EXHIBIT 10.35

                      REVOLVING CREDIT PROMISSORY NOTE


$1,250,000.00                                    October 31, 1995

For value received MIDCOAST ENERGY RESOURCES, INC., (hereinafter
called "Maker" whether one or more) promises to pay to the order of
AMERICAN NATIONAL BANK, ("Payee") at its office in Corpus Christi,
Nueces County, Texas, in lawful money of the United States the sum
of ONE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS, or so much
thereof as may be advanced and unpaid hereon from time to time,
together with interest on the unpaid principal balance hereon
outstanding from time to time prior to maturity at a rate which is
the lesser from time to time of:  (i) a variable rate which is one
and one-half percent (1.5%) per annum ABOVE THE REFERENCE RATE as
such varies from time to time, such variable rate to change at the
same time and with changes in the said Reference Rate; or (ii) the
maximum legal rate  which may be lawfully contracted for, charged
or received hereon from time to time  under applicable law; or
(iii) 24% per annum.  The term "Reference Rate" shall mean that
variable rate of interest per annum established by American
National Bank ("Reference Bank") from time to time as its "base
rate".  Such rate is set by the Reference Bank as a general
reference rate of interest, taking into account such factors as the
Reference Bank may deem appropriate, it being understood that many
of the Reference Bank's commercial or other loans are priced in
relation to such rate, that it is not necessarily the lowest or
best rate actually charged to any  customer and that the Reference
Bank may make various commercial or other loans at rates of
interest having no relationship to such rate.  In the event that
Reference Bank does not have a rate designated by it as its "base
rate", then the "Reference Rate" under the note shall be deemed to
be the variable rate of interest per annum which is the general
reference rate designated by Reference Bank as its "prime rate",
"reference rate", or other similar rate and which is comparable to
the Reference Rate as described above.  Any banking association
into which the Reference Bank may be converted or merged, or with
which it may be consolidated, or to which it might sell or transfer
its banking business and assets as a whole or substantially as a
whole, or any banking association resulting from any such
conversion, sale, merger, consolidation or transfer to which it is
a party, shall be and become successor Reference Bank hereunder.

All interest rates hereunder shall be computed on a full calendar
year (365/366  days) basis.  Article 5069  Chapter 15 V.A.T.S.
shall not in any event apply to the loan evidenced hereby.  After
maturity hereof, unpaid principal and accrued interest shall bear
interest from maturity until paid at the rate of eighteen percent
(18%) per annum, calculated on a full calendar year basis.

Principal shall be due and payable on or before November 1, 1998,
and also monthly payments, if any, shall be made as required under
a Revolving Credit Agreement of even date herewith.  Accrued
interest shall be due and payable on a monthly basis commencing
December 1, 1995, and on the same day of each succeeding month
thereafter, and at maturity.

All payments hereon shall be first applied to accrued interest with
the remainder, if any, applied to unpaid principal.  Principal and
accrued interest may be prepaid in whole or in part from time to
time without penalty or premium.

This note evidences funds to be advanced to Maker pursuant to a
Revolving Credit Agreement of even date.  Payment hereof is secured
and guaranteed as set forth in such Agreement.

This note shall evidence the Maker's, endorsers', sureties' and
guarantors' joint and several obligation to pay all advances,
together with interest thereon, made by Payee to Maker or for
Maker's account.  Interest shall accrue on principal only from the
date advanced until paid.

The Maker and all endorsers, guarantors and sureties hereof
authorize Payee from time to time to make advances to the Maker
hereof without any requirement that Payee notify them or any of
them of such advances, provided the total principal owing hereunder
shall not exceed at any one time the face amount of this note.  The
amount owing hereunder at any given time shall be determined by the
total of all advances made less any principal payments made plus
the unpaid accrued interest thereon as determined by the provisions
hereof.

