                             Bolivar,TX              obtained
                                                                                                77650
-----------------------------------------------------------------------------------------------------------------------------------
  2      A. Van Nordstrom    Butterfly -County      4         0        4                    wk-409-740-1517   PERMIT-C. Southerland
                                    Road
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                            hm-409-684-8330
-----------------------------------------------------------------------------------------------------------------------------------
  3      A. Van Nordstrom    Andrew M. Johnson,  100.68    100.68      0      3/18/2003          All                 COMPLETE
                                   Estate                                                   negotiations
                                                                                              are to be
-----------------------------------------------------------------------------------------------------------------------------------
                              (und. 4/5th int)                               #2003026387    handled with
                                                                                            A. Johnson,Jr
-----------------------------------------------------------------------------------------------------------------------------------
 3VS       41'x90'(.291       Cora Beth Evans                                 3/18/2003                              COMPLETE
              acres)              Johnson
-----------------------------------------------------------------------------------------------------------------------------------
         with 26' access      (und. 1/5th int)                               #2003026388                      V.S. Changed to 41x90
           road fr. 87
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>


                            PARTICIPATION AGREEMENT
                                 SCHEDULE 5(l)
                                    PAGE 38

<TABLE>
----------------------------------------------------------------------------------------------------------------------------
<S> <C>               <C>                  <C>     <C>      <C> <C>          <C>             <C>
4   A. Van Nordstrom  Highway 87-State of    7       0      7                                    PERMIT-C. Southerland
                             Texas
----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------
5   A. Van Nordstrom   Michael Roy Lange   254.62  254.62   0     4/8/2003       Lange                  COMPLETE
                                                                             Construction
----------------------------------------------------------------------------------------------------------------------------
                                                                #2003026385    3073 Kent     7 day notice needed to remove
                                                                                 Road                    cattle
----------------------------------------------------------------------------------------------------------------------------
                                                                               Beaumont,         prior to construction
                                                                              Texas 77705
----------------------------------------------------------------------------------------------------------------------------
                                                                              phone bk-
                                                                             Bluebonnet Ln.
----------------------------------------------------------------------------------------------------------------------------
                                                                             (409)796-1806
                                                                             (409)796-1972
----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------
                                                                             same as above
----------------------------------------------------------------------------------------------------------------------------
6                     Andrew Johnson, Jr.   81.33   81.33   0     4/5/2003                              COMPLETE
                            Indiv &
----------------------------------------------------------------------------------------------------------------------------
                           as Trustee                           #2003026386
                          (unrecorded)
----------------------------------------------------------------------------------------------------------------------------
6   A. Van Nordstrom   Intercoastal Canal   incl.   incl.         4/5/2003                              COMPLETE
----------------------------------------------------------------------------------------------------------------------------
                      (Andrew Johnson,Jr.                       #2003026386                  C. Southerland to handle permit
                            has fee)
----------------------------------------------------------------------------------------------------------------------------
6   A. Van Nordstrom  Andrew Johnson, Jr.   incl.   incl.         4/5/2003
----------------------------------------------------------------------------------------------------------------------------
                        (referred to as                         #2003026386
                          Goat Island)
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                            PARTICIPATION AGREEMENT
                                 SCHEDULE 5(l)
                                    PAGE 39

<TABLE>
----------------------------------------------------------------------------------------------------------------------------
<S>              <C>             <C>                 <C>     <C>  <C>     <C>   <C>            <C>
                    ENTERING
                    GALVESTON
                      BAY
-----------------------------------------------------------------------------------------------------------------------------
      WW                           Galveston Bay
-----------------------------------------------------------------------------------------------------------------------------
                   CROSSING      CITY OF TEXAS CITY                                                CITY OF TEXAS CITY/GLO
                     DIKE-
-----------------------------------------------------------------------------------------------------------------------------
       -               -                                                                              permits required
-----------------------------------------------------------------------------------------------------------------------------
       -           TEXAS CITY                                                                   City Engineer approved drill
                     ROUTE                                                                                  plans
-----------------------------------------------------------------------------------------------------------------------------
 Entering from
 Galveston Bay
   south of
Discharge Canal
  (swan lake)
-----------------------------------------------------------------------------------------------------------------------------
                 H. Littlefield  Union Carbide(Dow)  29.988   0   29.988            Fax#          Sent 5/19 To Dow Houston
                                                                                979-238-3587
-----------------------------------------------------------------------------------------------------------------------------
                                   West of Swan                                  Local-Bill    Manta Ray legal requested chgs
                                  lake-submerged                                    Knee
-----------------------------------------------------------------------------------------------------------------------------
                                                                                  3301 5th       to DOW document-L.A. Simper
                                                                                Avenue South
-----------------------------------------------------------------------------------------------------------------------------
                                                                                 Texas City,      will meet with DOW legal
                                                                                 Texas 77590
-----------------------------------------------------------------------------------------------------------------------------
                                                                                  (P.O. Box         negotiations ongoing
                                                                                    471)
-----------------------------------------------------------------------------------------------------------------------------
                                                                                (409)948-5153
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                            PARTICIPATION AGREEMENT
                                 SCHEDULE 5(l)
                                    PAGE 40

<TABLE>
----------------------------------------------------------------------------------------------------------------------------------
<S>              <C>                 <C>                  <C>     <C>  <C>     <C>  <C>             <C>
                                                                                        Houston
                                                                                     office-L. A.
                                                                                        Simper
----------------------------------------------------------------------------------------------------------------------------------
                                                                                    (713)978-3805
----------------------------------------------------------------------------------------------------------------------------------
                                                                                         Fax#
                                                                                     979-238-3587
----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------
                   H. Littlefield      Kohfeldt Family     22.89   0    22.89         Steven P.      Offer letter mailed 4/16/03
                                        Limited Ptnr.                                 Anderson
----------------------------------------------------------------------------------------------------------------------------------
                                                                                    P.O. Box 305       Spoke with Mr. Anderson
                                                                                                               5/14-he
----------------------------------------------------------------------------------------------------------------------------------
                                                                                     Denison,Tx     Anderson transferred info. To
                                                                                        75021
----------------------------------------------------------------------------------------------------------------------------------
                                                                                    (903)465-2000     Jim Reynolds-attorney for
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                    Kohlfelt partnership-reviewing
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                      documents. He was fed-exed
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                     info. On 6/4-will call 6/11
                                                                                                               to chk.
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                               status.
----------------------------------------------------------------------------------------------------------------------------------
                 H. B. Littlefield     Gulf Coast Waste
                                           Disposal
----------------------------------------------------------------------------------------------------------------------------------
                                          Authority       344.47   0   344.47       910 Bay Area     See Union Carbide(Dow) agmt.
                                                                                      Boulevard
----------------------------------------------------------------------------------------------------------------------------------
                                     (UTILIZING ROADWAY)                              Houston,       must be reached between Dow
                                                                                     Texas 77058
----------------------------------------------------------------------------------------------------------------------------------
                   Permit to use       Road Easement to                             (409)935-4783       and Sterling Chemical
                   roadway within     City of Texas City                            Ricky Clifton
----------------------------------------------------------------------------------------------------------------------------------
                  100' strip from     from Union Carbide                             Additional       GCWA will accept DOW form-
                  City of Tx City           (Dow)                                      Contact
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

                            PARTICIPATION AGREEMENT
                                 SCHEDULE 5(l)
                                    PAGE 41

<TABLE>
----------------------------------------------------------------------------------------------------------------------
<S>    <C>                 <C>                      <C>   <C>    <C>  <C>  <C>                  <C>
        (Waiting on City                                                   Charles Ganze             awaiting DOW
              Eng                                                                                   legal review of
          Determination)
----------------------------------------------------------------------------------------------------------------------
                                                                           (281)488-4115                changes
                                                                                                       requested
----------------------------------------------------------------------------------------------------------------------
                                                                               James
                                                                           McWhorter-City
                                                                             Engineer
----------------------------------------------------------------------------------------------------------------------
                                                                            P.O.Drawer
                                                                               2608
----------------------------------------------------------------------------------------------------------------------
                                                                            Texas City,
                                                                               Texas
                                                                            77592-2608
----------------------------------------------------------------------------------------------------------------------
                                                                           (409)643-5935
----------------------------------------------------------------------------------------------------------------------
                                                                             Leased to
                                                                            Texas City
                                                                               Intl.
----------------------------------------------------------------------------------------------------------------------
                                                                           Terminal for
                                                                           S. Cont. Port
----------------------------------------------------------------------------------------------------------------------
                                                                               (Alex
                                                                             Parkman)
----------------------------------------------------------------------------------------------------------------------
         H. Littlefield      (Texas City Port
             Survey             Boulevard)
----------------------------------------------------------------------------------------------------------------------
                                  TXDOT
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
         H. Littlefield     Amoco Oil Company       285    0     285                            BP to be negotiated by
             Survey                                                                                    Business
----------------------------------------------------------------------------------------------------------------------
                                                                                                     Development
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                            PARTICIPATION AGREEMENT
                                 SCHEDULE 5(l)
                                    PAGE 42

<TABLE>
----------------------------------------------------------------------------------------------------------------------------
<S>      <C>               <C>                      <C>   <C>    <C>  <C>  <C>                  <C>
           S. Bundick       Amoco Oil Company       470    0     470
----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------
           S. Bundick      Texas City Terminal       18    0      18                            BEING NEGOTIATED BUS. DEV.
                                 Railway
----------------------------------------------------------------------------------------------------------------------------
                             Leased to TEPPCO
----------------------------------------------------------------------------------------------------------------------------
                            Sub-leased SEAWAY                                                    Call Laura Gissen 24 hours
----------------------------------------------------------------------------------------------------------------------------
                               BP AMOCO TAP                                   Gissen            prior to entry (409)949-3708
                                                                           cell#(281)
                                                                            460-1130
----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------
                                                                             Galveston                PERMIT FOR LEVEE
                                                                              County
                                                                             Engineer
----------------------------------------------------------------------------------------------------------------------------
         H. Littlefield    County of Galveston       37    0      37           (Mike              MUST NOTIFY SUPER.-TODD
             Survey                                                         Fitzgerald)
----------------------------------------------------------------------------------------------------------------------------
                             Levee(Hurricane                                    123             NOLTE 3 days prior to entry
                               Protection)                                   Rosenberg
                                                                              Street
----------------------------------------------------------------------------------------------------------------------------
                                                                            Galveston,                 (409)948-4231
                                                                            Texas 77550
----------------------------------------------------------------------------------------------------------------------------
                                                                           (409)770-5552           Engineer must approve
----------------------------------------------------------------------------------------------------------------------------
         H. Littlefield    Texas City Terminal
             Survey              Railway
----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------
         H. Littlefield         AMOCO (BP)           18    0      18                                 BP REMAINDER TRACT
             Survey
----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                            PARTICIPATION AGREEMENT
                                 SCHEDULE 5(l)
                                    PAGE 43

<TABLE>
<S>      <C>               <C>                      <C>   <C>    <C>  <C>  <C>                  <C>
----------------------------------------------------------------------------------------------------------------------------
         H. Littlefield    Texas City Terminal       6     0      6
             Survey              Railway
-----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------
         H. Littlefield          FM 519E             6     0      6            Allen                       PERMIT
             Survey                                                        Byerly-Right
                                                                              -of-Way
----------------------------------------------------------------------------------------------------------------------------
                              STATE OF TEXAS                                 6810 Old
                                                                               Katy
                                                                            Rd-Houston
----------------------------------------------------------------------------------------------------------------------------
                                                                           (713)802-5681
----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------
         H. Littlefield     Amoco Oil Company        6     0      6
             Survey
----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------
         H. Littlefield      Texas New Mexico       20     0     20                             Federal expressed 6/4/03 to
             Survey               Power
----------------------------------------------------------------------------------------------------------------------------
                              (FIRST CHOICE)                                                       Engineer-Dennis Marcum
----------------------------------------------------------------------------------------------------------------------------
                                                                                                He will review in the field
                                                                                                            and
----------------------------------------------------------------------------------------------------------------------------
                                                                                                 then pass to legal-he did
                                                                                                          request
----------------------------------------------------------------------------------------------------------------------------
                                                                                                some document revisions-which
----------------------------------------------------------------------------------------------------------------------------
                                                                                                  were made on 6/9/03 and
                                                                                                          emailed
----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------
         H. Littlefield      Gulf Coast Waste       30     0     30                                Subject to final route
             Survey                                                                                      determination
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                            PARTICIPATION AGREEMENT
                                 SCHEDULE 5(l)
                                    PAGE 44


<TABLE>
<S>         <C>                 <C>           <C>   <C>    <C>   <C>   <C>   <C>
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
            J. Grant            AMOCO (BP)
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                 CAMERON HIGHWAY

                           PURCHASE AND SALE AGREEMENT

         THIS CAMERON HIGHWAY PURCHASE AND SALE AGREEMENT dated effective the 23
day of June, 2003, (the "Effective Date") by and between BHP BILLITON PETROLEUM
(DEEPWATER) INC. ("BHP") and CAMERON HIGHWAY OIL PIPELINE COMPANY
("CHOPS")(hereinafter "Purchase and Sale Agreement"). BHP and CHOPS are
individually referred to herein as a "Party", and collectively as "Parties", as
the context may require.

                                   WITNESSETH:

         WHEREAS, BHP is a working interest owner in certain offshore oil and
gas leases located in the Southern Green Canyon Area of the Gulf of Mexico, and
along with its co-working interest owners in the leases are developing or are
planning to develop the associated fields for the production of oil and gas as
further described herein;

         WHEREAS, CHOPS will construct and install (or cause the construction
and installation of) Cameron Highway (defined herein) and will connect such
pipeline with a deepwater Crude Oil pipeline to be constructed by Caesar Oil
Pipeline Company, LLC ("Caesar") from the Southern Green Canyon Area at SS 332 ;
and

         WHEREAS, CHOPS will purchase crude oil produced by BHP from the
offshore leases described above and resell volumes of crude oil to BHP at agreed
delivery points, all as set forth in this Purchase and Sale Agreement (such
purchase and sale arrangements collectively referred to as the "Transaction");
and

         WHEREAS, the Parties have agreed to undertake such activities necessary
to consummate the Transaction in accordance with the terms stated herein.

         NOW THEREFORE, in consideration of the premises and the mutual promises
and covenants contained herein, the receipt and sufficiency of which are hereby
acknowledged, and intending hereby to be legally bound, the Parties hereby agree
to the following principal terms and conditions of the Transaction:

                                   DEFINITIONS

         Capitalized terms used in this Purchase and Sale Agreement that are
defined in this Purchase and Sale Agreement shall have the meanings ascribed to
them herein. As used in this Purchase and Sale Agreement, the initially
capitalized terms listed below shall have the following meanings:

         "AAA" shall mean the American Arbitration Association.

         "API" shall mean American Petroleum Institute.

         "ADDITIONAL DELIVERY POINTS" shall mean each of the following points to
be established on Cameron Highway, where CHOPS shall deliver Crude Oil to BHP
(or its designees) upon nomination of any such point by BHP in accordance with
the terms of this Agreement: the Premcor Refinery, Premcor's Lucas Terminal and
Valero Energy Company's Texas City Refinery, and such other mutually agreed to
points, such agreement not be

                                       1
<PAGE>

unreasonably withheld. Deliveries to all Additional Delivery Points shall be
through a direct connection with Cameron Highway and such Additional Delivery
Point.

         "AFFILIATE" means a corporate entity which controls, or is controlled
by or which is under common control by an entity which controls a party. In the
case of BHP, Affiliate shall be deemed to include: (i) BHP Limited; (ii) any
corporate entity controlled by BHP Limited; (iii) any corporate entity
controlled by Billiton Plc and BHP Limited taking into account the aggregate
percentage interests of their respective direct or indirect shareholdings in
that corporate entity; or (iv) any corporate entity controlling or controlled by
that corporate entity. For the purposes of this definition, one corporate entity
controls another when at the relevant time it owns either directly or indirectly
not less than fifty (50%) percent of the shares entitled to vote at general
meetings of that other corporate entity.

         "ATLANTIS" shall mean Green Canyon Blocks 698, 699, 700, 701, 742, 743
and 744, Gulf of Mexico.

         "BARREL" shall mean forty-two (42) U.S. gallons at a temperature of
60 (Degree)F and 0 PSIG.

         "BASE GAS PRICE" shall mean the Henry Hub gas price as published in the
first of the month issue of FERC's Inside Gas Market Report for the then current
month of fuel purchases.

         "BASE OIL PRICE" shall mean Platt's Oilgram Mars monthly average price
(Trading) per Barrel. Platt's prices are as quoted in Platt's Oilgram and are
calculated from the 26th Day of the month, two (2) months prior to the month of
delivery through the 25th Day of the month, one (1) month prior to delivery,
excluding weekends and holidays.

         "BHP" shall mean BHP Billiton Petroleum (Deepwater) Inc., a Delaware
corporation.

         "BHP GROUP" shall mean BHP and its respective affiliates, subsidiaries,
co-working interest owners, members and joint venturers and the respective
employees, officers, directors, representatives, agents, contractors and
subcontractors of each.

         "BHP MDQ" shall mean the maximum daily quantity of Dedicated Production
CHOPS is required to accept and purchase from BHP on a Firm basis at the Receipt
Point(s) each Day, as further described in this Purchase and Sale Agreement.

         "BHP PRODUCTION" shall mean Dedicated Production and Excess Production,
collectively.

         "BONA FIDE REQUEST" shall have the meaning ascribed to such term in
Article VIII.a.i of this Purchase and Sale Agreement.

         "BOPD" shall mean Barrels of Crude Oil per Day.

         "BP" shall mean BP Exploration & Production Inc.

         "BTU" or "British Thermal Unit" shall mean the amount of heat required
to raise the temperature of one (1) pound of water one degree (1 degree)
Fahrenheit at sixty degrees (60 degrees) Fahrenheit at a pressure of 14.73
PSIG and determined on a gross, dry basis.

                                       2
<PAGE>

         "CAESAR SYSTEM" shall mean the approximately sixty (60) miles of
twenty-eight inch (28") offshore Crude Oil pipeline and all related laterals and
equipment and facilities to be owned, constructed and installed by Caesar or its
designee(s) that will extend from the area of the Initial Dedicated Leases to SS
332 where it will connect into Cameron Highway and could potentially extend to
other platforms and/or interconnect with other pipelines.

         "CAMERON HIGHWAY" shall mean the offshore Crude Oil pipeline and all
related equipment and facilities to be constructed and owned by CHOPS that will
extend from SS 332 to the Delivery Points (as such term is defined herein), but
shall not include any extensions, expansions or additions to such offshore Crude
Oil pipeline which are not described in this Purchase and Sale Agreement. Such
pipeline shall be used by CHOPS to purchase and sell the Crude Oil under this
Purchase and Sale Agreement.

         "CAMERON HIGHWAY COMPLETION DATE" shall mean the date on which Cameron
Highway is Fully Operational.

         "CHOPS" shall mean Cameron Highway Oil Pipeline Company, a Delaware
general partnership.

         "CHOPS GROUP" shall mean CHOPS and its affiliates, subsidiaries,
co-owners and joint venturers and its and their respective employees, officers,
directors, representatives, agents, contractors and subcontractors

         "CONFIDENTIALITY AGREEMENT" shall have the meaning ascribed to such
term in Article XXVII.

         "CONTRACT QUARTER" shall mean a consecutive three (3) month period. The
first such Contract Quarter shall begin with the month that production commences
from the first of the Dedicated Leases to commence production and ends at the
beginning of the next calendar quarter.

         "CRUDE OIL" shall mean the liquid hydrocarbon production from wells, or
a blend of such, in its natural form, not having been enhanced or altered in any
manner or by any process, other than those processes that normally occur on an
offshore production facility, that would result in misrepresentation of its true
value for adaptability to refining as a whole Crude Oil.

         "DAY" shall mean a period of twenty-four (24) consecutive hours,
beginning and ending at 7:00 A.M. (CST).

         "DEDICATED LEASES" shall mean the (i) Initial Dedicated Leases, as
described on Exhibit "A", and (ii) leases underlying other offshore fields that
BHP dedicates to this Purchase and Sale Agreement pursuant to Article IV hereof,
and which shall be added to Exhibit "A".

         "DEDICATED PRODUCTION" shall mean the first volumes of Crude Oil
produced from the Dedicated Leases up to the applicable BHP MDQ that are (i)
owned by BHP (or its successors or assigns), and/or (ii) with respect to royalty
volumes of Crude Oil owned and/or taken in kind by the Minerals Management
Service, controlled by BHP.

         "DELIVERY POINT(S)" shall mean the following points where CHOPS shall
deliver Crude Oil to BHP (or its designee(s)): BP Products North America Inc.'s
("BP Products") Texas City Refinery, Teppco Seaway Terminal, at Texas City, Sun
Marine Terminal in

                                       3
<PAGE>

Nederland, UNOCAL Pipeline Company's Beaumont Terminal. Deliveries to all
Delivery Points shall be through a direct connection with Cameron Highway and
such Delivery Point.

         "DISPUTE(S)" shall have the meaning ascribed to such term in Article
XXVI.a. hereof.

         "EFFECTIVE DATE" shall have the meaning ascribed to it in the preamble
to this Purchase and Sale Agreement.

         "EPFS" shall mean El Paso Field Services, L.P., a Delaware limited
partnership.

         "EPN" shall mean El Paso Energy Partners, L.P., a Delaware limited
partnership, predecessor to GulfTerra Energy Partners, L.P.

         "GTM SUB" shall have the meaning ascribed to it in Article
XXII.a.i.(A).

         "EXCESS PRODUCTION" shall mean Crude Oil produced from the Dedicated
Leases in excess of the Dedicated Production that is (i) owned by BHP (or its
successors or assigns), and/or (ii) with respect to royalty volumes of Crude Oil
owned and/or taken in kind by the Minerals Management Service, controlled by
BHP. Such Excess Production is not required to be delivered or sold to Cameron
Highway under the terms of this Purchase and Sale Agreement.

         "FERC" shall have the meaning ascribed to it in Article IX hereof.

         "FINANCIALLY CAPABLE ENTITY" shall have the meaning ascribed to it in
Article XXII.a.i.(C).

         "FIRM" shall mean not subject to interruption or curtailment except in
the event of Force Majeure or as provided in Article X.b hereof.

         "FORCE MAJEURE" shall have the meaning set forth in Article XXV.

         "FULLY OPERATIONAL" shall mean that the Cameron Highway pipeline
system, including all Delivery Point(s), is completed, active and operational
such that it is capable of receiving all Dedicated Production at the Receipt
Point(s) and delivering an equivalent volume of Crude Oil at the Delivery
Point(s).

         "GB 72" shall mean the existing platform owned by GTM located in Garden
Banks Block 72, Gulf of Mexico.

         "GTM" shall mean GulfTerra Energy Partners, L.P., successor to El Paso
Energy Partners, L.P.

         "HOLSTEIN" shall mean Green Canyon Blocks 644 and 645, Gulf of Mexico.

         "INITIAL DEDICATED LEASES" shall mean the leases underlying Atlantis
and Mad Dog.

         "INITIAL RECEIPT POINT" shall mean the Receipt Point between the Caesar
System and Cameron Highway on the Landing Platform, and specifically, the
downstream flange of the flow control valve located immediately downstream of
the LACT Unit.

         "INTERCONNECT AGREEMENT" shall mean that certain Offshore Facilities
Interconnection, Construction and Operating Agreement dated as of even date
herewith among CHOPS, Manta Ray, GTM and Caesar.

         "LANDING PLATFORM" shall mean either the SS 332 A Platform or the SS
332 B Platform as determined pursuant to Section 2.3 of the Interconnect
Agreement.

                                       4
<PAGE>

         "LACT UNIT" shall mean Lease Automated Custody Transfer Unit.

         "MAD DOG" shall mean Green Canyon Blocks 738, 739, 781, 782, 783, 825,
826 and 827, Gulf of Mexico.

         "MARDI GRAS" shall mean Mardi Gras Transportation System Inc., a
Delaware corporation.

         "MMBTU" shall mean one million (1,000,000) BTUs.

         "MOU" shall mean that certain Cameron Highway Memorandum of
Understanding between EPN and BHP effective February 11, 2002.

         "NON-SUBMITTING PARTY" shall have the meaning ascribed to such term in
Article XXVI.a.

         "OCSLA" shall mean the Outer Continental Shelf Lands Act (43 U.S.C.
Sections 1331 et seq.) as in effect on February 11, 2002, the effective date of
the MOU.

         "OPERATIONAL" shall mean that the Cameron Highway pipeline system is
active and operational such that it is capable of receiving all Dedicated
Production at the Receipt Point(s) and delivering an equivalent volume of Crude
Oil to one (1) or more of the Delivery Point(s).

         "PARTY OR PARTIES" shall have the meanings ascribed to such terms in
the preamble to this Purchase and Sale.

         "PORT ARTHUR LATERAL" shall mean the twenty-four inch (24") pipeline
segment from HI A-5 "C" to the Sun and Unocal Delivery Points.

         "POSEIDON" shall mean Poseidon Oil Pipeline Company, L.L.C., a Delaware
limited liability company.

         "POSEIDON PIPELINE" shall mean the crude oil pipeline system owned by
Poseidon that consists of (i) 117 miles of pipeline extending from the GB 72 to
SS 332, (ii) 122 miles of pipeline extending from SS 332 to Houma, Louisiana,
(iii) 32 miles of pipeline extending from Ewing Bank Block 873 to South
Timbalier Block 212, and (iv) 17 miles of pipeline extending from Garden Banks
Block 260 to South Marsh Island Block 205, as such pipeline system may be
modified or extended.

         "PSIG" shall mean pounds per square inch gauge.

         "RECEIPT POINT(S)" shall mean the point(s) including, without
limitation, the Initial Receipt Point, where CHOPS shall receive and purchase
Crude Oil from BHP.

         "REQUIRED COMMENCEMENT DATE" shall have the meaning ascribed to such
term in Article XI.c. hereof.

         "SS 332" shall mean either (i) a new platform to be located in Ship
Shoal Block 332, Gulf of Mexico and to be constructed, installed and owned by
CHOPS; or (ii) the existing platform owned by Atlantis Offshore, LLC located in
Ship Shoal Block 332, Gulf of Mexico, as determined pursuant to the Interconnect
Agreement.

         "SS 332 OWNER" shall mean CHOPS or Atlantis Offshore, LLC, as
applicable.

                                       5
<PAGE>

         "ST 301" shall mean the platform owned by Shell Offshore Inc. located
in South Timbalier Block 301, Gulf of Mexico.

         "SUBMITTING PARTY" shall have the meaning ascribed to such term in
Article XXVI.a. hereof.

         "TEXAS CITY LATERAL" shall mean the twenty-four inch (24") pipeline
segment from HI A-5 "C" to the Seaway and Amoco Oil Delivery Points.

         "TRANSACTION" shall have the meaning ascribed to such term in the
preamble to this Purchase and Sale Agreement.

         "UNOCAL" shall mean Union Oil Company of California.

                                   ARTICLE I.

                         CONSTRUCTION OF CAMERON HIGHWAY

         a.       CHOPS shall construct and install Cameron Highway, and shall
allow connection with the Caesar System as provided in the Interconnect
Agreement.

                                   ARTICLE II.

                             CHOPS PURCHASE FROM BHP

         a.       CHOPS agrees to receive and purchase, on a Firm basis, all
Dedicated Production delivered by BHP at the Receipt Point(s). If requested by
BHP, CHOPS shall receive and purchase Excess Production on an interruptible
basis to the extent capacity is available on Cameron Highway. Unless another
Receipt Point is mutually agreed to by the Parties, the BHP Production from the
Initial Dedicated Leases shall be received and purchased by CHOPS at the Initial
Receipt Point. BHP shall be responsible for costs to deliver its Crude Oil,
including BHP Production, to the Initial Receipt Point(s).

         b.       BHP shall have the right to add Receipt Point(s) in the future
at locations on Cameron Highway for the receipt of Crude Oil owned by BHP and
produced from leases other than the Initial Dedicated Leases, provided that BHP
bears the cost of connecting such leases to Cameron Highway and there is
available capacity on Cameron Highway.

                                  ARTICLE III.

                                CHOPS SALE TO BHP

         CHOPS shall sell and deliver to BHP, and BHP shall receive and purchase
from CHOPS, on a Firm basis, at the Delivery Point(s) and, as applicable, the
Additional Delivery Points, Crude Oil equivalent in volume to the volume
delivered by BHP to CHOPS at the Receipt Point(s) pursuant to Article II.
adjusted for pipeline loss or gain allowance as described in Article XIII. CHOPS
shall be responsible for the costs to deliver the Crude Oil from the Receipt
Point(s) to the Delivery Point(s) and, as applicable, Additional Delivery
Points.

                                       6
<PAGE>

                                   ARTICLE IV.

                            DEDICATION OF PRODUCTION

         a.       BHP hereby dedicates the Dedicated Production produced from
the Initial Dedicated Leases to Cameron Highway. Except as otherwise expressly
provided in this Purchase and Sale Agreement, such dedication shall be for the
commercial life of production from the Initial Dedicated Leases. BHP reserves
the rights and quantities of Dedicated Production sufficient to satisfy the
following: the right to deliver royalty oil in kind to lessors of the Dedicated
Leases; the right to process such Dedicated Production prior to delivery to
CHOPS by the use of such processes that normally occur on an offshore production
facility; the right to operate the Dedicated Leases free from any control by
CHOPS, including without limitation, the right (but not the obligation) to drill
new wells, to repair and rework old wells, to shut in wells, plug and abandon
wells and to relinquish any or all of the Dedicated Leases in whole or in part;
and the right to use such Dedicated Production for pipeline fill on Cameron
Highway and the Caesar System.

         b.       Except as otherwise expressly provided in this Purchase and
Sale Agreement, the foregoing dedication of the Initial Dedicated Leases by BHP
shall be an interest running with the land and shall be binding upon the
successors and assigns of BHP. The Parties agree to promptly execute and file a
memorandum of agreement and recordable agreement in the form of Exhibit "D",
together with all documents in the chain of title (including applicable leases
and assignments of interests) for the Dedicated Leases, with the MMS and in the
county and parish records of the appropriate jurisdictions.

         c.       Subject to available capacity on Cameron Highway, BHP shall
have the right to dedicate Crude Oil produced from other offshore leases it owns
an interest in to this Purchase and Sale Agreement. At BHP's request, such other
leases in which BHP owns an interest and dedicates to this Purchase and Sale
Agreement within a period of ten (10) years from the date of initial delivery by
CHOPS of Dedicated Production to a Delivery Point or Additional Delivery Point,
as applicable, hereunder shall receive the same terms and conditions, including
economic terms, applicable to the Initial Dedicated Leases. Such dedication
shall be for the commercial life of production from such Dedicated Leases. The
Parties agree that the rights granted to BHP under this Article IV.c. shall be
rights granted only to, and exercisable by, BHP (and not to permitted assignees
of BHP); provided, however, that to the extent Crude Oil from other offshore
leases is dedicated hereunder pursuant to the terms of this Article IV.c. prior
to a permitted assignment by BHP of an interest in such Dedicated Leases, then
following such permitted assignment, such Dedicated Production shall continue to
receive the same terms and conditions as were applicable to such Dedicated
Production prior to such assignment; provided, that such assignment is treated
in accordance with Article XXIV.

                                   ARTICLE V.

                         WARRANTY OF TITLE TO CRUDE OIL

         a.       BHP hereby represents and warrants that, it has good and
marketable title to or the right and authority to deliver to CHOPS, all Crude
Oil to be delivered to CHOPS at the Point(s) of Receipt hereunder. BHP
represents and warrants that all such Crude Oil delivered by BHP hereunder shall
be free and clear of all liens, encumbrances and claims

                                       7
<PAGE>

whatsoever and AGREES TO RELEASE, PROTECT, DEFEND, INDEMNIFY AND HOLD HARMLESS
CHOPS, its affiliates, and their officers, directors, employees, agents and
representatives against all losses incurred by such party on account of any such
liens, encumbrances and claims. BHP hereby represents and warrants that, as of
the date this Purchase and Sale Agreement is executed, BHP owns the applicable
working interest share in each of the Dedicated Leases as listed on Exhibit "A"
hereof.

         b.       CHOPS represents and warrants that it has the right and
authority to deliver to BHP at the Delivery Point(s) and Additional Delivery
Points, all Crude Oil delivered to BHP hereunder. CHOPS represents and warrants
that all such Crude Oil from the time of receipt to the time of delivery by
CHOPS shall be free and clear of all liens, encumbrances and claims whatsoever
and AGREES TO RELEASE, PROTECT, DEFEND, INDEMNIFY AND HOLD HARMLESS BHP, its
affiliates and their respective officers, directors, employees, agents and
representatives against all losses incurred by such party on account of any such
liens, encumbrances and claims.

                                   ARTICLE VI.

                            MAXIMUM DAILY QUANTITIES

         a.       As early as reasonably practicable in order to provide CHOPS
reasonable time to contract available space on Cameron Highway with third
parties and affiliated exploration and production companies, but in no event
later than five (5) Days prior to the first Day of each calendar month, BHP
shall give CHOPS written notice of the BHP MDQ for the succeeding month, which
shall equal one of the following BHP MDQ levels:

i)         Level 1          -       100,000 BOPD

ii)        Level 2          -         95,000 BOPD

iii)       Level 3          -         90,000 BOPD

iv)        Level 4          -         85,000 BOPD

v)         Level 5          -         80,000 BOPD

vi)        Level 6          -         75,000 BOPD, or

vii)       Level 7          -         70,000 BOPD

         Such minimum five (5) Day notice period may be changed with the
agreement of BHP and CHOPS based on safety or environmental concerns or the
final Cameron Highway nomination deadline.

         b.       If on any Day, BHP does not deliver Dedicated Production to
Cameron Highway equal to the applicable BHP MDQ selected by BHP pursuant to
Article VI.a. above, CHOPS shall have the right to utilize such unused capacity
on a fully interruptible basis.

         c.       Dedicated Production delivered to the Receipt Point(s) by BHP
that is produced from Dedicated Leases other than the Initial Dedicated Leases
shall be credited against the applicable BHP MDQ so long as deliveries by BHP
have not exceeded the applicable BHP MDQ at the time such additional Dedicated
Production is delivered to the Receipt Point(s) and there is BHP MDQ capacity
available because BHP does not have the production available from the Initial
Dedicated leases to fulfill its BHP MDQ obligations.

                                       8
<PAGE>

         d.       BHP shall have the right to deliver Crude Oil that has not
been dedicated to this Purchase and Sale Agreement to the Receipt Point(s), and
if capacity is available, BHP shall have the right to require CHOPS to enter
into an interruptible purchase and sale arrangement for such Crude Oil with
differentials no greater than those contained in Article XII. The right to
deliver Crude Oil that has not been dedicated to this Purchase and Sale
Agreement and receive differentials no greater than those contained in Article
XII. shall be a right granted only to, and exercisable by, BHP (and not to
permitted assignees of BHP); provided, however, that to the extent an
interruptible purchase and sale arrangement for such Crude Oil is entered into
pursuant to this Article VI.d. prior to a permitted assignment by BHP of an
interest in such Crude Oil, then following such permitted assignment, such Crude
Oil shall continue to receive the same differentials under such interruptible
purchase and sale arrangement as were applicable to such interruptible purchase
and sale arrangement prior to such assignment; provided, that such assignment is
treated in accordance with Article XXIV.

         e.       Except as provided in Article VIII. of this Purchase and Sale
Agreement, CHOPS shall not enter into any firm purchase and sale arrangements if
such arrangements would reasonably be expected by a reasonable and prudent
operator to jeopardize the ability of such operator to accept and purchase, on a
Firm basis, the volume of Crude Oil equivalent to Level 1 of the BHP MDQ levels
set forth in Article VI.a. above, at the Receipt Point(s) from BHP hereunder.

         f.       At BHP's request, CHOPS shall provide BHP then current and
up-to-date information regarding the aggregate contracted firm and interruptible
throughput of Cameron Highway, subject to confidentiality restrictions.

                                  ARTICLE VII.

                               INCREASE IN BHP MDQ

         a.       Notwithstanding anything to the contrary contained herein, at
BHP's request (to be accompanied by supporting data reasonably satisfactory to
CHOPS) and to the extent capacity is available on Cameron Highway, CHOPS shall
increase (i) Level 1 of the BHP MDQ Levels set forth in Article VI.a. above to
any amount less than or equal to 120,000 BOPD, and the remaining six (6) Levels
of the BHP MDQ Levels shall remain unchanged, and (ii) to the extent BHP
requests that Level 1 of the BHP MDQ Levels be increased in excess of 120,000
BOPD, all of the remaining six (6) Levels of the BHP MDQ Levels shall be
increased by the same amount that the increase in Level 1 exceeds 120,000 BOPD.
Upon such increase in the applicable Level(s) of the BHP MDQ Levels, CHOPS shall
be obligated to receive and purchase Dedicated Production at the Receipt
Point(s) at such increased Levels and sell and deliver the equivalent volume of
Crude Oil to BHP (as provided in Article III.a. above) at the Delivery Point(s)
and Additional Delivery Points, as applicable, all on a Firm basis as provided
in this Purchase and Sale Agreement. The terms related to an increase in BHP
MDQ, and the rights related thereto, shall be rights granted only to, and
exercisable by, BHP (and not to permitted assignees of BHP); provided, however,
that to the extent an increase in any BHP MDQ Level has occurred pursuant to
this Article VII.a. prior to a permitted assignment by BHP of an interest in the
Dedicated Leases and/or Dedicated Production, such increase in BHP MDQ Level(s)
shall continue in effect following such

                                       9
<PAGE>

permitted assignment provided that such assignment and the allocation of such
MDQ amounts are treated in accordance with Article XXIV.

         b.       In addition, subject to Article VII.c. below, it is agreed by
BHP and CHOPS that in the event BHP has delivered Crude Oil equivalent to the
applicable BHP MDQ and wishes to deliver Dedicated Production from Dedicated
Leases other than the Initial Dedicated Leases, then upon the dedication of such
other Dedicated Leases, CHOPS shall increase Level 1 of the BHP MDQ Levels set
forth in Article VI.a. in order to accommodate such additional Dedicated
Production; provided, that in no event shall Level 1 exceed 120,000 BOPD unless
the remaining six (6) Levels of the BHP MDQ Levels are increased by the same
volume as the amount Level 1 was increased in excess of 120,000 BOPD.

         c.       In the event capacity on Cameron Highway is not available for
CHOPS to receive and purchase Crude Oil at such increased BHP MDQ Levels as
requested by BHP in Article VII.a. and Article VII.b. above, CHOPS shall not
unreasonably refuse to expand Cameron Highway to accommodate such additional
volumes of Dedicated Production, provided such expansion is commercially
reasonable and economically viable for Cameron Highway in CHOPS' sole
discretion. CHOPS shall demonstrate such non-viability of such expansion to BHP
if CHOPS determines that such expansion of Cameron Highway is not commercially
reasonable and/or economically viable for Cameron Highway. In such event, CHOPS
and BHP shall use good faith efforts to jointly develop a transaction that is
commercially reasonable and economically viable for Cameron Highway and BHP.

                                  ARTICLE VIII.

                              REDUCTION IN BHP MDQ

         a.       In the event there has not been an increase, in accordance
with Article VII. above, in Level 1 of the BHP MDQ Levels resulting in Level 1
being greater than 100,000 BOPD, CHOPS shall have the right to request that BHP
reduce, temporarily or permanently, all seven (7) Levels of the BHP MDQ Levels
set forth in Article VI.a. above so long as each of the conditions precedent
contained in Article VIII.a. below have been satisfied:

                  i.       Conditions Precedent:

                           (A)      Forty-eight (48) calendar months must have
                  elapsed since the date of the first receipts and purchase of
                  Dedicated Production from BHP by CHOPS on Cameron Highway;

                           (B)      Except for reasons of Force Majeure or the
                  failure of CHOPS for any reason to receive and purchase all
                  volumes of Crude Oil delivered by BHP at the Receipt Point(s),
                  BHP has not utilized a minimum of 85% of Level 1 of the BHP
                  MDQ Levels for at least nine (9) of the immediately preceding
                  twelve (12) calendar months;

                           (C)      CHOPS can demonstrate to the reasonable
                  satisfaction of BHP that CHOPS has received a bona fide
                  request from any party, for a firm purchase and sale
                  arrangement on Cameron Highway and such request includes a
                  life of lease dedication by such party with respect to all
                  leases from which Crude Oil subject to such arrangement will
                  be produced (a "BONA FIDE REQUEST");

                           (D)      BHP is unable to demonstrate to CHOPS (with
                  data that reasonably supports such contention) that BHP has or
                  will have the ability to consistently deliver to the Receipt
                  Point(s) Crude Oil equivalent to Level 1 of the BHP MDQ Levels
                  set forth in Article VI.a. above during the immediately

                                       10
<PAGE>

                  following twelve (12) month period taking into consideration
                  (i) the then current level of Dedicated Production actually
                  being produced from the Dedicated Leases, and (ii) any volumes
                  of Crude Oil that will become Dedicated Production that BHP
                  reasonably anticipates will be produced from the Dedicated
                  Leases or from leases that BHP reasonably anticipates to
                  develop and dedicate to this Purchase and Sale Agreement (as
                  provided in Article VI.), within the immediately following
                  twelve (12) months; provided that BHP reasonably believes the
                  field will be developed; and

                           (E)      CHOPS has demonstrated to the reasonable
                  satisfaction of BHP that CHOPS has diligently and in good
                  faith requested reductions in maximum daily quantities, on a
                  pro rata basis, from all other parties with firm purchase and
                  sale arrangements on Cameron Highway that are not utilizing
                  their MDQ, and (b) CHOPS still cannot fulfill the Bona Fide
                  Request.

                  ii.      If each of the conditions precedent contained in
         Article VIII.a.i. above have been satisfied, each of the seven (7)
         Levels shall be reduced by an amount equal to the minimum amount
         required to fulfill such Bona Fide Request; provided, that in no event
         shall the reduction in Level 1 of the BHP MDQ Levels reduce such Level
         1 lower than 110% of the sum of (x) the then current amount of
         Dedicated Production being produced, plus (y) any additional Crude Oil
         that will become Dedicated Production that BHP reasonably anticipates
         will be produced from the Dedicated Leases or, from leases that BHP
         reasonably anticipates it will dedicate in the future to the Purchase
         and Sale Agreement as provided in Article IV. in the immediately
         following twelve (12) month period. CHOPS shall demonstrate to the
         reasonable satisfaction of BHP that the reduction in the seven (7) BHP
         MDQ Levels satisfies this Article VIII.a. The differentials set forth
         in Article XII.a. for the BHP MDQ Levels shall remain applicable
         following any reduction in such levels as provided in this Article
         VIII.a.

         b.       In the event there has been an increase, in accordance with
Article VII. above, in Level 1 of the BHP MDQ Levels resulting in Level 1 being
greater than 100,000 BOPD, CHOPS shall have the right to request that BHP
reduce, temporarily or permanently, Level 1 of the BHP MDQ Levels so long as
CHOPS can demonstrate to the reasonable satisfaction of BHP that CHOPS has
received a bona fide request from any party for a firm purchase and sale
arrangement on Cameron Highway. If CHOPS has received such a bona fide request,
and CHOPS requests that BHP reduce Level 1 of the BHP MDQ Levels, BHP shall
elect to either (i) reduce Level 1 of the BHP MDQ Levels by an amount equal to
the lesser of (x) the amount required to fulfill such request or (y) the amount
of the then current Level 1 that is in excess of 100,000 BOPD , or (ii) maintain
the then current amount of Level 1 of the BHP MDQ Levels and increase each of
Levels 2 through 7 by an amount equal to the amount of Barrels that were
required to fulfill such request. The differentials set forth in Article XII.a.
for Levels 1 through 7 of the BHP MDQ Levels shall remain applicable following
any reduction in such Level(s) as provided in this Article VIII.b.

         c.       In the event there has been an increase, in accordance with
Article VII. above, in Level 1 of the BHP MDQ Levels resulting in Level 1 being
greater than 100,000 BOPD, CHOPS shall have the right to request that BHP
reduce, temporarily, Level 1 of the BHP MDQ Levels so long as CHOPS can
demonstrate to the reasonable satisfaction of BHP that CHOPS has received a bona
fide request from any party for an interruptible purchase and sale arrangement
not to exceed three (3) calendar months on Cameron Highway. If CHOPS has
received such a request, and CHOPS requests that BHP reduce Level 1 of the BHP
MDQ Levels, BHP shall elect to either (i) reduce Level 1 of the BHP MDQ Levels
for such interruptible arrangement period (not to exceed three (3) calendar
months) by an amount equal to the lesser of (x) the amount required to fulfill
such request or (y) the amount of the then current Level 1 that is in excess of
100,000 BOPD, or (ii) maintain the then current

                                       11
<PAGE>

amount of Level 1 of the BHP MDQ Levels and, for the duration of the proposed
interruptible arrangement period (not to exceed three (3) calendar months)
increase Levels 2 through 7 by an amount equal to the amount of Barrels that
were required to fulfill such request. The differentials set forth in Article
XII.a. for Levels 1 through 7 of the BHP MDQ Levels shall remain applicable
following any reduction in such Level(s) as provided in this Article VIII.c. At
the end of such interruptible arrangement period (not to exceed three (3)
calendar months), all Levels of the BHP MDQ Levels shall automatically revert to
their respective volumetric levels effective on the date immediately preceding
such reduction.

         d.       With respect to all potential reductions in the BHP MDQ Levels
described in this Article VIII., in the event CHOPS has not entered into a
valid, binding and effective firm or interruptible, as the case may be, purchase
and sale arrangement with such requesting party effectuating the request within
sixty (60) Days of the effective date of the reduction of the applicable BHP MDQ
Level(s), then all such BHP MDQ Levels will automatically revert to their
respective volumetric levels effective on the date immediately preceding such
reduction.

                                   ARTICLE IX.

                        CAMERON HIGHWAY REGULATORY STATUS

         Regardless of the ultimate regulatory status of Cameron Highway,
subject to the terms contained in this Purchase and Sale Agreement, CHOPS shall
construct and install Cameron Highway. If CHOPS is unable for any reason to
establish and maintain the Cameron Highway system as a private pipeline system,
the Parties agree that in lieu of this Purchase and Sale Agreement, they shall
enter into a form of agreement under which CHOPS shall effectuate receipt at the
Receipt Point(s) and delivery to the Delivery Points and Additional Delivery
Points of (i) Dedicated Production, subject to applicable law, on a Firm basis,
and (ii) Excess Production and other non-dedicated Crude Oil, on an
interruptible basis, as provided in this Purchase and Sale Agreement, attempting
to preserve as many of the terms and conditions contained in this Purchase and
Sale Agreement as possible, and on the same economic basis for BHP and CHOPS as
agreed to in this Purchase and Sale Agreement. Without limiting the terms of the
foregoing sentence, the Parties further agree that to the extent the Federal
Energy Regulatory Commission ("FERC") requires a pro rata allocation of firm
capacity on Cameron Highway under the OCSLA, the terms of Articles XI.a.ii. and
XI.d. shall apply. BHP agrees that it will not support, or take any action, or
commence or participate in support of any proceeding before any court or
governmental authority, seeking (i) pro rata allocation of firm capacity on
Cameron Highway pursuant to, without limitation, the OCSLA, (ii) to have Cameron
Highway determined to be subject to the jurisdiction of any governmental
authority, or (iii) to challenge the lawfulness or reasonableness of any of the
fee differentials or other rates contained herein.

                                   ARTICLE X.

                    CURTAILMENT PRIORITIES ON CAMERON HIGHWAY

         a.       CHOPS shall not oversubscribe the capacity on Cameron Highway
so that firm purchase and sale arrangements would reasonably be expected by a
reasonable and prudent operator to be curtailed. However, if it becomes
necessary to curtail Crude Oil on Cameron Highway, as provided in this Purchase
and Sale Agreement, CHOPS shall curtail in the following order: (i) all
interruptible Crude Oil arrangements shall be curtailed on a pro rata basis and
completely curtailed if necessary to fulfill all firm purchase and sale
arrangements, and (ii) after all interruptible Crude Oil arrangements are
curtailed as

                                       12
<PAGE>

provided in (i) above if it is apparent that such curtailment is not sufficient
to enable CHOPS to fulfill all firm purchase and sale arrangements, such Crude
Oil subject to firm purchase and sale arrangements shall be curtailed pro rata
based on the then effective maximum daily quantities of all valid firm purchase
and sale arrangements. CHOPS shall use commercially reasonable efforts to
minimize the time period of any curtailments of Dedicated Production.

         b.       The Parties agree that CHOPS may temporarily curtail purchases
of Dedicated Production due to routine operations and maintenance on Cameron
Highway; provided that, CHOPS shall exercise reasonable diligence to schedule
routine operations and maintenance so as to as nearly as possible avoid service
interruptions and shall not schedule such operations during periods of peak
demand. To the extent known by CHOPS, CHOPS shall notify BHP in writing of the
routine operations and maintenance projects that CHOPS has planned for each
upcoming year, and shall immediately notify BHP of any unplanned routine
operations and maintenance projects.

         c.       To the extent that nominations for Crude Oil on either the
Port Arthur Lateral or the Texas City Lateral exceed the capacity on such
lateral, CHOPS shall curtail Crude Oil on such affected lateral in the following
order: (i) all interruptible Crude Oil arrangements on such lateral shall be
curtailed on a pro rata basis, and completely curtailed if necessary to fulfill
all firm purchase and sale arrangements on such lateral, and (ii) after all
interruptible Crude Oil arrangements on such lateral are curtailed as is
provided in subsection (i) of this Article X.c. ,if it is apparent that such
curtailment is not sufficient to enable CHOPS to fulfill all firm purchase and
sale arrangements on such lateral, such Crude Oil subject to firm purchase and
sale arrangements on such lateral shall be curtailed pro rata based on the then
effective maximum daily quantities of all valid firm purchase and sale
arrangements on such lateral. In the event of such a curtailment, the curtailed
volumes will be nominated for redelivery via the other lateral subject to
available capacity. Further, if such allocation of capacity continues for a
period of one hundred eighty (180) consecutive Days, then within the following
sixty (60) Days, CHOPS shall initiate a plan to expand the capacity of either
the Port Arthur Lateral or the Texas City Lateral; provided, that such expansion
is commercially reasonable and economically viable for Cameron Highway in CHOPS'
sole reasonable discretion. Such plan shall be implemented within one hundred
eighty (180) Days after the expiration of the sixty (60) Day period referenced
above.

                                   ARTICLE XI.

                         RELEASE OF DEDICATED PRODUCTION

         a.       Certain quantities of Dedicated Production shall be
temporarily released from dedication under this Purchase and Sale Agreement in
accordance with the following:

                  i.       In the event the Cameron Highway Completion Date has
         not occurred by the commencement of production from one or more of the
         Dedicated Leases, then the quantities of Dedicated Production that
         CHOPS is unable to receive and purchase shall be temporarily released;

                  ii.      If at any time during the terms of this Purchase and
         Sale Agreement, (x) the FERC requires a pro rata allocation of firm
         capacity on Cameron Highway under the OCSLA, or (y) CHOPS curtails
         Crude Oil on Cameron Highway as a direct

                                       13
<PAGE>

         response to a claim or threatened claim of any party under the OCSLA;
         then the Parties agree that to the extent such pro rata allocation
         results in CHOPS not being able to receive and purchase all of the
         Dedicated Production delivered by BHP at the Receipt Point(s) and sell
         and deliver an equivalent volume of Crude Oil at the Delivery Point(s)
         and Additional Delivery Points, then quantities of Dedicated Production
         that CHOPS is unable to receive and purchase shall be temporarily
         released; and

                  iii.     In the event that BHP at any time attempts to deliver
         to Cameron Highway any quantity of the Dedicated Production, and, other
         than for reasons described in Articles XI.a.i. and XI.a.ii. above or a
         breach by BHP of this Purchase and Sale Agreement, CHOPS fails to
         receive and purchase from BHP all of such quantity, then the quantity
         of Dedicated Production that CHOPS is unable to receive and purchase
         shall be temporarily released.

         b.       Each of the following shall apply to any temporary release of
Dedicated Production pursuant to Article XI.a. above:

                  i.       Except as otherwise provided in this Article XI., BHP
         shall have no obligations under this Purchase and Sale Agreement with
         respect to such temporarily released quantities of Dedicated Production
         during the applicable temporary release period described in Article
         XI.b.iv. below.

                  ii.      BHP shall have the right to deliver and/or sell such
         temporarily released quantities of Dedicated Production to any other
         Crude Oil pipelines without penalty hereunder and with no liability to
         CHOPS except as expressly provided in the following Article XI.b.iii.;
         provided that CHOPS shall be under no obligation to expend any funds to
         facilitate such deliveries to other Crude Oil pipelines.

                  iii.     Except as set forth in the immediately following
         sentence, Article XI.g. below shall not apply to such temporarily
         released quantities of Dedicated Production, and in no event shall BHP
         be obligated to compensate CHOPS for any such temporarily released
         quantities of Dedicated Production delivered to alternative pipelines.
         However, notwithstanding the foregoing, to the extent any quantity of
         Dedicated Production is temporarily released pursuant to the terms of
         Article XI.a.iii. above for reasons of the failure of the Dedicated
         Production to meet the quality specifications contained in Exhibit "E",
         and BHP diverts all or part of such temporarily released quantity to
         another pipeline, then such temporarily released and diverted quantity
         of Dedicated Production shall be treated as if BHP, in its sole
         discretion, elected to divert such quantity of Dedicated Production to
         the other pipeline(s) pursuant to the terms of Article XI.g., and in
         such case, BHP shall pay CHOPS the differential described in Article
         XI.g.

                  iv.      (x) In the event of a temporary release of Dedicated
         Production pursuant to Articles XI.a.i. or XI.a.ii, CHOPS shall give
         BHP ten (10) Days prior written notice of the effective date on which
         CHOPS is able to receive and purchase any portion of the temporarily
         released volumes of Dedicated Production tendered by BHP at the Receipt
         Point(s) and sell and deliver an equivalent volume of Crude Oil at the
         Delivery Point(s) and Additional Delivery Points. Upon receipt of such
         notice by BHP, such temporary release shall continue no longer than the
         remainder of the calendar month in which BHP receives such written
         notice and the succeeding calendar month. BHP shall commence deliveries
         to Cameron Highway of all volumes of Dedicated Production that were
         previously released, that CHOPS is then able to

                                       14
<PAGE>

         receive and purchase immediately upon the termination of the period
         described in the immediately preceding sentence.

                           (y)      (A) In the event of temporary release of
                  Dedicated Production pursuant to Article XI.a.iii., if such
                  temporary release has been in effect for fewer that twenty
                  (20) consecutive Days, CHOPS shall give BHP forty-eight (48)
                  hours prior written notice of the effective date on which
                  CHOPS is able to receive and purchase any portion of the
                  temporarily released volumes of Dedicated Production tendered
                  by BHP at the Receipt Point(s) and sell and deliver an
                  equivalent volume of Crude Oil at the Delivery Point(s) and
                  Additional Delivery Points. Upon receipt of such notice by
                  BHP, such temporary release shall continue no longer than
                  forty-eight (48) hours following such notice. BHP shall
                  commence deliveries to Cameron Highway of all volumes of
                  Dedicated Production that were previously released, that CHOPS
                  is then able to receive and purchase, immediately upon the
                  termination of the period described in the immediately
                  preceding sentence.

                           (B)      In the event of a temporary release of
                  Dedicated Production pursuant to Article Xi.a.iii., if such
                  temporary release has been in effect for twenty (20) or more
                  consecutive Days, the notice provisions and the timing of the
                  termination of the temporary release shall be in accordance
                  with Article XI.b.iv.x. above.

         c.       i. In the event the Cameron Highway Completion Date has not
occurred by 12:01 AM on August 15, 2004, as such date may be adjusted pursuant
to Article XI.h. below (the "Required Commencement Date"), with respect to
Dedicated Production temporarily released pursuant to Article XI.a.i. above,
subject to Article XI.f., then CHOPS shall pay BHP, as liquidated damages, $0.63
per Barrel for all such temporarily released quantities of Dedicated Production
delivered and/or sold by BHP to alternative Crude Oil pipelines during the
period commencing on the Required Commencement Date and extending until the
Cameron Highway Completion Date.

                  ii.      In the event the Cameron Highway Completion Date has
         not occurred by the Required Commencement Date, subject to Article
         XI.f., then CHOPS shall pay BHP, as liquidated damages, the following
         amounts per Barrel of Dedicated Production received and purchased by
         CHOPS at the Receipt Point(s) and redelivered to BHP hereunder during
         the period commencing on the Required Commencement Date and extending
         until the Cameron Highway Completion Date:

                           x.       $0.50 per Barrel to the extent that
                  deliveries of Dedicated Production to BHP can be made by CHOPS
                  at only one (1) of the Delivery Point(s),except to the extent
                  the one (1) Delivery Point is BP Products Texas City Refinery
                  ("BP Products Refinery") and BHP does not actually utilize the
                  BP Products Refinery Delivery Point, in which case such
                  damages amount shall be $0.63 per Barrel, or

                           y.       $0.35 per Barrel to the extent that
                  deliveries of Dedicated Production to BHP can be made by CHOPS
                  at only two (2) of the Delivery Point(s), except to the extent
                  that one (1) of the two (2) Delivery Point(s) is the BP
                  Products Refinery and BHP does not actually utilize the BP
                  Products

                                       15
<PAGE>

                  Refinery Delivery Point, in which case such damages amount
                  shall be $0.50 per Barrel, or

                           z.       $0.05 per Barrel to the extent that
                  deliveries of Dedicated Production to BHP can be made by CHOPS
                  at only three (3) of the Delivery Point(s), except to the
                  extent that two (2) of such Delivery Point(s) are located in
                  Port Arthur and one (1) of such Delivery Point(s) is the BP
                  Products Refinery and BHP does not actually utilize the BP
                  Products Refinery Delivery Point, in which case such damages
                  amount shall be $0.25 per Barrel.

         CHOPS shall not be obligated to pay liquidated damages to BHP for
temporarily released volumes of Dedicated Production that are delivered to
alternative Crude Oil pipelines by BHP prior to the Required Commencement Date.

         d.       With respect to Dedicated Production temporarily released
pursuant to Article XI.a.ii. above, subject to Article XI.f., CHOPS shall pay
BHP, as liquidated damages, (i) to the extent the then applicable BHP MDQ Level
is equal to or less than 100,000 BOPD, $0.63 per Barrel for all such temporarily
released quantities of Dedicated Production delivered and/or sold by BHP to
alternative Crude Oil pipelines, and (ii) to the extent the then applicable BHP
MDQ Level is greater than 100,000 BOPD, (x) $0.63 per Barrel for any such
temporarily released quantities that are within the first 100,000 BOPD of
Dedicated Production produced on such Day that are delivered and/or sold by BHP
to alternative Crude Oil pipelines, or (y) no amount of liquidated damages for
any such temporarily released quantities that are in excess of the first 100,000
BOPD of Dedicated Production produced on such Day that are delivered and/or sold
by BHP to alternative Crude Oil pipelines.

         e.       With respect to Dedicated Production temporarily released
pursuant to Article XI.a.iii. above, CHOPS shall not be liable to, or obligated
to pay, BHP any amounts with respect to such temporarily released quantities.

         f.       Notwithstanding the terms of Articles XI.c. and XI.d., (i)
without limiting subsection (ii) below, if BHP has not commenced deliveries of
Dedicated Production from the Mad Dog field to the Receipt Point(s) on or before
August 15, 2004, then beginning August 15, 2004 and continuing until such date
that deliveries of Dedicated Production from the Mad Dog field are received and
purchased by CHOPS at the Receipt Point(s), CHOPS shall not be liable to or
obligated to pay, BHP any amounts of liquidated damages described in Articles
XI.c. and XI.d., and (ii) without limiting subsection (i) above, if BHP has not
commenced deliveries of Dedicated Production from the Atlantis field to the
Receipt Point(s) on or before January 15, 2005, then beginning January 15, 2005
and continuing until such date that deliveries of Dedicated Production from the
Atlantis field are received and purchased by CHOPS at the Receipt Point(s),
CHOPS shall not be liable to, or obligated to pay, BHP any amounts of liquidated
damages described in Articles XI.c. and XI.d. The rights to receive liquidated
damages and other payments from CHOPS as described in this Article XI. shall be
rights granted only to, and exercisable by, BHP (and not to permitted assignees
of BHP ); provided, however, that the rights to have Dedicated Production
temporarily released shall be rights exercisable by BHP and its permitted
assignees. Notwithstanding anything to the contrary contained herein, the rights
to have Dedicated Production temporarily released, to receive liquidated damages
and other payments, and to receive the other rights expressly granted in this
Article XI., shall be the sole and exclusive

                                       16
<PAGE>

remedies (whether under contract or at law or equity) of BHP with respect to any
temporary release of Dedicated Production or related event.

         g.       BHP, in its sole discretion, shall have the right to divert
all or part of the Dedicated Production to other pipelines in lieu of delivery
to Cameron Highway as provided in this Article XI.g. In such case, and except as
expressly provided otherwise in this Purchase and Sale Agreement, BHP shall pay
CHOPS the differential that corresponds to the applicable BHP MDQ Level for such
diverted volumes of Dedicated Production.

         Notwithstanding anything to the contrary contained in this Purchase and
Sale Agreement, this Article XI.g. shall not apply to (a) Excess Production or
(b) except as provided in Article XI.b.iii., temporarily released Dedicated
Production as provided in Article XI.a. above. BHP is not obligated in any way
to deliver or sell Excess Production to Cameron Highway. Such Excess Production
may be delivered by BHP to any Crude Oil pipeline at BHP's sole discretion with
no restriction or penalty.

         h.       With respect to the term "Required Commencement Date," as such
term is used throughout this Purchase and Sale Agreement, the Parties agree that
the designated date of August 15, 2004, shall automatically be revised as
follows; (i) such date shall be delayed on a Day for Day basis with the duration
of any Force Majeure event(s) in excess of the first ninety (90) Days of Force
Majeure event(s) occurring during the construction phase of Cameron Highway and
(ii) such date shall be delayed until production actually commences from the
first of the Initial Dedicated Leases. In the event of anticipated delays in the
date of first production from the Initial Dedicated Leases which would
reasonably be expected to extend the Required Commencement Date, BHP shall
promptly notify CHOPS in writing of such anticipated delays and shall provide a
revised Required Commencement Date. For purposes of the Purchase and Sale
Agreement, the Required Commencement Date shall be deemed to be such revised
date, as further revised by the foregoing terms of this Article XI.h.

         i.       After the Cameron Highway Completion Date, in the event that
CHOPS fails to receive and purchase from BHP all of the tendered Dedicated
Production for more than ninety (90) consecutive or non-consecutive Days during
any rolling twelve month period, BHP may request in writing from CHOPS a
prospective permanent release of up to the average daily quantities of Crude Oil
which were tendered by BHP, but not actually received and purchased by CHOPS
under this Article XI.i. ("Impacted Quantities"); provided, however, the
calculation of Days shall not include any Days during which any non-receipt of
Crude Oil by CHOPS is caused by force majeure, events described in Article
XI.a.ii., acts or omissions by BHP or CHOPS' inability to confirm BHP's
nominations with downstream pipelines for redelivery hereunder. CHOPS shall have
six (6) months from the date of receipt of BHP's release request (but eighteen
(18) months if additional platform or pumping facilities are required) to resume
the receipt and purchase of all Dedicated Production. To that end, within three
(3) months following BHP's release request, CHOPS shall review with BHP the
steps or actions CHOPS is taking, or proposes to take, to enable CHOPS to
receive the Impacted Quantities from BHP. Within thirty (30) Days after such
review, BHP shall notify CHOPS in writing if BHP reasonably believes CHOPS has
not commenced activities which could reasonably be expected to allow CHOPS to
receive such Impacted Quantities and BHP, therefore, elects to implement the
permanent release with respect to the Impacted Quantities. If at the end of the
six (6) month or eighteen (18) month period set

                                       17
<PAGE>

forth above, CHOPS has not resumed the receipt and purchase of all of the
Dedicated Production, CHOPS will, on a go-forward, permanent basis, release the
Impacted Quantities from this Purchase and Sale Agreement; provided, however,
that CHOPS shall have the right to extend such release date for an additional
three (3) months beyond the original six (6) month period or, with respect to
platform or pumping facilities, the original eighteen (18) month period if: (i)
CHOPS has made a significant economic commitment with respect to such curative
actions; and (ii) it is reasonable to believe that such actions will enable
CHOPS to receive and purchase such Impacted Quantities within three (3) months
following either the original six (6) month period or, with respect to platform
or pumping facilities, the original eighteen (18) month period; provided,
however, any Crude Oil temporarily released pursuant to Article XI.a.i. above
shall be excluded from any such calculation if such Crude Oil is accepted and
transported by an alternate pipeline. BHP's right to request and obtain a
permanent release of the Impacted Quantities from this Purchase and Sale
Agreement shall be BHP's sole and exclusive remedy for CHOPS' failure to receive
and purchase Crude Oil under this Article XI.i.

                                   ARTICLE XII

                           PRICE AND PRICE ADJUSTMENTS

         a.       For each Barrel of Crude Oil delivered to the Receipt
Point(s), (excluding pipeline loss allowance described in Article XIII below),
CHOPS shall pay BHP the Base Oil Price less a differential from the Receipt
Point(s) to the Delivery Point(s) and Additional Delivery Points per Barrel
based on the then applicable BHP MDQ Level selected by BHP pursuant to Article
VI.a above as set forth in the table below. During the term hereof, such
differentials shall not be escalated for any reason.

                                  DIFFERENTIAL

<TABLE>
<CAPTION>
                  BHP MDQ               VOLUME UP TO        VOLUME IN EXCESS
                   (BOPD)                 BHP MDQ              OF BHP MDQ
                  -------               ------------        ----------------
<S>               <C>                   <C>                 <C>
Level 1     -     100,000               $0.95/Barrel           $0.95/Barrel

Level 2     -      95,000               $0.98/Barrel           $0.95/Barrel

Level 3     -      90,000               $1.01/Barrel           $0.95/Barrel

Level 4     -      85,000               $1.06/Barrel           $0.95/Barrel

Level 5     -      80,000               $1.12/Barrel           $0.95/Barrel

Level 6     -      75,000               $1.18/Barrel           $0.95/Barrel

Level 7     -      70,000               $1.24/Barrel           $0.95/Barrel
</TABLE>

         b.       BHP shall pay CHOPS the Base Oil Price for each Barrel
delivered at the Delivery Point(s) and Additional Delivery Points. For pricing
purposes, all Crude Oil delivered hereunder shall be deemed to have been
delivered in equal daily quantities.

         c.       With respect to Article XII.a. and Article XII.b. above, BHP,
at any time and from time to time, shall have the right to change the Base Oil
Price to a Platt's indicator for southern Green Canyon crude for deliveries in
Texas. BHP shall give CHOPS sixty (60) Days

                                       18
<PAGE>

prior written notice of such change. In the event BHP elects to change the Base
Oil Price as provided in this Article XII.c., BHP and CHOPS shall settle any
existing purchase and sale imbalance at such time pursuant to Article XXI.
below.

         d.       Any Crude Oil owned by and delivered to the Receipt Point(s)
by BHP and purchased by CHOPS on an interruptible basis shall be subject to the
terms, conditions and fee differentials contained in this Purchase and Sale
Agreement applicable to Dedicated Production for a period of ten (10) years from
the date of initial delivery by CHOPS of Crude Oil to a Delivery Point or
Additional Delivery Point hereunder. The Parties agree that the rights granted
to BHP under this Article XII.d. shall be rights granted only to, and
exercisable by, BHP (and not to a permitted assignee of BHP.

         e.       During the term of this Purchase and Sale Agreement, in the
event CHOPS either enters into a purchase and sale arrangement providing for
firm maximum daily quantities with either BP or UNOCAL, as working interest
owners in the Holstein, Mad Dog and Atlantis fields, as applicable, or amends
such agreement so that purchase and sale differentials for firm quantities for
the Holstein, Mad Dog and/or Atlantis fields , as applicable, are lower than the
corresponding differentials set forth in Article XII.a. of this Purchase and
Sale Agreement, the differentials applicable to BHP under this Purchase and Sale
Agreement shall be decreased to such lowest differential received by BP and/or
UNOCAL, for firm quantities of Crude Oil delivered by BHP from the Mad Dog
and/or Atlantis fields, as applicable, for a term consistent with that term
applicable to BP and/or UNOCAL, as applicable, with respect to the lower
differential; provided, however, that the Parties understand and agree that BP,
BHP and UNOCAL each have different firm maximum daily quantity levels, and such
levels shall be permitted to remain different during the term of this Purchase
and Sale Agreement without triggering the terms of this provision. In the event
BHP and CHOPS enter into an alternative form of agreement as described in
Article IX of this Purchase and Sale Agreement, and during the term of such
agreement, either BP or UNOCAL, as working interest owners in the Holstein, Mad
Dog and/or Atlantis fields, as applicable, enter into an alternative form of
agreement or amend such agreement so that the BP and/or UNOCAL agreement
contains fees for firm quantities that are lower than the corresponding fees for
firm quantities in the agreement between BHP and CHOPS, the fees applicable to
BHP under this Purchase and Sale Agreement for firm quantities shall be
decreased to such lowest fee received by BP and/or UNOCAL, for firm quantities
of Crude Oil delivered by BHP from the Mad Dog and/or Atlantis fields, as
applicable, for a term consistent with that term applicable to BP and/or UNOCAL,
as applicable, with respect to the lower fee for either BP or UNOCAL, as
applicable. Notwithstanding anything to the contrary contained herein, the
Parties agree that this Article XII.e. shall only be triggered by an agreement
between CHOPS and either BP or UNOCAL, as working interest owners in the Mad
Dog, Atlantis and Holstein fields, as applicable, and not by a future agreement
between CHOPS and BHP. At the expense of BHP and upon thirty (30) Days prior
written notice to CHOPS, BHP shall have the right to review and audit CHOPS'
books, records, and accounts in order to verify the compliance of CHOPS with
this Article XII.e. The Parties agree that the rights granted to BHP under this
Article XII.e. shall be rights granted only to, and exercisable by, BHP (and not
to a permitted assignee of BHP).

                                  ARTICLE XIII.

                         PIPELINE LOSS OR GAIN ALLOWANCE

                                       19
<PAGE>

         The pipeline loss or gain allowance shall initially be a fixed
percentage of volumes at the Receipt Point(s) or Delivery Point(s) and
Additional Delivery Points and the accounting shall conform to standard industry
practices on similarly situated pipeline systems. The pipeline loss or gain
allowance shall be adjusted annually in order to conform to the previous year's
actual pipeline loss or gain but such pipeline loss or gain allowance shall not
exceed two-tenths (2/10) of one percent (1%) for any calendar year.

                                  ARTICLE XIV.

                              QUALITY AND PRESSURE

         a.       The quality specifications for Cameron Highway are attached to
this Term Sheet as Exhibit "E".

         b.       Except for reasons of Force Majeure, the maximum pressure to
be provided by CHOPS at the Initial Receipt Point shall be no greater than 150
PSIG. BHP may, but is under no obligation to, deliver Crude Oil at pressures up
to 1950 PSIG.

                                   ARTICLE XV.

                                  QUALITY BANK

         a.       In order to compensate for variations in the quality of Crude
Oil delivered by BHP and other parties at the Receipt Point(s) and that
delivered by CHOPS at the Delivery Point(s) and Additional Delivery Points, a
market-based quality bank shall be established on Cameron Highway pursuant to
the guidelines set forth in Exhibit "C" attached hereto. The quality bank will
be developed by CHOPS and all interested parties who have entered into purchase
and sale arrangements with CHOPS on Cameron Highway that are effective upon the
Cameron Highway Completion Date. Any change to the quality bank shall require
the agreement of the sellers of at least seventy percent (70%) of the Crude Oil
sold to CHOPS at the Receipt Point(s) for the previous four (4) Contract
Quarter(s), and are still selling oil under a purchase and sale arrangement.

         b.       CHOPS, or its designee, shall be responsible for the
implementation and administration of the Cameron Highway quality bank. The
initial quality bank and any changes approved pursuant to Article XV.a. of this
Purchase and Sale Agreement shall be accepted and implemented by CHOPS, provided
that all quality bank terms satisfy the intent stated in such Article XV.a.

                                  ARTICLE XVI.

         RESPONSIBILITY, LIABILITY, POSSESSION AND CONTROL OF CRUDE OIL

         a.       As between BHP and CHOPS, (a) BHP shall control and possess
the Crude Oil delivered hereunder at all times prior to delivery to CHOPS at the
Receipt Point(s) and after delivery by CHOPS at the Delivery Point(s) and
Additional Delivery Points; and (b) CHOPS shall control and possess the Crude
Oil at all times after delivery by BHP at the Receipt Point(s) and until
delivery by CHOPS at the Delivery Point(s) and Additional Delivery Points.

         b.       The Party in control and possession of the Crude Oil shall be
responsible for, pay for and defend, protect, indemnify, release, and hold the
other Parties harmless from and against any and all losses, claims, damages and
expenses (including reasonable attorney's fees) caused thereby and occurring
while the Crude Oil is in, the possession and

                                       20
<PAGE>

control of such Party, including loss of Crude Oil, regardless of the
indemnified party's negligence (and regardless of whether such negligence is
sole, joint, concurrent, active or passive negligence), fault or liability
without fault; provided, however, that BHP shall be responsible and pay for, and
RELEASE, DEFEND AND INDEMNIFY the CHOPS Group from any and all losses directly
caused by or directly resulting from the failure of Crude Oil delivered
hereunder by BHP to CHOPS to meet the quality specifications set forth in
Article XIV of this Purchase and Sale Agreement. CHOPS' purchase and sale
agreements with other customers on Cameron Highway will contain provisions
substantially similar to this provision.

         c.       CHOPS SHALL BE RESPONSIBLE FOR AND SHALL DEFEND, PROTECT,
INDEMNIFY, RELEASE AND HOLD HARMLESS THE BHP GROUP FROM AND AGAINST ALL LOSS,
DAMAGES, CLAIMS, DEMANDS AND ACTIONS AND RELATED EXPENSES, INCLUDING REASONABLE
ATTORNEY'S FEES, ARISING FROM ACTS OR OMISSIONS OF THE CHOPS GROUP RELATING TO
THE OWNERSHIP AND OPERATION OF CHOPS' FACILITIES (INCLUDING WITHOUT LIMITATION
CAMERON HIGHWAY), REGARDLESS OF THE INDEMNIFIED PARTY'S NEGLIGENCE (AND
REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE, JOINT, CONCURRENT, ACTIVE OR
PASSIVE NEGLIGENCE), FAULT OR LIABILITY WITHOUT FAULT ON THE PART OF THE BHP
GROUP, EXCEPT TO THE EXTENT THAT ANY SUCH LOSS RESULTS FROM THE GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT OF THE INDEMNIFIED PARTY.

         d.       NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, NO PARTY TO
THE PURCHASE AND SALE AGREEMENT SHALL BE LIABLE TO THE OTHER PARTY HERETO FOR
SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES SUFFERED BY SUCH
PARTY RESULTING FROM OR ARISING OUT OF THE PURCHASE AND SALE AGREEMENT,
INCLUDING WITHOUT LIMITATION, LOSS OF USE, INCREASED COST OF OPERATIONS, LOSS OF
PROFIT OR REVENUE OR BUSINESS INTERRUPTIONS. IN FURTHERANCE OF THE FOREGOING,
EACH PARTY RELEASES THE OTHER PARTIES AND WAIVES ANY RIGHT OF RECOVERY FOR
SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES SUFFERED BY SUCH
PARTY REGARDLESS OF WHETHER ANY SUCH DAMAGES ARE CAUSED BY THE OTHER PARTY'S
NEGLIGENCE (AND REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE, JOINT,
CONCURRENT, ACTIVE, PASSIVE OR GROSS NEGLIGENCE), FAULT OR LIABILITY WITHOUT
FAULT.

         e.       NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, BHP AGREES TO
BE SOLELY RESPONSIBLE AND LIABLE FOR, AND RELEASE AND INDEMNIFY THE CHOPS GROUP
WITH RESPECT TO, ANY LOSSES RELATING TO THE DELAY OF PRODUCTION OR ANY DAMAGE TO
THE DEDICATED LEASES OR LOSS OF ANY RELATED RESERVES NOT PREVIOUSLY DELIVERED TO
THE CAMERON HIGHWAY RESULTING FROM ANY ACTS OR OMISSIONS BY CHOPS IN CONNECTION
WITH OR OTHERWISE RELATED TO THIS PURCHASE AND SALE AGREEMENT.

         f.       ALL INDEMNITIES UNDER THIS AGREEMENT (a) SHALL BE SUPPORTED
[BUT NOT LIMITED] BY AVAILABLE LIABILITY (OR OTHER APPROPRIATE) INSURANCE TO BE
CARRIED BY OR ON BEHALF OF THE INDEMNIFYING PARTY AT ITS SOLE COST AND EXPENSE
AND WHICH THE PARTIES AGREE SHALL HAVE BEEN OBTAINED BY OR ON BEHALF OF THE
INDEMNIFYING PARTY FOR THE BENEFIT OF THE OTHER PARTY AS

                                       21
<PAGE>

INDEMNITEE; AND (b) SHALL SURVIVE AND NOT BE AFFECTED BY TERMINATION OF THIS
AGREEMENT OR COMPLETION OF THE PURCHASE AND SALE ARRANGEMENT PROVIDED HEREUNDER.
IF IT IS JUDICIALLY DETERMINED THAT INSURANCE REQUIRED HEREUNDER OR THE
INDEMNITIES OR RELEASES ASSUMED UNDER THIS AGREEMENT EXCEED THE MAXIMUM MONETARY
LIMITS OR SCOPE PERMITTED UNDER APPLICABLE LAW, IT IS AGREED THAT SAID INSURANCE
REQUIREMENTS OR INDEMNITIES OR RELEASES SHALL AUTOMATICALLY BE AMENDED TO
CONFORM TO THE MAXIMUM MONETARY LIMITS OR SCOPE PERMITTED UNDER SUCH LAW.

                                  ARTICLE XVII.

                                    LINE FILL

         a.       CHOPS shall provide all line fill for Cameron Highway, and the
cost for such line fill shall be paid in accordance with this Article XVII. The
cost of such line fill Barrels shall be based on the Base Oil Price for the
month Cameron Highway line fill operations commence, less $0.95, plus or minus
(as the case may be) quality bank adjustments. The portion of the Base Oil Price
of a line fill Barrel up to $20.00 per Barrel shall be paid by CHOPS. All costs,
if any, of the line fill in excess of that which CHOPS is responsible for
pursuant to the preceding sentence shall be allocated to and paid by the working
interest owners in the Holstein, Mad Dog and Atlantis fields who enter into
purchase and sale arrangements with CHOPS on Cameron Highway (which shall be
effective prior to commencement of operations on Cameron Highway), and all other
parties who enter into purchase and sale arrangements with CHOPS on Cameron
Highway that are effective upon commencement of operations of Cameron Highway,
based on each party's maximum daily quantity compared to the aggregate maximum
daily quantity on Cameron Highway. BHP shall not own any line fill Barrels in
Cameron Highway.

         b.       Notwithstanding Article XVII.a., within fifteen (15) Days
after the execution of this Agreement, the parties will meet to implement a plan
for the acquisition of linefill for Cameron Highway. Such plan may include, but
not be limited to, the evaluation of purchasing linefill from the producer, the
mechanisms for the management of the crude oil price risk for the parties, and
the disclosure of operational parameters, including the approximate timeline and
approximate volumes required by CHOPS. The parties agree to use commercially
reasonable efforts to finalize a plan for the acquisition of the Cameron Highway
linefill within forty-five (45) Days after the first meeting.

                                       22
<PAGE>

                                 ARTICLE XVIII.

                                OIL PUMP FUEL GAS

         CHOPS shall provide all fuel gas for the operation of Cameron Highway,
and shall be permitted to purchase such fuel gas from any party. The cost of
such fuel gas shall be based on the Base Gas Price for the then current month of
fuel purchases, less $0.10 per MMBtu. The portion of the Base Gas Price up to
$5.00 per MMBTU shall be paid by CHOPS. All costs, if any, of the fuel gas in
excess of that which CHOPS is responsible for pursuant to the preceding sentence
shall be allocated to and paid by the working interest owners in the Holstein,
Mad Dog and Atlantis fields who enter into purchase and sale arrangements with
CHOPS on Cameron Highway (which shall be effective prior to commencement of
operations on Cameron Highway), and all other parties selling Crude Oil to CHOPS
at Cameron Highway receipt points, based on such parties' deliveries of Crude
Oil in proportion to the total deliveries of Crude Oil at all Cameron Highway
receipt points.

                                  ARTICLE XIX.

