Exhibit 10.5

                              SECURITY AGREEMENT
                                AUGUST 15, 2005

     This  Security Agreement ("Agreement") is made this Fifteenth day of August
     2005,  between  RIO  VISTA  OPERATING  PARTNERSHIP  L.P.  ("Debtor")  and
     TRANSMONTAIGNE  PRODUCT  SERVICES  INC.  ("Creditor") for good and valuable
     consideration,  receipt  of  which  is  hereby  acknowledged.

ARTICLE  I  -  DEBTOR'S  WARRANTIES  AND  REPRESENTATIONS.
          -----------------------------------------------

     Debtor makes the following warranties and representations to Creditor:

     SECTION  1.1.     Debtor is a limited partnership, organized under the laws
of  the  state of Delaware in good standing with its principal place of business
at  820  Gessner,  Suite  1285,  Houston,  Texas  77024.

     SECTION  1.2.  The  exact  legal  name  of  Debtor  is  Rio Vista Operating
Partnership  L.P.,  and  Debtor  uses  no other names or marks, and has no other
locations,  unless  listed  on  Exhibit  A  attached  hereto.

     SECTION  1.3.  Debtor  owns  the  Collateral, free from all liens, security
interests, or encumbrances, except as shown on Exhibit A hereto, and Debtor will
defend the Collateral against all claims and demands not so shown.

ARTICLE  II  -  SECURITY  INTERESTS.
           ------------------------

     SECTION  2.1.      Debtor  hereby  grants  Creditor  a  continuing security
interest  in  all  of  Debtor's  Collateral,  as that term is defined in Section
3.1(d)  of the Purchase and Sale Agreement, dated August 15, 2005 between Debtor
and  Creditor ("P&S Agreement"), and all supporting obligations of every nature,
rights  to  payment  of  money,  insurance refund claims and all other insurance
claims  and  proceeds  with respect to the Collateral, and all of Debtor's books
and  records  and  all  recorded  data  of any kind or nature, regardless of the
medium  of  recording,  including,  without  limitation, all software, writings,
plans,  specifications  and  schematics  concerning  the  Collateral,  and  all
proceeds,  products,  additions  and  accessions to the Collateral to secure the
payment of Debtor's indebtedness to Creditor in the amount of $1,300,000.00 (the
"Indebtedness"),  arising upon Creditor's advance of such amount to Debtor under
the  terms  of  the  P&S  Agreement,  together  with  any renewals or extensions
thereof,  and  whether  such  Indebtedness  is  from  time  to  time reduced and
thereafter increased, or entirely extinguished and thereafter re-incurred.

     SECTION  2.2. Debtor acknowledges and agrees that, with respect to any term
used  herein  that is defined in either Article 9 of the Uniform Commercial Code
in force in the jurisdiction in which this security agreement is signed, when it
is  signed,  or Article 9 in force at any relevant time or jurisdiction relating
to  the  Collateral, the meaning to be given with respect to any particular item
of  property  shall  be  that  under  the  more  encompassing  of  the  two


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definitions.  The  Debtor  further  acknowledges that this security agreement is
intended  to, and covers, all assets of the Debtor described as Collateral under
Section  3.1  of  the  P&S  Agreement  and  that  Creditor  may file a financing
statement which so states.  Debtor hereby ratifies, authorizes and authenticates
any  acts  taken  by  Creditor  which  occurred  prior  to the execution of this
agreement for the filing of an initial financing statement, in lieu of financing
statement  or  any  other  financing  statement.

ARTICLE  III  -  DEBTOR'S  COVENANTS.
            ------------------------

     Debtor covenants and agrees with Creditor as follows:

     SECTION  3.1.     Debtor  shall  notify  Creditor immediately in writing if
Debtor:  (i) changes or adds a name or mark to its business; (ii) changes in any
respect the form under which its business is operated;,  (iii) changes or adds a
business  location;  or  (iv) changes its state of organization or registration.

     SECTION  3.2. Debtor shall keep its books and records for the Collateral at
its  principal  place of business. Debtor shall not move such books and records,
or  the  Collateral,  without  written  consent  of  Creditor.

     SECTION  3.3.  Debtor  shall  keep  the  Collateral free of unpaid charges,
liens, security interests, and encumbrances (except those listed in Exhibit A or
granted  to  Creditor)  and  shall  pay  when due all taxes and assessments with
respect  to  the  Collateral  or  its  use  or  operation.

     SECTION 3.4. Creditor shall have the right to inspect and make an inventory
of  the  Collateral,  and  to  examine Debtor's books and records concerning the
Collateral  at  all  reasonable  times  and  wherever  located.

     SECTION  3.5.  Debtor  shall  obtain  and  maintain  coverage  insuring the
Collateral  against fire, theft, and extended coverage risks ordinarily included
in  similar  policies, all subject to Creditor's approval, with proceeds payable
to  Debtor  and  to  Creditor  as their interests may appear. All policies shall
require  at least 15 days' written notice to Creditor before any material change
or cancellation. Debtor shall give Creditor a certificate or a copy of each such
policy  within  15  days  after  the  date  of  this  Agreement.

