EXHIBIT 10.36

                        PROMISSORY NOTE

$1,200,000.00         Corpus Christi, Texas       October 3, 1995

     FOR VALUE RECEIVED, after date, without grace, in the manner,
on the dates, and in the amounts so herein stipulated, MIDCOAST
ENERGY RESOURCES, INC., a Nevada corporation, hereinafter called
"Maker", acting herein by and through its undersigned officers,
promises to pay to the order of RAINBOW INVESTMENTS COMPANY, a
Texas Corporation hereinafter called "Payee", at its office in the
City of Corpus Christi, Nueces County, Texas the sum of ONE MILLION

TWO HUNDRED THOUSAND AND NO/100 DOLLARS ($1,200,000.00), pursuant
to the terms of this Note, in lawful money of the United States of
America which shall be legal tender in payment of all debts and
dues, public and private, at the time of payment, and to pay
interest on the whole of the principal amount hereof from time to
time outstanding prior to the maturity of this Note at a rate per
annum equal to the lesser of:  (a) the rate designated by Frost
Bank, N.A. or its successors, as its base commercial rate
(hereinafter called the "Prime Rate"), as such Prime Rate shall
vary from time to time, plus five percent (5%) (hereinafter called
the "Margin Percentage"), or (b) the "Maximum Rate" (as hereinafter
defined).  The rate of interest payable on this Note shall change
without notice to Maker each time and as of the date that the Prime
Rate changes whether or not such Prime Rate change is published. 
Notwithstanding the foregoing, if at any time the sum of the Margin
Percentage plus such Prime Rate exceeds the Maximum Rate, the rate
of interest to accrue on this Note shall be limited to the Maximum
Rate.

     The sums of principal funded by Payee to Maker on this Note,
together with all accrued interest thereon, shall be due and
payable as follows:

     Interest only, computed on the unpaid principal balance
     of the sums funded by Payee to Maker on this Note, shall
     be due and payable monthly as it accrues, on the 1st day
     of each and every calendar month, beginning April 1,
     1996, and continuing regularly thereafter until and
     including January 31, 1997, after which date both the
     unpaid sums of principal funded by Payee to Maker on this
     Note and the unpaid interest accrued thereon shall be due
     and payable.

     All past-due, unpaid sums of principal funded on this Note,
together with all accrued and past-due, unpaid interest thereon,
shall bear interest from maturity until paid at the "Default Rate"
as hereinafter defined.

     The Maker hereof may at any time and from time to time pay the
full amount or any part of the sums of principal funded by Maker to
Payee on this Note, without the payment of any premium or fee.  All
payments on this Note, whether designated as payments of principal
or interest, shall be applied first to the payment of accrued
interest and balance, if any, to principal.

     It is especially agreed that if default shall be made in any
payment due hereon, either principal or interest, or if there is a
default in any of the terms, covenants, agreements, conditions or
provisions set forth in any instrument or document given to secure
this Note or executed simultaneously with this Note or hereafter,
or if any certificate, affidavit and/or financial statement
furnished to Payee in connection with the loan evidenced by this
Note is false or misleading or omits to state any material fact, or
should any Maker, endorser, surety or guarantor hereof become
insolvent or commit an act of bankruptcy or make an assignment for
the benefit of creditors or authorize the filing of a voluntary
petition in bankruptcy, or should a receiver of any of their
property be appointed, or should involuntary bankruptcy proceedings
be filed or threatened against any Maker, endorser, surety or
guarantor hereof, or should any event occur which results in the
acceleration of the maturity of any indebtedness of any Maker,
endorser, surety or guarantor hereof to Payee or to any other party
under any mortgage, deed of trust, security or loan agreement,
indenture, note or other undertaking, then in any such event, at
the option of Payee or any legal holder hereof at any time
thereafter, without demand or notice, the unpaid balance of the
sums of principal funded by Payee to Maker on this Note, together
with all accrued and unpaid interest thereon, shall at once become
due and payable and shall bear interest from the date of such
default or event (whichever occurs first) until paid at the
"Default Rate" which is defined as the Maximum Rate or, if there is
no Maximum Rate, then a rate per annum equal to the Prime Rate plus
eight percent (8%).