                          STATEMENTS, PAYMENTS, AUDITS

         a.       CHOPS shall render a statement to BHP on or before the
fifteenth (15th) Day of each calendar month setting forth the amount due BHP for
purchases of Crude Oil by CHOPS hereunder and the amount due for sales of Crude
Oil hereunder to BHP during the preceding month. If actual quantities cannot be
made available through no fault of CHOPS, CHOPS and BHP may utilize a
reasonable, good faith estimated quantity. As soon as the actual quantity
becomes available, the estimate shall be adjusted and the adjustment shall be
reflected in the subsequent month's statement. CHOPS agrees to prepare a summary
billing containing all amounts owed between BHP and CHOPS to each other for the
applicable production month and CHOPS shall deliver a net statement to BHP
showing the net balance.

         b.       The Party with the net balance due to the other Party shall
pay such other Party the amount due in the form of immediately available federal
funds by wire transfer to the bank account specified on the net statement, or
any other mutually agreed upon method, on or before the twentieth (20th) Day of
each month for transactions accruing hereunder during the preceding month.
Payments due on a Saturday or a bank holiday shall be made on the preceding
business Day unless such holiday is a Monday, in which case payment shall be
made on the following business Day; payments due on Sunday shall be made on the
following Monday. The paying Party must tender a timely payment even if the net
statement includes an estimated receipt or delivery volume. Any payment made
hereunder by a Party shall not prejudice the right of the paying Party to an
adjustment of any statement to which it has taken written exception, provided
that claim therefore shall have been made within sixty (60) Days from the date
of discovery of such error, but, in any event, within twenty-four (24) months
from the date of the net statement. If the paying Party fails to pay any
statement in whole or in part when due, in addition to any other rights or
remedies available to the Party to whom payment is due, interest at the Stated
Rate shall accrue on unpaid amounts. "Stated Rate" means an annual rate of
interest (compounded daily) equal to the lesser of (i) the sum of the prime or
reference rate posted from time to

                                       23
<PAGE>

time by Texas Commerce Bank (Houston, Texas office) or its successor or a
mutually agreed substitute bank plus two percent (2%) or (ii) the maximum lawful
interest rate then in effect under applicable law.

         Notwithstanding the foregoing, if a good faith dispute arises between
BHP and CHOPS concerning a net statement, the paying Party shall pay that
portion of the net statement not in dispute on or before such due date, and upon
the ultimate determination of the disputed portion of the statement, the paying
Party shall pay the remaining amount owed (if any) plus the interest accrued
thereon.

         c.       CHOPS shall maintain for not less than twenty-four (24) months
following the end of each calendar year, complete and accurate books, records
and accounts of any amounts which are charged to BHP hereunder during such
calendar year. For a period of twenty-four (24) months from the end of each
calendar year, and upon thirty (30) Days prior written notice to CHOPS, BHP
shall have the right to inspect, at BHP's expense, at any reasonable time and
from time-to-time, and audit such books, records and accounts related to any
invoice or payment made during such calendar year.

                                   ARTICLE XX.

                                   MEASUREMENT

         All measurement practices must conform to the latest guidelines set out
in the current API Manual of Petroleum Measurement Standards and all applicable
API Bulletin and API Standards publications.

                                  ARTICLE XXI.

                          PURCHASE AND SALE IMBALANCES

         The Parties will endeavor, as far as practicable, to keep the purchase
and sale arrangement in balance on a monthly basis and respond to status
statements. It is recognized that for a given month, a Crude Oil imbalance
between the Receipt Point(s) and the Delivery Point(s) and Additional Delivery
Points may exist. CHOPS shall calculate and track all imbalances and include
same in its monthly statement. The Parties agree to make a good faith effort to
correct any actual monthly imbalances by subsequent nominations and deliveries
of Crude Oil during the remainder of the month or the next available full
business month, including the adjustments of receipts, deliveries and
nominations. Delivery of such imbalance shall be made in the month following the
month in which the volume imbalance is determined.

                                  ARTICLE XXII.

                                   ASSIGNMENT

         a.       CHOPS.

                  i.       CHOPS shall have the right to assign or transfer this
         Purchase and Sale Agreement or the obligations hereunder (in whole or
         in part) as follows:

                           (A)      Prior to the Cameron Highway Completion
                  Date, without the prior consent of BHP, CHOPS shall have the
                  right to assign or transfer this Purchase and Sale Agreement
                  or the obligations hereunder (in whole or in part) to a
                  subsidiary (direct or indirect) of GTM in which GTM owns
                  (directly

                                       24
<PAGE>
                  or indirectly) a fifty percent (50%) or more interest (an "GTM
                  Sub"); provided, that if requested by BHP upon such
                  assignment, CHOPS shall (x) remain primarily liable for the
                  obligations hereunder so assigned to such GTM Sub and (y)
                  provide additional assurances of the performance of such GTM
                  Sub hereunder (including, without limitation, a company
                  guaranty from CHOPS) as may be reasonably required by BHP.
                  Further, CHOPS shall provide BHP written notice of such
                  assignment or transfer at least thirty (30) Days prior to the
                  effective date of such assignment or transfer, and agrees to
                  furnish BHP additional information regarding the GTM Sub in
                  order for BHP to evaluate whether additional assurances will
                  be required. Prior to the effective date of such assignment or
                  transfer, the Parties shall execute appropriate documents
                  regarding the primary liability of CHOPS for the obligations
                  assigned to such GTM Sub and CHOPS shall provide BHP any
                  additional assurances of performance as may be reasonably
                  requested by BHP.

                           (B)      Prior to the Cameron Highway Completion
                  Date, except as otherwise provided in Article XXII.a.i.A. ,
                  CHOPS shall not have the right to assign or transfer this
                  Purchase and Sale Agreement or the obligations hereunder (in
                  whole or in part) to any other party without the prior written
                  consent of BHP, such consent which is not to be unreasonably
                  withheld or delayed.

                           (C)      After the Cameron Highway Completion Date,
                  without the prior consent of BHP, CHOPS shall have the right
                  to assign or transfer this Purchase and Sale Agreement or the
                  obligations hereunder (in whole or in part) to any entity with
                  a Standard & Poor's rating of BB+ or better (a "Financially
                  Capable Entity"); provided, however, in such event, CHOPS
                  shall use reasonable efforts: (i) to ensure that such
                  Financially Capable Entity is proficient in the operation of
                  crude oil pipelines; or (ii) to implement an arrangement
                  whereby CHOPS would remain responsible for the operation of
                  Cameron Highway. Any other assignment or transfer of this
                  Purchase and Sale Agreement or the obligations hereunder (in
                  whole or in part) shall require the prior written consent of
                  BHP, such consent which is not to be unreasonably withheld or
                  delayed. Upon any permitted assignment by CHOPS, CHOPS shall
                  be relieved of its obligations under this Purchase and Sale
                  Agreement accruing after the effective date of such assignment
                  to the extent, and only to the extent, so assigned and
                  expressly assumed by the assignee.

                  ii.      Any assignment or transfer of this Purchase and Sale
         Agreement or the obligations hereunder (in whole or in part) by CHOPS
         shall be null and void unless such assignment or transfer is made in
         compliance with this Article XXII.a. Notwithstanding anything to the
         contrary contained in this Purchase and Sale Agreement, the Parties
         agree that to the extent of any obligations of CHOPS contained herein,
         CHOPS shall be permitted to fulfill such obligations by utilizing the
         employees and assistance of EPFS, and such utilization and assistance
         shall not be considered an assignment of any of such obligations.

                                       25
<PAGE>

         b.       BHP.

                  i.       Except as otherwise expressly provided in Articles
         IV.c., VI.d., VII.a., XI.f., XII.d and XII.e of this Purchase and Sale
         Agreement, without the prior consent of CHOPS, BHP shall have the right
         to assign or transfer this Purchase and Sale Agreement or the
         obligations hereunder (in whole or in part) to any entity which is a
         Financially Capable Entity or which, alternatively, provides a letter
         of credit, parent guaranty, or bank guaranty to the reasonable
         satisfaction of CHOPS; provided, that any other assignment or transfer
         of this Purchase and Sale Agreement or the obligations hereunder (in
         whole or in part) shall require the prior written consent of CHOPS,
         such consent which is not to be unreasonably withheld or delayed;
         provided further, that any assignment of BHP's rights and obligations
         under this Purchase and Sale Agreement shall also include the
         assignment or transfer of all or a portion of BHP's right, title or
         interest in the applicable Initial Dedicated Leases. Further, any
         assignment or other transfer of any or all of BHP's right, title or
         interest in the Initial Dedicated Leases shall be made subject to the
         applicable terms of this Purchase and Sale Agreement, and the assignee
         shall agree to be bound by such terms of this Purchase and Sale
         Agreement, such that BHP's Dedicated Production from such leases so
         assigned shall remain subject to this Purchase and Sale Agreement. Upon
         any permitted assignment by BHP, BHP shall be relieved of its
         obligations under this Purchase and Sale Agreement accruing after the
         effective date of such assignment to the extent, and only to the
         extent, so assigned and expressly assumed by the assignee. Any
         assignment or transfer of this Purchase and Sale Agreement or the
         obligations hereunder (in whole or in part) by BHP shall be null and
         void unless such assignment or transfer is made in compliance with this
         Article XXII.b.

                  ii.      Without the prior consent of CHOPS, and except as
         otherwise provided in this Paragraph XXII.b., BHP shall have the right
         to assign or transfer this Purchase and Sale Agreement or the
         obligations hereunder (in whole or in part) to BHP Billiton Ltd. ("BHP
         Corp") and/or a subsidiary (direct or indirect) of BHP Corp in which
         BHP Corp owns (directly or indirectly) a fifty percent (50%) or more
         interest ("Corp Sub"); provided, that if requested by CHOPS, upon such
         assignment BHP Corp shall (x) be primarily liable for the obligations
         hereunder so assigned to such Corp Sub and (y) provide additional
         assurances of the performance of such Corp Sub hereunder (including,
         without limitation, a company guaranty from BHP Corp) as may be
         reasonably required by CHOPS. Further, BHP shall provide CHOPS written
         notice of such assignment or transfer at least thirty (30) Days prior
         to the effective date of such assignment or transfer, and agrees to
         furnish CHOPS additional information regarding the Corp Sub in order
         for CHOPS to evaluate whether additional assurances will be required.
         Prior to the effective date of such assignment or transfer, the Parties
         shall execute appropriate documents regarding the primary liability of
         BHP Corp for the obligations assigned to such Corp Sub and BHP Corp
         shall provide CHOPS any additional assurances of performance as may be
         reasonably requested by CHOPS. Further, upon any assignment by BHP to
         BHP Corp and/or Corp Sub pursuant to the terms of this Paragraph
         XXII.b.ii., BHP shall be relieved of its obligations under this
         Purchase and Sale Agreement accruing after the effective date of such
         assignment to the extent, and only to the extent, so assigned and
         expressly assumed by such assignee.

                                       26
<PAGE>

                  iii.     Upon any assignment by BHP of this Purchase and Sale
         Agreement or the obligations hereunder (in whole or in part) pursuant
         to Article XXII.b.i. above, the following shall apply:

                           (A)      Any working interest in the Dedicated Lease
                  assigned by BHP and BHP's remaining working interest in the
                  Dedicated Leases shall remain dedicated to Cameron Highway,
                  pursuant to this Purchase and Sale Agreement.

                           (B)      The purchase and sale differentials
                  contained in Article XII. above shall be applicable to (x) the
                  Crude Oil delivered by BHP's assignee that is produced from
                  the Dedicated Lease(s) and (y) the Dedicated Production
                  delivered by BHP that is produced from the Dedicated Leases,
                  pursuant to this Purchase and Sale Agreement.

                           (C)      The BHP MDQ Levels set forth in Article VI.
                  above shall remain the same; provided, that following such
                  assignment by BHP, BHP shall receive a Barrel for Barrel
                  credit towards its MDQ obligations hereunder for the actual
                  number of Barrels delivered to Cameron Highway that is
                  produced from the working interest in the Dedicated Leases
                  assigned by BHP. Such assignee of BHP shall be entitled to a
                  maximum daily quantity level on Cameron Highway commensurate
                  with the daily volume of Dedicated Production reasonably
                  anticipated to be produced in the future from the Dedicated
                  Leases so assigned that is allocated to its working interest
                  share of such leases.

                           (D)      At such time(s) as BHP transfers or assigns
                  all or a portion of its working interest in one or more
                  Dedicated Leases, CHOPS shall execute a purchase and sale
                  agreement with BHP's assignee that contains the same terms and
                  conditions as those contained in this Purchase and Sale
                  Agreement (with the exception of the non-assignable rights of
                  BHP contained in Articles IV.c., VI.d., VII.a., XI.f., XII.d
                  and XII.e of this Purchase and Sale Agreement and that
                  reflects the maximum daily quantity level allocated to such
                  assignee as set forth in Article XXII.ii.C above.

         Notwithstanding anything contained in Article II. to the contrary, BHP
shall not be prohibited or restricted from assigning or transferring this
Purchase and Sale Agreement or the obligations hereunder (in whole or part)
pending negotiation and execution of the purchase and sale agreement between
CHOPS and BHP's assignee. It being the intent of the Parties that completion of
such negotiations and execution of such documentation shall not impede, hinder
or delay any consents by CHOPS required under this Purchase and Sale Agreement
with respect to an assignment or transfer thereof (in whole or in part) by BHP.

         c.       This Purchase and Sale Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the Parties.

                                       27
<PAGE>

                                 ARTICLE XXIII.

                                      TERM

         a.       This Purchase and Sale Agreement shall become effective as of
the execution and delivery thereof by each of the Parties, and except as
otherwise provided herein shall continue in effect for the commercial life of
production from the Dedicated Leases.

         b.       Notwithstanding the termination of this Purchase and Sale
Agreement or the expiration of this Purchase and Sale Agreement, the
indemnification provisions contained in Article XVI. shall survive such
termination/expiration of this Purchase and Sale Agreement.

         c.       Except with respect to those provisions in this Purchase and
Sale Agreement that expressly provide for sole and exclusive remedies, (i) in
the event of termination of this Purchase and Sale Agreement by either Party
pursuant to the terms of this Purchase and Sale Agreement, termination of this
Purchase and Sale Agreement shall not be the sole remedy of such Party, and (ii)
nothing contained in this Purchase and Sale Agreement shall prevent any Party
from pursuing any other remedies available to such Parties whether under
contract or at law or equity with respect to any other Party's breach or failure
to fulfill its obligations under this Purchase and Sale Agreement.

                                  ARTICLE XXIV.

                   RIGHTS OF PARTIES UPON TRANSFER/ASSIGNMENT

         The Parties hereby acknowledge and agree that many of the provisions of
this Purchase and Sale Agreement, including, but not limited to, terms related
to the dedication of reserves, the BHP MDQ Levels, the price differentials, the
grant of rights to future receipt points and future dedication cannot be
segregated between BHP and any potential assignee under the current structure of
the terms of this Purchase and Sale Agreement, and are not intended to be rights
transferable to or exercisable by a permitted assignee of BHP. However, to
facilitate the transactions contemplated under this Purchase and Sale Agreement,
it is the intent of the Parties to consummate the transactions contemplated
under this Purchase and Sale Agreement with the understanding that,
notwithstanding the terms of Article XXII., prior to any proposed assignment or
transfer by BHP of any of its rights under this Purchase and Sale Agreement, the
Parties shall enter into good faith negotiations to mutually agree on the terms
of such assignment, and specifically to the allocation of the rights, duties and
obligations of BHP and the permitted assignee. The Parties further acknowledge
that upon any such permitted assignment, an amendment to this Purchase and Sale
Agreement may be required to revise the terms of this Purchase and Sale
Agreement in a manner that preserves, to the maximum extent possible, the
respective rights and economic positions of the Parties. The Parties agree to
act reasonably and in good faith, and negotiate diligently to facilitate BHP's
desire to assign their rights as referenced hereunder under the time schedule
desired by BHP.

                                       28
<PAGE>

                                  ARTICLE XXV.

                                  FORCE MAJEURE

         a.       Definition. No Party shall be liable to the other Parties for
failure to perform any of its obligations under this agreement to the extent
such performance is hindered, delayed or prevented by Force Majeure. For
purposes of this agreement, "Force Majeure" shall mean causes, conditions,
events or circumstances affecting the Parties, or downstream or upstream
facilities which are beyond the reasonable control of the Party claiming Force
Majeure. Such causes, conditions, events and circumstances shall include,
without limitation, acts of God, wars (declared or undeclared), hostilities,
acts of terrorism, strikes, lockouts, riots, floods, fires, storms, storm
warnings, industrial disturbances, acts of the public enemy, sabotage,
blockades, insurrections, epidemics, landslides, lightning, earthquakes,
washouts, arrests and restraints of rulers and peoples, civil disturbances,
explosions, breakage or accidents to machinery or lines of pipe, hydrate
obstruction or blockages of any kind of lines of pipe, abnormal operating
conditions on a Party's facilities, repairs, improvements, replacements or
alterations to plants, lines of pipe or related facilities, inability of a Party
to obtain necessary machinery, drilling or workover rigs, materials, permits,
easements or rights-of-way on reasonable terms, freezing of the well or delivery
facility, well blowout, cratering, depletion of reserves, the partial or entire
failure of a well, the act of any court or governmental authority prohibiting a
Party from discharging its obligations under this agreement or resulting in
diminutions in service and conduct which would violate any applicable law.
Inability of a Party to make payments when due, be profitable or to secure
funds, arrange bank loans or other financing, obtain credit or have adequate
capacity (other than for reasons of Force Majeure declared by such downstream
facilities) on downstream facilities shall not be regarded as an event of Force
Majeure. Further, it is specifically agreed by the Parties that the events and
activities referenced in Article IX and Article XI.a.ii shall not be regarded as
events of Force Majeure.

         b.       Notice. A Party which is unable, in whole or in part, to carry
out its obligations under this agreement due to Force Majeure shall promptly
give written notice to that effect to the other Parties stating the
circumstances underlying such Force Majeure.

         c.       Resolution. A Party claiming Force Majeure shall use
commercially reasonable efforts to remove the cause, condition, event or
circumstance of such Force Majeure, shall give written notice to the other
Parties of the termination of such Force Majeure and shall resume performance of
any suspended obligation promptly after termination of such Force Majeure.

                                  ARTICLE XXVI.

                          DISPUTE RESOLUTION PROCEDURE

         a.       With respect to any controversy or claim ("DISPUTE"), whether
based on contract, tort, statute or other legal or equitable theory (including,
but not limited to, any claim of fraud, misrepresentation or fraudulent
inducement or any question of validity or effect of this Purchase and Sale
Agreement including this clause) arising out of or related to this Purchase and
Sale Agreement (including any amendments or extensions), or the breach or
termination thereof, the Parties hereto shall in good faith attempt to settle
such Dispute by consultation between senior management representatives of such
Parties initiated by a

                                       29
<PAGE>

Party's ("SUBMITTING PARTY") delivery of written notice of the Dispute to the
other Party (the "NON-SUBMITTING PARTY"). In the event such consultation does
not settle the Dispute within thirty (30) Days after receipt of the written
notice of such Dispute by the Non-Submitting Party, the Dispute shall be
submitted to non-binding mediation. In the event the Parties are unable to
settle the Dispute through use of mediation within thirty (30) Days of the
commencement of such mediation, the Dispute shall be settled by binding
arbitration in accordance with the Commercial Arbitration Rules of the AAA and
this provision.

         b.       The arbitration shall be governed by the Federal Arbitration
Act, 9 U.S.C. Sections 1-16 to the exclusion of any provision of state law
inconsistent therewith, and judgment upon the award rendered by the arbitrator
may be entered by any court having jurisdiction. Any arbitration proceeding
hereunder will be conducted on a confidential basis.

         The arbitration shall be held in Houston, Texas.

         There shall be one (1) arbitrator. The Parties shall attempt jointly to
select an arbitrator. If the Parties are unable or fail to agree upon an
arbitrator within fifteen (15) Days after the commencement of arbitration, one
shall be selected by AAA. The arbitration hearing shall occur no later than
sixty (60) Days after selection of the arbitrator. The arbitrator shall
determine the claims of the Parties and render a final award in accordance with
the substantive law of the State of Texas, excluding the conflicts provisions of
such law. Unless otherwise provided in this Purchase and Sale Agreement, the
arbitrator shall not have the right or the ability to terminate this Purchase
and Sale Agreement. The arbitrator shall set forth the reasons for the award in
writing within ten (10) working Days after the close of evidence and any
post-evidence briefing and arguments that may be agreed upon (which shall be
concluded within fourteen (14) Days after close of evidence). The arbitrator
shall not have the right to terminate this Purchase and Sale Agreement.

         Any claim by a Party shall be time-barred if the Submitting Party
commences arbitration with respect to such claim later than two (2) years after
the receipt of the written notice of the Dispute by the Non-Submitting Party.
All statutes of limitations and defenses based upon passage of time applicable
to any claim of a defending Party (including any counterclaim or setoff) shall
be tolled while the arbitration is pending.

         The obligation to arbitrate any Dispute shall extend to the successors
and assigns of the Parties. The Parties shall use their commercially reasonable
efforts to cause the obligation to arbitrate any Dispute to extend to any
officer, director, employee, shareholder, agent, trustee, affiliate, or
subsidiary. The terms hereof shall not limit any obligations of a Party to
defend, indemnify or hold harmless another Party against court proceedings or
other claims, losses, damages or expenses.

         The arbitrator shall order the Parties to promptly exchange copies of
all exhibits and witness lists, and, if requested by a Party, to produce other
relevant documents, to answer up to ten (10) interrogatories (including
subparts), to respond to up to ten (10) requests for admissions (which shall be
deemed admitted if not denied) and to produce for deposition and, if requested,
at the hearing all witnesses that such Party has listed and up to four (4) other
persons within such Party's control. Any additional discovery shall only occur
by agreement of the Parties or as ordered by the arbitrator upon a finding of
good cause.

                                       30
<PAGE>

         Each Party shall bear its own costs, expenses and attorney's fees;
provided that if court proceedings to stay litigation or compel arbitration are
necessary, the Party who unsuccessfully opposes such proceedings shall pay all
reasonable associated costs, expenses, and attorney's fees in connection with
such court proceeding.

         In order to prevent irreparable harm, the arbitrator shall have the
power to grant temporary or permanent injunctive or other equitable relief.
Prior to the appointment of an arbitrator a Party may, notwithstanding any other
provision of this Purchase and Sale Agreement, seek temporary injunctive relief
from any court of competent jurisdiction; provided that the Party seeking such
relief shall (if arbitration has not already been commenced) simultaneously
commence arbitration. Such court ordered relief shall not continue more than ten
(10) Days after the appointment of the arbitrator (or in any event for longer
than sixty (60) Days).

         If any part of this arbitration provision is held to be unenforceable,
it shall be severed and shall not affect either the duty to arbitrate or any
other part of this provision.

                                 ARTICLE XXVII.

                                 CONFIDENTIALITY

         a.       Subject to Article XXVI.b below, the existence of this
Purchase and Sale Agreement, its contents, and the discussions between the
Parties regarding this Purchase and Sale Agreement are subject to the
Confidentiality Agreement ("Confidentiality Agreement") dated January 10, 2001
by and between BHP and El Paso Energy Partners, L.P., a copy of which is
attached hereto as Exhibit "B". To the extent of a permitted assignment or
transfer, a Party may disclose the applicable portions of this Purchase and Sale
Agreement and its contents to any bona fide, financially responsible,
prospective assignee of any portion of such Party's interest in the Dedicated
Leases, the Caesar System or Cameron Highway, provided that (i) such disclosing
Party shall give the other Party to this Purchase and Sale Agreement not less
than ten (10) Days prior written notice specifying the extent to which that
Party intends to disclose this Purchase and Sale Agreement to the prospective
assignee and (ii) the prospective assignee is bound by a written confidentiality
agreement to not disclose any information regarding this Purchase and Sale
Agreement or the Parties hereto, and such confidentiality agreement contains
terms and provisions at least as stringent as those contained in the
Confidentiality Agreement. Notwithstanding anything contained in this Article
XXVII.a. to the contrary, BHP may not disclose the terms of this Purchase and
Sale Agreement to Shell Pipeline Company, L.P.

         b.       Public announcements concerning the Transaction or this
Purchase and Sale Agreement shall be subject to the applicable provisions of the
Confidentiality Agreement; provided, that notwithstanding any applicable
provisions in the Confidentiality Agreement, to the contrary, it is agreed and
understood that, to the extent such announcement is required by applicable laws
or securities exchange, market or similar rules, any Party is permitted to issue
a press release or make a public announcement concerning the Transaction or the
Purchase and Sale Agreement without the other Party's consent, in which case the
disclosing Party shall provide an advance copy of the proposed public disclosure
to the non-disclosing Party and permit the non-disclosing Party the opportunity
to reasonably comment on such proposed disclosure.

                                       31
<PAGE>

                                 ARTICLE XXVIII.

                                  MISCELLANEOUS

         a.       NOTICES. All notices and other communications under this
Purchase and Sale Agreement will be in writing and will be deemed to have been
given (i) when received if given in person or by courier or a courier service,
(ii) on the date of transmission if sent by facsimile or other wire transmission
and receipt thereof is confirmed by telephone, or (iii) three (3) business Days
after being deposited in the mail, certified or registered, postage prepaid:

                           if to CHOPS, addressed as follows:

                           Cameron Highway Oil Pipeline Company
                           Attn: Manta Ray Gathering Company, L.L.C., Operator
                           Four Greenway Plaza
                           Houston, Texas 77046
                           Attn: President
                           (832) 676-5666 (telephone)
                           (832) 676-1710 (facsimile)

                           if to BHP, addressed as follows:
                           BHP Billiton Petroleum (Deepwater) Inc.
                           1360 Post Oak Blvd., Suite 150
                           Houston, TX 77056

                           Attn: Vice President AODAT
                                 (713)961-8500(telephone)
                                 (713)961-8400(facsimile)

                           With a copy to:

                           BHP Billiton Petroleum (Deepwater) Inc.
                           1360 Post Oak Blvd., Suite 150
                           Houston, TX 77056

                           Attn: Joe Beaty
                                 (713)961-8658 (telephone)
                                 (713)961-8670 (facsimile)

         Any Party may change any address to which notice is to be given to it
by giving notice as provided above of such change of address.

         b.       INSURANCE. All Parties shall procure and maintain or cause to
be procured and maintained all insurance or self-insurance in the types and
amounts as required by applicable laws, rules and regulations, to provide
coverage against such risks, which are the subject of this Purchase and Sale
Agreement, as is either customarily carried by companies owning, operating or
conducting similar business(es), or as deemed necessary and reasonably requested
by the Parties from time to time.

                                       32
<PAGE>

         c.       TAXES. BHP shall be responsible for all applicable production,
excise, sales, use or similar taxes and royalties on or with respect to the
production, delivery and sale, of Crude Oil to CHOPS hereunder. BHP shall also
be responsible for any tax, fee, or other charge levided against either BHP or
CHOPS, pursuant to any federal, State, or local act or regulation for the
purpose of creating a fund for the prevention, containment, clean up and/or
removal of spills and/or the reimbursement of persons sustaining loss therefrom.
CHOPS shall be responsible for all applicable excise, sales, use or similar
taxes on or with respect to the delivery and sale to BHP of Crude Oil hereunder.

         d.       COMMINGLING. CHOPS shall have the right to commingle
production from the Dedicated Leases with production from other properties,
pipelines and facilities.

         e.       NO PARTNERSHIP AND NO FIDUCIARY OBLIGATIONS. Nothing herein is
intended to create a partnership, joint venture, agency or other relationship
creating fiduciary or quasi fiduciary duties or similar duties and obligations
or otherwise subject the Parties to joint and several or vicarious liability or
to impose any duty, obligation or liability that would arise therefrom with
respect to any of the Parties.

         f.       ENTIRE AGREEMENT. This Purchase and Sale Agreement (including
the Confidentiality Agreement, as amended herein) constitutes the entire
agreement of the Parties as of the Effective Date with respect to the
Transaction and supersedes (i) all prior oral or written proposals or agreements
between the Parties, (ii) all contemporaneous oral proposals or agreements and
(iii) all previous negotiations and all other communications or understandings
between the Parties with respect to the subject matter hereof. Effective as of
the Effective Date hereof, the Parties hereto terminate the MOU.

         g.       AMENDMENT, MODIFICATION AND WAIVER. This Purchase and Sale
Agreement may be amended, modified, superseded or canceled, and any of the
terms, covenants, representations, warranties or conditions hereof may be
waived, only by a written instrument executed by the Parties. The failure of a
Party at any time or times to require performance of any provisions hereof shall
in no manner affect the right at a later time to enforce the same. No waiver by
any Party of any condition, or of any breach of any term, covenant,
representation or warranty contained in this Purchase and Sale Agreement, in any
one or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such condition or breach or a waiver of any other
condition or of any breach of any other term, covenant, representation or
warranty.

         h.       EXHIBITS AND ATTACHMENTS. All exhibits, attachments and the
like contained herein or attached hereto are integrally related to this Purchase
and Sale Agreement, and are hereby made a part of this Purchase and Sale
Agreement for all purposes. In the event of a conflict between this Purchase and
Sale Agreement and any of its exhibits and attachments, the terms of this
Purchase and Sale Agreement shall control.

         i.       FEES AND EXPENSES. Each Party hereto shall bear and pay all
costs and expenses incurred by it in connection with the negotiations
contemplated by this Purchase and Sale Agreement.

         j.       INVALID TERMS. If any term or other provisions of this
Purchase and Sale Agreement is determined to be invalid, illegal or incapable of
being enforced by any rule of law or public policy, all other terms and
conditions of this Purchase and Sale Agreement shall nevertheless remain in full
force and effect. In the event a term or other provision of this Purchase and
Sale Agreement is determined to be invalid, illegal or incapable of being

                                       33
<PAGE>

enforced, except as otherwise provided in Articles IX. or XI.a.ii., the Parties
shall cooperate to develop a mutually acceptable alternative term or other
provision that reflects the original intent of the Parties and maintains the
commercial and economic benefits to the Parties.

         k.       FURTHER ASSURANCES. Subject to the terms and conditions set
forth in this Purchase and Sale Agreement, each Party agrees to use its
commercially reasonable efforts to take, or to cause to be taken, all actions,
and to do, or to cause to be done, all things necessary, proper or advisable
under applicable laws to consummate and make effective the Transactions
contemplated by this Purchase and Sale Agreement. In case, at any time after the
execution of this Purchase and Sale Agreement, any further action is necessary
or desirable to carry out its purposes, the Parties will take or cause to be
taken all such necessary action. More specifically, the Parties acknowledge that
CHOPS or its Affiliates will be implementing certain bank financing arrangements
with respect to Cameron Highway. BHP agrees to reasonably consider all documents
required by CHOPS' or its Affiliates' lenders to facilitate such bank financing
arrangements.

         l.       COUNTERPARTS. This Purchase and Sale Agreement may be executed
in one or more counterparts, each of which will be deemed to be an original copy
of this Purchase and Sale Agreement and all of which, when taken together, will
be deemed to constitute one and the same Purchase and Sale Agreement.

         m.       GOVERNING LAW. THIS PURCHASE AND SALE AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
WITHOUT REGARD TO ANY CONFLICT OF LAW PRINCIPLES WHICH, IF APPLIED, MIGHT PERMIT
OR REQUIRE THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION, AND THE PARTIES
AGREE THAT THE PLACE OF EXECUTION OF THIS PURCHASE AND SALE AGREEMENT IS HARRIS
COUNTY, TEXAS AND THAT VENUE WITH RESPECT TO ANY DISPUTE ARISING HEREUNDER OR IN
CONNECTION HEREWITH SHALL LIE IN HOUSTON, HARRIS COUNTY, TEXAS.

         n.       INTERPRETATION. Whenever the context requires: the gender of
all words used in this agreement includes the masculine, feminine, and neuter; a
reference to any person or entity includes its permitted successors and assigns;
the words "hereof," "herein," "hereto," "hereunder," and words of similar import
when used in this agreement will refer to this agreement as a whole and not to
any particular provisions of this agreement; articles and other titles or
headings are for convenience only and neither limit nor amplify the provisions
of the agreement itself, and all references herein to articles, sections or
subdivisions thereof will refer to the corresponding article, section or
subdivision thereof of this agreement unless specific reference is made to such
articles, sections or subdivisions of another document or instrument; any
reference to "includes" or "including" will mean "includes without limitation"
or "including but not limited to," respectively; and any references in the
singular will include references in the plural and vice-versa.

         o.       MISCELLANEOUS. Each Party declares (i) that it has contributed
to the drafting of this Purchase and Sale Agreement or has had it reviewed by
its legal counsel before executing it, (ii) that this Purchase and Sale
Agreement has been purposefully drawn and correctly reflects such Party's
understanding of the Transaction that it contemplates as of the Effective Date
hereof, (iii) that this Purchase and Sale Agreement has been validly

                                       34
<PAGE>

executed and delivered, (iv) that this Purchase and Sale Agreement has been duly
authorized by all action necessary for the authorization thereof, and (v) this
Purchase and Sale Agreement constitutes a binding and enforceable obligation of
such Party, enforceable in accordance with its terms.

         IN WITNESS WHEREOF, the Parties hereto have caused this Purchase and
Sale Agreement to be signed by their respective duly authorized representatives
effective as of the day and year first written above.

CAMERON HIGHWAY OIL PIPELINE              BHP BILLITON PETROLEUM
COMPANY                                   (DEEPWATER) INC.

By: /s/ James Lytal                       By: /s/ Bill R. McHoliek
    -----------------------------             -------------------------------
Name:  James Lytal                        Name: Bill R. McHoliek
Title: President                          Title: Vice President
Date:  6/23/03                            Date: 6/23/03

                                       35
<PAGE>

                                   EXHIBIT "A"

                INITIAL DEDICATED LEASES AND DEDICATED PRODUCTION

<TABLE>
<CAPTION>
                           LEASES                        BHP WORKING INTEREST
                           ------                        --------------------
<S>                     <C>                              <C>
ATLANTIS                Green Canyon 698                            44%
                        Green Canyon 699                            44%
                        Green Canyon 700                            44%
                        Green Canyon 701                            44%
                        Green Canyon 742                            44%
                        Green Canyon 743                            44%
                        Green Canyon 744                            44%

MAD DOG                 Green Canyon 738                          23.9%
                        Green Canyon 739                          23.9%
                        Green Canyon 781                          23.9%
                        Green Canyon 782                          23.9%
                        Green Canyon 783                          23.9%
                        Green Canyon 785                          23.9%
                        Green Canyon 786                          23.9%
                        Green Canyon 787                          23.9%
</TABLE>

                                       A

<PAGE>

                                   EXHIBIT "B"

                            CONFIDENTIALITY AGREEMENT

                                      B-1

<PAGE>

                                   EXHIBIT "C"

           QUALITY BANK RULES FOR CAMERON HIGHWAY OIL PIPELINE SYSTEM

                            MARKET BASED QUALITY BANK

                                   SECTION I.

                                     GENERAL

1.       The purpose of this Market Based Quality Bank ("Quality Bank") is to
         mitigate damage and/or improvement to producers whose crude oil is
         purchased by CHOPS and commingled in Cameron Highway. Differences in
         the quality of all the producers' crude oil that are mixed within the
         common crude oil stream in Cameron Highway either increase or decrease
         the quality of the common crude oil stream. This Quality Bank charges
         the producer or pays the producer depending on the quality of the
         common crude oil stream and the quality of the producer's crude oil.
         Each producer will be required, as a condition of tendering, to
         participate in this Quality Bank.

2.       API gravity and sulfur content are the quality parameters used to
         determine the relative value of each producer's receipt stream.
         Adjustment factors for gravity and sulfur are based upon a market price
         spread between Louisiana Light Sweet ("LLS") and Mars (see Section III-
         Current Month Gravity and Sulfur Adjustment Factors). The price spread
         is derived using Platt's spot price quote, high/low mean, posted
         average trade month (the 26th of the month two months prior to delivery
         through the 25th of the month one month prior to delivery, workdays
         only)("Trade Month").

3.       Should a Platt's Quote for Cameron Highway common stream be
         established, it will replace Mars in the Quality Bank calculations,
         subject to the provisions of Section VI. -Periodic Review.

4.       Any material changes to the Quality Bank, including proposed changes
         from a Periodic Review, must be approved by greater than a seventy
         percent (70%) vote of the producers then participating in this Quality
         Bank in order to effect the change. Each five hundred (500) Barrels of
         monthly average production (based on the monthly average of the twelve
         month period preceding the month the vote is taken) will have one vote.

         Any group of producers with seventy percent (70%) of the volume on
         Cameron Highway may make a proposal to CHOPS providing for an alternate
         method and an explanation of why such alternate method provides a more
         accurate, actual market price to quality relationship than the then
         existing Quality Bank. CHOPS will retain the right to reject such
         proposal if CHOPS believes, in it's sole discretion after using good
         faith, reasonable efforts to analyze such proposal, that the proposal
         does not uphold the intent of the Quality Bank as stated in Paragraph 1
         above in this Section I.

                                      C-1

<PAGE>

         Notwithstanding any of the above, CHOPS may, at it's sole discretion,
         change any of the provisions of this Exhibit as necessary to comply
         with any governmental requirement, order or mandate and such change
         will be binding upon BHP and all participants upon proper notice
         thereof.

                                   SECTION II.

Gravity and Sulfur Weighting Factors

1.       Gravity and Sulfur weighting factors are used in establishing a price
         and quality relationship between different crude oil streams.

2.       The weighting factors, to be used in calculating the GAF and SAF as
         defined in Section III, are as follows.

                        Gravity Weighting ("GW") = 31.5%

                         Sulfur Weighting ("SW") = 44.3%

                                  SECTION III.

CURRENT MONTH GRAVITY AND SULFUR ADJUSTMENT FACTORS

1.       The applicable delivery month Gravity Adjustment Factor ("GAF") and the
         applicable delivery month Sulfur Adjustment Factor ("SAF") are
         calculated using the following equations:

                           GAF = (GW x a) divided by b

                           SAF = (SW x a) divided by c

         Where Gravity and Sulfur Weighting factors (GW and SW) are expressed as
         decimals and,

         "a" =    The price differential between the LLS Platt's Quote and the
                  Mars Platt's Quote for the Trade Month.

         "b" =    The delivery month Gravity difference between LLS and Mars
                  based on the gravity of LLS crude oil at the point of sale
                  where "a" is determined, currently Capline's LLS receipt
                  stream at St. James, Louisiana as calculated by Gravcap, minus
                  the weighted average gravity of Mars at the point of sale
                  where "a" is determined, currently Shell's composite gravity
                  for Mars deliveries at Clovelly, LA.

                                      C-2

<PAGE>

         "c" = The delivery month Sulfur difference between LLS and Mars
               based on the weighted average of sulfur of LLS crude oil at
               the point of sale where "a" is determined, currently Capline's
               LLS receipt stream at St. James, Louisiana as calculated by
               Gravcap, minus the weighted average sulfur of Mars at the
               point of sale where "a" is determined, currently Shell's
               composite sulfur for Mars deliveries at Clovelly, LA.

                                   SECTION IV.

CALCULATION OF QUALITY BANK CREDIT/DEBIT

Quality Bank credit/debit adjustments between producers are computed as follows:

1.       The applicable receipt Barrels and gravities are the delivery month
         actual net Barrels at sixty (60) degrees Fahrenheit (with no deductions
         for loss allowance) and the gravities recorded by CHOPS at the
         measurement facility where it customarily records gravities and
         quantities.

2.       No compensation is given for gravity between 37 and 45 degrees API. For
         gravities of 45 API degrees and above, a "bend-over" disincentive is
         applied.

3.       GRAVITY CREDIT/DEBIT CALCULATION

         To compute the gravity credit/debit to be paid/received the following
         equation is used:

                  Gravity credit/debit = ((PG - WAG) multiplied by GAF)
         multiplied by T

         Where,

                  "PG" = BHP's gravity based on the custody transfer
                         tickets, subject to the Gravity Limits set out below.

                 "WAG" = The weighted average receipt gravity of the common
                         stream for a given delivery Month. For Quality Bank
                         calculation purposes, WAG is obtained by taking the
                         sum of the products obtained by multiplying the
                         gravity of each producer's point of receipt volume
                         based on the custody transfer tickets (subject to the
                         Gravity Limits set out below) by the number of net
                         Barrels in each producer's receipt point volume, and
                         divide the total resultant by the total net Barrels
                         received during the given delivery month.

                   "T" = The total current month volume produced by BHP
                         based on the custody transfer tickets.

                                      C-3

<PAGE>

                  Gravity Limits:   When actual gravity exceeds 37 but is less
                                    than 45 degrees API, a Deemed Gravity of 37
                                    degrees API is used in determining PG and
                                    WAG. When actual gravity is equal to or
                                    greater than 45 degrees API, a Deemed
                                    Gravity is used that is calculated by the
                                    formula: Deemed Gravity = 80 minus actual
                                    API gravity. In all other instances (gravity
                                    less than or equal to 37 API) the actual API
                                    gravity is used.

4.       SULFUR CREDIT/DEBIT CALCULATION

         To compute the sulfur credit/debit to be paid/received the following
equation is used:

                  Sulfur credit/debit = ((WAS - PS) multiplied by SAF)
         multiplied by T

         Where,

                  "PS" = BHP's Sulfur based on the custody transfer tickets.

                 "WAS" = The weighted average receipt sulfur of the common
                         stream for a given delivery Month. WAS is obtained by
                         taking the sum of the products obtained by
                         multiplying the sulfur percentage (by weight) of each
                         producer's point of receipt volume based on the
                         custody transfer tickets by the number of net Barrels
                         in each producer's point of receipt, and divide the
                         total resultant by the total net Barrels received
                         during the given delivery Month. Since there will be
                         no minimum or maximum sulfur percentage limitations,
                         this weighted average sulfur percentage calculation
                         will be used for Quality Bank adjustment purposes.

                   "T" = The total current month volume produced by BHP
                         based on the custody transfer tickets.

5.       To obtain the total Quality Bank Credit/Debit add the Gravity and
         Sulfur credit/debit. Sample calculations are attached hereto as Table
         1.

6.       These calculations will be made for each delivery month and the
         algebraic sum of all the producers' credit/debit for Cameron Highway
         will be zero (+/- fifty Dollars). If a producer has a net debit balance
         in combining the two adjustments made above, the balance due will be
         remitted to CHOPS within fifteen (15) Days from receipt of statements
         of such debit. If a producer has a credit, the CHOPS will remit the
         amount thereof within 5 Days of receipt of all the payments due from
         those producers owing a debit.

                                      C-4

<PAGE>

                                   SECTION V.

                                 ADMINISTRATIVE

1.       Capitalized terms, including "CHOPS" and "BHP," have the meanings
         defined in the Purchase and Sale Agreement to which this Exhibit is
         attached, unless the context dictates otherwise. Similarly, the term
         "producer" means an individual producer on Cameron Highway
         (collectively "producers").

2.       CHOPS will include requirements for participation in the Quality Bank
         and procedures for calculating adjustments between producers in all
         contracts to be entered into with producers covering the purchase and
         sale of crude oil on Cameron Highway.

3.       CHOPS will administer the Quality Bank and will perform the
         clearinghouse business of calculating and effecting adjustments, by a
         process of debits and credits and interchange of funds, among the
         producers of crude oil connected to Cameron Highway. CHOPS may
         subcontract any or all of the work associated with the Quality Bank,
         but by doing so CHOPS will not be relieved of any of its obligations
         hereunder.

4.       CHOPS will perform necessary calculations and prepare appropriate
         statements for each producer as soon as the gravity, sulfur and price
         data is available.

5.       CHOPS will be responsible, at its sole cost and expense, for
         determining and/or securing data on all gravities, sulfur contents, net
         Barrels of the crude oil received into Cameron Highway, and Platt's
         Quote prices. The gravities will be determined from the custody
         transfer receipt tickets written by the CHOPS. The sulfur content will
         be determined based on samples secured by the CHOPS from the composite
         sampler at the time the custody transfer receipt tickets are written.
         The gravity will be determined by ASTM 287 (Standard Test Method for
         API gravity of Crude Petroleum and Petroleum Products) and the sulfur
         content pursuant to ASTM D-2622 (ASTM D-4294 is acceptable if ASTM
         D-2622 is not available) (Standard Test Method for Sulfur in Petroleum
         Products).

6.       If any producer fails to perform any Quality Bank payment obligation as
         established herein, CHOPS will make equivalent payment into the Quality
         Bank within five (5) Days of such failure, to enable distribution of
         funds to producers due credits. CHOPS will, however, have the right to
         withhold payment of or offset against, any moneys due such failing
         producer pursuant to the Purchase and Sale Agreement between the
         producer and CHOPS to recover or otherwise fulfill any and all of
         producer's Quality Bank payment obligations.

7.       CHOPS agrees that all transfers of interest in Cameron Highway will be
         made subject to this Agreement and will require the transferee to
         assume as to such interest all of the obligations of CHOPS under this
         Agreement which accrue on or after the effective date of the transfer.

                                      C-5

<PAGE>

8.       Notwithstanding anything to the contrary set forth in Article XVI of
         the Agreement, inasmuch as CHOPS has agreed to operate the Quality Bank
         without profit, and except to the extent resulting from the gross
         negligence or willful misconduct of CHOPS, BHP hereby fully releases
         and agrees to indemnify the CHOPS from all claims, actions and demands
         for loss by, or damage to, CHOPS or BHP arising out of, in connection
         with, or as an incident to any act or omission, including any
         negligence, of the CHOPS or its employees, agents or contractors, in
         the administration of the Quality Bank. Neither CHOPS nor BHP will be
         liable to CHOPS or other producers, or to any third person, in respect
         to obligations or liabilities incurred by CHOPS or other producers in
         connection with their separate business unrelated to said Cameron
         highway, and obligations to CHOPS or BHP under this Agreement are
         several and not joint or in solido to CHOPS or other producer.

9.       Any individual producer, or his representative, will, at any time
         during normal business hours and upon reasonable notice, have access to
         the books, accounts and records of CHOPS for the purpose of verifying
         that CHOPS is operating the process of adjustments and determining
         values in accordance with the provisions of this Quality Bank. Samples
         used for Quality Bank calculations will be retained by CHOPS for 60
         days following the month in which the samples were obtained. Cost of
         such individual audits will be borne by the producer(s) requesting the
         audit.

                                   SECTION VI.

                                 PERIODIC REVIEW

1.       The Quality Bank will be periodically reviewed and updated in
         accordance with the following:

            -  Immediately prior to the date when Cameron Highway common stream
               replaces Mars crude oil as a component of differential market
               price, in order to re-establish adjustment factors and verify
               satisfactory correlation of an updated database.

            -  At any time a quality parameter other than gravity or sulfur
               significantly affects the pricing of the Cameron Highway common
               stream, or the pricing of LLS or Mars (if Mars is then currently
               being used as the proxy to Cameron Highway common stream).

            -  Every five years following April 30, 2002, to determine if the
               market for database crude oil types or the Cameron Highway common
               stream has changed sufficiently to warrant modifications of the
               adjustment factors or formulas used by the Quality Bank.

2.       In any subsequent review of the Quality Bank, the Cameron Highway
         common stream will be incorporated into the crude oil database if
         sufficient independently published price data are available. Other
         crude oils commonly marketed on the

                                      C-6

<PAGE>

         USGC may also be added at this time if required to expand the range of
         the crude oil database to ensure it encompasses the full range of
         gravity and sulfur applicable to crude oil streams that might be
         introduced into the pipeline system. These other crude oils will only
         be added if appropriate pricing data from an independent source is
         available covering the specified period.

3.       The following criteria will be used in assembling a historical
         database.

         -  It will include commercially traded Gulf of Mexico originating crude
            oil streams (types) that are representative of the U.S. Gulf Coast
            ("USGC") market and for which there are sufficient published price
            data.

         Import crude oils that routinely compete in the USGC market will be
         added to the historical database to cover the full range of key quality
         parameters anticipated to be seen in the pipeline system.

         -  If pricing data is based on transactions, such pricing must be
            continuously available from publicly available sources for the crude
            oils used, and ideally cover one (multiple preferred) pricing cycle.

         -  Accurate assay data on the crude oils must be available.

         -  Certain crude oils will be excluded from the database based on the
            characteristics listed below, provided that (i) such characteristic
            is not taken into account in the Quality Bank and (ii) the Cameron
            Highway common stream does not, or is not expected to, have such
            characteristic.

            -   Crude oils that are not chemically similar.

            -   Crude oils that are known to routinely contain contaminants,
                to a degree that market price is significantly affected.

            -   Crude oils whose assays indicate they are not whole crude
                oils.

4.       A historical database will contain, at a minimum, the prices, API
         gravity and sulfur content of each selected crude oil type. To the
         extent possible, the database should contain crude oil types which
         encompass the full range of gravity and sulfur applicable to crude oil
         streams that might be introduced into the pipeline system and provide
         sufficient variation of the key quality parameters to yield a robust
         Quality Bank. It is expected the database will include the most
         recently available monthly data for a minimum period encompassing not
         less than one complete crude oil pricing cycle or twelve consecutive
         months, whichever is greater. The database will be extended to a longer
         period if the required data are available, provided that the database
         will not be extended beyond sixty (60) months unless a determination is
         made that market conditions and transportation costs do not distort the
         older data.

5.       For the purpose of correlating the key quality parameters to price, the
         published crude oil price for each crude oil type will be adjusted to a
         commonly accepted market clearing location on the USGC for that type. .
         All costs that are reasonably expected to be incurred in transporting
         each crude oil from its usual marketing center to the selected market
         clearing location, using predominant and efficient transportation, will
         serve as the basis for such adjustments.

                                      C-7

<PAGE>

6.       All transportation costs will be based on arms-length transactions, and
         will exclude discounted or contract rates (such as those requiring
         minimum shipments over a specified period of time). If pipeline tariffs
         are not published then purchase and sale (buy/sell) differentials may
         be substituted, provided that such differentials are known or can be
         reasonably estimated from trade experience or market pricing.

7.       Other types of adjustments to deal with different pricing bases and
         timing biases may be made as reasonably determined to be necessary or
         convenient.

                                      C-8

<PAGE>

                                     TABLE 1
                    SAMPLE CALCULATION OF CHOPS QUALITY BANK


GRAVITY AND SULFUR WEIGHTING FACTORS

<TABLE>
<CAPTION>
                                                  GRAVITY LIMITS
                                        API Gravity           Deemed Gravity
                                        ------------------------------------
<S>                            <C>      <C>                   <C>
GRAVITY WEIGHTING (GW) =       31.50%   37 or less            API Gravity
SULFUR WEIGHTING (SW) =        44.30%   Between 37 - 45       37 API
                                        45 or greater         80 - API
</TABLE>

PLATT'S PRICING AND TESTED QUALITY      (Platt's Quote = Average Trade Month
                                        High/Low Mean, Workdays Only)

<TABLE>
<CAPTION>
                     Platt's
     Month    Crude   Quote   Gravity  Sulfur
---------------------------------------------
<S>           <C>    <C>      <C>      <C>
    Mar-02      LLS  $ 20.76   38.60    0.31%
    Mar-02     Mars  $ 18.37   29.90    1.93%
                     ------------------------
Difference           $  2.39    8.70    -1.62%
</TABLE>

CURRENT MONTH GRAVITY AND SULFUR ADJUSTMENT FACTORS

<TABLE>
<CAPTION>
<S>                                           <C>
a = LLS - Mars Price Differential =           $  2.3900
b = LLS - Mars Gravity Differential =              8.70
c = Mars - LLS Sulfur Differential =               1.62

GAF        = (GW times a) divided by b =      $0.086534 per degree API
SAF        = (SW times a) divided by c =      $0.653562 per % sulfur
</TABLE>

CALCULATION OF QUALITY BANK CREDIT/DEBIT

<TABLE>
<CAPTION>
                     T                          PG                               PG - WAG            GRAVITY
GRAVITY      (Prod Vol in Bbls)  API Grav  (Prod Gravity)    Bbls X PG       (Grav Difference)  CREDIT / (DEBIT)
-----------  ---------------------------------------------------------------------------------------------------
<S>          <C>                 <C>       <C>              <C>              <C>                <C>
Producer A      4,200,000.00       22.8        22.80         95,760,000          (3.881667)      ($1,410,771.67)
Producer B      2,100,000.00       37.5        37.00         77,700,000          10.318333        $1,875,072.44
Producer C      1,500,000.00       24.7        24.70         37,050,000          (1.981667)      ($  257,223.75)
Producer D        450,000.00       32.5        32.50         14,625,000           5.818333        $  226,568.91
Producer E        750,000.00       60.0        20.00         15,000,000          (6.681667)      ($  433,645.93)
              --------------               ----------------------------                          --------------
      Total     9,000,000.00                                240,135,000                          ($        0.00)
                                  WAG =    26.681667       = Weighted Avg PG
</TABLE>

<TABLE>
<CAPTION>
                        T                   PS                               WAS - PS                SULFUR
  SULFUR       (Prod Vol in Bbls)   (Prod wt% Sulfur)      Bbls X PS    (Sulfur Difference)     CREDIT / (DEBIT)
------------   -------------------------------------------------------------------------------------------------
<S>            <C>                  <C>                    <C>          <C>                     <C>
Producer A         4,200,000.00            2.96            12,432,000       (0.945000)          ($2,593,986.50)
Producer B         2,100,000.00            0.99             2,079,000        1.025000            $1,406,791.62
Producer C         1,500,000.00            1.98             2,970,000        0.035000            $   34,311.99
Producer D           450,000.00            1.12               504,000        0.895000            $  263,221.99
Producer E           750,000.00            0.20               150,000        1.815000            $  889,660.90
               ------------------------------------------------------                            -------------
       Total       9,000,000.00                            18,135,000                            $        0.00
                          WAS =        2.015000        = Weighted Avg PS
</TABLE>

                   CREDIT / (DEBIT) = PAYMENT FROM / (TO) BANK

<TABLE>
<CAPTION>
   TOTAL                      Gravity                  Sulfur                  Total
-----------------         ----------------------------------------------------------------
<S>                       <C>                     <C>                     <C>
Producer A                ($  1,410,771.67)       ($  2,593,986.50)       ($  4,004,758.17)
Producer B                 $  1,875,072.44         $  1,406,791.62         $  3,281,864.06
Producer C                ($    257,223.75)        $     34,311.99        ($    222,911.76)
Producer D                 $    226,568.91         $    263,221.99         $    489,790.90
Producer E                ($    433,645.93)        $    889,660.90         $    456,014.98
                          ----------------------------------------------------------------
           Total          ($          0.00)        $          0.00        ($          0.00)
</TABLE>

                                      C-9

<PAGE>

                                   EXHIBIT "D"

                MEMORANDUM OF AGREEMENT AND RECORDABLE AGREEMENT

         I.       PURPOSE. This Recordable Agreement dated as of ____________,
2003, (this "AGREEMENT") is executed to (i) bind the parties hereto to the
agreements and covenants contained herein and (ii) effect notice to third
parties of the agreements and covenants contained herein and in that certain
Purchase and Sale Agreement entered into as of even date herewith (the "PURCHASE
AND SALE AGREEMENT"), by and between Cameron Highway Oil Pipeline Company
("COMPANY"), on the one hand, and BHP Billiton Petroleum (Deepwater) Inc.
("PRODUCER"), on the other hand.

         II.      DESCRIPTION OF THE PROPERTY. This Agreement and the Purchase
and Sale Agreement affect all of Producer's right, title and interest (whether
now owned or hereafter acquired during the term of this Agreement) in and to any
hydrocarbons or crude oil ("OIL"), underlying the lands located offshore
Louisiana, Gulf of Mexico, Outer Continental Shelf, in the areas and blocks
listed below (collectively, the "DEDICATED LEASES"):

<TABLE>
<CAPTION>
   Areas                                      Blocks
   -----                                      ------
<S>                                           <C>
Green Canyon                                    698
Green Canyon                                    699
Green Canyon                                    700
Green Canyon                                    701
Green Canyon                                    742
Green Canyon                                    743
Green Canyon                                    744
Green Canyon                                    738
Green Canyon                                    739
Green Canyon                                    781
Green Canyon                                    782
Green Canyon                                    783
Green Canyon                                    785
Green Canyon                                    786
Green Canyon                                    787
</TABLE>

         For purposes of this Agreement, "DEDICATED PRODUCTION" includes all of
the Oil now or hereafter owned by Producer that is produced from the Dedicated
Leases.

         III.     CONSIDERATION. Producer and Company executed and entered into
this Agreement and the Purchase and Sale Agreement for and in consideration of,
among other things, the execution of, and the premises and mutual covenants
contained in, this Agreement and the Purchase and Sale Agreement, including,
without limitation, the agreements described in Articles IV-VII below, and other
good nd valuable consideration (the receipt and sufficiency of which is hereby
confirmed and acknowledged).

         IV.      TENDER AND COMMITMENT OF PRODUCTION. Producer permanently
tendered and committed (subject to the terms and conditions of the Purchase and
Sale Agreement), and Producer hereby permanently tenders and commits, to Company
for delivery to, and gathering by, Company all Oil owned by Producer and
produced, saved and marketed from the Dedicated Leases. In addition, Producer
agreed, and agrees, that any attempted assignment or transfer of any interest in
such production will be null and void unless such transfer includes an express
provision stating that such assignment or transfer is made

                                      D-1

<PAGE>

subject to the terms of this Agreement and the Purchase and Sale Agreement and
the transferee agrees to be bound by the terms and conditions of this Agreement
and the Purchase and Sale Agreement.

         V.       AGREEMENT TO BE BOUND. Company and Producer have executed and
entered into this Agreement and the Purchase and Sale Agreement for the
consideration herein described and hereby agree that the terms and conditions of
this Agreement and the Purchase and Sale Agreement contain all necessary terms
and conditions for the agreements described herein to be binding upon the
parties hereto, and Company and Producer agree to be bound by the terms and
conditions of this Agreement and the Purchase and Sale Agreement. Company and
Producer acknowledge and agree that (i) this Agreement has been executed in
addition to the Purchase and Sale Agreement and not as a replacement, supplement
or other amendment to any of the terms and conditions in the Purchase and Sale
Agreement and (ii) the Purchase and Sale Agreement contains terms and conditions
similar to those described herein and covering the subject matter hereof as well
as other terms and conditions. The terms and conditions of this Agreement and
the Purchase and Sale Agreement will be construed together; provided, however,
that the terms and conditions contained in the Purchase and Sale Agreement will
govern and control any conflicts, ambiguities or inconsistencies between the
terms and conditions of this Agreement and the Purchase and Sale Agreement.

         VI.      NAMES AND ADDRESSES OF PARTIES:

                  If to Company to:
                  Cameron Highway Oil Pipeline Company
                  Four Greenway Plaza
                  Houston, Texas  77046
                  Telephone: (832) 676-5666
                  Telecopy: (832) 676-1710

                  If to Producer to:
                  BHP Billiton Petroleum (Deepwater) Inc.
                  1360 Post Oak Blvd., Suite 150
                  Houston,  Texas 77056
                  Attn:  Vice President AODAT
                  Telephone: (713)961-8500
                  Telecopy: (713)961-8400
                  With a copy to:
                  BHP Billiton Petroleum (Deepwater) Inc.
                  1360 Post Oak Blvd.,  Suite 150
                  Houston, Texas 77056
                  Attn:  Joe Beaty
                  Telephone: (713)961-8658
                  Telecopy: (713)961-8670

                                      D-2

<PAGE>

         VII.     MISCELLANEOUS. This Agreement (i) may be executed in multiple
counterparts, each of which, when executed, will be deemed an original, and all
of which will constitute but one and the same instrument, (ii) may enforced by
specific performance and (iii) WILL BE GOVERNED BY TEXAS LAW TO THE EXTENT THE
LAW OF ANOTHER JURISDICTION IS NOT REQUIRED TO BE APPLIED. Subject to the
provisions of this Agreement and the Purchase and Sale Agreement, any Party may
transfer, assign or otherwise alienate any or all of its rights, title or
interest under this Agreement (such transfers will hereinafter be referred to as
"assignments") to any other Person with or without the consent of all of the
other Parties; provided, however, that no such assignment will be effective as
to the nonassigning Party or Parties until the assigning Party has delivered
written notice of such assignment to all nonassigning Parties.

                [Remainder of this page intentionally left blank]

                                      D-3

<PAGE>

         IN WITNESS WHEREOF, the Parties have hereunto executed this Agreement
as of the date first written in the Preamble.

                                    COMPANY
                                    CAMERON HIGHWAY OIL PIPELINE COMPANY

                                    By:_________________________________

                                    Printed Name:_______________________

                                    Title:______________________________

                                    PRODUCER
                                    BHP BILLITON PETROLEUM (DEEPWATER) INC.

                                    By:_________________________________

                                    Printed Name:_______________________

                                    Title:______________________________

                                      D-4

<PAGE>

         STATE OF  [TEXAS/LOUISIANA]
         COUNTY OF _______________

         This instrument was acknowledged before me on ____________, 2003, by
_______________, the __________ of Cameron Highway Oil Pipeline Company on
behalf of said partnership.

                                           _____________________________________

                                           Notary Public, State of Texas

         STATE OF  [TEXAS/LOUISIANA]
         COUNTY OF _______________

         This instrument was acknowledged before me on ____________, 2003, by
_______________, the __________ of BHP Billiton Petroleum (Deepwater) Inc., on
behalf of said company.

                                           _____________________________________

                                           Notary Public, State of Texas

                                      D-5

<PAGE>

                                   EXHIBIT "E"
                           OIL QUALITY SPECIFICATIONS

1.       Crude Oil delivered by Producer to CHOPS under the terms of this
         Purchase and Sale Agreement will conform to the specifications and
         operating conditions required by other refineries, terminals or
         pipelines downstream of the Delivery Point(s) and Additional Delivery
         Points ultimately receiving the Crude Oil (the "Downstream Facilities")
         and will meet the following specifications except if the specifications
         of the Downstream Facilities should be more stringent

         (a)      Viscosity, Gravity, and Pour Point. The Crude Oil must be good
                  and merchantable Crude Oil of such viscosity, gravity and pour
                  point such that it will be readily susceptible for movement
                  through Cameron Highway, and subject to the Quality Bank set
                  forth in Exhibit C, will not materially affect or damage the
                  quality of other shipments or cause disadvantage to other
                  shippers and/or CHOPS. No Crude Oil will be accepted for
                  purchase which has a pour point greater than 40 degrees
                  Fahrenheit or viscosity greater than 400 Saybolt Universal
                  Seconds at 60 degrees Fahrenheit unless under terms and
                  conditions acceptable to CHOPS.

         (b)      Basic Sediment, Water and Other Impurities. The Crude Oil will
                  not have a content consisting of more than one percent (1%) of
                  basic sediment, water or other impurities. CHOPS reserves the
                  right to reject Crude Oil containing more than one percent
                  (1%) of basic sediment, water, and other impurities, except
                  that sediment and water limitations of a connecting carrier
                  may be imposed upon CHOPS when such limits are less than that
                  of CHOPS, in which case the limitations of the connecting
                  carrier will be applied.

         (c)      Vapor Pressure. The Crude Oil will not have a Reid Vapor
                  Pressure (RVP) of more than 8.6 pounds per square inch. During
                  the winter months (October through November), Crude Oil with a
                  maximum RVP of 9.6 will be accepted. Crude Oil with a maximum
                  RVP above 9.6 may be accepted at the discretion of Cameron
                  Highway.

         (d)      Refined. The Crude Oil will not have been partially refined or
                  altered in any way so as to impact its value.

         (e)      Contamination. The Crude Oil will not have been contaminated
                  by the presence of any chemicals, chlorinated and/or
                  oxygenated hydrocarbons, arsenic, or other metals; provided,
                  however, that this Section 1(f) will not prohibit Producer's
                  use of corrosion/paraffin inhibitors, asphaltene dispersants
                  or demulsifiers in its platform or pipeline operations. The
                  Crude Oil will not

                                      E-1

<PAGE>

                  have been contaminated by the presence of methanol. Producer
                  will contact CHOPS prior to subsea well start-up, well
                  unloading operations, and other procedures requiring the use
                  of methanol.

2.       If any Crude Oil delivered and sold by Producer to CHOPS hereunder
         fails at any time to conform to the applicable specifications above,
         then, subject to 5(a) below, CHOPS will immediately have the right to
         discontinue purchasing such non-conforming Crude Oil so long as such
         Crude Oil continues to be non-conforming. In any event, Producer will
         undertake commercially reasonable measures to eliminate the cause of
         such non-conformance. Producer will be held responsible for any
         disposal required and/or expenses incurred in CHOPS' handling of such
         non-conforming Crude Oil.

3.       Assay. Upon initial start up of production, a laboratory analysis of
         Crude Oil will be submitted to CHOPS by Producer and will include API
         gravity, Reid vapor pressure, pour point, sediment and water content,
         sulfur content, viscosity at 60 and 100 degrees Fahrenheit, and other
         characteristics as may be required by CHOPS.

4.       CHOPS reserves the right to periodically sample and test the quality of
         the Crude Oil delivered by Producer at the Receipt Point(s). CHOPS
         shall be responsible for all costs attributable to such periodic
         sampling and testing.

5.       To the extent CHOPS must discontinue redelivery of Cameron Highway
         common stream Crude Oil to one or more of the Delivery Points and
         Additional Delivery Points as a result of Producer's non-conformance
         hereunder, Producer and CHOPS agree to the following:

         (a)      If Producer is the sole party nominating deliveries to such
                  Delivery Point(s) and Additional Delivery Points that is not
                  accepting the common stream, CHOPS will continue to accept and
                  redeliver Producer's Crude Oil to the other Delivery Point(s)
                  and Additional Delivery Points that are accepting the common
                  stream until such time as CHOPS is required to again deliver
                  Crude Oil to any Delivery Point or Additional Delivery Point
                  that is not accepting the common stream by another party
                  delivering conforming Crude Oil. It being the intent of both
                  of the Parties that CHOPS will continue to accept and
                  redeliver Producer's Crude Oil so long as redeliveries can be
                  made to any Delivery Point and any Additional Delivery Point
                  and Cameron Highway does not have to curtail its deliveries to
                  any Delivery Point or Additional Delivery Point due to
                  Producer's non-conformance.

         (b)      If third-party conforming Crude Oil is nominated to any
                  Delivery Point or Additional Delivery Point that is not
                  accepting the common stream, CHOPS will immediately have the
                  right to discontinue purchasing Crude Oil so long as such
                  Crude Oil continues to be non-conforming. In any event,
                  Producer will undertake commercially reasonable measures to
                  eliminate the cause of such non-conformance.

                                      E-2

<PAGE>

                                 CAMERON HIGHWAY

                           PURCHASE AND SALE AGREEMENT

         THIS CAMERON HIGHWAY PURCHASE AND SALE AGREEMENT dated effective the
23rd day of June, 2003 (the "Effective Date"), by and between UNION OIL COMPANY
OF CALIFORNIA ("UNOCAL") and CAMERON HIGHWAY OIL PIPELINE COMPANY ("CHOPS")
(hereinafter "Purchase and Sale Agreement"). UNOCAL and CHOPS are individually
referred to herein as a "Party", and collectively as "Parties".

                                   WITNESSETH:

         WHEREAS, UNOCAL is a working interest owner in certain offshore oil and
gas leases located in the Southern Green Canyon Area of the Gulf of Mexico, and
along with its co-working interest owners in the leases are developing or are
planning to develop the associated fields for the production of oil and gas as
further described herein;

         WHEREAS, subject to the terms of the Construction Agreement (as defined
in "Definitions"), CHOPS will construct and install (or cause the construction
and installation of) a crude oil pipeline ("Cameron Highway") and connect such
pipeline with a deepwater Crude Oil pipeline ("Caesar Pipeline System") to be
constructed by Caesar Oil Pipeline Company, LLC ("Caesar") from the Southern
Green Canyon Area at Ship Shoal Block 332 ; and

         WHEREAS, CHOPS will purchase crude oil produced by UNOCAL from the
offshore leases described above and resell volumes of crude oil to UNOCAL at
agreed delivery points, all as set forth in this Purchase and Sale Agreement
(such purchase and sale arrangements collectively referred to as the
"Transaction"); and

         WHEREAS, the Parties have agreed to undertake such activities necessary
to consummate the Transaction in accordance with the terms stated herein.

         NOW THEREFORE, in consideration of the premises and the mutual promises
and covenants contained herein, the receipt and sufficiency of which are hereby
acknowledged, and intending hereby to be legally bound, the Parties hereby agree
to the following principal terms and conditions of the Transaction:

                                   DEFINITIONS

         Capitalized terms used in this Purchase and Sale Agreement that are
defined in this Purchase and Sale Agreement shall have the meanings ascribed to
them herein. As used in this Purchase and Sale Agreement, the initially
capitalized terms listed below shall have the following meanings:

         "AAA" shall mean the American Arbitration Association.

         "API" shall mean American Petroleum Institute.

         "ADDITIONAL DELIVERY POINT" shall mean each of the following points to
be established on Cameron Highway, where CHOPS shall deliver Crude Oil to UNOCAL
(or its designees) upon nomination of any such point by UNOCAL in accordance
with the terms of this Agreement: the Premcor Refinery, Premcor's Lucas Terminal
and Valero Energy

                                     - 1 -
<PAGE>

Company's Texas City Refinery, and such other mutually agreed to points, such
agreement not to be unreasonably withheld. Deliveries to all Additional Delivery
Points shall be through a direct connection with Cameron Highway and such
Additional Delivery Point.

         "ATLANTIS" shall mean Green Canyon Blocks 698, 699, 700, 701, 742, 743
and 744, Gulf of Mexico.

         "BARREL" shall mean forty-two (42) U.S. gallons at a temperature of
60 degrees F and 0 PSIA.

         "BASE GAS PRICE" shall mean the Henry Hub gas price as published in the
first of the month issue of FERC's Inside Gas Market Report for the then current
month of fuel purchases.

         "BASE OIL PRICE" shall mean Platt's Oilgram Mars monthly average price
(Trading) per Barrel. Platt's prices are as quoted in Platt's Oilgram and are
calculated from the 26th of the month, two (2) months prior to the month of
delivery through the 25th of the month, one (1) month prior to delivery,
excluding weekends and holidays.

         "BHP" shall mean BHP Billiton Petroleum (Deepwater) Inc., a Delaware
corporation.

         "BP" shall mean BP Exploration & Production Inc.

         "BONA FIDE REQUEST" shall have the meaning ascribed to such term in
Article VIII.a.i of this Purchase and Sale Agreement.

         "BOPD" shall mean Barrels of Crude Oil per Day.

         "BTU" or "British Thermal Unit" shall mean the amount of heat required
to raise the temperature of one (1) pound of water one degree (1 degree)
Fahrenheit at sixty degrees (60 degrees) Fahrenheit at a pressure of 14.73 PSIG
and determined on a gross, dry basis.

         "CAESAR PIPELINE SYSTEM" shall mean the approximately sixty (60) miles
of twenty-eight inch (28") offshore Crude Oil pipeline and all related laterals
and equipment and facilities to be owned, constructed and installed by Caesar or
its designee(s) that will extend from the area of the Initial Dedicated Leases
to SS 332 where it will connect into Cameron Highway and could potentially
extend to other platforms and/or interconnect with other pipelines.

         "CAMERON HIGHWAY" shall mean the offshore Crude Oil pipeline and all
related equipment and facilities to be constructed and owned by CHOPS that will
extend from SS 332 to the Delivery Points (as such term is defined herein) but
shall not include any extensions, expansions or additions to such offshore Crude
Oil pipeline which are not described in this Purchase and Sale Agreement. Such
pipeline shall be used by CHOPS to purchase and sell the Crude Oil under this
Purchase and Sale Agreement.

         "CAMERON HIGHWAY COMPLETION DATE" shall mean the date on which Cameron
Highway is Fully Operational.

         "CHOPS" shall mean Cameron Highway Oil Pipeline Company, a Delaware
general partnership.

         "CHOPS GROUP" shall mean CHOPS and its affiliates, subsidiaries,
co-owners and joint venturers its and their respective employees, officers,
directors, representatives, agents, contractors and subcontractors

                                     - 2 -
<PAGE>

         "CONFIDENTIALITY AGREEMENT" shall have the meaning ascribed to such
term in Article XXVII.

         "CONSTRUCTION AGREEMENT" shall mean that certain Construction Agreement
dated of even date herewith between BP, Mardi Gras, GTM and CHOPS.

         "CONTRACT QUARTER" shall mean a consecutive three (3) month period. The
first such Contract Quarter shall begin with the month that production commences
from the first of the Dedicated Leases to commence production and ends at the
beginning of the next calendar quarter.

         "CRUDE OIL" shall mean the liquid hydrocarbon production from wells, or
a blend of such, in its natural form, not having been enhanced or altered in any
manner or by any process, other than those processes that normally occur on an
offshore production facility, that would result in misrepresentation of its true
value for adaptability to refining as a whole Crude Oil.

         "DAY" shall mean a period of twenty-four (24) consecutive hours,
beginning and ending at 7:00 AM (CST).

         "DEDICATED LEASES" shall mean the (i) Initial Dedicated Leases, as
described on Exhibit "A", and (ii) leases underlying other offshore fields that
UNOCAL has the right to dedicate to this Purchase and Sale Agreement pursuant to
Article IV. hereof, and which shall be added to Exhibit "A".

         "DEDICATED PRODUCTION" shall mean the first volumes of Crude Oil
produced from the Dedicated Leases up to the applicable UNOCAL MDQ that are (i)
owned by UNOCAL (or its successors or assigns, and/or (ii) with respect to
royalty volumes of Crude Oil owned and/or taken in kind by the Minerals
Management Service, controlled by UNOCAL.

         "DELIVERY POINT(S)" shall mean the following points where CHOPS shall
deliver Crude Oil to UNOCAL (its designee(s)): BP Products North America Inc.'s
("BP Products") Texas City Refinery, TEPPCO Seaway Terminal ("Seaway") at Texas
City, Sun Marine Terminal ("Sun") in Nederland, UNOCAL Pipeline Company's
Beaumont Terminal ("Unocal Pipeline"). Deliveries to all Delivery Points shall
be through a direct connection" with Cameron Highway and such Delivery Point.

         "DISPUTE(S)" shall have the meaning ascribed to such term in Article
XXVI.a. hereof.

         "EFFECTIVE DATE" shall have the meaning ascribed to it in the preamble
to this Purchase and Sale Agreement.

         "EPFS" shall mean El Paso Field Services, L.P., a Delaware limited
partnership.

         "EPN" shall mean El Paso Energy Partners, L.P., a Delaware limited
partnership, predecessor to GTM.

         "EXCESS PRODUCTION" shall mean Crude Oil produced from the Dedicated
Leases in excess of the Dedicated Production that is (i) owned by UNOCAL (or its
successor or assigns), and/or (ii) with respect to royalty volumes of Crude Oil
owned and/or taken in kind by the Minerals Management Service, controlled by
UNOCAL. Such Excess Production is not required to be delivered or sold to
Cameron Highway under the terms of this Purchase and Sale Agreement.

                                     - 3 -
<PAGE>

         "FERC" shall have the meaning ascribed to it in Article IX hereof.

         "FINANCIALLY CAPABLE ENTITY" shall have the meaning ascribed to it in
Article XXII.a.i.(C).

         "FIRM" shall mean not subject to interruption or curtailment except in
the event of Force Majeure or as provided in Article X.b hereof.

         "FORCE MAJEURE" shall have the meaning set forth in Article XXV.

         "FULLY OPERATIONAL" shall mean that the Cameron Highway pipeline
system, including all Delivery Point(s), is completed, active and operational
such that it is capable of receiving all Dedicated Production at the Receipt
Point(s) and delivering an equivalent volume of Crude Oil at the Delivery
Point(s).

         "GTM" shall mean GulfTerra Energy Partners, L.P., a Delaware limited
partnership, and successor to EPN.

         "GTM SUB" shall have the meaning ascribed to it in Article
XXII.a.i.(A).

         "GB 72" shall mean the existing platform owned by GTM located in Garden
Banks Block 72, Gulf of Mexico.

         "HOLSTEIN" shall mean Green Canyon Blocks 644 and 645, Gulf of Mexico.

         "INITIAL DEDICATED LEASES" shall mean the leases underlying Mad Dog.

         "INITIAL RECEIPT POINT" shall mean the Receipt Point between the Caesar
System and Cameron Highway on SS 332, specifically the insulating flange located
immediately upstream of the custody transfer meter located on SS 332.

         "INTERCONNECT AGREEMENT" shall mean that certain Offshore Facilities
Interconnection, Construction and Operating Agreement dated of even date
herewith between Caesar, Manta Ray Gathering Company, L.L.C., GTM and CHOPS.

         "MAD DOG" shall mean Green Canyon Blocks 738, 739, 781, 782, 783, 825,
826 and 827, Gulf of Mexico.

         "MARDI GRAS" shall mean Mardi Gras Transportation System Inc., a
Delaware corporation.

         "MMBTU" shall mean one million (1,000,000) BTUs.

         "MOU" shall mean that certain Cameron Highway Memorandum of
Understanding between EPN and UNOCAL effective February 12, 2002.

         "NON-SUBMITTING PARTY" shall have the meaning ascribed to such term in
Article XXVI.a.

         "OCSLA" shall mean the Outer Continental Shelf Lands, Act (43
U.S.C.Sections 1331 et seq.) as in effect on February 12, 2002, the Effective
Date of the MOU.

         "OPERATIONAL" shall mean that the Cameron Highway pipeline system is
active and operational such that it is capable of receiving all Dedicated
Production at the Receipt Point(s) and delivering an equivalent volume of Crude
Oil to one (1) or more of the Delivery Point(s).

                                     - 4 -
<PAGE>

         "PARTY OR PARTIES" shall have the meanings ascribed to such terms in
the preamble to this Purchase and Sale Agreement.

         "PORT ARTHUR LATERAL" shall mean the twenty-four inch (24") pipeline
segment from HI A-5 "C" to the Sun and Unocal Pipeline Delivery Points, with an
initial capacity of 350,000 BOPD expandable to 400,000 BOPD.

         "POSEIDON" shall mean Poseidon Oil Pipeline Company, L.L.C., a Delaware
limited liability company.

         "POSEIDON PIPELINE" shall mean the crude oil pipeline system owned by
Poseidon that consists of (i) 117 miles of pipeline extending from the GB 72 to
SS 332, (ii) 122 miles of pipeline extending from SS 332 to Houma, Louisiana,
(iii) 32 miles of pipeline extending from Ewing Bank Block 873 to South
Timbalier Block 212, and (iv) 17 miles of pipeline extending from Garden Banks
Block 260 to South Marsh Island Block 205, as such pipeline system may be
modified or extended. Poseidon Pipeline is operated by GTM.

         "PSIA" shall mean pounds per square inch absolute.

         "PSIG" shall mean pounds per square inch gauge.

         "RECEIPT POINT(S)" shall mean the point(s) including, without
limitation, the Initial Receipt Point, where CHOPS shall receive and purchase
Crude Oil from UNOCAL.

         "REQUIRED COMMENCEMENT DATE" shall have the meaning ascribed to such
term in Article XI.c hereof.

         "SS 332" shall mean either (i) a new platform to be located in Ship
Shoal Block 332, Gulf of Mexico and to be constructed, installed and owned by
CHOPS; or (ii) the existing platform owned by Atlantis Offshore, LLC located in
Ship Shoal Block 332, Gulf of Mexico, as determined pursuant to the Interconnect
Agreement.

         "ST 301" shall mean the platform owned by Shell Offshore Inc. located
in South Timbalier Block 301, Gulf of Mexico.

         "SUBMITTING PARTY" shall have the meaning ascribed to such term in
Article XXVI.a hereof.

         "TEXAS CITY LATERAL" shall mean the twenty-four inch (24") pipeline
segment from HI A-5 "C" to the Seaway and Amoco Oil Delivery Points, with an
initial capacity of 350,000 BOPD expandable to 400,000 BOPD.

         "TRANSACTION" shall have the meaning ascribed to such term in the
preamble to this Purchase and Sale Agreement.

         "UNOCAL" shall mean Union Oil Company of California a California
corporation.

         "UNOCAL CORP SUB" shall have the meaning ascribed to it in Article
XXII.b.ii.

         "UNOCAL GROUP" shall mean UNOCAL and its affiliates, subsidiaries,
co-working interest owners, members and joint venturers and the respective
employees, officers, directors, representatives, agents, contractors and
subcontractors of each.

         "UNOCAL MDQ" shall mean the maximum daily quantity of Dedicated
Production CHOPS is required to accept and purchase from UNOCAL on a Firm basis
at the Receipt Point(s) each Day, as further described in this Purchase and Sale
Agreement.

                                     - 5 -
<PAGE>

         "UNOCAL PRODUCTION" shall mean Dedicated Production and Excess
Production, collectively.

                                   ARTICLE I.

                         CONSTRUCTION OF CAMERON HIGHWAY

CHOPS shall construct and install Cameron Highway pursuant to the Construction
Agreement and allow connection with the Caesar System as provided in the
Interconnect Agreement.

                                   ARTICLE II.

                           CHOPS PURCHASE FROM UNOCAL

         a.       CHOPS agrees to receive and purchase on a Firm basis, all
Dedicated Production delivered by UNOCAL at the Receipt Point(s). If requested
by UNOCAL, CHOPS shall receive and purchase Excess Production on an
interruptible basis to the extent capacity is available on Cameron Highway.
Unless another Receipt Point is mutually agreed to by the Parties, the UNOCAL
Production from the Initial Dedicated Leases shall be received and purchased by
CHOPS at the Initial Receipt Point. UNOCAL shall be responsible for costs to
deliver its Crude Oil, including UNOCAL Production, to the Initial Receipt
Point.

         b.       UNOCAL shall have the right to add Receipt Point(s) in the
future at locations on Cameron Highway for the receipt of Crude Oil owned by
UNOCAL and produced from leases other than the Initial Dedicated Leases,
provided that UNOCAL and CHOPS agree upon the terms and conditions of an
interconnect agreement outlining the design, construction, responsibilities and
reimbursements for the facilities, and there is available capacity on Cameron
Highway.

                                  ARTICLE III.