     SECTION  3.6.  Debtor  shall  notify  Creditor  within  five days if Debtor
becomes  involved  in  any  new  claim or dispute, or in any litigation or other
proceeding  before  any court, tribunal, or similar body, in which any potential
recovery  from  Debtor  may  exceed  $50,000.

     SECTION  3.7.  Debtor  shall  not  merge,  consolidate,  or  acquire all or
substantially  all  of  the assets of any other person or entity without written
notice  to  Creditor.

     SECTION  3.8.  Debtor  and  Creditor  agree  that  all payments received by
Creditor  for  payment of any of the Indebtedness shall be applied to the oldest
portion  of the Indebtedness, whether evidenced by invoices or otherwise, unless
otherwise  applied  by  Creditor.


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ARTICLE  IV  -  DEBTOR  DEFAULT.
           --------------------

     Any  of  the  following  shall  be  an  event  of Debtor default under this
Agreement:

     SECTION  4.1.     Failure  of  Debtor  to  pay  any  Indebtedness when due.

     SECTION  4.2.     Failure  of  Debtor  to perform any obligation under this
Agreement  and/or  any  other  agreement  with  or  in  favor  of  Creditor.

     SECTION  4.3.  Making  false  statements  to  Creditor,  or withholding any
information  with  the  intent  to  deceive  Creditor.

     SECTION  4.4.  Loss,  theft,  damage  or  destruction,  levy,  seizure,  or
attachment  of any of the Collateral, unless such Collateral is either (i) fully
covered  by  insurance,  or  (ii) replaced as Collateral by property of equal or
greater value, or unless (iii) any such levy, seizure, or attachment is released
or  dissolved  within  three  days  after  it  is  made.

     SECTION  4.5. A change in the financial or other condition of Debtor or the
Collateral such that in Creditor's opinion Creditor's risks are increased or the
value  or  security  of  the  Collateral  is  impaired.

     SECTION  4.6.  Debtor's  dissolution  or  termination  of  existence,  or
insolvency  of Debtor; or Debtor's inability to pay its debts as they mature; or
the appointment of a receiver of any property of Debtor; or Debtor's filing of a
voluntary  petition  in bankruptcy; or the adjudication of Debtor as a bankrupt;
or  any  transfer,  without  prior written consent by Creditor, of a substantial
part  of  Debtor's  property.

ARTICLE  V  -  CREDITOR'S  REMEDIES.
          -------------------------

     Upon  any  Debtor  default,  Creditor  at  its option and without demand or
notice to Debtor, may have any one or more of the following remedies, plus other
remedies  available  under  applicable  law:

     SECTION  5.1.     Declare  all  Indebtedness due and payable, with interest
thereon,  from  the  date of default until paid, at the rate of 10% per annum or
the maximum rate permitted by law, whichever is less, unless a different rate is
required  by  any  applicable  instrument.

     SECTION 5.2. Take possession of the Collateral wherever located; and Debtor
hereby  authorizes  Creditor  to  enter  upon  Debtor's  premises  and secure or
identify  the  Collateral  as  Creditor's.

     SECTION  5.3.  Sell  or  otherwise  dispose  of the Collateral at public or
private,  sale,  whether or not Debtor is present at the sale, on such terms and
in  such  manner  as  Creditor  may  determine in compliance with the applicable
Uniform  Commercial  Code  (hereinafter  referred  to  as  the  Code) and Debtor
expressly  agrees that reasonable notice of the time and place of the sale shall
be  ten  days.


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     SECTION  5.4.     Make  demand  for,  and  Debtor promptly shall deliver to
Creditor,  in kind, the proceeds of any sale or other disposition of Collateral;
and Creditor shall have the right to notify any or all account Debtors of Debtor
of  Creditor's security interest, and to require remittance directly to Creditor
of  all  sums due Debtor, and Debtor hereby authorizes Creditor, in its sole and
absolute  discretion,  to compromise and settle any claims of the Debtor against
third  persons in a commercially reasonable manner, and to endorse Debtor's name
on  any  instruments  received  in  payment  of  an  account.

     SECTION  5.5.  If  a  default  hereunder  also is a default under any other
agreement  between  Debtor  and Creditor, including, without limitation, the P&S
Agreement,  then Creditor shall have the right to pursue its remedies under such
agreement  and  under this Agreement, successively or concurrently, or otherwise
as  Creditor  may  determine,  and  Creditor  shall  not  thereby  be stopped or
prevented  from  pursuing  any other remedy it may have under such agreement, or
under  this  Agreement,  or  by  law.