At the option of the holder hereof, the maturity of this note may
be accelerated and all unpaid amounts of principal and accrued
interest shall become immediately due and payable, without
presentment or demand or notice to any person obligated as Maker or
any other person obligated hereon, upon the occurrence of any of
the following events: default in the payment of any indebtedness or
any part thereof owing to holder by any person obligated as Maker
or any other person obligated hereon, whether evidenced by this
note or otherwise; or failure to perform or keep any of the
conditions and covenants contained in any document given to secure
indebtedness owing to holder by any person obligated as Maker or
any other person obligated hereon or any document evidencing loan
agreements made in connection herewith; or insolvency or making of
any general assignment for the benefit of creditors by any person
obligated as Maker or any other person obligated hereon; or the
filing of any petition or commencement of any proceeding by or
against any person obligated as Maker or any other person obligated
hereon for any relief, discharge, rearrangement, reorganization or
otherwise under any bankruptcy or insolvency laws; or the levying
on, seizure or freezing of any account of any person obligated as
Maker or any other person obligated hereon by any agency or
instrumentality of the State or Federal government; or the issuance
of any writ of attachment or garnishment relating to or affecting
any of the property or assets of any person obligated as Maker or
any other person obligated hereon; or if the holder hereof in good
faith deems itself insecure.

Maker and all sureties, endorsers and guarantors of this note
hereby severally waive demand, presentment for payment, notice of
non-payment, protest, notice of protest, notice of intention to
accelerate maturity, notice of acceleration of maturity, and all
other notice, and diligence in collecting this note or filing suit
thereon or enforcing any security given therefor, and agree to any
substitution, exchange or release of any security now or hereafter
given for this note or the release of any party primarily or
secondarily liable hereon. Maker and all sureties, endorsers and
guarantors of this note further severally agree that it will not be
necessary for the payee or any holder hereof, in order to enforce
payment of this note, to first institute or exhaust its remedies
against any person obligated as Maker or other party liable
therefor or to enforce its rights against any security for this
note and hereby consent to the renewal and extension or
modification from time to time of this note (regardless of the
number or length of time of the renewals, extensions or
modifications), and to any other indulgence with respect hereto,
without notice of any such renewal, extension, modification or
indulgence.  All persons obligated hereon, whether as a maker,
endorser, surety, guarantor or otherwise, shall be jointly and
severally liable for repayment of the indebtedness evidenced by or
arising under this note.  

In the event that this note is placed into the hands of an attorney
for collection, or if collected through probate, bankruptcy or
other judicial proceedings, then there shall be additionally owing
hereon all expenses and costs of collection, including reasonable
attorney's fees.
 
It is expressly provided and stipulated that, notwithstanding any
provision of this Note or any loan agreement or in any deed of
trust, assignment, security agreement or other agreement securing
payment of this note, in no event shall the aggregate of all
interest paid by the Maker to the holder hereof or contracted for,
chargeable or receivable hereunder ever exceed the maximum legal
rate of interest which may lawfully be charged Maker under the laws
of the State of Texas or the United States (whichever may permit
the higher rate) on the principal balance of this note from time to
time advanced and 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 usury laws of the State of Texas
or the United States (whichever may permit the higher rate).  In
the event said maximum legal rate is calculated under Texas
statutes, the applicable rate ceiling (maximum rate) shall be the
indicated (weekly) rate ceiling from time to time in effect, as
provided in Article 5069-1.04 V.A.T.S., as amended. In furtherance
thereof, none of the terms of this note or any loan agreement or in
any deed of trust, assignment, security agreement or other
agreement securing payment of this note, shall ever be construed to
create a contract to pay for the use, forbearance or detention of
money, interest at a rate in excess of the maximum legal interest
rate permitted to be charged to the Maker under such laws.  The
Maker or any guarantors, endorsers or other parties now or
hereafter becoming liable for payment of this note shall never be
liable for interest in excess of the maximum interest that may
lawfully be charged under such laws, and the provisions of this
paragraph shall govern over all other provisions of this note or
any loan agreement or any deed of trust, assignment, security
agreement or other agreement securing payment of this note, should
such provisions be in apparent conflict herewith. All sums paid or
agreed to be paid to payee or the holder of this note for the use,
forbearance or detention of the indebtedness of Maker under the
terms of this note or otherwise shall be amortized, prorated,
allocated and spread throughout the full term of such indebtedness
until payment in full so that the actual rate of interest with
respect to such indebtedness is uniform throughout the term hereof,
and, in conjunction therewith, if the loan evidenced by this note
should ever be deemed to consist of two or more loans, then any sum
paid or agreed to be paid to the holder hereof for the use,
forbearance or detention of the indebtedness of Maker to payee
under the terms of this note which is deemed to be excessive
interest with respect to one or more of such loans shall be
allocated to the loans for which a maximum lawful rate of interest
has not been contracted for, charged or received or for which no
maximum rate of interest exists.