                              CHOPS SALE TO UNOCAL

         a.       CHOPS shall sell and deliver to UNOCAL, and UNOCAL shall
receive and purchase from CHOPS, on a Firm basis, at the Delivery Point(s) and,
as applicable, the Additional Delivery Points, Crude Oil equivalent in volume to
the volume delivered by UNOCAL to CHOPS at the Receipt Point(s) pursuant to
Article II. adjusted for pipeline loss or gain allowance as described in Article
XIII hereof. CHOPS shall be responsible for the costs to deliver the Crude Oil
from the Receipt Point(s) to the Delivery Point(s) and, as applicable,
Additional Delivery Points. UNOCAL will negotiate in good faith and in a timely
manner with CHOPS to establish a Cameron Highway delivery point at UNOCAL
Pipeline Company's Beaumont Terminal under commercially reasonable terms. CHOPS
shall be responsible for the design, cost, construction and installation of the
twenty-four inch (24") pipeline to UNOCAL Pipeline Company's Beaumont Terminal.

                                     - 6 -
<PAGE>

                                   ARTICLE IV.

                            DEDICATION OF PRODUCTION

         a.       UNOCAL hereby dedicates the Dedicated Production produced from
the Initial Dedicated Leases to Cameron Highway. Except as otherwise expressly
provided in this Purchase and Sale Agreement, such dedication shall be for the
commercial life of production from the Initial Dedicated Leases. UNOCAL reserves
the rights and quantities of Dedicated Production sufficient to satisfy the
following: the right to deliver royalty oil in kind to lessors of the Dedicated
Leases; the right to process such Dedicated Production prior to delivery to
CHOPS by the use of such processes that normally occur on an offshore production
facility; the right to operate the Dedicated Leases free from any control by
CHOPS, including without limitation, the right (but not the obligation) to drill
new wells, to repair and rework old wells, to shut in wells, plug and abandon
wells and to relinquish any or all of the Dedicated Leases in whole or in part;
and the right to use such Dedicated Production for pipeline fill on Cameron
Highway and the Caesar System.

         b.       Except as otherwise expressly provided in this Purchase and
Sale Agreement, the foregoing dedication of the Initial Dedicated Leases by
UNOCAL shall be an interest running with the land and shall be binding upon the
successors and assigns of UNOCAL. The Parties agree to promptly execute and file
a memorandum of agreement and recordable agreement in the form of Exhibit "D",
together with all documents in the chain of title (including applicable leases
and assignments of interests) for the Dedicated Leases, with the MMS and in the
county and parish records of the appropriate jurisdictions.

         c.       Subject to available capacity on Cameron Highway, UNOCAL shall
have the right to dedicate Crude Oil produced from other offshore leases it owns
an interest in under this Purchase and Sale Agreement. At UNOCAL's request, such
other leases in which UNOCAL owns an interest and dedicates to this Purchase and
Sale Agreement within a period of ten (10) years from the date of initial
delivery by CHOPS of Dedicated Production to a Delivery Point or Additional
Delivery Point, as applicable, hereunder shall receive the same terms and
conditions applicable to the Initial Dedicated Leases. Such dedication shall be
for the commercial life of production from such Dedicated Leases. The Parties
agree that the rights granted to UNOCAL under this Article IV.c. shall be rights
granted only to, and exercisable by, UNOCAL (and not to permitted assignees of
UNOCAL ); provided, however, that to the extent Crude Oil from other offshore
leases is dedicated hereunder pursuant to the terms of this Article IV.c. prior
to a permitted assignment by UNOCAL of an interest in such Dedicated Leases,
then following such permitted assignment, such Dedicated Production shall
continue to receive the same terms and conditions as were applicable to such
Dedicated Production prior to such assignment; provided, that such assignment is
treated in accordance with Article XXIV.

                                   ARTICLE V.

                         WARRANTY OF TITLE TO CRUDE OIL

         a.       UNOCAL hereby represents and warrants that, it has good and
marketable title and the right and authority to deliver to CHOPS, all Crude Oil
to be delivered by UNOCAL to CHOPS at the Point(s) of Receipt hereunder. UNOCAL
represents and warrants

                                     - 7 -
<PAGE>

that all Crude Oil delivered by UNOCAL hereunder shall be free and clear of all
liens, encumbrances and claims whatsoever and AGREES TO RELEASE, PROTECT,
DEFEND, INDEMNIFY AND HOLD HARMLESS CHOPS, its affiliates, and their officers,
directors, employees, agents and representatives against all losses incurred by
such party on account of any such liens, encumbrances and claims. UNOCAL hereby
represents and warrants that, as of the date this Purchase and Sale Agreement is
executed, UNOCAL owns the applicable working interest share in each of the
Dedicated Leases as listed on Exhibit "A" hereof.

         b.       CHOPS represents and warrants that it has the right and
authority to deliver to UNOCAL at the Delivery Point(s) and Additional Delivery
Points, all Crude Oil delivered to Unocal hereunder. CHOPS represents and
warrants that all such Crude Oil from the time of receipt to the time of
delivery by CHOPS shall be free and clear of all liens, encumbrances and claims
whatsoever and AGREES TO RELEASE, PROTECT, DEFEND, INDEMNIFY AND HOLD HARMLESS
UNOCAL, its affiliates and their respective officers, directors, employees,
agents and representatives against all losses incurred by such party on account
of any such liens, encumbrances and claims.

                                   ARTICLE VI.

                            MAXIMUM DAILY QUANTITIES

         a.       As early as reasonably practicable in order to provide CHOPS
reasonable time to contract available space on Cameron Highway with third
parties and affiliated exploration and production companies, but in no event
later than five (5) Days prior to the first Day of each calendar month, UNOCAL
shall give CHOPS written notice of the UNOCAL MDQ for the succeeding month,
which shall equal one of the following UNOCAL MDQ levels:

                   i)       Level 1       -       12,500 BOPD

                   ii)      Level 2       -       10,000 BOPD

                   iii)     Level 3       -        7,500 BOPD

         Such minimum five (5) Day notice period may be changed with the
agreement of UNOCAL and CHOPS based on safety or environmental concerns or the
final Cameron Highway nomination deadline. Notwithstanding the foregoing and
subject to the terms of this Purchase and Sale Agreement, CHOPS shall be
obligated to receive and purchase from UNOCAL a minimum volume of Dedicated
Production up to the applicable UNOCAL MDQ.

         b.       If on any Day, UNOCAL does not deliver Dedicated Production to
Cameron Highway equal to the applicable UNOCAL MDQ selected by UNOCAL pursuant
to Article VI.a. above, CHOPS shall have the right to utilize such unused
capacity on a fully interruptible basis.

         c.       Dedicated Production delivered to the Receipt Point(s) by
UNOCAL that is produced from Dedicated Leases other than the Initial Dedicated
Leases shall be credited against the applicable UNOCAL MDQ so long as deliveries
by UNOCAL have not exceeded the applicable UNOCAL MDQ at the time such
additional Dedicated Production is delivered to the Receipt Point(s) and there
is UNOCAL MDQ capacity available because UNOCAL does not have the production
available from the Initial Dedicated Leases to fulfill its UNOCAL MDQ
obligations.

                                     - 8 -
<PAGE>

         d.       UNOCAL shall have the right to deliver Crude Oil that has not
been dedicated to this Purchase and Sale Agreement to the Receipt Point(s), and
if capacity on Cameron Highway is available, UNOCAL shall have the right to
require CHOPS to enter into an interruptible purchase and sale arrangement for
such Crude Oil with differentials no greater than those contained in Article
XII. The right to deliver Crude Oil that has not been dedicated to this Purchase
and Sale Agreement and receive differentials no greater than those contained in
Article XII. shall be a right granted only to, and exercisable by, UNOCAL (and
not to permitted assignees of UNOCAL); provided, however, that to the extent an
interruptible purchase and sale arrangement for such Crude Oil is entered into
pursuant to this Article VI.e prior to a permitted assignment by UNOCAL of an
interest in such Crude Oil, then following such permitted assignment, such Crude
Oil shall continue to receive the same differentials under such interruptible
purchase and sale arrangement as were applicable to such interruptible purchase
and sale arrangement prior to such assignment; provided, that such assignment is
treated in accordance with Article XXIV.

         e.       Except as provided in Article VIII. hereof, CHOPS shall not
enter into any firm purchase and sale arrangements if such arrangements would
reasonably be expected by a reasonable and prudent operator to jeopardize the
ability of such operator to accept and purchase, on a Firm basis, the volume of
Crude Oil equivalent to Level 1 of the UNOCAL MDQ levels set forth in Article
VI.a. above, at the Receipt Point(s) from UNOCAL hereunder.

         f.       At UNOCAL's request, CHOPS shall provide UNOCAL then current
and up-to-date information regarding the aggregate contracted firm and
interruptible throughput of Cameron Highway.

                                  ARTICLE VII.

                             INCREASE IN UNOCAL MDQ

         a.       Notwithstanding anything to the contrary contained herein, at
UNOCAL's request (to be accompanied by supporting data reasonably satisfactory
to CHOPS) and to the extent capacity is available on Cameron Highway, CHOPS
shall increase (i) Level 1 of the UNOCAL MDQ Levels set forth in Article VI.a.
to any amount less than or equal to 15,000 BOPD, and the remaining two (2)
Levels of the UNOCAL MDQ Levels shall remain unchanged, and (ii) to the extent
UNOCAL requests that Level 1 of the UNOCAL MDQ Levels be increased in excess of
15,000 BOPD, all of the remaining two (2) Levels of the UNOCAL MDQ Levels shall
be increased by the same amount that the increase in Level 1 exceeds 15,000
BOPD. Upon such increase in the applicable Level(s) of the UNOCAL MDQ Levels,
CHOPS shall be obligated to receive and purchase Dedicated Production at the
Receipt Point(s) at such increased Levels and sell the equivalent volume of
Crude Oil to UNOCAL (as provided in Article III.a. above) at the Delivery
Point(s) and Additional Delivery Points, all on a Firm basis as provided in this
Purchase and Sale Agreement. The terms related to an increase in UNOCAL MDQ, and
the rights related thereto, shall be rights granted only to, and exercisable by,
UNOCAL (and not to permitted assignees of UNOCAL); provided, however, that to
the extent an increase in any UNOCAL MDQ Level has occurred pursuant to this
Article VII.a. prior to a permitted assignment by UNOCAL of an interest in the
Dedicated Leases and/or Dedicated Production, such increase in UNOCAL MDQ
Level(s) shall continue in effect following such permitted assignment provided
that such assignment and the allocation of such MDQ amounts are treated in
accordance with Article XXIV.

                                     - 9 -
<PAGE>

         b.       In addition, subject to Article VII.c. below, it is agreed by
UNOCAL and CHOPS that in the event UNOCAL has delivered Crude Oil equivalent to
the applicable UNOCAL MDQ and wishes to deliver Dedicated Production from
Dedicated Leases other than the Initial Dedicated Leases, then upon the
dedication of such other Dedicated Leases, CHOPS shall increase Level 1 of the
UNOCAL MDQ Levels set forth in Article VI.a. in order to accommodate such
additional Dedicated Production; provided, that in no event shall Level 1 exceed
15,000 BOPD unless all remaining two (2) Levels of the UNOCAL MDQ Levels are
increased by the same volume as the amount Level 1 was increased in excess of
15,000 BOPD.

         c.       In the event capacity on Cameron Highway is not available for
CHOPS to receive and purchase Crude Oil at such increased UNOCAL MDQ Levels as
requested by UNOCAL in accordance with Article VII.a. and Article VII.b above,
CHOPS shall not unreasonably refuse to expand Cameron Highway to accommodate
such additional volumes of Dedicated Production, provided such expansion is
commercially reasonable and economically viable for Cameron Highway in CHOPS'
sole discretion. CHOPS shall demonstrate such non-viability of such expansion to
UNOCAL if CHOPS determines that such expansion of Cameron Highway is not
commercially reasonable and/or economically viable for Cameron Highway. In such
event, CHOPS and UNOCAL shall use good faith efforts to jointly develop a
transaction that is commercially reasonable and economically viable for Cameron
Highway and UNOCAL.

                                  ARTICLE VIII.

                             REDUCTION IN UNOCAL MDQ

         a.       In the event there has not been an increase, in accordance
with Article VII. above, in Level 1 of the UNOCAL MDQ Levels resulting in Level
1 being greater than 12,500 BOPD, CHOPS shall have the right to request that
UNOCAL reduce, temporarily or permanently, all three (3) Levels of the UNOCAL
MDQ Levels set forth in Article VI.a. above so long as each of the conditions
precedent contained in Article VIII.a. below have been satisfied:

                  i.       Conditions Precedent:

                           (A)      Forty-eight (48) calendar months must have
                  elapsed since the date of the first receipts and purchase of
                  Dedicated Production from UNOCAL by CHOPS on Cameron Highway;

                           (B)      Except for reasons of Force Majeure or the
                  failure of CHOPS for any reason to receive and purchase all
                  volumes of Crude Oil delivered by UNOCAL at the Receipt
                  Point(s), UNOCAL has not utilized a minimum of 85% of Level 1
                  of the UNOCAL MDQ Levels for at least nine (9) of the
                  immediately preceding twelve (12) calendar months;

                           (C)      CHOPS can demonstrate to the reasonable
                  satisfaction of UNOCAL that CHOPS has received a bona fide
                  request from any party, for a firm purchase and sale
                  arrangement on Cameron Highway and such request includes a
                  life of lease dedication by such party with respect to all
                  leases from which Crude Oil subject to such arrangement will
                  be produced (a "BONA FIDE REQUEST");

                           (D)      UNOCAL is unable to demonstrate to CHOPS
                  (with data that reasonably supports such contention) that
                  UNOCAL has or will have the ability to consistently deliver to
                  the Receipt Point(s) Crude Oil equivalent to Level 1

                                     - 10 -
<PAGE>

                  of the UNOCAL MDQ Levels set forth in Article VI.a. above
                  during the immediately following twelve (12) month period
                  taking into consideration (i) the then current level of
                  Dedicated Production actually being produced from the
                  Dedicated Leases, and (ii) any volumes of Crude Oil that will
                  become Dedicated Production that UNOCAL reasonably anticipates
                  will be produced from the Dedicated Leases or from leases that
                  UNOCAL reasonably anticipates to develop and dedicate to the
                  Purchase and Sale Agreement (as provided in Article IV.
                  hereof), within the immediately following twelve (12) months;
                  provided that UNOCAL reasonably believes the field will be
                  developed; and

                           (E)      CHOPS has demonstrated to the reasonable
                  satisfaction of UNOCAL that CHOPS has diligently and in good
                  faith requested reductions in maximum daily quantities on a
                  pro rata basis, from all other parties with firm purchase and
                  sale arrangements on Cameron Highway that are not utilizing
                  their MDQ, and (b) CHOPS still cannot fulfill the Bona Fide
                  Request.

                  ii.      If each of the conditions precedent contained in
         Article VIII.a.i. above have been satisfied, each of the three (3)
         Levels of the UNOCAL MDQ Levels shall be reduced by an amount equal to
         the minimum amount required to fulfill such Bona Fide Request;
         provided, that in no event shall the reduction in Level 1 of the UNOCAL
         MDQ Levels reduce such Level 1 lower than 110% of the sum of (x) the
         then current amount of Dedicated Production being produced, plus (y)
         any additional Crude Oil that will become Dedicated Production that
         UNOCAL reasonably anticipates will be produced from the Dedicated
         Leases or from leases that UNOCAL reasonably anticipates it will
         dedicate in the future to the Purchase and Sale Agreement as provided
         in Article IV. hereof in the immediately following twelve (12) month
         period. CHOPS shall demonstrate to the reasonable satisfaction of
         UNOCAL that the reduction in the three (3) UNOCAL MDQ Levels satisfies
         this Article VIII.a. The differentials set forth in Article XII.a.
         hereof for the UNOCAL MDQ Levels shall remain applicable following any
         reduction in such levels as provided in this Article VIII.a.

         b.       In the event there has been an increase, in accordance with
Article VII. above, in Level 1 of the UNOCAL MDQ Levels resulting in Level 1
being greater than 12,500 BOPD, CHOPS shall have the right to request that
UNOCAL reduce, temporarily or permanently, Level 1 of the UNOCAL MDQ Levels so
long as CHOPS can demonstrate to the reasonable satisfaction of UNOCAL that
CHOPS has received a bona fide request from any party for a firm purchase and
sale arrangement on Cameron Highway. If CHOPS has received such a bona fide
request, and CHOPS requests that UNOCAL reduce Level 1 of the UNOCAL MDQ Levels,
UNOCAL shall elect to either (i) reduce Level 1 of the UNOCAL MDQ Levels by an
amount equal to the lesser of (x) the amount required to fulfill such third
party request or (y) the amount of the then current Level 1 that is in excess of
12,500 BOPD, or (ii) maintain the then current amount of Level 1 of the UNOCAL
MDQ Levels and increase each of Levels 2 through 3 by an amount equal to the
amount of Barrels that were required to fulfill such request. The differentials
set forth in Article XII.a. Levels 1 through 3 of the UNOCAL MDQ Levels shall
remain applicable following any reduction in such Level(s) as provided in this
Article VIII.b.

         c.       In the event there has been an increase, in accordance with
Article VII. above, in Level 1 of the UNOCAL MDQ Levels resulting in Level 1
being greater than 12,500 BOPD, CHOPS shall have the right to request that
UNOCAL reduce, temporarily, Level 1 of the UNOCAL MDQ Levels so long as CHOPS
can demonstrate to the reasonable satisfaction of UNOCAL that CHOPS has received
a bona fide request from any party or for an interruptible purchase and sale
arrangement not to exceed three (3) calendar months on Cameron Highway. If CHOPS
has received such a request, and CHOPS requests that UNOCAL reduce Level 1 of
the UNOCAL MDQ Levels, UNOCAL shall elect to either (i) reduce Level 1 of the
UNOCAL MDQ Levels for such interruptible arrangement period (not to exceed

                                     - 11 -
<PAGE>

three (3) calendar months) by an amount equal to the lesser of (x) the amount
required to fulfill such request or (y) the amount of the then current Level 1
that is in excess of 12,500 BOPD, or (ii) maintain the then current amount of
Level 1 of the UNOCAL MDQ Levels and, for the duration of the proposed
interruptible arrangement period (not to exceed three (3) calendar months),
increase Levels 2 through 3 by an amount equal to the amount of Barrels that
were required to fulfill such request. The differentials set forth in Article
XII.a. for Levels 1 through 3 of the UNOCAL MDQ Levels shall remain applicable
following any reduction in such Level(s) as provided in this Article VIII.c. At
the end of such interruptible arrangement period (not to exceed three (3)
calendar months), all Levels of the UNOCAL MDQ Levels shall automatically revert
to their respective volumetric levels effective on the date immediately
preceding such reduction.

         d.       With respect to all potential reductions in the UNOCAL MDQ
Levels described in this Article VIII., in the event CHOPS has not entered into
a valid, binding and effective firm or interruptible, as the case may be,
purchase and sale arrangement with such requesting party effectuating the
request within sixty (60) Days of the effective date of the reduction of the
applicable UNOCAL MDQ Level(s), then all such UNOCAL MDQ Levels will
automatically revert to their respective volumetric levels effective on the date
immediately preceding such reduction.

                                   ARTICLE IX.

                       CAMERON HIGHWAY REGULATAORY STATUS

         Regardless of the ultimate regulatory status of Cameron Highway,
subject to the terms contained in this Purchase and Sale Agreement and the
Construction Agreement, CHOPS shall construct and install Cameron Highway. If
CHOPS is unable for any reason to establish and maintain the Cameron Highway
system as a private pipeline system, the Parties agree that in lieu of this
Purchase and Sale Agreement, they shall enter into a form of agreement under
which CHOPS shall effectuate receipt at the Receipt Point(s) and delivery to the
Delivery Points and Additional Delivery Points of (i) Dedicated Production,
subject to applicable law, on a Firm basis, and (ii) Excess Production and other
non-dedicated Crude Oil, on an interruptible basis, as provided in this Purchase
and Sale Agreement, attempting to preserve as many of the terms and conditions
contained in this Purchase and Sale Agreement as possible, and on the same
economic basis for UNOCAL and CHOPS as agreed to in this Purchase and Sale
Agreement. Without limiting the terms of the foregoing sentence, the Parties
further agree that to the extent the Federal Energy Regulatory Commission
("FERC") requires a pro rata allocation of firm capacity on Cameron Highway
under OCSLA, the terms of Articles XI.a.ii. and XI.d. shall apply. UNOCAL agrees
that it will not support, or take any action, or commence or participate in
support of any proceeding before any court or governmental authority, seeking
(i) pro rata allocation of firm capacity on Cameron Highway pursuant to, without
limitation, the OCSLA, (ii) to have Cameron Highway determined to be subject to
the jurisdiction of any governmental authority, or (iii) to challenge the
lawfulness or reasonableness of any of the fee differentials or other rates
contained herein.

                                   ARTICLE X.

                    CURTAILMENT PRIORITIES ON CAMERON HIGHWAY

         a. CHOPS shall not oversubscribe the capacity on Cameron Highway so
that firm purchase and sale arrangements would reasonably be expected by a
reasonable and

                                      -12-
<PAGE>

prudent operator to be curtailed. However, if it becomes necessary to curtail
Crude Oil on Cameron Highway, as provided in this Purchase and Sale Agreement,
CHOPS shall curtail in the following order: (i) all interruptible Crude Oil
arrangements shall be curtailed on a pro rata basis, and completely curtailed if
necessary to fulfill all firm purchase and sale arrangements, and (ii) after all
interruptible Crude Oil arrangements are curtailed as provided in (i) above if
it is apparent that such curtailment is not sufficient to enable CHOPS to
fulfill all firm purchase and sale arrangements, such Crude Oil subject to firm
purchase and sale arrangements shall be curtailed pro rata based on the then
effective maximum daily quantities of all valid firm purchase and sale
arrangements. CHOPS shall use commercially reasonable efforts to minimize the
time period of any curtailments of Dedicated Production.

         b.       The Parties agree that CHOPS may temporarily curtail purchases
of Dedicated Production due to routine operations and maintenance on Cameron
Highway; provided that, CHOPS shall exercise reasonable diligence to schedule
routine operations and maintenance so as to as nearly as possible avoid service
interruptions and shall not schedule such operations during periods of peak
demand. To the extent known by CHOPS, CHOPS shall notify UNOCAL in writing of
the routine operations and maintenance projects that CHOPS has planned for each
upcoming year, and shall immediately notify UNOCAL of any unplanned routine
operations and maintenance projects. For the duration of any actual curtailment
of any Dedicated Production, Unocal shall have the right to sell any quantities
of Dedicated Production curtailed pursuant to this Article X.b. on other
pipelines and incur no penalties hereunder; provided, however, Unocal shall
recommence delivery of any such curtailed Dedicated Production to Cameron
Highway hereunder within ten days (10) of notification from CHOPS.

         c.       To the extent that nominations for Crude Oil on either the
Port Arthur or the Texas City Lateral exceed the capacity on such lateral, CHOPS
shall curtail Crude Oil on such affected lateral in the following order: (i) all
interruptible Crude Oil arrangements on such lateral shall be curtailed on a pro
rata basis, and completely curtailed if necessary to fulfill all firm purchase
and sale arrangements on such lateral, and (ii) after all interruptible Crude
Oil arrangements on such lateral are curtailed as provided in subsection (i) of
this Article X.c., if it is apparent that such curtailment is not sufficient to
enable CHOPS to fulfill all firm purchase and sale arrangements on such lateral,
such Crude Oil subject to firm purchase and sale arrangements on such lateral
shall be curtailed pro rata based on the then effective maximum daily quantities
of all valid firm purchase and sale arrangements on such lateral. In the event
of such a curtailment, the curtailed volumes will nominated for redelivery via
the other lateral subject to available capacity. Further, if such allocation of
capacity continues for a period of one hundred eighty (180) consecutive Days,
then within the following sixty (60) Days, CHOPS shall initiate a plan to expand
the capacity of either the Port Arthur Lateral or the Texas City Lateral;
provided, that such expansion is commercially reasonable and economically viable
for Cameron Highway in CHOPS' sole reasonable discretion. Such plan shall be
implemented within one hundred eighty (180) Days after the expiration of the
sixty (60) Day period referenced above.

                                      -13-

<PAGE>

                                   ARTICLE XI.

                         RELEASE OF DEDICATED PRODUCTION

         a.       Certain quantities of Dedicated Production shall be
temporarily released from dedication under this Purchase and Sale Agreement in
accordance with the following:

                  i.       In the event the Cameron Highway Completion Date has
         not occurred by the commencement of production from one or more of the
         Dedicated Leases, then the quantities of Dedicated Production that
         CHOPS is unable to receive and purchase shall be temporarily released;

                  ii.      If at any time during the terms of this Purchase and
         Sale Agreement, (x) the FERC requires a pro rata allocation of firm
         capacity on Cameron Highway under the OCSLA, or (y) CHOPS curtails
         Crude Oil on Cameron Highway as a direct response to a claim or
         threatened claim of any party under the OCSLA; then the Parties agree
         that to the extent such pro rata allocation results in CHOPS not being
         able to receive and purchase all of the Dedicated Production delivered
         by UNOCAL at the Receipt Point(s) and sell and deliver an equivalent
         volume of Crude Oil at the Delivery Point(s) and Additional Delivery
         Points, then quantities of Dedicated Production that CHOPS is unable to
         receive and purchase shall be temporarily released; and

                  iii.     In the event that UNOCAL at any time attempts to
         deliver to Cameron Highway any quantity of the Dedicated Production,
         and, other than for reasons described in Articles XI.a.i. and XI.a.ii.
         above or a breach by UNOCAL of this Purchase and Sale Agreement, CHOPS
         fails to receive and purchase from UNOCAL all of such quantity, then
         the quantity of Dedicated Production that CHOPS is unable to receive
         and purchase shall be temporarily released.

         b.       Each of the following shall apply to any temporary release of
Dedicated Production pursuant to Article XI.a. above:

                  i.       Except as otherwise provided in this Article XI.,
         UNOCAL shall have no obligations under this Purchase and Sale Agreement
         with respect to such temporarily released quantities of Dedicated
         Production during the applicable temporary release period described in
         Article XI.b.iv. below.

                  ii.      UNOCAL shall have the right to deliver and/or sell
         such temporarily released quantities of Dedicated Production to any
         other Crude Oil pipelines without penalty hereunder and with no
         liability to CHOPS except as expressly provided in the following
         Article XI.b.iii;, provided that CHOPS shall be under no obligation to
         expend any funds to facilitate such deliveries to other Crude Oil
         pipelines.

                  iii.     Except as set forth in the immediately following
         sentence, Article XI.g. below shall not apply to such temporarily
         released quantities of Dedicated Production, and in no event shall
         UNOCAL be obligated to compensate CHOPS for any such temporarily
         released quantities of Dedicated Production delivered to alternative
         pipelines. However, notwithstanding the foregoing, to the extent any
         quantity of Dedicated Production is temporarily released pursuant to
         the terms of Article XI.a.iii. above for reasons of the failure of the
         Dedicated Production to meet the quality specifications contained in
         Exhibit "E", and UNOCAL diverts all or part of such temporarily
         released quantity to another pipeline, then such temporarily released
         and diverted quantity of Dedicated Production shall be treated as if
         UNOCAL, in its sole discretion, elected to divert such quantity of
         Dedicated Production to the other pipeline(s) pursuant to the terms of
         Article XI.g., and in such case, UNOCAL shall pay CHOPS the
         differential described in Article XI.g.

                                     - 14 -
<PAGE>

                  iv.      (x)      In the event of a temporary release of
         Dedicated Production pursuant to Article XI.a.i. or XI.a.ii., CHOPS
         shall give UNOCAL ten (10) Days prior written notice of the effective
         date on which CHOPS is able to receive and purchase the temporarily
         released volumes of Dedicated Production tendered by UNOCAL at the
         Receipt Point(s) and sell and deliver an equivalent volume of Crude Oil
         at the Delivery Point(s) and Additional Delivery Points. Upon receipt
         by UNOCAL of such notice, such temporary release shall continue no
         longer than the remainder of the calendar month in which UNOCAL
         receives such written notice and the succeeding calendar month. UNOCAL
         shall commence deliveries to Cameron Highway of all volumes of
         Dedicated Production that were previously released, that CHOPS is then
         able to receive and purchase immediately upon the termination of the
         period described in the immediately preceding sentence.

                           (y)      (A.) In the event of temporary release of
                  Dedicated Production pursuant to Article XI.a.iii., if such
                  temporary release has been in effect for fewer than twenty
                  (20) consecutive Days, CHOPS shall give UNOCAL forty-eight
                  (48) hours prior written notice of the effective date on which
                  CHOPS is able to receive and purchase any portion of the
                  temporarily released volumes of Dedicated Production tendered
                  by UNOCAL at the Receipt Point(s) and sell and deliver an
                  equivalent volume of Crude Oil at the Delivery Point(s) and
                  Additional Delivery Points. Upon receipt of such notice by
                  UNOCAL, such temporary release shall continue no longer than
                  forty-eight (48) hours following such notice. UNOCAL shall
                  commence deliveries to Cameron Highway of all volumes of
                  Dedicated Production that were previously released, that CHOPS
                  is then able to receive and purchase, immediately upon the
                  termination of the period described in the immediately
                  preceding sentence.

                           (B.)     In the event of a temporary release of
                  Dedicated Production pursuant to Article XI.a.iii., if such
                  temporary release has been in effect for twenty (20) or more
                  consecutive Days, the notice provisions and the timing of the
                  termination of the temporary release shall be in accordance
                  with Article XI.b.iv.x. above.

         c.       i.       In the event the Cameron Highway Completion Date has
not occurred by 12:01 AM on August 15, 2004, as such date may be adjusted
pursuant to Article XI.h. below, (the "Required Commencement Date"), with
respect to Dedicated Production temporarily released pursuant to Article XI.a.i.
above, subject to Article XI.f., then CHOPS shall pay UNOCAL, as liquidated
damages, $0.63 per Barrel for all such temporarily released quantities of
Dedicated Production delivered and/or sold by UNOCAL to alternative Crude Oil
Pipelines during the period commencing on the Required Commencement Date and
extending until the Cameron Highway Completion Date:.

                  ii.      In the event the Cameron Highway Completion Date has
         not occurred by the Required Commencement Date, subject to Article
         XI.f., then CHOPS shall pay UNOCAL, as liquidated damages, the
         following amounts per Barrel of Dedicated Production received and
         purchased by CHOPS at the Receipt Point(s) and redelivered

                                     - 15 -
<PAGE>

         to UNOCAL hereunder during the period commencing on the Required
         Commencement Date and extending until the Cameron Highway Completion
         Date:

                           x.       $0.50 per Barrel to the extent that
                  deliveries of Dedicated Production to UNOCAL can be made by
                  CHOPS at only one (1) of the Delivery Point(s), except to the
                  extent that one (1) Delivery Point is BP Products Texas City
                  Refinery ("BP Products Refinery") and UNOCAL does not actually
                  utilize the BP Products Refinery Delivery Point, in which case
                  such damages amount shall be $0.63 per Barrel, or

                           y.       $0.35 per Barrel to the extent that
                  deliveries of Dedicated Production to UNOCAL can be made by
                  CHOPS at only two (2) of the Delivery Point(s), except to the
                  extent that one (1) of the two Delivery Point(s) is the BP
                  Products Refinery and UNOCAL does not actually utilize the BP
                  Products Refinery Delivery Point, in which case such damages
                  amount shall be $0.50 per Barrel, or

                           z.       $0.05 per Barrel to the extent that
                  deliveries of Dedicated Production to UNOCAL can be made by
                  CHOPS at only three (3) of the Delivery Point(s), except to
                  the extent that two (2) of such Delivery Point(s) are located
                  in Port Arthur and one (1) of such Delivery Point(s) is the BP
                  Products Refinery and UNOCAL does not actually utilize the BP
                  Products Refinery Delivery Point, in which case such damages
                  amount shall be $0.25 per Barrel.

         Notwithstanding anything contained in this Article XI.c.ii. to the
contrary, if UNOCAL Pipeline Company's Beaumont Terminal is one of the available
Delivery Point(s) specified in Articles XI.c.ii.x, XI.c.ii.y, and XI.c.ii.z, the
liquidated damages amounts specified in Articles XI.c.ii.x, XI.c.ii.y, and
XI.c.ii.z above shall be reduced by $0.10 per Barrel: provided, however, such
liquidated damages amount shall not be less than $0.00. CHOPS shall not be
obligated to pay liquidated damages to UNOCAL for temporarily released volumes
of Dedicated Production that are delivered to alternative oil pipelines by
UNOCAL prior to the Required Commencement Date. If CHOPS anticipates, in its
sole reasonable judgment, that the Cameron Highway Completion Date will not
occur by August 15, 2004, as adjusted pursuant to Article XI.h. below, CHOPS
will provide UNOCAL written notice of same forty-five (45) days prior to the
Cameron Highway Completion Date, as such date may be adjusted pursuant to
Article XI.h. below.

         d.       With respect to Dedicated Production temporarily released
pursuant to Article XI.a.ii above, subject to Article XI.f., CHOPS shall pay
UNOCAL, as liquidated damages, (i) to the extent the then applicable UNOCAL MDQ
Level is equal to or less than 12,500 BOPD, $0.63 per Barrel for all such
temporarily released quantities of Dedicated Production delivered and/or sold by
UNOCAL to alternative Crude Oil pipelines, and (ii) to the extent the then
applicable UNOCAL MDQ Level is greater than 12,500 BOPD, (x) $0.63 per Barrel
for any such temporarily released quantities that are within the first 12,500
BOPD of Dedicated Production produced on such Day that are delivered and/or sold
by UNOCAL to alternative Crude Oil pipelines, or (y) no amount of liquidated
damages for any such temporarily released quantities that are in excess of the
first 12,500 BOPD of Dedicated Production produced on such Day that are
delivered and/or sold by UNOCAL to alternative Crude Oil pipelines.

                                     - 16 -
<PAGE>

         e.       With respect to Dedicated Production temporarily released
pursuant to Article XI.a.iii. above, CHOPS shall not be liable to, or obligated
to pay, UNOCAL any amounts with respect to such temporarily released quantities.

         f.       Notwithstanding the terms of Articles XI.c. and XI.d., if
UNOCAL has not commenced deliveries of Dedicated Production from the Mad Dog
field to the Receipt Point(s) on or before August 15, 2004, then beginning
August 15, 2004 and continuing until such date that deliveries of Dedicated
Production from the Mad Dog field are received and purchased by CHOPS at the
Receipt Point(s), CHOPS shall not be liable to or obligated to pay, UNOCAL any
amounts of liquidated damages described in Articles XI.c. and XI.d. The rights
to receive liquidated damages and other payments from CHOPS as described in this
Article XI. shall be rights granted only to, and exercisable by, UNOCAL (and not
to permitted assignees of UNOCAL); provided, however that the rights to have
Dedicated Production temporarily released shall be rights exercisable by UNOCAL
and its permitted assignees. Notwithstanding anything to the contrary contained
herein, the rights to have Dedicated Production temporarily released, to receive
liquidated damages and other payments, and to receive the other rights expressly
granted in this Article XI., shall be the sole and exclusive remedies (whether
under contract or at law or equity) of UNOCAL with respect to any temporary
release of Dedicated Production or related event.

         g.       After the Cameron Highway Completion Date, UNOCAL in its sole
discretion shall have the right to divert all or part of the Dedicated
Production to other pipelines in lieu of delivery to Cameron Highway as provided
in this Article XI.g. In such case, and except as expressly provided otherwise
in this Purchase and Sale Agreement, UNOCAL shall pay CHOPS the differential
that corresponds to the applicable UNOCAL MDQ Level for such diverted volumes of
Dedicated Production. Notwithstanding anything to the contrary contained in this
Purchase and Sale Agreement, this Article XI.g. shall not apply to (a) Excess
Production or (b) except as provided in Article XI.b.iii, temporarily released
Dedicated Production as provided in Article XI.a. above. UNOCAL is not obligated
in any way to deliver or sell Excess Production to Cameron Highway. Such Excess
Production may be delivered by UNOCAL to any Crude Oil pipeline at UNOCAL's sole
discretion with no restriction or penalty.

         h.       With respect to the term "Required Commencement Date," as such
term is used throughout this Purchase and Sale Agreement, the Parties agree that
the designated date of August 15, 2004, shall automatically be revised as
follows; (i) such date shall be delayed on a Day for Day basis with the duration
of any Force Majeure event(s) in excess of the first ninety (90) Days of Force
Majeure event(s) occurring during the construction phase of Cameron Highway and
(ii) such date shall be delayed until production actually commences from the
first of the Initial Dedicated Leases. In the event of anticipated delays in the
date of first production from the Initial Dedicated Leases which would
reasonably be expected to extend the Required Commencement Date, UNOCAL shall
promptly notify CHOPS in writing of such anticipated delays and shall provide a
revised Required Commencement Date. For purposes of this Purchase and Sale
Agreement, the Required Commencement Date shall be deemed to be such revised
date, as further revised by the foregoing terms of this Article XI.h.

                                     - 17 -
<PAGE>

                                  ARTICLE XII.

                           PRICE AND PRICE ADJUSTMENTS

         a.       For each Barrel of Crude Oil delivered to the Receipt
Point(s), (excluding pipeline loss allowance described in Article XIII below)
CHOPS shall pay UNOCAL the Base Oil Price less a differential from the Receipt
Point(s) to the Delivery Point(s) and the Additional Delivery Points per Barrel
based on the then applicable UNOCAL MDQ Level selected by UNOCAL pursuant to
Article VI.a. above as set forth in the table below. During the term hereof,
such differentials shall not be escalated for any reason.

<TABLE>
<CAPTION>
                                     DIFFERENTIAL

   UNOCAL MDQ                        VOLUME UP TO        VOLUME IN EXCESS
     (BOPD)                           UNOCAL MDQ           OF UNOCAL MDQ
----------------                    -------------        ----------------
<S>                                 <C>                  <C>
Level 1  - 12,500                     $0.95/Barrel         $0.95/Barrel

Level 2  - 10,000                     $1.06/Barrel         $0.95/Barrel

Level 3  -  7,500                     $1.24/Barrel         $0.95/Barrel
</TABLE>

         b.       UNOCAL shall pay CHOPS the Base Price for each Barrel
delivered at the Delivery Point(s) and Additional Delivery Points. For pricing
purposes, all Crude Oil delivered hereunder shall be deemed to have been
delivered in equal daily quantities.

         c.       With respect to Article XII.a. and Article XII.b. above,
UNOCAL, at any time and from time to time, shall have the right to change the
Base Oil Price to a Platt's indicator for southern Green Canyon crude for
deliveries in Texas. UNOCAL shall give CHOPS sixty (60) Days prior written
notice of such change. In the event UNOCAL elects to change the Base Oil Price
as provided in this Article XII.c., UNOCAL and CHOPS shall settle any existing
purchase and sale imbalance at such time pursuant to Article XXI. below.

         d.       Any Crude Oil owned by and delivered to the Receipt Point(s)
by UNOCAL and purchased by CHOPS on an interruptible basis shall be subject to
the fee differentials contained in this Purchase and Sale Agreement applicable
to Dedicated Production for a period of ten (10) years from the date of initial
delivery by CHOPS of Crude Oil to a Delivery Point or Additional Delivery Point
hereunder. The Parties agree that the rights granted to UNOCAL under this
Article XII.d shall be rights granted only to, and exercisable by, UNOCAL (and
not to a permitted assignee of UNOCAL).

         e.       During the term of this Purchase and Sale Agreement, in the
event CHOPS either enters into a purchase and sale arrangement providing for
firm maximum daily quantities with either BP or BHP, as working interest owners
in the Holstein, Mad Dog and/or Atlantis fields, as applicable, or amends such
agreement so that purchase and sale differentials for firm quantities for the
Holstein, Mad Dog and/or Atlantis fields, as applicable, are lower than the
corresponding differentials set forth in Article XII.a. of this Purchase and
Sale Agreement, the differentials applicable to UNOCAL under this Purchase and
Sale Agreement shall be decreased to such lowest differential for firm
quantities received by BP and/or BHP, for Crude Oil delivered by UNOCAL from the
Mad Dog field, for a term consistent with that term applicable to BP and/or BHP,
as applicable, with respect to the lower differential for firm quantities;
provided, however, that the Parties understand and agree that BP, BHP and UNOCAL
each have different firm maximum daily quantity levels,

                                     - 18 -
<PAGE>

and such levels shall be permitted to remain different during the term of this
Purchase and Sale Agreement without triggering the terms of this provision. In
the event UNOCAL and CHOPS enter into an alternative form of agreement as
described in Article IX. of this Purchase and Sale Agreement, and during the
term of such agreement, either BP or BHP, as working interest owners in the
Holstein, Mad Dog and/or Atlantis fields, as applicable, enter into an
alternative form of agreement or amends such agreement so that the BP and/or BHP
agreement contains fees for firm quantities that are lower than the
corresponding fees in the agreement between UNOCAL and CHOPS, the fees
applicable to UNOCAL under this Purchase and Sale Agreement for firm quantities
shall be decreased to such lowest fee received by BP and/or BHP for firm
quantities of Crude Oil delivered by UNOCAL from the Mad Dog field for a term
consistent with that term applicable to BP and/or BHP, as applicable, with
respect to the lower fee for either BP or BHP, as applicable. Notwithstanding
anything to the contrary contained herein, the Parties agree that this Article
XII.e shall only be triggered by an agreement between CHOPS and either BP or
BHP, as working interest owners in the Holstein, Mad Dog and Atlantis fields, as
applicable, and not by a future agreement between CHOPS and UNOCAL. At the
expense of UNOCAL and upon thirty (30) Days prior written notice to CHOPS,
UNOCAL shall have the right to review and audit CHOPS's books, records, and
accounts in order to verify the compliance of CHOPS with this Article XII.e. The
Parties agree that the rights granted to UNOCAL under this Article XII.e. shall
be rights granted only to, and exercisable by, UNOCAL (and not to a permitted
assignee of UNOCAL).

                                  ARTICLE XIII.

                         PIPELINE LOSS OR GAIN ALLOWANCE

         The pipeline loss or gain allowance shall initially be a fixed
percentage of volumes at the Receipt Point(s) or Delivery Point(s) and
Additional Delivery Points and the accounting shall conform to standard industry
practices on similarly situated pipeline systems. The pipeline loss or gain
allowance shall be adjusted annually in order to conform to the previous year's
actual pipeline loss or gain but such pipeline loss or gain allowance shall not
exceed two-tenths (2/10) of one percent (1%) for any calendar year.

                                  ARTICLE XIV.

                              QUALITY AND PRESSURE

         a.       The quality specifications for Cameron Highway are attached to
this Purchase and Sale Agreement as Exhibit "E".

         b.       Except for reasons of Force Majeure, the maximum pressure to
be provided by CHOPS at the Initial Receipt Point shall be no greater than 150
PSIG. UNOCAL may but is under no obligation to, deliver Crude Oil at pressures
up to, 1950 PSIG.

                                   ARTICLE XV.

                                  QUALITY BANK

         a.       In order to compensate for variations in the quality of Crude
Oil delivered by UNOCAL and other parties at the Receipt Point(s) and that
delivered by CHOPS at the Delivery Point(s) and Additional Delivery Points, a
market-based quality bank shall be established on Cameron Highway pursuant to
the guidelines set forth in Exhibit "C" attached hereto. The quality bank will
be developed by CHOPS and all interested parties who have

                                     - 19 -
<PAGE>

entered into purchase and sale arrangements with CHOPS on Cameron Highway that
are effective upon the Cameron Highway Completion Date. Any change to the
quality bank shall require the agreement of the sellers of at least seventy
percent (70%) of the Crude Oil sold to CHOPS at the Receipt Point(s) for the
previous four (4) Contract Quarter(s), and are still selling oil under a
purchase and sale arrangement.

         b.       CHOPS, or its designee, shall be responsible for the
implementation and administration of the Cameron Highway quality bank. The
initial quality bank and any changes approved pursuant to Article XV.a. of this
Purchase and Sale Agreement shall be accepted and implemented by CHOPS, provided
that all quality bank terms satisfy the intent stated in such Article XV.a.

                                  ARTICLE XVI.

         RESPONSIBILITY, LIABILITY, POSSESSION AND CONTROL OF CRUDE OIL

         a.       As between UNOCAL and CHOPS, (a) UNOCAL shall control and
possess the Crude Oil delivered hereunder at all times prior to delivery to
CHOPS at the Receipt Point(s) and after delivery by CHOPS at the Delivery
Point(s) and Additional Delivery Points; and (b) CHOPS shall control and possess
the Crude Oil at all times after delivery by UNOCAL at the Receipt Point(s) and
until delivery by CHOPS at the Delivery Point(s) and Additional Delivery Points.

         b.       The Party in control and possession of the Crude Oil shall be
responsible for, pay for and defend, protect, indemnify, release, and hold the
other Parties harmless from and against any and all losses, claims, damages and
expenses (including reasonable attorney's fees) caused thereby and occurring
while the Crude Oil is in, the possession and control of such Party, regardless
of the indemnified party's negligence (and regardless of whether such negligence
is sole, joint, concurrent, active or passive negligence), fault or liability
without fault; provided, however, that UNOCAL shall be responsible and pay for,
and RELEASE, DEFEND AND INDEMNIFY the CHOPS Group from any and all losses
directly caused by or directly resulting from the failure of Crude Oil delivered
hereunder by UNOCAL to CHOPS to meet the quality specifications set forth in
Article XIV.a. of this Purchase and Sale Agreement, except to the extent that
CHOPS has waived any of the requirements of Article XIV and Exhibit E in
writing.

         c.       CHOPS SHALL BE RESPONSIBLE FOR AND SHALL DEFEND, PROTECT,
INDEMNIFY, RELEASE AND HOLD HARMLESS THE UNOCAL GROUP FROM AND AGAINST ALL LOSS,
DAMAGES, CLAIMS, DEMANDS AND ACTIONS AND RELATED EXPENSES, INCLUDING REASONABLE
ATTORNEY'S FEES, ARISING FROM ACTS OR OMISSIONS OF THE CHOPS GROUP RELATING TO
THE OWNERSHIP AND OPERATION OF CHOPS' FACILITIES (INCLUDING WITHOUT LIMITATION
CAMERON HIGHWAY), REGARDLESS OF THE INDEMNIFIED PARTY'S NEGLIGENCE (AND
REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE, JOINT, CONCURRENT, ACTIVE OR
PASSIVE NEGLIGENCE) , FAULT OR LIABILITY WITHOUT FAULT ON THE PART OF THE UNOCAL
GROUP, EXCEPT TO THE EXTENT THAT ANY SUCH LOSS RESULTS FROM THE GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT OF THE INDEMNIFIED PARTY.

         d.       NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, NO PARTY TO
THE PURCHASE AND SALE AGREEMENT SHALL BE LIABLE TO THE OTHER PARTY HERETO FOR
SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES SUFFERED

                                     - 20 -
<PAGE>

BY SUCH PARTY RESULTING FROM OR ARISING OUT OF THIS PURCHASE AND SALE AGREEMENT,
INCLUDING WITHOUT LIMITATION, LOSS OF USE, INCREASED COST OF OPERATIONS, LOSS OF
PROFIT OR REVENUE OR BUSINESS INTERRUPTIONS. IN FURTHERANCE OF THE FOREGOING,
EACH PARTY RELEASES THE OTHER PARTIES AND WAIVES ANY RIGHT OF RECOVERY FOR
SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES SUFFERED BY SUCH
PARTY REGARDLESS OF WHETHER ANY SUCH DAMAGES ARE CAUSED BY THE OTHER PARTY'S
NEGLIGENCE (AND REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE, JOINT,
CONCURRENT, ACTIVE, PASSIVE OR GROSS NEGLIGENCE), FAULT OR LIABILITY WITHOUT
FAULT.

         e.       NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, TO THE EXTENT
OF ITS WORKING INTEREST IN THE PRODUCING FIELDS, UNOCAL AGREES TO BE SOLELY
RESPONSIBLE AND LIABLE FOR, AND RELEASE AND INDEMNIFY THE CHOPS GROUP WITH
RESPECT TO, ANY LOSSES SUFFERED BY UNOCAL RELATING TO THE DELAY OF PRODUCTION OR
ANY DAMAGE TO THE CRUDE OIL LEASES OR LOSS OF ANY RELATED RESERVES NOT
PREVIOUSLY DELIVERED TO THE CAMERON HIGHWAY RESULTING FROM ANY ACTS OR OMISSIONS
BY CHOPS IN CONNECTION WITH OR OTHERWISE RELATED TO THE PURCHASE AND SALE
AGREEMENT, EXCEPT TO THE EXTENT THAT ANY SUCH LOSSES RESULT FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF CHOPS.

                                  ARTICLE XVII.

                                    LINE FILL

         a.       CHOPS shall provide all line fill for Cameron Highway, and the
cost for such line fill shall be paid in accordance with this Article XVII. The
cost of such line fill Barrels shall be based on the Base Oil Price for the
month Cameron Highway line fill operations commence less $0.95 plus or minus (as
the case may be) quality bank adjustments. The portion of the Base Oil Price of
a line fill Barrel up to $20.00 per Barrel shall be paid by CHOPS. All costs, if
any, of the line fill in excess of that which CHOPS is responsible for pursuant
to the preceding sentence shall be allocated to and paid by the working interest
owners in the Holstein, Mad Dog and Atlantis fields who enter into purchase and
sale arrangements with CHOPS on Cameron Highway (which shall be effective prior
to commencement of operations on Cameron Highway) and all other parties who
enter into purchase and sale arrangements with CHOPS on Cameron Highway that are
effective upon commencement of operations of Cameron Highway, based on each
party's maximum daily quantity compared to the aggregate maximum daily quantity
on Cameron Highway. CHOPS shall render a statement to UNOCAL for any amounts
owed to CHOPS for line fill for the preceding month pursuant to Article XIX.
UNOCAL shall not own any line fill Barrels in Cameron Highway.

         b.       Notwithstanding Article XVII.a., within fifteen (15) Days
after the execution of this Agreement, the parties will meet to implement a plan
for the acquisition of linefill for Cameron Highway. Such plan may include, but
not be limited to, the evaluation of purchasing linefill from the producer, the
mechanisms for the management of the crude oil price risk for the parties, and
the disclosure of operational parameters, including the approximate timeline and
approximate volumes required by CHOPS. The parties agree to use commercially
reasonable efforts to finalize a plan for the acquisition of the Cameron Highway
linefill within forty-five (45) Days after the first meeting.

                                     - 21 -
<PAGE>

                                 ARTICLE XVIII.

                                OIL PUMP FUEL GAS

         CHOPS shall provide all fuel gas for the operation of Cameron Highway,
and shall be permitted to purchase such fuel gas from any party. The cost of
such fuel gas shall be based on the Base Gas Price for the then current month of
fuel purchases less $0.10 per MMBtu. The portion of the Base Gas Price up to
$5.00 per MMBTU shall be paid by CHOPS. All costs, if any, of the fuel gas in
excess of that which CHOPS is responsible for pursuant to the preceding sentence
shall be allocated to and paid by the working interest owners in the Holstein,
Mad Dog and Atlantis fields who enter into purchase and sale arrangements with
CHOPS on Cameron Highway (which shall be effective prior to commencement of
operations on Cameron Highway), and all other parties selling Crude Oil to CHOPS
at Cameron Highway receipt points based on such parties' deliveries of Crude Oil
in proportion to the total deliveries of Crude Oil at all Cameron Highway
receipt points.

                                  ARTICLE XIX.

                           STATEMENTS, PAYMENTS, AUDIT

         a.       CHOPS shall render a statement to UNOCAL on or before the
fifteenth (15th) Day of each calendar month setting forth the amount due UNOCAL
for purchases of Crude Oil by CHOPS hereunder and the amount due for sales of
Crude Oil hereunder to UNOCAL during the preceding month. If actual quantities
cannot be made available through no fault of CHOPS, CHOPS and UNOCAL may utilize
a reasonable, good faith estimated quantity. As soon as the actual quantities
becomes available, the estimate shall be adjusted and the adjustment shall be
reflected in the subsequent month's statement. CHOPS agrees to prepare a summary
billing containing all amounts owed between UNOCAL and CHOPS for the applicable
production month and CHOPS shall deliver a net statement to the Party showing
the net balance.

         b.       The Party with the net balance due to the other Party shall
pay such other Party the amount due in the form of immediately available federal
funds by wire transfer to the bank account specified on the net statement, or
any other mutually agreed upon method, on or before the twentieth (20th) Day of
each month for transactions accruing hereunder during the preceding month.
Payments due on a Saturday or a bank holiday shall be made on the preceding
business Day unless such holiday is a Monday, in which case payment shall be
made on the following business Day; payments due on Sunday shall be made on the
following Monday. The paying Party must tender a timely payment even if the net
statement includes an estimated receipt or delivery volume. Any payment made
hereunder by a Party shall not prejudice the right of the paying Party to an
adjustment of any statement to which it has taken written exception, provided
that claim therefore shall have been made within sixty (60) Days from the date
of discovery of such error, but, in any event, within twenty-four (24) months
from the date of the net statement. If the paying Party fails to pay any
statement in whole or in part when due, in addition to any other rights or
remedies available to the Party to whom payment is due, interest at the Stated
Rate shall accrue on unpaid amounts. "Stated Rate" means an annual rate of
interest (compounded daily) equal to the lesser of (i) the sum of the prime or
reference rate posted from time to time by Texas Commerce Bank (Houston, Texas
office) or its successor or a mutually

                                     - 22 -
<PAGE>

agreed substitute bank plus two percent (2%) or (ii) the maximum lawful interest
rate then in effect under applicable law.

         Notwithstanding the foregoing, if a good faith dispute arises between
UNOCAL and CHOPS concerning a net statement, the paying Party shall pay that
portion of the net statement not in dispute on or before such due date, and upon
the ultimate determination of the disputed portion of the statement, the paying
Party shall pay the remaining amount owed (if any) plus the interest accrued
thereon.

         c.       CHOPS shall maintain for not less than twenty-four (24) months
following the end of each calendar year, complete and accurate books, records
and accounts of any amounts, which are charged to UNOCAL hereunder during such
calendar year. For a period of twenty-four (24) months from the end of each
calendar year, and upon thirty (30) Days prior written notice to CHOPS, UNOCAL
shall have the right to inspect, at UNOCAL's expense, at any reasonable time and
from time-to-time, and audit such books, records and accounts related to any
invoice or payment made during such calendar year.

                                   ARTICLE XX.

                                   MEASUREMENT

         All measurement practices (a) must conform to the latest guidelines set
out in the current API Manual of Petroleum Measurement Standards and all
applicable API Bulletin and API Standards publications, and (b) will be governed
by the terms of the Interconnect Agreement.

                                  ARTICLE XXI.

                           PURCHASE AND SALE BALANCES

         The Parties will endeavor, as far as practicable, to keep the purchase
and sale arrangement in balance on a monthly basis and respond to status
statements. It is recognized that for a given month, Crude Oil imbalance between
the Receipt Point(s) and the Delivery Point(s) and Additional Delivery Points
may exist. CHOPS shall calculate and track all imbalances and include same in
its monthly statement. The Parties agree to make a good faith effort to correct
any actual monthly imbalances by subsequent nominations and deliveries of Crude
Oil during the remainder of the month or the next available full business month,
including the adjustments of receipts, deliveries and nominations. Delivery of
such imbalance shall be made in the month following the month in which the
volume imbalance is determined.

                                  ARTICLE XXII.

                                   ASSIGNMENT

         a.       CHOPS.

                  i.       CHOPS shall have the right to assign or transfer this
         Purchase and Sale Agreement or the obligations hereunder (in whole or
         in part) as follows:

                           (A)      Prior to the Cameron Highway Completion
                  Date, without the prior consent of UNOCAL, CHOPS shall have
                  the right to assign or transfer this Purchase and Sale
                  Agreement or the obligations hereunder (in whole or in part)
                  to a subsidiary (direct or indirect) of GTM in which GTM owns
                  (directly

                                     - 23 -
<PAGE>
                   or indirectly) a fifty percent (50%) or more interest (an
                  "GTM Sub"); provided, that if requested by UNOCAL upon such
                  assignment, CHOPS shall (x) remain primarily liable for the
                  obligations hereunder so assigned to such GTM Sub and (y)
                  provide additional assurances of the performance of such GTM
                  Sub hereunder (including, without limitation, a company
                  guaranty from CHOPS) as may be reasonably required by UNOCAL.
                  Further, CHOPS shall provide UNOCAL written notice of such
                  assignment or transfer at least thirty (30) Days prior to the
                  effective date of such assignment or transfer, and agrees to
                  furnish UNOCAL additional information regarding the GTM Sub in
                  order for UNOCAL to evaluate whether additional assurances
                  will be required. Prior to the effective date of such
                  assignment or transfer, the Parties shall execute appropriate
                  documents regarding the primary liability of CHOPS for the
                  obligations assigned to such GTM Sub and CHOPS shall provide
                  UNOCAL any additional assurances of performance as may be
                  reasonably requested by UNOCAL.

                           (B)      Prior to the Cameron Highway Completion
                  Date, except as otherwise provided in Article XXII.a.i.A. ,
                  CHOPS shall not have the right to assign or transfer this
                  Purchase and Sale Agreement or the obligations hereunder (in
                  whole or in part) to any other party without the prior written
                  consent of UNOCAL, such consent which is not to be
                  unreasonably withheld or delayed; provided, however, prior to
                  giving consent hereunder, UNOCAL may require that CHOPS assign
                  to an entity with a Standard & Poor's rating of BB+ or better
                  (a "Financially Capable Entity").

                           (C)      After the Cameron Highway Completion Date,
                  without the prior consent of UNOCAL, CHOPS shall have the
                  right to assign or transfer this Purchase and Sale Agreement
                  or the obligations hereunder (in whole or in part) to any
                  Financially Capable Entity; provided, that any other
                  assignment or transfer of this Purchase and Sale Agreement or
                  the obligations hereunder (in whole or in part) shall require
                  the prior written consent of UNOCAL, such consent which is not
                  to be unreasonably withheld or delayed; provided further, that
                  upon any permitted assignment by CHOPS, CHOPS shall be
                  relieved of its obligations under this Purchase and Sale
                  Agreement accruing after the effective date of such assignment
                  to the extent, and only to the extent, so assigned and
                  expressly assumed by the assignee.

                  ii.      Any assignment or transfer of this Purchase and Sale
Agreement or the obligations hereunder (in whole or in part) by CHOPS shall be
null and void unless such assignment or transfer is made in compliance with this
Article XXII.a. Notwithstanding anything to the contrary contained in this
Purchase and Sale Agreement, the Parties agree that to the extent of any
obligations of CHOPS contained herein, CHOPS shall be permitted to fulfill such
obligations by utilizing the employees and assistance of EPFS, and such
utilization and assistance shall not be considered an assignment of any of such
obligations.

                                     - 24 -
<PAGE>

         b.       UNOCAL.

                  i.       Except as otherwise expressly provided in Articles
         IV.c., VI.d., VII.a., XI.f., XII.d. and XII.e. of this Purchase and
         Sale Agreement, without the prior consent of CHOPS, UNOCAL shall have
         the right to assign or transfer this Purchase and Sale Agreement or the
         obligations hereunder (in whole or in part) to any Financially Capable
         Entity; provided, that any other assignment or transfer of this
         Purchase and Sale Agreement or the obligations hereunder (in whole or
         in part) shall require the prior written consent of CHOPS, such consent
         which is not to be unreasonably withheld or delayed; provided further,
         that any assignment of UNOCAL's rights and obligations under this
         Purchase and Sale Agreement shall also include the assignment or
         transfer of all or a portion of UNOCAL's right, title or interest in
         the applicable Initial Dedicated Leases. Further, any assignment or
         other transfer of any or all of UNOCAL's right, title or interest in
         the Initial Dedicated Leases shall be made subject to the applicable
         terms of this Purchase and Sale Agreement, and the assignee shall agree
         to be bound by such terms of this Purchase and Sale Agreement, such
         that UNOCAL's Dedicated Production from such leases so assigned shall
         remain subject to this Purchase and Sale Agreement. Upon any permitted
         assignment by UNOCAL, UNOCAL shall be relieved of its obligations under
         this Purchase and Sale Agreement accruing after the effective date of
         such assignment to the extent, and only to the extent, so assigned and
         expressly assumed by the assignee. Any assignment or transfer of this
         Purchase and Sale Agreement or the obligations hereunder (in whole or
         in part) by UNOCAL shall be null and void unless such assignment or
         transfer is made in compliance with this Article XXII.b.

                  (ii)     Without the prior consent of CHOPS, and except as
         otherwise provided in this Article XXII.b., UNOCAL shall have the right
         to assign or transfer this Purchase and Sale Agreement or the
         obligations hereunder (in whole or in part) to Unocal Corporation
         ("UNOCAL Corp") and/or a subsidiary (direct or indirect) of UNOCAL Corp
         in which UNOCAL Corp owns (directly or indirectly) a fifty percent
         (50%) or more interest (a "UNOCAL Corp Sub"); provided that if
         requested by CHOPS, upon such assignment, UNOCAL shall (x) remain
         primarily liable for the obligations hereunder so assigned to such
         UNOCAL Corp Sub and (y) provide additional assurances of the
         performance of such UNOCAL Corp Sub hereunder (including, without
         limitation, a company guaranty from UNOCAL ) as may be reasonably
         required by CHOPS. Further UNOCAL shall provide CHOPS written notice of
         such assignment of transfer at least thirty (30) Days prior to the
         effective date of such assignment or transfer, and agrees to furnish
         CHOPS additional information regarding the UNOCAL Corp Sub in order for
         CHOPS to evaluate whether additional assurances will be required. Prior
         to the effective date of such assignment or transfer, the Parties shall
         execute the appropriate documents regarding the primary liability of
         UNOCAL for the obligations assigned to such UNOCAL Corp Sub and UNOCAL
         shall provide CHOPS any additional assurances of performance as may be
         reasonably requested by CHOPS. Further, upon any assignment by UNOCAL
         to UNOCAL Corp Sub pursuant to the terms of this Article XXII.b.i.A.,
         UNOCAL shall be relieved of its obligations under this Purchase and
         Sale Agreement accruing after the

                                     - 25 -
<PAGE>

         effective date of such assignment to the extent, and only to the
         extent, so assigned and expressly assumed by such assignee.

                  iii.     Upon any assignment by UNOCAL of this Purchase and
         Sale Agreement or the obligations hereunder (in whole or in part)
         pursuant to Article XXII.b.i. above, the following shall apply:

                           (A)      Any working interest in the Dedicated Leases
                  assigned by UNOCAL and UNOCAL's remaining working interest in
                  the Dedicated Leases shall remain dedicated to Cameron
                  Highway, pursuant to this Purchase and Sale Agreement.

                           (B)      The purchase and sale differentials
                  contained in Article XII. above shall be applicable to (x) the
                  Crude Oil delivered by UNOCAL's assignee that is produced from
                  the Dedicated Lease(s) and (y) the Dedicated Production
                  delivered by UNOCAL that is produced from the Dedicated
                  Leases, pursuant to this Purchase and Sale Agreement.

                           (C)      The UNOCAL MDQ Levels set forth in Article
                  VI. above shall remain the same; provided, that following such
                  assignment by UNOCAL, UNOCAL shall receive a Barrel for Barrel
                  credit towards its MDQ obligations hereunder for the actual
                  number of Barrels delivered to Cameron Highway that is
                  produced from the working interest in the Dedicated Leases
                  assigned by UNOCAL. Such assignee of UNOCAL shall be entitled
                  to a maximum daily quantity level on Cameron Highway
                  commensurate with the daily volume of Dedicated Production
                  reasonably anticipated to be produced in the future from the
                  Dedicated Leases so assigned that is allocated to its working
                  interest share of such leases.

                           (D)      At such time(s) as UNOCAL transfers or
                  assigns all or a portion of its working interest in one or
                  more Dedicated Leases, CHOPS shall execute a purchase and sale
                  agreement with UNOCAL's assignee that contains the same terms
                  and conditions as those contained in this Purchase and Sale
                  Agreement (with the exception of the non-assignable rights of
                  UNOCAL contained in Articles IV.c., VI.d., VII.a., XI.f.,
                  XII.d. and XII.e of this Purchase and Sale Agreement and that
                  reflects the maximum daily quantity level allocated to such
                  assignee as set forth in Article XXII.ii.C above.

         Notwithstanding anything contained in Article XXII.b. to the contrary,
UNOCAL shall not be prohibited or restricted from assigning or transferring this
Purchase and Sale Agreement or the obligations hereunder (in whole or part)
pending negotiation and execution of the purchase and sale agreement between
CHOPS and UNOCAL's assignee. It being the intent of the Parties that completion
of such negotiations and execution of such documentation shall not impede,
hinder or delay any consents by CHOPS required under this Purchase and Sale
Agreement with respect to an assignment or transfer thereof (in whole or in
part) by UNOCAL.

         c.       This Purchase and Sale Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the Parties.

                                     - 26 -
<PAGE>

                                 ARTICLE XXIII.

                                      TERM

         a.       This Purchase and Sale Agreement shall become effective as of
the execution and delivery thereof by each of the Parties, and except as
otherwise provided herein shall continue in effect for the commercial life of
production from the Dedicated Leases.

         b.       Notwithstanding the termination of this Purchase and Sale
Agreement or the expiration of this Purchase and Sale Agreement, the
indemnification provisions contained in Article XVI. shall survive such
termination/expiration of this Purchase and Sale Agreement.

         c.       Except with respect to those provisions in this Purchase and
Sale Agreement that expressly provide for sole and exclusive remedies, (i) in
the event of termination of this Purchase and Sale Agreement by either Party
pursuant to the terms of this Purchase and Sale Agreement, termination of this
Purchase and Sale Agreement shall not be the sole remedy of such Party, and (ii)
nothing contained in this Purchase and Sale Agreement shall prevent any Party
from pursuing any other remedies available to such Parties whether under
contract or at law or equity with respect to any other Party's breach or failure
to fulfill its obligations under this Purchase and Sale Agreement.

                                  ARTICLE XXIV.

                   RIGHTS OF PARTIES UPON TRANSFER/ASSIGNMENT

         The Parties hereby acknowledge and agree that many of the provisions of
this Purchase and Sale Agreement, including, but not limited to, terms related
to the dedication of reserves, the UNOCAL MDQ Levels, the price differentials,
the grant of rights to future receipt points and future dedication cannot be
segregated between UNOCAL and any potential assignee under the current structure
of the terms of this Purchase and Sale Agreement, and are not intended to be
rights transferable to or exercisable by a permitted assignee of UNOCAL.
However, to facilitate the transactions contemplated under this Purchase and
Sale Agreement, it is the intent of the Parties to consummate the transactions
contemplated under this Purchase and Sale Agreement with the understanding that,
notwithstanding the terms of Article XXII. and the other assignment provisions
contained herein, prior to any proposed assignment or transfer by UNOCAL of any
of its rights under this Purchase and Sale Agreement, the Parties shall enter
into good faith negotiations to mutually agree on the terms of such assignment,
and specifically to the allocation of the rights, duties and obligations of
UNOCAL and the permitted assignee. The Parties further acknowledge that upon any
such permitted assignment, an amendment to this Purchase and Sale Agreement may
be required to revise the terms of this Purchase and Sale Agreement in a manner
that preserves, to the maximum extent possible, the respective rights and
economic positions of the Parties. The Parties agree to act reasonably and in
good faith, and negotiate diligently to facilitate UNOCAL's desire to assign
their rights as referenced hereunder under the time schedule desired by UNOCAL.

                                  ARTICLE XXV.

                                  FORCE MAJEURE

         a.       Definition. No Party shall be liable to the other Parties for
failure to perform any of its obligations under this agreement to the extent
such performance is hindered, delayed or prevented by Force Majeure. For
purposes of this agreement, "Force Majeure"

                                     - 27 -
<PAGE>

shall mean causes, conditions, events or circumstances affecting the Parties, or
downstream or upstream facilities, which are beyond the reasonable control of
the Party claiming Force Majeure. Such causes, conditions, events and
circumstances shall include, without limitation, acts of God, wars (declared or
undeclared), acts of terrorism, hostilities, strikes, lockouts, riots, floods,
fires, storms, storm warnings, industrial disturbances, acts of the public
enemy, sabotage, blockades, insurrections, epidemics, landslides, lightning,
earthquakes, washouts, arrests and restraints of rulers and peoples, civil
disturbances, explosions, breakage or accidents to machinery or lines of pipe,
hydrate obstruction or blockages of any kind of lines of pipe, abnormal
operating conditions on a Party's facilities, repairs, improvements,
replacements or alterations to plants, lines of pipe or related facilities,
inability of a Party to obtain necessary machinery, drilling or workover rigs,
materials, permits, easements or rights-of-way on reasonable terms, freezing of
the well or delivery facility, well blowout, cratering, depletion of reserves,
the partial or entire failure of a well, the act of any court or governmental
authority prohibiting a Party from discharging its obligations under this
agreement or resulting in diminutions in service and conduct which would violate
any applicable law. Inability of a Party to make payments when due, be
profitable or to secure funds, arrange bank loans or other financing, obtain
credit or have adequate capacity (other than for reasons of Force Majeure
declared by such downstream facilities) on downstream facilities shall not be
regarded as an event of Force Majeure. Further, it is specifically agreed by the
Parties that the events and activities referenced in Article IX. and Article
XI.a.ii shall not be regarded as events of Force Majeure.

         b.       Notice. A Party which is unable, in whole or in part, to carry
out its obligations under this Purchase and Sale Agreement due to Force Majeure
shall promptly give written notice to that effect to the other Parties stating
the circumstances underlying such Force Majeure.

         c.       Resolution. A Party claiming Force Majeure shall use
commercially reasonable efforts to remove the cause, condition, event or
circumstance of such Force Majeure, shall give written notice to the other
Parties of the termination of such Force Majeure and shall resume performance of
any suspended obligation promptly after termination of such Force Majeure.

                                  ARTICLE XXVI.

                          DISPUTE RESOLUTION PROCEDURE

         a.       With respect to any controversy or claim ("Dispute"), whether
based on contract, tort, statute or other legal or equitable theory (including,
but not limited to, any claim of fraud, misrepresentation or fraudulent
inducement or any question of validity or effect of this Purchase and Sale
Agreement including this clause) arising out of or related to this Purchase and
Sale Agreement (including any amendments or extensions), or the breach or
termination thereof, the Parties to this Purchase and Sale Agreement shall in
good faith attempt to settle such Dispute by consultation between senior
management representatives of such Parties initiated by a Party's ("Submitting
Party") delivery of written notice of the Dispute to the other Party (the
"Non-Submitting Party"). In the event such consultation does not settle the
Dispute within thirty (30) Days after receipt of the written notice of such
Dispute by the Non-Submitting Party, the Dispute shall be submitted to
non-binding mediation. In the event the Parties are unable to settle the Dispute
through use of mediation within thirty (30) Days of the commencement of such
mediation, the Dispute

                                     - 28 -
<PAGE>

shall be settled by binding arbitration in accordance with the Commercial
Arbitration Rules of the AAA, and this provision.

         The arbitration shall be governed by the Federal Arbitration Act, 9
U.S.C. Sections 1-16 to the exclusion of any provision of state law inconsistent
therewith, and judgment upon the award rendered by the arbitrator may be entered
by any court having jurisdiction. Any arbitration proceeding hereunder will be
conducted on a confidential basis.

         The arbitration shall be held in Houston, Texas.

         There shall be one (1) arbitrator. The Parties shall attempt jointly to
select an arbitrator. If the Parties are unable or fail to agree upon an
arbitrator within fifteen (15) Days after the commencement of arbitration, one
shall be selected by AAA. The arbitration hearing shall occur no later than
sixty (60) Days after selection of the arbitrator. The arbitrator shall
determine the claims of the Parties and render a final award in accordance with
the substantive law of the State of Texas, excluding the conflicts provisions of
such law. Unless otherwise provided in the agreement, the arbitrator shall not
have the right or the ability to terminate this Purchase and Sale Agreement. The
arbitrator shall set forth the reasons for the award in writing within ten (10)
working Days after the close of evidence and any post-evidence briefing and
arguments that may be agreed upon (which shall be concluded within fourteen (14)
Days after close of evidence). The arbitrator shall not have the right to
terminate this Purchase and Sale Agreement.

         Any claim by a Party shall be time-barred if the Submitting Party
commences arbitration with respect to such claim later than two (2) years after
the receipt of the written notice of the Dispute by the Non-Submitting Party.
All statutes of limitations and defenses based upon passage of time applicable
to any claim of a defending Party (including any counterclaim or setoff) shall
be tolled while the arbitration is pending.

         The obligation to arbitrate any Dispute shall extend to the successors
and assigns of the Parties. The Parties shall use their commercially reasonable
efforts to cause the obligation to arbitrate any Dispute to extend to any
officer, director, employee, shareholder, agent, trustee, affiliate, or
subsidiary. The terms hereof shall not limit any obligations of a Party to
defend, indemnify or hold harmless another Party against court proceedings or
other claims, losses, damages or expenses.

         The arbitrator shall order the Parties to promptly exchange copies of
all exhibits and witness lists, and, if requested by a Party, to produce other
relevant documents, to answer up to ten (10) interrogatories (including
subparts), to respond to up to ten (10) requests for admissions (which shall be
deemed admitted if not denied) and to produce for deposition and, if requested,
at the hearing all witnesses that such Party has listed and up to four (4) other
persons within such Party's control. Any additional discovery shall only occur
by agreement of the Parties or as ordered by the arbitrator upon a finding of
good cause.

         Each Party shall bear its own costs, expenses and attorney's fees;
provided that if court proceedings to stay litigation or compel arbitration are
necessary, the Party who unsuccessfully opposes such proceedings shall pay all
reasonable associated costs, expenses, and attorney's fees in connection with
such court proceeding.

         In order to prevent irreparable harm, the arbitrator shall have the
power to grant temporary or permanent injunctive or other equitable relief.
Prior to the appointment of an

                                     - 29 -
<PAGE>

arbitrator a Party may, notwithstanding any other provision of this Purchase and
Sale Agreement, seek temporary injunctive relief from any court of competent
jurisdiction; provided that the Party seeking such relief shall (if arbitration
has not already been commenced) simultaneously commence arbitration. Such court
ordered relief shall not continue more than ten (10) Days after the appointment
of the arbitrator (or in any event for longer than sixty (60) Days).

         If any part of this arbitration provision is held to be unenforceable,
it shall be severed and shall not affect either the duty to arbitrate or any
other part of this provision.

                                 ARTICLE XXVII.

                                 CONFIDENTIALITY

         a.       Subject to Article XXVII.b. below, the existence of this
Purchase and Sale Agreement, its contents, and the discussions between the
Parties regarding this Purchase and Sale Agreement are subject to the
Confidentiality Agreement ("Confidentiality Agreement") dated January 10, 2001
by and between UNOCAL, BHP and El Paso Energy Partners, L.P., a copy of which is
attached hereto as Exhibit "B". To the extent of a permitted assignment or
transfer, a Party may disclose the applicable portions of this Purchase and Sale
Agreement and its contents to any bona fide, financially responsible,
prospective assignee of any portion of such Party's interest in the Dedicated
Leases, the Caesar System or Cameron Highway, provided that (i) such disclosing
Party shall give the other Party to this Purchase and Sale Agreement not less
than ten (10) Days prior written notice specifying the extent to which that
Party intends to disclose this Purchase and Sale Agreement to the prospective
assignee and (ii) the prospective assignee is bound by a written confidentiality
agreement to not disclose any information regarding this Purchase and Sale
Agreement or the Parties hereto, and such confidentiality agreement contains
terms and provisions at least as stringent as those contained in the
Confidentiality Agreement. Notwithstanding anything contained in this Article
XXVII.a. to the contrary, UNOCAL may not disclose the terms of this Purchase and
Sale Agreement to Equilon.

         b.       Public announcements concerning the Transaction or this
Purchase and Sale Agreement shall be subject to the applicable provisions of the
Confidentiality Agreement; provided that, notwithstanding the applicable
provisions in the Confidentiality Agreement, to the contrary, it is agreed and
understood that, to the extent such announcement is required by applicable laws
or securities exchange, market or similar rules, any Party is permitted to issue
a press release or make a public announcement concerning the Transaction or the
Purchase and Sale Agreement without the other Party's consent, in which case the
disclosing Party shall provide an advance copy of the proposed public disclosure
to the non-disclosing Party and permit the non-disclosing Party the opportunity
to reasonably comment on such proposed disclosure.

                                 ARTICLE XXVIII.

                                  MISCELLANEOUS

         a.       NOTICES. All notices and other communications under this
Purchase and Sale Agreement will be in writing and will be deemed to have been
given (i) when received if given in person or by courier or a courier service,
(ii) on the date of transmission if sent by facsimile or other wire transmission
and receipt thereof is confirmed by telephone, or (iii)

                                     - 30 -
<PAGE>

three (3) business Days after being deposited in the mail, certified or
registered, postage prepaid:

                           if to CHOPS, addressed as follows:

                           Cameron Highway Oil Pipeline Company
                           Attn: Manta Ray Gathering Company, L.L.C., Operator
                           Four Greenway Plaza
                           Houston, Texas 77046
                           Attn: President
                           (832) 676-5666 (telephone)
                           (832) 676-1710 (facsimile)

                           if to UNOCAL, addressed as follows:
                           UNOCAL
                           14141 Southwest Freeway
                           Sugarland, TX 77478

                           For accounting matters:

                           Attn: Unocal Energy Trading Inc.
                                 Manager Crude Oil Accounting
                                 (281) 287-7521 (telephone)
                                 (281) 287-7331 (facsimile)

                           For contract matters:

                           Attn: Unocal Midstream & Trade
                                 Ronald Kaltenbaugh
                                 (281)287-5964 (telephone)
                                 (281)287-7327(facsimile)

Any Party may change any address to which notice is to be given to it by giving
notice as provided above of such change of address.

         b.       INSURANCE. All Parties shall procure and maintain or cause to
be procured and maintained all insurance or provide self-insurance in the types
and amounts as required by applicable laws, rules and regulations, to provide
coverage against such risks, which are the subject of this Purchase and Sale
Agreement, as is either customarily carried by companies owning, operating or
conducting similar business(es), or as deemed necessary and reasonably requested
by the Parties from time to time.

         c.       TAXES. UNOCAL shall be responsible for all applicable
production, excise, sales, use or similar taxes and royalties on or with respect
to the production, delivery and sale, of Crude Oil to CHOPS hereunder. UNOCAL
shall also be responsible for any tax, fee, or other charge levided against
either UNOCAL or CHOPS, pursuant to any federal, State, or local act or
regulation for the purpose of creating a fund for the prevention, containment,
clean up and/or removal of spills and/or the reimbursement of persons sustaining
loss therefrom. CHOPS shall be responsible for all applicable excise, sales, use
or similar taxes on or with respect to the delivery and sale to UNOCAL of Crude
Oil hereunder.