     SECTION 5.6. Make demand for, and Debtor promptly shall pay to Creditor any
deficiency  if  proceeds  of  any  sale  or  other disposition of Collateral are
insufficient  to  satisfy  the  Indebtedness;  and,  in  addition,  Debtor shall
reimburse  Creditor  upon demand for all costs and expenses incurred by Creditor
in  retaking,  holding, and preparing the Collateral for disposition, and in the
sale  or  other  disposition,  and  for  all  attorneys'  fees,  legal costs and
expenses, and collection fees incurred by Creditor in the exercise of its rights
and  remedies  under  this  Agreement and in the collection of Indebtedness. All
such  costs  and  expenses  also  shall  be  Indebtedness,  secured  under  this
Agreement.

     SECTION  5.7.  In  the event that the security interest held by Creditor in
the  LPG  Tanks  is foreclosed and the LPG Tanks are acquired by any party other
than  Debtor, then Debtor shall provide an access easement to the LPG Tanks over
and  across Debtor's leasehold premises arising under BND Lease No. 2823 for the
purposes  of  inspecting, maintaining, disassembling and removing the LPG Tanks.

ARTICLE  VI  -  GENERAL.
           ------------

     SECTION  6.1.     Debtor  hereby authorizes Creditor to prepare and/or file
and/or add additional information as it becomes available, or otherwise transmit
any  and  all  records,  including  but not limited to writings or other written
documents,  if  applicable,  which  Creditor  in  its sole discretion shall deem
necessary  to  create  and  perfect  a  security  interest  consistent with this
Security Agreement or with any future grant of a security interest authenticated
by  Debtor,  (such  authentication  can  be by any medium, written or unwritten,
including  but  not  limited to telephone, electronic transmission or a writing)
including  but not limited to a security agreement, initial financing statement,
financing statement, in lieu of financing statement, amendments and continuation
statements,  by  any  means  authorized by law, whether such law is currently in
effect  or  becomes  effective  after the execution hereof, including electronic
filing.  Debtor  understands and agrees that by executing this agreement, Debtor
has  hereby  authenticated (as that term is defined in the applicable commercial
code) this agreement as a record and (1)  authorizes Creditor to (1) prepare and
file  such  record(s)  without the signature of Debtor, (2) to file such writing
bearing  any  general,  generic  or  super-generic description of the collateral
authorized  by


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the applicable code and (3) authorizes Creditor to file any future records which
shall  hereby  be  deemed authenticated (as defined in the applicable commercial
code)  by  Debtor.

     SECTION  6.2.     All  notices shall be in writing and delivered personally
or  by  certified  mail,  postage  prepaid,  to the other party at the following
addresses:

          To Creditor:

          TransMontaigne  Product  Services  Inc.
          Attn:  President
          1670  Broadway,  Suite  3100
          Denver,  Colorado  80202

          To Debtor:

          Charles  Handly
          Rio  Vista  Operating  Partnership  L.P.
          820  Gessner,     Suite  1285
          Houston,  Texas  77024

          With a copy (which shall not constitute effective notice) to:
          Ian  Bothwell
          Penn  Octane  Corporation
          840  Apollo  Street  Ste  313
          El Segundo, CA 90245

or  other  address  given  by  notice,  and  shall  be  effective when delivered
personally or as shown on the receipt, or if none, 48 hours after deposit in the
mails.

     SECTION  6.3.     This  Agreement  shall  inure to the benefit of and shall
bind  each  of  the  parties  and  their  respective  heirs,  representatives,
successors,  and assigns; but Debtor shall not assign any interest or obligation
herein  without  prior  written  consent  of  Creditor.

     SECTION  6.4.  If  any  provision  hereof  is held to be invalid, the other
provisions shall remain enforceable unless deletion of the invalid material will
defeat  the  essential  purposes  of  the  parties  as  expressed  herein.

     SECTION 6.5. The terms of this Agreement are intended by the parties as the
complete,  final,  and  exclusive statement of their agreement as to the matters
described  herein,  and  may  not  be  contradicted  by evidence of any prior or
contemporaneous  oral  or  written  agreement.

     SECTION  6.6. If two or more parties are referred to herein as Debtor, they
shall be jointly and severally liable under this Agreement, and the liability of
each  shall  not  be affected as to a party by the termination or release of any
party  or  security  of  or  from  any  other  party.


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     SECTION  6.7.     This Agreement and all transaction contemplated herein or
resulting  herefrom  shall be governed by and construed in accordance with Texas
law.

     Executed as of the date first given above.

TRANSMONTAIGNE  PRODUCT                RIO VISTA OPERATING PARTNERSHIP L.P.
SERVICES  INC.                         By:  Rio  Vista Operating GP LLC, general
                                            partner

By:  /s/  William S. Dickey            By:  /s/  Charles  Handly
   --------------------------             ----------------------------
Name:  William S. Dickey               Name:  Charles  Handly
Title: President                       Title: President


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                                   EXHIBIT "A"

Security Agreement dated August 15, 2005

Debtor:     Rio Vista Operating Partnership L.P.

Other Debtor Names or Marks:     None

Other Debtor Locations:     None

Liens, Security Interests, or Encumbrances on Collateral:     BND, Lenders and
Secured Debt Lender