     If any sums becoming owing on this Note are not paid at
maturity, however such maturity may be brought about, and the same
is placed in the hands of an attorney for collection or if
collected by suit or through bankruptcy, probate, receivership or
other legal or judicial proceedings, the Maker hereof agrees to pay
an additional amount of not less than ten percent (10%) of all
unpaid sums of principal funded by Payee to Maker on this Note as
costs of collection and reasonable attorney's fees.

     Each Maker and all sureties, endorsers and guarantors of this
Note, and each party hereafter assuming or otherwise becoming
liable hereon (i) waive demand, presentment for payment, notice of
intention to accelerate the maturity of this Note and to declare
the entire unpaid balance of the sums of principal funded by Payee
to Maker on this Note, together with all accrued and unpaid
interest thereon, due and payable, notice that the entire unpaid
balance of the sums of principal funded by Payee to Maker on this
Note, together with all accrued and unpaid interest thereon, has
been declared due and payable, notice of nonpayment, protest,
notice of protest and all other notices, filings of suit and
diligence in collecting this Note or enforcing any of the security
herefor, (ii) agree to any substitution, exchange or release of any
such security or the release of any party primarily or secondarily
liable hereon, (iii) agree that Payee or other holder hereof shall
not be required first to institute suit or exhaust its remedies
hereon against the Maker or others liable or to become liable
hereon or enforce its rights against any security herefor in order
to enforce payment of this Note by it, and (iv) consent to any
extensions or postponement of time of payment of this Note and to
any other indulgence with respect hereto without notice thereof to
any of them.

     Any check, draft, money order or other instrument given in
payment of all or any portion of any sums becoming owing on this
Note may be accepted by the payee or any other holder hereof and
handled in collection in the customary manner, but the same shall
not constitute payment hereunder or diminish any rights of the
Payee or any other holder hereof, except to the extent that actual
cash proceeds of such instrument are unconditionally received by
the Payee or any other holder hereof and applied to this
indebtedness as herein provided.

     For the purposes of this Note the term "Maximum Rate" shall
mean the maximum rate of interest which the Payee may charge the
Maker on the loan evidenced by this Note without thereby charging
interest which is usurious or unlawful under the state or federal
laws applicable for the purpose of determining the maximum lawful
rate of interest which may be charged on such loan and this Note;
and provided that all fees, "points", and other charges which
constitute interest shall be included and taken into account in
determining such Maximum Rate.  It is expressly provided and
stipulated that, notwithstanding any other provision of this Note,
in no event shall the aggregate of (i) the aggregate interest which
has accrued on this Note from the date hereof through the date of
such calculation, and (ii) the aggregate of any other amounts
accrued or paid which, under applicable laws, are deemed to
constitute interest upon the loan evidenced hereby from the date
hereof through the date of such calculation, ever exceed the
Maximum Rate on the principal balance of the loan evidenced by this
Note from time to time remaining unpaid.  In this connection, it is
expressly stipulated and agreed that it is the intent of the Payee
and the Maker in the execution and delivery of this Note to
contract in strict compliance with the usury laws, if any,
applicable to this Note.  None of the terms of this Note or the
security instruments securing same shall ever be construed to
create a contract to pay interest for the use, forbearance or
detention of money, at a rate in excess of the Maximum Rate.  The
Maker, and any guarantors, endorsers or other parties now or
hereafter becoming liable for the payment of this Note, shall never
be liable for interest in excess of the Maximum Rate and the
provisions of this Note and the security instruments securing same
which may be in apparent conflict herewith.

     Should this Note be signed or endorsed by more than one person
and/or entity, all of the obligations herein contained shall be
considered the joint and several obligations of each maker and
endorser hereof.

     Payment of all unpaid sums of principal funded by Payee to
Maker on this Note, together with all accrued and unpaid interest
thereon, and all fees and other charges, if any, becoming due and
owing on this Note shall be secured by any and all guaranties,
security agreements and other security instruments executed by the
Maker or any other party in favor of Payee as security for this
Note, including those executed simultaneously herewith, those
heretofore executed, and those hereafter executed.

     If any payment on this Note shall become due on a Saturday,
Sunday, or public holiday on which Payee is not open for business,
such payment shall be made on the next succeeding day on which
Payee is open for business and such extension of time shall in such
case be included in computing interest in connection with such
payment.

     IN WITNESS WHEREOF, the undersigned Maker has duly executed
this Note as of the day and year above first written.

                              MIDCOAST ENERGY RESOURCES,INC.



                              By:                       
                                  Dan C. Tutcher,
                                  President