                                     - 31 -
<PAGE>

         d.       COMMINGLING. CHOPS shall have the right to commingle
production from the Dedicated Leases with production from other properties,
pipelines and facilities.

         e.       NO PARTNERSHIP AND NO FIDUCIARY OBLIGATIONS. Nothing herein is
intended to create a partnership, joint venture, agency or other relationship
creating fiduciary or quasi fiduciary duties or similar duties and obligations
or otherwise subject the Parties to joint and several or vicarious liability or
to impose any duty, obligation or liability that would arise therefrom with
respect to any of the Parties.

         f.       ENTIRE AGREEMENT. This Purchase and Sale Agreement (including
the Confidentiality Agreement, as amended herein) constitutes the entire
agreement of the Parties as of the Effective Date hereof with respect to the
Transaction and supersedes (i) all prior oral or written proposals or agreements
between the Parties, (ii) all contemporaneous oral proposals or agreements and
(iii) all previous negotiations and all other communications or understandings
between the Parties with respect to the subject matter hereof. Effective as of
the Effective Date hereof, the Parties hereto terminate the MOU.

         g.       AMENDMENT, MODIFICATION AND WAIVER. This Purchase and Sale
Agreement may be amended, modified, superseded or canceled, and any of the
terms, covenants, representations, warranties or conditions hereof may be
waived, only by a written instrument executed by the Parties. The failure of a
Party at any time or times to require performance of any provisions hereof shall
in no manner affect the right at a later time to enforce the same. No waiver by
any Party of any condition, or of any breach of any term, covenant,
representation or warranty contained in this Purchase and Sale Agreement, in any
one or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such condition or breach or a waiver of any other
condition or of any breach of any other term, covenant, representation or
warranty.

         h.       EXHIBITS AND ATTACHMENTS. All exhibits, attachments and the
like contained herein or attached hereto are integrally related to this Purchase
and Sale Agreement, and are hereby made a part of this Purchase and Sale
Agreement for all purposes. In the event of a conflict between this memorandum
and any of its exhibits and attachments, the terms of this memorandum shall
control.

         i.       FEES AND EXPENSES. Each Party hereto shall bear and pay all
costs and expenses incurred by it in connection with the negotiations
contemplated by this Purchase and Sale Agreement.

         j.       INVALID TERMS. If any term or other provision of this Purchase
and Sale Agreement is determined to be invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other terms and conditions of
this Purchase and Sale Agreement shall nevertheless remain in full force and
effect. In the event a term or other provision of this Purchase and Sale
Agreement is determined to be invalid, illegal or incapable of being enforced,
except as otherwise provided in Article IX. or Article XI.a.ii., the Parties
shall cooperate to develop a mutually acceptable alternative term or other
provision that reflects the original intent of the Parties and maintains the
commercial and economic benefits to the Parties.

         k.       FURTHER ASSURANCES. Subject to the terms and conditions set
forth in this Purchase and Sale Agreement, each Party agrees to use its
commercially reasonable efforts to take, or to cause to be taken, all actions,
and to do, or to cause to be done, all things

                                     - 32 -
<PAGE>

necessary, proper or advisable under applicable laws to consummate and make
effective the Transaction contemplated by this Purchase and Sale Agreement. In
case, at any time after the execution of this Purchase and Sale Agreement, any
further action is necessary or desirable to carry out its purposes, the Parties
will take or cause to be taken all such necessary action.

         l.       COUNTERPARTS. This Purchase and Sale Agreement may be executed
in one or more counterparts, each of which will be deemed to be an original copy
of this Purchase and Sale Agreement and all of which, when taken together, will
be deemed to constitute one and the same Purchase and Sale Agreement.

         m.       GOVERNING LAW. THIS PURCHASE AND SALE AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
WITHOUT REGARD TO ANY CONFLICT OF LAW PRINCIPLES WHICH, IF APPLIED, MIGHT PERMIT
OR REQUIRE THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION, AND THE PARTIES
AGREE THAT THE PLACE OF EXECUTION OF THIS PURCHASE AND SALE AGREEMENT IS HARRIS
COUNTY, TEXAS AND THAT VENUE WITH RESPECT TO ANY DISPUTE ARISING HEREUNDER OR IN
CONNECTION HEREWITH SHALL LIE IN HOUSTON, HARRIS COUNTY, TEXAS.

         n.       INTERPRETATION. Whenever the context requires: the gender of
all words used in this agreement includes the masculine, feminine, and neuter; a
reference to any person or entity includes its permitted successors and assigns;
the words "hereof," "herein," "hereto," "hereunder," and words of similar import
when used in this agreement will refer to this agreement as a whole and not to
any particular provisions of this agreement; articles and other titles or
headings are for convenience only and neither limit nor amplify the provisions
of the agreement itself, and all references herein to articles, sections or
subdivisions thereof will refer to the corresponding article, section or
subdivision thereof of this agreement unless specific reference is made to such
articles, sections or subdivisions of another document or instrument; any
reference to "includes" or "including" will mean "includes without limitation"
or "including but not limited to," respectively; and any references in the
singular will include references in the plural and vice-versa.

         o.       OTHER. Each Party declares (i) that it has contributed to the
drafting of this Purchase and Sale Agreement or has had it reviewed by its legal
counsel before executing it, (ii) that this Purchase and Sale Agreement has been
purposefully drawn and correctly reflects such Party's understanding of the
Transaction that it contemplates as of the Effective Date hereof, (iii) that
this Purchase and Sale Agreement has been validly executed and delivered, (iv)
that this Purchase and Sale Agreement has been duly authorized by all action
necessary for the authorization thereof, and (v) this Purchase and Sale
Agreement constitutes a binding and enforceable obligation of such Party,
enforceable in accordance with its terms.

                           [SIGNATURE PAGE TO FOLLOW]

                                     - 33 -
<PAGE>

         IN WITNESS WHEREOF, the Parties hereto have caused this Purchase and
Sale Agreement to be signed by their respective duly authorized representatives
effective as of the day and year first written above.

CAMERON HIGHWAY OIL PIPELINE                  UNION OIL COMPANY OF CALIFORNIA
COMPANY
By:  /s/ James Lytal                          By: /s/ Joseph A. Blount Jr.
    ------------------------------                ------------------------------
Name: James Lytal                             Name: Joseph A. Blount Jr.
Title: President                              Title: Vice President
Date: 6/24/03                                 Date: 6/23/03

                                     - 34 -
<PAGE>

                                   EXHIBIT "A"

                INITIAL DEDICATED LEASES AND DEDICATED PRODUCTION

<TABLE>
<CAPTION>
                                LEASES                                UNOCAL WORKING INTEREST
                                ------                                -----------------------
<S>                        <C>                                        <C>
MAD DOG                    GREEN CANYON 738                                     15.6%

                           GREEN CANYON 739                                     15.6%

                           GREEN CANYON 781                                     15.6%

                           GREEN CANYON 782                                     15.6%

                           GREEN CANYON 783                                     15.6%

                           GREEN CANYON 785                                     15.6%

                           GREEN CANYON 786                                     15.6%

                           GREEN CANYON 787                                     15.6%
</TABLE>

                                      A-1
<PAGE>

                                   EXHIBIT "B"
                            CONFIDENTIALITY AGREEMENT

                                      B-1

<PAGE>

                                   EXHIBIT "C"

           QUALITY BANK RULES FOR CAMERON HIGHWAY OIL PIPELINE SYSTEM

                            MARKET BASED QUALITY BANK

                                   SECTION I.

                                    GENERAL

1.       The purpose of this Market Based Quality Bank ("Quality Bank") is to
         mitigate damage and/or improvement to producers whose crude oil is
         purchased by CHOPS and commingled in Cameron Highway. Differences in
         the quality of all the producers' crude oil that are mixed within the
         common crude oil stream in Cameron Highway either increase or decrease
         the quality of the common crude oil stream. This Quality Bank charges
         the producer or pays the producer depending on the quality of the
         common crude oil stream and the quality of the producer's crude oil.
         Each producer will be required, as a condition of tendering, to
         participate in this Quality Bank.

2.       API gravity and sulfur content are the quality parameters used to
         determine the relative value of each producer's receipt stream.
         Adjustment factors for gravity and sulfur are based upon a market price
         spread between Louisiana Light Sweet ("LLS") and Mars (see Section III-
         Current Month Gravity and Sulfur Adjustment Factors). The price spread
         is derived using Platt's spot price quote, high/low mean, posted
         average trade month (the 26th of the month two months prior to delivery
         through the 25th of the month one month prior to delivery, workdays
         only)("Trade Month").

3.       Should a Platt's Quote for Cameron Highway common stream be
         established, it will replace Mars in the Quality Bank calculations,
         subject to the provisions of Section VI. -Periodic Review.

4.       Any material changes to the Quality Bank, including proposed changes
         from a Periodic Review, must be approved by greater than a seventy
         percent (70%) vote of the producers then participating in this Quality
         Bank in order to effect the change. Each five hundred (500) Barrels of
         monthly average production (based on the monthly average of the twelve
         month period preceding the month the vote is taken) will have one vote.

         Any group of producers with seventy percent (70%) of the volume on
         Cameron Highway may make a proposal to CHOPS providing for an alternate
         method and an explanation of why such alternate method provides a more
         accurate, actual market price to quality relationship than the then
         existing Quality Bank. CHOPS will retain the right to reject such
         proposal if CHOPS believes, in it's sole discretion after using good
         faith, reasonable efforts to analyze such proposal, that the proposal
         does not uphold the intent of the Quality Bank as stated in Paragraph 1
         above in this Section I.

                                      C-1
<PAGE>

         Notwithstanding any of the above, CHOPS may, at it's sole discretion,
         change any of the provisions of this Exhibit as necessary to comply
         with any governmental requirement, order or mandate and such change
         will be binding upon Unocal and all participants upon proper notice
         thereof.

                                   SECTION II.

Gravity and Sulfur Weighting Factors

1.       Gravity and Sulfur weighting factors are used in establishing a price
         and quality relationship between different crude oil streams. These
         weighting factors effectively allocate a portion of the market spread
         to each of the quality parameters of gravity and sulfur.

2.       The weighting factors, to be used in calculating the GAF and SAF as
         defined in Section III, are as follows.

                        Gravity Weighting ("GW") = 31.5%

                         Sulfur Weighting ("SW") = 44.3%

                                  SECTION III.

CURRENT MONTH GRAVITY AND SULFUR ADJUSTMENT FACTORS

1.       The applicable delivery month Gravity Adjustment Factor ("GAF") and the
         applicable delivery month Sulfur Adjustment Factor ("SAF") are
         calculated using the following equations:

                           GAF = (GW x a) divided by b

                           SAF = (SW x a) divided by c

         Where Gravity and Sulfur Weighting factors (GW and SW) are expressed as
         decimals and,

         "a"  =   The price differential between the LLS Platt's Quote and the
                  Mars Platt's Quote for the Trade Month.

         "b"  =   The delivery month Gravity difference between LLS and Mars
                  based on the gravity of LLS crude oil at the point of sale
                  where "a" is determined, currently Capline's LLS receipt
                  stream at St. James, Louisiana as calculated by Gravcap, minus
                  the weighted average gravity of Mars at the point of sale
                  where "a" is determined, currently Shell's composite gravity
                  for Mars deliveries at Clovelly, LA.

                                      C-2
<PAGE>

         "c"  =   The delivery month Sulfur difference between LLS and Mars
                  based on the weighted average of sulfur of LLS crude oil at
                  the point of sale where "a" is determined, currently Capline's
                  LLS receipt stream at St. James, Louisiana as calculated by
                  Gravcap, minus the weighted average sulfur of Mars at the
                  point of sale where "a" is determined, currently Shell's
                  composite sulfur for Mars deliveries at Clovelly, LA.

                                   SECTION IV.

CALCULATION OF QUALITY BANK CREDIT/DEBIT

Quality Bank credit/debit adjustments between producers are computed as follows:

1.       The applicable receipt Barrels and gravities are the delivery month
         actual net Barrels at sixty (60) degrees Fahrenheit (with no deductions
         for loss allowance) and the gravities recorded by CHOPS at the custody
         transfer measurement facility where CHOPS customarily records gravities
         and quantities received into Cameron Highway.

2.       No compensation is given for gravity between 37 and 45 degrees API. For
         gravities of 45 API degrees and above, a "bend-over" disincentive is
         applied.

3.       GRAVITY CREDIT/DEBIT CALCULATION

         To compute the gravity credit/debit to be paid/received the following
         equation is used:

     Gravity credit/debit = ((PG - WAG) multiplied by GAF) multiplied by T

         Where,

                  "PG"  =  Unocals gravity based on each custody transfer
                           tickets for each receipt point into Cameron Highway
                           where Unocal has production being delivered into
                           Cameron Highway, subject to the Gravity Limits set
                           out below.

                  "WAG" =  The weighted average receipt gravity of the common
                           stream for a given delivery Month. For Quality Bank
                           calculation purposes, WAG is obtained by taking the
                           sum of the products obtained by multiplying the
                           gravity of each producer's point of receipt volume
                           based on the custody transfer tickets (subject to the
                           Gravity Limits set out below) by the number of net
                           Barrels in each producer's receipt point volume, and
                           divide the total resultant by the total net Barrels
                           received during the given delivery month.

                  "T"   =  The total current month volume produced by Unocal
                           based on the custody transfer tickets at each point
                           of

                                      C-3
<PAGE>

                           interconnect with Cameron Highway that Unocal has
                           production being delivered into Cameron Highway.

                  Gravity Limits: When actual gravity exceeds 37 but is less
                                  than 45 degrees API, a Deemed Gravity of 37
                                  degrees API is used in determining PG and
                                  WAG. When actual gravity is equal to or
                                  greater than 45 degrees API, a Deemed
                                  Gravity is used that is calculated by the
                                  formula: Deemed Gravity = 80 minus actual
                                  API gravity. In all other instances (gravity
                                  less than or equal to 37 API) the actual API
                                  gravity is used.

4.       SULFUR CREDIT/DEBIT CALCULATION

         To compute the sulfur credit/debit to be paid/received the following
equation is used:

      Sulfur credit/debit = ((WAS - PS) multiplied by SAF) multiplied by T

          Where,

                   "PS"  =  Unocal's Sulfur based on each custody transfer
                            tickets for each receipt point into Cameron
                            Highway where Unocal has production being
                            delivered into Cameron Highway .

                  "WAS"  =  The weighted average receipt sulfur of the
                            common stream for a given delivery Month. WAS
                            is obtained by taking the sum of the products
                            obtained by multiplying the sulfur percentage
                            (by weight) of each producer's point of
                            receipt volume based on the custody transfer
                            tickets by the number of net Barrels in each
                            producer's point of receipt, and divide the
                            total resultant by the total net Barrels
                            received during the given delivery Month.
                            Since there will be no minimum or maximum
                            sulfur percentage limitations, this weighted
                            average sulfur percentage calculation will be
                            used for Quality Bank adjustment purposes.

                    "T"  =         The total current month volume produced
                            by Unocal based on the custody transfer
                            tickets at each point of interconnect with
                            Cameron Highway that Unocal has production
                            being delivered into Cameron Highway .

5.       To obtain the total Quality Bank Credit/Debit add the Gravity and
         Sulfur credit/debit. Sample calculations are attached hereto as Table
         1.

6.       These calculations will be made for each delivery month and the
         algebraic sum of all the producers' credit/debit for Cameron Highway
         will be zero (+/- fifty Dollars). If a producer has a net debit balance
         in combining the two adjustments made above, the balance due will be
         remitted to CHOPS within fifteen (15) Days

                                     C-4
<PAGE>

         from receipt of statements of such debit. If a producer has a credit,
         the CHOPS will remit the amount thereof within 5 Days of receipt of all
         the payments due from those producers owing a debit.

                                   SECTION V.

                                 ADMINISTRATIVE

1.       Capitalized terms, including "CHOPS" and "Unocal," have the meanings
         defined in the Purchase and Sale Agreement to which this Exhibit is
         attached, unless the context dictates otherwise. Similarly, the term
         "producer" means an individual producer on Cameron Highway
         (collectively "producers").

2.       CHOPS will include requirements for participation in the Quality Bank
         and procedures for calculating adjustments between producers in all
         contracts to be entered into with producers covering the purchase and
         sale of crude oil on Cameron Highway.

3.       CHOPS will administer the Quality Bank and will perform the
         clearinghouse business of calculating and effecting adjustments, by a
         process of debits and credits and interchange of funds, among the
         producers of crude oil connected to Cameron Highway. CHOPS may
         subcontract any or all of the work associated with the Quality Bank,
         but by doing so CHOPS will not be relieved of any of its obligations
         hereunder.

4.       CHOPS will perform necessary calculations and prepare appropriate
         statements for each producer as soon as the gravity, sulfur and price
         data is available.

5.       CHOPS will be responsible, at its sole cost and expense, for
         determining and/or securing data on all gravities, sulfur contents, net
         Barrels of the crude oil received into Cameron Highway, and Platt's
         Quote prices. The gravities will be determined from the custody
         transfer receipt tickets written by the CHOPS. The sulfur content will
         be determined based on samples secured by the CHOPS from the composite
         sampler at the time the custody transfer receipt tickets are written.
         The gravity will be determined by ASTM 287 (Standard Test Method for
         API gravity of Crude Petroleum and Petroleum Products) and the sulfur
         content pursuant to ASTM D-2622 (ASTM D-4294 is acceptable if ASTM
         D-2622 is not available) (Standard Test Method for Sulfur in Petroleum
         Products).

6.       If any producer fails to perform any Quality Bank payment obligation as
         established herein, CHOPS will make equivalent payment into the Quality
         Bank within five (5) Days of such failure, to enable distribution of
         funds to producers due credits. CHOPS will, however, have the right to
         withhold payment of or offset against, any moneys due such failing
         producer pursuant to the Purchase and Sale Agreement between the
         producer and CHOPS to recover or otherwise fulfill any and all of
         producer's Quality Bank payment obligations.

                                      C-5
<PAGE>

7.       CHOPS agrees that all transfers of interest in Cameron Highway will be
         made subject to this Agreement and will require the transferee to
         assume as to such interest all of the obligations of CHOPS under this
         Agreement which accrue on or after the effective date of the transfer.

8.       Notwithstanding anything to the contrary set forth in Article XV of the
         Agreement, inasmuch as CHOPS has agreed to operate the Quality Bank
         without profit, and except to the extent resulting from the gross
         negligence or willful misconduct of CHOPS, Unocal hereby fully releases
         and agrees to indemnify the CHOPS from all claims, actions and demands
         for loss by, or damage to, CHOPS or Unocal arising out of, in
         connection with, or as an incident to any act or omission, including
         any negligence, of the CHOPS or its employees, agents or contractors,
         in the administration of the Quality Bank. Neither CHOPS nor Unocal
         will be liable to CHOPS or other producers, or to any third person, in
         respect to obligations or liabilities incurred by CHOPS or other
         producers in connection with their separate business unrelated to said
         Cameron highway, and obligations to CHOPS or Unocal under this
         Agreement are several and not joint or in solido to CHOPS or other
         producer.

9.       Any individual producer, or his representative, will, at any time
         during normal business hours and upon reasonable notice, have access to
         the books, accounts and records of CHOPS for the purpose of verifying
         that CHOPS is operating the process of adjustments and determining
         values in accordance with the provisions of this Quality Bank. Samples
         used for Quality Bank calculations will be retained by CHOPS for 60
         days following the month in which the samples were obtained. Cost of
         such individual audits will be borne by the producer(s) requesting the
         audit.

                                   SECTION VI.
                                 PERIODIC REVIEW

1.       The Quality Bank will be periodically reviewed and updated in
         accordance with the following:

            -  Immediately prior to the date when Cameron Highway common stream
               replaces Mars crude oil as a component of differential market
               price, in order to re-establish adjustment factors and verify
               satisfactory correlation of an updated database.

            -  At any time a quality parameter other than gravity or sulfur
               significantly affects the pricing of the Cameron Highway common
               stream, or the pricing of LLS or Mars (if Mars is then currently
               being used as the proxy to Cameron Highway common stream).

            -  Every five years following April 30, 2002, to determine if the
               market for database crude oil types or the Cameron Highway common
               stream has

                                      C-6
<PAGE>

               changed sufficiently to warrant modifications of the adjustment
               factors or formulas used by the Quality Bank.

2.       In any subsequent review of the Quality Bank, the Cameron Highway
         common stream will be incorporated into the crude oil database if
         sufficient independently published price data are available. Other
         crude oils commonly marketed on the USGC may also be added at this time
         if required to expand the range of the crude oil database to ensure it
         encompasses the full range of gravity and sulfur applicable to crude
         oil streams that might be introduced into the pipeline system. These
         other crude oils will only be added if appropriate pricing data from an
         independent source is available covering the specified period.

3.       The following criteria will be used in assembling a historical
         database.

         -  It will include commercially traded Gulf of Mexico originating crude
            oil streams (types) that are representative of the U.S. Gulf Coast
            ("USGC") market and for which there are sufficient published price
            data.

         Import crude oils that routinely compete in the USGC market will be
         added to the historical database to cover the full range of key quality
         parameters anticipated to be seen in the pipeline system.

         -  If pricing data is based on transactions, such pricing must be
            continuously available from publicly available sources for the crude
            oils used, and ideally cover one (multiple preferred) pricing cycle.

         -  Accurate assay data on the crude oils must be available.

         -  Certain crude oils will be excluded from the database based on the
            characteristics listed below, provided that (i) such characteristic
            is not taken into account in the Quality Bank and (ii) the Cameron
            Highway common stream does not, or is not expected to, have such
            characteristic.

            -     Crude oils that are not chemically similar.

            -     Crude oils that are known to routinely contain contaminants,
                  to a degree that market price is significantly affected.

            -     Crude oils whose assays indicate they are not whole crude
                  oils.

4.       A historical database will contain, at a minimum, the prices, API
         gravity and sulfur content of each selected crude oil type. To the
         extent possible, the database should contain crude oil types which
         encompass the full range of gravity and sulfur applicable to crude oil
         streams that might be introduced into the pipeline system and provide
         sufficient variation of the key quality parameters to yield a robust
         Quality Bank. It is expected the database will include the most
         recently available monthly data for a minimum period encompassing not
         less than one complete crude oil pricing cycle or twelve consecutive
         months, whichever is greater. The database will be extended to a longer
         period if the required data are available, provided that the database
         will not be extended beyond sixty (60) months unless a determination is
         made that market conditions and transportation costs do not distort the
         older data.

                                      C-7
<PAGE>

5.       For the purpose of correlating the key quality parameters to price, the
         published crude oil price for each crude oil type will be adjusted to a
         commonly accepted market clearing location on the USGC for that type. .
         All costs that are reasonably expected to be incurred in transporting
         each crude oil from its usual marketing center to the selected market
         clearing location, using predominant and efficient transportation, will
         serve as the basis for such adjustments.

6.       All transportation costs will be based on arms-length transactions, and
         will exclude discounted or contract rates (such as those requiring
         minimum shipments over a specified period of time). If pipeline tariffs
         are not published then purchase and sale (buy/sell) differentials may
         be substituted, provided that such differentials are known or can be
         reasonably estimated from trade experience or market pricing.

7.       Other types of adjustments to deal with different pricing bases and
         timing biases may be made as reasonably determined to be necessary or
         convenient.

                                      C-8
<PAGE>

                                     TABLE 1
                    SAMPLE CALCULATION OF CHOPS QUALITY BANK

GRAVITY AND SULFUR WEIGHTING FACTORS

<TABLE>
<CAPTION>
                                                 GRAVITY LIMITS
                                        API Gravity           Deemed Gravity
                                        ------------------------------------
<S>                            <C>      <C>                   <C>
GRAVITY WEIGHTING (GW) =       31.50%   37 or less            API Gravity
SULFUR WEIGHTING (SW) =        44.30%   Between 37 - 45       37 API
                                               45 or greater         80 - API
</TABLE>

PLATT'S PRICING AND TESTED QUALITY      (Platt's Quote = Average Trade Month
                                        High/Low Mean, Workdays Only)

<TABLE>
<CAPTION>
                     Platt's
     Month    Crude   Quote   Gravity  Sulfur
---------------------------------------------
<S>           <C>    <C>      <C>      <C>
    Mar-02      LLS  $ 20.76   38.60    0.31%
    Mar-02     Mars  $ 18.37   29.90    1.93%
                     -----------------------
Difference           $  2.39    8.70   -1.62%
</TABLE>

CURRENT MONTH GRAVITY AND SULFUR ADJUSTMENT FACTORS

<TABLE>
<CAPTION>
<S>                                           <C>
a = LLS - Mars Price Differential =           $  2.3900
b = LLS - Mars Gravity Differential =              8.70
c = Mars - LLS Sulfur Differential =               1.62

GAF        = (GW times a) divided by b =      $0.086534 per degree API
SAF        = (SW times a) divided by c =      $0.653562 per % sulfur
</TABLE>

CALCULATION OF QUALITY BANK CREDIT/DEBIT

<TABLE>
<CAPTION>
                     T                          PG                               PG - WAG          GRAVITY
GRAVITY      (Prod Vol in Bbls)  API Grav  (Prod Gravity)    Bbls X PG       (Grav Difference)  CREDIT / (DEBIT)
-----------  ---------------------------------------------------------------------------------------------------
<S>          <C>                 <C>       <C>              <C>              <C>                <C>
Producer A      4,200,000.00       22.8        22.80         95,760,000          (3.881667)      ($1,410,771.67)
Producer B      2,100,000.00       37.5        37.00         77,700,000          10.318333        $1,875,072.44
Producer C      1,500,000.00       24.7        24.70         37,050,000          (1.981667)      ($  257,223.75)
Producer D        450,000.00       32.5        32.50         14,625,000           5.818333        $  226,568.91
Producer E        750,000.00       60.0        20.00         15,000,000          (6.681667)      ($  433,645.93)
              --------------               ----------------------------                          --------------
      Total     9,000,000.00                                240,135,000                          ($        0.00)
                                  WAG =    26.681667       = Weighted Avg PG
</TABLE>

<TABLE>
<CAPTION>
                      T                    PS                              WAS - PS                SULFUR
  SULFUR       (Prod Vol in Bbls)   (Prod wt% Sulfur)      Bbls X PS    (Sulfur Difference)     CREDIT / (DEBIT)
------------   -------------------------------------------------------------------------------------------------
<S>            <C>                  <C>                    <C>          <C>                     <C>
Producer A         4,200,000.00            2.96            12,432,000        (0.945000)         ($2,593,986.50)
Producer B         2,100,000.00            0.99             2,079,000         1.025000           $1,406,791.62
Producer C         1,500,000.00            1.98             2,970,000         0.035000           $   34,311.99
Producer D           450,000.00            1.12               504,000         0.895000           $  263,221.99
Producer E           750,000.00            0.20               150,000         1.815000           $  889,660.90
               ------------------------------------------------------                            -------------
      Total        9,000,000.00                            18,135,000                            $        0.00
                          WAS =        2.015000        = Weighted Avg PS
</TABLE>

                  CREDIT / (DEBIT) = PAYMENT FROM / (TO) BANK

<TABLE>
<CAPTION>

TOTAL                         Gravity                  Sulfur                  Total
------------              ----------------------------------------------------------------
<S>                       <C>                     <C>                     <C>
Producer A                ($  1,410,771.67)       ($  2,593,986.50)       ($  4,004,758.17)
Producer B                 $  1,875,072.44         $  1,406,791.62         $  3,281,864.06
Producer C                ($    257,223.75)        $     34,311.99        ($    222,911.76)
Producer D                 $    226,568.91         $    263,221.99         $    489,790.90
Producer E                ($    433,645.93)        $    889,660.90         $    456,014.98
                          ----------------------------------------------------------------
      Total               ($          0.00)        $          0.00        ($          0.00)
</TABLE>

                                      C-9
<PAGE>

                                   EXHIBIT "D"

                MEMORANDUM OF AGREEMENT AND RECORDABLE AGREEMENT

         I.       PURPOSE. This Recordable Agreement dated as of February 12,
2003, (this "AGREEMENT") is executed to (i) bind the parties hereto to the
agreements and covenants contained herein and (ii) effect notice to third
parties of the agreements and covenants contained herein and in that certain
Purchase and Sale Agreement entered into as of even date herewith (the "PURCHASE
AND SALE AGREEMENT"), by and between Cameron Highway Oil Pipeline Company
("COMPANY"), on the one hand, and Union Oil Company of California ("PRODUCER"),
on the other hand.

         II.      DESCRIPTION OF THE PROPERTY. This Agreement and the Purchase
and Sale Agreement affect all of Producer's right, title and interest (whether
now owned or hereafter acquired during the term of this Agreement) in and to any
hydrocarbons or crude oil ("OIL"), underlying the lands located offshore
Louisiana, Gulf of Mexico, Outer Continental Shelf, in the areas and blocks
listed below (collectively, the "DEDICATED LEASES"):

<TABLE>
<CAPTION>
   Areas                                      Blocks
   -----                                      ------
<S>                                           <C>
Green Canyon                                    738
Green Canyon                                    739
Green Canyon                                    781
Green Canyon                                    782
Green Canyon                                    783
Green Canyon                                    785
Green Canyon                                    786
Green Canyon                                    787
</TABLE>

                  For purposes of this Agreement, "DEDICATED PRODUCTION"
                  includes all of the Oil now or hereafter owned by Producer
                  that is produced from the Dedicated Leases.

         III.     CONSIDERATION. Producer and Company executed and entered into
this Agreement and the Purchase and Sale Agreement for and in consideration of,
among other things, the execution of, and the premises and mutual covenants
contained in, this Agreement and the Purchase and Sale Agreement, including,
without limitation, the agreements described in Articles IV-VII below, and other
good and valuable consideration (the receipt and sufficiency of which is hereby
confirmed and acknowledged).

         IV.      TENDER AND COMMITMENT OF PRODUCTION. Producer permanently
tendered and committed (subject to the terms and conditions of the Purchase and
Sale Agreement), and Producer hereby permanently tenders and commits, to Company
for delivery to, and gathering by, Company all Oil owned by Producer and
produced, saved and marketed from the Dedicated Leases. In addition, Producer
agreed, and agrees, that any attempted assignment or transfer of any interest in
such production will be null and void unless such transfer includes an express
provision stating that such assignment or transfer is made subject to the terms
of this Agreement and the Purchase and Sale Agreement and the transferee agrees
to be bound by the terms and conditions of this Agreement and the Purchase and
Sale Agreement.

                                      D-1
<PAGE>

         V.       AGREEMENT TO BE BOUND. Company and Producer have executed and
entered into this Agreement and the Purchase and Sale Agreement for the
consideration herein described and hereby agree that the terms and conditions of
this Agreement and the Purchase and Sale Agreement contain all necessary terms
and conditions for the agreements described herein to be binding upon the
parties hereto, and Company and Producer agree to be bound by the terms and
conditions of this Agreement and the Purchase and Sale Agreement. Company and
Producer acknowledge and agree that (i) this Agreement has been executed in
addition to the Purchase and Sale Agreement and not as a replacement, supplement
or other amendment to any of the terms and conditions in the Purchase and Sale
Agreement and (ii) the Purchase and Sale Agreement contains terms and conditions
similar to those described herein and covering the subject matter hereof as well
as other terms and conditions. The terms and conditions of this Agreement and
the Purchase and Sale Agreement will be construed together; provided, however,
that the terms and conditions contained in the Purchase and Sale Agreement will
govern and control any conflicts, ambiguities or inconsistencies between the
terms and conditions of this Agreement and the Purchase and Sale Agreement.

         VI.      NAMES AND ADDRESSES OF PARTIES:

                  If to Company to:
                  Cameron Highway Oil Pipeline Company
                  Attn: Manta Ray Gathering Company, L.L.C., Operator
                  Four Greenway Plaza
                  Houston, Texas  77046
                  Telephone: (832) 676-5666
                  Telecopy: (832) 676-1710

                  If to Producer to:

                  UNOCAL
                  14141 Southwest Freeway
                  Sugarland, TX 77478
                  Attn: Ronald Kaltenbaugh
                  (281)287-5964 (telephone)
                  (281)287-7327(facsimile)

         VII.     MISCELLANEOUS. This Agreement (i) may be executed in multiple
counterparts, each of which, when executed, will be deemed an original, and all
of which will constitute but one and the same instrument, (ii) may enforced by
specific performance and (iii) WILL BE GOVERNED BY TEXAS LAW TO THE EXTENT THE
LAW OF ANOTHER JURISDICTION IS NOT REQUIRED TO BE APPLIED. Subject to the
provisions of this Agreement and the Purchase and Sale Agreement, any Party may
transfer, assign or otherwise alienate any or all of its rights, title or
interest under this Agreement (such transfers will hereinafter be referred to as
"assignments") to any other Person with or without the consent of all of the
other Parties; provided, however, that no such assignment will be effective as
to the nonassigning Party or Parties until the assigning Party has delivered
written notice of such assignment to all nonassigning Parties.

                                      D-2
<PAGE>

         IN WITNESS WHEREOF, the Parties have hereunto executed this Agreement
as of the date first written in the Preamble.

                                            COMPANY

                                            CAMERON HIGHWAY OIL PIPELINE COMPANY

                                            By:_________________________________

                                            Printed Name:_______________________

                                            Title:______________________________

                                            PRODUCER
                                            UNION OIL COMPANY OF CALIFORNIA

                                            By:_________________________________

                                            Printed Name:_______________________

                                            Title:______________________________

                                      D-3
<PAGE>

         STATE OF  [TEXAS/LOUISIANA]
         COUNTY OF _______________

         This instrument was acknowledged before me on ____________, 2003, by
_______________, the __________ of Cameron Highway Oil Pipeline Company on
behalf of said partnership.

                                               _________________________________
                                               Notary Public, State of Texas

         STATE OF  [TEXAS/LOUISIANA]
         COUNTY OF _______________

         This instrument was acknowledged before me on ____________, 2003, by
_______________, the __________ of Union Oil Company of California on behalf of
said company.

                                               _________________________________
                                               Notary Public, State of Texas

                                      D-4
<PAGE>

                                   EXHIBIT "E"

                           OIL QUALITY SPECIFICATIONS

1.       Crude Oil delivered by Producer to CHOPS under the terms of this
         Purchase and Sale Agreement will conform to the specifications and
         operating conditions required by other refineries, terminals or
         pipelines downstream of the Delivery Point(s)and Additional Delivery
         Points ultimately receiving the Crude Oil (the "Downstream Facilities")
         and will meet the following specifications except if the specifications
         of the Downstream Facilities should be more stringent

         (a)      Viscosity, Gravity, and Pour Point. The Crude Oil must be good
                  and merchantable Crude Oil of such viscosity, gravity and pour
                  point such that it will be readily susceptible for movement
                  through Cameron Highway, and subject to the Quality Bank, will
                  not materially affect or damage the quality of other shipments
                  or cause disadvantage to other shippers and/or CHOPS. No Crude
                  Oil will be accepted for purchase which has a pour point
                  greater than 40 degrees Fahrenheit or viscosity greater than
                  400 Saybolt Universal Seconds at 60 degrees Fahrenheit unless
                  under terms and conditions acceptable to CHOPS.

         (b)      Basic Sediment, Water and Other Impurities. The Crude Oil will
                  not have a content consisting of more than one percent (1%) of
                  basic sediment, water or other impurities. CHOPS reserves the
                  right to reject Crude Oil containing more than one percent
                  (1%) of basic sediment, water, and other impurities, except
                  that sediment and water limitations of a connecting carrier
                  may be imposed upon CHOPS when such limits are less than that
                  of CHOPS, in which case the limitations of the connecting
                  carrier will be applied.

         (c)      Vapor Pressure. The Crude Oil will not have a Reid Vapor
                  Pressure (RVP) of more than 8.6 pounds per square inch. During
                  the winter months (October through November), Crude Oil with a
                  maximum RVP of 9.6 will be accepted. Crude Oil with a maximum
                  RVP above 9.6 may be accepted at the discretion of Cameron
                  Highway.

         (d)      Refined. The Crude Oil will not have been partially refined or
                  altered in any way so as to impact its value.

         (e)      Contamination. The Crude Oil will not have been contaminated
                  by the presence of any chemicals, chlorinated and/or
                  oxygenated hydrocarbons, arsenic, or other metals; provided,
                  however, that this Section 1(f) will not prohibit Producer's
                  use of corrosion/paraffin inhibitors, asphaltene dispersants
                  or demulsifiers in its platform or pipeline operations. The
                  Crude Oil will not

                                      E-1
<PAGE>

                  have been contaminated by the presence of methanol. Producer
                  will contact CHOPS prior to subsea well start-up, well
                  unloading operations, and other procedures requiring the use
                  of methanol.

2.       If any Crude Oil delivered and sold by Producer to CHOPS hereunder
         fails at any time to conform to the applicable specifications above,
         then, subject to 5(a) below, CHOPS will immediately have the right to
         discontinue purchasing such non-conforming Crude Oil so long as such
         Crude Oil continues to be non-conforming. In any event, Producer will
         undertake commercially reasonable measures to eliminate the cause of
         such non-conformance. Producer will be held responsible for any
         disposal required and/or expenses incurred in CHOPS' handling of such
         non-conforming Crude Oil.

3.       Assay. Upon initial start up of production, a laboratory analysis of
         Crude Oil will be submitted to CHOPS by Producer and will include API
         gravity, Reid vapor pressure, pour point, sediment and water content,
         sulfur content, viscosity at 60 and 100 degrees Fahrenheit, and other
         characteristics as may be required by CHOPS.

4.       CHOPS reserves the right to periodically sample and test the quality of
         the Crude Oil delivered by Producer at the Receipt Point(s). CHOPS
         shall be responsible for all costs attributable to such periodic
         sampling and testing.

5.       To the extent CHOPS must discontinue redelivery of Cameron Highway
         common stream Crude Oil to one or more of the Delivery Points as a
         result of Producer's non-conformance hereunder, Producer and CHOPS
         agree to the following:

         (a)      If Producer is the sole party nominating deliveries to such
                  Delivery Point(s) and Additional Delivery Points that is not
                  accepting the common stream, CHOPS will continue to accept and
                  redeliver Producer's Crude Oil to the other Delivery Point(s)
                  that are accepting the common stream until such time as CHOPS
                  is required to again deliver Crude Oil to any Delivery Point
                  or Additional Delivery Point that is not accepting the common
                  stream by another party delivering conforming Crude Oil. It
                  being the intent of both of the Parties that CHOPS will
                  continue to accept and redeliver Producer's Crude Oil so long
                  as redeliveries can be made to any Delivery Point and any
                  Additional Delivery Point and Cameron Highway does not have to
                  curtail its deliveries to any Delivery Point or Additional
                  Delivery Point due to Producer's non-conformance.

         (b)      If third-party conforming Crude Oil is nominated to any
                  Delivery Point or Additional Delivery Point that is not
                  accepting the common stream, CHOPS will immediately have the
                  right to discontinue purchasing Crude Oil so long as such
                  Crude Oil continues to be non-conforming. In any event,
                  Producer will undertake commercially reasonable measures to
                  eliminate the cause of such non-conformance.

                                      E-2

<PAGE>

                             CONSTRUCTION AGREEMENT
                                 CAMERON HIGHWAY

         This CONSTRUCTION AGREEMENT (this "Agreement") is entered into
effective as of the 23rd day of June, 2003 ("Effective Date") among BP
Exploration & Production Inc., a Delaware corporation ("BP"), Mardi Gras
Transportation System Inc., a Delaware corporation ("Mardi Gras"), Cameron
Highway Oil Pipeline Company, a Delaware general partnership ("CHOPS"), and
GulfTerra Energy Partners, L.P., a Delaware limited partnership ("GTM"),
successor to El Paso Energy Partners, L.P. BP, Mardi Gras, CHOPS and GTM are
individually referred to herein as a "Party" and collectively as "Parties".
CHOPS and GTM are collectively referred to herein as the "CHOPS Parties".

                              W I T N E S S E T H:

         WHEREAS, BP is a working interest owner in certain offshore oil and gas
leases located in the southern Green Canyon Area of the Gulf of Mexico, and
along with its co-working interest owners in the leases, are developing or are
planning to develop the associated fields for the production of oil and gas;

         WHEREAS, the CHOPS Parties will construct and install (or cause the
construction and installation of) (a) an offshore Crude Oil pipeline, depicted
in Exhibit A, that will extend from a connection with the Caesar System at Ship
Shoal Block 332 to the Delivery Points, (b) the SS 332 B Platform, and (c) all
related equipment and facilities (collectively, "Cameron Highway"), and the
CHOPS Parties will purchase Crude Oil provided by BP (or its designee) and
resell volumes of Crude Oil to BP (or its designee) at the Delivery Points
pursuant to that certain Purchase and Sale Agreement dated as of even date
herewith among the CHOPS Parties and BP (as such agreement may be modified and
amended from time-to-time, the "Purchase and Sale Agreement");

         WHEREAS, BP, Mardi Gras and the CHOPS Parties desire to document the
rights and obligations of each of the Parties with regard to the design,
fabrication, installation, construction, and operation of Cameron Highway as set
forth in this Agreement;

         WHEREAS, as a material inducement to BP's and Mardi Gras' agreeing to
enter into this Agreement, GTM is entering into this Agreement as a joint and
several primary obligor with respect to the obligations of CHOPS hereunder;

         NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants contained herein, the receipt and sufficiency of which
are hereby acknowledged, and intending hereby to be legally bound, the Parties
hereby agree and stipulate as follows:

                             CONSTRUCTION AGREEMENT
                                 CAMERON HIGHWAY

<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

As used herein, the initially capitalized terms listed below shall have the
following meanings:

         "AAA" shall mean the American Arbitration Association.

         "API" shall mean the American Petroleum Institute.

         "ADDITIONAL DELIVERY POINTS" shall have the meaning set forth in the
Purchase and Sale Agreement.

         "AFFILIATE" shall mean, as to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with such first Person. As used in this definition, the term "control"
(including the phrases "controlled by" and "under common control") shall mean
possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise); provided
that, in any event, any Person that owns, directly or indirectly, more than 50%
of the voting interests in any Person will be deemed to control such Person.

         "AGREEMENT" shall have the meaning set forth in the introductory
paragraph of this Agreement.

         "ATLANTIS" shall have the meaning set forth in the Purchase and Sale
Agreement.

         "BOPD" shall mean Barrels of Crude Oil per Day.

         "BP" shall have the meaning set forth in the introductory paragraph of
this Agreement.

         "BP GROUP" shall mean BP and its Affiliates, subsidiaries, co-working
interest owners, members and joint venturers and the respective employees,
officers, directors, representatives, agents, contractors and subcontractors of
each.

         "BP PRODUCTS" shall mean BP Products North America Inc., a Maryland
corporation.

         "BARREL" shall mean forty-two (42) U.S. gallons at a temperature of
60 degrees F and 0 Psig.

         "BUSINESS DAY" shall mean Monday through Friday of each week, except
that a legal holiday recognized as such by the government of the United States
or the States of Texas or Louisiana shall not be regarded as a Business Day.

         "CAESAR" shall mean Caesar Oil Pipeline Company, LLC, a Delaware
limited liability company, of which Mardi Gras is a member and is the designated
construction manager and operator of the Caesar System.

                             CONSTRUCTION AGREEMENT
                                 CAMERON HIGHWAY

                                      -2-
<PAGE>

         "CAESAR SYSTEM" shall mean the offshore Crude Oil pipeline consisting
of approximately sixty (60) miles of twenty-eight inch (28") trunkline and all
related laterals and equipment and facilities to be owned, constructed and
installed by Caesar or its designee(s) that will begin from the area of the
Initial Dedicated Leases and extend to platforms and/or interconnections with
other pipelines, including to Ship Shoal Block 332 where it will connect into
Cameron Highway.

         "CAMERON HIGHWAY" shall have the meaning set forth in the second
WHEREAS clause of this Agreement.

         "CAMERON HIGHWAY COMPLETION DATE" shall mean the date on which Cameron
Highway is Fully Operational.

         "CAMERON HIGHWAY MOU" shall mean that certain Memorandum of
Understanding dated effective February 11, 2002 among BP, Mardi Gras, EPN, and
Manta Ray, as amended.

         "CHOPS" shall have the meaning set forth in the introductory paragraph
of this Agreement.

         "CHOPS PARTIES" shall have the meaning set forth in the introductory
paragraph of this Agreement.

         "CHOPS PARTIES CAP" shall have the meaning set forth in Section
2.3(a)(iv).

         "CHOPS PARTIES GROUP" shall mean each of CHOPS and GTM, and their
respective Affiliates members, subsidiaries, co-owners, and joint venturers and
its and their respective employees, officers, directors, representatives,
agents, pipeline operators, construction managers, contractors and
subcontractors.

         "COMPUTER TAPES" shall have the meaning set forth in Section 5.13(e) of
this Agreement.

         "CONFIDENTIAL INFORMATION" means this Agreement and any other written
data or information that is privileged, confidential or proprietary, except
information that (a) is a matter of public knowledge at the time of its
disclosure or is thereafter published in or otherwise ascertainable from any
source available to the public without breach of this Agreement, (b) constitutes
information that is obtained from a third party (who or which is not a member or
an Affiliate of one of the Parties) other than by or as a result of unauthorized
disclosure or (c) prior to the time of disclosure had been independently
developed by the receiving Party or its members or Affiliates not utilizing
improper means.

         "CONFIDENTIALITY AGREEMENT" shall mean that certain Confidentiality
Agreement dated April 3, 2001 by and between Amoco Production Company, BP
Exploration & Oil Inc. and EPN, as amended.

                             CONSTRUCTION AGREEMENT
                                 CAMERON HIGHWAY

                                      -3-
<PAGE>

         "CONSTRUCTION PERIOD" shall have the meaning set forth in Section
5.25(b) of this Agreement.

         "CRUDE OIL" shall mean the liquid hydrocarbon production from wells, or
a blend of such, in its natural form, not having been enhanced or altered in any
manner or by any process (other than those processes that normally occur on an
offshore production facility) that would result in misrepresentation of its true
value for adaptability to refining as a whole crude oil.

         "DAY" shall mean a period of twenty-four (24) consecutive hours,
beginning and ending at 7:00 A.M. (CST).

         "DEDICATED LEASES" shall have the meaning set forth in the Purchase and
Sale Agreement.

         "DEDICATED PRODUCTION" shall have the meaning set forth in the Purchase
and Sale Agreement.

         "DELIVERY POINTS" shall have the meaning set forth in the Purchase and
Sale Agreement.

         "DISPUTE(S)" shall have the meaning set forth in Section 5.22.

         "EFFECTIVE DATE" shall have the meaning set forth in the introductory
paragraph of this Agreement.

         "EPN" shall mean El Paso Energy Partners, L.P., predecessor to GTM.

         "FERC" shall mean the Federal Energy Regulatory Commission and any
successor governmental agency.

         "FINANCIALLY CAPABLE ENTITY" shall mean an entity ("Proposed Assignee")
whose financial capability and resources, for purposes of this Agreement, shall
be evaluated based on (a) the financial wherewithal of such entity and (b) any
guaranty, agreement or other obligation of any other Person (including a
Proposed Assignee's parent entity) to the extent such guaranty, agreement or
other obligation provides for such Person to be financially obligated for the
obligations of the Proposed Assignee in connection with any applicable
assignment of this Agreement to the Proposed Assignee.

         "FORCE MAJEURE" shall mean causes, conditions, events or circumstances
affecting the Parties, or downstream or upstream facilities that are beyond the
reasonable control of the Party claiming Force Majeure. Such causes, conditions,
events and circumstances may include, without limitation, acts of God, wars
(declared or undeclared), hostilities, acts of terrorism, strikes, lockouts,
riots, floods, fires, storms, storm warnings, industrial disturbances, acts of
the public enemy, sabotage, blockades, insurrections, epidemics, landslides,
lightning, earthquakes, washouts, arrests and restraints of rulers and peoples,
civil disturbances, explosions, breakage or accidents to machinery or lines of
pipe, hydrate obstruction or blockages of any kind of lines of

                             CONSTRUCTION AGREEMENT
                                 CAMERON HIGHWAY

                                      -4-
<PAGE>

pipe, abnormal operating conditions on a Party's facilities, repairs,
improvements, replacements or alterations to plants, lines of pipe or related
facilities, inability of a Party to obtain necessary machinery, drilling or
workover rigs, materials, permits, easements or rights-of-way on reasonable
terms, freezing of a well or delivery facility, well blowout, cratering,
depletion of reserves, the partial or entire failure of a well, the act of any
court or governmental authority prohibiting a Party from discharging its
obligations under this Agreement or resulting in diminutions in service and
conduct that would violate any applicable law, all of which events must be
beyond the reasonable control of the Party claiming such event as Force Majeure.
Notwithstanding anything in this definition of "Force Majeure" to the contrary,
none of the following events shall be regarded as events of Force Majeure: (a)
the inability of a Party to (i) make payments when due, (ii) be profitable,
(iii) secure funds, (iv) arrange bank loans or other financing, or (v) obtain
credit, (b) the failure of Cameron Highway to be established and/or maintained
as a private pipeline system, (c) any portion of Cameron Highway being made
subject to the jurisdiction of any governmental authority, (d) a governmental
authority or court requiring a pro rata allocation of firm capacity on Cameron
Highway pursuant to the OCSLA, (e) any curtailment of Crude Oil by the owner or
operator of Cameron Highway as a direct response to a claim or threatened claim
of any party related to the OCSLA, or (f) the lack of or failure to obtain any
Poseidon SS 332 A Approval or the failure of any Poseidon SS 332 A Approval to
be valid, binding or effective for any reason.

         "FULLY OPERATIONAL" shall mean that Cameron Highway, including all
Delivery Points, is completed, active and operational such that it is capable of
receiving all Dedicated Production at the Receipt Points and delivering an
equivalent volume of Crude Oil at the Delivery Points.

         "GB 72" shall mean the existing platform owned by GTM and GOM Shelf,
LLC located in Garden Banks Block 72, Gulf of Mexico.

         "GTM" shall have the meaning set forth in the introductory paragraph of
this Agreement.

         "GOVERNMENTAL AGENCIES" shall mean the FERC and any governmental
agencies claiming or asserting jurisdiction under the OCSLA.

         "HI A-5"C"" shall mean a platform to be owned by CHOPS located in the
area of High Island Block A-5, which Cameron Highway is anticipated to cross.

         "HOLSTEIN" shall have the meaning set forth in the Purchase and Sale
Agreement.

         "INITIAL DEDICATED LEASES" shall have the meaning set forth in the
Purchase and Sale Agreement.

         "INITIAL CAMERON HIGHWAY RECEIPT POINT" shall have the meaning set
forth in the Purchase and Sale Agreement.

         "INTERCONNECT AGREEMENT" shall mean that certain Offshore Facilities
Interconnection, Construction and Operating Agreement dated as of even date
herewith among Caesar, Manta

                             CONSTRUCTION AGREEMENT
                                 CAMERON HIGHWAY

                                      -5-
<PAGE>

Ray, CHOPS, and GTM as such agreement may be modified, amended, restated or
replaced from time to time.

         "INTERCONNECT PARTIES" shall mean (a) Caesar, Facsimile Number
281-366-7910, Attn: Vice President, (b) Manta Ray, Facsimile Number
832-676-1710, Attn: President, (c) Mardi Gras, Facsimile Number 281-366-7910,
Attn: Vice President, (d) CHOPS, Facsimile Number 832-676-1710, Attn: President,
and (e) GTM, Facsimile Number 832-676-1710, Attn: President.

         "LENDER LIENS" shall have the meaning set forth in Section 5.14 of this
Agreement.

         "MMS" shall mean the Minerals Management Service and any successor
governmental agency.

         "MAD DOG" shall have the meaning set forth in the Purchase and Sale
Agreement.

         "MANTA RAY" shall mean Manta Ray Gathering Company, L.L.C., a direct
wholly-owned subsidiary of GTM, and a member of Atlantis Offshore, LLC.

         "MARDI GRAS" shall have the meaning set forth in the introductory
paragraph of this Agreement.

         "MARDI GRAS GROUP" shall mean Mardi Gras and its Affiliates,
subsidiaries, co-owners, members and joint venturers and its and their
respective employees, officers, directors, representatives, agents, contractors
and subcontractors.

         "NON-SUBMITTING PARTIES" shall have the meaning set forth in Section
5.22 of this Agreement.

         "OCSLA" shall mean the Outer Continental Shelf Lands Act (43 U.S.C.
Sections 1331 et seq.) as in effect on February 11, 2002, and any regulations or
rules promulgated thereunder by Governmental Agencies and decisions of courts
interpreting same.

         "OPERATIONAL" shall mean that Cameron Highway is active and operational
such that it is capable of receiving all Dedicated Production at the Receipt
Points and delivering an equivalent volume of Crude Oil to at least one (1) but
less than or equal to three (3) Delivery Points.

         "OTHER RECORDS" shall have the meaning set forth in Section 5.13(e) of
this Agreement.

         "PARTIES" shall have the meaning set forth in the introductory
paragraph of this Agreement.

         "PARTY" shall have the meaning set forth in the introductory paragraph
of this Agreement.

         "PERSON" shall mean any individual, governmental authority,
corporation, limited liability company, partnership, limited partnership, trust,
association or other entity.

                             CONSTRUCTION AGREEMENT
                                 CAMERON HIGHWAY

                                      -6-
<PAGE>

         "POSEIDON PIPELINE" shall mean the Crude Oil pipeline system owned by
Poseidon Oil Pipeline Company, L.L.C. consisting of approximately (a) 117 miles
of pipeline extending from GB 72 to the SS 332 A Platform, (b) 122 miles of
pipeline extending from the SS 332 A Platform to Houma, Louisiana, (c) 32 miles
of pipeline extending from Ewing Bank Block 873 to South Timbalier Block 212,
and (d) 17 miles of pipeline extending from Garden Banks Block 260 to South
Marsh Island Block 205, as such pipeline system may be modified or extended.

         "POSEIDON SS 332 A APPROVAL" shall have the meaning given to such term
in the Interconnect Agreement.

         "PROPOSED ASSIGNEE" shall have the meaning set forth in the definition
of the term "Financially Capable Entity".

         "PSIG" shall mean pounds per square inch gauge.

         "PURCHASE AND SALE AGREEMENT" shall have the meaning set forth in the
second WHEREAS clause of this Agreement.

         "RECEIPT POINTS" shall mean the points including, without limitation,
the Initial Cameron Highway Receipt Point, where the CHOPS Parties shall receive
and purchase Crude Oil pursuant to the Purchase and Sale Agreement.

         "REQUIRED COMMENCEMENT DATE" shall have the meaning set forth in
Section 2.1(a) of this Agreement.

         "RULES" shall mean the then current Commercial Arbitration Rules of
AAA.

         "SGC FIELDS" shall mean Atlantis, Holstein and Mad Dog.

         "SS 332 A PLATFORM" shall mean the existing platform owned by Atlantis
Offshore, LLC, located in Ship Shoal Block 332, Gulf of Mexico.

         "SS 332 B PLATFORM" shall mean the platform to be constructed and
installed by the CHOPS Parties, and owned by CHOPS, and located in Ship Shoal
Block 332, Gulf of Mexico, which platform is included in the definition of
"Cameron Highway".

         "SUBMITTING PARTY" shall have the meaning set forth in Section 5.22 of
this Agreement.

         "SUPPLEMENTARY AGREEMENT" shall mean that certain Cameron Highway
Supplementary Agreement dated as of even date herewith among BP, GTM and Mardi
Gras.

         "TEXAS CITY LATERAL" shall have the meaning set forth in the Purchase
and Sale Agreement.

                             CONSTRUCTION AGREEMENT
                                 CAMERON HIGHWAY

                                      -7-
<PAGE>

                                   ARTICLE II
                       CONSTRUCTION, OWNERSHIP, OPERATION
                               OF CAMERON HIGHWAY

         2.1      Construction Responsibilities and Activities.

                  (a)      Subject to the terms and conditions of this
Agreement, the CHOPS Parties shall (i) design, fabricate, construct, install and
commission Cameron Highway (with CHOPS owning Cameron Highway) at their sole
cost, risk, liability and expense, and (ii) use commercially reasonable efforts
to ensure that Cameron Highway is Fully Operational no later than 12:01 a.m. on
August 15, 2004 (as such date may be adjusted pursuant to Section 2.1(c) below,
the "Required Commencement Date"). In addition, the CHOPS Parties shall cause
the interconnection of Cameron Highway with the Caesar System as set forth in
the Interconnect Agreement.

                  (b)      Except as provided in Sections 2.3(c) and (d), from
and after the date hereof, at the request of any Party, the Parties shall, and
the CHOPS Parties shall cause Manta Ray to, meet to discuss the progress of the
construction of Cameron Highway and the Caesar System and the status of the
development of the SGC Fields.

                  (c)      With respect to the term "Required Commencement
Date", the Parties agree that the designated date of August 15, 2004 shall
automatically be revised as follows: (i) such date shall be delayed on a day for
day basis with the duration of any Force Majeure event(s) declared by CHOPS
hereunder in excess of the first ninety (90) days of Force Majeure event(s)
declared by CHOPS hereunder occurring during the construction phase of Cameron
Highway, and (ii) such date shall be delayed until production actually commences
from the first of the Initial Dedicated Leases to commence production. In the
event of anticipated delays in the date of commencement of production from the
first of the Initial Dedicated Leases that BP in its reasonable discretion
believes it cannot make up, which delays would reasonably be expected to extend
the Required Commencement Date beyond August 15, 2004, BP shall promptly notify
CHOPS in writing of such anticipated delays and shall provide a revised Required
Commencement Date to the CHOPS Parties. For purposes of this Agreement, the
Required Commencement Date shall be deemed to be such revised date, as such date
may be further revised by the foregoing terms of this Section 2.1(c). Upon any
adjustment to the Required Commencement Date pursuant to this Section 2.1, the
CHOPS Parties shall promptly notify the Interconnect Parties via facsimile of
such adjustment and of the updated Required Commencement Date pursuant to this
Section 2.1.

                  (d)      The CHOPS Parties (or their designee) shall design,
fabricate, construct, install and commission, and shall be responsible for the
design, cost, construction and installation of, all necessary facilities at each
Delivery Point in order to effectuate deliveries from Cameron Highway including,
without limitation, the meter facilities. CHOPS shall own all such facilities.
BP shall cause BP Products to negotiate in good faith and in a timely manner
with the CHOPS Parties to establish the Delivery Point at BP Products' Texas
City Refinery under commercially reasonable terms. The CHOPS Parties shall be
responsible for the design, cost, construction and installation of the Texas
City Lateral.

                             CONSTRUCTION AGREEMENT
                                 CAMERON HIGHWAY

                                      -8-
<PAGE>

                  (e)      The CHOPS Parties shall notify the Interconnect
Parties via facsimile of the Cameron Highway Completion Date promptly upon
Cameron Highway becoming Fully Operational.

         2.2      Cameron Highway Pipe Diameters and Capacities.

                  (a)      The CHOPS Parties shall construct Cameron Highway so
that the pipeline diameters, initial pipeline capacities and expanded pipeline
capacities are as set forth below. Such diameters and capacities are depicted on
the schematic attached hereto as Exhibit A.

<TABLE>
<CAPTION>
Cameron Highway         Pipeline           Initial Daily             Expanded Daily
Pipeline Segment*       Diameter        Pipeline Capacity**       Pipeline Capacity***
======================================================================================
<S>                     <C>             <C>                       <C>
SS 332 to GB 72            30"              400,000 BOPD             600,000 BOPD

GB 72  to HI A-5"C"        30"              500,000 BOPD             650,000 BOPD

HI A-5"C" to Sun and
   Unocal Delivery
   Point(s)                24"              350,000 BOPD             450,000 BOPD

HI A-5"C" to Seaway
   and BP Products
   Delivery Point(s)       24"              350,000 BOPD             450,000 BOPD
</TABLE>

*        The location of the pump stations and platforms in the GB 72 and HI
A-5"C" are subject to further optimization so long as the above-referenced
capacities are not decreased.

**       Initial Daily Pipeline Capacity shall mean the approximate maximum
initial daily capacity of the pipeline segment without the use of drag reducing
agents and additional pumps.

***      Expanded Daily Pipeline Capacity shall mean the approximate expanded
daily capacity of the pipeline segment with the addition of additional pumps
and/or drag reducing agents.

The pipeline capacities described above are peak capacities and do not include
downtime on Cameron Highway. The pipeline capacities described above were
developed using an API gravity of thirty degrees (30 degrees) and viscosity of
44.0 centipoise at sixty degrees Fahrenheit (60 degrees F).

                  (b)      Any material changes or modifications in the pipeline
capacities or diameters described in Section 2.2(a) above or in the attached
Exhibit A shall require the prior written approval of BP and Mardi Gras. Any
deviation of ten (10) miles or more in the Cameron Highway pipeline route
described in Exhibit A shall also require the prior written approval of BP and
Mardi Gras. Notwithstanding any deviation of the Cameron Highway pipeline route,
the CHOPS Parties shall construct and install Cameron Highway so that deliveries
of Crude Oil can be made to all of the Delivery Points.

                             CONSTRUCTION AGREEMENT
                                 CAMERON HIGHWAY

                                      -9-
<PAGE>

         2.3      Construction Management.

                  (a)      CHOPS shall be, and GTM shall cause CHOPS to be, the
construction manager of Cameron Highway and shall not, and GTM will not allow
CHOPS to, delegate, assign or transfer any obligations (in whole or in part)
associated with the design, fabrication, construction, installation and
commissioning of such pipeline and all related equipment and facilities, except
as provided in Section 5.1 below. The CHOPS Parties shall keep BP and Mardi Gras
apprised of any anticipated delays that would reasonably be anticipated to cause
Cameron Highway not to be Fully Operational by the Required Commencement Date.
In the event the CHOPS Parties notify BP and Mardi Gras of any such anticipated
delays, the Parties shall promptly meet to discuss such anticipated delays. If,
for reasons other than Force Majeure events or a breach of this Agreement by BP
or Mardi Gras, the CHOPS Parties or any of their contractors and subcontractors
fail to perform or perform in such a manner that BP and/or Mardi Gras determine
that such performance or failure to perform would reasonably be expected to
result in a delay in the design, fabrication, construction, installation and
commissioning of any portion of Cameron Highway to the extent that Cameron
Highway would reasonably be expected to not be (i) Operational by the Required
Commencement Date, and (ii) Fully Operational within six (6) months following
the Required Commencement Date, BP and/or Mardi Gras (or their respective
designee(s)) shall notify CHOPS in writing of such concerns and the CHOPS
Parties shall have sixty (60) days to remedy the situation.

                           (i)      If within such sixty (60) day period, the
CHOPS Parties have not remedied the situation to the reasonable satisfaction of
BP and Mardi Gras (or their respective designee(s)), then BP and/or Mardi Gras
(or their respective designee(s)) shall have the right to replace CHOPS as
construction manager of Cameron Highway and complete Cameron Highway as provided
in Section 2.3(a)(ii) below. BP and/or Mardi Gras (or their respective
designee(s)) shall notify CHOPS in writing in the event this right to replace
CHOPS as construction manager is exercised.

                           (ii)     If CHOPS receives written notice from BP
and/or Mardi Gras (or their respective designee(s)) that such Party(ies) (or
their respective designee(s)) has elected to replace CHOPS as construction
manager and CHOPS reasonably believes the situation described above in this
Section 2.3(a) to be remedied so that Cameron Highway is reasonably expected to
be (A) Operational by the Required Commencement Date, and (B) Fully Operational
within six (6) months following the Required Commencement Date, CHOPS shall give
BP and Mardi Gras (or their respective designee(s)) written notice of such
dispute, and the determination of whether such situation has been remedied will
be submitted to one of the third party engineering firms listed on Exhibit B
attached hereto. Within ten (10) days of receipt by CHOPS of the notice
referenced in Section 2.3(a)(i) above, the Parties shall agree which one of the
engineering firms listed on Exhibit B to utilize. The Parties shall cooperate to
the maximum extent possible to furnish the engineering firm with all information
and data required by the engineering firm to make such determination. The
Parties shall direct the engineering firm to make its final decision within
thirty (30) days of the submission of the issue to the engineering firm. During
such period, CHOPS shall remain as construction manager and continue to perform
all obligations and duties hereunder including without limitation the
performance of all activities related to Cameron

                             CONSTRUCTION AGREEMENT
                                 CAMERON HIGHWAY

                                      -10-
<PAGE>

Highway. During such period, BP and Mardi Gras (or their respective designee(s))
shall have the right to monitor all work performed by the CHOPS Parties, their
contractors and subcontractors related to the design, fabrication, construction,
installation and commissioning of Cameron Highway. Each Party shall bear its own
internal costs (including, without limitation, attorney's fees and expert
witness fees) attributable to the preparation and presentation of its case to
the engineering firm. The fees and costs of the engineering firm shall be borne
by the non-prevailing Party in the proceeding.

                           (iii)    In the event the engineering firm determines
that the CHOPS Parties' performance or failure to perform would not reasonably
be expected to result in a delay in the design, fabrication, construction,
installation and commissioning of any portion of Cameron Highway to the extent
that Cameron Highway would reasonably be expected to be (A) Operational by the
Required Commencement Date, and (B) Fully Operational within six (6) months
following the Required Commencement Date, then CHOPS shall remain as
construction manager.

                           (iv)     In the event the engineering firm determines
that the CHOPS Parties' performance or failure to perform would reasonably be
expected to result in a delay in the design, fabrication, construction,
installation and commissioning of any portion of Cameron Highway to the extent
that Cameron Highway would reasonably be expected to not be (A) Operational by
the Required Commencement Date, and (B) Fully Operational within six (6) months
following the Required Commencement Date, then BP and/or Mardi Gras (or their
respective designee(s)) (as the case may be) shall have the right to replace
CHOPS as construction manager of Cameron Highway. In such event, all costs
attributable to the completion of Cameron Highway (including, without
limitation, design, fabrication, construction, installation and commissioning
costs) shall be borne by the CHOPS Parties; provided, that in such event the
total cumulative cost to be borne by the CHOPS Parties to design, fabricate,
construct, install and commission Cameron Highway shall not exceed $480 million
plus an additional amount directly attributable to the costs to BP and Mardi
Gras resulting from or arising out of the CHOPS Parties' performance or failure
to perform under this Agreement (such $480 million plus such additional amount
collectively referred to as the "CHOPS Parties Cap"), which additional amount
shall be mutually agreed to by the Parties. In the event the Parties cannot
agree on such additional amount, the determination of such additional amount
shall be determined by the third party engineering firm selected pursuant to
Section 2.3(a)(ii) above. In addition, in the event BP and/or Mardi Gras (or
their respective designee(s)) replaces CHOPS as construction manager of Cameron
Highway and elects, in their sole discretion, to complete Cameron Highway
utilizing the CHOPS Parties' contracts and agreements with contractors and
subcontractors, the CHOPS Parties shall be responsible for and shall reimburse
BP and Mardi Gras for all damages, judgments, costs, fees, and expenses
(including, without limitation, attorneys' fees) incurred by BP and Mardi Gras
(or their respective designee(s)) related to claims and lawsuits brought by such
contractors and subcontractors or their employees and agents, or for which the
CHOPS Parties would have been responsible for in accordance with the indemnity
provisions of such contracts and agreements had CHOPS remained as construction
manager, arising out of such Cameron Highway activities and accruing after CHOPS
is replaced as construction manager, but only to the extent not resulting from
the negligence or misconduct of BP or Mardi Gras (or their respective

                             CONSTRUCTION AGREEMENT
                                 CAMERON HIGHWAY

                                      -11-
<PAGE>

designee(s)), and such obligations of the CHOPS Parties, including their
reimbursement obligations, shall not be subject to the CHOPS Parties Cap. In the
event BP and/or Mardi Gras (or their respective designee(s)) elect not to
utilize the CHOPS Parties' contracts and agreements with contractors and
subcontractors to complete Cameron Highway, and instead secure their own
contracts and agreements with contractors and subcontractors, the
indemnification provisions contained in Article III below shall apply. The
rights to replace CHOPS as construction manager pursuant to the terms of this
Section 2.3(a) shall be rights granted only to, and exercisable by, BP and Mardi
Gras (and not to permitted assignees of BP and Mardi Gras).

                           (v)      If BP and/or Mardi Gras (or their respective
designee(s)) elect to replace CHOPS as construction manager pursuant to the
terms of this Section 2.3(a), the engineering firm referenced in Section
2.3(a)(ii) above shall determine the number of days such firm reasonably
believes Cameron Highway would have been delayed in being (A) Operational by the
Required Commencement Date, and (B) Fully Operational within six (6) months
following the Required Commencement Date had CHOPS remained as construction
manager. Notwithstanding anything to the contrary contained herein, (x) the
CHOPS Parties shall not be liable or responsible to BP for the liquidated
damages referenced in Articles XI.c. and XI.d. of the Purchase and Sale
Agreement attributable to any additional delay in Cameron Highway becoming (i)
Operational by the Required Commencement Date, and (ii) Fully Operational within
six (6) months following the Required Commencement Date beyond that number of
days as determined by such engineering firm, and (y) such replacement as
construction manager, along with the express rights and remedies granted in this
Section 2.3(a), and the liquidated damages referenced in Articles XI.c. and
XI.d. of the Purchase and Sale Agreement, if applicable, for that number of days
of delay as determined by the engineering firm, shall be the sole and exclusive
remedies (whether under contract or at law or equity) of BP and Mardi Gras with
respect to any alleged delay by the CHOPS Parties in the design, fabrication,
construction, installation and commissioning of any portion of Cameron Highway.

                  (b)      Except as expressly set forth herein, in performing
as construction manager of Cameron Highway, CHOPS is not subject to the control
or direction of BP or Mardi Gras. In addition, if BP and/or Mardi Gras or their
designee(s) are acting as construction manager of Cameron Highway pursuant to
the terms of this Agreement, in performing as construction manager, BP and/or
Mardi Gras or their designee(s), as applicable, are not subject to the control
or direction of the CHOPS Parties.

                  (c)      Mardi Gras and BP shall each have the right to assign
representatives to the CHOPS Parties' Cameron Highway project team for the
purpose of (i) monitoring the progress of the design, fabrication, construction
and installation of Cameron Highway, and (ii) reviewing plans for the design,
fabrication, commissioning and engineering of Cameron Highway. Specifically, BP
and Mardi Gras shall each have the right to participate in technical discussions
and all team meetings. Notwithstanding the foregoing, subject to Section
2.3(a)(iv) above, all final decisions shall be made by and the responsibility of
the CHOPS Parties with respect to all design, fabrication, engineering,
construction, installation and commissioning matters. The right to assign
representatives to the CHOPS Parties' Cameron Highway project team granted above
shall be a right granted only to, and exercisable by, Mardi Gras and BP (and not
to permitted assignees of Mardi Gras and BP).

                             CONSTRUCTION AGREEMENT
                                 CAMERON HIGHWAY

                                      -12-
<PAGE>

                  (d)      The CHOPS Parties shall provide BP and Mardi Gras
with monthly status reports regarding the progress of Cameron Highway. In
addition, the CHOPS Parties shall keep BP and Mardi Gras informed of matters
which a reasonable and prudent operator would reasonably expect to impact such
operator's ability to have Cameron Highway Fully Operational by the Required
Commencement Date.

                  (e)      The CHOPS Parties shall use their commercially
reasonable efforts to obtain all rights of way necessary for Cameron Highway,
and after the CHOPS Parties have exhausted all commercially reasonable efforts
to obtain rights of way for Cameron Highway, BP agrees to use commercially
reasonable efforts to utilize its existing pipeline rights of way where
beneficial to the construction of Cameron Highway. In the event BP's rights of
way are utilized, BP shall be compensated by the CHOPS Parties for the use of
such rights of way based on customary and reasonable practice in the pipeline
industry.

         2.4      Standard of Care. The CHOPS Parties shall conduct all
activities and operations in a sound and workmanlike manner, as would a
reasonable and prudent operator under the same or similar circumstances, and in
accordance with applicable laws, statutes, rules and regulations.

         2.5      Quality Specifications. The quality specifications for Cameron
Highway are attached to this Agreement as Exhibit C.

         2.6      Governmental Approvals.

                  (a)      Except for the Poseidon SS 332 A Approval, the
construction of Cameron Highway and the Caesar System under this Agreement shall
be subject to the applicable Parties obtaining all required governmental
approvals relating to such construction.

                  (b)      The CHOPS Parties shall diligently pursue and use
commercially reasonable efforts to obtain all required governmental approvals in
a timely manner.

         2.7      Access and Space Rights. The CHOPS Parties will use
commercially reasonable efforts to obtain all access and space rights necessary
on GB 72 and HI A-5"C" for the construction and installation of Cameron Highway
as contemplated by this Agreement.

                                   ARTICLE III

                          INDEMNIFICATION AND INSURANCE

         3.1      MARDI GRAS GROUP.

                  (a)      SUBJECT TO SECTION 2.3(a)(iv) ABOVE, MARDI GRAS SHALL
BE RESPONSIBLE FOR AND SHALL DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD
HARMLESS THE CHOPS PARTIES GROUP FROM AND AGAINST ALL LOSSES, DAMAGES, CLAIMS,
DEMANDS AND ACTIONS AND RELATED EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES,
FOR OR BASED UPON (i) DAMAGE

                             CONSTRUCTION AGREEMENT
                                 CAMERON HIGHWAY

                                      -13-
<PAGE>

TO OR LOSS OF PROPERTY OF THE MARDI GRAS GROUP AND (ii) PERSONAL INJURY TO OR
DEATH OF PERSONS IN THE MARDI GRAS GROUP, IN EACH CASE OF (i) AND (ii) ABOVE,
RELATED TO, ARISING OUT OF, CONNECTED WITH OR IN ANY MANNER ATTRIBUTABLE TO (OR
ALLEGED TO BE RELATED TO, ARISING OUT OF, CONNECTED WITH OR IN ANY MANNER
ATTRIBUTABLE TO), DIRECTLY OR INDIRECTLY, THE ACTIVITIES OR PERFORMANCE
CONTEMPLATED BY THIS AGREEMENT, EVEN THOUGH CAUSED IN WHOLE OR IN PART BY THE
CHOPS PARTIES GROUP'S NEGLIGENCE (ACTIVE, PASSIVE, JOINT, CONCURRENT OR SOLE) OR
STRICT LIABILITY, OR OTHER LEGAL FAULT OF THE CHOPS PARTIES GROUP, EXCEPT TO THE
EXTENT THAT ANY SUCH LOSS RESULTS FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF A MEMBER OF THE CHOPS PARTIES GROUP.

                  (b)      SUBJECT TO SECTION 2.3(a)(iv) ABOVE, MARDI GRAS SHALL
BE RESPONSIBLE FOR AND SHALL DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD
HARMLESS THE BP GROUP FROM AND AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS AND
ACTIONS AND RELATED EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES, FOR OR BASED
UPON (i) DAMAGE TO OR LOSS OF PROPERTY OF THE MARDI GRAS GROUP AND (ii) PERSONAL
INJURY TO OR DEATH OF PERSONS IN THE MARDI GRAS GROUP, IN EACH CASE OF (i) AND
(ii) ABOVE, RELATED TO, ARISING OUT OF, CONNECTED WITH OR IN ANY MANNER
ATTRIBUTABLE TO (OR ALLEGED TO BE RELATED TO, ARISING OUT OF, CONNECTED WITH OR
IN ANY MANNER ATTRIBUTABLE TO), DIRECTLY OR INDIRECTLY, THE ACTIVITIES OR
PERFORMANCE CONTEMPLATED BY THIS AGREEMENT, EVEN THOUGH CAUSED IN WHOLE OR IN
PART BY THE BP GROUP'S NEGLIGENCE (ACTIVE, PASSIVE, JOINT, CONCURRENT OR SOLE)
OR STRICT LIABILITY, OR OTHER LEGAL FAULT OF THE BP GROUP, EXCEPT TO THE EXTENT
THAT ANY SUCH LOSS RESULTS FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A
MEMBER OF THE BP GROUP.

         3.2      CHOPS PARTIES GROUP.

                  (a)      IN ADDITION TO THE LIABILITIES ASSUMED BY THE CHOPS
PARTIES IN SECTION 2.3(a)(iv) ABOVE, THE CHOPS PARTIES, JOINTLY AND SEVERALLY,
SHALL BE RESPONSIBLE FOR AND SHALL DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD
HARMLESS THE MARDI GRAS GROUP FROM AND AGAINST ALL LOSSES, DAMAGES, CLAIMS,
DEMANDS AND ACTIONS AND RELATED EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES,
FOR OR BASED UPON (i) DAMAGE TO OR LOSS OF PROPERTY OF THE CHOPS PARTIES GROUP
AND (ii) PERSONAL INJURY TO OR DEATH OF PERSONS IN THE CHOPS PARTIES GROUP, IN
EACH CASE OF (i) AND (ii) ABOVE, RELATED TO, ARISING OUT OF, CONNECTED WITH OR
IN ANY MANNER ATTRIBUTABLE TO (OR ALLEGED TO BE RELATED TO, ARISING OUT OF,
CONNECTED WITH OR IN ANY MANNER ATTRIBUTABLE TO), DIRECTLY OR INDIRECTLY, THE
ACTIVITIES OR PERFORMANCE CONTEMPLATED BY THIS AGREEMENT, EVEN THOUGH CAUSED IN
WHOLE OR IN PART BY THE MARDI GRAS GROUP'S NEGLIGENCE (ACTIVE,

                             CONSTRUCTION AGREEMENT
                                 CAMERON HIGHWAY

                                      -14-
<PAGE>

PASSIVE, JOINT, CONCURRENT OR SOLE) OR STRICT LIABILITY, OR OTHER LEGAL FAULT OF
THE MARDI GRAS GROUP, EXCEPT TO THE EXTENT THAT ANY SUCH LOSS RESULTS FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A MEMBER OF THE MARDI GRAS GROUP.

                  (b)      IN ADDITION TO THE LIABILITIES ASSUMED BY THE CHOPS
PARTIES IN SECTION 2.3(a)(iv) ABOVE, THE CHOPS PARTIES, JOINTLY AND SEVERALLY,
SHALL BE RESPONSIBLE FOR AND SHALL DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD
HARMLESS THE BP GROUP FROM AND AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS AND
ACTIONS AND RELATED EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES, FOR OR BASED
UPON (i) DAMAGE TO OR LOSS OF PROPERTY OF THE CHOPS PARTIES GROUP AND (ii)
PERSONAL INJURY TO OR DEATH OF PERSONS IN THE CHOPS PARTIES GROUP, IN EACH CASE
OF (i) AND (ii) ABOVE, RELATED TO, ARISING OUT OF, CONNECTED WITH OR IN ANY
MANNER ATTRIBUTABLE TO (OR ALLEGED TO BE RELATED TO, ARISING OUT OF, CONNECTED
WITH OR IN ANY MANNER ATTRIBUTABLE TO), DIRECTLY OR INDIRECTLY, THE ACTIVITIES
OR PERFORMANCE CONTEMPLATED BY THIS AGREEMENT, EVEN THOUGH CAUSED IN WHOLE OR IN
PART BY THE BP GROUP'S NEGLIGENCE (ACTIVE, PASSIVE, JOINT, CONCURRENT OR SOLE)
OR STRICT LIABILITY, OR OTHER LEGAL FAULT OF THE BP GROUP, EXCEPT TO THE EXTENT
THAT ANY SUCH LOSS RESULTS FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A
MEMBER OF THE BP GROUP.

         3.3      BP GROUP.

                  (a)      SUBJECT TO SECTION 2.3(a)(iv) ABOVE, BP SHALL BE
RESPONSIBLE FOR AND SHALL DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD HARMLESS
THE MARDI GRAS GROUP FROM AND AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS AND
ACTIONS AND RELATED EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES, FOR OR BASED
UPON (i) DAMAGE TO OR LOSS OF PROPERTY OF THE BP GROUP AND (ii) PERSONAL INJURY
TO OR DEATH OF PERSONS IN THE BP GROUP, IN EACH CASE OF (i) AND (ii) ABOVE,
RELATED TO, ARISING OUT OF, CONNECTED WITH OR IN ANY MANNER ATTRIBUTABLE TO (OR
ALLEGED TO BE RELATED TO, ARISING OUT OF, CONNECTED WITH OR IN ANY MANNER
ATTRIBUTABLE TO), DIRECTLY OR INDIRECTLY, THE ACTIVITIES OR PERFORMANCE
CONTEMPLATED BY THIS AGREEMENT, EVEN THOUGH CAUSED IN WHOLE OR IN PART BY THE
MARDI GRAS GROUP'S NEGLIGENCE (ACTIVE, PASSIVE, JOINT, CONCURRENT OR SOLE) OR
STRICT LIABILITY, OR OTHER LEGAL FAULT OF THE MARDI GRAS GROUP, EXCEPT TO THE
EXTENT THAT ANY SUCH LOSS RESULTS FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF A MEMBER OF THE MARDI GRAS GROUP.

                  (b)      SUBJECT TO SECTION 2.3(a)(iv) ABOVE, BP SHALL BE
RESPONSIBLE FOR AND SHALL DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD HARMLESS
THE CHOPS PARTIES GROUP FROM AND AGAINST ALL LOSSES,

                             CONSTRUCTION AGREEMENT
                                 CAMERON HIGHWAY

                                      -15-
<PAGE>

DAMAGES, CLAIMS, DEMANDS AND ACTIONS AND RELATED EXPENSES, INCLUDING REASONABLE
ATTORNEYS' FEES, FOR OR BASED UPON (i) DAMAGE TO OR LOSS OF PROPERTY OF THE BP
GROUP AND (ii) PERSONAL INJURY TO OR DEATH OF PERSONS IN THE BP GROUP, IN EACH
CASE OF (i) AND (ii) ABOVE, RELATED TO, ARISING OUT OF, CONNECTED WITH OR IN ANY
MANNER ATTRIBUTABLE TO (OR ALLEGED TO BE RELATED TO, ARISING OUT OF, CONNECTED
WITH OR IN ANY MANNER ATTRIBUTABLE TO), DIRECTLY OR INDIRECTLY, THE ACTIVITIES
OR PERFORMANCE CONTEMPLATED BY THIS AGREEMENT, EVEN THOUGH CAUSED IN WHOLE OR IN
PART BY THE CHOPS PARTIES GROUP'S NEGLIGENCE (ACTIVE, PASSIVE, JOINT, CONCURRENT
OR SOLE) OR STRICT LIABILITY, OR OTHER LEGAL FAULT OF THE CHOPS PARTIES GROUP,
EXCEPT TO THE EXTENT THAT ANY SUCH LOSS RESULTS FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF A MEMBER OF THE CHOPS PARTIES GROUP.

         3.4      THIRD PARTIES.

                  (a)      FOR PURPOSES OF THIS SECTION 3.4, "THIRD PARTIES"
SHALL MEAN ALL PERSONS AND ENTITIES THAT ARE NOT INCLUDED IN THE CHOPS PARTIES
GROUP, THE BP GROUP, OR THE MARDI GRAS GROUP.

                  (b)      SUBJECT TO SECTION 2.3(a)(iv) ABOVE, MARDI GRAS SHALL
BE RESPONSIBLE FOR AND SHALL DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD
HARMLESS THE CHOPS PARTIES GROUP FROM AND AGAINST ALL LOSSES, DAMAGES, CLAIMS,
DEMANDS AND ACTIONS AND RELATED EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES,
FOR OR BASED UPON (i) DAMAGE TO OR LOSS OF PROPERTY OF THIRD PARTIES AND (ii)
PERSONAL INJURY TO OR DEATH OF THIRD PARTIES, IN EACH CASE OF (i) AND (ii)
ABOVE, WHEN CAUSED BY OR RESULTING FROM THE NEGLIGENCE OR FAULT OF THE MARDI
GRAS GROUP AND RELATED TO, ARISING OUT OF, CONNECTED WITH OR IN ANY MANNER
ATTRIBUTABLE TO (OR ALLEGED TO BE RELATED TO, ARISING OUT OF, CONNECTED WITH, OR
IN ANY MANNER ATTRIBUTABLE TO), DIRECTLY OR INDIRECTLY, THE ACTIVITIES OR
PERFORMANCE CONTEMPLATED BY THIS AGREEMENT; PROVIDED THAT, IN THE EVENT OF JOINT
OR CONCURRENT NEGLIGENCE OR FAULT OF THE MARDI GRAS GROUP AND THE CHOPS PARTIES
GROUP, MARDI GRAS' INDEMNIFICATION OBLIGATION HEREUNDER SHALL BE LIMITED TO THE
MARDI GRAS GROUP'S ALLOCABLE SHARE OF SUCH JOINT OR CONCURRENT NEGLIGENCE OR
FAULT.

                  (c)      SUBJECT TO SECTION 2.3(a)(iv) ABOVE, MARDI GRAS SHALL
BE RESPONSIBLE FOR AND SHALL DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD
HARMLESS THE BP GROUP FROM AND AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS AND
ACTIONS AND RELATED EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES, FOR OR BASED
UPON (i) DAMAGE TO OR LOSS OF PROPERTY OF THIRD PARTIES AND (ii) PERSONAL INJURY
TO OR DEATH OF THIRD PARTIES, IN EACH CASE OF (i) AND (ii) ABOVE, WHEN CAUSED BY
OR

                             CONSTRUCTION AGREEMENT
                                 CAMERON HIGHWAY

                                      -16-
<PAGE>

RESULTING FROM THE NEGLIGENCE OR FAULT OF THE MARDI GRAS GROUP AND RELATED TO,
ARISING OUT OF, CONNECTED WITH OR IN ANY MANNER ATTRIBUTABLE TO (OR ALLEGED TO
BE RELATED TO, ARISING OUT OF, CONNECTED WITH, OR IN ANY MANNER ATTRIBUTABLE
TO), DIRECTLY OR INDIRECTLY, THE ACTIVITIES OR PERFORMANCE CONTEMPLATED BY THIS
AGREEMENT; PROVIDED THAT, IN THE EVENT OF JOINT OR CONCURRENT NEGLIGENCE OR
FAULT OF THE MARDI GRAS GROUP AND THE BP GROUP, MARDI GRAS' INDEMNIFICATION
OBLIGATION HEREUNDER SHALL BE LIMITED TO THE MARDI GRAS GROUP'S ALLOCABLE SHARE
OF SUCH JOINT OR CONCURRENT NEGLIGENCE OR FAULT.

                  (d)      IN ADDITION TO THE LIABILITIES ASSUMED BY THE CHOPS
PARTIES IN SECTION 2.3(a)(iv) ABOVE, THE CHOPS PARTIES, JOINTLY AND SEVERALLY,
SHALL BE RESPONSIBLE FOR AND SHALL DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD
HARMLESS THE MARDI GRAS GROUP FROM AND AGAINST ALL LOSSES, DAMAGES, CLAIMS,
DEMANDS AND ACTIONS AND RELATED EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES,
FOR OR BASED UPON (i) DAMAGE TO OR LOSS OF PROPERTY OF THIRD PARTIES AND (ii)
PERSONAL INJURY TO OR DEATH OF THIRD PARTIES, IN EACH CASE OF (i) AND (ii)
ABOVE, WHEN CAUSED BY OR RESULTING FROM THE NEGLIGENCE OR FAULT OF THE CHOPS
PARTIES GROUP AND RELATED TO, ARISING OUT OF, CONNECTED WITH OR IN ANY MANNER
ATTRIBUTABLE TO (OR ALLEGED TO BE RELATED TO, ARISING OUT OF, CONNECTED WITH, OR
IN ANY MANNER ATTRIBUTABLE TO), DIRECTLY OR INDIRECTLY, THE ACTIVITIES OR
PERFORMANCE CONTEMPLATED BY THIS AGREEMENT; PROVIDED THAT, IN THE EVENT OF JOINT
OR CONCURRENT NEGLIGENCE OR FAULT OF THE MARDI GRAS GROUP AND THE CHOPS PARTIES
GROUP, THE CHOPS PARTIES' INDEMNIFICATION OBLIGATION HEREUNDER SHALL BE LIMITED
TO THE CHOPS PARTIES GROUP'S ALLOCABLE SHARE OF SUCH JOINT OR CONCURRENT
NEGLIGENCE OR FAULT.

                  (e)      IN ADDITION TO THE LIABILITIES ASSUMED BY THE CHOPS
PARTIES IN SECTION 2.3(a)(iv) ABOVE, THE CHOPS PARTIES, JOINTLY AND SEVERALLY,
SHALL BE RESPONSIBLE FOR AND SHALL DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD
HARMLESS THE BP GROUP FROM AND AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS AND
ACTIONS AND RELATED EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES, FOR OR BASED
UPON (i) DAMAGE TO OR LOSS OF PROPERTY OF THIRD PARTIES AND (ii) PERSONAL INJURY
TO OR DEATH OF THIRD PARTIES, IN EACH CASE OF (i) AND (ii) ABOVE, WHEN CAUSED BY
OR RESULTING FROM THE NEGLIGENCE OR FAULT OF THE CHOPS PARTIES GROUP AND RELATED
TO, ARISING OUT OF, CONNECTED WITH OR IN ANY MANNER ATTRIBUTABLE TO (OR ALLEGED
TO BE RELATED TO, ARISING OUT OF, CONNECTED WITH, OR IN ANY MANNER ATTRIBUTABLE
TO), DIRECTLY OR INDIRECTLY, THE ACTIVITIES OR PERFORMANCE CONTEMPLATED BY THIS
AGREEMENT; PROVIDED THAT, IN THE EVENT OF JOINT OR CONCURRENT NEGLIGENCE OR
FAULT OF THE BP GROUP AND THE CHOPS PARTIES GROUP, THE CHOPS PARTIES'
INDEMNIFICATION OBLIGATION

                             CONSTRUCTION AGREEMENT
                                 CAMERON HIGHWAY

                                      -17-
<PAGE>

HEREUNDER SHALL BE LIMITED TO THE CHOPS PARTIES GROUP'S ALLOCABLE SHARE OF SUCH
JOINT OR CONCURRENT NEGLIGENCE OR FAULT.

                  (f)      SUBJECT TO SECTION 2.3(a)(iv) ABOVE, BP SHALL BE
RESPONSIBLE FOR AND SHALL DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD HARMLESS
THE MARDI GRAS GROUP FROM AND AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS AND
ACTIONS AND RELATED EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES, FOR OR BASED
UPON (i) DAMAGE TO OR LOSS OF PROPERTY OF THIRD PARTIES AND (ii) PERSONAL INJURY
TO OR DEATH OF THIRD PARTIES, IN EACH CASE OF (i) AND (ii) ABOVE, WHEN CAUSED BY
OR RESULTING FROM THE NEGLIGENCE OR FAULT OF THE BP GROUP AND RELATED TO,
ARISING OUT OF, CONNECTED WITH OR IN ANY MANNER ATTRIBUTABLE TO (OR ALLEGED TO
BE RELATED TO, ARISING OUT OF, CONNECTED WITH, OR IN ANY MANNER ATTRIBUTABLE
TO), DIRECTLY OR INDIRECTLY, THE ACTIVITIES OR PERFORMANCE CONTEMPLATED BY THIS
AGREEMENT; PROVIDED THAT, IN THE EVENT OF JOINT OR CONCURRENT NEGLIGENCE OR
FAULT OF THE BP GROUP AND THE MARDI GRAS GROUP, BP'S INDEMNIFICATION OBLIGATION
HEREUNDER SHALL BE LIMITED TO THE BP GROUP'S ALLOCABLE SHARE OF SUCH JOINT OR
CONCURRENT NEGLIGENCE OR FAULT.

                  (g)      SUBJECT TO SECTION 2.3(a)(iv) ABOVE, BP SHALL BE
RESPONSIBLE FOR AND SHALL DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD HARMLESS
THE CHOPS PARTIES GROUP FROM AND AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS
AND ACTIONS AND RELATED EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES, FOR OR
BASED UPON (i) DAMAGE TO OR LOSS OF PROPERTY OF THIRD PARTIES AND (ii) PERSONAL
INJURY TO OR DEATH OF THIRD PARTIES, IN EACH CASE OF (i) AND (ii) ABOVE, WHEN
CAUSED BY OR RESULTING FROM THE NEGLIGENCE OR FAULT OF THE BP GROUP AND RELATED
TO, ARISING OUT OF, CONNECTED WITH OR IN ANY MANNER ATTRIBUTABLE TO (OR ALLEGED
TO BE RELATED TO, ARISING OUT OF, CONNECTED WITH, OR IN ANY MANNER ATTRIBUTABLE
TO), DIRECTLY OR INDIRECTLY, THE ACTIVITIES OR PERFORMANCE CONTEMPLATED BY THIS
AGREEMENT; PROVIDED THAT, IN THE EVENT OF JOINT OR CONCURRENT NEGLIGENCE OR
FAULT OF THE BP GROUP AND THE CHOPS PARTIES GROUP, BP'S INDEMNIFICATION
OBLIGATION HEREUNDER SHALL BE LIMITED TO THE BP GROUP'S ALLOCABLE SHARE OF SUCH
JOINT OR CONCURRENT NEGLIGENCE OR FAULT.

         3.5      GENERAL. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT, NO PARTY TO THIS AGREEMENT SHALL BE LIABLE TO THE OTHER PARTIES FOR
SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES SUFFERED BY SUCH
OTHER PARTIES RESULTING FROM OR ARISING OUT OF THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION, LOSS OF USE, INCREASED COST OF OPERATIONS, LOSS OF PROFIT OR REVENUE
OR BUSINESS INTERRUPTIONS. IN FURTHERANCE OF THE FOREGOING, EACH PARTY

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY

                                      -18-
<PAGE>

RELEASES THE OTHER PARTIES AND WAIVES ANY RIGHT OF RECOVERY FOR SPECIAL,
INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES SUFFERED BY SUCH PARTY
REGARDLESS OF WHETHER ANY SUCH DAMAGES ARE CAUSED BY THE OTHER PARTIES'
NEGLIGENCE (AND REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE, JOINT,
CONCURRENT, ACTIVE, PASSIVE OR GROSS NEGLIGENCE), FAULT OR LIABILITY WITHOUT
FAULT.

         3.6      Insurance. All Parties shall procure and maintain or cause to
be procured and maintained all insurance in the types and amounts as required by
applicable laws, rules and regulation, to provide coverage against risks which
are the subject of this Agreement, as is either customarily carried by companies
owning, operating or conducting similar business(es), or as deemed necessary and
reasonably requested by the Parties from time to time. Any such insurance
purchased by or on behalf of any Party shall be properly endorsed to waive the
insurer's rights of subrogation under any such policies against the other
Parties (and the other Parties' insurers) when any such other Party is released
from liability or loss or damage pursuant to this Agreement. Notwithstanding
anything in this Agreement to the contrary, a Party may, in its sole discretion,
elect to self-insure with respect to such coverage so long as the Party
providing self insurance has the overall ability to assume and be responsible
financially for any and all liability hereunder.

                                   ARTICLE IV
                                  FORCE MAJEURE

         4.1      Force Majeure. No Party shall be liable to the other Parties
for failure to perform any of its obligations under this Agreement, other than
the obligation to make payments pursuant to this Agreement, to the extent such
performance is hindered, delayed or prevented by Force Majeure.

         4.2      Notice. A Party who is unable, in whole or in part, to carry
out its obligations under this Agreement due to Force Majeure shall promptly
give written notice to that effect to the other Parties stating the
circumstances underlying such Force Majeure.

         4.3      Resolution. A Party claiming Force Majeure shall use
commercially reasonable efforts to remove the cause, condition, event or
circumstance of such Force Majeure, shall give written notice to the other
Parties of the termination of such Force Majeure and shall resume performance of
any suspended obligation promptly after termination of such Force Majeure.

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY

                                      -19-
<PAGE>

                                    ARTICLE V
                                  MISCELLANEOUS

         5.1      Assignment.

                  (a)      CHOPS Parties.

                           (i)      Neither CHOPS nor GTM may assign or transfer
this Agreement or their respective obligations hereunder (including CHOPS'
rights, duties and obligations as construction manager under this Agreement) (in
whole or in part) unless the other (either CHOPS or GTM) is also assigning or
transferring its interest in this Agreement or the obligations hereunder to the
same assignee in the same assignment transaction, and any assignment or transfer
by CHOPS and/or GTM of this Agreement or any obligations hereunder shall require
the prior written consent of BP and Mardi Gras, such consent which may be
withheld by BP and/or Mardi Gras in their sole discretion.

                           (ii)     Any assignment or transfer by the CHOPS
Parties of their obligations under this Agreement (in whole or in part) shall
also include the assignment or transfer of all or a portion, as applicable, of
CHOPS' ownership interest in Cameron Highway. Further, any assignee of any or
all of CHOPS' right, title and interest in Cameron Highway shall agree to be
bound by the terms of this Agreement and any such assignment shall be made
subject to this Agreement.

                           (iii)    Any assignment or transfer of this Agreement
or the obligations hereunder (in whole or in part) by the CHOPS Parties shall be
null and void unless such assignment or transfer is made in compliance with this
Section 5.1(a).

                  (b)      Mardi Gras.

                           (i)      Except as otherwise expressly provided in
this Agreement, Mardi Gras shall have the right to assign or transfer this
Agreement or the obligations hereunder (in whole or in part), without the prior
consent of the other Parties, to (i) Caesar or (ii) any Financially Capable
Entity; provided, that any other assignment or transfer of this Agreement or the
obligations hereunder (in whole or in part) shall require the prior written
consent of the other Parties, such consent not to be unreasonably withheld or
delayed; provided further, that upon any permitted assignment by Mardi Gras,
Mardi Gras shall be relieved of its obligations under this Agreement accruing
after the effective date of such assignment to the extent, and only to the
extent, so assigned and expressly assumed by the assignee.

                           (ii)     Any assignee of any or all of Mardi Gras'
right, title and interest in this Agreement shall agree to be bound by the terms
of this Agreement, and any such assignment shall be made subject to this
Agreement.

                           (iii)    Any assignment or transfer of this Agreement
or the obligations hereunder (in whole or in part) by Mardi Gras shall be null
and void unless such assignment or transfer is made in compliance with this
Section 5.1(b).

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY

                                      -20-
<PAGE>

                  (c)      BP. Except as otherwise expressly provided in this
Agreement, BP shall have the right to assign or transfer this Agreement or the
obligations hereunder (in whole or in part), without the prior consent of the
other Parties, to any creditworthy entity or creditworthy Affiliate of BP;
provided, that any other assignment or transfer of this Agreement or the
obligations hereunder (in whole or in part) shall require the prior written
consent of the other Parties, such consent not to be unreasonably withheld or
delayed; provided further, that any assignment of BP's rights and obligations
under this Agreement shall also include the assignment or transfer of all or a
portion of BP's right, title or interest in the applicable Dedicated Leases.
Upon any permitted assignment by BP, BP shall be relieved of its obligations
under this Agreement accruing after the effective date of such assignment to the
extent, and only to the extent, so assigned and expressly assumed by the
assignee. Any assignment or transfer of this Agreement or the obligations
hereunder (in whole or in part) by BP shall be null and void unless such
assignment or transfer is made in compliance with this Section 5.1(c).

                  (d)      This Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the Parties.

         5.2      Term.

                  (a)      The Construction Agreement shall become effective as
of execution and delivery thereof by all of the Parties, and, except as
otherwise provided herein, shall continue in effect until Cameron Highway is
Fully Operational and the expiration of a subsequent one hundred twenty (120)
consecutive days of Cameron Highway pipeline operations with no material
operational or integrity problems.

                  (b)      The provisions contained in Article III
(Indemnification and Insurance), Article IV (Force Majeure), and Article V
(Miscellaneous) of this Agreement shall survive the termination/expiration of
this Agreement.

                  (c)      Except with respect to provisions contained in this
Agreement that expressly provide for sole and exclusive remedies, (i) in the
event of termination of this Agreement by any Party pursuant to the terms
hereof, such termination shall not be the sole remedy of such Party, and (ii)
nothing contained in this Agreement shall prevent such Party from pursuing any
other remedies available to such Party whether under contract or at law or
equity with respect to any other Party's breach of or failure to fulfill its
obligations under this Agreement.

         5.3      Laws. It is understood by the Parties that this Agreement and
performance hereunder is subject to all present and future valid and applicable
laws, orders, statutes, and regulations of courts or regulatory bodies (state or
federal) having jurisdiction over the Parties.

         5.4      Authorizations. The Parties hereto represent that they have
all requisite corporate authorizations necessary or proper to consummate this
Agreement.

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY

                                      -21-
<PAGE>

         5.5      Notices. Any notice, request, demand, statement or payment
provided for in this Agreement shall be confirmed in writing and shall be made
as specified below; provided, however, that notices claiming default, or
initiating dispute resolution procedures, or similar matters, shall only be made
using overnight mail, certified mail, or courier; and provided further, that
notices of meetings and routine matters may be provided verbally or by
electronic mail, effective immediately and, upon request, confirmed in writing.
A notice sent by facsimile transmission shall be deemed received by the close of
the Business Day on which such notice was transmitted or such earlier time as
confirmed by the receiving Party and by overnight mail or courier shall be
deemed to have been received two (2) Business Days after it was sent or such
earlier time as is confirmed by the receiving Party unless it confirms a prior
verbal communication in which case any such notice shall be deemed received on
the day sent. The addresses of the Parties are set forth below:

         To Mardi Gras:             Mardi Gras Transportation System Inc.
                                    501 WestLake Park Blvd.
                                    Houston, TX 77079
                                    Attn: Commercial Manager
                                    Telephone: 281-366-4732
                                    Facsimile: 281-366-7910

         Copies with attachments:   Mardi Gras Transportation System Inc.
                                    501 Westlake Park Blvd.
                                    Houston, TX 77079
                                    Attn: Peter A. Edlund
                                    Telephone: 281-366-5614
                                    Facsimile: 281-366-7910
                                    Email: edlundpa@bp.com

         To BP:                     BP Exploration & Production Inc.
                                    501 WestLake Park Blvd.
                                    Houston, TX 77079
                                    Attn: Commercial Manager, Gulf of
                                          Mexico Deepwater Projects
                                    Telephone: 281-366-5311
                                    Facsimile: 281-366-7870
                                    Email: morristd@bp.com

         To CHOPS:                  Cameron Highway Oil Pipeline Company
                                    Attn: Manta Ray Gathering Company, L.L.C.,
                                          Operator
                                    Four Greenway Plaza, Houston, Texas 77046
                                    Attn: President
                                    Telephone: 832-676-5666
                                    Facsimile: 832-676-1710
                                    E-Mail: james.lytal@elpaso.com

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY

                                      -22-
<PAGE>

         To GTM:                    GulfTerra Energy Partners, L.P.
                                    Four Greenway Plaza
                                    Houston, Texas, 77406
                                    Attn: President
                                    Facsimile: 832-676-1710
                                    Telephone: 832-676-5666
                                    E-Mail: james.lytal@elpaso.com

         These addresses will remain in effect for the duration of this
Agreement, unless changed by notice.

         5.6      Entirety. This Agreement (including the Exhibits hereto),
together with the Purchase and Sale Agreement and the Supplementary Agreement,
constitutes the entire agreement between the Parties hereto relative to the
subject matter hereof, and replaces and supersedes all prior agreements,
conditions, understandings, representations and warranties made between the
Parties with respect to the subject matter hereof, whether written or oral,
including, without limitation, the Cameron Highway MOU and the Confidentiality
Agreement. This Agreement is intended to be construed together with the Purchase
and Sale Agreement and the Supplementary Agreement and should be interpreted so
as to give full effect to this Agreement, the Supplementary Agreement and the
Purchase and Sale Agreement; provided, that, in the event of any inconsistency
between this Agreement and the Purchase and Sale Agreement related to the
dedication, purchase and sale of the Dedicated Production, the Purchase and Sale
Agreement shall govern, and in the event of any inconsistency between this
Agreement and the Purchase and Sale Agreement related to the design,
fabrication, construction, installation, commissioning, ownership, operation or
maintenance of Cameron Highway, then this Agreement shall govern, and in the
event of any inconsistency between this Agreement and the Supplementary
Agreement related to the matters covered by the Supplementary Agreement, then
the Supplementary Agreement shall govern.

         5.7      GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO
ANY CONFLICT OF LAW PRINCIPLES WHICH, IF APPLIED, MIGHT PERMIT OR REQUIRE THE
APPLICATION OF THE LAW OF ANOTHER JURISDICTION, AND THE PARTIES AGREE THAT THE
PLACE OF EXECUTION OF THIS AGREEMENT IS HOUSTON, HARRIS COUNTY, TEXAS, AND THAT
VENUE WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT OR IN CONNECTION
HEREWITH SHALL LIE IN HOUSTON, HARRIS COUNTY, TEXAS. NOTWITHSTANDING THE
FOREGOING, SECTIONS 3.1(a)(ii), 3.1(b)(ii), 3.2(a)(ii), 3.2(b)(ii), 3.3(a)(ii),
AND 3.3(b)(ii) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
MARITIME LAWS OF THE UNITED STATES.

         5.8      Non-Waiver. No waiver by any Party hereto of any one or more
defaults by any other Party in the performance of any of the provisions of this
Agreement shall be construed as a waiver of any other default or defaults
whether of a like kind or different nature. Any delay, less than any applicable
statutory period of limitations, in asserting or enforcing any rights under this

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY

                                      -23-
<PAGE>

Agreement, shall not be deemed a waiver of such rights. Failure of any Party to
enforce any provision of this Agreement or to require performance by any other
Party of any of the provisions hereof shall not be construed to waive such
provision, or to affect the validity of this Agreement or any part thereof, or
the right of any Party thereafter to enforce each and every provision hereof.

         5.9      Severability. If any term or other provision of this Agreement
is determined to be invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other terms and conditions of this Agreement shall
nevertheless remain in full force and effect.

         5.10     Amendments. This Agreement shall not be amended or modified
except by a written document executed by all the Parties.

         5.11     No Electronic Means. The Parties agree not to conduct the
transactions contemplated by this Agreement by electronic means, except as
specifically set forth in Section 5.5.

         5.12     Headings. The headings used for the Articles and Sections
herein are for convenience and reference purposes only and shall in no way
affect the meaning or interpretation of the provisions of this Agreement.

         5.13     Confidentiality.

                  (a)      No Party shall disclose another Party's Confidential
Information to a third party (other than such Party's and its members' or
Affiliates' employees, lenders, agents, servants, counsel, contractors,
consultants or accountants who need to know and agree to maintain the
confidentiality of the Confidential Information in accordance with this Section
5.13) except in order to comply with any applicable law, order, regulation or
exchange rule and except in connection with any arbitration in accordance with
Exhibit D; provided, however, that a disclosing Party shall notify the other
Parties of any proceeding of which it is aware that may result in disclosure and
use reasonable efforts to prevent or limit the disclosure. The Parties shall be
entitled to all remedies available at law or in equity to enforce, or seek
relief in connection with, this confidentiality obligation including, without
limitation, obtaining an injunction against disclosure; provided, all monetary
damages shall be limited to actual direct damages and a breach of this section
shall not give rise to a right to suspend or terminate this transaction.

                  (b)      Notwithstanding any other provision in this
Agreement, but subject to the provisions of Section 5.13(c), (i) a Party
(including its members) may disclose all terms and conditions of this Agreement
to (A) its members, (B) any third party where such third party is a potential
bona fide purchaser or user of substantially all of a Party's or its members'
assets, or of the portion of such assets affected by this Agreement, or (C) its
pipeline operator, pipeline construction manager, or its contractors and
consultants, (ii) the Parties may disclose Confidential Information to Manta Ray
Offshore Gathering, LLC to the extent (A) related to the design, fabrication,
construction, and installation of the interconnection of Cameron Highway with
the Caesar System and (B) necessary in connection with the design, fabrication,
construction, and installation of the interconnection of Cameron Highway with
the Caesar

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY

                                      -24-
<PAGE>

System, and (iii) Mardi Gras may disclose all terms and conditions of this
Agreement to Caesar and the members thereof.

                  (c)      If a Party discloses any or all of the terms and
conditions of this Agreement as contemplated in paragraph (b) above, it shall do
so only if a confidentiality arrangement exists, containing terms no less
stringent than those provided herein, with the Person to whom such Confidential
Information is to be disclosed.

                  (d)      The terms of this Section 5.13 shall survive and
Confidential Information received from a Party shall be kept confidential for a
period of three (3) years following termination of this Agreement.

                  (e)      Upon (i) the termination of this Agreement and (ii)
the request of a Party, the other Parties shall return or destroy all written
Confidential Information (excluding this Agreement but including written
confirmation of oral communications) provided by the requesting Party which was
stamped "Confidential," provided that a Party may keep a copy of a document
marked "Confidential" if such Party's counsel determines that it is required to
do so by law or pending the outcome of any dispute involving the Parties under
this Agreement. In the event of such request, documents, analyses, compilations,
studies or other materials prepared by a Party or its representatives that
contain or reflect Confidential Information from the other Parties, other than
computer archival and backup tapes or archival and backup files (collectively
"Computer Tapes") and billing and trading records (collectively, "Other
Records") shall be destroyed (such destruction to be confirmed in writing by a
duly authorized officer of the returning Party) or shall be retained on a
confidential basis consistent with the terms of this Agreement. Computer Tapes
and Other Records shall be kept confidential in accordance with the terms of
this Agreement. Notwithstanding the foregoing, no Party shall be required to
destroy or return documents covered by this provision prior to the later of the
expiration of applicable statutes of limitations for actions that might arise
with respect to the subject matter of such documents or final action with
respect to any legal action or arbitration involving such documents.

                  (f)      The Parties agree that except as provided herein,
each Party shall maintain its right, title and interest in all proprietary data,
documentation and software furnished to the other Parties pursuant to this
Agreement, except any portion of information that was supplied by the other
Parties, which information shall be returned or destroyed pursuant to paragraph
(e) above.

         5.14     Representations. As of the Effective Date, each Party
declares, warrants, and represents on behalf of itself (a) that it has
contributed to the drafting of this Agreement or has had it reviewed by legal
counsel before executing it, (b) that this Agreement has been purposefully drawn
and correctly reflects such Party's understanding of the transaction that it
contemplates as of the effective date hereof, (c) that this Agreement has been
validly executed and delivered; (d) that this Agreement has been duly authorized
by all action necessary for the authorization thereof, (e) this Agreement
constitutes a binding and enforceable obligation of the Party, enforceable in
accordance with its terms, and (f) that the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY

                                      -25-
<PAGE>

will not (i) violate, conflict with, or result in a breach of any provisions of
(or with notice or lapse of time or both would constitute such a breach of) any
agreement, arrangement or other instrument or obligation to which such Party is
a party or by which any its assets are bound, or (ii) violate any order, writ,
injunction, decree, statute, rule or regulation of any court, commission,
governmental body, regulatory agency, authority, political subdivision or
tribunal to which such Party is subject or by which it is bound. As of the
Effective Date, the CHOPS Parties jointly and severally represent and warrant to
BP and Mardi Gras that, to the best knowledge of the CHOPS Parties, there are no
liens or claims filed or threatened relating to Cameron Highway (other than any
liens in favor of any lenders in connection with the financing of the
construction of Cameron Highway (collectively, "Lender Liens")).

         5.15     Counterparts. This Agreement may be executed by signing the
original or a counterpart thereof. If this Agreement is executed in
counterparts, all counterparts taken together shall have the same effect as if
all Parties had signed the same instrument.

         5.16     Independent Contractor Status; No Partnership. In the event
that any Party performs any work on behalf of another Party, such working Party
will perform in the status of an independent contractor and shall not be deemed
to be an agent or employee of the other Parties as a result of such work.
Nothing herein is intended to create a partnership, joint venture, agency or
other relationship creating fiduciary or quasi fiduciary duties or similar
duties and obligations or otherwise subject the Parties to joint and several or
vicarious liability or, except as otherwise provided in this Agreement, to
impose any duty, obligation or liability that would arise therefrom with respect
to either Party.

         5.17     No Third Party Beneficiaries. This Agreement is for the sole
and exclusive benefit of the Parties hereto. Except as expressly provided herein
to the contrary, nothing herein is intended to benefit any other Person not a
Party hereto, and no such Person shall have any legal or equitable right, remedy
or claim under this Agreement.

         5.18     Exhibits and Schedules. All exhibits, schedules and the like
contained herein or attached hereto are integrally related to this Agreement and
are hereby made a part of this Agreement for all purposes. To the extent of any
ambiguity, inconsistency or conflict between the body of this Agreement and any
of the exhibits, schedules and the like attached hereto, the terms of the body
of this Agreement shall prevail.

         5.19     Further Assurances. Subject to the terms and conditions set
forth in this Agreement, each of the Parties agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or to cause to be
done, all things necessary, proper or advisable under applicable laws to
consummate and make effective the transactions contemplated by this Agreement.
In case, at any time after the execution of this Agreement, any further action
is necessary or desirable to carry out its purpose, the proper members, officers
or directors of the Parties shall take or cause to be taken all such necessary
actions.

         5.20     Interpretation. Whenever the context requires: the gender of
all words used in this agreement includes the masculine, feminine, and neuter; a
reference to any Person includes its permitted successors and assigns; the words
"hereof," "herein," "hereto," "hereunder," and

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY

                                      -26-
<PAGE>

words of similar import when used in this Agreement will refer to this Agreement
as a whole and not to any particular provisions of such Agreement; articles and
other titles or headings are for convenience only and neither limit nor amplify
the provisions of this Agreement itself, and all references herein to articles,
sections or subdivisions thereof will refer to the corresponding article,
section or subdivision thereof of this Agreement unless specific reference is
made to such articles, sections or subdivisions of another document or
instrument; any reference to "includes" or "including" will mean "includes
without limitation" or "including but not limited to," respectively; and any
references in the singular will include references in the plural and vice-versa.

         5.21     Time of the Essence. Time is of the essence with respect to
any and all obligations arising pursuant to this Agreement.

         5.22     Dispute Resolution. Other than any claim for injunctive relief
restricting disclosure of Confidential Information as specifically provided
under Section 5.13(a) of this Agreement, any controversy or claim (whether based
on contract, tort, statute or other legal or equitable theory (including, but
not limited to, any claim of fraud, misrepresentation or fraudulent inducement
or any question as to the validity or effect of this Agreement)), or the breach
or termination hereof (a "Dispute") shall be exclusively resolved pursuant to
the dispute resolution procedures set forth in Exhibit D. With respect to any
particular Dispute, the Party bringing such Dispute is referred to as a
"Submitting Party", and the other Parties are referred to as the "Non-Submitting
Parties".

         5.23     Public Announcements. Except with respect to (a) information
already in the public domain (other than as a result of the breach of this
Agreement) and (b) public announcements required by applicable laws or
securities exchange, market or similar rules, public announcements concerning
this Agreement and the activities contemplated hereunder shall require the prior
written consent of the other Parties, such consent not to be unreasonably
withheld. In the case of any public announcement pursuant to Section 5.23(b)
above, the disclosing Party shall provide an advance copy of the proposed public
disclosure to the non-disclosing Parties and permit the non-disclosing Parties
the opportunity to reasonably comment on such proposed disclosure.

         5.24     Joint, Several and Primary Obligations of the CHOPS Parties.
As consideration for Mardi Gras' and BP's entering into this Agreement, and
further expressly acknowledging Mardi Gras' and BP's reliance on the
undertakings set forth in this Section 5.24, each of CHOPS and GTM hereby agrees
and acknowledges that all of the obligations and liabilities of the CHOPS
Parties under this Agreement (including, without limitation, obligations and
liabilities relating to or arising in connection with representations,
warranties, covenants, the payment of money, performance or otherwise) are the
joint and several, primary and direct obligations and liabilities of each of
CHOPS and GTM, and the CHOPS Parties agree that each of them is jointly,
severally and fully and primarily responsible and liable for all such
obligations and liabilities. In addition, without limiting the foregoing, each
of CHOPS and GTM agrees that its obligation for the obligations and liabilities
of the CHOPS Parties contained in this Agreement shall include the obligation of
such CHOPS Party to cause the other CHOPS Party to perform such obligations and
liabilities of the CHOPS Parties under this Agreement. For example (and

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY

                                      -27-
<PAGE>

without limiting anything contained herein), the CHOPS Parties obligation in the
first sentence of Section 2.1(e). to "notify the Interconnect Parties via
facsimile . . ." shall include (i) the joint and several (together with CHOPS),
primary obligation of GTM to, and to cause CHOPS to, notify the Interconnect
Parties, and (ii) the joint and several (together with GTM), primary obligation
of CHOPS to, and to cause GTM to, notify the Interconnect Parties, in each case,
in accordance with the terms of such sentence.

         The joint and several, primary and direct obligations and liabilities
of each of CHOPS and GTM under this Agreement shall not be subject to any
reduction, limitation, impairment or termination for any claim of waiver,
release, surrender, alteration or compromise that may be granted or otherwise
provided to one or more of the other CHOPS Parties but not to it, and shall not
be subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
obligations of the other CHOPS Parties or otherwise.

         Upon payment or performance by any CHOPS Party of any amounts,
obligations or liabilities owed to BP and/or Mardi Gras under this Agreement,
all rights of the paying or performing CHOPS Party against the other CHOPS Party
arising as a result thereof by way of right of subrogation or otherwise shall in
all respects be subordinated and junior in right of payment and performance to
the prior indefeasible payment and performance in full of all obligations of
each of the CHOPS Parties to BP and Mardi Gras.

         5.25     Additional Covenants of the CHOPS Parties. As material
inducement for and in consideration of BP's and Mardi Gras' entering into this
Agreement, from and after the date of this Agreement, the CHOPS Parties shall
deliver, or cause to be delivered, to BP and Mardi Gras:

         (a)      a copy of the final term sheet relating to the financing of
the Cameron Highway within two Business Days following the finalization thereof,

         (b)      during the period between the date of this Agreement and the
Cameron Highway Completion Date (the "Construction Period"), promptly upon
issuance thereof, a copy of the final Stone & Webster engineering report
relating to Cameron Highway, redacted to exclude information relating to (i) the
specific terms of any business relationships between the equity owners of CHOPS
and (ii) Crude Oil deliveries to CHOPS and/or GTM at Cameron Highway receipt
points,

         (c)      during the Construction Period, monthly updates of current and
projected monthly forecasts of capital expenditures for Cameron Highway, and

         (d)      during the Construction Period, prompt notice of any liens or
claims filed or threatened relating to Cameron Highway other than any Lender
Liens.

         With respect to the sharing of information received pursuant to this
Section 5.25 with Caesar, Mardi Gras and BP (a) may not share any share any
information and documents received pursuant to Section 5.25(a) with Caesar, (b)
other than the section of the executive summary of

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY

                                      -28-
<PAGE>

the Stone & Webster engineering report titled "Approvals and Permits" (which is
anticipated to be section 1.6 of such executive summary), may only share the
executive summary of the Stone & Webster engineering report received pursuant to
Section 5.25(b) with Caesar, (c) may share any information and documents
received pursuant to Section 5.25(c) with Caesar, and (d) may share any
information and documents received pursuant to Section 5.25(d) with Caesar.

                          [Next Page Is Signature Page]

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY

                                      -29-
<PAGE>

         IN WITNESS WHEREOF, the Parties have executed this Agreement effective
as of the date set forth hereinabove.

BP EXPLORATION & PRODUCTION INC.

By /s/ O. Kirk Wardlaw
   -------------------------------
Name O. Kirk Wardlaw
Title Attorney-In-Fact

MARDI GRAS TRANSPORTATION SYSTEM INC.

By /s/ L. L. Freeman
   -------------------------------
Name L.L. Freeman
Title Vice President

CAMERON HIGHWAY OIL PIPELINE COMPANY

By /s/ James Lytal
   -------------------------------
Name James Lytal
Title President

GULFTERRA ENERGY PARTNERS, L.P.

By /s/ James Lytal
   -------------------------------
Name James Lytal
Title President

Exhibits:

A    -        Cameron Highway Schematic

B    -        Third Party Engineering Firms

C    -        Cameron Highway Quality Specifications

D    -        Dispute Resolution Procedures

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY
                                 SIGNATURE PAGE

<PAGE>

                                    EXHIBIT A
                            CAMERON HIGHWAY SCHEMATIC

See attached.

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY

                                      -A-1


<PAGE>

                                    EXHIBIT B
                          THIRD PARTY ENGINEERING FIRMS

Pegasus International, Inc.

Fluor Daniel, Inc.

Halliburton KBR

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY

                                      -B-1


<PAGE>

                                    EXHIBIT C
                     CAMERON HIGHWAY QUALITY SPECIFICATIONS

1.       Crude Oil delivered to Cameron Highway will conform to the
specifications and operating conditions required by other refineries, terminals
or pipelines downstream of the Delivery Points and Additional Delivery Points
ultimately receiving the Crude Oil (for purposes of this Exhibit C, the
"Downstream Facilities") and will meet the following specifications except if
the specifications of the Downstream Facilities should be more stringent:

                  (a)      Viscosity, Gravity, and Pour Point. The Crude Oil
                  must be good and merchantable Crude Oil of such viscosity,
                  gravity and pour point such that it will be readily
                  susceptible for movement through Cameron Highway, and subject
                  to the Cameron Highway quality bank, will not materially
                  affect or damage the quality of other shipments or cause
                  disadvantage to other parties with a purchase and sale
                  arrangement with CHOPS. No Crude Oil will be accepted for
                  purchase which has a pour point greater than 40 degrees
                  Fahrenheit or viscosity greater than 400 Saybolt Universal
                  Seconds at 60 degrees Fahrenheit unless under terms and
                  conditions acceptable to CHOPS.

                  (b)      Basic Sediment, Water and Other Impurities. The Crude
                  Oil will not have a content consisting of more than one
                  percent (1%) of basic sediment, water or other impurities.
                  CHOPS reserves the right to reject Crude Oil containing more
                  than one percent (1%) of basic sediment, water, and other
                  impurities, except that sediment and water limitations of a
                  connecting carrier may be imposed upon CHOPS when such limits
                  are less than that of CHOPS, in which case the limitations of
                  the connecting carrier will be applied.

                  (c)      Vapor Pressure. The Crude Oil shall not have a Reid
                  Vapor Pressure (RVP) of more than 8.6 pounds per square inch.
                  During the months of October through March, Crude Oil with a
                  maximum RVP of 9.6 will be accepted. Crude Oil with a maximum
                  RVP above 9.6 may be accepted at the discretion of CHOPS.

                  (d)      Refined. The Crude Oil will not have been partially
                  refined or altered in any way so as to impact its value.

                  (e)      Contamination. The Crude Oil will not have been
                  contaminated by the presence of any chemicals, chlorinated
                  and/or oxygenated hydrocarbons, arsenic, or greater than trace
                  amounts of other metals; provided, however, that this Section
                  1(e) will not prohibit use of corrosion/paraffin inhibitors,
                  asphaltene dispersants or demulsifiers in platform or pipeline
                  operations. If CHOPS pre-approves the introduction of
                  methanol, BP is responsible for notifying CHOPS as soon as
                  reasonably practicable concerning the initiation and duration
                  of methanol use by BP, as well as anticipated concentration
                  levels. Receipt of any methanol-treated Crude Oil may be
                  suspended at CHOPS' sole discretion if the methanol dosage is
                  not below levels that would adversely affect Crude Oil value
                  and end-user operations.

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY

                                      -C-1

<PAGE>

2.       If any Crude Oil delivered and sold by BP to CHOPS fails at any time to
conform to the applicable specifications above, then, subject to Section 5(a)
below, CHOPS will immediately have the right to discontinue purchasing such
non-conforming Crude Oil so long as such Crude Oil continues to be
non-conforming. In any event, BP will undertake commercially reasonable measures
to eliminate the cause of such non-conformance. BP will be held responsible for
any disposal required and/or expenses incurred in CHOPS' handling of such
non-conforming Crude Oil.

3.       Assay. Upon initial start up of production, a laboratory analysis of
Crude Oil will be submitted to CHOPS by BP and will include API gravity, Reid
vapor pressure, pour point, sediment and water content, sulfur content,
viscosity at 60 and 100 degrees Fahrenheit, and other characteristics as may be
required by CHOPS.

4.       CHOPS reserves the right to periodically sample and test the quality of
the Crude Oil delivered by BP at any Receipt Point. The CHOPS Parties shall be
responsible for all costs attributable to such periodic sampling and testing.

5.       To the extent CHOPS must discontinue redelivery of Cameron Highway
common stream Crude Oil to one or more of the Delivery Points and Additional
Delivery Points as a result of BP's non-conformance hereunder, BP and the CHOPS
Parties agree to the following:

                  (a)      If BP is the sole party nominating deliveries to such
                  Delivery Points and Additional Delivery Points that is not
                  accepting the common stream, CHOPS will continue to accept and
                  redeliver BP's Crude Oil to the other Delivery Points and
                  Additional Delivery Points that are accepting the common
                  stream until such time as CHOPS is required to again deliver
                  Crude Oil to any Delivery Point or Additional Delivery Point
                  that is not accepting the common stream by another party
                  delivering conforming Crude Oil. It being the intent that
                  CHOPS will continue to accept and redeliver BP's Crude Oil so
                  long as redeliveries can be made to any Delivery Point and
                  Additional Delivery Point and CHOPS does not have to curtail
                  deliveries to any Delivery Point or Additional Delivery Point
                  due to BP's non-conformance.

                  (b)      If third-party conforming Crude Oil is nominated to
                  the Delivery Point or Additional Delivery Point that is not
                  accepting the common stream, CHOPS will immediately have the
                  right to discontinue purchasing Crude Oil so long as such
                  Crude Oil continues to be non-conforming. In any event, BP
                  will undertake commercially reasonable measures to eliminate
                  the cause of such non-conformance.

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY

                                      -C-2

<PAGE>

                                    EXHIBIT D
                          DISPUTE RESOLUTION PROCEDURES

1.       If a Dispute arises, the Submitting Party shall deliver written notice
to the Non-Submitting Parties of such Dispute, and the Parties shall in good
faith attempt to settle such Dispute by consultation between senior management
representatives of the Submitting Party and the Non-Submitting Parties. In the
event such consultation does not settle the Dispute within thirty (30) days
after receipt of the written notice of such Dispute by the Non-Submitting
Parties, the Dispute shall be submitted to non-binding mediation. In the event
the Parties are unable to settle the Dispute through use of mediation within
thirty (30) days of the commencement of such mediation, the Dispute shall be
settled by binding arbitration in accordance with the Rules of the AAA, and the
following provisions of this Exhibit D:

         (a)      The arbitration shall be governed by the Federal Arbitration
Act, 9 U.S.C. Sections 1-16 to the exclusion of any provision of state law
inconsistent therewith, and judgment upon the award rendered by the arbitrator
may be entered by any court having jurisdiction. Any arbitration proceeding
hereunder will be conducted on a confidential basis.

         (b)      The arbitration shall be held in Houston, Texas.

         (c)      There shall be one (1) arbitrator. The Parties shall attempt
jointly to select an arbitrator. If the Parties are unable or fail to agree upon
an arbitrator within fifteen (15) days after the commencement of arbitration,
one shall be selected by AAA in accordance with its Rules. The arbitration
hearing shall occur no later than sixty (60) days after selection of the
arbitrator. The arbitrator shall determine the claims of the Parties and render
a final award in accordance with the substantive law of the State of Texas,
excluding the conflicts provisions of such law. The arbitrator shall not have
the right or the ability to terminate this Agreement. The arbitrator shall set
forth the reasons for the award in writing within ten (10) Business Days after
the close of evidence and any post-evidence briefing and arguments that may be
agreed upon (which shall be concluded within fourteen (14) days after close of
evidence).

         (d)      Any claim by a Party shall be time-barred if the Submitting
Party commences arbitration with respect to such claim later than two (2) years
after the receipt of the written notice of the Dispute by the Non-Submitting
Party. All statutes of limitations and defenses based upon passage of time
applicable to any claim of a defending Party (including any counterclaim or
setoff) shall be tolled while the arbitration is pending.

         (e)      The obligation to arbitrate any Dispute shall extend to the
successors and assigns of the Parties. The Parties shall use their commercially
reasonable efforts to cause the obligation to arbitrate any Dispute to extend to
any officer, director, employee, shareholder, agent, trustee, Affiliate, or
subsidiary. The terms hereof shall not limit any obligations of a Party to
defend, indemnify or hold harmless another Party against court proceedings or
other claims, losses, damages or expenses.

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY

                                      -D-1
<PAGE>

         (f)      The arbitrator shall order the Parties to promptly exchange
copies of all exhibits and witness lists and, if requested by a Party, to
produce other relevant documents, to answer up to ten (10) interrogatories
(including subparts), to respond to up to ten (10) requests for admissions
(which shall be deemed admitted if not denied) and to produce for deposition
and, if requested, at the hearing all witnesses that such Party has listed and
up to four (4) other Persons within such Party's control. Any additional
discovery shall only occur by agreement of the Parties or as ordered by the
arbitrator upon a finding of good cause.

         (g)      Each Party shall bear its own costs, expenses and attorney's
fees; provided that if court proceedings to stay litigation or compel
arbitration are necessary, the Party who unsuccessfully opposes such proceedings
shall pay all reasonable associated costs, expenses, and attorney's fees in
connection with such court proceeding.

         (h)      In order to prevent irreparable harm, the arbitrator shall
have the power to grant temporary or permanent injunctive or other equitable
relief. Prior to the appointment of an arbitrator a Party may, notwithstanding
any other provision of this Agreement, seek temporary injunctive relief from any
court of competent jurisdiction; provided that the Party seeking such relief
shall (if arbitration has not already been commenced) simultaneously commence
arbitration. Such court ordered relief shall not continue more than ten (10)
days after the appointment of the arbitrator (or in any event for longer than
sixty (60) days).

2.       If any part of these dispute resolution procedures is held to be
unenforceable, it shall be severed and shall not affect either the duty to
arbitrate or any other part of these provisions.

                             CONSTRUCTION AGREEMENT
                                CAMERON HIGHWAY

                                      -D-2

<PAGE>

                                 CAMERON HIGHWAY

                           PURCHASE AND SALE AGREEMENT

         THIS CAMERON HIGHWAY PURCHASE AND SALE AGREEMENT dated effective the
23rd day of June, 2003 (the "EFFECTIVE DATE"), by and between BP Exploration &
Production Inc., a Delaware corporation ("BP"), Cameron Highway Oil Pipeline
Company, a Delaware general partnership ("CHOPS") and GulfTerra Energy Partners,
L.P., a Delaware limited partnership ("GTM") successor to El Paso Energy
Partners, L.P., (hereinafter the "AGREEMENT"). BP, CHOPS and GTM are
individually referred to herein as a "PARTY", and collectively as "PARTIES", as
the context may require. CHOPS and GTM are collectively referred to herein as
the "CHOPS PARTIES".

                                   WITNESSETH:

         WHEREAS, BP is a working interest owner in certain offshore oil and gas
leases located in the Southern Green Canyon Area of the Gulf of Mexico, and
along with its co-working interest owners in the leases, are developing or are
planning to develop the associated fields for the production of oil and gas as
further described herein;

         WHEREAS, subject to the terms of the Construction Agreement, the CHOPS
Parties will construct and install (or cause the construction and installation
of) a Crude Oil pipeline and connect such pipeline with a deepwater Crude Oil
pipeline to be constructed by Caesar Oil Pipeline Company, LLC from the southern
Green Canyon Area to Ship Shoal Block 332, Gulf of Mexico; and

         WHEREAS, the CHOPS Parties will purchase Crude Oil at the Receipt
Points produced by BP and resell volumes of Crude Oil to BP at the Delivery
Points and Additional Delivery Points, all as set forth in this Agreement;

         WHEREAS, as a material inducement to BP's agreeing to enter into this
Agreement, GTM is entering into this Agreement as a joint and several primary
obligor with respect to the obligations of CHOPS hereunder; and

         WHEREAS, BP and the CHOPS Parties desire to document the rights and
obligations of each of the Parties with regard to the purchase and sale of Crude
Oil as set forth in this Agreement.

         NOW THEREFORE, in consideration of the premises and the mutual promises
and covenants contained herein, the receipt and sufficiency of which are hereby
acknowledged, and intending hereby to be legally bound, the Parties hereby agree
and stipulate as follows:

                                   DEFINITIONS

         As used in this Agreement, the initially capitalized terms listed below
shall have the following meanings:

         "AAA" shall mean the American Arbitration Association.

         "API" shall mean American Petroleum Institute.

         "ADDITIONAL DELIVERY POINTS" shall mean each of the following points to
be established on Cameron Highway, where the CHOPS Parties shall deliver Crude
Oil to BP (or its Affiliate designees) upon nomination of any such point by BP
in accordance with the terms of this Agreement: the Premcor Refinery, Premcor's
Lucas Terminal and Valero Energy Company's Texas City Refinery, and such other
mutually agreed to points, such

                                       1
<PAGE>

agreement not to be unreasonably withheld. Deliveries to all Additional Delivery
Points shall be through a direct connection with Cameron Highway and such
Additional Delivery Point.

         "AFFILIATE" shall mean, as to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with such first Person. As used in this definition, the term "control"
(including the phrases "controlled by" and "under common control") shall mean
possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise); provided,
that, in any event, any Person that owns, directly or indirectly, more than 50%
of the voting interests in any Person will be deemed to control such Person.

         "AGREEMENT" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.

         "ATLANTIS" shall mean Green Canyon Blocks 698, 699, 700, 701, 742, 743
and 744, Gulf of Mexico.

         "BHP" shall mean BHP Billiton Petroleum (Deepwater) Inc.

         "BOPD" shall mean Barrels of Crude Oil per Day.

         "BP" shall have the meaning ascribed to such term in the introductory
paragraph of this Agreement.

         "BP AFFILIATE" shall mean a direct or indirect wholly-owned subsidiary
of BP's parent companies.

         "BP GROUP" shall mean BP and its Affiliates, subsidiaries, co-working
interest owners and joint venturers and the respective employees, officers,
directors, representatives, agents, contractors and subcontractors of each.

         "BP MDQ" shall mean the maximum daily quantity of Dedicated Production
the CHOPS Parties are required to accept and purchase from BP on a Firm basis at
the Receipt Points each Day, as further described in this Agreement.

         "BP MDQ LEVELS" shall have the meaning ascribed to such term in Article
VI.a. of this Agreement.

         "BP PRICE" shall have the meaning ascribed to such term in Article
XII.b. of this Agreement.

         "BP PRODUCTION" shall mean Dedicated Production and Excess Production,
collectively.

         "BTU OR BRITISH THERMAL UNIT" shall mean the amount of heat required to
raise the temperature of one (1) pound of water one degree (1(0)) Fahrenheit at
sixty degrees (60(0)) Fahrenheit at a pressure of 14.73 PSIG and determined on a
gross, dry basis.

         "BARREL" shall mean forty-two (42) U.S. gallons at a temperature of
60(0)F and 0 PSIG.

         "BASE GAS PRICE" shall mean the Henry Hub gas price as published in the
first of the month issue of FERC's Inside Gas Market Report for the then current
month of fuel purchases.

         "BASE OIL PRICE" shall mean Platt's Oilgram Mars monthly average price
(Trading) per Barrel. Platt's prices are as quoted in Platt's Oilgram and are
calculated from the 26th day of the month two (2) months prior to the month of
delivery through the 25th day of the month one (1) month prior to delivery,
excluding weekends and holidays.

                                       2
<PAGE>

         "BUSINESS DAY" shall mean Monday through Friday of each week, except
that a legal holiday recognized as such by the government of the United States
or the States of Texas or Louisiana shall not be regarded as a Business Day.

         "CAESAR" shall mean Caesar Oil Pipeline Company, LLC, a Delaware
limited liability company.

         "CAESAR SYSTEM" shall mean the offshore Crude Oil pipeline consisting
of approximately sixty (60) miles of twenty-eight inch (28") trunkline and all
related laterals and equipment and facilities to be owned, constructed and
installed by Caesar that will extend from the area of the Initial Dedicated
Leases to Ship Shoal Block 332, Gulf of Mexico, where it will connect into
Cameron Highway and could potentially extend to other platforms and/or
interconnect with other pipelines.

         "CAMERON HIGHWAY" shall mean the offshore Crude Oil pipeline depicted
in Exhibit "A" and all related equipment and facilities and including a new
platform located in Ship Shoal Block 332, Gulf of Mexico, to be constructed and
installed by the CHOPS Parties and owned by CHOPS pursuant to the terms of the
Construction Agreement that will extend from Ship Shoal Block 332, Gulf of
Mexico, to the Delivery Points. Such pipeline shall be used by the CHOPS Parties
to purchase and sell the Crude Oil under this Agreement.

         "CAMERON HIGHWAY COMPLETION DATE" shall mean the date on which Cameron
Highway is Fully Operational.

         "CAMERON HIGHWAY MOU" shall mean that certain Cameron Highway
Memorandum of Understanding dated effective February 11, 2002 among BP, Mardi
Gras, Manta Ray and EPN, as amended.

         "CHOPS" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.

         "CHOPS PARTIES" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.

         "CHOPS PARTIES GROUP" shall mean each of CHOPS and GTM, and their
respective Affiliates, members, subsidiaries, co-owners and joint venturers and
its and their respective employees, officers, directors, representatives,
agents, contractors and subcontractors.

         "CHOPS PARTIES PRICE" shall have the meanings ascribed to such term in
Article XII.a. of this Agreement.

         "COMPUTER TAPES" shall have the meaning ascribed to such term in
Article XXVI.e. of this Agreement.

         "CONFIDENTIAL INFORMATION" shall mean this Agreement and any other
written data or information that is privileged, confidential or proprietary,
except information that (a) is a matter of public knowledge at the time of its
disclosure or is thereafter published in or otherwise ascertainable from any
source available to the public without breach of this Agreement, (b) constitutes
information that is obtained from a third party (who or which is not an
Affiliate of one of the Parties) other than by or as a result of unauthorized
disclosure or (c) prior to the time of disclosure had been independently
developed by the receiving Party or its Affiliates not utilizing improper means.

         "CONFIDENTIALITY AGREEMENT" shall mean that certain Confidentiality
Agreement dated April 3, 2001, by and between Amoco Production Company, BP
Exploration & Oil Inc. and EPN, as amended.

         "CONSTRUCTION AGREEMENT" shall mean that certain Cameron Highway
Construction Agreement dated as of even date herewith among BP, Mardi Gras, and
the CHOPS Parties.

                                       3
<PAGE>

         "CONTRACT QUARTER" shall mean a consecutive three (3) month period. The
first such Contract Quarter shall begin with the month that production commences
from the first of the Dedicated Leases to commence production and ends at the
beginning of the next calendar quarter.

         "CRUDE OIL" shall mean the liquid hydrocarbon production from wells, or
a blend of such, in its natural form, not having been enhanced or altered in any
manner or by any process, other than those processes that normally occur on an
offshore production facility, that would result in misrepresentation of its true
value for adaptability to refining as a whole crude oil.

         "DAY" shall mean a period of twenty-four (24) consecutive hours,
beginning and ending at 7:00 A.M. (CST).

         "DEDICATED LEASES" shall mean the (i) Initial Dedicated Leases, as
described on Exhibit "B", and (ii) leases underlying other offshore fields that
BP dedicates to this Agreement pursuant to Article IV. of this Agreement and
which shall be added to Exhibit "B".

         "DEDICATED PRODUCTION" shall mean the first volumes of Crude Oil
produced from the Dedicated Leases up to the applicable BP MDQ that are (i)
owned by BP (or its Affiliate designees (as provided in Article II.a. below), or
successors or assigns), and/or (ii) with respect to royalty volumes of Crude Oil
owned and/or taken in kind by the MMS, controlled by BP or its Affiliates.

         "DELIVERY POINTS" shall mean the following points where the CHOPS
Parties shall deliver Crude Oil to BP (or its Affiliate designees): BP Products
North America Inc.'s ("BP PRODUCTS") Texas City Refinery, TEPPCO Seaway Terminal
at Texas City, Sun Marine Terminal in Nederland, and Unocal Pipeline Company's
Beaumont Terminal. Deliveries to all Delivery Points shall be through a direct
connection with Cameron Highway and such Delivery Point.

         "DISPUTES" shall have the meaning ascribed to such term in Article
XXV.a. of this Agreement.

         "EFFECTIVE DATE" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.

         "EPN" shall mean El Paso Energy Partners, L.P., predecessor to GTM.

         "EXCESS PRODUCTION" shall mean Crude Oil produced from the Dedicated
Leases in excess of the Dedicated Production that is (i) owned by BP (or its
Affiliate designees (as provided in Article II.a. below), or successors or
assigns), and/or (ii) with respect to royalty volumes of Crude Oil owned and/or
taken in kind by the MMS, controlled by BP or its Affiliates. Such Excess
Production is not required to be delivered or sold to Cameron Highway under the
terms of this Agreement.

         "FERC" shall mean the Federal Energy Regulatory Commission and any
successor governmental agency.

         "FINAL APPROVAL" shall have the meaning ascribed to such term in
Article I.a. of this Agreement.

         "FINANCIALLY CAPABLE ENTITY" shall mean an entity ("PROPOSED ASSIGNEE")
whose financial capability and resources, for purposes of this Agreement, shall
be evaluated based on (a) the financial wherewithal of such entity and (b) any
guaranty, agreement or other obligation of any other Person (including such
Proposed Assignee's parent entity) to the extent such guaranty, agreement or
other obligation provides for such Person to be

                                       4
<PAGE>

financially obligated for the obligations of the Proposed Assignee in connection
with any applicable assignment of this Agreement to the Proposed Assignee.

         "FIRM" shall mean not subject to interruption or curtailment except in
the event of Force Majeure, or as provided in Article X.b. of this Agreement.

         "FIRM P&S REQUEST" shall have the meaning ascribed to such term in
Article VIII.a.i. of this Agreement.

         "FORCE MAJEURE" shall have the meaning ascribed to such term in Article
XXIV.a. of this Agreement.

         "FULLY OPERATIONAL" shall mean that the Cameron Highway pipeline
system, including all Delivery Points, is completed, active and operational such
that it is capable of receiving all Dedicated Production at the Receipt Points
and delivering an equivalent volume of Crude Oil at the Delivery Points.

         "GB 72" shall mean the existing platform owned by GTM and GOM Shelf,
LLC located in Garden Banks Block 72, Gulf of Mexico.

         "GOVERNMENTAL AGENCIES" shall mean the FERC and any governmental
agencies claiming or asserting jurisdiction under the OCSLA.

         "GTM" shall have the meaning ascribed to such term in the introductory
paragraph of this Agreement.

         "HI A-5 "C"" shall mean a platform to be owned by CHOPS located in the
area of High Island Block A-5, which Cameron Highway is anticipated to cross.

         "HOLSTEIN" shall mean Green Canyon Blocks 644 and 645, Gulf of Mexico.

         "INITIAL DEDICATED LEASES" shall mean the leases underlying Atlantis,
Holstein and Mad Dog.

         "INITIAL CAMERON HIGHWAY RECEIPT POINT" shall mean the Receipt Point
between the Caesar System and Cameron Highway, on the SS 332 B Platform and
specifically, the downstream flange of the flow control valve located
immediately downstream of the LACT Unit.

         "INTERCONNECT AGREEMENT" shall mean that certain Offshore Facilities
Interconnection, Construction and Operating Agreement dated as of even date
herewith among the CHOPS Parties, Manta Ray and Caesar.

         "LACT UNIT" shall mean Lease Automated Custody Transfer Unit.

         "LANDING PLATFORM" shall have the meaning ascribed to such term in the
Interconnect Agreement.

         "MMBTU" shall mean one million (1,000,000) BTUs.

         "MMS" shall mean the Minerals Management Service and any successor
governmental agency.

         "MAD DOG" shall mean Green Canyon Blocks 738, 739, 781, 782, 783, 825,
826 and 827, Gulf of Mexico.

         "MANTA RAY" shall mean Manta Ray Gathering Company, L.L.C., a direct
wholly-owned subsidiary of GTM, and a member of Atlantis Offshore, LLC.

         "MARDI GRAS" shall mean Mardi Gras Transportation System Inc., a
Delaware corporation.

                                       5
<PAGE>

         "NON-SUBMITTING PARTY" shall have the meaning ascribed to such term in
Article XXV.a. of this Agreement.

         "OCSLA" shall mean the Outer Continental Shelf Lands Act (43 U.S.C.
Sections 1331 et seq.) as in effect on February 11, 2002, the effective date of
the Cameron Highway MOU, and any regulations or rules promulgated thereunder by
Governmental Agencies and decisions of courts interpreting same.

         "OPERATIONAL" shall mean that the Cameron Highway pipeline system is
active and operational such that it is capable of receiving all Dedicated
Production at the Receipt Points and delivering an equivalent volume of Crude
Oil to at least one (1) but less than or equal to three (3) Delivery Points.

         "OTHER RECORDS" shall have the meaning ascribed to such term in Article
XXVI.e. of this Agreement.

         "PSIG" shall mean pounds per square inch gauge.

         "PARTY OR PARTIES" shall have the meanings ascribed to such terms in
the introductory paragraph of this Agreement.

         "PERSON" shall mean any individual, governmental authority,
corporation, limited liability company, partnership, limited partnership, trust,
association or other entity.

         "PORT ARTHUR LATERAL" shall mean the twenty-four inch (24") pipeline
segment from HI A-5 "C" to the following Delivery Points: Sun Marine Terminal in
Nederland and Unocal Pipeline Company's Beaumont Terminal.

         "POSEIDON" shall mean Poseidon Oil Pipeline Company, L.L.C., a Delaware
limited liability company.

         "POSEIDON PIPELINE" shall mean the crude oil pipeline system owned by
Poseidon that consists of (i) 117 miles of pipeline extending from the GB 72 to
SS 332, (ii) 122 miles of pipeline extending from SS 332 to Houma, Louisiana,
(iii) 32 miles of pipeline extending from Ewing Bank Block 873 to South
Timbalier Block 212, and (iv) 17 miles of pipeline extending from Garden Banks
Block 260 to South Marsh Island Block 205, as such pipeline system may be
modified or extended.

         "PROPOSED ASSIGNEE" shall have the meaning ascribed to such term in the
definition of "Financially Capable Entity".

         "RECEIPT POINTS" shall mean the points including, without limitation,
the Initial Cameron Highway Receipt Point, where the CHOPS Parties shall receive
and purchase Crude Oil from BP (or its Affiliate designee).

         "REQUIRED COMMENCEMENT DATE" shall have the meaning ascribed to such
term in Article XI.c. of this Agreement.

         "RULES" shall mean the then current Commercial Arbitration Rules of
AAA.

         "SS 332" shall mean the existing platform owned by Atlantis Offshore,
LLC located in Ship Shoal Block 332, Gulf of Mexico.

         "SUBMITTING PARTY" shall have the meaning ascribed to such term in
Article XXV.a. of this Agreement.

         "SUPPLEMENTARY AGREEMENT" shall mean that certain Cameron Highway
Supplementary Agreement dated of even date herewith among BP, GTM and Mardi
Gras.

                                       6
<PAGE>

         "TEXAS CITY LATERAL" shall mean the twenty-four inch (24") pipeline
segment from HI A-5 "C" to the following Delivery Points: BP Products' Texas
City Refinery and TEPPCO Seaway Terminal at Texas City.

         "UNOCAL" shall mean Union Oil Company of California, a California
corporation.

                                   ARTICLE I.

                   DEVELOPMENT OF INITIAL DEDICATED LEASES AND

                         CONSTRUCTION OF CAMERON HIGHWAY

         a.       For purposes of this Article I.a., "FINAL APPROVAL" shall mean
(x) with respect to BP, that BP has obtained all necessary management and
applicable board of directors approvals to fund its working interest share of
the costs to develop the applicable Dedicated Leases, and the development plan
for the applicable Dedicated Leases has been approved pursuant to the terms of
the applicable operating agreement, and the applicable Dedicated Leases will be
developed pursuant to the terms of the applicable operating agreement, as
amended; and (y) with respect to the CHOPS Parties, that the CHOPS Parties have
obtained all necessary management and applicable board of directors approvals to
fund and construct Cameron Highway.

         b.       BP has received Final Approval with respect to Atlantis,
Holstein and Mad Dog.

         c.       The CHOPS Parties have received Final Approval to construct
Cameron Highway, and the CHOPS Parties shall commence designing, fabricating,
constructing, installing and commissioning Cameron Highway pursuant to the terms
and conditions of the Construction Agreement. The CHOPS Parties shall design,
fabricate, construct, install and commission and CHOPS shall own Cameron Highway
pursuant to the Construction Agreement, and allow connection with the Caesar
System as provided in the Interconnect Agreement.

         d.       Upon execution of this Agreement by all the Parties, BP and
the CHOPS Parties shall continue to meet monthly to discuss the progress of the
construction of Cameron Highway. At CHOPS' request, the Parties shall meet to
discuss the progress of the development of the Initial Dedicated Leases.

                                   ARTICLE II.

                       THE CHOPS PARTIES PURCHASE FROM BP

         a.       The CHOPS Parties agree to receive and purchase, on a Firm
basis, all Dedicated Production delivered by BP, or an Affiliate designee of BP,
at the Receipt Points. If requested by BP, the CHOPS Parties shall receive and
purchase Excess Production on an interruptible basis to the extent capacity is
available on Cameron Highway. Unless another Receipt Point is mutually agreed to
by the Parties, the BP Production from the Initial Dedicated Leases shall be
received and purchased by the CHOPS Parties at the Initial Cameron Highway
Receipt Point. BP shall be responsible for costs to deliver its Crude Oil,
including BP Production, to the Initial Cameron Highway Receipt Point.

         b.       BP shall have the right to add Receipt Points in the future at
locations on Cameron Highway for the receipt of Crude Oil owned by BP (or its
Affiliate designee) and produced from leases other than the Initial Dedicated
Leases, provided that BP bears the cost of connecting such leases to Cameron
Highway and there is available capacity on Cameron Highway. Subject to available
capacity on Cameron Highway and available space on such platforms, solely for
the purpose of making deliveries into Cameron Highway hereunder, and subject to
and as limited by GTM's and CHOPS', as applicable, right of

                                       7
<PAGE>

access and deck and riser space on such platforms, GTM and CHOPS hereby grant BP
(at no cost to BP) access to HI A-5 "C", GB 72 and other platforms GTM and CHOPS
may utilize in the future for Cameron Highway activities, and sufficient deck
and riser space on all such platforms in accordance with industry standards for
(i) the construction, installation, operation, maintenance and repair of
facilities and equipment and (ii) the construction, installation, operation,
maintenance and repair of import risers. The rights of access to HI A-5 "C", GB
72 and other platforms granted above shall be rights granted only to, and
exercisable by (x) BP and, to the extent relating to BP Production or Dedicated
Leases, solely for the purpose of making deliveries into Cameron Highway
hereunder, Affiliate designees of BP (as provided in Article II.a. above), and
assignees of BP who take assignment from BP of an interest in such BP Production
or Dedicated Leases and (y) operators of fields (or their designees) from which
BP (or BP's Affiliate designee as provided in Article II.a. above) is delivering
BP Production to Cameron Highway, but only to the extent relating to BP
Production or Dedicated Leases solely for the purpose of making deliveries into
Cameron Highway hereunder. The rights of deck and riser space on HI A-5 "C", GB
72 and other platforms granted above shall be rights granted only to, and
exercisable by, BP and the parties described in subsections (x) and (y) of this
Article II.b., but not to any other assignee of BP.

                                  ARTICLE III.

                          THE CHOPS PARTIES SALE TO BP

         a.       The CHOPS Parties shall sell and deliver to BP or an Affiliate
designee of BP, and BP or such Affiliate designee shall receive and purchase
from the CHOPS Parties, on a Firm basis, at the Delivery Points and, as
applicable, the Additional Delivery Points, Crude Oil equivalent in volume to
the volume delivered by BP to the CHOPS Parties contemporaneously at the Receipt
Points, subject to normal imbalances, pursuant to Article II adjusted for
pipeline loss or gain allowance as described in Article XIII. Any Affiliate
designee of BP receiving and purchasing Crude Oil from the CHOPS Parties under
this Article III.a. shall be the same Affiliate designee of BP which delivered
Crude Oil to the CHOPS Parties under Article II.a. The CHOPS Parties shall be
responsible for the costs to deliver the Crude Oil from the Receipt Points to
the Delivery Points and, as applicable, Additional Delivery Points.

         b.       Subject to the capacity available on the downstream facility,
BP (or its Affiliate designees, as provide in Article III.a. above) shall have
the right to make a nomination for its Crude Oil at any Delivery Point or
Additional Delivery Point.

                                   ARTICLE IV.

                            DEDICATION OF PRODUCTION

         a.       BP hereby dedicates the Dedicated Production from the Initial
Dedicated Leases to Cameron Highway. Except as otherwise expressly provided in
this Agreement, such dedication shall be for the commercial life of production
from the Initial Dedicated Leases. BP hereby reserves the rights and quantities
of Dedicated Production sufficient to satisfy the following: the right to
deliver royalty oil in kind to lessors of the Dedicated Leases; the right to
process such Dedicated Production prior to delivery to the CHOPS Parties by the
use of such processes that normally occur on an offshore production facility;
the right to operate the Dedicated Leases free from any control by the CHOPS
Parties, including without limitation, the right (but not the obligation) to
drill new wells, to repair and rework old wells, to shut in wells, plug and
abandon wells and to relinquish any or all of the Dedicated Leases in whole or
in part; and the right to use such Dedicated Production for pipeline fill on
Cameron Highway and the Caesar System.

                                       8
<PAGE>

         b.       Except as otherwise expressly provided in this Agreement, the
foregoing dedication of the Initial Dedicated Leases by BP shall be an interest
running with the Dedicated Leases and shall be binding upon the successors and
assigns of BP. The Parties agree to promptly execute a recordable memorandum of
agreement in the form of Exhibit "C", and if required by applicable law, include
all documents in the chain of title (including applicable leases and assignments
of interests) for the Initial Dedicated Leases. The CHOPS Parties, at their sole
cost and expense, may file such agreement with the MMS and in the county and
parish records of the appropriate jurisdictions.

         c.       Subject to available capacity on Cameron Highway, BP shall
have the right to dedicate Crude Oil produced from other offshore leases in
which it holds a working interest to this Agreement. At the request of BP, such
other leases that BP dedicates to this Agreement within a period of ten (10)
years from the date of initial delivery by the CHOPS Parties of Dedicated
Production to a Delivery Point or Additional Delivery Point, as applicable,
hereunder shall receive the same terms and conditions applicable to the Initial
Dedicated Leases, and, upon such request, Exhibit "B" shall automatically be
deemed to be amended to include all such leases. The Parties shall document such
amendment to Exhibit "B" by execution of a written amendment to this Agreement
that shall include a revised Exhibit "B". Such dedication shall be for the
commercial life of production from such Dedicated Leases. The Parties agree that
the rights granted to BP under this Article IV.c. shall be rights granted only
to, and exercisable by, BP (and not to permitted assignees of BP); provided,
however, that to the extent Crude Oil from other offshore leases is dedicated
hereunder pursuant to the terms of this Article IV.c. prior to a permitted
assignment by BP of all or a portion of its working interest in such Dedicated
Leases, then following such permitted assignment, such Dedicated Production
shall continue to receive the same terms and conditions as were applicable to
such Dedicated Production prior to such assignment. It being the intent of the
Parties that once a lease is dedicated to this Agreement by BP, such Dedicated
Lease and the Dedicated Production from such lease shall remain dedicated to
this Agreement as provided in this Agreement.

         d.       Upon expiration of the commercial life of production of any
Dedicated Lease, BP and the CHOPS Parties shall file of record a termination of
the memorandum of agreement and release of dedication thereunder, with respect
to such Dedicated Leases.

                                   ARTICLE V.

                         WARRANTY OF TITLE TO CRUDE OIL

         a.       BP hereby represents and warrants that it has good and
marketable title to, or the right and authority to deliver to the CHOPS Parties,
all Crude Oil delivered by BP or its Affiliate designee to the CHOPS Parties at
the Receipt Points hereunder. BP represents and warrants that all such Crude Oil
delivered by BP (or its Affiliate designee) hereunder shall be free and clear of
all liens, encumbrances and claims whatsoever and AGREES TO RELEASE, PROTECT,
DEFEND, INDEMNIFY AND HOLD HARMLESS the CHOPS Parties, their Affiliates, and
their respective officers, directors, employees, agents and representatives
against all losses incurred by such party on account of any such liens,
encumbrances and claims. BP hereby represents and warrants that, as of the
Effective Date, BP holds the applicable working interest share in each of the
Dedicated Leases as listed on Exhibit "B" hereto.

         b.       The CHOPS Parties represent and warrant that they have good
and marketable title to, and the right and authority to deliver to BP (or its
Affiliate designee as provided in Article III.a. above) at the Delivery Points
and Additional Delivery Points, all Crude Oil delivered to BP (or its Affiliate
designee) hereunder. The CHOPS Parties represent and warrant that all such Crude
Oil delivered by the CHOPS Parties hereunder

                                       9
<PAGE>

shall be free and clear of all liens, encumbrances and claims whatsoever and
AGREES TO RELEASE, PROTECT, DEFEND, INDEMNIFY AND HOLD HARMLESS BP, its
Affiliates and their respective officers, directors, employees, agents and
representatives against all losses incurred by such party on account of any such
liens, encumbrances and claims.

                                   ARTICLE VI.

                            MAXIMUM DAILY QUANTITIES

         a.       As early as reasonably practicable in order to provide CHOPS
reasonable time to contract available space on Cameron Highway with third
parties and affiliated exploration and production companies, but in no event
later than five (5) days prior to the first day of each calendar month, BP shall
give CHOPS written notice of the BP MDQ for the succeeding month which shall
equal one of the following BP MDQ levels ("BP MDQ LEVELS"):

<TABLE>
<CAPTION>
BP MDQ
 LEVEL              VOLUME
 -----              ------
<S>              <C>
Level 1 -        210,000 BOPD
Level 2 -        205,000 BOPD
Level 3 -        200,000 BOPD
Level 4 -        195,000 BOPD
Level 5 -        190,000 BOPD
Level 6 -        185,000 BOPD
Level 7 -        180,000 BOPD
Level 8 -        175,000 BOPD
Level 9 -        170,000 BOPD
Level 10 -       165,000 BOPD
Level 11 -       160,000 BOPD
Level 12 -       155,000 BOPD
Level 13 -       150,000 BOPD
Level 14 -       145,000 BOPD
Level 15 -       140,000 BOPD
</TABLE>

Such minimum five (5) day notice period may be changed with the agreement of BP
and the CHOPS Parties based on safety or environmental concerns or the final
Cameron Highway nomination deadline. Subject to the terms of this Agreement, the
CHOPS Parties shall be obligated to receive and purchase from BP a minimum
volume of Dedicated Production equal to the applicable BP MDQ.

         b.       If on any Day, BP delivers less Dedicated Production to
Cameron Highway than the applicable BP MDQ selected by BP pursuant to Article
VI.a. above, CHOPS shall have the right to utilize such unused capacity on a
fully interruptible basis.

         c.       Dedicated Production delivered to the Receipt Points by BP
that is produced from Dedicated Leases other than the Initial Dedicated Leases
shall be credited against the applicable BP MDQ so long as Dedicated Production
delivered by BP from the Initial Dedicated Leases has not exceeded the
applicable BP MDQ at the time such additional Dedicated Production is delivered
to the Receipt Points.

         d.       If capacity is available, BP shall have the right to deliver
Crude Oil that has not been dedicated to this Agreement to the Receipt Points.
BP shall have the right to require the CHOPS Parties to enter into an
interruptible purchase and sale arrangement for such Crude Oil with
differentials no greater than those contained in Article XII of this Agreement.
The right to deliver Crude Oil that has not been dedicated to this Agreement and
receive differentials no greater than those contained in Article XII. shall be a
right granted only to, and exercisable by, BP (and not to permitted assignees of
BP); provided,

                                       10
<PAGE>

however, that to the extent an interruptible purchase and sale arrangement for
such Crude Oil is entered into pursuant to this Article VI.d. prior to a
permitted assignment by BP of all or a portion of its working interest in the
lease from which such Crude Oil is produced, then following such permitted
assignment, such Crude Oil shall continue to receive the same differentials
under such interruptible purchase and sale arrangement as were applicable to
such interruptible purchase and sale arrangement prior to such assignment;
provided, that such assignment is treated in accordance with Article XXII.b.

         e.       Except as provided in Article VIII., the CHOPS Parties shall
not enter into any firm purchase and sale arrangements if such arrangements
would reasonably be expected by a reasonable and prudent operator to jeopardize
the ability of such operator to accept and purchase, on a Firm basis, the volume
of Crude Oil equivalent to Level 1 of the BP MDQ levels set forth in Article
VI.a. above, at the Receipt Points from BP hereunder.

         f.       At the request of BP, the CHOPS Parties shall provide BP then
current and up-to-date information regarding the aggregate contracted firm and
interruptible throughput of Cameron Highway, subject to confidentiality
restrictions.

                                  ARTICLE VII.

                            INCREASE IN BP MDQ LEVELS

         a.       Notwithstanding anything to the contrary contained herein, at
the request of BP (to be accompanied by supporting data, reasonably satisfactory
to the CHOPS Parties, that indicates that BP has or will have the ability to
deliver Crude Oil (whether or not deliveries are actually made) at such
requested levels) and to the extent capacity is available on Cameron Highway,
the CHOPS Parties shall increase (i) to the extent BP requests that Level 1 of
the BP MDQ Levels set forth in Article VI.a above be increased to an amount that
is less than or equal to 250,000 BOPD, then Level 1 of the BP MDQ Levels shall
be increased to such requested amount, and the remaining fourteen (14) Levels of
the BP MDQ Levels shall remain unchanged, and (ii) to the extent BP requests
that Level 1 of the BP MDQ Levels be increased in excess of 250,000 BOPD, then
Level 1 of the BP MDQ Levels shall be increased to such requested amount, and
all of the remaining fourteen (14) Levels of the BP MDQ Levels shall be
increased by the same amount that the increase in Level 1 exceeds 250,000 BOPD.
Within sixty (60) days after receipt of BP's request, the CHOPS Parties shall
notify BP in writing whether and to what extent capacity is available on Cameron
Highway to accommodate any such requested increase (taking into consideration
only existing and contracted written commitments of CHOPS to receive and deliver
Crude Oil on Cameron Highway). Any increases in BP MDQ Levels made pursuant to
this Article VII shall be evidenced by a formal amendment to this Agreement.
Upon such increase in the applicable Levels of the BP MDQ Levels, the CHOPS
Parties shall be obligated to receive and purchase Dedicated Production at the
Receipt Points at such increased Levels and contemporaneously sell and deliver
the equivalent volume of Crude Oil to BP or its Affiliate designee (as provided
in Article III.a. above) at the Delivery Points and Additional Delivery Points,
subject to normal imbalances, all on a Firm basis as provided in this Agreement.
The terms related to an increase in BP MDQ Levels, and the rights related
thereto, shall be rights granted only to, and exercisable by, BP (and not to
permitted assignees of BP); provided, however, that to the extent an increase in
any BP MDQ Level has occurred pursuant to this Article VII.a. prior to a
permitted assignment by BP of all or a portion of its working interest in the
Dedicated Leases and/or all or a portion of its interest in the Dedicated
Production, such increase in BP MDQ Levels shall continue in effect following
such permitted assignment; provided, that such assignment is treated in
accordance with Article XXII.b.

                                       11
<PAGE>

         b.       In addition, subject to Article VII.c. below, it is agreed by
BP and the CHOPS Parties that in the event BP has delivered Crude Oil equivalent
to the applicable BP MDQ and wishes to deliver Dedicated Production from
Dedicated Leases other than the Initial Dedicated Leases, then upon the
dedication of such other Dedicated Leases, the CHOPS Parties shall increase
Level 1 of the BP MDQ Levels set forth in Article VI.a. in order to accommodate
such additional Dedicated Production; provided, that in no event shall Level 1
exceed 250,000 BOPD unless the remaining fourteen (14) Levels of the BP MDQ
Levels are increased by the same volume as the amount Level 1 was increased in
excess of 250,000 BOPD.

         c.       In the event capacity on Cameron Highway is not available for
the CHOPS Parties to receive and purchase Crude Oil at such increased BP MDQ
Levels as requested by BP in Article VII.a. and Article VII.b. above, the CHOPS
Parties shall not unreasonably refuse to expand Cameron Highway to accommodate
such additional volumes of Dedicated Production, provided such expansion is
commercially reasonable and economically viable for Cameron Highway in the CHOPS
Parties' sole reasonable discretion. The CHOPS Parties shall demonstrate such
non-viability of such expansion to BP if the CHOPS Parties determine that such
expansion of Cameron Highway is not commercially reasonable and/or economically
viable for Cameron Highway. In such event, the CHOPS Parties and BP shall use
good faith efforts to jointly develop a transaction that is commercially
reasonable and economically viable for Cameron Highway and BP.

                                  ARTICLE VIII.

                           REDUCTION IN BP MDQ LEVELS

         a.       In the event there has not been an increase, in accordance
with Article VII. above, in Level 1 of the BP MDQ Levels resulting in Level 1
being greater than 210,000 BOPD, CHOPS shall have the right to request that BP
reduce, temporarily or permanently, all fifteen (15) Levels of the BP MDQ Levels
set forth in Article VI.a. above so long as each of the conditions precedent
contained in Article VIII.a. below have been satisfied:

                  i.       Conditions Precedent:

                           (A)      Forty-eight (48) calendar months must have
                  elapsed since the date of the first receipts and purchase of
                  Dedicated Production from BP by the CHOPS Parties on Cameron
                  Highway;

                           (B)      Except for reasons of Force Majeure or the
                  failure of the CHOPS Parties for any reason to receive and
                  purchase all volumes of Crude Oil delivered by BP at the
                  Receipt Points, BP has not utilized at least 85% of Level 1 of
                  the BP MDQ Levels for at least nine (9) of the immediately
                  preceding twelve (12) calendar months;

                           (C)      CHOPS can demonstrate to the reasonable
                  satisfaction of BP that CHOPS has received a bona fide request
                  from any party for a firm purchase and sale arrangement on
                  Cameron Highway and such request includes a life of lease
                  dedication by such party with respect to all leases from which
                  Crude Oil subject to such arrangement will be produced (a
                  "FIRM P&S REQUEST");

                           (D)      BP is unable to demonstrate to CHOPS (with
                  data that reasonably supports such contention) that it has or
                  will have the ability to consistently deliver (whether or not
                  deliveries are actually made) to the Receipt Points Crude Oil
                  equivalent to Level 1 of the BP MDQ Levels set forth in
                  Article VI.a. above during the immediately following twelve
                  (12) month period taking into consideration (i) the then
                  current level of Dedicated

                                       12
<PAGE>

                  Production actually being produced from the Dedicated Leases,
                  and (ii) any volumes of Crude Oil that will become Dedicated
                  Production that BP reasonably anticipates will be produced
                  from the Dedicated Leases, or from leases that BP reasonably
                  anticipates to develop and dedicate to this Agreement (as
                  provided in Article IV.) within the immediately following
                  twelve (12) months; provided, that BP reasonably believes the
                  field will be developed; and

                           (E)      CHOPS has demonstrated to the reasonable
                  satisfaction of BP that CHOPS has diligently and in good faith
                  requested reductions in maximum daily quantities, on a pro
                  rata basis, from all other parties with firm purchase and sale
                  arrangements on Cameron Highway that are not utilizing their
                  MDQ, and (b) CHOPS still cannot fulfill the Firm P&S Request.

                  ii.      If each of the conditions precedent contained in
         Article VIII.a.i. above have been satisfied, each of the fifteen (15)
         Levels of the BP MDQ Levels set forth in Article VI.a. above shall be
         reduced by an amount equal to the minimum amount required to fulfill
         such Firm P&S Request; provided, that in no event shall the reduction
         in Level 1 of the BP MDQ Levels reduce such Level 1 lower than 110% of
         the sum of (x) the then current amount of Dedicated Production being
         produced, plus (y) any additional Crude Oil that will become Dedicated
         Production that BP reasonably anticipates will be produced from the
         Dedicated Leases or from leases that BP reasonably anticipates it will
         dedicate to the Agreement as provided in Article IV. in the immediately
         following twelve (12) month period. The CHOPS Parties shall demonstrate
         to the reasonable satisfaction of BP that the reduction in the fifteen
         (15) BP MDQ Levels satisfies this Article VIII.a. The differentials set
         forth in Article XII.a. for the BP MDQ Levels shall remain applicable
         following any reduction in such levels as provided in this Article
         VIII.a.

         b.       In the event there has been an increase, in accordance with
Article VII. above, in Level 1 of the BP MDQ Levels resulting in Level 1 being
greater than 210,000 BOPD, CHOPS shall have the right to request that BP reduce,
temporarily or permanently, Level 1 of the BP MDQ Levels so long as CHOPS can
demonstrate to the reasonable satisfaction of BP that CHOPS has received a bona
fide request from any party for a firm purchase and sale arrangement on Cameron
Highway. If CHOPS has received such a bona fide request, and CHOPS requests that
BP reduce Level 1 of the BP MDQ Levels, BP shall elect to either (i) reduce
Level 1 of the BP MDQ Levels by an amount equal to the lesser of (x) the amount
required to fulfill such request or (y) the amount of the then current Level 1
that is in excess of 210,000 BOPD, or (ii) maintain the then current amount of
Level 1 of the BP MDQ Levels and increase each of Levels 2 through 15 by an
amount equal to the number of Barrels that were required to fulfill such
request. The differentials set forth in Article XII.a. for Levels 1 through 15
of the BP MDQ Levels shall remain applicable following any reduction in such
Levels as provided in this Article VIII.b.

         c.       In the event there has been an increase, in accordance with
Article VII. above, in Level 1 of the BP MDQ Levels resulting in Level 1 being
greater than 210,000 BOPD, CHOPS shall have the right to request that BP reduce,
temporarily, Level 1 of the BP MDQ Levels so long as the CHOPS Parties can
demonstrate to the reasonable satisfaction of BP that CHOPS has received a bona
fide request from any party for an interruptible purchase and sale arrangement
not to exceed three (3) calendar months on Cameron Highway. If CHOPS has
received such a request, and CHOPS requests that BP reduce Level 1 of the BP MDQ
Levels, BP shall elect to either (i) reduce Level 1 of the BP MDQ Levels for
such interruptible arrangement period (not to exceed three (3) calendar months)
by an amount equal to the lesser of (x) the amount required to fulfill such
request or (y) the

                                       13
<PAGE>

amount of the then current Level 1 that is in excess of 210,000 BOPD, or (ii)
maintain the then current amount of Level 1 of the BP MDQ Levels and, for the
duration of the proposed interruptible arrangement period (not to exceed three
(3) calendar months), increase Levels 2 through 15 by an amount equal to the
number of Barrels that were required to fulfill such request. The differentials
set forth in Article XII.a. for Levels 1 through 15 of the BP MDQ Levels shall
remain applicable following any reduction in such Levels as provided in this
Article VIII.c. At the end of such interruptible arrangement period (not to
exceed three (3) calendar months), all Levels of the BP MDQ Levels shall
automatically revert to their respective volumetric levels effective on the date
immediately preceding such reduction.

         d.       With respect to all potential reductions in the BP MDQ Levels
described in this Article VIII., in the event CHOPS has not entered into a
valid, binding and effective firm or interruptible, as the case may be, purchase
and sale arrangement with such requesting party effectuating the request within
sixty (60) days of the effective date of the reduction of the applicable BP MDQ
Levels, then all such BP MDQ Levels will automatically revert to their
respective volumetric levels effective on the date immediately preceding such
reduction.

         e.       Any reductions in BP MDQ Levels made pursuant to this Article
VIII shall be evidenced by a formal amendment to this Agreement.

                                   ARTICLE IX.

                        CAMERON HIGHWAY REGULATORY STATUS

         a.       The CHOPS Parties have elected to establish Cameron Highway as
a private pipeline system. Regardless of the ultimate regulatory status of
Cameron Highway, subject to the terms contained in the Construction Agreement,
the CHOPS Parties shall construct and install Cameron Highway. If the CHOPS
Parties are unable for any reason to establish and maintain the Cameron Highway
system as a private pipeline system, such failure shall not be deemed a breach
of this Agreement. In such case, the Parties agree that they shall
simultaneously terminate this Agreement and enter into a replacement agreement
under which the CHOPS Parties shall effectuate receipt at the Receipt Points and
delivery to the Delivery Points and Additional Delivery Points of (i) Dedicated
Production, and (ii) Excess Production and other non-dedicated Crude Oil, with
as close to the same type and level of services as provided in this Agreement as
the circumstances will allow, attempting to preserve as many of the terms and
conditions contained in this Agreement as possible, and on the same economic
basis for BP and the CHOPS Parties as agreed to in this Agreement.

         b.       The Parties further agree that to the extent one or more
Governmental Agencies or a court requires a pro rata allocation of firm capacity
on Cameron Highway pursuant to the OCSLA, the terms of Articles XI.a.ii. and
XI.d. below shall apply.

         c.       Subject to the terms contained in this Article IX.c., BP
agrees that it will not support, commence or participate in support of any
proceeding before any court or Governmental Agency, seeking (i) pro rata
allocation of firm capacity on Cameron Highway pursuant to the OCSLA, or (ii) to
have Cameron Highway determined to be subject to the jurisdiction of any
Governmental Agency.

                  (1)      In the event BP or a BP Affiliate, acting solely on
         its own behalf and not as part of a group or organization (other than a
         group consisting solely of BP Affiliates), supports, commences or
         participates in support of any proceeding before any court or
         Governmental Agency seeking any of the actions described in subsections
         (i) or (ii) of this Article IX.c., CHOPS shall have the right to notify
         BP in writing that CHOPS believes such action is prohibited by this
         Article IX.c.

                           (A)      In the event BP or a BP Affiliate, acting
                  solely on its own behalf and not as part of a group or
                  organization (other than a group consisting

                                       14
<PAGE>

                  solely of BP Affiliates), supports, commences or participates
                  in support of any proceeding before any court or Governmental
                  Agency seeking pro rata allocation of firm capacity on Cameron
                  Highway pursuant to the OCSLA, and CHOPS does not notify BP in
                  writing that CHOPS believes such action is prohibited by this
                  Article IX.c., then if such proceeding directly results in pro
                  rata allocation of firm capacity on Cameron Highway pursuant
                  to the OCSLA, then BP shall waive any right to receive
                  liquidated damages pursuant to Article XI.d. below.

                           (B)      In the event BP or a BP Affiliate, acting
                  solely on its own behalf and not as part of a group or
                  organization (other than a group consisting solely of BP
                  Affiliates), supports, commences or participates in support of
                  any proceeding before any court or Governmental Agency seeking
                  pro rata allocation of firm capacity on Cameron Highway
                  pursuant to the OCSLA, and CHOPS notified BP in writing that
                  CHOPS believes such action is prohibited by this Article IX.c.
                  and requests that any pleadings and filings made by BP or such
                  BP Affiliate be withdrawn from such action and that BP or such
                  BP Affiliate withdraw from such action, then BP shall have the
                  right to notify CHOPS in writing if BP disputes such
                  allegation of CHOPS. In the event BP disputes such allegation
                  of CHOPS, such dispute shall be submitted to dispute
                  resolution and the Parties agree that such dispute resolution
                  procedure shall be accelerated so that the arbitrator's
                  decision shall be rendered within forty-five (45) days of
                  CHOPS' receipt of BP's notice referenced in the immediately
                  preceding sentence. During any dispute resolution process
                  described in this Article IX.c., neither BP, nor such BP
                  Affiliate, shall be required to withdraw pleadings and filings
                  made in any proceeding or withdraw from any such proceeding,
                  and BP shall not be deemed to be in breach of this Article
                  IX.c.

                                    i.       If the arbitrator determines that
                           BP or a BP Affiliate has supported, commenced or
                           participated in support of any proceeding before any
                           court or Governmental Agency, seeking pro rata
                           allocation of firm capacity on Cameron Highway
                           pursuant to the OCSLA, BP shall have the right to
                           either (i) withdraw its pleadings and filings in such
                           proceeding and withdraw from the proceeding (or cause
                           BP Affiliate to do the same) and in such event,
                           regardless of the result of such proceeding the CHOPS
                           Parties shall remain liable and responsible for the
                           payment of liquidated damages as set forth in Article
                           XI.d. below, if applicable, or (ii) maintain all
                           pleadings and filings made in the proceeding and
                           remain active in the proceeding and in such event, to
                           the extent such proceeding directly results in pro
                           rata allocation of firm capacity on Cameron Highway
                           pursuant to the OCSLA, BP shall waive any right to
                           receive liquidated damages pursuant to Article XI.d.

                                    ii.      If the arbitrator determines that
                           BP or a BP Affiliate has not supported, commenced or
                           participated in support of any proceeding before any
                           court or Governmental Agency, seeking pro rata
                           allocation of firm capacity on Cameron Highway
                           pursuant to the OCSLA, BP or BP Affiliate, as
                           applicable, shall have the right to continue its
                           participation in such proceeding and shall not be
                           required to withdraw any filings or pleadings made
                           and the CHOPS Parties shall remain liable and
                           responsible for the payment of all liquidated damages
                           as set forth in Article XI.d., if applicable.

                                       15
<PAGE>

                           (C)      In the event BP or a BP Affiliate, acting
                  solely on its own behalf and not as part of a group or
                  organization (other than a group consisting solely of BP
                  Affiliates), supports, commences or participates in support of
                  any proceeding before any court or Governmental Agency seeking
                  to have Cameron Highway determined to be subject to the
                  jurisdiction of any Governmental Agency, and CHOPS does not
                  notify BP in writing that CHOPS believes such action violates
                  this Article IX.c., then if such proceeding directly results
                  in Cameron Highway being made subject to the jurisdiction of
                  any Governmental Agency, then BP and the CHOPS Parties agree
                  that they shall simultaneously terminate this Agreement and
                  enter into a replacement agreement under which the CHOPS
                  Parties shall effectuate receipt at the Receipt Points and
                  delivery to the Delivery Points and Additional Delivery Points
                  of Dedicated Production, Excess Production and other
                  non-dedicated Crude Oil with as close to the same type and
                  level of services as provided in this Agreement as the
                  circumstances will allow, attempting to preserve as many of
                  the terms and conditions contained in this Agreement as
                  possible, and on the same economic basis for BP and the CHOPS
                  Parties as agreed to in this Agreement.

                           (D)      In the event BP or a BP Affiliate, acting
                  solely on its own behalf and not as part of a group or
                  organization (other than a group consisting solely of BP
                  Affiliates), supports, commences or participates in support of
                  any proceeding before any court or Governmental Agency seeking
                  to have Cameron Highway determined to be subject to the
                  jurisdiction of any Governmental Agency, and the CHOPS Parties
                  notify BP in writing that CHOPS believes such action violates
                  this Article IX.c. and CHOPS requests that any pleadings and
                  filings made by BP or such BP Affiliate be withdrawn from such
                  action and that BP or such BP Affiliate withdraw from such
                  action, then BP shall have the right to notify CHOPS in
                  writing if BP disputes such allegation of CHOPS. In the event
                  BP disputes such allegation of CHOPS, such dispute shall be
                  submitted to dispute resolution and the Parties agree that
                  such dispute resolution procedure shall be accelerated so that
                  the arbitrator's decision shall be rendered within forty-five
                  (45) days of CHOPS' receipt of BP's notice referenced in the
                  immediately preceding sentence. During any dispute resolution
                  process described in this Article IX.c., neither BP, nor such
                  BP Affiliate shall be required to withdraw pleadings and
                  filings made in any proceeding or withdraw from any such
                  proceeding, and BP shall not be deemed to be in breach of this
                  Article IX.c.

                                    i.       If the arbitrator determines that
                           BP or a BP Affiliate has supported, commenced or
                           participated in support of any proceeding before any
                           court or Governmental Agency, seeking to have Cameron
                           Highway determined to be subject to the jurisdiction
                           of any Governmental Agency, BP shall have the right
                           to either (i) withdraw its pleadings and filings in
                           such proceeding and withdraw from the proceeding (or
                           cause its BP Affiliate to do the same), or (ii)
                           maintain all pleadings and filings made in the
                           proceeding and remain active in the proceeding, and
                           in the event of either (i) or (ii) above, if such
                           proceeding directly results in Cameron Highway being
                           made subject to the jurisdiction of any Governmental
                           Agency, then BP and the CHOPS Parties agree that they
                           shall simultaneously terminate this Agreement and
                           enter into a replacement agreement under which the
                           CHOPS Parties shall effectuate receipt at the Receipt
                           Points and delivery to the

                                       16
<PAGE>

                           Delivery Points and Additional Delivery Points of
                           Dedicated Production, Excess Production and other
                           non-dedicated Crude Oil with as close to the same
                           type and level of services as provided in this
                           Agreement as the circumstances will allow, attempting
                           to preserve as many of the terms and conditions
                           contained in this Agreement as possible, and on the
                           same economic basis for BP and the CHOPS Parties as
                           agreed to in this Agreement; and further, in the
                           event of either (i) or (ii) above, if such proceeding
                           does not result in Cameron Highway being made subject
                           to the jurisdiction of any Governmental Agency, this
                           Agreement shall remain in effect.

                                    ii.      If the arbitrator determines that
                           BP or a BP Affiliate has not supported, commenced or
                           participated in support of any proceeding before any
                           court or Governmental Agency, seeking to have Cameron
                           Highway determined to be subject to the jurisdiction
                           of any Governmental Agency, BP or BP Affiliate, as
                           applicable, shall have the right to continue its
                           participation in such proceeding and shall not be
                           required to withdraw any filings or pleadings made
                           and the terms of this Agreement shall remain in
                           effect.

                  (2)      Notwithstanding anything to the contrary contained
         herein, the remedies expressly set forth in this Article IX.c. shall be
         the sole and exclusive remedies (whether under contract or at law or
         equity) of the Parties with respect to any violation or alleged
         violation of Article IX.c. by BP or BP Affiliates.

                                   ARTICLE X.

                    CURTAILMENT PRIORITIES ON CAMERON HIGHWAY

         a.       The CHOPS Parties shall not oversubscribe the capacity on
Cameron Highway so that firm purchase and sale arrangements would reasonably be
expected by a reasonable and prudent operator to be curtailed. However, if it
becomes necessary to curtail Crude Oil on Cameron Highway as provided in this
Agreement, the CHOPS Parties shall curtail in the following order: (i) all
interruptible Crude Oil arrangements shall be curtailed on a pro rata basis, and
completely curtailed if necessary to fulfill all firm purchase and sale
arrangements, and (ii) after all interruptible Crude Oil arrangements are
curtailed as provided in (i) above if it is apparent that such curtailment is
not sufficient to enable the CHOPS Parties to fulfill all firm purchase and sale
arrangements, such Crude Oil subject to firm purchase and sale arrangements
shall be curtailed pro rata based on the then effective maximum daily quantities
of all valid firm purchase and sale arrangements. The CHOPS Parties shall use
commercially reasonable efforts to minimize the time period of any curtailments
of Dedicated Production.

         b.       The Parties agree that the CHOPS Parties may temporarily
curtail purchases of Dedicated Production due to routine operations and
maintenance on Cameron Highway; provided that, the CHOPS Parties shall exercise
reasonable diligence to schedule routine operations and maintenance so to as
nearly as possible avoid service interruptions and shall not schedule such
operations during periods of peak demand. To the extent known by the CHOPS
Parties, the CHOPS Parties shall notify BP in writing of the routine operations
and maintenance projects that CHOPS has planned for each upcoming year, and
shall immediately notify BP of any unplanned routine operations and maintenance
projects.

         c.       To the extent that nominations for Crude Oil on either the
Port Arthur Lateral or the Texas City Lateral exceed the capacity on such
lateral, the CHOPS Parties shall curtail Crude Oil on such affected lateral in
the following order: (i) all interruptible Crude Oil arrangements on such
lateral shall be curtailed on a pro rata basis, and completely curtailed

                                       17
<PAGE>

if necessary to fulfill all firm purchase and sale arrangements on such lateral,
and (ii) after all interruptible Crude Oil arrangements on such lateral are
curtailed as provided in subsection (i) of this Article X.c., if it is apparent
that such curtailment is not sufficient to enable the CHOPS Parties to fulfill
all firm purchase and sale arrangements on such lateral, such Crude Oil subject
to firm purchase and sale arrangements on such lateral shall be curtailed pro
rata based on the then effective maximum daily quantities of all valid firm
purchase and sale arrangements on such lateral. In the event of such a
curtailment, the affected volumes will be nominated to Delivery Points and
Additional Delivery Points on the other lateral. Further, if such allocation of
capacity continues for a period of one hundred eighty (180) consecutive days,
then within the following sixty (60) days, the CHOPS Parties shall initiate a
plan to expand the capacity of either the Port Arthur Lateral or the Texas City
Lateral to the extent such expansion is commercially reasonable and economically
viable for Cameron Highway in the CHOPS Parties' sole reasonable discretion.
Such plan shall be implemented within one hundred eighty (180) days after the
expiration of the sixty (60) day period referenced above.

                                   ARTICLE XI.

                         RELEASE OF DEDICATED PRODUCTION

         a.       Certain quantities of Dedicated Production shall be
temporarily released from dedication under this Agreement in accordance with the
following:

                  i.       In the event the Cameron Highway Completion Date has
         not occurred by the commencement of production from one or more of the
         Dedicated Leases, then the quantities of Dedicated Production that the
         CHOPS Parties are unable to receive and purchase shall be temporarily
         released;

                  ii.      If at any time during the terms of this Agreement,
         (x) any Governmental Agency or court requires a pro rata allocation of
         firm capacity on Cameron Highway pursuant to the OCSLA, or (y) the
         CHOPS Parties, in their discretion, curtails Crude Oil on Cameron
         Highway as a direct response to a claim or threatened claim of any
         party related to the OCSLA; then the Parties agree that, to the extent
         such pro rata allocation results in the CHOPS Parties not being able
         (i) to receive and purchase all of the Dedicated Production delivered
         by BP at the Receipt Points and (ii) to sell and deliver an equivalent
         volume of Crude Oil at the Delivery Points and Additional Delivery
         Points, quantities of Dedicated Production that the CHOPS Parties are
         unable to receive and purchase shall be temporarily released; and

                  iii.     In the event that BP at any time attempts to deliver
         to Cameron Highway any quantity of the Dedicated Production, and, for
         reasons other than (A) those described in Articles XI.a.i. and XI.a.ii.
         above, or (B) a breach by BP of this Agreement, the CHOPS Parties fail
         to receive and purchase from BP all of such quantity, then the quantity
         of Dedicated Production that the CHOPS Parties fail to receive and
         purchase shall be temporarily released. For the avoidance of doubt, if,
         for reasons other than those described in Article XI.a.i. and XI.a.ii.,
         CHOPS fails to receive and purchase any Dedicated Production due to
         such Dedicated Production not meeting the quality specifications set
         forth in Exhibit "D", such Dedicated Production that the CHOPS Parties
         fail to receive and purchase shall be temporarily released pursuant to
         this Article XI.a.iii.

         b.       Each of the following shall apply to any temporary release of
Dedicated Production pursuant to Article XI.a. above:

                  i.       Except as otherwise provided in Article XI.b.iii.
         below, BP shall have no obligations under this Agreement with respect
         to such temporarily released

                                       18
<PAGE>

         quantities of Dedicated Production during the applicable temporary
         release period described in Article XI.b.iv. below.

                  ii.      BP shall have the right to deliver and/or sell such
         temporarily released quantities of Dedicated Production to any other
         Crude Oil pipelines without penalty hereunder and with no liability to
         the CHOPS Parties except as expressly provided in the following Article
         XI.b.iii.; provided, that the CHOPS Parties shall be under no
         obligation to BP to expend any funds to make connections to other Crude
         Oil pipelines.

                  iii.     Except as set forth in the immediately following
         sentence, Article XI.g. below shall not apply to such temporarily
         released quantities of Dedicated Production, and in no event shall BP
         be obligated to compensate the CHOPS Parties for any such temporarily
         released quantities of Dedicated Production delivered to alternative
         pipelines. However, notwithstanding the foregoing, to the extent any
         quantity of Dedicated Production is temporarily released pursuant to
         the terms of Article XI.a.iii. above due to the failure of the
         Dedicated Production to meet the quality specifications contained in
         Exhibit "D", and BP diverts all or part of such temporarily released
         quantity to another pipeline, then such temporarily released and
         diverted quantity of Dedicated Production shall be treated as if BP, in
         its sole discretion, elected to divert such quantity of Dedicated
         Production to the other pipelines pursuant to the terms of Article
         XI.g. below, and in such case, BP shall pay the CHOPS Parties the
         differential described in Article XI.g. below.

                  iv.      (x)      In the event of a temporary release of
         Dedicated Production pursuant to Articles XI.a.i. or XI.a.ii. above,
         the CHOPS Parties shall give BP ten (10) days prior written notice of
         the effective date on which the CHOPS Parties are able to receive and
         purchase any portion of the temporarily released volumes of Dedicated
         Production tendered by BP at the Receipt Points and sell and deliver an
         equivalent volume of Crude Oil at the Delivery Points and Additional
         Delivery Points. Upon receipt of such notice by BP, such temporary
         release shall continue no longer than the remainder of the calendar
         month in which BP receives such written notice and the succeeding
         calendar month. BP shall commence deliveries to Cameron Highway of all
         volumes of Dedicated Production that were previously released, that the
         CHOPS Parties are then able to receive and purchase, immediately upon
         the termination of the period described in the immediately preceding
         sentence.

                           (y)      (A)      In the event of a temporary release
                  of Dedicated Production pursuant to Article XI.a.iii., if such
                  temporary release has been in effect for fewer than twenty
                  (20) consecutive days, the CHOPS Parties shall give BP
                  forty-eight (48) hours prior written notice of the effective
                  date on which the CHOPS Parties are able to receive and
                  purchase any portion of the temporarily released volumes of
                  Dedicated Production tendered by BP at the Receipt Points and
                  sell and deliver an equivalent volume of Crude Oil at the
                  Delivery Points and Additional Delivery Points. Upon receipt
                  of such notice by BP, such temporary release shall continue no
                  longer than forty-eight (48) hours following such receipt. BP
                  shall commence deliveries to Cameron Highway of all volumes of
                  Dedicated Production that were previously released, that the
                  CHOPS Parties are then able to receive and purchase,
                  immediately upon the termination of the period described in
                  the immediately preceding sentence.

                           (B)      In the event of a temporary release of
                  Dedicated Production pursuant to Article XI.a.iii., if such
                  temporary release has been in effect for twenty (20) or more
                  consecutive days, the notice provisions and the timing of

                                       19
<PAGE>

                  the termination of the temporary release shall be in
                  accordance with Article XI.b.iv.(x). above.

         c.       In the event the Cameron Highway Completion Date has not
occurred by 12:01 AM on August 15, 2004 (as such date may be adjusted pursuant
to Article XI.h. below, the "REQUIRED COMMENCEMENT DATE") and quantities of
Dedicated Production are temporarily released pursuant to Article XI.a.i. above,
then subject to Article XI.f. below, the CHOPS Parties shall pay BP the
following liquidated damages:

                  i.       $0.63 per Barrel for all such temporarily released
         quantities of Dedicated Production delivered and/or sold by BP to
         alternative Crude Oil pipelines during the period commencing on the
         Required Commencement Date and extending until the Cameron Highway
         Completion Date, and

                  ii.      The following amounts per Barrel of Dedicated
         Production received and purchased by the CHOPS Parties at the Receipt
         Points and redelivered to BP hereunder during the period commencing on
         the Required Commencement Date and extending until the Cameron Highway
         Completion Date:

                           w.       $0.50 per Barrel to the extent that
                  nominated deliveries of Dedicated Production to BP can be made
                  by the CHOPS Parties at only one (1) of the Delivery Points,
                  or

                           x.       $0.35 per Barrel to the extent that
                  nominated deliveries of Dedicated Production to BP can be made
                  by the CHOPS Parties at only two (2) of the Delivery Points,
                  or

                           y.       $0.15 per Barrel to the extent that
                  nominated deliveries of Dedicated Production to BP can be made
                  by the CHOPS Parties at only three (3) of the Delivery Points,
                  if the Delivery Point not operational is BP Products' Texas
                  City Refinery, or

                           z.       $0.05 per Barrel to the extent that
                  nominated deliveries of Dedicated Production to BP can be made
                  by the CHOPS Parties at only three (3) of the Delivery Points,
                  if the Delivery Point not operational is a Delivery Point
                  other than BP Products' Texas City Refinery.

The CHOPS Parties shall not be obligated to pay liquidated damages to BP for
temporarily released volumes of Dedicated Production that are delivered to
alternative Crude Oil pipelines by BP prior to the Required Commencement Date.

         d.       With respect to Dedicated Production temporarily released
pursuant to Article XI.a.ii. above, subject to Article XI.f. below, the CHOPS
Parties shall pay BP, as liquidated damages, (i) to the extent the then
applicable BP MDQ Level is equal to or less than 210,000 BOPD, $0.63 per Barrel
for the temporarily released quantities of Dedicated Production delivered and/or
sold by BP to alternative Crude Oil pipelines, and (ii) to the extent the then
applicable BP MDQ Level is greater than 210,000 BOPD, (x) $0.63 per Barrel for
the temporarily released quantities that are within the first 210,000 BOPD of
Dedicated Production produced on such Day that are delivered and/or sold by BP
to alternative Crude Oil pipelines, and (y) no amount of liquidated damages for
the temporarily released quantities that are in excess of the first 210,000 BOPD
of Dedicated Production produced on such Day that are delivered and/or sold by
BP to alternative Crude Oil pipelines.

         e.       With respect to Dedicated Production temporarily released
pursuant to Article XI.a.iii. above, the CHOPS Parties shall not be liable to,
or obligated to pay, BP any liquidated damages with respect to such temporarily
released quantities.

         f.       Without limiting the terms of the immediately following
sentence, if (i) the CHOPS Parties are otherwise able and willing to receive and
purchase all Dedicated

                                       20
<PAGE>

Production able to be delivered by BP and (ii) BP has not commenced deliveries
of Dedicated Production from Mad Dog to the Receipt Points on or before November
15, 2004, then beginning November 15, 2004 and continuing until such date that
deliveries of Dedicated Production from Mad Dog are tendered by BP at the
Receipt Points, the CHOPS Parties shall not be liable to, or obligated to pay,
BP any amounts of liquidated damages described in Articles XI.c. and XI.d.
above. If (i) the CHOPS Parties are otherwise able and willing to receive and
purchase all Dedicated Production able to be delivered by BP and (ii) BP has not
commenced deliveries of Dedicated Production from Atlantis to the Receipt Points
on or before April 1, 2005, then beginning April 1, 2005 and continuing until
such date that deliveries of Dedicated Production from Atlantis are tendered by
BP at the Receipt Points, the CHOPS Parties shall not be liable to, or obligated
to pay, BP any amounts of liquidated damages described in Article XI.c. and
XI.d. above. Notwithstanding anything in this Article XI.f. to the contrary, if
BP commences deliveries of Dedicated Production from Holstein prior to November
15, 2004 and/or April 1, 2005, and the CHOPS Parties are not able to receive and
purchase all Dedicated Production tendered by BP up to the applicable BP MDQ,
the CHOPS Parties shall be liable for and shall pay BP liquidated damages as
provided in this Article XI. The rights to receive liquidated damages and other
payments from the CHOPS Parties as described in this Article XI. shall be rights
granted only to, and exercisable by, BP (and not to permitted assignees of BP);
provided, however, that the rights to have Dedicated Production temporarily
released shall be rights exercisable by BP and its permitted assignees.
Notwithstanding anything to the contrary contained herein, the rights to have
Dedicated Production temporarily released, to receive liquidated damages and
other payments, and to receive the other rights expressly granted in this
Article XI., shall be the sole and exclusive remedies (whether under contract or
at law or equity) of BP with respect to any temporary release of Dedicated
Production or related event.

         g.       After the Cameron Highway Completion Date, BP, in its sole
discretion, shall have the right to divert all or part of the Dedicated
Production to other pipelines in lieu of delivery to Cameron Highway as provided
in this Article XI.g. In such case and except as expressly provided otherwise in
this Agreement, BP shall pay CHOPS the differential that corresponds to the
applicable BP MDQ Level as reflected in BP's notice given pursuant to Article
VI.a. for such diverted volumes of Dedicated Production. This Article XI.g.
shall not apply to Excess Production, it being understood by the Parties that BP
is not obligated in any way to deliver or sell Excess Production to Cameron
Highway. Such Excess Production may be delivered by BP to any Crude Oil pipeline
at BP's sole discretion with no restriction or penalty. Except as provided in
Article XI.b.iii. above, this Article XI.g. shall not apply to Dedicated
Production temporarily released pursuant to Article XI.a. above.

         h.       With respect to the term "Required Commencement Date", the
Parties agree that the designated date of August 15, 2004, shall automatically
be revised as follows: (i) such date shall be delayed on a day for day basis
with the duration of any Force Majeure events declared by CHOPS hereunder in
excess of the first ninety (90) days of Force Majeure events declared by CHOPS
hereunder occurring during the construction phase of Cameron Highway, and (ii)
such date shall be delayed until production actually commences from the first of
the Initial Dedicated Leases to commence production. In the event of anticipated
delays in the date of commencement of production from the first of the Initial
Dedicated Leases that BP in its reasonable discretion believes it cannot make
up, which would reasonably be expected to extend the Required Commencement Date,
BP shall promptly notify CHOPS in writing of such anticipated delays and shall
provide a revised Required Commencement Date. For purposes of this Agreement,
the Required Commencement Date shall be deemed to be such revised date as
further revised by the foregoing terms of this Article XI.h.

                                       21
<PAGE>

                                  ARTICLE XII.

                           PRICE AND PRICE ADJUSTMENTS

         a.       For each Barrel of Crude Oil delivered to the Receipt Points
(excluding pipeline loss or gain allowance described in Article XIII. below),
the CHOPS Parties shall pay BP the Base Oil Price less a differential amount per
Barrel based on the then applicable BP MDQ Level selected by BP pursuant to
Article VI.a. above as set forth in the table below (such price being referred
to as the "CHOPS PARTIES PRICE"). Such differentials shall not be escalated for
any reason.

<TABLE>
<CAPTION>
                                    DIFFERENTIAL ($)
                                    ----------------
 BP MDQ                 VOLUMES UP TO            VOLUMES IN EXCESS
 LEVEL                     BP MDQ                    OF BP MDQ
 -----                     ------                    ---------
<S>                     <C>                      <C>
Level 1                 $0.95/Barrel               $0.95/Barrel
Level 2                 $0.97/Barrel               $0.95/Barrel
Level 3                 $0.99/Barrel               $0.95/Barrel
Level 4                 $1.01/Barrel               $0.95/Barrel
Level 5                 $1.03/Barrel               $0.95/Barrel
Level 6                 $1.04/Barrel               $0.95/Barrel
Level 7                 $1.05/Barrel               $0.95/Barrel
Level 8                 $1.06/Barrel               $0.95/Barrel
Level 9                 $1.09/Barrel               $0.95/Barrel
Level 10                $1.12/Barrel               $0.95/Barrel
Level 11                $1.15/Barrel               $0.95/Barrel
Level 12                $1.18/Barrel               $0.95/Barrel
Level 13                $1.21/Barrel               $0.95/Barrel
Level 14                $1.23/Barrel               $0.95/Barrel
Level 15                $1.24/Barrel               $0.95/Barrel
</TABLE>

         b.       BP shall pay the CHOPS Parties the Base Oil Price for each
Barrel delivered at the Delivery Points and Additional Delivery Points (such
price being referred to as the "BP PRICE").

         c.       With respect to Article XII.a. and Article XII.b. above, BP,
at any time and from time to time, shall have the right to change the Base Oil
Price to a Platt's indicator for southern Green Canyon crude for deliveries in
Texas. BP shall give CHOPS sixty (60) days prior written notice of such change.
In the event BP elects to change the Base Oil Price as provided in this Article
XII.c., BP and the CHOPS Parties shall settle any existing purchase and sale
imbalance at such time pursuant to Article XXI. below.

         d.       Any Crude Oil attributable to BP's working interest in a lease
that is delivered to the Receipt Points by BP and purchased by the CHOPS Parties
on an interruptible basis shall be subject to the fee differentials contained in
this Agreement applicable to Dedicated Production for a period of ten (10) years
from the date of the initial delivery by the CHOPS Parties of Crude Oil to any
Delivery Point or Additional Delivery Point hereunder. The Parties

                                       22
<PAGE>

agree that the rights granted to BP under this Article XII.d. shall be rights
granted only to, and exercisable by, BP (and not to a permitted assignee of BP).

         e.       During the term of this Agreement, in the event that the owner
of Cameron Highway enters into a purchase and sale arrangement containing firm
maximum daily quantities with either BHP or Unocal, as working interest owners
in Mad Dog and/or Atlantis, as applicable, or amends any such agreement so that
purchase and sale differentials for firm quantities for Mad Dog and/or Atlantis,
as applicable, are lower than the corresponding differentials set forth in
Article XII.a. of this Agreement, the differentials applicable to BP under this
Agreement shall be decreased to such lowest differential for firm quantities
received by BHP and/or Unocal, for Crude Oil delivered by BP from Mad Dog and/or
Atlantis, as applicable, for a term consistent with that term applicable to BHP
and/or Unocal, as applicable, with respect to the lower differential for firm
quantities; provided, however, that the Parties understand and agree that BP,
BHP and Unocal each have different firm maximum daily quantity levels, and such
levels shall be permitted to remain different during the term of this Agreement
without triggering the terms of this provision. In the event BP and the CHOPS
Parties enter into an alternative form of agreement as described in Article IX.
of this Agreement and during the term of such agreement, either BHP or Unocal,
as working interest owners in Mad Dog and/or Atlantis, as applicable, enter into
an alternative form of agreement or amend such agreement so that the BHP and/or
Unocal agreement contains fees for firm quantities that are lower than the
corresponding fees in the agreement between BP and the CHOPS Parties, the fees
applicable to BP under this Agreement shall be decreased to such lowest fee
received by BHP and/or Unocal, for firm quantities of Crude Oil delivered by BP
from Mad Dog and/or Atlantis, as applicable, for a term consistent with that
term applicable to BHP and/or Unocal, as applicable, with respect to the lower
fee. Notwithstanding anything to the contrary contained herein, the Parties
agree that this Article XII.e. shall only be triggered by an agreement between
the owner of Cameron Highway and either BHP or Unocal, as working interest
owners in Mad Dog and Atlantis, as applicable, and not by a future agreement
between the owner of Cameron Highway and BP. At the expense of BP and upon
thirty (30) days prior written notice to the CHOPS Parties, BP shall have the
right to review and audit the books, records, and accounts of the owner of
Cameron Highway in order to verify the compliance of the CHOPS Parties with this
Article XII.e. The Parties agree that the rights granted to BP under this
Article XII.e. shall be rights granted only to, and exercisable by, BP (and not
to a permitted assignee of BP).

         f.       Notwithstanding anything contained in this Agreement to the
contrary, as a result of the requirement contained in this Agreement that, for
any volumes of Crude Oil delivered by BP (or its Affiliate designee) to the
CHOPS Parties at the Receipt Points, equivalent volumes of Crude Oil be
delivered simultaneously by the CHOPS Parties to BP (or its Affiliate designee)
at the Delivery Points and Additional Delivery Points, BP and the CHOPS Parties
hereby acknowledge and agree that subject only to normal imbalances and
adjustments for pipeline loss or gain allowance as described in Article XIII, as
a result of equivalent volumes of Crude Oil being purchased by the CHOPS Parties
from BP (or its Affiliate designee) at the Receipt Points and contemporaneously
sold by the CHOPS Parties to BP (or its Affiliate designee) at the Delivery
Points and Additional Delivery Points, the CHOPS Parties shall only be entitled
to receive the net amount equal to the BP Price for such Crude Oil less the
CHOPS Parties Price for such Crude Oil resulting from such purchase and sale,
and not the full BP Price for such Crude Oil.

                                       23
<PAGE>

                                  ARTICLE XIII.

                         PIPELINE LOSS OR GAIN ALLOWANCE

         The pipeline loss or gain allowance shall initially be a fixed
percentage of volumes at the Receipt Points or Delivery Points and Additional
Delivery Points and the accounting shall conform to standard industry practices
on similarly situated pipeline systems. The pipeline loss or gain allowance
shall be adjusted annually in order to conform to the previous year's actual
pipeline loss or gain but such pipeline loss or gain allowance shall not exceed
two-tenths (2/10) of one percent (1%) for any calendar year.

                                  ARTICLE XIV.

                              QUALITY AND PRESSURE

         a.       The quality specifications for Cameron Highway are attached to
this Agreement as Exhibit "D".

         b.       Except for reasons of Force Majeure, the maximum pressure to
be provided by the CHOPS Parties at the Initial Cameron Highway Receipt Point
shall be no greater than 150 PSIG. BP may, but is under no obligation to,
deliver Crude Oil at pressures up to 1950 PSIG.

                                   ARTICLE XV.

                                  QUALITY BANK

         a.       CHOPS shall have the right to commingle production from the
Dedicated Leases with production from other properties, pipelines and
facilities. BP acknowledges and agrees that the Crude Oil delivered by BP at the
Receipt Points will be commingled and blended with the Cameron Highway common
stream.

         b.       In order to compensate for variations in the quality of Crude
Oil delivered by BP and other parties at the Receipt Points and that delivered
by the CHOPS Parties at the Delivery Points and Additional Delivery Points, the
CHOPS Parties shall establish and administer a market based quality bank. The
operating procedures and details concerning the computation of quality bank
adjustments are set forth in Exhibit "E" attached hereto. BP, as well as all
other parties selling Crude Oil at Cameron Highway receipt points are required
to participate in such quality bank. BP hereby authorizes the CHOPS Parties to
compute adjustments among all such parties for quality differences in accordance
with the procedures set forth in Exhibit "E".

                                  ARTICLE XVI.

         RESPONSIBILITY, LIABILITY, POSSESSION AND CONTROL OF CRUDE OIL

         a.       As between BP and the CHOPS Parties, (a) BP shall control and
possess the Crude Oil delivered hereunder at all times prior to delivery to the
CHOPS Parties at the Receipt Points and after delivery by the CHOPS Parties at
the Delivery Points and Additional Delivery Points and (b) the CHOPS Parties
shall control and possess the Crude Oil at all times after delivery by BP at the
Receipt Points and until delivery by the CHOPS Parties at the Delivery Points
and Additional Delivery Points.

         b.       EXCEPT AS OTHERWISE PROVIDED IN ARTICLE XVI.e. BELOW, BP SHALL
BE RESPONSIBLE FOR AND SHALL DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD
HARMLESS THE CHOPS PARTIES GROUP FROM AND AGAINST ALL LOSSES, DAMAGES, CLAIMS,
DEMANDS AND ACTIONS AND RELATED EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES,
ARISING OUT OF THE PERFORMANCE OF THIS AGREEMENT AND OCCURRING WHILE THE CRUDE
OIL IS IN THE POSSESSION AND CONTROL OF BP, EVEN

                                       24
<PAGE>

THOUGH SUCH IS CAUSED IN WHOLE OR IN PART BY THE CHOPS PARTIES GROUP'S
NEGLIGENCE (ACTIVE, PASSIVE, JOINT, CONCURRENT OR SOLE) OR STRICT LIABILITY, OR
OTHER LEGAL FAULT OF THE CHOPS PARTIES GROUP, EXCEPT TO THE EXTENT THAT ANY SUCH
LOSS, DAMAGE, CLAIM, DEMAND OR ACTION RESULTS FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF A MEMBER OF THE CHOPS PARTIES GROUP.

         c.       EXCEPT AS OTHERWISE PROVIDED IN ARTICLE XVI.d. BELOW, THE
CHOPS PARTIES SHALL, JOINTLY AND SEVERALLY, BE RESPONSIBLE FOR AND SHALL DEFEND,
PROTECT, INDEMNIFY, RELEASE AND HOLD HARMLESS THE BP GROUP FROM AND AGAINST ALL
LOSSES, DAMAGES, CLAIMS, DEMANDS AND ACTIONS AND RELATED EXPENSES, INCLUDING
REASONABLE ATTORNEYS' FEES, ARISING OUT OF THE PERFORMANCE OF THIS AGREEMENT AND
OCCURRING WHILE THE CRUDE OIL IS IN THE POSSESSION AND CONTROL OF THE CHOPS
PARTIES, EVEN THOUGH SUCH IS CAUSED IN WHOLE OR IN PART BY THE BP GROUP'S
NEGLIGENCE (ACTIVE, PASSIVE, JOINT, CONCURRENT OR SOLE) OR STRICT LIABILITY, OR
OTHER LEGAL FAULT OF THE BP GROUP, EXCEPT TO THE EXTENT THAT ANY SUCH LOSS,
DAMAGE, CLAIM, DEMAND OR ACTION RESULTS FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF A MEMBER OF THE BP GROUP.

         d.       BP SHALL BE RESPONSIBLE FOR AND SHALL DEFEND, PROTECT,
INDEMNIFY, RELEASE AND HOLD HARMLESS THE CHOPS PARTIES GROUP FROM AND AGAINST
ALL LOSSES, DAMAGES, CLAIMS, DEMANDS AND ACTIONS AND RELATED EXPENSES, INCLUDING
REASONABLE ATTORNEYS' FEES, DIRECTLY CAUSED BY OR DIRECTLY RESULTING FROM THE
FAILURE OF THE CRUDE OIL DELIVERED BY BP TO THE CHOPS PARTIES AT THE RECEIPT
POINTS TO MEET THE QUALITY SPECIFICATIONS SET FORTH IN ARTICLE XIV.a. OF THIS
AGREEMENT.

         e.       EXCEPT AS DIRECTLY CAUSED BY OR DIRECTLY RESULTING FROM BP'S
DELIVERY TO THE CHOPS PARTIES OF CRUDE OIL AT THE RECEIPT POINTS THAT DOES NOT
MEET THE QUALITY SPECIFICATION SET FORTH IN ARTICLE XIV.a. OF THIS AGREEMENT,
THE CHOPS PARTIES SHALL BE RESPONSIBLE FOR AND SHALL DEFEND, PROTECT, INDEMNIFY,
RELEASE AND HOLD HARMLESS THE BP GROUP FROM AND AGAINST ALL LOSSES, DAMAGES,
CLAIMS, DEMANDS AND ACTIONS AND RELATED EXPENSES, INCLUDING REASONABLE
ATTORNEYS' FEES, DIRECTLY CAUSED BY OR DIRECTLY RESULTING FROM THE FAILURE OF
THE CRUDE OIL DELIVERED BY THE CHOPS PARTIES TO BP AT ANY DELIVERY POINT OR
ADDITIONAL DELIVERY POINT TO MEET THE QUALITY SPECICATIONS SET FORTH IN ARTICLE
XIV.a. OF THIS AGREEMENT.

         f.       NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, NO PARTY TO
THIS AGREEMENT SHALL BE LIABLE TO ANY OTHER PARTY HERETO FOR SPECIAL, INDIRECT,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES SUFFERED BY SUCH OTHER PARTY
RESULTING FROM OR ARISING OUT OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION,
LOSS OF USE, INCREASED COST OF OPERATIONS, LOSS OF PROFIT OR REVENUE OR BUSINESS
INTERRUPTIONS. IN FURTHERANCE OF THE FOREGOING, EACH PARTY RELEASES THE OTHER
PARTIES AND WAIVES ANY RIGHT OF RECOVERY FOR SPECIAL, INDIRECT, CONSEQUENTIAL,
PUNITIVE OR EXEMPLARY DAMAGES SUFFERED BY SUCH PARTY REGARDLESS OF WHETHER ANY
SUCH DAMAGES ARE CAUSED BY ANY OTHER PARTY'S NEGLIGENCE (AND REGARDLESS OF
WHETHER SUCH NEGLIGENCE IS SOLE, JOINT, CONCURRENT, ACTIVE, PASSIVE OR GROSS
NEGLIGENCE), FAULT OR LIABILITY WITHOUT FAULT.

         g.       NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY BUT EXCEPT AS
OTHERWISE PROVIDED IN THE CONSTRUCTION AGREEMENT, TO THE EXTENT OF ITS WORKING
INTEREST IN THE DEDICATED LEASES, BP AGREES TO BE SOLELY RESPONSIBLE AND LIABLE
FOR, AND RELEASE AND INDEMNIFY THE CHOPS PARTIES GROUP WITH RESPECT TO, ANY
LOSSES SUFFERED BY BP ARISING OUT OF, CONNECTED WITH OR IN

                                       25
<PAGE>

ANY MANNER ATTRIBUTABLE TO (OR ALLEGED TO BE RELATED TO, ARISING OUT OF,
CONNECTED WITH OR IN ANY MANNER ATTRIBUTABLE TO), DIRECTLY OR INDIRECTLY TO THE
DELAY OF PRODUCTION OR ANY DAMAGE TO THE DEDICATED LEASES OR LOSS OF ANY RELATED
RESERVES NOT PREVIOUSLY DELIVERED TO THE CAMERON HIGHWAY RESULTING FROM ANY ACTS
OR OMISSIONS BY THE CHOPS PARTIES IN CONNECTION WITH OR OTHERWISE RELATED TO
THIS AGREEMENT.

                                  ARTICLE XVII.

                                    LINE FILL

         a.       The CHOPS Parties shall provide all line fill for Cameron
Highway. The cost of such line fill Barrels shall be based on the Base Oil Price
for the month Cameron Highway line fill operations commence, less $0.95, plus or
minus (as the case may be) quality bank adjustments. The portion of the Base Oil
Price of a line fill Barrel up to $20.00 per Barrel shall be paid by the CHOPS
Parties. The portion of the Base Oil Price of a line fill Barrel in excess of
$20.00 per Barrel shall be allocated to and paid by the working interest owners
in Holstein, Mad Dog and Atlantis who enter into purchase and sale arrangements
on Cameron Highway, and all other parties who enter into purchase and sale
arrangements on Cameron Highway that are effective upon commencement of
operations of Cameron Highway, based on each party's maximum daily quantity
compared to the aggregate maximum daily quantity on Cameron Highway.

         b.       Within fifteen (15) Days after the Effective Date of this
Agreement, the Parties will meet to implement a plan for the acquisition of
linefill for Cameron Highway. Such plan may include, but not be limited to, the
evaluation of purchasing linefill from BP (or an Affiliate designee of BP), the
mechanisms for the management of the Crude Oil price risk for the Parties
related to such linefill, and the disclosure of operational parameters related
to such linefill, including the approximate timeline and approximate volumes of
linefill required by CHOPS. The Parties agree to use their respective
commercially reasonable efforts to finalize a plan for the acquisition of the
Cameron Highway linefill within forty-five (45) Days after their first meeting
as provided in the first sentence of this Article XVII.b.

                                 ARTICLE XVIII.

                                OIL PUMP FUEL GAS

         The CHOPS Parties shall provide all fuel gas for the operation of
Cameron Highway. The cost of such fuel gas shall be based on the Base Gas Price
for the then current month of fuel purchases, less $0.10 per MMBTU. The portion
of the Base Gas Price up to $5.00 per MMBTU shall be paid by the CHOPS Parties.
The portion of the Base Gas Price of an MMBTU in excess of $5.00 per MMBTU shall
be allocated to and paid by all parties selling Crude Oil at Cameron Highway
receipt points at the time such fuel gas is utilized by Cameron Highway, based
on such parties' deliveries of Crude Oil in proportion to the total deliveries
of Crude Oil at all Cameron Highway receipt points.

                                  ARTICLE XIX.

                           STATEMENTS, PAYMENTS, AUDIT

         a.       The CHOPS Parties shall render a statement to BP on or before
the fifteenth (15th) day of each calendar month setting forth the amount due BP
for purchases of Crude Oil by the CHOPS Parties hereunder and the amount due for
sales of Crude Oil hereunder during the preceding month. If actual quantities
cannot be made available through no fault of the CHOPS Parties, the CHOPS
Parties and BP may utilize a reasonable, good faith estimated quantity. As soon
as the actual quantity becomes

                                       26
<PAGE>

available, the estimate shall be adjusted and the adjustment shall be reflected
in the subsequent month's statement. The CHOPS Parties agree to prepare a
summary billing containing all amounts owed between BP and the CHOPS Parties to
each other as provided in this Agreement for the applicable production month and
the CHOPS Parties shall deliver a net statement to BP showing the net balance.

         b.       The Party with the net balance due to the other Party shall
pay such other Party the amount due in the form of immediately available federal
funds by wire transfer to the bank account specified on the net statement, or
any other mutually agreed upon method, on or before the twentieth (20th) day of
each month for transactions accruing hereunder during the preceding month.
Payments due on a Saturday or a bank holiday shall be made on the preceding
Business Day unless such holiday is a Monday, in which case payment shall be
made on the following Business Day; payments due on Sunday shall be made on the
following Monday. The paying Party must tender a timely payment even if the net
statement includes an estimated receipt or delivery volume. Any payment made
hereunder by a Party shall not prejudice the right of the paying Party to an
adjustment of any statement to which it has taken written exception, provided
that claim therefore shall have been made within sixty (60) days from the date
of discovery of such error, but, in any event, within twenty-four (24) months
from the date of the net statement. If the paying Party fails to pay any
statement in whole or in part when due, in addition to any other rights or
remedies available to the Party to whom payment is due, interest at the Stated
Rate shall accrue on unpaid amounts. "STATED RATE" means an annual rate of
interest (compounded daily) equal to the lesser of (i) the sum of the prime or
reference rate posted from time to time by JP Morgan Chase Bank (Houston, Texas
office) or its successor or a mutually agreed substitute bank plus two percent
(2%) or (ii) the maximum lawful interest rate then in effect under applicable
law.

         Notwithstanding the foregoing, if a good faith dispute arises between
BP and the CHOPS Parties concerning a net statement, the paying Party shall pay
that portion of the net statement not in dispute on or before such due date, and
upon the ultimate determination of the disputed portion of the statement, the
paying Party shall pay the remaining amount owed (if any) plus the interest
accrued thereon.

         c.       The CHOPS Parties shall maintain for not less than twenty-four
(24) months following the end of each calendar year, complete and accurate
books, records and accounts of any amounts which are charged to BP hereunder
during such calendar year, specifically including any records with respect to
Article XII.e. For a period of twenty-four (24) months from the end of each
calendar year, upon thirty (30) days' prior written notice to the CHOPS Parties,
BP, at its sole expense, shall have the right to inspect, at any reasonable time
and from time-to-time, and audit such books, records and accounts related to any
invoice or payment made during such calendar year.

                                   ARTICLE XX.

                                   MEASUREMENT

         All measurement practices must conform to the latest guidelines set out
in the current API Manual of Petroleum Measurement Standards and all applicable
API Bulletin and API Standards publications.

                                  ARTICLE XXI.

                           PURCHASE AND SALE BALANCES

         The Parties will endeavor, as far as practicable, to keep the purchase
and sale arrangement in balance on a monthly basis and respond to status
statements. It is recognized that for a given month, a Crude Oil imbalance
between the Receipt Points, on

                                       27
<PAGE>

the one hand, and the Delivery Points and Additional Delivery Points, on the
other hand, may exist. The CHOPS Parties shall calculate and track all
imbalances and include same in their monthly statement. The Parties agree to
make a good faith effort to correct any actual monthly imbalances by subsequent
nominations and deliveries of Crude Oil during the remainder of the month or the
next available full business month, including the adjustments of receipts,
deliveries and nominations. Delivery of such imbalance shall be made in the
month following the month in which the volume imbalance is determined.

                                  ARTICLE XXII.

                                   ASSIGNMENT

         a.       CHOPS Parties.

                  i.       Prior to the Cameron Highway Completion Date, (A)
         Neither CHOPS nor GTM may assign or transfer this Agreement or their
         respective obligations hereunder (in whole or in part) unless the other
         (either CHOPS or GTM) is also assigning or transferring its interest in
         this Agreement or the obligations hereunder to the same assignee in the
         same assignment transaction, and (B) any assignment or transfer of this
         Agreement or the obligations hereunder (in whole or in part) by CHOPS
         and/or GTM shall require the prior written consent of BP (which consent
         may be withheld by BP in its sole discretion). After the Cameron
         Highway Completion Date, the CHOPS Parties shall have the right to
         assign or transfer this Agreement or the obligations hereunder (in
         whole or in part) to any Financially Capable Entity without the prior
         consent of BP; provided, that any other assignment or transfer of this
         Agreement or the obligations hereunder (in whole or in part) shall
         require the prior written consent of BP, such consent not to be
         unreasonably withheld or delayed; provided further, that upon any
         permitted assignment by the CHOPS Parties, the CHOPS Parties shall be
         relieved of their obligations under this Agreement accruing after the
         effective date of such assignment to the extent, and only to the
         extent, so assigned and expressly assumed by the assignee.

                  ii.      Any assignment or transfer by the CHOPS Parties of
         this Agreement or the obligations hereunder (in whole or in part) shall
         also include the assignment or transfer of all or a portion of CHOPS'
         ownership interest in Cameron Highway (such that Cameron Highway
         remains subject to this Agreement). Further, any assignee of any or all
         of CHOPS' right, title and interest in Cameron Highway shall agree to
         be bound by the terms of this Agreement, and any such assignment shall
         be made subject to this Agreement.

                  iii.     Any assignment or transfer of this Agreement or the
         obligations hereunder (in whole or in part) by the CHOPS Parties shall
         be null and void unless such assignment or transfer is made in
         compliance with this Article XXII.a.

         b.       BP.

                  i.       Except as otherwise expressly provided in Articles
         II.b., IV.c., VI.d., VII.a., XI.f., XI.g., XII.d. and XII.e. of this
         Agreement, BP shall have the right to assign or transfer this Agreement
         or the obligations hereunder (in whole or in part) to any creditworthy
         entity or creditworthy Affiliate of BP without the prior consent of the
         CHOPS Parties; provided, that any other assignment or transfer of this
         Agreement or the obligations hereunder (in whole or in part) shall
         require the prior written consent of the CHOPS Parties, such consent
         not to be unreasonably withheld;

                                       28
<PAGE>

         provided further, that any assignment of BP's rights and obligations
         under this Agreement shall also include the assignment or transfer of
         all or a portion of BP's right, title or interest in the applicable
         Dedicated Leases. Further, any assignee of any or all of BP's right,
         title or interest in the Dedicated Leases shall agree to be bound by
         the terms of this Agreement, such that BP's Dedicated Production from
         such leases so assigned shall remain subject to this Agreement. Upon
         any permitted assignment by BP, BP shall be relieved of its obligations
         under this Agreement accruing after the effective date of such
         assignment to the extent, and only to the extent, so assigned and
         expressly assumed by the assignee. Any assignment or transfer of this
         Agreement or the obligations hereunder (in whole or in part) by BP
         shall be null and void unless such assignment or transfer is made in
         compliance with this Article XXII.b.

                  ii.      In conjunction with the assignment by BP of all or a
         portion of its working interest in the Dedicated Leases, upon any such
         assignment by BP of this Agreement or the obligations hereunder (in
         whole or in part) pursuant to Article XXII.b.i. above, the following
         shall apply:

                           (A)      Any working interest in the Dedicated Leases
                  assigned by BP, and BP's remaining working interest in the
                  Dedicated Leases, shall remain dedicated to Cameron Highway,
                  pursuant to this Agreement.

                           (B)      The purchase and sale differentials
                  contained in Article XII. above shall be applicable to (x) the
                  Crude Oil delivered by BP's assignee that is produced from the
                  Dedicated Leases and (y) the BP Production delivered by BP
                  that is produced from the Dedicated Leases, pursuant to this
                  Agreement.

                           (C)      The BP MDQ Levels set forth in Article VI.
                  above shall remain the same; provided, that following such
                  assignment by BP, BP shall receive a Barrel for Barrel credit
                  against the applicable BP MDQ for the actual number of Barrels
                  delivered to Cameron Highway that are produced from the
                  working interest in the Dedicated Leases assigned by BP. Such
                  assignee of BP shall be entitled to a maximum daily quantity
                  level on Cameron Highway commensurate with the daily volume of
                  Dedicated Production reasonably anticipated to be produced in
                  the future from the Dedicated Leases so assigned that is
                  allocated to its working interest share of such leases.

                           (D)      At such times as BP transfers or assigns all
                  or a portion of its working interest in one or more Dedicated
                  Leases, the CHOPS Parties shall execute a purchase and sale
                  agreement with BP's assignee that contains the same terms and
                  conditions as those contained in this Agreement (with the
                  exception of the non-assignable rights of BP contained in
                  Articles II.b., IV.c., VI.d., VII.a., XI.f., XI.g., XII.d. and
                  XII.e. of this Agreement) and that reflects the maximum daily
                  quantity level allocated to such assignee as set forth in
                  Article XXII.ii.C. above.

         Notwithstanding anything contained in Article XXII.b. to the contrary,
BP shall not be prohibited or restricted from assigning or transferring this
Agreement or the obligations hereunder (in whole or in part) pending negotiation
and execution of the purchase and sale agreement between the CHOPS Parties and
BP's assignee. It being the intent of the Parties that completion of such
negotiations and execution of such documentation shall not impede,

                                       29
<PAGE>

hinder or delay any consents by the CHOPS Parties required under this Agreement
with respect to an assignment or transfer thereof (in whole or in part) by BP.

         c.       This Agreement shall be binding upon and inure to the benefit
of the respective successors and assigns of the Parties.

                                 ARTICLE XXIII.

                                      TERM

         a.       This Agreement shall become effective as of the execution and
delivery thereof by each of the Parties and, except as otherwise provided
herein, shall continue in effect for the commercial life of production from the
Dedicated Leases.

         b        The provisions contained in Article XVI. (Responsibility,
Liability, Possession and Control of Crude Oil), Article XIX. (Statements,
Payment, Audit), Article XXIV. (Force Majeure) and Article XXV. (Dispute
Resolution), Article XXVI (Confidentiality), and Article XXVII. (Miscellaneous)
of this Agreement shall survive termination/expiration of this Agreement.

         c.       Except with respect to those provisions in this Agreement that
expressly provide for sole and exclusive remedies, (i) in the event of
termination of this Agreement by a Party pursuant to the terms of this
Agreement, such termination of this Agreement shall not be the sole remedy of
such Party, and (ii) nothing contained in this Agreement shall prevent any Party
from pursuing any other remedies available to such Party whether under contract
or at law or equity with respect to any other Party's breach of or failure to
fulfill its obligations under this Agreement.

                                  ARTICLE XXIV.

                                  FORCE MAJEURE

         a.       Definition. No Party shall be liable to the other Parties for
failure to perform any of its obligations under this Agreement, other than the
obligation to make payments pursuant to the Agreement, to the extent such
performance is hindered, delayed or prevented by Force Majeure. For purposes of
this Agreement, "FORCE MAJEURE" shall mean causes, conditions, events or
circumstances affecting the Parties, or downstream or upstream facilities which
are beyond the reasonable control of the Party claiming Force Majeure. The term
"Force Majeure" may include, without limitation, acts of God, wars (declared or
undeclared), hostilities, acts of terrorism, strikes, lockouts, riots, floods,
fires, storms, storm warnings, industrial disturbances, acts of the public
enemy, sabotage, blockades, insurrections, epidemics, landslides, lightning,
earthquakes, washouts, arrests and restraints of rulers and peoples, civil
disturbances, explosions, breakage or accidents to machinery or lines of pipe,
hydrate obstruction or blockages of any kind of lines of pipe, abnormal
operating conditions on a Party's facilities, repairs, improvements,
replacements or alterations to plants, lines of pipe or related facilities,
inability of a Party to obtain necessary machinery, drilling or workover rigs,
materials, permits, easements or rights-of-way on reasonable terms, freezing of
a well or delivery facility, well blowout, cratering, depletion of reserves, the
partial or entire failure of a well, the act of any court or governmental
authority prohibiting a Party from discharging its obligations under this
agreement or resulting in diminutions in service and conduct which would violate
any applicable law, all of which events must be beyond the reasonable control of
the Party claiming such event as Force Majeure. Notwithstanding anything in this
Article XXIV. to the contrary, inability of a Party to make payments when due,
be profitable or to secure funds, arrange bank loans or other financing, obtain
credit or have adequate capacity (other than for reasons of Force Majeure
declared by such

                                       30
<PAGE>

downstream facilities) on downstream facilities, and the events and activities
referenced in Article IX. and Article XI.a.ii. shall not be regarded as events
of Force Majeure.

         b.       Notice. A Party which is unable, in whole or in part, to carry
out its obligations under this Agreement due to Force Majeure shall promptly
give written notice to that effect to the other Parties stating the
circumstances underlying such Force Majeure.

         c.       Resolution. A Party claiming Force Majeure shall use
commercially reasonable efforts to remove the cause, condition, event or
circumstance of such Force Majeure, shall give written notice to the other
Parties of the termination of such Force Majeure and shall resume performance of
any suspended obligation promptly after termination of such Force Majeure.

                                  ARTICLE XXV.

                          DISPUTE RESOLUTION PROCEDURE

         a.       With respect to any controversy or claim ("DISPUTE"), whether
based on contract, tort, statute or other legal or equitable theory (including,
but not limited to, any claim of fraud, misrepresentation or fraudulent
inducement or any question of validity or effect of this Agreement including
this clause) arising out of or related to this Agreement (including any
amendments or extensions), or the breach or termination thereof, the Parties to
this Agreement shall in good faith attempt to settle such Dispute by
consultation between senior management representatives of such Parties initiated
by a Party's ("SUBMITTING PARTY") delivery of written notice of the Dispute to
the other Party (the "NON-SUBMITTING PARTY"). In the event such consultation
does not settle the Dispute within thirty (30) days after receipt of the written
notice of such Dispute by the Non-Submitting Party, the Dispute shall be
submitted to non-binding mediation. In the event the Parties are unable to
settle the Dispute through use of mediation within thirty (30) days of the
commencement of such mediation, the Dispute shall be settled by binding
arbitration in accordance with the Rules of the AAA, and this provision.

         b.       The arbitration shall be governed by the Federal Arbitration
Act, 9 U.S.C. Sections 1-16 to the exclusion of any provision of state law
inconsistent therewith, and judgment upon the award rendered by the arbitrator
may be entered by any court having jurisdiction. Any arbitration proceeding
hereunder will be conducted on a confidential basis.

         The arbitration shall be held in Houston, Texas.

         There shall be one (1) arbitrator. The Parties shall attempt jointly to
select an arbitrator. If the Parties are unable or fail to agree upon an
arbitrator within fifteen (15) days after the commencement of arbitration, one
shall be selected by AAA in accordance with its Rules. The arbitration hearing
shall occur no later than sixty (60) days after selection of the arbitrator. The
arbitrator shall determine the claims of the Parties and render a final award in
accordance with the substantive law of the State of Texas, excluding the
conflicts provisions of such law. Unless otherwise provided in this Agreement,
the arbitrator shall not have the right or the ability to terminate this
Agreement. Further, the arbitrator shall not have the right to award any
special, indirect, consequential, punitive or exemplary damages. The arbitrator
shall set forth the reasons for the award in writing within ten (10) Business
Days after the close of evidence and any post-evidence briefing and arguments
that may be agreed upon (which shall be concluded within fourteen (14) days
after close of evidence).

         Any claim by a Party shall be time-barred if the Submitting Party
commences arbitration with respect to such claim later than two (2) years after
the receipt of the written notice of the Dispute by the Non-Submitting Party.
All statutes of limitations and

                                       31
<PAGE>

defenses based upon passage of time applicable to any claim of a defending Party
(including any counterclaim or setoff) shall be tolled while the arbitration is
pending.

         The obligation to arbitrate any Dispute shall extend to the successors
and assigns of the Parties. The Parties shall use their commercially reasonable
efforts to cause the obligation to arbitrate any Dispute to extend to any
officer, director, employee, shareholder, agent, trustee, Affiliate, or
subsidiary. The terms hereof shall not limit any obligations of a Party to
defend, indemnify or hold harmless another Party against court proceedings or
other claims, losses, damages or expenses.

         The arbitrator shall order the Parties to promptly exchange copies of
all exhibits and witness lists, and, if requested by a Party, to produce other
relevant documents, to answer up to ten (10) interrogatories (including
subparts), to respond to up to ten (10) requests for admissions (which shall be
deemed admitted if not denied) and to produce for deposition and, if requested,
at the hearing all witnesses that such Party has listed and up to four (4) other
Persons within such Party's control. Any additional discovery shall only occur
by agreement of the Parties or as ordered by the arbitrator upon a finding of
good cause.

         Each Party shall bear its own costs, expenses and attorney's fees;
provided that if court proceedings to stay litigation or compel arbitration are
necessary, the Party who unsuccessfully opposes such proceedings shall pay all
reasonable associated costs, expenses, and attorney's fees in connection with
such court proceeding.

         In order to prevent irreparable harm, the arbitrator shall have the
power to grant temporary or permanent injunctive or other equitable relief.
Prior to the appointment of an arbitrator a Party may, notwithstanding any other
provision of this Agreement, seek temporary injunctive relief from any court of
competent jurisdiction; provided that the Party seeking such relief shall (if
arbitration has not already been commenced) simultaneously commence arbitration.
Such court ordered relief shall not continue more than ten (10) days after the
appointment of the arbitrator (or in any event for longer than sixty (60) days).

         If any part of this arbitration provision is held to be unenforceable,
it shall be severed and shall not affect either the duty to arbitrate or any
other part of this provision.

                                  ARTICLE XXVI.

                                 CONFIDENTIALITY

         a.       No Party shall disclose any other Party's Confidential
Information to a third party (other than such Party's and its Affiliates'
employees, lenders, agents, servants, counsel, contractors, consultants or
accountants who need to know and agree to maintain the confidentiality of the
Confidential Information in accordance with this Article XXVI.) except in order
to comply with any applicable law, order, regulation or exchange rule and except
in connection with any arbitration in accordance with Article XXV.; provided
each Party shall notify the other Parties of any proceeding of which it is aware
that may result in disclosure and use reasonable efforts to prevent or limit the
disclosure. The Parties shall be entitled to all remedies available at law or in
equity to enforce, or seek relief in connection with, this confidentiality
obligation including, without limitation, obtaining an injunction against
disclosure; provided, all monetary damages shall be limited to actual direct
damages and a breach of this section shall not give rise to a right to suspend
or terminate this transaction.

         b.       Notwithstanding any other provision in this Agreement, but
subject to the provisions of Article XXVI.c. below, a Party may disclose all
terms and conditions of this Agreement to (A) any third party where such third
party is a potential bona fide purchaser

                                       32
<PAGE>

of substantially all of a Party's assets, or of the portion of such assets
affected by this Agreement, or (B) its contractors and consultants.

         c.       If a Party discloses any or all of the terms and conditions of
this Agreement as contemplated in Article XXVI.b. above, it shall do so only
after (A) giving all other Parties not less than ten (10) days prior written
notice specifying the extent to which the disclosing Party intends to disclose
the Confidential Information and (B) entering into a confidentiality
arrangement, containing terms no less stringent than those provided herein, with
the Person to whom such Confidential Information is to be disclosed.

         d.       The terms of this Article XXVI. shall survive and Confidential
Information received from the other Party shall be kept confidential for a
period of three (3) years following termination of this Agreement.

         e.       Upon (i) the termination of this Agreement and (ii) the
request of the applicable Party, the Party receiving such request shall return
or destroy all written Confidential Information (excluding this Agreement but
including written confirmation of oral communications) provided by the
requesting Party which was stamped "Confidential," provided that a Party may
keep a copy of a document marked "Confidential" if such Party's counsel
determines that it is required to do so by law or pending the outcome of any
dispute involving the Parties under this Agreement. In the event of such
request, documents, analyses, compilations, studies or other materials prepared
by a Party or its Representatives that contain or reflect Confidential
Information from any other Party, other than computer archival and backup tapes
or archival and backup files (collectively "COMPUTER TAPES") and billing and
trading records (collectively, "OTHER RECORDS") shall be destroyed (such
destruction to be confirmed in writing by a duly authorized officer of the
returning Party) or shall be retained on a confidential basis consistent with
the terms of this Agreement. Computer Tapes and Other Records shall be kept
confidential in accordance with the terms of this Agreement. Notwithstanding the
foregoing, no Party shall be required to destroy or return documents covered by
this provision prior to the later of the expiration of applicable statutes of
limitations for actions that might arise with respect to the subject matter of
such documents or final action with respect to any legal action or arbitration
involving such documents.

         f.       The Parties agree that except as provided herein, each Party
shall maintain its right, title and interest in all proprietary data,
documentation and software furnished to the other Parties pursuant to this
Agreement, except any portion of information that was supplied by any other
Party, which information shall be returned or destroyed pursuant to paragraph
(e) above.

         g.       Except with respect to (a) information already in the public
domain (other than as a result of the breach of this Agreement) and (b) public
announcements required by applicable laws or securities exchange, market or
similar rules, public announcements concerning this Agreement and the activities
contemplated hereunder shall require the prior written consent of the other
Parties, such consent not to be unreasonably withheld. In the case of any public
announcement pursuant to Article XXVI.g.(b) above, the disclosing Party shall
provide an advance copy of the proposed public disclosure to the non-disclosing
Parties and permit the non-disclosing Parties the opportunity to reasonably
comment on such proposed disclosure.

                                       33
<PAGE>

                                 ARTICLE XXVII.

                                  MISCELLANEOUS

         a.       NOTICES. Any notice, request, demand, statement or payment
provided for in this Agreement shall be confirmed in writing and shall be made
as specified below; provided, however, that notices claiming default, or
initiating dispute resolution procedures, or similar matters, shall only be made
using overnight mail, certified mail, or courier; and provided further, that
notices of interruption and similar operating matters may be provided verbally
or by electronic mail, effective immediately and, upon request, confirmed in
writing. A notice sent by facsimile transmission shall be deemed received by the
close of the Business Day on which such notice was transmitted or such earlier
time as confirmed by the receiving Party and by overnight mail or courier shall
be deemed to have been received two (2) Business Days after it was sent or such
earlier time as is confirmed by the receiving Party unless it confirms a prior
verbal communication in which case any such notice shall be deemed received on
the day sent. The addresses of the Parties are set forth below:

                  if to GTM, addressed as follows:

                  GulfTerra Energy Partners, L.P.
                  Four Greenway Plaza
                  Houston, Texas 77046
                  Attn: President
                  (832) 676-5666 (telephone)
                  (832) 676-1710 (facsimile)

                  if to CHOPS, addressed as follows:

                  Cameron Highway Oil Pipeline Company
                  Attn: Manta Ray Gathering Company, L.L.C., Operator
                  Four Greenway Plaza
                  Houston, TX 77046
                  Attention: President
                  (832) 676-5666 (telephone)
                  (832) 676-1710 (facsimile)

                  if to BP, addressed as follows:

                  BP Exploration & Production Inc.
                  501 WestLake Park Blvd.
                  Houston, TX 77079
                  Attn: Commercial Manager, Gulf of Mexico Deepwater Projects
                  281-366-5311 (telephone)
                  281-366-7870 (facsimile)

These addresses will remain in effect for the duration of this Agreement, unless
changed by notice.

                                       34

<PAGE>

         b.       INSURANCE. All Parties shall procure and maintain or cause to
be procured and maintained all insurance in the types and amounts as required by
applicable laws, rules and regulations, to provide coverage against risks which
are the subject of this Agreement, as is either customarily carried by companies
owning, operating or conducting similar business(es), or as deemed necessary and
reasonably requested by the Parties from time to time. Any such insurance
purchased by or on behalf of any Party shall be properly endorsed to waive the
insurer's rights of subrogation under any such policies against the other
Parties (and the other Parties' insurers) when any such other Party is released
from liability or loss or damage pursuant to this Agreement. Notwithstanding
anything in this Agreement to the contrary, a Party may, in its sole discretion,
elect to self-insure with respect to such coverage so long as the Party
providing self insurance has the overall ability to assume and be responsible
financially for any and all liability hereunder.

         c.       TAXES. BP shall be responsible for all applicable production,
excise, sales, use or similar taxes and royalties on or with respect to the
production, delivery and sale, of Crude Oil to the CHOPS Parties hereunder. BP
shall also be responsible for any tax, fee, or other charge levied by any
governmental authority against BP, pursuant to any federal, State, or local act
or regulation for the purpose of creating a fund for the prevention,
containment, clean up and/or removal of spills and/or the reimbursement of
persons sustaining loss therefrom. The CHOPS Parties shall be responsible for
all applicable excise, sales, use or similar taxes on or with respect to the
delivery and sale to BP of Crude Oil hereunder. The CHOPS Parties shall also be
responsible for any tax, fee, or other charge levied by any governmental
authority against any CHOPS Party or any operator of Cameron Highway, pursuant
to any federal, State, or local act or regulation for the purpose of creating a
fund for the prevention, containment, cleanup and/or removal of spills and/or
the reimbursement of persons sustaining loss therefrom.

         d.       TIME OF THE ESSENCE. Time is of the essence with respect to
any and all obligations arising pursuant to this Agreement.

         e.       INDEPENDENT CONTRACTOR STATUS; NO PARTNERSHIP. In the event
that any Party performs any work on behalf of any other Party, such working
Party will perform in the status of an independent contractor and shall not be
deemed to be an agent or employee of the other Parties as a result of such work.
Nothing herein is intended to create a partnership, joint venture, agency or
other relationship creating fiduciary or quasi fiduciary duties or similar
duties and obligations or otherwise subject the Parties to joint and several or
vicarious liability or, except as otherwise provided in this Agreement, to
impose any duty, obligation or liability that would arise therefrom with respect
to any Party.

         f.       ENTIRETY. This Agreement (including the Exhibits hereto),
together with the Construction Agreement and the Supplementary Agreement,
constitutes the entire agreement between the Parties hereto relative to the
subject matter hereof, and replaces and supersedes all prior agreements,
conditions, understandings, representations and warranties made between the
Parties with respect to the subject matter hereof, whether written or oral,
including, without limitation, the Cameron Highway MOU and the Confidentiality
Agreement. This Agreement is intended to be construed together with the
Construction Agreement and the Supplementary Agreement and should be interpreted
so as to give full effect to this Agreement, the Construction Agreement and the
Supplementary Agreement; provided, that, in the event of any inconsistency
between this Agreement and the Construction Agreement related to the dedication,
purchase and sale of the Dedicated Production, this Agreement shall govern, and
in the event of any inconsistency between this Agreement and the Construction
Agreement related to the design, fabrication, construction, installation,
commissioning, ownership, operation or maintenance of Cameron Highway, then the
Construction Agreement shall govern, and in the event of any inconsistency

                                       35

<PAGE>

between this Agreement and the Supplementary Agreement related to the matters
covered by the Supplementary Agreement, then the Supplementary Agreement shall
govern.

         g.       NON-WAIVER. No waiver by any Party hereto of any one or more
defaults by any other Party in the performance of any of the provisions of this
Agreement shall be construed as a waiver of any other default or defaults
whether of a like kind or different nature. Any delay, less than any applicable
statutory period of limitations, in asserting or enforcing any rights under this
Agreement, shall not be deemed a waiver of such rights. Failure of any Party to
enforce any provision of this Agreement or to require performance by any other
Party of any of the provisions hereof shall not be construed to waive such
provision, or to affect the validity of this Agreement or any part thereof, or
the right of any Party thereafter to enforce each and every provision hereof.

         h.       AMENDMENTS. This Agreement shall not be amended or modified
except by a written document executed by all of the Parties.

         i.       SEVERABILITY. If any term or other provision of this Agreement
is determined to be invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other terms and conditions of this Agreement shall
nevertheless remain in full force and effect.

         j.       NO ELECTRONIC MEANS. The Parties agree not to conduct the
transactions contemplated by this Agreement by electronic means, except as
specifically set forth in Article XXVII.a.

         k.       HEADINGS. The headings used for the Articles and Sections
herein are for convenience and reference purposes only and shall in no way
affect the meaning or interpretation of the provisions of this Agreement.

         l.       REPRESENTATIONS. As of the Effective Date, each Party
declares, warrants, and represents on behalf of itself (a) that it has
contributed to the drafting of this Agreement or has had it reviewed by legal
counsel before executing it, (b) that this Agreement has been purposefully drawn
and correctly reflects such Party's understanding of the transaction that it
contemplates as of the Effective Date hereof, (c) that this Agreement has been
validly executed and delivered; (d) that this Agreement has been duly authorized
by all action necessary for the authorization thereof, (e) this Agreement
constitutes a binding and enforceable obligation of the Party, enforceable in
accordance with its terms, and (f) that the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
will not (i) violate, conflict with, or result in a breach of any provisions of
(or with notice or lapse of time or both would constitute such a breach of) any
agreement, arrangement or other instrument or obligation to which such Party is
a party or by which any its assets are bound, or (ii) violate any order, writ,
injunction, decree, statute, rule or regulation of any court, commission,
governmental body, regulatory agency, authority, political subdivision or
tribunal to which such Party is subject or by which it is bound.

         m.       GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO
ANY CONFLICT OF LAW PRINCIPLES WHICH, IF APPLIED, MIGHT PERMIT OR REQUIRE THE
APPLICATION OF THE LAW OF ANOTHER JURISDICTION, AND THE PARTIES AGREE THAT THE
PLACE OF EXECUTION OF THIS AGREEMENT IS HARRIS COUNTY, TEXAS AND THAT VENUE WITH
RESPECT

                                       36

<PAGE>

TO ANY DISPUTE ARISING HEREUNDER OR IN CONNECTION HEREWITH SHALL LIE IN HOUSTON,
HARRIS COUNTY, TEXAS.

         n.       LAWS. It is understood by the Parties that this Agreement and
performance hereunder is subject to all present and future valid and applicable
laws, orders, statutes, and regulations of courts or regulatory bodies (state or
federal) having jurisdiction over the Parties.

         o.       AUTHORIZATIONS. The Parties hereto represent that they have
all requisite corporate authorizations necessary or proper to consummate this
Agreement.

         p.       COUNTERPARTS. This Agreement may be executed by signing the
original or a counterpart thereof. If this Agreement is executed in
counterparts, all counterparts taken together shall have the same effect as if
all of the Parties had signed the same instrument.

         q.       NO THIRD PARTY BENEFICIARIES. This Agreement is for the sole
and exclusive benefit of the Parties hereto. Except as expressly provided herein
to the contrary, nothing herein is intended to benefit any other Person not a
Party hereto, and no such Person shall have any legal or equitable right, remedy
or claim under this Agreement.

         r.       EXHIBITS AND SCHEDULES. All exhibits, schedules and the like
contained herein or attached hereto are integrally related to this Agreement and
are hereby made a part of this Agreement for all purposes. To the extent of any
ambiguity, inconsistency or conflict between the body of this Agreement and any
of the exhibits, schedules and the like attached hereto, the terms of the body
of this Agreement shall prevail.

         s.       FURTHER ASSURANCES. Subject to the terms and conditions set
forth in this Agreement, each of the Parties agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or to cause to be
done, all things necessary, proper or advisable under applicable laws to
consummate and make effective the transactions contemplated by this Agreement.
In case, at any time after the execution of this Agreement, any further action
is necessary or desirable to carry out its purpose, the proper members, officers
or directors of the Parties shall take or cause to be taken all such necessary
actions.

         t.       INTERPRETATION. Whenever the context requires: the gender of
all words used in this Agreement includes the masculine, feminine, and neuter; a
reference to any Person or entity includes its permitted successors and assigns;
the words "hereof," "herein," "hereto," "hereunder," and words of similar import
when used in this Agreement will refer to such applicable agreement as a whole
and not to any particular provisions of such agreement; articles and other
titles or headings are for convenience only and neither limit nor amplify the
provisions of the agreement itself, and all references herein to articles,
sections or subdivisions thereof will refer to the corresponding article,
section or subdivision thereof of this Agreement unless specific reference is
made to such articles, sections or subdivisions of another document or
instrument; any reference to "includes" or "including" will mean "includes
without limitation" or "including but not limited to," respectively; and any
references in the singular will include references in the plural and vice versa.

         u.       RECOUPMENT AND SETOFF. In addition to and not in lieu of any
other rights and remedies available under contract, at law, in equity or
otherwise, this Agreement constitutes a grant by each Party to the other Parties
of a contractual right of

                                       37

<PAGE>

(i) recoupment and (ii) setoff, and each Party shall be entitled to exercise its
respective rights of (i) recoupment and (ii) setoff, without notice to, or
consent of, the other Parties.

         v.       JOINT, SEVERAL AND PRIMARY OBLIGATIONS OF THE CHOPS PARTIES.
As consideration for BP's entering into this Agreement, and further expressly
acknowledging BP's reliance on the undertakings set forth in this Article
XXVII.v., each of CHOPS and GTM hereby agrees and acknowledges that all of the
obligations and liabilities of the CHOPS Parties under this Agreement
(including, without limitation, obligations and liabilities relating to or
arising in connection with representations, warranties, covenants, the payment
of money, performance or otherwise) are the joint and several, primary and
direct obligations and liabilities of each of CHOPS and GTM, and the CHOPS
Parties agree that each of them is jointly, severally and fully and primarily
responsible and liable for all such obligations and liabilities. In addition,
without limiting the foregoing, each of CHOPS and GTM agrees that its obligation
for the obligations and liabilities of the CHOPS Parties contained in this
Agreement shall include the obligation of such CHOPS Party to cause the other
CHOPS Party to perform such obligations and liabilities of the CHOPS Parties
under this Agreement. For example (and without limiting anything contained
herein), the CHOPS Parties obligation in the first sentence of Article II.a. to
"receive and purchase, on a Firm Basis, all Dedicated Production delivered by
BP, or an Affiliate designee of BP, at the Receipt Points" shall include (i) the
joint and several (together with CHOPS), primary obligation of GTM to, and to
cause CHOPS to, receive and purchase, and (ii) the joint and several (together
with GTM), primary obligation of CHOPS to, and to cause GTM to, receive and
purchase, in each case, in accordance with the terms of such sentence.

         The joint and several, primary and direct obligations and liabilities
of each of CHOPS and GTM under this Agreement shall not be subject to any
reduction, limitation, impairment or termination for any claim of waiver,
release, surrender, alteration or compromise that may be granted or otherwise
provided to one or more of the other CHOPS Parties but not to it, and shall not
be subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
obligations of the other CHOPS Parties or otherwise.

         Upon payment or performance by any CHOPS Party of any amounts,
obligations or liabilities owed to BP under this Agreement, all rights of the
paying or performing CHOPS Party against the other CHOPS Party arising as a
result thereof by way of right of subrogation or otherwise shall in all respects
be subordinated and junior in right of payment and performance to the prior
indefeasible payment and performance in full of all obligations of each of the
CHOPS Parties to BP.

                                       38

<PAGE>

         IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
signed by their respective duly authorized representatives effective as of the
Effective Date.

GULFTERRA ENERGY PARTNERS, L.P.                 BP EXPLORATION & PRODUCTION INC.

By:/s/ James Lytal                              By:/s/ O. Kirk Wardlaw
   ----------------------------------              ---------------------------
Name: James Lytal                               Name: O. Kirk Wardlaw
Title: President                                Title: Attorney-In-Fact
Date: June 23, 2003                             Date: June 23, 2003

CAMERON HIGHWAY OIL PIPELINE COMPANY

By:/s/ James Lytal
   ----------------------------------
Name: James Lytal
Title: President
Date: June 23, 2003

                                       39

<PAGE>

                                   EXHIBIT "A"

                             CAMERON HIGHWAY DIAGRAM

                                 (see attached)

                                      A-1

<PAGE>

                                   EXHIBIT "B"

                            INITIAL DEDICATED LEASES

<TABLE>
<CAPTION>
 Field                Leases           BP Working Interest
 -----                ------           -------------------
<S>               <C>                  <C>
Atlantis          Green Canyon 698              56  %
                  Green Canyon 699              56  %
                  Green Canyon 700              56  %
                  Green Canyon 701              56  %
                  Green Canyon 742              56  %
                  Green Canyon 743              56  %
                  Green Canyon 744              56  %

Holstein          Green Canyon 644              50  %
                  Green Canyon 645              50  %

Mad Dog           Green Canyon 738              60.5%
                  Green Canyon 739              60.5%
                  Green Canyon 781              60.5%
                  Green Canyon 782              60.5%
                  Green Canyon 783              60.5%
                  Green Canyon 825              60.5%
                  Green Canyon 826              60.5%
                  Green Canyon 827              60.5%
</TABLE>

                                      B-1

<PAGE>

                                   EXHIBIT "C"

                             MEMORANDUM OF AGREEMENT

                           Memorandum of Agreement and

                   Covenant Running With The Dedicated Leases

         This Memorandum of Agreement and Covenant Running With the Dedicated
Leases ("Memorandum") is effective as of the ______ day of ______, 2003, and is
entered into by and among BP Exploration & Production Inc., a Delaware
corporation ("BP"), Cameron Highway Oil Pipeline Company, A Delaware general
partnership ("CHOPS"), and GulfTerra Energy Partners, L.P., a Delaware limited
partnership ("GTM"). BP, CHOPS and GTM are individually referred to herein as a
"Party" and collectively as "Parties."

         1.       The Parties hereto have entered into a Purchase and Sale
Agreement providing for among other things, the commitment and dedication by BP
of its crude petroleum produced from, or attributable to, certain leases in the
Green Canyon Area, Offshore Louisiana, Gulf of Mexico (the "Leases") to a
pipeline (the "Pipeline") to be constructed and installed by GTM and CHOPS that
will extend from Ship Shoal Block 332, Gulf of Mexico, OCS Region to various
delivery points specified in the Purchase and Sale Agreement. Such Leases are
set forth in Attachment "1", hereto.

         2.       The purpose of this Memorandum is to place third parties on
notice that BP's interest in the Leases is committed and dedicated to the
Pipeline for delivery to such various delivery points. Any purported assignment
of the Leases is restricted by the terms of the Purchase and Sale Agreement.
Should any person or firm desire additional information regarding the Purchase
and Sale Agreement, said person or firm should contact (a) BP Exploration &
Production Inc. (Attention: Commercial Manager, Gulf of Mexico Deepwater
Projects), 501 WestLake Park Boulevard, Houston, TX 77079 and (b) Cameron
Highway Oil Pipeline Company (Attention: President), Four Greenway Plaza,
Houston, TX 77046.

         3.       The Parties acknowledge and agree that (i) this Agreement has
been executed in addition to the Purchase and Sale Agreement and not as a
replacement, supplement or other amendment to any of the terms and conditions in
the Purchase and Sale Agreement and (ii) the terms and conditions contained in
the Purchase and Sale Agreement will govern and control any conflicts,
ambiguities or inconsistencies between the terms and conditions of this
Agreement and the Purchase and Sale Agreement.

         4.       This Memorandum shall be binding upon and shall inure to the
benefit of the Parties hereto, and to their respective successors and permitted
assigns.

WITNESSES:                                  BP EXPLORATION & PRODUCTION INC.

____________________________________        By:_________________________________

____________________________________        Name:_______________________________

____________________________________        Title:______________________________

____________________________________        Date:_______________________________

                                      C-1

<PAGE>

WITNESSES:                                  GULFTERRA ENERGY PARTNERS, L.P.

____________________________________        By:_________________________________

____________________________________        Name:_______________________________

____________________________________        Title:______________________________

____________________________________        Date:_______________________________

WITNESSES:                                  CAMERON HIGHWAY OIL PIPELINE COMPANY

____________________________________        By:_________________________________

____________________________________        Name:_______________________________

____________________________________        Title:______________________________

____________________________________        Date:_______________________________

STATE OF TEXAS

COUNTY OF HARRIS

         On this _______ day of _______, 2003, before me personally appeared
_________, to me personally known, who, being by me duly sworn, did say that he
is the ________of BP Exploration & Production Inc. and said appearer
acknowledged to me, Notary, in the presence of the undersigned competent
witnesses, that the foregoing instrument was signed on behalf of said
corporation by authority of its Board of Directors, and said appearer
acknowledged said instrument to be the free act and deed of said corporation.

         IN WITNESS WHEREOF, said appearer has executed these presents together
with me, Notary, and the undersigned competent witnesses, in the County and
State aforesaid, on the date first above written.

WITNESSES:

____________________________________

                                            ____________________________________

____________________________________

                      ____________________________________
                                  Notary Public

                                      C-2

<PAGE>



STATE OF TEXAS

COUNTY OF HARRIS

         On this ______ day of ________, 2003, before me personally appeared
__________, to me personally known, who, being by me duly sworn, did say that he
is the ________of GulfTerra Energy Partners, L.P. and said appearer acknowledged
to me, Notary, in the presence of the undersigned competent witnesses, that the
foregoing instrument was signed on behalf of said partnership by authority of
its partners, and said appearer acknowledged said instrument to be the free act
and deed of said corporation.

         IN WITNESS WHEREOF, said appearer has executed these presents together
with me, Notary, and the undersigned competent witnesses, in the County and
State aforesaid, on the date first above written.

WITNESSES:
____________________________________

                                            ____________________________________

____________________________________

                      ____________________________________
                                  Notary Public

STATE OF TEXAS

COUNTY OF HARRIS

         On this _____ day of ________, 2003, before me personally appeared
_________, to me personally known, who, being by me duly sworn, did say that he
is the _________of Cameron Highway Oil Pipeline Company and said appearer
acknowledged to me, Notary, in the presence of the undersigned competent
witnesses, that the foregoing instrument was signed on behalf of said
partnership by authority of its partners, and said appearer acknowledged said
instrument to be the free act and deed of said corporation.

         IN WITNESS WHEREOF, said appearer has executed these presents together
with me, Notary, and the undersigned competent witnesses, in the County and
State aforesaid, on the date first above written.

WITNESSES:

____________________________________

                                            ____________________________________

____________________________________

                      ____________________________________
                                  Notary Public

                                      C-3

<PAGE>

                                  ATTACHMENT 1

                                       TO

                                   MEMORANDUM

The Leases consist of the following lands and leases located offshore Louisiana:

<TABLE>
<CAPTION>
 Field                 Blocks                  Leases
 -----                 ------                  ------
<S>               <C>                       <C>
Atlantis          Green Canyon 698          OCS-G 15603
                  Green Canyon 699          OCS-G 15604
                  Green Canyon 700          OCS-G 15605
                  Green Canyon 701          OCS-G 16779
                  Green Canyon 742          OCS-G 15606
                  Green Canyon 743          OCS-G 15607
                  Green Canyon 744          OCS-G 15608

Holstein          Green Canyon 644          OCS-G 11080
                  Green Canyon 645          OCS-G 11081

Mad Dog           Green Canyon 738          OCS-G 16786
                  Green Canyon 739          OCS-G 16787
                  Green Canyon 781          OCS-G 15609
                  Green Canyon 782          OCS-G 15610
                  Green Canyon 783          OCS-G 15611
                  Green Canyon 825          OCS-G 9981
                  Green Canyon 826          OCS-G 9982
                  Green Canyon 827          OCS-G 16810
</TABLE>

                                      C-4

<PAGE>

                                   EXHIBIT "D"

                     CAMERON HIGHWAY QUALITY SPECIFICATIONS

1.       Crude Oil delivered to Cameron Highway will conform to the
specifications and operating conditions required by other refineries, terminals
or pipelines downstream of the Delivery Points and Additional Delivery Points
ultimately receiving the Crude Oil (the "Downstream Facilities") and will meet
the following specifications except if the specifications of the Downstream
Facilities should be more stringent:

         (a)      Viscosity, Gravity, and Pour Point. The Crude Oil must be good
         and merchantable Crude Oil of such viscosity, gravity and pour point
         such that it will be readily susceptible for movement through Cameron
         Highway, and subject to the Cameron Highway quality bank, will not
         materially affect or damage the quality of other shipments or cause
         disadvantage to other parties with a purchase and sale arrangement with
         CHOPS. No Crude Oil will be accepted for purchase which has a pour
         point greater than 40 degrees Fahrenheit or viscosity greater than 400
         Saybolt Universal Seconds at 60 degrees Fahrenheit unless under terms
         and conditions acceptable to CHOPS.

         (b)      Basic Sediment, Water and Other Impurities. The Crude Oil will
         not have a content consisting of more than one percent (1%) of basic
         sediment, water or other impurities. CHOPS reserves the right to reject
         Crude Oil containing more than one percent (1%) of basic sediment,
         water, and other impurities, except that sediment and water limitations
         of a connecting carrier may be imposed upon CHOPS when such limits are
         less than that of CHOPS, in which case the limitations of the
         connecting carrier will be applied.

         (c)      Vapor Pressure. The Crude Oil shall not have a Reid Vapor
         Pressure (RVP) of more than 8.6 pounds per square inch. During the
         months of October through March, Crude Oil with a maximum RVP of 9.6
         will be accepted. Crude Oil with a maximum RVP above 9.6 may be
         accepted at the discretion of CHOPS.

         (d)      Refined. The Crude Oil will not have been partially refined or
         altered in any way so as to impact its value.

         (e)      Contamination. The Crude Oil will not have been contaminated
         by the presence of any chemicals, chlorinated and/or oxygenated
         hydrocarbons, arsenic, or greater than trace amounts of other metals;
         provided, however, that this Section 1(e) will not prohibit use of
         corrosion/paraffin inhibitors, asphaltene dispersants or demulsifiers
         in platform or pipeline operations. If CHOPS pre-approves the
         introduction of methanol, BP is responsible for notifying CHOPS as soon
         as reasonably practicable concerning the initiation and duration of
         methanol use by BP, as well as anticipated concentration levels.
         Receipt of any methanol-treated Crude Oil may be suspended at CHOPS'
         sole discretion if the methanol dosage is not below levels that would
         adversely affect Crude Oil value and end-user operations.

2.       If any Crude Oil delivered and sold by BP to CHOPS fails at any time to
conform to the applicable specifications above, then, subject to Section 5(a)
below, CHOPS will immediately have the right to discontinue purchasing such
non-conforming Crude Oil so long as such Crude Oil continues to be
non-conforming. In any event, BP will undertake commercially reasonable measures
to eliminate the cause of such non-conformance. BP will be held responsible for
any disposal required and/or expenses incurred in CHOPS' handling of such
non-conforming Crude Oil.

                                      D-1

<PAGE>

3.       Assay. Upon initial start up of production, a laboratory analysis of
Crude Oil will be submitted to CHOPS by BP and will include API gravity, Reid
vapor pressure, pour point, sediment and water content, sulfur content,
viscosity at 60 and 100 degrees Fahrenheit, and other characteristics as may be
required by CHOPS.

4.       CHOPS reserves the right to periodically sample and test the quality of
the Crude Oil delivered by BP at any Receipt Points. CHOPS shall be responsible
for all costs attributable to such periodic sampling and testing.

5.       To the extent CHOPS must discontinue redelivery of Cameron Highway
common stream Crude Oil to one or more of the Delivery Points and Additional
Delivery Points as a result of BP's non-conformance hereunder, BP and the CHOPS
Parties agree to the following:

         (a)      If BP is the sole party nominating deliveries to such Delivery
         Points and Additional Delivery Points that is not accepting the common
         stream, CHOPS will continue to accept and redeliver BP's Crude Oil to
         the other Delivery Points and Additional Delivery Points that are
         accepting the common stream until such time as CHOPS is required to
         again deliver Crude Oil to any Delivery Point or Additional Delivery
         Point that is not accepting the common stream by another party
         delivering conforming Crude Oil. It being the intent that CHOPS will
         continue to accept and redeliver BP's Crude Oil so long as redeliveries
         can be made to any Delivery Point and any Additional Delivery Point and
         CHOPS does not have to curtail deliveries to any Delivery Point or
         Additional Delivery Point due to BP's non-conformance.

         (b)      If third-party conforming Crude Oil is nominated to any
         Delivery Point or Additional Delivery Point that is not accepting the
         common stream, CHOPS will immediately have the right to discontinue
         purchasing Crude Oil so long as such Crude Oil continues to be
         non-conforming. In any event, BP will undertake commercially reasonable
         measures to eliminate the cause of such non-conformance.

                                      D-2

<PAGE>

                                   EXHIBIT "E"

           QUALITY BANK RULES FOR CAMERON HIGHWAY OIL PIPELINE SYSTEM
                            MARKET BASED QUALITY BANK

                                   SECTION I.

GENERAL

1.       The purpose of this Market Based Quality Bank ("Quality Bank") is to
         mitigate damage and/or improvement to producers whose crude oil is
         purchased by CHOPS and commingled in Cameron Highway. Differences in
         the quality of all the producers' crude oil that are mixed within the
         common crude oil stream in Cameron Highway either increase or decrease
         the quality of the common crude oil stream. This Quality Bank charges
         the producer or pays the producer depending on the quality of the
         common crude oil stream and the quality of the producer's crude oil.
         Each producer will be required, as a condition of tendering, to
         participate in this Quality Bank.

2.       API gravity and sulfur content are the quality parameters used to
         determine the relative value of each producer's receipt stream.
         Adjustment factors for gravity and sulfur are based upon a market price
         spread between Louisiana Light Sweet ("LLS") and Mars (see Section III-
         Current Month Gravity and Sulfur Adjustment Factors). The price spread
         is derived using Platt's spot price quote, high/low mean, posted
         average trade month (the 26th of the month two months prior to delivery
         through the 25th of the month one month prior to delivery, Business
         Days only)("Trade Month").

3.       Should a Platt's Quote for Cameron Highway common stream be
         established, it will replace Mars in the Quality Bank calculations,
         subject to the provisions of Section VI. -Periodic Review.

4.       Any material changes to the Quality Bank, including proposed changes
         from a Periodic Review, must be approved by greater than a seventy
         percent (70%) vote of the producers then participating in this Quality
         Bank in order to effect the change. Each five hundred (500) Barrels of
         monthly average production (based on the monthly average of the twelve
         month period preceding the month the vote is taken) will have one vote.

         Any group of producers with seventy percent (70%) of the volume
         purchased by CHOPS and delivered to Cameron Highway may make a proposal
         to CHOPS providing for an alternate method and an explanation of why
         such alternate method provides a more accurate, actual market price to
         quality relationship than the then existing Quality Bank. CHOPS will
         retain the right to reject such proposal if CHOPS believes, in it's
         sole discretion after using good faith, reasonable efforts to analyze
         such proposal, that the proposal does not uphold the intent of the
         Quality Bank as stated in Paragraph 1 above in this Section I.

         Notwithstanding any of the above, CHOPS may, at it's sole discretion,
         change any of the provisions of this Exhibit as necessary to comply
         with any governmental requirement, order or mandate and such change
         will be binding upon BP and all participants upon proper notice
         thereof.

                                      E-1

<PAGE>

                                   SECTION II.

GRAVITY AND SULFUR WEIGHTING FACTORS

1.       Gravity and Sulfur weighting factors are used in establishing a price
         and quality relationship between different crude oil streams.

2.       The weighting factors, to be used in calculating the GAF and SAF as
         defined in Section III, are as follows.

                        Gravity Weighting ("GW") = 31.5%

                         Sulfur Weighting ("SW") = 44.3%

                                  SECTION III.

CURRENT MONTH GRAVITY AND SULFUR ADJUSTMENT FACTORS

1.       The applicable delivery month Gravity Adjustment Factor ("GAF") and the
         applicable delivery month Sulfur Adjustment Factor ("SAF") are
         calculated using the following equations:

                           GAF = (GW x a) divided by b

                           SAF = (SW x a) divided by c

         Where Gravity and Sulfur Weighting factors (GW and SW) are expressed as
         decimals and,

         "a"  =   The price differential between the LLS Platt's Quote and the
                  Mars Platt's Quote for the Trade Month.

         "b"  =   The delivery month Gravity difference between LLS and Mars
                  based on the gravity of LLS crude oil at the point of sale
                  where "a" is determined, currently Capline's LLS receipt
                  stream at St. James, Louisiana as calculated by Gravcap, minus
                  the weighted average gravity of Mars at the point of sale
                  where "a" is determined, currently Shell's composite gravity
                  for Mars deliveries at Clovelly, LA.

         "c"  =   The delivery month Sulfur difference between LLS and Mars
                  based on the weighted average of sulfur of LLS crude oil at
                  the point of sale where "a" is determined, currently Capline's
                  LLS receipt stream at St. James, Louisiana as calculated by
                  Gravcap, minus the weighted average sulfur of Mars at the
                  point of sale where "a" is determined, currently Shell's
                  composite sulfur for Mars deliveries at Clovelly, LA.

                                   SECTION IV.

CALCULATION OF QUALITY BANK CREDIT/DEBIT

                                      E-2

<PAGE>

Quality Bank credit/debit adjustments between producers are computed as follows:

1.       The applicable receipt Barrels and gravities are the delivery month
         actual net Barrels at sixty (60) degrees Fahrenheit (with no deductions
         for loss allowance) and the gravities recorded by CHOPS at the
         measurement facility where it customarily records gravities and
         quantities.

2.       No compensation is given for gravity between 37 and 45 degrees API. For
         gravities of 45 API degrees and above, a "bend-over" disincentive is
         applied.

3.       GRAVITY CREDIT/DEBIT CALCULATION

         To compute the gravity credit/debit to be paid/received the following
equation is used:

           Gravity credit/debit = ((PG - WAG) multiplied by GAF) multiplied by T

         Where,

                  "PG"    =         BP's gravity based on the custody transfer
                                    tickets, subject to the Gravity Limits set
                                    out below.

                  "WAG"   =         The weighted average receipt gravity of the
                                    common stream for a given delivery month.
                                    For Quality Bank calculation purposes, WAG
                                    is obtained by taking the sum of the
                                    products obtained by multiplying the gravity
                                    of each producer's point of receipt volume
                                    based on the custody transfer tickets
                                    (subject to the Gravity Limits set out
                                    below) by the number of net Barrels in each
                                    producer's receipt point volume, and divide
                                    the total resultant by the total net Barrels
                                    received during the given delivery month.

                  "T"     =         The total current month volume delivered to
                                    CHOPS by BP based on the custody transfer
                                    tickets.

                  Gravity Limits:   When actual gravity exceeds 37 but is less
                                    than 45 degrees API, a Deemed Gravity of 37
                                    degrees API is used in determining PG and
                                    WAG. When actual gravity is equal to or
                                    greater than 45 degrees API, a Deemed
                                    Gravity is used that is calculated by the
                                    formula: Deemed Gravity = 80 minus actual
                                    API gravity. In all other instances (gravity
                                    less than or equal to 37 API) the actual API
                                    gravity is used.

4.       SULFUR CREDIT/DEBIT CALCULATION

         To compute the sulfur credit/debit to be paid/received the following
equation is used:

      Sulfur credit/debit = ((WAS - PS) multiplied by SAF) multiplied by T

         Where,

                                      E-3

<PAGE>

                  "PS"    =         BP's Sulfur based on the custody transfer
                                    tickets.

                  "WAS"   =         The weighted average receipt sulfur of the
                                    common stream for a given delivery month.
                                    WAS is obtained by taking the sum of the
                                    products obtained by multiplying the sulfur
                                    percentage (by weight) of each producer's
                                    point of receipt volume based on the custody
                                    transfer tickets by the number of net
                                    Barrels in each producer's point of receipt,
                                    and divide the total resultant by the total
                                    net Barrels received during the given
                                    delivery month. Since there will be no
                                    minimum or maximum sulfur percentage
                                    limitations, this weighted average sulfur
                                    percentage calculation will be used for
                                    Quality Bank adjustment purposes.

                  "T"     =         The total current month volume delivered to
                                    CHOPS by BP based on the custody transfer
                                    tickets.

5.       To obtain the total Quality Bank Credit/Debit add the Gravity and
         Sulfur credit/debit. Sample calculations are attached hereto as Table
         1.

6.       These calculations will be made for each delivery month and the
         algebraic sum of all the producers' credit/debit for Cameron Highway
         will be zero (+/- fifty Dollars). If a producer has a net debit balance
         in combining the two adjustments made above, the balance due will be
         remitted to CHOPS within fifteen (15) days from producer's receipt of
         statements of such debit. If a producer has a credit, CHOPS will remit
         the amount thereof within 5 days of receipt of all the payments due
         from those producers owing a debit.

                                   SECTION V.

       ADMINISTRATIVE

1.       Capitalized terms, including "GTM," "CHOPS" and "BP," have the meanings
         defined in the Purchase and Sale Agreement to which this Exhibit is
         attached, unless the context dictates otherwise. Similarly, the term
         "producer" means an individual producer on Cameron Highway
         (collectively "producers").

2.       CHOPS will include requirements for participation in the Quality Bank
         and procedures for calculating adjustments between producers in all
         contracts to be entered into with producers covering the purchase and
         sale of crude oil on Cameron Highway.

3.       CHOPS will administer the Quality Bank and will perform the
         clearinghouse business of calculating and effecting adjustments, by a
         process of debits and credits and interchange of funds, among the
         producers of crude oil connected to Cameron Highway. CHOPS may
         subcontract any or all of the work associated with the Quality Bank,
         but by doing so CHOPS will not be relieved of any of its obligations
         hereunder.

                                      E-4

<PAGE>

4.       CHOPS will perform necessary calculations and prepare appropriate
         statements for each producer as soon as the gravity, sulfur and price
         data is available.

5.       CHOPS will be responsible, at its sole cost and expense, for
         determining and/or securing data on all gravities, sulfur contents, net
         Barrels of the crude oil received into Cameron Highway, and Platt's
         Quote prices. The gravities will be determined from the custody
         transfer receipt tickets written by CHOPS. The sulfur content will be
         determined based on samples secured by CHOPS from the composite sampler
         at the time the custody transfer receipt tickets are written. The
         gravity will be determined by ASTM 287 (Standard Test Method for API
         gravity of Crude Petroleum and Petroleum Products) and the sulfur
         content pursuant to ASTM D-2622 (ASTM D-4294 is acceptable if ASTM
         D-2622 is not available) (Standard Test Method for Sulfur in Petroleum
         Products).

6.       If any producer fails to perform any Quality Bank payment obligation as
         established herein, CHOPS will make equivalent payment into the Quality
         Bank within five (5) Days of such failure, to enable distribution of
         funds to producers due credits. CHOPS will, however, have the right to
         withhold payment of or offset against, any moneys due such failing
         producer pursuant to the Purchase and Sale Agreement between the
         producer and CHOPS to recover or otherwise fulfill any and all of
         producer's Quality Bank payment obligations.

7.       CHOPS agrees that all transfers of interest of Cameron Highway will be
         made subject to this Agreement and will require the transferee to
         assume, as to such interest acquired, all of the obligations of CHOPS
         under this Agreement which accrue on or after the effective date of the
         transfer.

8.       Notwithstanding anything to the contrary set forth in Article XVI of
         the Agreement, inasmuch as CHOPS has agreed to operate the Quality Bank
         without profit, and except to the extent resulting from the gross
         negligence or willful misconduct of CHOPS, BP hereby fully releases and
         agrees to indemnify CHOPS from all claims, actions and demands for loss
         by, or damage to, CHOPS or BP arising out of, in connection with, or as
         an incident to any act or omission, including any negligence, of CHOPS
         or its employees, agents or contractors, in the administration of the
         Quality Bank. CHOPS will have no liability to BP or to any producers or
         to any third person in respect to obligations or liabilities incurred
         by any such producers or third persons in connection with their
         separate business unrelated to Cameron Highway, and obligations to BP
         under this Agreement are several and not joint or in solido to any
         producer or any third person. BP will have no liability to CHOPS or to
         any producers or to any third person in respect to obligations or
         liabilities incurred by any such producers or third persons in
         connection with their separate business unrelated to Cameron Highway,
         and obligations to CHOPS under this Agreement are several and not joint
         or in solido to any producer or any third person.

9.       Any individual producer, or his representative, will, at any time
         during normal business hours and upon reasonable notice, have access to
         the books, accounts and records of CHOPS for the purpose of verifying
         that CHOPS is operating the process of adjustments and determining
         values in accordance with the provisions of this Quality Bank. Samples
         used for Quality Bank calculations will be retained by CHOPS for 90
         days following the month in which the samples were used for Quality
         Bank adjustments. Cost of such individual audits will be borne by the
         producer(s) requesting the audit.

                                      E-5

<PAGE>

                                   SECTION VI.

PERIODIC REVIEW

1.       The Quality Bank will be periodically reviewed and updated in
         accordance with the following:

-    Immediately prior to the date when Cameron Highway common stream replaces
     Mars crude oil as a component of differential market price, in order to
     re-establish adjustment factors and verify satisfactory correlation of an
     updated database.

-    At any time a quality parameter other than gravity or sulfur significantly
     affects the pricing of the Cameron Highway common stream, or the pricing of
     LLS or Mars (if Mars is then currently being used as the proxy to Cameron
     Highway common stream).

-    Every five years following April 30, 2002, to determine if the market for
     database crude oil types or the Cameron Highway common stream has changed
     sufficiently to warrant modifications of the adjustment factors or formulas
     used by the Quality Bank.

2.       In any subsequent review of the Quality Bank, the Cameron Highway
         common stream will be incorporated into the crude oil database if
         sufficient independently published price data are available. Other
         crude oils commonly marketed on the U.S. Gulf Coast ("USGC") may also
         be added at this time if required to expand the range of the crude oil
         database to ensure it encompasses the full range of gravity and sulfur
         applicable to crude oil streams that might be introduced into the
         pipeline system. These other crude oils will only be added if
         appropriate pricing data from an independent source is available
         covering the specified period.

3.       The following criteria will be used in assembling a historical
         database.

-    It will include commercially traded Gulf of Mexico originating crude oil
     streams (types) that are representative of the USGC market and for which
     there are sufficient published price data.

         Import crude oils that routinely compete in the USGC market will be
         added to the historical database to cover the full range of key quality
         parameters anticipated to be seen in Cameron Highway.

-    If pricing data is based on transactions, such pricing must be continuously
     available from publicly available sources for the crude oils used, and
     ideally cover one (multiple preferred) pricing cycle.

-    Accurate assay data on the crude oils must be available.

-    Certain crude oils will be excluded from the database based on the
     characteristics listed below, provided that (i) such characteristic is not
     taken into account in the Quality Bank and (ii) the Cameron Highway common
     stream does not, or is not expected to, have such characteristic.

-    Crude oils that are not chemically similar.

                                      E-6

<PAGE>

-    Crude oils that are known to routinely contain contaminants, to a degree
     that market price is significantly affected.

-    Crude oils whose assays indicate they are not whole crude oils.

4.       A historical database will contain, at a minimum, the prices, API
         gravity and sulfur content of each selected crude oil type. To the
         extent possible, the database should contain crude oil types which
         encompass the full range of gravity and sulfur applicable to crude oil
         streams that might be introduced into Cameron Highway and provide
         sufficient variation of the key quality parameters to yield a robust
         Quality Bank. It is expected the database will include the most
         recently available monthly data for a minimum period encompassing not
         less than one complete crude oil pricing cycle or twelve consecutive
         months, whichever is greater. The database will be extended to a longer
         period if the required data are available, provided that the database
         will not be extended beyond sixty (60) months unless a determination is
         made that market conditions and transportation costs do not distort the
         older data.

5.       For the purpose of correlating the key quality parameters to price, the
         published crude oil price for each crude oil type will be adjusted to a
         commonly accepted market clearing location on the USGC for that type.
         All costs that are reasonably expected to be incurred in transporting
         each crude oil from its usual marketing center to the selected market
         clearing location, using predominant and efficient transportation, will
         serve as the basis for such adjustments.

6.       All transportation costs will be based on arms-length transactions, and
         will exclude discounted or contract rates (such as those requiring
         minimum shipments over a specified period of time). If pipeline tariffs
         are not published then purchase and sale (buy/sell) differentials may
         be substituted, provided that such differentials are known or can be
         reasonably estimated from trade experience or market pricing.

7.       Other types of adjustments to deal with different pricing bases and
         timing biases may be made as reasonably determined to be necessary or
         convenient.

                                      E-7

<PAGE>

                                    OFFSHORE

             FACILITIES INTERCONNECTION, CONSTRUCTION AND OPERATING

                                    AGREEMENT

                                 CAMERON HIGHWAY

         This OFFSHORE FACILITIES INTERCONNECTION, CONSTRUCTION AND OPERATING
AGREEMENT (this "AGREEMENT") is entered into effective as of the 23rd day of
June, 2003 among Caesar Oil Pipeline Company, LLC, a Delaware limited liability
company ("CAESAR"), Manta Ray Gathering Company, L.L.C., a Delaware limited
liability company ("MANTA RAY"), Cameron Highway Oil Pipeline Company, a
Delaware general partnership ("CHOPS"), and GulfTerra Energy Partners, L.P., a
Delaware limited partnership ("GTM"). Caesar, Manta Ray, CHOPS and GTM are
individually referred to herein as a "PARTY" and collectively as "PARTIES".
Manta Ray and GTM are collectively referred to herein as the "MR PARTIES". CHOPS
and GTM are collectively referred to herein as the "CHOPS PARTIES".

                              W I T N E S S E T H:

         WHEREAS, Caesar intends to install, own and operate an offshore Crude
Oil pipeline system consisting of approximately sixty (60) miles of twenty-eight
inch (28") trunkline and all related laterals, equipment and facilities that is
anticipated to extend from the area of the SGC Fields to one or more shelf
connections located offshore Louisiana in the Gulf of Mexico (including all
future extensions and laterals of such system, the "CAESAR SYSTEM");

         WHEREAS, the CHOPS Parties intend to construct, install and operate,
and CHOPS shall own, a Crude Oil pipeline system consisting of (a) approximately
239 miles of thirty inch (30") pipe and 139 miles of twenty-four inch (24")
pipe, (b) a platform located in Ship Shoal Block 332, Gulf of Mexico (the "SS
332 B PLATFORM"), and (c) and all related equipment and facilities, with it
being intended that the pipeline extend from a connection with the Caesar System
to certain delivery points, including without limitation, BP Products North
America Inc.'s Texas City Refinery, TEPPCO Seaway Terminal at Texas City, Sun
Marine Terminal in Nederland, and Unocal Pipeline Company's Beaumont Terminal.
(collectively, "CAMERON HIGHWAY");

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

<PAGE>

         WHEREAS, the Parties initially intended to (a) cause the
interconnection of the Caesar System with Cameron Highway on the SS 332 A
Platform and (b) cause certain access and platform space rights to be granted to
Caesar from the CHOPS Parties relating to interconnections of the Caesar System
with the Poseidon Pipeline and the Amberjack Pipeline on the SS 332 A Platform;

         WHEREAS, the Parties now intend to (a) cause the interconnection of the
Caesar System with Cameron Highway on the Landing Platform, (b) cause certain
access and platform space rights to be granted to Caesar from the CHOPS Parties
relating to intended interconnections of the Caesar System with the Amberjack
Pipeline on the Landing Platform, and (c) cause certain access and platform
space rights to be granted to Caesar from the CHOPS Parties relating to the
intended interconnection of the Caesar System with the Poseidon Pipeline on the
SS 332 A Platform, including access and space rights relating to extending the
Caesar System from the Landing Platform to the Poseidon Pipeline on the SS 332 A
Platform;

         WHEREAS, in order to determine whether the Landing Platform will be the
SS 332 A Platform or the SS 332 B Platform, Caesar intends to evaluate the
progress of the construction of the SS 332 B Platform at certain Milestone
Dates;

         WHEREAS, Caesar, GTM, Manta Ray and CHOPS desire to document the rights
and obligations of each of the Parties with regard to the interconnection of the
Caesar System with Cameron Highway, the Poseidon Pipeline and other pipeline
systems, as well as the related access and use of the SS 332 B Platform and the
SS 332 A Platform in this Agreement, and the other matters covered by this
Agreement; and

         WHEREAS, as a material inducement to Caesar's agreeing to enter into
this Agreement, GTM is entering into this Agreement as a joint and several
primary obligor with respect to the obligations of CHOPS and Manta Ray
hereunder;

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -2-
<PAGE>

         NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants contained herein, the receipt and sufficiency of which
are hereby acknowledged, and intending hereby to be legally bound, the Parties
hereby agree and stipulate as follows:

                                   ARTICLE I
                                   DEFINITIONS

         As used herein, the initially capitalized terms listed below shall have
the following meanings:

         "AAA" shall mean the American Arbitration Association.

         "ANSI" shall mean the American National Standards Institute.

         "API" shall mean the American Petroleum Institute.

         "ADDITIONAL ITEMS" shall have the meaning set forth in Section 4.1(a)
of this Agreement.

         "AFFILIATE" shall mean, as to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with such first Person. As used in this definition, the term "control"
(including the phrases "controlled by" and "under common control") shall mean
possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise); provided
that, in any event, any Person that owns, directly or indirectly, more than 50%
of the voting interests in any Person will be deemed to control such Person.

         "AGREEMENT" shall have the meaning set forth in the introductory
paragraph of this Agreement.

         "AMBERJACK" shall mean Amberjack Pipeline Company, a Texas general
partnership.

         "AMBERJACK PIPELINE" shall mean the crude oil pipeline system owned by
Amberjack (or its successors or assigns) extending from ST 301 to a connection
with Mars Oil Pipeline Company's oil pipeline at Fourchon, Louisiana.

         "ATLANTIS" shall mean Green Canyon Blocks 698, 699, 700, 701, 742, 743
and 744, Gulf of Mexico.

         "BUSINESS DAY" shall mean Monday through Friday of each week, except
that a legal holiday recognized as such by the government of the United States
or the States of Texas or Louisiana shall not be regarded as a Business Day.

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -3-

<PAGE>

         "CAESAR" shall have the meaning set forth in the introductory paragraph
of this Agreement.

         "CAESAR GROUP" shall mean Caesar and its Affiliates, subsidiaries,
co-owners, members and joint venturers and its and their respective employees,
officers, directors, representatives, agents, pipeline operators, construction
managers, contractors and subcontractors.

         "CAESAR RECEIVER EQUIPMENT" shall mean all pressure and fluid handling
equipment and/or materials to be located on the Landing Platform that are
required for the monitoring and receipt of pipeline pigs to be transported
through the Caesar System.

         "CAESAR RISER MATERIAL" shall mean all pressure containing riser
materials that are part of the Caesar Pipeline.

         "CAESAR SYSTEM" shall have the meaning set forth in the first WHEREAS
clause of this Agreement.

         "CAMERON HIGHWAY" shall have the meaning set forth in the second
WHEREAS clause of this Agreement.

         "CAMERON HIGHWAY COMPLETION DATE" shall mean the date identified as the
"Cameron Highway Completion Date" in a written notice delivered to the Parties
from CHOPS.

         "CAMERON HIGHWAY RECEIPT POINT" shall mean the receipt point between
the Caesar System and Cameron Highway on the SS 332 B Platform, and
specifically, the downstream flange of the flow control valve located
immediately downstream of the LACT Unit.

         "CHART OF RESPONSIBILITIES" shall have the meaning set forth in Section
4.1(a) of this Agreement.

         "CHOPS" shall have the meaning set forth in the introductory paragraph
of this Agreement.

         "CHOPS GROUP" shall mean CHOPS and its Affiliates, members,
subsidiaries, co-owners and joint venturers and its and their respective
employees, officers, directors, representatives, agents, pipeline operators,
construction managers, contractors and subcontractors.

         "CHOPS INTERCONNECT FACILITIES" shall have the meaning set forth in
Section 4.1(a) of this Agreement.

         "CHOPS PARTIES" shall have the meaning set forth in the introductory
paragraph of this Agreement.

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -4-

<PAGE>

         "COMPUTER TAPES" shall have the meaning set forth in Section 7.14(e) of
this Agreement.

         "CONFIDENTIAL INFORMATION" means this Agreement and any other written
data or information that is privileged, confidential or proprietary, except
information that (a) is a matter of public knowledge at the time of its
disclosure or is thereafter published in or otherwise ascertainable from any
source available to the public without breach of this Agreement, (b) constitutes
information that is obtained from a third party (who or which is not a member or
an Affiliate of one of the Parties) other than by or as a result of unauthorized
disclosure or (c) prior to the time of disclosure had been independently
developed by the receiving Party or its members or affiliates not utilizing
improper means.

         "CRUDE OIL" shall mean the liquid hydrocarbon production from wells, or
a blend of such, in its natural form, not having been enhanced or altered in any
manner or by any process (other than those processes that normally occur on an
offshore production facility) that would result in misrepresentation of its true
value for adaptability to refining as a whole crude oil.

         "DAY" shall mean a period of twenty-four (24) consecutive hours,
beginning and ending at 7:00 a.m. (CST).

         "DISPUTE" shall have the meaning set forth in Section 7.23.

         "FERC" shall mean the Federal Energy Regulatory Commission and any
successor governmental agency.

         "FINANCIALLY CAPABLE ENTITY" shall mean an entity ("PROPOSED ASSIGNEE")
whose financial capability and resources, for purposes of this Agreement, shall
be evaluated based on (a) the financial wherewithal of such entity to perform
under this Agreement and (b) any guaranty, agreement or other obligation of any
other Person (including a Proposed Assignee's parent entity) to the extent such
guaranty, agreement or other obligation provides for such Person to be
financially obligated for the obligations of the Proposed Assignee in connection
with any applicable assignment of this Agreement to the Proposed Assignee.

         "FORCE MAJEURE" shall mean causes, conditions, events or circumstances
affecting the Parties, or downstream or upstream facilities that are beyond the
reasonable control of the Party claiming Force Majeure. Such causes, conditions,
events and circumstances may include, without limitation, acts of God, wars
(declared or undeclared), hostilities, acts of terrorism, strikes, lockouts,
riots, floods, fires, storms, storm warnings, industrial disturbances, acts of
the public enemy, sabotage, blockades, insurrections, epidemics, landslides,
lightning, earthquakes, washouts, arrests and restraints of rulers and peoples,
civil disturbances, explosions, breakage or accidents to machinery or lines of
pipe, hydrate obstruction or blockages of any kind of lines of pipe, abnormal
operating conditions on a Party's facilities, repairs, improvements,
replacements or alterations to plants, lines of pipe or related facilities,
inability of a Party to obtain necessary machinery, drilling or workover rigs,
materials, permits, easements or rights-of-way on

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -5-

<PAGE>

reasonable terms, freezing of a well or delivery facility, well blowout,
cratering, depletion of reserves, the partial or entire failure of a well, the
act of any court or governmental authority prohibiting a Party from discharging
its obligations under this Agreement or resulting in diminutions in service and
conduct that would violate any applicable law, all of which events must be
beyond the reasonable control of the Party claiming such event as Force Majeure.
Notwithstanding anything in this definition of "Force Majeure" to the contrary,
none of the following events shall be regarded as events of Force Majeure: (a)
the inability of a Party to (i) make payments when due, (ii) be profitable,
(iii) secure funds, (iv) arrange bank loans or other financing, or (v) obtain
credit, (b) the failure of Cameron Highway to be established and/or maintained
as a private pipeline system, (c) any portion of Cameron Highway being made
subject to the jurisdiction of any governmental authority, (d) a governmental
authority or court requiring a pro rata allocation of firm capacity on Cameron
Highway pursuant to the OCSLA (e) any curtailment of Crude Oil by the owner or
operator of Cameron Highway as a direct response to a claim or threatened claim
of any party related to the OCSLA or (f) the lack of or failure to obtain the
Poseidon SS 332 A Approval, or the failure of the Poseidon SS 332 A Approval to
be valid for any reason.

         "GB 72" shall mean the existing platform owned by GTM and GOM Shelf,
LLC and located in Garden Banks Block 72, Gulf of Mexico.

         "GOVERNMENTAL AGENCIES" shall mean the FERC and any governmental
agencies claiming or asserting jurisdiction under the OCSLA.

         "GTM" shall have the meaning set forth in the introductory paragraph of
this Agreement.

         "GTM CHOPS OBLIGATIONS" shall mean the obligations and liabilities of
GTM as a CHOPS Party under this Agreement, including GTM's obligations and
liabilities under Section 4.7.

         "GTM MANTA RAY OBLIGATIONS" shall mean (a) the obligations and
liabilities of GTM as a MR Party under this Agreement, including GTM's
obligations and liabilities under Section 4.8, and (b) any obligations and
liabilities assigned to GTM from Manta Ray pursuant to Section 7.1(c)(i), if
applicable.

         "GTM SUB" shall mean a subsidiary (direct or indirect of GTM in which
GTM owns (directly or indirectly) a fifty percent (50%) or more ownership
interest.

         "HOLSTEIN" shall mean the Green Canyon Block 644 Unit consisting of
Green Canyon Blocks 644 and 645, Gulf of Mexico.

         "INTERCONNECT FACILITIES" shall have the meaning set forth in Section
4.1(a).

         "LACT UNIT" shall mean Lease Automated Custody Transfer Unit.

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -6-

<PAGE>

         "LANDING PLATFORM" shall mean either the SS 332 A Platform or the SS
332 B Platform, as determined pursuant to Section 2.3.

         "MMS" shall mean the Minerals Management Service and any successor
governmental agency.

         "MAD DOG" shall mean Green Canyon Blocks 738, 739, 781, 782, 783, 825,
826 and 827, Gulf of Mexico.

         "MANTA RAY" shall have the meaning set forth in the introductory
paragraph of this Agreement.

         "MANTA RAY GROUP" shall mean Manta Ray and its Affiliates (including,
without limitation, GTM, the SS 332 A Platform Owner and CHOPS), subsidiaries,
co-owners, members and joint venturers and its and their respective employees,
officers, directors, representatives, agents, pipeline operators, construction
managers, contractors and subcontractors.

         "MILESTONE DATES" shall mean the dates identified on Exhibit D as
"Milestone Dates", which dates correspond to the Milestones described on Exhibit
D.

         "MILESTONE STANDARDS" shall have the meaning set forth in Section
2.2(a).

         "MILESTONES" shall mean the completion Milestones related to the
design, construction and installation of the SS 332 B Platform described on
Exhibit D under the heading "Milestones", which Milestones correspond to the
Milestone Dates identified on Exhibit D.

         "MISSED MILESTONE" shall have the meaning set forth in Section 2.3(a).

         "MISSED MILESTONE DETERMINATION DATE" shall have the meaning set forth
in Section 2.3(a)(i).

         "MR PARTIES" shall have the meaning set forth in the introductory
paragraph of this Agreement.

         "NON-SUBMITTING PARTIES" shall have the meaning set forth in Section
7.23 of this Agreement.

         "OBTAINED SS 332 A APPROVALS" shall mean the approval issued by the MMS
on May 8, 2003 approving a proposed structural modification to allow for a
bridge connection between the SS 332 A Platform and the SS 332 B Platform.

         "OCSLA" shall mean the Outer Continental Shelf Lands Act (43 U.S.C.
Sections. 1331 et seq.) as in effect on February 11, 2002, and any regulations
or rules promulgated thereunder by Governmental Agencies and decisions of courts
interpreting same.

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -7-

<PAGE>

         "OPTION PERIOD" shall have the meaning set forth in Section 2.3(a)(ii).

         "OTHER RECORDS" shall have the meaning set forth in Section 7.14(e) of
this Agreement.

         "PARTIES" shall have the meaning set forth in the introductory
paragraph of this Agreement.

         "PARTY" shall have the meaning set forth in the introductory paragraph
of this Agreement.

         "PERSON" shall mean any individual, governmental authority,
corporation, limited liability company, partnership, limited partnership, trust,
association or other entity.

         "POSEIDON" shall mean Poseidon Oil Pipeline Company, L.L.C., a Delaware
limited liability company.

         "POSEIDON PIPELINE" shall mean the Crude Oil pipeline system consisting
of approximately (a) 117 miles of pipeline extending from GB 72 to the SS 332 A
Platform, (b) 122 miles of pipeline extending from the SS 332 A Platform to
Houma, Louisiana, (c) 32 miles of pipeline extending from Ewing Bank Block 873
to South Timbalier Block 212, and (d) 17 miles of pipeline extending from Garden
Banks Block 260 to South March Island Block 205 and related equipment and
facilities that will extend from a connection with the Caesar System to certain
delivery points as such pipeline system may be modified or extended.

         "POSEIDON SS 332 A APPROVAL" shall mean the permits required to connect
the Caesar System to the Poseidon Pipeline on the SS 332 A Platform.

         "PROPOSED ASSIGNEE" shall have the meaning set forth in the definition
of the term "Financially Capable Entity".

         "PSIG" shall mean pounds per square inch gauge.

         "PURCHASE AND SALE AGREEMENTS" shall mean (i) each of the Purchase and
Sale Agreements among CHOPS and/or GTM and (a) BP Exploration & Production Inc.,
(b) Union Oil Company of California, and (c) BHP Billiton Petroleum (Deepwater)
Inc., each of (a) through (c) dated effective as of even date herewith, and (ii)
any other purchase and sale agreements between any of the members of Caesar (or
any of their Affiliates), as parties of the first part, and CHOPS, as party of
the second part, and each of (i) and (ii) as such may be amended, supplemented
or restated from time to time.

         "PURCHASE AND SALE LOSSES" shall mean any and all losses, damages,
claims, demands and actions and related expenses covered by the scope of the
indemnity obligations set forth in the Purchase and Sale Agreements.

         "REQUIRED COMMENCEMENT DATE" shall mean 12:01 a.m. on August 15, 2004,
as such date may be adjusted by a written notice delivered to the Parties from
CHOPS.

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -8-

<PAGE>

         "RULES" shall mean the then current Commercial Arbitration Rules of
AAA.

         "SGC FIELDS" shall mean Atlantis, Holstein and Mad Dog.

         "SS 332 A APPROVALS" shall mean all required approvals including,
without limitation, those required by the MMS, to maintain the SS 332 A Platform
in its current location and for the purposes contained in this Agreement,
including the Obtained SS 332 A Approvals and including (a) approvals relating
to the interconnection of the Caesar System with Cameron Highway and the
Poseidon Pipeline on the SS 332 A Platform, and (b) any necessary approvals
relating to any bridge or subsea connection between the SS 332 A Platform and
the SS 332 B Platform.

         "SS 332 A PLATFORM" shall mean the existing platform owned by Atlantis
Offshore, LLC, located in Ship Shoal Block 332, Gulf of Mexico.

         "SS 332 A PLATFORM OWNER" shall mean Atlantis Offshore, LLC.

         "SS 332 B PLATFORM" shall have the meaning set forth in the second
WHEREAS clause of this Agreement.

         "SS 332 B APPROVALS" shall have the meaning set forth in Section 3.2 of
this Agreement.

         "ST 301" shall mean the platform owned by Shell Offshore Inc. located
in South Timbalier Block 301, Gulf of Mexico.

         "SUBMITTING PARTY" shall have the meaning set forth in Section 7.23 of
this Agreement.

         "VALVE ASSEMBLY" means a 28-inch ANSI 1500 series valve installed on
the Landing Platform between the Caesar System 28-inch riser and the inlet
flange to the Caesar System pig receiver skid.

                                   ARTICLE II

        CONSTRUCTION OF THE CAESAR SYSTEM, CAMERON HIGHWAY AND THE SS 332
                 B PLATFORM; DETERMINATION OF LANDING PLATFORM

         2.1      Construction of Cameron Highway and the Caesar System. The
CHOPS Parties shall (a) design, fabricate, construct, install and commission
Cameron Highway at their sole cost, risk, liability and expense (and CHOPS shall
own Cameron Highway), and (b) use their commercially reasonable efforts to cause
Cameron Highway to be completed and operational by the Required Commencement
Date, and Caesar shall cause the twenty-eight inch (28") trunkline included in
the Caesar System to be completed and operational by the Required Commencement
Date. Upon request by CHOPS to Caesar, Caesar shall provide CHOPS with an update
regarding the progress of the construction of the Caesar System.

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -9-
<PAGE>

         2.2      Completion of SS 332 B Platform Milestones.

                  (a)      In addition to the CHOPS Parties' obligation to use
their commercially reasonable efforts to cause the completion of the design,
fabrication, construction, installation and commissioning of Cameron Highway by
the Required Commencement Date, the CHOPS Parties shall use their commercially
reasonable efforts to cause each Milestone to be completed in accordance with
prudent, sound and generally acceptable industry practices, standards and
procedures (the "MILESTONE STANDARDS") by the corresponding Milestone Date for
such Milestone. Upon completion of each Milestone, CHOPS shall provide Caesar
with a written certificate signed by an officer of CHOPS, certifying that the
Milestone has been completed in accordance with this Agreement. One of the CHOPS
Parties shall provide Caesar with written monthly updates regarding the status
of the completion of the Milestones, and, upon reasonable request by Caesar,
shall provide Caesar with the opportunity to inspect the work related to the
completion of the Milestones.

                  (b)      The Parties acknowledge that, in order for the CHOPS
Parties to meet the Milestone Dates, Caesar must provide (i) all Caesar Riser
Materials to CHOPS on or before August 30, 2003, and (ii) all Caesar Receiver
Equipment on or before September 8, 2003; provided that, with respect to Caesar
Receiver Equipment, Caesar agrees to provide Caesar Receiver Equipment
components as such components become available and shall take commercially
reasonable efforts to provide all Caesar Receiver Equipment to CHOPS on or
before August 8, 2003. In the event Caesar has not provided all of the Caesar
Riser Materials and Caesar Receiver Equipment by their respective corresponding
due dates described above in (i) and (ii), the Milestone Dates that have not yet
been reached shall be extended day for day to the extent of such delay.

                  (c)      Subject to applicable confidentiality obligations,
for which Caesar will use its commercially reasonable efforts to receive
waivers, Caesar agrees that, on a monthly basis, it will discuss with CHOPS the
status of the Caesar System commissioning schedule. If, based on such
discussions, Caesar and CHOPS mutually agree (as determined by each of Caesar
and CHOPS in its sole discretion) to adjust the Milestone Dates based on such
commissioning schedule, then the Parties shall enter into an amendment to this
Agreement to reflect such adjusted Milestone Dates.

         2.3      Landing Platform Determination. The Landing Platform, as such
term is used herein, shall be the SS 332 B Platform; provided, however, that the
Landing Platform designation shall change for all purposes under this Agreement
in accordance with the terms of this Section 2.3.

                  (a)      If the CHOPS Parties fail to complete any Milestone
to the Milestone Standards by the corresponding Milestone Date for such
Milestone (a "MISSED MILESTONE"), Caesar shall have the right and option to
designate the SS 332 A Platform as the Landing Platform as provided in this
Section 2.3(a).

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -10-

<PAGE>

                           (i)      Upon the occurrence of any Missed Milestone,
the Parties shall meet no later than two Business Days after the later of (A)
the Milestone Date of the applicable Missed Milestone or (B) the date that the
applicable Milestone was determined to be a Missed Milestone as a result of the
determination of an engineering firm pursuant to the procedures set forth in
Exhibit D, if applicable (such later date being referred to as the "MISSED
MILESTONE DETERMINATION DATE"). At such meeting, the Parties shall discuss the
Missed Milestone, the ability and timing of the anticipated completion of the
Missed Milestone and the overall impact of the Missed Milestone on the
completion of SS 332 B Platform by the CHOPS Parties. In addition, at such
meeting, the CHOPS Parties shall provide Caesar with all relevant information
relating to the anticipated completion of the Missed Milestone by the CHOPS
Parties.

                           (ii)     During the period beginning two Business
Days after the Missed Milestone Determination Date of the applicable Missed
Milestone and ending 12 days after the Missed Milestone Determination Date of
the applicable Missed Milestone (the "OPTION PERIOD"), Caesar shall have the
right (determined by Caesar in its reasonable discretion) to designate the SS
332 A Platform as the Landing Platform. If Caesar elects to cause the SS 332 A
Platform to be the Landing Platform during the Option Period, Caesar shall
notify GTM, CHOPS and Manta Ray in writing of such election, and the SS 332 A
Platform shall become the Landing Platform for all purposes of this Agreement.
Upon such election to cause the SS 332 A Platform to be the Landing Platform,
(A) the Parties shall cause the interconnection of the Caesar System with
Cameron Highway on the SS 332 A Platform (as the Landing Platform) in accordance
with the terms of this Agreement, and the CHOPS Parties and the MR Parties shall
grant Caesar all of the rights contained in this Agreement on the SS 332 A
Platform as the Landing Platform (including the rights related to connection of
the Caesar System with the Poseidon Pipeline and the Amberjack Pipeline), (B)
the CHOPS Parties and the MR Parties, at their sole cost and expense, shall be
responsible for obtaining all SS 332 A Approvals in accordance with ARTICLE III,
and (C) except as set forth in (B) above, each Party shall be responsible for
its own respective costs and expenses of having the Landing Platform changed
from the SS 332 B Platform to the SS 332 A Platform.

                           (iii)    For any Missed Milestone, (A) if Caesar does
not elect to exercise its option to cause the SS 332 A Platform to be the
Landing Platform during the Option Period, or (B) if the CHOPS Parties cause all
of the then-existing Missed Milestones to be completed prior to Caesar's
exercise of its option to cause the SS 332 A Platform to be the Landing
Platform, then Caesar's right to cause the SS 332 A Platform to be the Landing
Platform that arose as a result of such Missed Milestone shall terminate only
relative to that particular Missed Milestone.

                  (b)      If, after Caesar has elected to cause the SS 332 A
Platform to be the Landing Platform in accordance with Section 2.3(a), the CHOPS
Parties and the MR Parties fail to obtain all SS 332 A Approvals by forty-five
days after Caesar's designation of the SS 332 A Platform as the Landing
Platform, Caesar shall have the right and option (determined by Caesar in its
sole discretion) to designate the SS 332 B Platform as the Landing Platform. If
Caesar so elects to cause the SS 332 B Platform to be the Landing Platform in
accordance with this Section

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -11-

<PAGE>

2.3(c), Caesar shall notify GTM, CHOPS and Manta Ray in writing of such election
to cause the SS 332 B Platform to be the Landing Platform, and the SS 332 B
Platform shall become the Landing Platform for all purposes of this Agreement.
Upon such election to cause the SS 332 B Platform to be the Landing Platform,
(i) the Parties shall cause the interconnection of the Caesar System with
Cameron Highway on the SS 332 B Platform (as the Landing Platform) in accordance
with the terms of this Agreement, and the CHOPS Parties and the MR Parties shall
grant Caesar all of the rights contained in this Agreement on the SS 332 B
Platform as the Landing Platform (including the rights related to connection of
the Caesar System with the Poseidon Pipeline and the Amberjack Pipeline), (ii)
the CHOPS Parties and the MR Parties, at their sole cost and expense, shall be
responsible for obtaining all SS 332 B Approvals in accordance with ARTICLE III,
and (iii) the CHOPS Parties and the MR Parties shall pay and reimburse Caesar
for all costs and expenses of Caesar in connection with causing the Landing
Platform to change from the SS 332 A Platform to the SS 332 B Platform,
including all costs and expenses relating to the design, construction and
installation of the equipment necessary to cause the Caesar System to connect to
the SS 332 B Platform and connect to Cameron Highway on the SS 332 B Platform as
the Landing Platform and to connect to the Poseidon Pipeline on the SS 332 A
Platform (including, without limitation, all costs and expenses relating to
disconnection, equipment removal, commissioning, and hydrotesting).

                                  ARTICLE III
                                   APPROVALS

         3.1      Poseidon Approval. The MR Parties, at their sole cost and
expense, shall use their respective best efforts to cause the SS 332 A Platform
Owner to submit the completed Poseidon SS 332 A Approval application to the MMS
as soon as practicable. Upon request of Caesar (which request may be made no
more than weekly), the MR Parties shall provide Caesar with written updates
regarding the status of their efforts to complete and cause the submission of
the Poseidon SS 332 A Approval application in accordance with this Section 3.1,
and each such update shall provide Caesar with reasonable detail regarding all
activities performed by the MR Parties and their affiliates (including the SS
332 A Platform Owner) in connection with obtaining such approval. In addition,
Caesar and its representatives shall have the right (subject to the consent of
the SS 332 A Platform Owner to the extent required) to participate in the
process of obtaining such approval, including the right to participate in all
meetings regarding such approval (including internal meetings of the MR Parties
and/or their affiliates, and meetings of the MR Parties and/or their affiliates
with third parties such as the MMS).

         3.2      SS 332 B Approvals. The CHOPS Parties shall, at their sole
cost and expense, be responsible for, and shall use their commercially
reasonable efforts to obtain in a timely manner, (i) all approvals to be
obtained by a platform owner and/or operator that are required by the MMS for
the SS 332 B Platform as contemplated by this Agreement and (ii) all other
approvals related to the SS 332 B Platform customarily obtained by a platform
owner and operator, including, as applicable, (a) approvals relating to the
interconnections of the Caesar System with Cameron Highway and the Amberjack
Pipeline on the SS 332 B Platform, (b) approvals relating to the LACT Unit
related to the interconnection of the Caesar System and Cameron Highway

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -12-

<PAGE>

being located on the SS 332 B Platform, and (c) approvals relating to any bridge
or subsea connection necessary to extend the Caesar System from the SS 332 B
Platform to the SS 332 A Platform in order to allow the connection of the Caesar
System with the Poseidon Pipeline on the SS 332 A Platform (collectively, the
"SS 332 B APPROVALS"). The CHOPS Parties shall use their commercially reasonable
efforts to cause such approvals to be valid, binding and effective during the
term of this Agreement. Upon request of Caesar (which request may be made no
more than weekly), the CHOPS Parties shall provide Caesar with written updates
regarding the status of their efforts to obtain the SS 332 B Approvals, and each
such update shall provide Caesar with reasonable detail regarding all activities
performed by the CHOPS Parties and their affiliates in connection with obtaining
such approvals. In addition, Caesar and its representatives shall have the right
to participate in the process of obtaining such approvals, including the right
to participate in all meetings regarding such approvals (including internal
meetings of the CHOPS Parties and/or their affiliates, and meetings of the CHOPS
Parties and/or their affiliates with third parties such as the MMS).

         3.3      SS 332 A Approvals.

                  (a)      The MR Parties shall, at their sole cost and expense,
be responsible for, and shall use their commercially reasonable efforts to
obtain, and shall use their commercially reasonable efforts to cause the SS 332
A Platform Owner to obtain, in a timely manner, as applicable, the SS 332 A
Approvals. The MR Parties shall use their commercially reasonable efforts to
cause the SS 332 A Approvals to be valid, binding and effective during the term
of this Agreement. Upon request of Caesar (which request may be made no more
often than weekly) the MR Parties shall provide Caesar with written updates
regarding the status of their efforts to obtain the SS 332 A Approvals, and each
such update shall provide Caesar with reasonable detail regarding all activities
performed by the MR Parties and their affiliates (including the SS 332 A
Platform Owner) in connection with obtaining such approvals. In addition, Caesar
and its representatives shall have the right (subject to the consent of the SS
332 A Platform Owner to the extent required) to participate in the process of
obtaining such approvals, including the right to participate in all meetings
regarding such approvals (including internal meetings of the MR Parties and/or
their affiliates, and meetings of the MR Parties and/or their affiliates with
third parties such as the MMS).

                  (b)      The MR Parties and the CHOPS Parties represent and
warrant to Caesar that, as of the date of this Agreement, the Obtained SS 332 A
Approvals have been obtained and are valid, binding and effective.

         3.4      Amendments to Permits.

                  (a)      Following the receipt of the Poseidon SS 332 A
Approval, the CHOPS Parties and the MR Parties shall not cause, or take any
action or fail to take any action that causes or has the effect of causing, any
modification of the Poseidon SS 332 A Approval.

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -13-

<PAGE>


                  (b)      If, upon the completion of the last Milestone, Caesar
has not elected to cause the Landing Platform to be the SS 332 A Platform
pursuant to Section 2.3(a), then the CHOPS Parties and the MR Parties shall, at
their sole cost and expense, use commercially reasonable efforts to obtain in a
timely manner any necessary amendments or modifications to the Poseidon SS 332 A
Approval.

                  (c)      If, upon the completion of the last Milestone, Caesar
has not elected to cause the Landing Platform to be the SS 332 A Platform
pursuant to Section 2.3(a), Caesar shall, at its sole cost and expense, use
commercially reasonable efforts to obtain in a timely manner an amendment to its
approval from the MMS allowing the Caesar System to board the SS 332 A Platform
to provide that such boarding may occur on the SS 332 B Platform.

                  (d)      If, after Caesar has elected to cause the SS 332 A
Platform to be the Landing Platform in accordance with Section 2.3(a), Caesar
then elects to cause the Landing Platform to be the SS 332 B Platform pursuant
to Section 2.3(b), Caesar shall, at its sole cost and expense, use commercially
reasonable efforts to obtain in a timely manner an amendment to its approval
from the MMS allowing the Caesar System to board the SS 332 A Platform to
provide that such boarding may occur on the SS 332 B Platform.

                                   ARTICLE IV
             CONSTRUCTION, OWNERSHIP, OPERATIONS AND MAINTENANCE OF
                     INTERCONNECT FACILITIES; REIMBURSEMENT

         4.1      Engineering, Design, Fabrication and Construction of
Interconnect Facilities. The engineering, design, fabrication and construction
of the interconnect facilities relating to the interconnection of the Caesar
System and Cameron Highway shall be in accordance with the terms of this Section
4.1, and shall provide for the Cameron Highway Receipt Point to be located on
the Landing Platform, with the LACT Unit relating to such interconnection to be
located upstream of the Cameron Highway Receipt Point.

                  (a)      By the Required Commencement Date, Caesar and the
CHOPS Parties shall conduct all activities necessary to design, fabricate,
construct, install and commission the equipment and facilities necessary to
interconnect Cameron Highway and the Caesar System, including all necessary
pipeline risers and meter systems and associated facilities on the Landing
Platform, all in accordance with the Chart of Responsibilities (the "CHART OF
RESPONSIBILITIES") set forth in Exhibit B (collectively, including any items
identified pursuant to the last sentence of this Section 4.1(a) and the Valve
Assembly, the "INTERCONNECT FACILITIES"). The Chart of Responsibilities
identifies, for each item included in the Interconnect Facilities, the Party
responsible for the design, construction, transport and installation, related
capital expenditures, provision of necessary deck space on the Landing Platform,
operation, operating expenses, maintenance and repair, costs of maintenance and
repair for any single item or occurrence costing $5,000 or less, and costs of
maintenance and repair for any single item or occurrence costing in excess of
$5,000 (such costs of maintenance and repair, for purposes of the Chart of
Responsibilities, being referred to as "TANGIBLE MAINTENANCE"), in each case,
for each such

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -14-

<PAGE>

item, and additionally identifies the Party that will own each such item. Unless
otherwise expressly permitted pursuant to Section 7.1(a) of this Agreement, with
respect to the items identified on the Chart of Responsibilities for which the
CHOPS Parties are designated as having construction responsibilities (such items
being referred to as the "CHOPS INTERCONNECT FACILITIES"), Manta Ray shall be
the construction manager and shall not delegate, assign or transfer (in whole or
in part) any such obligations. If the Parties identify any portions of the
Interconnect Facilities that are reasonably necessary for the completion of the
Interconnect Facilities and that are not listed on the Chart of Responsibilities
("ADDITIONAL ITEMS"), the Parties agree that they will use their good faith
efforts to reach agreement with each other regarding the Party or Parties who
will be responsible for such Additional Items with respect to the categories of
responsibility listed on the Chart of Responsibilities.

                  (b)      Caesar shall have the right to assign representatives
to the CHOPS Interconnect Facilities project team of the CHOPS Parties for the
purpose of (i) monitoring the progress of the design, fabrication, construction,
installation and commissioning of the CHOPS Interconnect Facilities, and (ii)
reviewing plans for the design, construction, fabrication, installation,
commissioning and engineering of the CHOPS Interconnect Facilities.
Specifically, Caesar shall have the right to participate in technical
discussions and all team meetings related to the CHOPS Interconnect Facilities.
Notwithstanding the foregoing, all final decisions shall be made by and be the
responsibility of the CHOPS Parties with respect to all design, fabrication,
construction, installation and commissioning matters. The right to assign
representatives to the CHOPS Interconnect Facilities project team granted above
shall be a right granted only to, and exercisable by, Caesar (and not to
permitted assignees of Caesar).

                  (c)      The design and installation plan of the Interconnect
Facilities shall provide for and be in compliance with the following:

                           (i)      The design, fabrication, construction and
installation of the Interconnect Facilities shall be done in a good and
workmanlike manner in accordance with prudent, sound and generally acceptable
industry practices, standards and procedures, and shall be in accordance with
primary design codes for crude oil pipelines, including platform piping and pig
receiver facilities, in the following order of precedence:

                           -        Code of Federal Regulations 49 CFR 195; and

                           -        ANSI B31.4; and

                           -        ANSI B31.3, as applicable.

                           (ii)     All exposed steel of the Interconnect
Facilities shall be suitably coated with a coating to retain its corrosion
protection.

                           (iii)    All equipment included in the Interconnect
Facilities that will be attached to the Caesar System and used to contain Crude
Oil (e.g., check valves, associated

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                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

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<PAGE>

piping, fittings, connectors, etc.) shall be hydrostatically tested prior to
installation of such equipment.

                           (iv)     All meter design and development shall be
designed and agreed to by CHOPS and Caesar.

                  (d)      GTM, CHOPS and Manta Ray have requested, and the
Parties have agreed, to include the Valve Assembly in the Interconnect
Facilities, with the Valve Assembly being treated as if it was included as a
line item on the Chart of Responsibilities, with (i) Caesar responsible for the
design, fabrication, construction, transport and installation, related capital
expenditures, and costs of maintenance and repair for any single item or
occurrence directly relating to the Valve Assembly costing in excess of $5,000,
(ii) the CHOPS Parties or the MR Parties, as the case may be, responsible for
providing necessary deck space on the Landing Platform, all operating expenses,
maintenance and repair, and costs of maintenance and repair for any single item
or occurrence directly relating to the Valve Assembly costing $5,000 or less,
(iii) the CHOPS Parties responsible for operating the Valve Assembly, and (iv)
Caesar owning the Valve Assembly; provided, however, that the CHOPS Parties
shall, within 30 days after receipt of an invoice therefore, reimburse Caesar
for all reasonable capital expenditures related to the Valve Assembly.

         4.2      Operation of Interconnect Facilities and Equipment; Meter
Systems.

                  (a)      The Interconnect Facilities specified shall be
operated by the Party specified as the Party who "Operates" in the Chart of
Responsibilities. As provided in the Chart of Responsibilities, the CHOPS
Parties shall operate the meter system between Cameron Highway and the Caesar
System, however, the CHOPS Parties shall provide Caesar with reasonable prior
notice of all meter system calibration operations, and Caesar shall have the
right to witness and be present for all such meter system calibration
operations. Caesar shall have the right to take over operations of the
Interconnect Facilities and associated equipment operated by the CHOPS Parties
under this Agreement at any time by giving thirty (30) days prior written notice
to CHOPS, at which time Caesar shall commence paying all costs related to such
operations. The right to take over operations of the Interconnect Facilities
granted above shall be rights granted only to, and exercisable by, Caesar for
purposes of use by the Caesar System.

                  (b)      In addition, upon the interconnection of the Caesar
System with the Poseidon Pipeline on the SS 332 A Platform, for so long as Manta
Ray is the operator of the Poseidon Pipeline, Caesar hereby designates the MR
Parties as the operator of the Poseidon interconnect facilities. Such Poseidon
interconnect facilities shall be operated by the MR Parties at the MR Parties'
sole cost and expense in accordance with prudent, sound and generally acceptable
industry practices, standards and procedures. Caesar shall have the right to
revoke such designation for any reason and take over operations of the Poseidon
interconnect facilities and associated equipment at any time by giving thirty
(30) days prior written notice to Manta Ray, at which time the MR Parties shall
cease to be the operator of the Poseidon interconnect facilities and Caesar
shall commence paying all costs related to such operations.

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<PAGE>

                  (c)      The CHOPS Parties and the MR Parties shall use their
respective commercially reasonable efforts to cooperate with Caesar to obtain
all required approvals in a timely manner, including without limitation, those
required by the MMS, for the interconnection of the Caesar System with the
Amberjack Pipeline on the Landing Platform. If Caesar has the right to designate
the operator of the Amberjack Pipeline meter related to the interconnection of
the Caesar System with the Amberjack Pipeline and such meter is located on the
Landing Platform (which shall only occur with Manta Ray's consent if the Landing
Platform is the SS 332 A Platform, and which shall only occur with CHOPS'
consent if the Landing Platform is the SS 332 B Platform), then Caesar shall
designate the CHOPS Parties (if the Landing Platform is the SS 332 B Platform)
or the MR Parties (if the Landing Platform is the SS 332 A Platform) to operate
such Amberjack Pipeline meter, and such operator shall operate such Amberjack
meter at its sole cost and expense in accordance with prudent, sound and
generally acceptable industry practices, standards and procedures. Caesar shall
have the right to revoke such designation for any reason and take over
operations of the Amberjack meter and associated equipment at any time by giving
thirty (30) days prior written notice to the operator thereof, at which time the
CHOPS Parties or the MR Parties, as appropriate, shall cease to be the operator
of the Amberjack meter and Caesar shall commence paying all costs related to
such operations.

         4.3      Use of Deck Space and Riser Space on the SS 332 A Platform and
the SS 332 B Platform by Caesar; Access to the SS 332 A Platform and the SS 332
B Platform.

                  (a)      The CHOPS Parties and the MR Parties, as the case may
be, shall provide (or cause to be provided) to Caesar at no cost to Caesar the
following:

                           (i)      Sufficient deck and riser space on the
Landing Platform in accordance with industry standards for the construction,
installation, operation, maintenance and repair of (A) the Caesar System
facilities and equipment necessary to effectuate Crude Oil deliveries from the
Caesar System to Cameron Highway, including, but not limited to, meters, pig
receiver, piping, and valves, and (B) a 28" import riser for the Caesar System
on the Landing Platform;

                           (ii)     Sufficient deck and riser space on the
Landing Platform in accordance with industry standards for the construction,
installation, operation, maintenance and repair of (A) a pig launcher, piping,
and valves necessary to effectuate Crude Oil deliveries from the Caesar System
to the Amberjack Pipeline, and (B) a 20" or smaller (at Caesar's sole
discretion) export riser to allow an interconnect with the Amberjack Pipeline
upon Caesar's election at any time after the date hereof to connect the Caesar
System with the Amberjack Pipeline at the Landing Platform; and

                           (iii)    Sufficient deck space on the SS 332 A
Platform and the SS 332 B Platform in accordance with industry standards for the
construction, installation, operation, maintenance and repair of an
interconnection with the Poseidon Pipeline and a meter system and all other
facilities related thereto on the SS 332 A Platform or the SS 332 B Platform, as
applicable, upon Caesar's election at any time after the date hereof to connect
the Caesar System

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with the Poseidon Pipeline at the SS 332 A Platform, including, in the event the
Landing Platform is the SS 332 B Platform, (A) sufficient deck space on the SS
332 A Platform and the SS 332 B Platform to allow Caesar to construct, install,
operate, maintain and repair a bridge or subsea piping connection extending the
Caesar System from the SS 332 B Platform to the SS 332 A Platform to allow such
connection with the Poseidon Pipeline, and (B) sufficient deck space on the SS
332 B Platform for a meter system and other facilities related to the
interconnection of the Caesar System with the Poseidon Pipeline.

                  (b)      The CHOPS Parties shall bear the costs, if any, to
prepare the Landing Platform and the SS 332 A Platform, as applicable, to
accommodate all the Caesar System facilities and equipment and the risers and
second meter system described in Section 4.3(a) including, without limitation,
the costs to relocate and/or remove facilities and equipment on the Landing
Platform and the SS 332 A Platform as necessary. The Parties agree that the deck
space and rights granted to Caesar under this Section 4.3 shall be rights
granted only to, and exercisable by, Caesar for purposes of use by the Caesar
System as contemplated herein, including for purposes of interconnections with
the Poseidon Pipeline and the Amberjack Pipeline.

                  (c)      Exhibit C-1 attached hereto more fully outlines the
deck space on the SS 332 A Platform referenced in Section 4.3(a) and the
responsibilities related thereto, in the event the Landing Platform is the SS
332 A Platform; and Exhibit C-2 attached hereto more fully outlines the deck
space on the SS 332 B Platform and the SS 332 A Platform referenced in Section
4.3(a) and the responsibilities related thereto, in the event the Landing
Platform is the SS 332 B Platform. Exhibits C-1 and C-2 are the Parties' best
approximation (based on accepted engineering practices and industry standards)
of the allocation of deck space on the SS 332 A Platform and the SS 332 B
Platform as of the date of this Agreement. The Parties acknowledge that such
allocation may change as the design and engineering work on the SS 332 A
Platform and/or the SS 332 B Platform progresses. Any proposed change (i) shall
be reviewed and discussed by the Parties prior to the re-allocation of deck
space and (ii) shall not in any way impede or impair the rights of Caesar under
this Agreement.

                  (d)      Caesar (and its members, construction manager,
operator, contractors, subcontractors and designees) shall have the right of
access to the SS 332 A Platform and the SS 332 B Platform, and the right to
access and use deck space and riser space described in this Section 4.3 at all
reasonable times (to the extent such access or use does not impede or impair
other ongoing operations on the SS 332 A Platform or the SS 332 B Platform in
any material respect) for purposes of design, construction, installation,
commissioning, operation, maintenance, repair and removal of (i) the Caesar
System, (ii) the interconnection facilities related to the connection of the
Caesar System and the Poseidon Pipeline, and (iii) the other facilities and
equipment contemplated by this Agreement, together with the right to land
helicopters on the SS 332 A Platform and SS 332 B Platform heliports and to moor
vessels to the SS 332 A Platform and SS 332 B Platform mooring facilities;
provided, however, each such landing or mooring shall first be cleared with the
SS 332 A Platform or SS 332 B Platform representative, as applicable, designated
by Manta Ray or CHOPS. In addition, upon Caesar's

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                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -18-

<PAGE>

prior written request in connection with any access to the SS 332 A Platform or
the SS 332 B Platform contemplated by this Agreement or related to the
Interconnect Facilities or the Caesar System, the CHOPS Parties and the MR
Parties shall provide Caesar and its members, construction manager, operator,
contractors, subcontractors, designees and employees with quarters, room and
board on the SS 332 A Platform or the SS 332 B Platform, as applicable, at
reasonable industry standard costs, subject to availability of the requested
quarters, room and board. Caesar's request shall contain the number of persons
to be accommodated and the estimated duration of their stay on the SS 332 A
Platform or the SS 332 B Platform, as applicable.

         4.4      Other Pipeline System Connections.

                  (a)      In addition to Cameron Highway, Caesar shall have the
right to construct and install connections upstream of the Landing Platform to
any other crude oil pipelines. Pipelines to which Caesar may connect the Caesar
System shall include the Amberjack Pipeline (at the Landing Platform) and the
Poseidon Pipeline (at the SS 332 A Platform), and Caesar shall have the right to
construct, install, own and/or operate (or cause the construction and
installation of (without regard to ownership)) (i) at Caesar's sole cost and
expense, a pipeline commencing at the Landing Platform and extending to ST 301
in order to interconnect the Caesar System with the Amberjack Pipeline, and (ii)
(A) in the event the SS 332 B Platform is the Landing Platform, at the CHOPS
Parties' sole cost and expense, the piping necessary to cross the bridge from
the SS 332 B Platform to the SS 332 A Platform, or to extend the piping subsea
from the SS 332 B Platform to the SS 332 A Platform, as appropriate, each in
anticipation of a connection between the Caesar Pipeline and the Poseidon
Pipeline at the SS 332 A Platform and, at Caesar's sole cost and expense, the
piping necessary to connect the piping from the point of landing on the SS 332 A
Platform to the Poseidon Pipeline, and (B) in the event the SS 332 A Platform is
the Landing Platform, at Caesar's sole cost and expense, a pipeline connection
at the SS 332 A Platform with the Poseidon Pipeline with the approval of
Poseidon.

                  (b)      Each of the CHOPS Parties and the MR Parties shall
not take any action (or cause any action to be taken by any other Person
including, without limitation, the SS 332 A Platform Owner) that would
reasonably be expected to impede the construction, installation or operation of
such pipeline connections. Neither Caesar, Poseidon, nor any shipper on the
Caesar System shall be charged any fees or costs by the CHOPS Parties or the MR
Parties (or cause any action to be taken by the SS 332 A Platform Owner to
charge any fees or costs) to access pipeline connections with Cameron Highway,
the Amberjack Pipeline and the Poseidon Pipeline on the SS 332 A Platform or the
SS 332 B Platform. In the event any fees or costs to access these pipelines are
charged to and paid by Caesar, Poseidon, or any shipper on the Caesar System,
the CHOPS Parties shall reimburse such parties for all such fees and costs paid.

                  (c)      Neither Cameron Highway nor the CHOPS Parties shall
be required to provide pumps or similar equipment to effectuate deliveries of
Crude Oil into either the Poseidon Pipeline or the Amberjack Pipeline.

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -19-

<PAGE>

         4.5      Pipeline System Coordination Between Caesar and the CHOPS
Parties. Except for reasons of Force Majeure, the maximum pressure to be
provided by the CHOPS Parties at the Cameron Highway Receipt Point shall be no
greater than 150 Psig. Caesar may, but is under no obligation to, deliver Crude
Oil at pressures up to 1,950 Psig.

         4.6      Governmental Approvals. The obligations of Caesar under this
Agreement shall be subject to Caesar obtaining all required governmental
approvals. Caesar shall diligently pursue and use commercially reasonable
efforts to obtain such approvals in a timely manner.

         4.7      Joint, Several and Primary Obligations of the CHOPS Parties.
As consideration for Caesar's entering into this Agreement, and further
expressly acknowledging Caesar's reliance on the undertakings set forth in this
Section 4.7, each of CHOPS and GTM hereby agrees and acknowledges that all of
the obligations and liabilities of the CHOPS Parties under this Agreement
(including, without limitation, obligations and liabilities relating to or
arising in connection with representations, warranties, covenants, the payment
of money, performance or otherwise) are the joint and several, primary and
direct obligations and liabilities of each of CHOPS and GTM, and the CHOPS
Parties agree that each of them is jointly, severally and fully and primarily
responsible and liable for all such obligations and liabilities. In addition,
without limiting the foregoing, each of CHOPS and GTM agrees that its obligation
for the obligations and liabilities of the CHOPS Parties contained in this
Agreement shall include the obligation of such CHOPS Party to cause the other
CHOPS Party to perform such obligations and liabilities of the CHOPS Parties
under this Agreement. For example (and without limiting anything contained
herein), the CHOPS Parties obligation in the first sentence of Section 2.1 to
"design, fabricate, construct, install and commission Cameron Highway . . . ."
shall include (i) the joint and several (together with CHOPS), primary
obligation of GTM to, and to cause CHOPS to, perform such activities, and (ii)
the joint and several (together with GTM), primary obligation of CHOPS to, and
to cause GTM to, perform such activities, in each case, in accordance with the
terms of such sentence.

         The joint and several, primary and direct obligations and liabilities
of each of CHOPS and GTM under this Agreement shall not be subject to any
reduction, limitation, impairment or termination for any claim of waiver,
release, surrender, alteration or compromise that may be granted or otherwise
provided to one or more of the other CHOPS Parties but not to it, and shall not
be subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
obligations of the other CHOPS Parties or otherwise.

         Upon payment or performance by any CHOPS Party of any amounts,
obligations or liabilities owed to Caesar under this Agreement, all rights of
the paying or performing CHOPS Party against the other CHOPS Party arising as a
result thereof by way of right of subrogation or otherwise shall in all respects
be subordinated and junior in right of payment and performance to the prior
indefeasible payment and performance in full of all obligations of each of the
CHOPS Parties to Caesar.

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                      CONSTRUCTION AND OPERATING AGREEMENT
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<PAGE>

         4.8      Joint, Several and Primary Obligations of the MR Parties. As
consideration for Caesar's entering into this Agreement, and further expressly
acknowledging Caesar's reliance on the undertakings set forth in this Section
4.8, each of Manta Ray and GTM hereby agrees and acknowledges that all of the
obligations and liabilities of the MR Parties under this Agreement (including,
without limitation, obligations and liabilities relating to or arising in
connection with representations, warranties, covenants, the payment of money,
performance or otherwise) are the joint and several, primary and direct
obligations and liabilities of each of Manta Ray and GTM, and the MR Parties
agree that each of them is jointly, severally and fully and primarily
responsible and liable for all such obligations and liabilities. In addition,
without limiting the foregoing, each of Manta Ray and GTM agrees that its
obligation for the obligations and liabilities of the MR Parties contained in
this Agreement shall include the obligation of such MR Party to cause the other
MR Party to perform such obligations and liabilities of the MR Parties under
this Agreement. For example (and without limiting anything contained herein),
the MR Parties obligation in the first sentence of Section 3.1 to "use their
respective best efforts to cause the SS 332 A Platform Owner to submit the
completed Poseidon SS 332 A Approval application . . . ." shall include (i) the
joint and several (together with Manta Ray), primary obligation of GTM to, and
to cause Manta Ray to, perform such activities, and (ii) the joint and several
(together with GTM), primary obligation of Manta Ray to, and to cause GTM to,
perform such activities, in each case, in accordance with the terms of such
sentence.

         The joint and several, primary and direct obligations and liabilities
of each of Manta Ray and GTM under this Agreement shall not be subject to any
reduction, limitation, impairment or termination for any claim of waiver,
release, surrender, alteration or compromise that may be granted or otherwise
provided to one or more of the other MR Parties but not to it, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
obligations of the other MR Parties or otherwise.

         Upon payment or performance by any MR Party of any amounts, obligations
or liabilities owed to Caesar under this Agreement, all rights of the paying or
performing MR Party against the other MR Party arising as a result thereof by
way of right of subrogation or otherwise shall in all respects be subordinated
and junior in right of payment and performance to the prior indefeasible payment
and performance in full of all obligations of each of the MR Parties to Caesar.

         4.9      HAZOP.

                  (a)      Caesar and Manta Ray have commenced a joint HAZOP
study on the SS 332 A Platform. The HAZOP shall be managed by a qualified
representative of a third party engineering firm that is mutually agreeable to
Manta Ray and Caesar. The CHOPS Parties and Caesar shall each be responsible for
fifty percent (50%) of the costs of such HAZOP. The results of the HAZOP shall
be delivered to Caesar within 30 days of completion of the HAZOP and shall be
deemed Confidential Information (as defined herein) and subject to the
confidentiality provisions contained in Section 7.14 of this Agreement. If the
HAZOP results indicate any

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                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -21-

<PAGE>


repairs or alterations may be necessary in order to accommodate all facilities
and equipment contemplated by this Agreement to be located on the SS 332 A
Platform, then the MR Parties shall, in their sole reasonable discretion and at
their sole risk and liability, determine whether to implement any or all of the
repairs or alterations indicated. Caesar (or its designee) may submit a written
request for repairs or alterations to Manta Ray for consideration. Unless
mutually agreed to otherwise in writing by Caesar and Manta Ray, the performance
(or nonperformance) of any repairs or alterations made to the SS 332 A Platform
as a result of the HAZOP or in response to a request by Caesar (or its designee)
shall be at the MR Parties' sole discretion and at the CHOPS Parties' sole cost,
risk and liability.

                  (b)      The CHOPS Parties caused the piping and
instrumentation drawings related to the SS 332 B Platform to be completed and
delivered to Caesar on April 14, 2003. The CHOPS Parties and Caesar commenced a
joint HAZOP study on the SS 332 B Platform during the week of April 14, 2003.
The HAZOP shall be managed by a qualified representative of a third party
engineering firm that is mutually agreeable to CHOPS and Caesar. The CHOPS
Parties shall be solely responsible for the costs of such HAZOP. The results of
the HAZOP shall be delivered to Caesar within 30 days of completion of the HAZOP
and shall be deemed Confidential Information (as defined herein) and subject to
the confidentiality provisions contained in Section 7.14 of this Agreement. If
the HAZOP results indicate any repairs or alterations may be necessary in order
to accommodate all facilities and equipment contemplated by this Agreement to be
located on the SS 332 B Platform, then the CHOPS Parties shall, at their sole
cost and expense and at their sole risk and liability, implement such repairs
and alterations indicated. Caesar (or its designee) may submit a written request
for repairs or alterations to CHOPS for consideration. Unless mutually agreed to
otherwise in writing by Caesar and CHOPS, the performance (or nonperformance) of
any repairs or alterations made to the SS 332 B Platform as a result of the
HAZOP or in response to a request by Caesar (or its designee) shall be at the
CHOPS Parties sole cost, risk and liability.

                                   ARTICLE V
                          INDEMNIFICATION AND INSURANCE

         5.1      CAESAR.

                  (a)      EXCEPT FOR ANY PURCHASE AND SALE LOSSES, CAESAR SHALL
BE RESPONSIBLE FOR AND SHALL DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD
HARMLESS THE MANTA RAY GROUP FROM AND AGAINST ALL LOSSES, DAMAGES, CLAIMS,
DEMANDS AND ACTIONS AND RELATED EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES,
FOR OR BASED UPON (i) DAMAGE TO OR LOSS OF PROPERTY OF THE CAESAR GROUP AND (ii)
PERSONAL INJURY TO OR DEATH OF PERSONS IN THE CAESAR GROUP, IN EACH CASE OF (i)
AND (ii) ABOVE, RELATED TO, ARISING OUT OF, CONNECTED WITH OR IN ANY MANNER
ATTRIBUTABLE TO (OR ALLEGED TO BE RELATED TO, ARISING OUT OF, CONNECTED WITH OR
IN ANY MANNER ATTRIBUTABLE TO), DIRECTLY OR INDIRECTLY, THE ACTIVITIES OR
PERFORMANCE CONTEMPLATED BY THIS

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AGREEMENT, EVEN THOUGH CAUSED IN WHOLE OR IN PART BY THE MANTA RAY GROUP'S
NEGLIGENCE (ACTIVE, PASSIVE, JOINT, CONCURRENT OR SOLE) OR STRICT LIABILITY, OR
OTHER LEGAL FAULT OF THE MANTA RAY GROUP, EXCEPT TO THE EXTENT THAT ANY SUCH
LOSS RESULTS FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A MEMBER OF THE
MANTA RAY GROUP.

                  (b)      EXCEPT FOR ANY PURCHASE AND SALE LOSSES, CAESAR SHALL
BE RESPONSIBLE FOR AND SHALL DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD
HARMLESS THE CHOPS GROUP FROM AND AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS
AND ACTIONS AND RELATED EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES, FOR OR
BASED UPON (i) DAMAGE TO OR LOSS OF PROPERTY OF THE CAESAR GROUP AND (ii)
PERSONAL INJURY TO OR DEATH OF PERSONS IN THE CAESAR GROUP, IN EACH CASE OF (i)
AND (ii) ABOVE, RELATED TO, ARISING OUT OF, CONNECTED WITH OR IN ANY MANNER
ATTRIBUTABLE TO (OR ALLEGED TO BE RELATED TO, ARISING OUT OF, CONNECTED WITH OR
IN ANY MANNER ATTRIBUTABLE TO), DIRECTLY OR INDIRECTLY, THE ACTIVITIES OR
PERFORMANCE CONTEMPLATED BY THIS AGREEMENT, EVEN THOUGH CAUSED IN WHOLE OR IN
PART BY THE CHOPS GROUP'S NEGLIGENCE (ACTIVE, PASSIVE, JOINT, CONCURRENT OR
SOLE) OR STRICT LIABILITY, OR OTHER LEGAL FAULT OF THE CHOPS GROUP, EXCEPT TO
THE EXTENT THAT ANY SUCH LOSS RESULTS FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF A MEMBER OF THE CHOPS GROUP.

         5.2      THE MR PARTIES.

                  (a)      THE MR PARTIES SHALL BE RESPONSIBLE FOR AND SHALL
DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD HARMLESS THE CAESAR GROUP FROM AND
AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS AND ACTIONS AND RELATED EXPENSES,
INCLUDING REASONABLE ATTORNEYS' FEES, FOR OR BASED UPON (i) DAMAGE TO OR LOSS OF
PROPERTY OF THE MANTA RAY GROUP AND (ii) PERSONAL INJURY TO OR DEATH OF PERSONS
IN THE MANTA RAY GROUP, IN EACH CASE OF (i) AND (ii) ABOVE, RELATED TO, ARISING
OUT OF, CONNECTED WITH OR IN ANY MANNER ATTRIBUTABLE TO (OR ALLEGED TO BE
ATTRIBUTABLE TO), DIRECTLY OR INDIRECTLY, THE ACTIVITIES OR PERFORMANCE
CONTEMPLATED BY THIS AGREEMENT, EVEN THOUGH CAUSED IN WHOLE OR IN PART BY THE
CAESAR GROUP'S NEGLIGENCE (ACTIVE, PASSIVE, JOINT, CONCURRENT OR SOLE) OR STRICT
LIABILITY, OR OTHER LEGAL FAULT OF THE CAESAR GROUP, EXCEPT TO THE EXTENT THAT
ANY SUCH LOSS RESULTS FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A
MEMBER OF THE CAESAR GROUP.

                  (b)      THE MR PARTIES SHALL BE RESPONSIBLE FOR AND SHALL
DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD HARMLESS THE CHOPS

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                      CONSTRUCTION AND OPERATING AGREEMENT
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                                      -23-

<PAGE>

GROUP FROM AND AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS AND ACTIONS AND
RELATED EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES, FOR OR BASED UPON (i)
DAMAGE TO OR LOSS OF PROPERTY OF THE MANTA RAY GROUP AND (ii) PERSONAL INJURY TO
OR DEATH OF PERSONS IN THE MANTA RAY GROUP, IN EACH CASE OF (i) AND (ii) ABOVE,
RELATED TO, ARISING OUT OF, CONNECTED WITH OR IN ANY MANNER ATTRIBUTABLE TO (OR
ALLEGED TO BE RELATED TO, ARISING OUT OF, CONNECTED WITH OR IN ANY MANNER
ATTRIBUTABLE TO), DIRECTLY OR INDIRECTLY, THE ACTIVITIES OR PERFORMANCE
CONTEMPLATED BY THIS AGREEMENT, EVEN THOUGH CAUSED IN WHOLE OR IN PART BY THE
CHOPS GROUP'S NEGLIGENCE (ACTIVE, PASSIVE, JOINT, CONCURRENT OR SOLE) OR STRICT
LIABILITY, OR OTHER LEGAL FAULT OF THE CHOPS GROUP, EXCEPT TO THE EXTENT THAT
ANY SUCH LOSS RESULTS FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A
MEMBER OF THE CHOPS GROUP.

         5.3      THE CHOPS PARTIES.

                  (a)      THE CHOPS PARTIES SHALL BE RESPONSIBLE FOR AND SHALL
DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD HARMLESS THE CAESAR GROUP FROM AND
AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS AND ACTIONS AND RELATED EXPENSES,
INCLUDING REASONABLE ATTORNEYS' FEES, FOR OR BASED UPON (i) DAMAGE TO OR LOSS OF
PROPERTY OF THE CHOPS GROUP AND (ii) PERSONAL INJURY TO OR DEATH OF PERSONS IN
THE CHOPS GROUP, IN EACH CASE OF (i) AND (ii) ABOVE, RELATED TO, ARISING OUT OF,
CONNECTED WITH OR IN ANY MANNER ATTRIBUTABLE TO (OR ALLEGED TO BE ATTRIBUTABLE
TO), DIRECTLY OR INDIRECTLY, THE ACTIVITIES OR PERFORMANCE CONTEMPLATED BY THIS
AGREEMENT, EVEN THOUGH CAUSED IN WHOLE OR IN PART BY THE CAESAR GROUP'S
NEGLIGENCE (ACTIVE, PASSIVE, JOINT, CONCURRENT OR SOLE) OR STRICT LIABILITY, OR
OTHER LEGAL FAULT OF THE CAESAR GROUP, EXCEPT TO THE EXTENT THAT ANY SUCH LOSS
RESULTS FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A MEMBER OF THE
CAESAR GROUP.

                  (b)      THE CHOPS PARTIES SHALL BE RESPONSIBLE FOR AND SHALL
DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD HARMLESS THE MANTA RAY GROUP FROM
AND AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS AND ACTIONS AND RELATED
EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES, FOR OR BASED UPON (i) DAMAGE TO
OR LOSS OF PROPERTY OF THE CHOPS GROUP AND (ii) PERSONAL INJURY TO OR DEATH OF
PERSONS IN THE CHOPS GROUP, IN EACH CASE OF (i) AND (ii) ABOVE, RELATED TO,
ARISING OUT OF, CONNECTED WITH OR IN ANY MANNER ATTRIBUTABLE TO (OR ALLEGED TO
BE RELATED TO, ARISING OUT OF, CONNECTED WITH OR IN ANY MANNER ATTRIBUTABLE TO),
DIRECTLY OR INDIRECTLY, THE ACTIVITIES OR PERFORMANCE CONTEMPLATED BY THIS
AGREEMENT, EVEN THOUGH CAUSED

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IN WHOLE OR IN PART BY THE MANTA RAY GROUP'S NEGLIGENCE (ACTIVE, PASSIVE, JOINT,
CONCURRENT OR SOLE) OR STRICT LIABILITY, OR OTHER LEGAL FAULT OF THE MANTA RAY
GROUP, EXCEPT TO THE EXTENT THAT ANY SUCH LOSS RESULTS FROM THE GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT OF A MEMBER OF THE MANTA RAY GROUP.

         5.4      THIRD PARTIES.

                  (a)      FOR PURPOSES OF THIS SECTION 5.4, "THIRD PARTIES"
SHALL MEAN ALL PERSONS THAT ARE NOT INCLUDED IN THE CHOPS GROUP, MANTA RAY GROUP
OR THE CAESAR GROUP.

                  (b)      CAESAR SHALL BE RESPONSIBLE FOR AND SHALL DEFEND,
PROTECT, INDEMNIFY, RELEASE AND HOLD HARMLESS THE MANTA RAY GROUP FROM AND
AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS AND ACTIONS AND RELATED EXPENSES,
INCLUDING REASONABLE ATTORNEYS' FEES, FOR OR BASED UPON (i) DAMAGE TO OR LOSS OF
PROPERTY OF THIRD PARTIES AND (ii) PERSONAL INJURY TO OR DEATH OF THIRD PARTIES,
IN EACH CASE OF (i) AND (ii) ABOVE, WHEN CAUSED BY OR RESULTING FROM THE
NEGLIGENCE OR FAULT OF THE CAESAR GROUP AND RELATED TO, ARISING OUT OF,
CONNECTED WITH OR IN ANY MANNER ATTRIBUTABLE TO (OR ALLEGED TO BE RELATED TO,
ARISING OUT OF, CONNECTED WITH, OR IN ANY MANNER ATTRIBUTABLE TO), DIRECTLY OR
INDIRECTLY, THE ACTIVITIES OR PERFORMANCE CONTEMPLATED BY THIS AGREEMENT;
PROVIDED THAT, IN THE EVENT OF JOINT OR CONCURRENT NEGLIGENCE OR FAULT OF THE
CAESAR GROUP AND THE MANTA RAY GROUP, CAESAR'S INDEMNIFICATION OBLIGATION
HEREUNDER SHALL BE LIMITED TO THE CAESAR GROUP'S ALLOCABLE SHARE OF SUCH JOINT
OR CONCURRENT NEGLIGENCE OR FAULT.

                  (c)      CAESAR SHALL BE RESPONSIBLE FOR AND SHALL DEFEND,
PROTECT, INDEMNIFY, RELEASE AND HOLD HARMLESS THE CHOPS GROUP FROM AND AGAINST
ALL LOSSES, DAMAGES, CLAIMS, DEMANDS AND ACTIONS AND RELATED EXPENSES, INCLUDING
REASONABLE ATTORNEYS' FEES, FOR OR BASED UPON (i) DAMAGE TO OR LOSS OF PROPERTY
OF THIRD PARTIES AND (ii) PERSONAL INJURY TO OR DEATH OF THIRD PARTIES, IN EACH
CASE OF (i) AND (ii) ABOVE, WHEN CAUSED BY OR RESULTING FROM THE NEGLIGENCE OR
FAULT OF THE CAESAR GROUP AND RELATED TO, ARISING OUT OF, CONNECTED WITH OR IN
ANY MANNER ATTRIBUTABLE TO (OR ALLEGED TO BE RELATED TO, ARISING OUT OF,
CONNECTED WITH, OR IN ANY MANNER ATTRIBUTABLE TO), DIRECTLY OR INDIRECTLY, THE
ACTIVITIES OR PERFORMANCE CONTEMPLATED BY THIS AGREEMENT; PROVIDED THAT, IN THE
EVENT OF JOINT OR CONCURRENT NEGLIGENCE OR FAULT OF THE CAESAR GROUP AND THE
CHOPS GROUP, CAESAR'S INDEMNIFICATION OBLIGATION HEREUNDER SHALL BE LIMITED TO

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<PAGE>

THE CAESAR GROUP'S ALLOCABLE SHARE OF SUCH JOINT OR CONCURRENT NEGLIGENCE OR
FAULT.

                  (d)      THE MR PARTIES SHALL BE RESPONSIBLE FOR AND SHALL
DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD HARMLESS THE CAESAR GROUP FROM AND
AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS AND ACTIONS AND RELATED EXPENSES,
INCLUDING REASONABLE ATTORNEYS' FEES, FOR OR BASED UPON (i) DAMAGE TO OR LOSS OF
PROPERTY OF THIRD PARTIES AND (ii) PERSONAL INJURY TO OR DEATH OF THIRD PARTIES,
IN EACH CASE OF (i) AND (ii) ABOVE, WHEN CAUSED BY OR RESULTING FROM THE
NEGLIGENCE OR FAULT OF THE MANTA RAY GROUP AND RELATED TO, ARISING OUT OF,
CONNECTED WITH OR IN ANY MANNER ATTRIBUTABLE TO (OR ALLEGED TO BE RELATED TO,
ARISING OUT OF, CONNECTED WITH, OR IN ANY MANNER ATTRIBUTABLE TO), DIRECTLY OR
INDIRECTLY, THE ACTIVITIES OR PERFORMANCE CONTEMPLATED BY THIS AGREEMENT;
PROVIDED THAT, IN THE EVENT OF JOINT OR CONCURRENT NEGLIGENCE OR FAULT OF THE
MANTA RAY GROUP AND THE CAESAR GROUP, MANTA RAY'S INDEMNIFICATION OBLIGATION
HEREUNDER SHALL BE LIMITED TO THE MANTA RAY GROUP'S ALLOCABLE SHARE OF SUCH
JOINT OR CONCURRENT NEGLIGENCE OR FAULT.

                  (e)      THE MR PARTIES SHALL BE RESPONSIBLE FOR AND SHALL
DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD HARMLESS THE CHOPS GROUP FROM AND
AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS AND ACTIONS AND RELATED EXPENSES,
INCLUDING REASONABLE ATTORNEYS' FEES, FOR OR BASED UPON (i) DAMAGE TO OR LOSS OF
PROPERTY OF THIRD PARTIES AND (ii) PERSONAL INJURY TO OR DEATH OF THIRD PARTIES,
IN EACH CASE OF (i) AND (ii) ABOVE, WHEN CAUSED BY OR RESULTING FROM THE
NEGLIGENCE OR FAULT OF THE MANTA RAY GROUP AND RELATED TO, ARISING OUT OF,
CONNECTED WITH OR IN ANY MANNER ATTRIBUTABLE TO (OR ALLEGED TO BE RELATED TO,
ARISING OUT OF, CONNECTED WITH, OR IN ANY MANNER ATTRIBUTABLE TO), DIRECTLY OR
INDIRECTLY, THE ACTIVITIES OR PERFORMANCE CONTEMPLATED BY THIS AGREEMENT;
PROVIDED THAT, IN THE EVENT OF JOINT OR CONCURRENT NEGLIGENCE OR FAULT OF THE
MANTA RAY GROUP AND THE CHOPS GROUP, MANTA RAY'S INDEMNIFICATION OBLIGATION
HEREUNDER SHALL BE LIMITED TO THE MANTA RAY GROUP'S ALLOCABLE SHARE OF SUCH
JOINT OR CONCURRENT NEGLIGENCE OR FAULT.

                  (f)      THE CHOPS PARTIES SHALL BE RESPONSIBLE FOR AND SHALL
DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD HARMLESS THE CAESAR GROUP FROM AND
AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS AND ACTIONS AND RELATED EXPENSES,
INCLUDING REASONABLE ATTORNEYS' FEES, FOR OR BASED UPON (i) DAMAGE TO OR LOSS OF
PROPERTY OF THIRD PARTIES AND (ii) PERSONAL INJURY TO OR DEATH OF THIRD PARTIES,
IN EACH CASE OF (i) AND (ii) ABOVE, WHEN CAUSED BY OR RESULTING FROM THE

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NEGLIGENCE OR FAULT OF THE CHOPS GROUP AND RELATED TO, ARISING OUT OF, CONNECTED
WITH OR IN ANY MANNER ATTRIBUTABLE TO (OR ALLEGED TO BE RELATED TO, ARISING OUT
OF, CONNECTED WITH, OR IN ANY MANNER ATTRIBUTABLE TO), DIRECTLY OR INDIRECTLY,
THE ACTIVITIES OR PERFORMANCE CONTEMPLATED BY THIS AGREEMENT; PROVIDED THAT, IN
THE EVENT OF JOINT OR CONCURRENT NEGLIGENCE OR FAULT OF THE CHOPS GROUP AND THE
CAESAR GROUP, CHOPS' INDEMNIFICATION OBLIGATION HEREUNDER SHALL BE LIMITED TO
THE CHOPS GROUP'S ALLOCABLE SHARE OF SUCH JOINT OR CONCURRENT NEGLIGENCE OR
FAULT.

                  (g)      THE CHOPS PARTIES SHALL BE RESPONSIBLE FOR AND SHALL
DEFEND, PROTECT, INDEMNIFY, RELEASE AND HOLD HARMLESS THE MANTA RAY GROUP FROM
AND AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS AND ACTIONS AND RELATED
EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES, FOR OR BASED UPON (i) DAMAGE TO
OR LOSS OF PROPERTY OF THIRD PARTIES AND (ii) PERSONAL INJURY TO OR DEATH OF
THIRD PARTIES, IN EACH CASE OF (i) AND (ii) ABOVE, WHEN CAUSED BY OR RESULTING
FROM THE NEGLIGENCE OR FAULT OF THE CHOPS GROUP AND RELATED TO, ARISING OUT OF,
CONNECTED WITH OR IN ANY MANNER ATTRIBUTABLE TO (OR ALLEGED TO BE RELATED TO,
ARISING OUT OF, CONNECTED WITH, OR IN ANY MANNER ATTRIBUTABLE TO), DIRECTLY OR
INDIRECTLY, THE ACTIVITIES OR PERFORMANCE CONTEMPLATED BY THIS AGREEMENT;
PROVIDED THAT, IN THE EVENT OF JOINT OR CONCURRENT NEGLIGENCE OR FAULT OF THE
CHOPS GROUP AND THE MANTA RAY GROUP, CHOPS' INDEMNIFICATION OBLIGATION HEREUNDER
SHALL BE LIMITED TO THE CHOPS GROUP'S ALLOCABLE SHARE OF SUCH JOINT OR
CONCURRENT NEGLIGENCE OR FAULT.

         5.5      GENERAL. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT, NO PARTY SHALL BE LIABLE TO ANY OTHER PARTY FOR SPECIAL, INDIRECT,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES SUFFERED BY ANY SUCH OTHER PARTIES
RESULTING FROM OR ARISING OUT OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION,
LOSS OF USE, INCREASED COST OF OPERATIONS, LOSS OF PROFIT OR REVENUE OR BUSINESS
INTERRUPTIONS. IN FURTHERANCE OF THE FOREGOING, EACH PARTY RELEASES THE OTHER
PARTIES AND WAIVES ANY RIGHT OF RECOVERY FOR SPECIAL, INDIRECT, CONSEQUENTIAL,
PUNITIVE OR EXEMPLARY DAMAGES SUFFERED BY SUCH PARTY REGARDLESS OF WHETHER ANY
SUCH DAMAGES ARE CAUSED BY THE OTHER PARTIES' NEGLIGENCE (AND REGARDLESS OF
WHETHER SUCH NEGLIGENCE IS SOLE, JOINT, CONCURRENT, ACTIVE, PASSIVE OR GROSS
NEGLIGENCE), FAULT OR LIABILITY WITHOUT FAULT.

         5.6      Insurance. All Parties shall procure and maintain or cause to
be procured and maintained all insurance in the types and amounts as required by
applicable laws, rules and regulations, to provide coverage against such risks,
which are the subject of this Agreement, as is

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either customarily carried by companies owning, operating or conducting similar
business(es), or as deemed necessary and reasonably requested by the Parties
from time to time. Any such insurance purchased by or on behalf of any Party
shall be properly endorsed to waive the insurer's rights of subrogation under
any such policies against the other Parties (and the other Parties' insurers)
when any such other Party is released from liability or loss or damage pursuant
to this Agreement. Notwithstanding anything in this Agreement to the contrary, a
Party may, in its sole discretion, elect to self-insure with respect to such
coverage so long as the Party providing self insurance has the overall ability
to assume and be responsible financially for any and all liability hereunder.

                                   ARTICLE VI
                                  FORCE MAJEURE

         6.1      Force Majeure. No Party shall be liable to the other Parties
for failure to perform any of its obligations under this Agreement, other than
the obligation to make payments pursuant to this Agreement, to the extent such
performance is hindered, delayed or prevented by Force Majeure.

         6.2      Notice. A Party who is unable, in whole or in part, to carry
out its obligations under this Agreement due to Force Majeure shall promptly
give written notice to that effect to the other Parties stating the
circumstances underlying such Force Majeure.

         6.3      Resolution. A Party claiming Force Majeure shall use
commercially reasonable efforts to remove the cause, condition, event or
circumstance of such Force Majeure, shall give written notice to the other
Parties of the termination of such Force Majeure and shall resume performance of
any suspended obligation promptly after termination of such Force Majeure.

                                   ARTICLE VII
                                  MISCELLANEOUS

         7.1      Assignment.

                  (a)      CHOPS Parties.

                           (i)      Prior to the Cameron Highway Completion
Date, (A) CHOPS may not assign or transfer this Agreement or its obligations
hereunder (in whole or in part) and GTM may not assign or transfer any GTM CHOPS
Obligation unless the other (either CHOPS or GTM) is also assigning or
transferring, in the case of CHOPS, its interest in this Agreement or the
obligations hereunder or, in the case of GTM, the GTM CHOPS Obligations, to the
same assignee in the same assignment transaction, and (B) any assignment or
transfer of all or any portion this Agreement by CHOPS or all or any portion of
the GTM CHOPS Obligations by GTM shall require the prior written consent of the
other Parties (which consent may be withheld by the other Parties in their sole
discretion). After the Cameron Highway Completion Date, CHOPS shall have the
right to assign or transfer this Agreement or the obligations hereunder (in

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                                      -28-
<PAGE>

whole or in part) and GTM shall have the right to assign or transfer the GTM
CHOPS Obligations (in whole or in part) to any Financially Capable Entity
without the prior consent of the other Parties; provided, that any other
assignment or transfer of this Agreement or the obligations hereunder (in whole
or in part) shall require the prior written consent of the other Parties, such
consent not to be unreasonably withheld or delayed; provided further, that upon
any permitted assignment by the CHOPS Parties, the CHOPS Parties shall be
relieved of their obligations under this Agreement accruing after the effective
date of such assignment to the extent, and only to the extent, so assigned and
expressly assumed by the assignee.

                           (ii)     Any assignment or transfer by the CHOPS
Parties of their obligations under this Agreement (in whole or in part) shall
also include the assignment or transfer of all or a portion, as applicable, of
CHOPS' ownership interest in Cameron Highway (such that Cameron Highway remains
subject to this Agreement). Further, any assignee of any or all of CHOPS' right,
title and interest in Cameron Highway shall agree to be bound by the terms of
this Agreement and any such assignment shall be made subject to this Agreement.

                           (iii)    Any assignment or transfer of this Agreement
or the obligations hereunder (in whole or in part) by the CHOPS Parties shall be
null and void unless such assignment or transfer is made in compliance with this
Section 7.1(a).

                  (b)      Caesar.

                           (i)      Except as otherwise expressly provided in
this Agreement, Caesar shall have the right to assign or transfer this Agreement
or the obligations hereunder (in whole or in part), without the prior consent of
the other Parties, to any Financially Capable Entity; provided, that any other
assignment or transfer of this Agreement or the obligations hereunder (in whole
or in part) shall require the prior written consent of the other Parties, such
consent not to be unreasonably withheld or delayed; provided further, that upon
any permitted assignment by Caesar, Caesar shall be relieved of its obligations
under this Agreement accruing after the effective date of such assignment to the
extent, and only to the extent, so assigned and expressly assumed by the
assignee.

                           (ii)     Any assignee of any or all of Caesar's
right, title and interest in this Agreement shall agree to be bound by the terms
of this Agreement, and any such assignment shall be made subject to this
Agreement.

                           (iii)    Any assignment or transfer of this Agreement
or the obligations hereunder (in whole or in part) by Caesar shall be null and
void unless such assignment or transfer is made in compliance with this Section
7.1(b).

                  (c)      Manta Ray.

                           (i)      Prior to the Cameron Highway Completion
Date, Manta Ray shall have the right to assign or transfer this Agreement or the
obligations hereunder (in whole or in

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                                      -29-
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part) without the prior consent of the other Parties to GTM and/or GTM Sub;
provided, that if requested by Caesar, upon and as a condition to such an
assignment to GTM Sub, GTM shall (x) remain primarily liable for the obligations
hereunder so assigned to such GTM Sub and (y) provide additional assurances of
the performance of such GTM Sub hereunder (including, without limitation, a
company guaranty from GTM) as may be reasonably required by Caesar. Further,
Manta Ray shall provide Caesar written notice of such assignment or transfer at
least thirty (30) Days prior to the effective date of such assignment or
transfer, and agrees to promptly furnish Caesar additional information regarding
the GTM Sub in order for Caesar to sufficiently evaluate whether additional
assurances will be required. Prior to the effective date of such assignment or
transfer, Caesar and GTM shall execute appropriate documents regarding the
primary liability of GTM for the obligations assigned to such GTM Sub and Manta
Ray shall, and shall cause GTM to, provide Caesar any additional assurances of
performance as may be reasonably required by Caesar.

                           (ii)     Prior to the Cameron Highway Completion
Date, other than any assignment covered by Section 7.1(c)(i), (A) neither Manta
Ray nor GTM Sub may assign or transfer this Agreement or its obligations
hereunder (in whole or in part) unless GTM is also assigning or transferring the
GTM Manta Ray Obligations to the same assignee in the same assignment
transaction, (B) GTM may not assign or transfer any GTM Manta Ray Obligation
unless Manta Ray and GTM Sub are also assigning or transferring their respective
interests in this Agreement and their respective obligations hereunder to the
same assignee in the same assignment transaction, and (C) any assignment or
transfer of all or any portion of this Agreement by Manta Ray or GTM Sub or all
or any portion of the GTM Manta Ray Obligations by GTM shall require the prior
written consent of the other Parties (which consent may be withheld by the other
Parties in their sole discretion). After the Cameron Highway Completion Date,
Manta Ray and GTM Sub shall each have the right to assign or transfer this
Agreement or the obligations hereunder (in whole or in part) and GTM shall have
the right to assign or transfer the GTM Manta Ray Obligations (in whole or in
part) to any Financially Capable Entity without the prior consent of the other
Parties; provided, that any other assignment or transfer of this Agreement or
the obligations hereunder (in whole or in part) shall require the prior written
consent of the other Parties, such consent not to be unreasonably withheld or
delayed.

                           (iii)    Any assignment or transfer by Manta Ray or
GTM Sub of this Agreement or the obligations hereunder (in whole or in part) or
GTM (in the case of the GTM Manta Ray Obligations) shall also include the
assignment or transfer of all or a portion, as applicable, of Manta Ray's
ownership interest in Atlantis Offshore, LLC, the SS 332 A Platform Owner.
Further, any assignee of any or all of Manta Ray's right, title and interest in
the SS 332 A Platform or Atlantis Offshore, LLC shall agree to be bound by the
terms of this Agreement, such that the SS 332 A Platform remains subject to this
Agreement. Further, upon any permitted assignment by Manta Ray, GTM Sub or GTM
under the terms of this Section 7.1(c), such Person (whether Manta Ray, GTM Sub
or GTM) shall be relieved of its obligations under this Agreement accruing after
the effective date of such assignment to the extent, and only to the extent, so
assigned and expressly assumed by the assignee.

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<PAGE>

                           (iv)     Any assignment or transfer of this Agreement
or the obligations hereunder (in whole or in part) by Manta Ray, GTM Sub or GTM
(with respect to the GTM Manta Ray Obligations) shall be null and void unless
such assignment or transfer is made in compliance with this Section 7.1(c).

                  (d)      This Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the Parties.

         7.2      Term.

                  (a)      This Agreement shall become effective as of the
execution and delivery thereof by all of the Parties and, except as otherwise
provided herein, shall continue in effect until Caesar's (or its successor's or
assignee's, as applicable) election, in its sole discretion, to cease operations
and abandon the Caesar System.

                  (b)      The provisions contained in ARTICLE V
(Indemnification and Insurance), ARTICLE VI (Force Majeure) and ARTICLE VII
(Miscellaneous) of this Agreement shall survive termination/expiration of this
Agreement.

                  (c)      In the event of termination of this Agreement by any
Party pursuant to the terms hereof, such termination of this Agreement shall not
be the sole remedy of such Party.

         7.3      Payments. If (a) any Party (or its employees, agents or
contractors), performs any work or services on behalf of another Party (with the
prior approval of such other Party) in connection with this Agreement or (b) any
Party owes another Party any amount as a reimbursement or other payment pursuant
to the terms of this Agreement, payment for such work, services, reimbursement
or other payment shall be due and payable to the Party providing the work or
services or entitled to the reimbursement or other payment, as to all invoiced
amounts, within thirty (30) days of the other Party's receipt of an invoice
therefor. All books, accounts and records related to such invoices for the
current and preceding two (2) calendar years shall at all reasonable times be
open to inspection by the Party who was invoiced. Such Party, at its sole
expense, may audit the invoicing Party's books, accounts and records related to
such invoices by giving sixty (60) days written notice to such Party, but such
Party may decline to permit more than one (1) such audit to be conducted in any
six-month period. All audit exceptions shall be resolved in a timely manner.

         7.4      Laws. It is understood by the Parties that this Agreement and
performance hereunder is subject to all present and future valid and applicable
laws, orders, statutes, and regulations of courts or regulatory bodies (state or
federal) having jurisdiction over the Parties.

         7.5      Authorizations. The Parties hereto represent that they have
all requisite corporate authorizations necessary or proper to consummate this
Agreement.

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         7.6      Notices. Any notice, request, demand, statement or payment
provided for in this Agreement shall be confirmed in writing and shall be made
as specified below; provided, however, that notices claiming default, or
initiating dispute resolution procedures, or similar matters, shall only be made
using overnight mail, certified mail, or courier; and provided further, that
notices of interruption and similar operating matters may be provided verbally
or by electronic mail, effective immediately and, upon request, confirmed in
writing. A notice sent by facsimile transmission shall be deemed received by the
close of the Business Day on which such notice was transmitted or such earlier
time as confirmed by the receiving Party and by overnight mail or courier shall
be deemed to have been received two (2) Business Days after it was sent or such
earlier time as is confirmed by the receiving Party unless it confirms a prior
verbal communication in which case any such notice shall be deemed received on
the day sent. The addresses of the Parties are set forth below:

         To Caesar:                 Caesar Oil Pipeline Company, LLC
                                    501 WestLake Park Blvd.
                                    Houston, TX 77079
                                    Attn: Vice President
                                    Telephone: 281-366-3644
                                    Facsimile: 281-366-7910

         Copies with attachments:   Mardi Gras Transportation System Inc.
                                    501 WestLake Park Blvd.
                                    Houston, TX 77079
                                    Attn: Peter A. Edlund
                                    Telephone: 281-366-5614
                                    Facsimile: 281-366-7910
                                    Email: edlundpa@bp.com

         To Manta Ray:              Manta Ray Gathering Company, L.L.C.
                                    Four Greenway Plaza
                                    Houston, TX  77046
                                    Attn: President
                                    Telephone: 832-676-5666
                                    Facsimile: 832-676-1710
                                    Email: james.lytal@elpaso.com

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<PAGE>

         To CHOPS:                  Cameron Highway Oil Pipeline Company
                                    Attn: Manta Ray Gathering Company,
                                     L.L.C., Operator
                                    Four Greenway Plaza
                                    Houston, TX  77046
                                    Attn: President
                                    Telephone: 832-676-5666
                                    Facsimile: 832-676-1710
                                    Email: james.lytal@elpaso.com

         To GTM:                    GulfTerra Energy Partners, L.P.
                                    Four Greenway Plaza
                                    Houston, TX  77046
                                    Attn: President
                                    Telephone: 832-676-5666
                                    Facsimile: 832-676-1710
                                    Email: james.lytal@elpaso.com

         These addresses will remain in effect for the duration of this
Agreement, unless changed by notice.

         7.7      Entirety. This Agreement and the Exhibits hereto constitute
the entire agreement between the Parties hereto relative to the subject matter
hereof, and replace and supersede all prior agreements, conditions,
understandings, representations and warranties made between the Parties with
respect to the subject matter hereof, whether written or oral.

         7.8      GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO
ANY CONFLICT OF LAW PRINCIPLES WHICH, IF APPLIED, MIGHT PERMIT OR REQUIRE THE
APPLICATION OF THE LAW OF ANOTHER JURISDICTION, AND THE PARTIES AGREE THAT THE
PLACE OF EXECUTION OF THIS AGREEMENT IS HOUSTON, HARRIS COUNTY, TEXAS, AND THAT
VENUE WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT OR IN CONNECTION
HEREWITH SHALL LIE IN HOUSTON, HARRIS COUNTY, TEXAS. NOTWITHSTANDING THE
FOREGOING, SECTIONS 5.1(a)(ii), 5.1(b)(ii), 5.2(a)(ii), 5.2(b)(ii), 5.3(a)(ii)
AND 5.3(b)(ii) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
MARITIME LAWS OF THE UNITED STATES.

         7.9      Non-Waiver. No waiver by any Party hereto of any one or more
defaults by any other Party in the performance of any of the provisions of this
Agreement shall be construed as a waiver of any other default or defaults
whether of a like kind or different nature. Any delay, less than any applicable
statutory period of limitations, in asserting or enforcing any rights under this
Agreement, shall not be deemed a waiver of such rights. Failure of any Party to
enforce any provision of this Agreement or to require performance by any other
Party of any of the

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provisions hereof shall not be construed to waive such provision, or to affect
the validity of this Agreement or any part thereof, or the right of any Party
thereafter to enforce each and every provision hereof.

         7.10     Severability. If any term or other provision of this Agreement
is determined to be invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other terms and conditions of this Agreement shall
nevertheless remain in full force and effect.

         7.11     Amendments. This Agreement shall not be amended or modified
except by a written document executed by GTM, Caesar and CHOPS; provided,
however, that any amendment or modification that relates to access to the SS 332
A Platform, or space or activities on the SS 332 A Platform, shall also require
the written consent of Manta Ray.

         7.12     No Electronic Means. The Parties agree not to conduct the
transactions contemplated by this Agreement by electronic means, except as
specifically set forth in Section 7.6.

         7.13     Headings. The headings used for the ARTICLES and Sections
herein are for convenience and reference purposes only and shall in no way
affect the meaning or interpretation of the provisions of this Agreement.

         7.14     Confidentiality.

                  (a)      No Party shall disclose any other Party's
Confidential Information to a third party (other than such Party's and its
members' or Affiliates' employees, lenders, agents, servants, counsel,
contractors, consultants or accountants who need to know and agree to maintain
the confidentiality of the Confidential Information in accordance with this
Section 7.14) except in order to comply with any applicable law, order,
regulation or exchange rule and except in connection with any arbitration in
accordance with Exhibit A; provided, however, that each Party shall notify the
other Parties of any proceeding of which it is aware that may result in
disclosure and use reasonable efforts to prevent or limit the disclosure. The
Parties shall be entitled to all remedies available at law or in equity to
enforce, or seek relief in connection with, this confidentiality obligation
including, without limitation, obtaining an injunction against disclosure;
provided, all monetary damages shall be limited to actual direct damages and a
breach of this section shall not give rise to a right to suspend or terminate
this transaction.

                  (b)      Notwithstanding any other provision in this
Agreement, but subject to the provisions of Section 7.14(c), (i) a Party
(including its members) may disclose all terms and conditions of this Agreement
to (A) its members, (B) any third party where such third party is a potential
bona fide purchaser or user of substantially all of a Party's or its members'
assets, or of the portion of such assets affected by this Agreement, or (C) its
pipeline operator, pipeline construction manager, or its contractors and
consultants, and (ii) the Parties may disclose Confidential Information to Manta
Ray Offshore Gathering Company, L.L.C. to the extent (A) related to the design,
fabrication, construction, and installation of the interconnection of

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -34-
<PAGE>

Cameron Highway with the Caesar System and (B) necessary in connection with the
design, fabrication, construction, and installation of the interconnection of
Cameron Highway with the Caesar System.

                  (c)      If a Party discloses any or all of the terms and
conditions of this Agreement as contemplated in paragraph (b) above, it shall do
so only if a confidentiality arrangement exists, containing terms no less
stringent than those provided herein, with the Person to whom such Confidential
Information is to be disclosed.

                  (d)      The terms of this Section 7.14 shall survive and
Confidential Information received from the another Party shall be kept
confidential for a period of three (3) years following termination of this
Agreement.

                  (e)      Upon (i) the termination of this Agreement and (ii)
the request of a Party, the other Parties shall return or destroy all written
Confidential Information (excluding this Agreement but including written
confirmation of oral communications) provided by the requesting Party which was
stamped "Confidential," provided that a Party may keep a copy of a document
marked "Confidential" if such Party's counsel determines that it is required to
do so by law or pending the outcome of any dispute involving the Parties under
this Agreement. In the event of such request, documents, analyses, compilations,
studies or other materials prepared by a Party or its representatives that
contain or reflect Confidential Information from another Party, other than
computer archival and backup tapes or archival and backup files (collectively
"COMPUTER TAPES") and billing and trading records (collectively, "OTHER
RECORDS") shall be destroyed (such destruction to be confirmed in writing by a
duly authorized officer of the returning Party) or shall be retained on a
confidential basis consistent with the terms of this Agreement. Computer Tapes
and Other Records shall be kept confidential in accordance with the terms of
this Agreement. Notwithstanding the foregoing, no Party shall be required to
destroy or return documents covered by this provision prior to the later of the
expiration of applicable statutes of limitations for actions that might arise
with respect to the subject matter of such documents or final action with
respect to any legal action or arbitration involving such documents.

                  (f)      The Parties agree that except as provided herein,
each Party shall maintain its right, title and interest in all proprietary data,
documentation and software furnished to the other Parties pursuant to this
Agreement, except any portion of information that was supplied by another Party,
which information shall be returned or destroyed pursuant to paragraph (e)
above.

         7.15     Representations and Warranties of the Parties.

                  (a)      The MR Parties represent and warrant to Caesar that:

                           (i)      Manta Ray is a direct wholly-owned
subsidiary of GTM and is a member of Atlantis Offshore, LLC, the SS 332 A
Platform Owner;

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -35-
<PAGE>

                           (ii)     As a member of the SS 332 A Platform Owner,
Manta Ray has all right and authority to grant Caesar, GTM and CHOPS (A) access
to the SS 332 A Platform for the purposes described in this Agreement and (B)
the right to access and use the deck space and riser space on the SS 332 A
Platform for the activities contemplated in this Agreement; and

                           (iii)    Manta Ray has all right and authority to
execute this Agreement and to fulfill the obligations and duties contained
herein.

                  (b)      The CHOPS Parties represent and warrant to Caesar
that:

                           (i)      CHOPS is a general partnership, with 50% of
its ownership interests owned by Cameron Highway Pipeline I, L.P. (an indirect
wholly-owned subsidiary of GTM), 25% of its ownership interests owned by Cameron
Highway Pipeline II, L.P. (an indirect wholly-owned subsidiary of GTM) and 25%
of its ownership interests owned by Cameron Highway Pipeline III, L.P. (an
indirect wholly-owned subsidiary of GTM). CHOPS has all necessary rights and
authorities to grant Caesar (A) access to the SS 332 B Platform for the purposes
described in this Agreement and (B) the right to access and use the deck space
and riser space on the SS 332 B Platform for the activities contemplated in this
Agreement; and

                           (ii)     CHOPS has all right and authority to execute
this Agreement and to fulfill the obligations and duties contained herein.

                  (c)      Caesar represents and warrants to CHOPS and Manta Ray
that:

                           (i)      Caesar is a Delaware limited liability
company and is the owner of the Caesar System; and

                           (ii)     Caesar has all right and authority to
execute this Agreement and to fulfill the obligations and duties contained
herein.

                  (d)      GTM represents and warrants to Caesar that:

                           (i)      GTM is a Delaware limited partnership; and

                           (ii)     GTM has all right and authority to execute
this Agreement and to fulfill the obligations and duties contained herein.

                  (e)      Each Party declares, warrants, and represents on
behalf of itself (i) that it has contributed to the drafting of this Agreement
or has had it reviewed by legal counsel before executing it, (ii) that this
Agreement has been purposefully drawn and correctly reflects such Party's
understanding of the transaction that it contemplates as of the effective date
hereof, (iii) that this Agreement has been validly executed and delivered, (iv)
that this Agreement has been duly authorized by all action necessary for the
authorization thereof, and (v) this Agreement constitutes a binding and
enforceable obligation of the Party, enforceable in accordance with its terms.

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -36-
<PAGE>

         7.16     Counterparts. This Agreement may be executed by signing the
original or a counterpart thereof. If this Agreement is executed in
counterparts, all counterparts taken together shall have the same effect as if
all Parties had signed the same instrument.

         7.17     Independent Contractor Status; No Partnership. In the event
that any Party performs any work on behalf of another Party, such working Party
will perform in the status of an independent contractor and shall not be deemed
to be an agent or employee of the other Parties as a result of such work.
Nothing herein is intended to create a partnership, joint venture, agency or
other relationship creating fiduciary or quasi fiduciary duties or similar
duties and obligations or otherwise subject the Parties to joint and several or
vicarious liability or, except as otherwise provided in this Agreement, to
impose any duty, obligation or liability that would arise therefrom with respect
to any Party.

         7.18     No Third Party Beneficiaries. This Agreement is for the sole
and exclusive benefit of the Parties hereto. Except as expressly provided herein
to the contrary, nothing herein is intended to benefit any other Person not a
Party hereto, and no such Person shall have any legal or equitable right, remedy
or claim under this Agreement.

         7.19     Exhibits and Schedules. All exhibits, schedules and the like
contained herein or attached hereto are integrally related to this Agreement and
are hereby made a part of this Agreement for all purposes. To the extent of any
ambiguity, inconsistency or conflict between the body of this Agreement and any
of the exhibits, schedules and the like attached hereto, the terms of the body
of this Agreement shall prevail.

         7.20     Further Assurances. Subject to the terms and conditions set
forth in this Agreement, each of the Parties agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or to cause to be
done, all things necessary, proper or advisable under applicable laws to
consummate and make effective the transactions contemplated by this Agreement.
In case, at any time after the execution of this Agreement, any further action
is necessary or desirable to carry out its purpose, the proper members, officers
or directors of the Parties shall take or cause to be taken all such necessary
actions.

         7.21     Interpretation. Whenever the context requires: the gender of
all words used in this Agreement includes the masculine, feminine, and neuter; a
reference to any Person or entity includes its permitted successors and assigns;
the words "hereof," "herein," "hereto," "hereunder," and words of similar import
when used in this Agreement will refer to this Agreement as a whole and not to
any particular provisions of such Agreement; articles and other titles or
headings are for convenience only and neither limit nor amplify the provisions
of this Agreement itself, and all references herein to articles, sections or
subdivisions thereof will refer to the corresponding article, section or
subdivision thereof of this Agreement unless specific reference is made to such
articles, sections or subdivisions of another document or instrument; any
reference to "includes" or "including" will mean "includes without limitation"
or "including but not limited to," respectively; and any references in the
singular will include references in the plural and vice-versa.

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -37-
<PAGE>

         7.22     Time of the Essence. Time is of the essence with respect to
any and all obligations arising pursuant to this Agreement.

         7.23     Dispute Resolution. Other than any claim for injunctive relief
restricting disclosure of Confidential Information as specifically provided
under Section 7.14(a) of this Agreement, any controversy or claim (whether based
on contract, tort, statute or other legal or equitable theory (including, but
not limited to, any claim of fraud, misrepresentation or fraudulent inducement
or any question as to the validity or effect of this Agreement)), or the breach
or termination hereof (a "DISPUTE") shall be exclusively resolved pursuant to
the dispute resolution procedures set forth in Exhibit A. With respect to any
particular Dispute, the Party bringing such Dispute is referred to as a
"SUBMITTING PARTY", and the other Parties are referred to as the "NON-SUBMITTING
PARTIES".

         7.24     Public Announcements. Except with respect to (a) information
already in the public domain (other than as a result of the breach of this
Agreement) and (b) public announcements required by applicable laws or
securities exchange, market or similar rules, public announcements concerning
this Agreement and the activities contemplated hereunder shall require the prior
written consent of the other Parties, such consent not to be unreasonably
withheld. In the case of any public announcement pursuant to Section 7.24(b)
above, the disclosing Party shall provide an advance copy of the proposed public
disclosure to the non-disclosing Parties and permit the non-disclosing Parties
the opportunity to reasonably comment on such proposed disclosure.

            [The remainder of this page is intentionally left blank]

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -38-
<PAGE>

         IN WITNESS WHEREOF, the Parties have executed this Agreement effective
as of the date set forth hereinabove.

                                   CAESAR OIL PIPELINE COMPANY, LLC

                                   By: /s/ J. F. Wenzel
                                      ---------------------------------
                                   Name: J. F. Wenzel
                                   Title: Vice President

                                   MANTA RAY GATHERING COMPANY, L.L.C.

                                   By: /s/ James Lytal
                                      ---------------------------------
                                   Name: James Lytal
                                   Title: President

                                   CAMERON HIGHWAY OIL PIPELINE COMPANY

                                   By: /s/ James Lytal
                                      ---------------------------------
                                   Name: James Lytal
                                   Title: President

                                   GULFTERRA ENERGY PARTNERS, L.P.

                                   By: /s/ James Lytal
                                      ---------------------------------
                                   Name: James Lytal
                                   Title: President

Exhibits:

A        -        Dispute Resolution Procedures

B        -        Chart of Responsibilities

C-1      -        SS 332 A Platform Deck Space and Responsibilities

C-2      -        SS 332 B Platform Deck Space and Responsibilities

D        -        SS 332 B Platform Milestones and Milestone Dates

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                 SIGNATURE PAGE

<PAGE>

                                    Exhibit A

                          Dispute Resolution Procedures

1.       If a Dispute arises, the Submitting Party shall deliver written notice
to the Non-Submitting Parties of such Dispute, and the Parties shall in good
faith attempt to settle such Dispute by consultation between senior management
representatives of the Submitting Party and the Non-Submitting Parties. In the
event such consultation does not settle the Dispute within thirty (30) days
after receipt of the written notice of such Dispute by the Non-Submitting
Parties, the Dispute shall be submitted to non-binding mediation. In the event
the Parties are unable to settle the Dispute through use of mediation within
thirty (30) days of the commencement of such mediation, the Dispute shall be
settled by binding arbitration in accordance with the Rules of the AAA, and the
following provisions of this Exhibit A:

                  (a)      The arbitration shall be governed by the Federal
Arbitration Act, 9 U.S.C. Sections 1-16 to the exclusion of any provision of
state law inconsistent therewith, and judgment upon the award rendered by the
arbitrator may be entered by any court having jurisdiction. Any arbitration
proceeding hereunder will be conducted on a confidential basis.

                  (b)      The arbitration shall be held in Houston, Texas.

                  (c)      There shall be one (1) arbitrator. The Parties shall
attempt jointly to select an arbitrator. If the Parties are unable or fail to
agree upon an arbitrator within fifteen (15) days after the commencement of
arbitration, one shall be selected by AAA in accordance with its Rules. The
arbitration hearing shall occur no later than sixty (60) days after selection of
the arbitrator. The arbitrator shall determine the claims of the Parties and
render a final award in accordance with the substantive law provided for in the
Agreement. The arbitrator shall not have the right or the ability to terminate
this Agreement. The arbitrator shall set forth the reasons for the award in
writing within ten (10) Business Days after the close of evidence and any
post-evidence briefing and arguments that may be agreed upon (which shall be
concluded within fourteen (14) days after close of evidence).

                  (d)      Any claim by a Party shall be time-barred if the
Submitting Party commences arbitration with respect to such claim later than two
(2) years after the receipt of the written notice of the Dispute by the
Non-Submitting Parties. All statutes of limitations and defenses based upon
passage of time applicable to any claim of a defending Party (including any
counterclaim or setoff) shall be tolled while the arbitration is pending.

                  (e)      The obligation to arbitrate any Dispute shall extend
to the successors and assigns of the Parties. The Parties shall use their
commercially reasonable efforts to cause the obligation to arbitrate any Dispute
to extend to any officer, director, employee, shareholder, agent, trustee,
Affiliate, or subsidiary. The terms hereof shall not limit any obligations of a
Party

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -A-1-
<PAGE>

to defend, indemnify or hold harmless another Party against court proceedings or
other claims, losses, damages or expenses.

                  (f)      The arbitrator shall order the Parties to promptly
exchange copies of all exhibits and witness lists and, if requested by a Party,
to produce other relevant documents, to answer up to ten (10) interrogatories
(including subparts), to respond to up to ten (10) requests for admissions
(which shall be deemed admitted if not denied) and to produce for deposition
and, if requested, at the hearing all witnesses that such Party has listed and
up to four (4) other Persons within such Party's control. Any additional
discovery shall only occur by agreement of the Parties or as ordered by the
arbitrator upon a finding of good cause.

                  (g)      Each Party shall bear its own costs, expenses and
attorney's fees; provided that if court proceedings to stay litigation or compel
arbitration are necessary, the Party who unsuccessfully opposes such proceedings
shall pay all reasonable associated costs, expenses, and attorney's fees in
connection with such court proceeding.

                  (h)      In order to prevent irreparable harm, the arbitrator
shall have the power to grant temporary or permanent injunctive or other
equitable relief. Prior to the appointment of an arbitrator a Party may,
notwithstanding any other provision of this Agreement, seek temporary injunctive
relief from any court of competent jurisdiction; provided that the Party seeking
such relief shall (if arbitration has not already been commenced) simultaneously
commence arbitration. Such court ordered relief shall not continue more than ten
(10) days after the appointment of the arbitrator (or in any event for longer
than sixty (60) days).

2.       If any part of these dispute resolution procedures is held to be
unenforceable, it shall be severed and shall not affect either the duty to
arbitrate or any other part of these provisions.

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -A-2-
<PAGE>

                                    Exhibit B

                            Chart of Responsibilities

         RESPONSIBILITIES FOR CAESAR TIE-IN AND ASSOCIATED FACILITIES ON
                              THE LANDING PLATFORM

<TABLE>
<CAPTION>
NUMBER               ITEM                       DESIGN   CONSTRUCT   TRANSPORT AND INSTALL   OWN   CAPEX   PROVIDE DECK SPACE
-------------------------------------------------------------------------------------------------------------------------------
                                                                  CAESAR/CAMERON HIGHWAY RISER AND FACILITIES
-------------------------------------------------------------------------------------------------------------------------------
<S>     <C>                                     <C>      <C>         <C>                     <C>   <C>     <C>
  1     28" Import Riser to EL. (+) 12'           C          C                 C              C     C             CH
-------------------------------------------------------------------------------------------------------------------------------
  2     28" Riser From EL (+) 12' to Pig          C          C                 C              C     C             CH
        Receiver
-------------------------------------------------------------------------------------------------------------------------------
  3     Pig Receiver Skid Package                 C          C                 C              C     C             CH
-------------------------------------------------------------------------------------------------------------------------------
  4     LACT Unit & Prover                        C          CH                CH             C     CH            CH
                                                  CH
-------------------------------------------------------------------------------------------------------------------------------
  5     Dedicated Interconnect Piping
        Between Pig Receiver and LACT             CH         CH                CH             C     CH            CH
        Unit
-------------------------------------------------------------------------------------------------------------------------------
  6     Interconnect Piping Downstream            CH         CH                CH             CH    CH            CH
        of LACT Unit
-------------------------------------------------------------------------------------------------------------------------------
  7     Utilities                                 CH         CH                CH             CH    CH            CH
-------------------------------------------------------------------------------------------------------------------------------
             Instrument Air                       CH         CH                CH             CH    CH            CH
-------------------------------------------------------------------------------------------------------------------------------
             Lighting                             CH         CH                CH             CH    CH            CH
-------------------------------------------------------------------------------------------------------------------------------
             Electrical Power                     CH         CH                CH             CH    CH            CH
-------------------------------------------------------------------------------------------------------------------------------
             Hot oil Recycle/Dewaxing             CH         CH                CH             CH    CH            CH
-------------------------------------------------------------------------------------------------------------------------------
  8     Relief System                             CH         CH                CH             CH    CH            CH
-------------------------------------------------------------------------------------------------------------------------------
  9     Open Drain System                         CH         CH                CH             CH    CH            CH
-------------------------------------------------------------------------------------------------------------------------------
  10    Closed Drain System                       CH         CH                CH             CH    CH            CH
-------------------------------------------------------------------------------------------------------------------------------
  11    Emergency Support System (ESD &          C/CH        C                 C              C     C             CH
        Fusible Loop on Skid)
-------------------------------------------------------------------------------------------------------------------------------
  12    Fire Fighting Equipment                   CH         CH                CH             CH    CH            CH
-------------------------------------------------------------------------------------------------------------------------------
  13    SCADA System                              C          C                 C              C     C             CH
-------------------------------------------------------------------------------------------------------------------------------
             Dish                                 C          C                 C              C     C             CH
-------------------------------------------------------------------------------------------------------------------------------
             Space in Existing Control
                 Building Space                   CH         CH                CH             CH    CH            CH
-------------------------------------------------------------------------------------------------------------------------------
             Communications Equipment             C          C                 C              C     C             CH
-------------------------------------------------------------------------------------------------------------------------------
  14    Process Control/Safety System Panel       C          C                 C              C     C             CH
-------------------------------------------------------------------------------------------------------------------------------
  15    Instrument & Electrical Interconnect      CH         CH                CH             C     C             CH
-------------------------------------------------------------------------------------------------------------------------------
  16    Pigs                                      C          C                 N/A            C     C             CH
-------------------------------------------------------------------------------------------------------------------------------
  17    Pig Storage Containers                    C          C                 C              C     C             CH
-------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                       PAY FOR MAINTENANCE(1)   PAY FOR TANGIBLE
NUMBER               ITEM                       OPERATE   PAY FOR OPEX   MAINTENANCE   COSTING $5,000 OR LESS     MAINTENANCE(2)
--------------------------------------------------------------------------------------------------------------------------------
                                                                  CAESAR/CAMERON HIGHWAY RISER AND FACILITIES
-------------------------------------------------------------------------------------------------------------------------------
<S>     <C>                                     <C>       <C>            <C>           <C>                      <C>
  1     28" Import Riser to EL. (+) 12'           C            C             C                   C                     C
--------------------------------------------------------------------------------------------------------------------------------
  2     28" Riser From EL (+) 12' to Pig          CH           CH            CH                  CH                    C
        Receiver
--------------------------------------------------------------------------------------------------------------------------------
  3     Pig Receiver Skid Package                 CH           CH            CH                  CH                    C
--------------------------------------------------------------------------------------------------------------------------------
  4     LACT Unit & Prover                        CH           CH            CH                  CH                    C
--------------------------------------------------------------------------------------------------------------------------------
   5    Dedicated Interconnect Piping
        Between Pig Receiver and LACT             CH           CH            CH                  CH                    CH
        Unit
--------------------------------------------------------------------------------------------------------------------------------
  6     Interconnect Piping Downstream            CH           CH            CH                  CH                    CH
        of LACT Unit
--------------------------------------------------------------------------------------------------------------------------------
  7     Utilities                                 CH           CH            CH                  CH                    CH
--------------------------------------------------------------------------------------------------------------------------------
             Instrument Air                       CH           CH            CH                  CH                    CH
--------------------------------------------------------------------------------------------------------------------------------
             Lighting                             CH           CH            CH                  CH                    CH
--------------------------------------------------------------------------------------------------------------------------------
             Electrical Power                     CH           CH            CH                  CH                    CH
--------------------------------------------------------------------------------------------------------------------------------
             Hot oil Recycle/Dewaxing             CH           C             CH                  CH                    C
--------------------------------------------------------------------------------------------------------------------------------
  8     Relief System                             CH           CH            CH                  CH                    CH
--------------------------------------------------------------------------------------------------------------------------------
  9     Open Drain System                         CH           CH            CH                  CH                    CH
--------------------------------------------------------------------------------------------------------------------------------
  10    Closed Drain System                       CH           CH            CH                  CH                    CH
--------------------------------------------------------------------------------------------------------------------------------
  11    Emergency Support System (ESD &           CH           CH            CH                  CH                    C
        Fusible Loop on Skid)
--------------------------------------------------------------------------------------------------------------------------------
  12    Fire Fighting Equipment                   CH           CH            CH                  CH                    CH
--------------------------------------------------------------------------------------------------------------------------------
  13    SCADA System                              C            C             C                   C                     C
--------------------------------------------------------------------------------------------------------------------------------
             Dish                                 C            C             C                   C                     C
--------------------------------------------------------------------------------------------------------------------------------
             Space in Existing Control
                 Building Space                   CH           CH            CH                  CH                    CH
--------------------------------------------------------------------------------------------------------------------------------
             Communications Equipment             C            C             C                   C                     C
--------------------------------------------------------------------------------------------------------------------------------
  14    Process Control/Safety System Panel       CH           CH            CH                  CH                    C
--------------------------------------------------------------------------------------------------------------------------------
  15    Instrument & Electrical Interconnect      CH           CH            CH                  CH                    C
-------------------------------------------------------------------------------------------------------------------------------
  16    Pigs                                      CH           CH            C                   C                     C
--------------------------------------------------------------------------------------------------------------------------------
  17    Pig Storage Containers                    CH           C             C                   C                     C
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -B-1-
<PAGE>

<TABLE>
<S>     <C>                                       <C>    <C>    <C>   <C>   <C>   <C>   <C>   <C>  <C>     <C>     <C>
----------------------------------------------------------------------------------------------------------------------
  18    Pig Handling Equipment.                   CH     CH     CH    CH    CH    CH    CH    CH   CH      CH      CH
----------------------------------------------------------------------------------------------------------------------
  19    Pig Transport From SS 332 'A'             N/A    N/A    N/A   N/A   N/A   CH    CH    C    N/A     N/A     N/A
----------------------------------------------------------------------------------------------------------------------
  20    Paraffin Handling                         N/A    N/A    N/A   N/A   N/A   CH    CH    C    CH      C       C
----------------------------------------------------------------------------------------------------------------------
</TABLE>

         RESPONSIBILITIES FOR CAESAR TIE-IN AND ASSOCIATED FACILITIES ON
                              THE LANDING PLATFORM

<TABLE>
<CAPTION>
NUMBER               ITEM                       DESIGN   CONSTRUCT   TRANSPORT AND INSTALL   OWN   CAPEX   PROVIDE DECK SPACE
-----------------------------------------------------------------------------------------------------------------------------
                        CAESAR RISER AND FACILITIES IN ADDITION TO CAMERON HIGHWAY RISER AND FACILITIES
-----------------------------------------------------------------------------------------------------------------------------
<S>     <C>                                     <C>      <C>         <C>                     <C>   <C>     <C>
  1     Pig Launcher Skid Package                 C          C                 C              C      C            CH
-----------------------------------------------------------------------------------------------------------------------------
  2     20" Export Riser from Launcher            C          C                 C              C      C            CH
        to EL (+) 12'
-----------------------------------------------------------------------------------------------------------------------------
  3     20" Export Riser from EL (+) 12'          C          C                 C              C      C            CH
        to ST 301P/L Tie-in
-----------------------------------------------------------------------------------------------------------------------------
  4     Interconnect Piping Between 28"           CH         CH                CH             C      C            CH
        P/L Receiver and 20" P/L Launcher
-----------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                    PAY FOR MAINTENANCE(1)   PAY FOR TANGIBLE
NUMBER               ITEM                    OPERATE   PAY FOR OPEX   MAINTENANCE   COSTING $5,000 OR LESS     MAINTENANCE(2)
-----------------------------------------------------------------------------------------------------------------------------
                        CAESAR RISER AND FACILITIES IN ADDITION TO CAMERON HIGHWAY RISER AND FACILITIES
-----------------------------------------------------------------------------------------------------------------------------
<S>     <C>                                  <C>       <C>            <C>           <C>                      <C>
  1     Pig Launcher Skid Package              CH           CH            CH                  CH                    C
-----------------------------------------------------------------------------------------------------------------------------
  2     20" Export Riser from Launcher         CH           CH            CH                  CH                    C
        to EL (+) 12'
-----------------------------------------------------------------------------------------------------------------------------
  3     20" Export Riser from EL (+) 12'       C            C             C                   C                     C
        to ST 301P/L Tie-in
-----------------------------------------------------------------------------------------------------------------------------
  4     Interconnect Piping Between 28"        CH           C             CH                  C                     C
        P/L Receiver and 20" P/L Launcher
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

Key:     C        Caesar Oil Pipeline Company, LLC

         CH       Cameron Highway Oil Pipeline System, L.P.

         (1)      Any single item or occurrence of maintenance or repair costing
                  $5,000 or less

         (2)      Any single item or occurrence of maintenance or repair costing
                  in excess of $5,000

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -B-2-
<PAGE>

                                   Exhibit C-1

                SS 332 A Platform Deck Space and Responsibilities

                            [PICTURE OF FLOOR PLAN]

                                   CELLAR DECK
                                     (SPECS)

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -C-1-

<PAGE>

                            [PICTURE OF FLOOR PLAN]

                                      PLAN
                                SUB-CELLAR DECK
                                     (SPECS)

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -C-2-

<PAGE>

                                   Exhibit C-2

                SS 332 B Platform Deck Space and Responsiblities

                            [PICTURE OF FLOOR PLAN]

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -C-3-
<PAGE>

                            [PICTURE OF FLOOR PLAN]

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -C-4-
<PAGE>

                            [PICTURE OF FLOOR PLAN]

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -C-5-
<PAGE>

                                    EXHIBIT D

                SS 332 B Platform Milestones and Milestone Dates

With respect to each Milestone that contains a requirement that an item be a
certain percentage complete, the Parties agree that the completion of such
Milestone will be determined as follows: Such Milestones will be reviewed on a
weekly basis by the fabricator's project manager, a Caesar representative and a
CHOPS site representative. Such review will consist of an on-site visual
inspection of each activity and based on such review, Caesar and CHOPS will
mutually agree on the percentage completion of the applicable Milestone. Upon
such mutual consent, the Caesar and CHOPS representative will execute a written
statement evidencing their agreement on the percentage completion for the
applicable Milestone, and such percentage completion shall control for all
purposes under this Agreement.

The determination of the percentage completion will vary depending on the
activity at issue. For example, in the case of rolling cans for jacket legs or
piles, the percentage completion shall be the number of cans that have been
rolled and welded on the long seam as a percentage of the total number of cans
to be rolled and welded on the long seam. In the case of painting, the
percentage completion is based on the square footage covered and the number of
coats applied as a percentage of the total square footage to be painted and the
total number of coats to be applied, respectively. The Parties acknowledge that
some of these measures are somewhat subjective, thus requiring a joint review
and mutual agreement.

Notwithstanding Section 7.23 of the Agreement to the contrary, in the event
Caesar and CHOPS are unable to mutually agree on the percentage completion for
any Milestone as provided above, Caesar and CHOPS will submit the determination
of the percentage completion to one of the following engineering firms (the one
firm to be used to be agreed by Caesar and CHOPS): Pegasus International, Inc.,
Fluor Daniel, Inc. or Halliburton KBR. Caesar and CHOPS shall cooperate to the
maximum extent possible to furnish the engineering firm with all information and
data required by the engineering firm to make such determination. Caesar and
CHOPS shall direct the engineering firm to make its final decision within five
(5) days of the submission of the issue to the engineering firm. Each of Caesar
and CHOPS shall bear its own internal costs (including, without limitation,
attorney's fees and expert witness fees) attributable to the preparation and
presentation of its case to the engineering firm. The fees and costs of the
engineering firm shall be borne by the non-prevailing Party in the proceeding.
The determination of the engineering firm as to the percentage completion of the
applicable Milestone shall be final and binding on the Parties for all purposes
under this Agreement.

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -D-1-
<PAGE>

JACKET AND PILES

         On or before July 16, 2003

              -   46% complete or better overall

              -   All materials for critical path components on site (critical
                  path components as defined on Contractor's fabrication
                  schedule)

              -   100% complete on fabrication of jacket row A

              -   90% complete on fabrication of jacket row B

         On or before August 14, 2003

              -   56% complete or better overall

              -   100% complete on fabrication of jacket elevations

              -   100% complete on installation of row B skirt pile sleeves

         On or before September 18, 2003

              -   78% complete or better overall

              -   Horizontal framing elevations and row 1 and 2 braces erected
                  onto row A

              -   Row B floated onto rows 1 and 2

         On or before November 1, 2003

              -   Jacket and piles loaded out, tied down, and ready to sail
                  (unless deferred by installation contractor, in which case the
                  completion date for this activity will be as needed to
                  dovetail with the installation contractor's schedule)

CELLAR DECK AND BRIDGE

         On or before July 16, 2003

              -   100% complete on fabrication of cellar deck center section,
                  wings, sub-cellar deck, and sub-structure

              -   90% complete on installation of major pipe supports below
                  cellar deck center section and wings

              -   Progress milestones defined for piping fabrication and
                  installation

         On or before September 12, 2003

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -D-2-
<PAGE>

              -   100% complete on coating of cellar deck center section, wings,
                  sub-cellar deck, and sub-structure (excluding touch-up)

              -   100% complete on installation of cellar deck center section on
                  sub-structure

              -   100% complete on installation of sub-cellar deck (including
                  sump tank) under cellar deck

              -   100% complete on installation of wings on center section

              -   90% complete on fabrication of bridge structure

              -   Installation of piping below cellar deck in progress (%
                  complete to be specified by June 16)

OTHER

         On or before December 30, 2003

              -   The jacket and cellar deck of the SS 332 B Platform shall be
                  installed (including the pig receiver and riser related to the
                  connection of the Caesar System with the SS 332 B Platform),
                  the jacket and cellar deck of the SS 332 B Platform (including
                  the pig receiver and riser related to the connection of the
                  Caesar System with the SS 332 B Platform) shall meet all
                  required technical specifications and requirements reasonably
                  necessary for the hydrotesting and commissioning of the Caesar
                  System on the SS 332 B Platform in accordance with prudent,
                  sound and generally acceptable industry practices, standards
                  and procedures, and all SS 332 B Approvals necessary for (a)
                  and (b) above shall have been obtained and shall be in full
                  force and effect.

                      OFFSHORE FACILITIES INTERCONNECTION,
                      CONSTRUCTION AND OPERATING AGREEMENT
                                 CAMERON HIGHWAY

                                      -D-3-
<PAGE>

                         GULFTERRA ENERGY PARTNERS, L.P.
                               Four Greenway Plaza
                              Houston, Texas 77046

June 23, 2003

Cameron Highway Oil Pipeline Company
Four Greenway Plaza
Houston, Texas 77046
Attn: James Lytal, President

         Re: Liquidated Damages Letter Agreement

Dear James:

         Reference is hereby made to (i) that certain Cameron Highway Purchase
and Sale Agreement dated effective the 23rd day of June, 2003, by and between BP
Exploration & Production Inc. and Cameron Highway Oil Pipeline Company (the
"Company") (the "BP PSA"), (ii) that certain Cameron Highway Purchase and Sale
Agreement dated effective the 23rd day of June, 2003, by and between BHP
Billiton Petroleum (Deepwater) Inc. and the Company (the "BHP PSA"), (iii) that
certain Cameron Highway Purchase and Sale Agreement dated effective the 23rd day
of June, 2003, by and between Union Oil Company of California and the Company
(the "Unocal PSA"), and (iv) all other agreements relating to the purchase of
oil from and the sale of oil to the Cameron Highway Oil Pipeline ("Purchase and
Sale Agreements", together with the BP PSA, the BHP PSA, and the Unocal PSA, the
"Agreements").

         The Company (a) has agreed to pay liquidated damages to each of BP, BHP
and Unocal (as applicable) upon the occurrence of certain specified
circumstances as set forth in Article XI.c.-.f. of each Agreement with such
party, and (b) may agree under Purchase and Sale Agreements to pay liquidated
damages resulting from the failure of the Cameron Highway Oil Pipeline to be
mechanically complete or in - service (or a concept of similar import) by a
particular date certain ((a) and (b) collectively, the "Payment Obligations").
GulfTerra Energy Partners, L.P. ("GTM") hereby agrees, during the term of this
Letter Agreement, (i) to fully and timely pay, perform, and discharge in
accordance with their terms 100% of the Payment Obligations under each of the
Agreements, and (ii) to the extent the Company pays all or a portion of such
Payment Obligations directly, to reimburse, indemnify and hold harmless the
Company within 10 business days after such Company payment (and the Company
shall deliver to GTM an invoice requesting reimbursement therefore timely such
that GTM can meet its obligations hereunder).

         This Letter Agreement shall automatically terminate upon the occurrence
of "Conversion" of the construction loans into term loans under the project
financing currently being negotiated by the Company in respect of the Cameron
Highway Oil Pipeline, as such term shall ultimately be defined under the final,
executed financing agreements. This Letter Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes (i) all prior oral or written proposals or agreements between the
parties hereto, (ii) all contemporaneous oral or written proposals or agreements
and (iii) all

<PAGE>

previous negotiations and all other communications or understandings between the
parties hereto with respect to the subject matter hereof. All of the other terms
of each Agreement shall remain effective and binding; provided that in the event
of a conflict between the terms of any Agreement and this Letter Agreement, this
Letter Agreement shall control. The terms and conditions of this Letter
Agreement will inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto. This Letter Agreement will be
governed by, and construed in accordance with, the laws of the State of Texas
without regard to the conflict of laws rules of such state.

                            [Signature Page Follows]

<PAGE>

If the foregoing accurately describes our agreement with respect to the
foregoing, please so indicate by signing this letter in the space indicated
below.

                               Very truly yours,

                               GULFTERRA ENERGY PARTNERS, L.P.

                               By: /s/ Keith Forman
                                   ---------------------------------------------
                               Name: Keith Forman
                               Title: Vice President and Chief Financial Officer

Acknowledged and accepted by:

CAMERON HIGHWAY OIL PIPELINE COMPANY

By: /s/ James Lytal
    ----------------------------
Name: James Lytal
Title: President

             [Signature Page of Liquidated Damages Letter Agreement]
<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(j)
                             POSEIDON OPPORTUNITIES

                                      None.

<PAGE>

                             PARTICIPATION AGREEMENT
                                  SCHEDULE 5(l)
                                     PAGE 1

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                         Permit               Authorizing Agency       Permit Status     Secured  Pending           Comments
------------------------------------------------------------------------------------------------------------------------------------
<S>          <C>                            <C>                     <C>                  <C>      <C>      <C>
I) Offshore                                                               Offshore[1]
------------------------------------------------------------------------------------------------------------------------------------
     1        Pipeline Right-of-Way Permit       United States        Applications for               X       Additional information
              No. OCS-G24294, Segment No.      Department of the        Amendment of                        requested by MMS for all
             13972 OCS-G24664, Segment No.    Interior, Minerals        Application                            four segments was
             14077 OCS-G24626, Segment No.    Management Service    submitted to MMS on                    submitted on February 23,
             13987 OCS-G24667, Segment No.          ("MMS")           December 3, 2002                      2003 and March 2, 2003.
                         14096                                        and January 17,
                                                                           2003.
------------------------------------------------------------------------------------------------------------------------------------
     2        Garden Banks to High Island     United States Army                            X                Additional information
                Fairway Crossing Permit       Corps of Engineers                                             requested by USACE was
                                                   ("USACE")                                                 submitted on March 2,
                                                                                                                     2003.
------------------------------------------------------------------------------------------------------------------------------------
     3          Coastal Zone Consistency    Louisiana Coastal Zone  Letter dated 25 Feb     X                 Copy of letter to be
             Review No. C20030012, Coastal    Management ("LCZM")       03 indicates                           forwarded to MMS.
                    Zone Consistency                                     project is
                                                                      consistent with
                                                                        LCZM program
------------------------------------------------------------------------------------------------------------------------------------
     4         Six-Inch Fuel Gas Pipeline             MMS             Planned date for               X     Application documents are
                                                                       submission of                            being prepared.
                                                                       application is
                                                                          4/15/03.
------------------------------------------------------------------------------------------------------------------------------------
     5               HI A5 Platform                   MMS                Submitted                   X
------------------------------------------------------------------------------------------------------------------------------------
     6              SS 332 Platform                   MMS             To be Submitted                X
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                  SCHEDULE 6(h)

                              VALERO OPPORTUNITIES

                                      NONE.

<PAGE>

                                  SCHEDULE 8(a)

                    PERSONS WITH "KNOWLEDGE" - GTM COMPANIES

                                   James Lytal
                                  Keith Forman
                                   Brad Graves
                                   Drew Cozby
                                  Scott Jenkins
                                  Dennis Jahde
                                  Wynne Harvey
                                 Bart Heijermans
                                   David Ferer

<PAGE>

                                  SCHEDULE 8(b)

                        PERSONS WITH "KNOWLEDGE" - VALERO

                                 Mike Ciskowski
                                   Chris Quinn
                                  Rodney Reese
                                    Tom Shoaf
                                  Mike Hoeltzel