NOTICE TO BORROWER: THIS LOAN IS PAYABLE IN FULL ON NOVEMBER 1,
1998. YOU MUST REPAY THE ENTIRE PRINCIPAL BALANCE OF THE LOAN AND
UNPAID ACCRUED INTEREST THEN DUE. THE LENDER IS UNDER NO OBLIGATION
TO REFINANCE THE LOAN AT THAT TIME. 

MIDCOAST ENERGY RESOURCES, INC.



By:
     Stevens G. Herbst
     Executive Vice President<PAGE>
                   

                      REVOLVING CREDIT AGREEMENT


This Agreement, made this 31st day of October, 1995, among AMERICAN
NATIONAL BANK ("Lender"), and MIDCOAST ENERGY RESOURCES, INC.
("Borrower"), whose address is 1100 Louisiana, Suite 3030, Houston,
Texas 77002 and STEVENS G. HERBST, KENNETH B. HOLMES, JR. and DAN
C. TUTCHER (the "Guarantors"); WITNESSETH:

SECTION ONE: LINE OF CREDIT

1.01 Amount. Subject to the further terms and provisions hereof,
Lender agrees to and does hereby grant to and establish in favor of
Borrower a reducing line of credit under which Lender shall be
committed to make loans or advances to Borrower from time to time. 
The line of credit shall initially be in the amount of
$1,250,000.00; however on December 1, 1995 and on the first day of
each month thereafter the amount of available credit on the line of
credit shall reduce by $20,833.00 per month.

1.02 Term.  The term of the line of credit shall be until November
1, 1998, and on and after such date the Borrower shall not be
entitled to any further advances on the line of credit; and on such
date shall repay all amounts then owing on the line of credit.

1.03 Repayment. Principal advanced and owing under the line of
credit shall be repayable in accordance with the terms hereof, but
in any event on November 1, 1998.  Also, on the first day of each
month the Borrower shall make such principal payment, if any, as
may be necessary to cause the outstanding principal balance to not
exceed the amount of credit then available, as reduced on such
date. Interest accrued and owing on advanced and unpaid principal
shall be due and payable monthly on the first day of each month and
at maturity. In order to evidence the obligation to repay Lender
all advances, together with interest thereon, made by Lender
pursuant to the said line of credit, Borrower shall execute and
deliver to Lender a promissory note in the form attached hereto as
EXHIBIT "A".  The line of credit shall be repaid in accordance with
such note. 

1.04 Interest Rate. All amounts advanced hereunder on the line of
credit loan shall bear interest, prior to maturity from the date
advanced until repaid, at a variable rate which is to be determined
from time to time and which is equal to one and one-half percent
(1.5%) per annum above the Lender's "base rate" as such base rate
changes from time to time, not to exceed the legal maximum that may
be paid by Borrower, and as otherwise set forth in the said form of
promissory note. After maturity, all unpaid principal and all past
due interest shall bear interest until paid at the rate set forth
in said note. 

1.05 Conditions Precedent. The performance of every covenant to be
performed by Borrower and Guarantors, and the truth of every
representation made by Borrower and Guarantors, shall be a
condition precedent to each and every advance to be made by Lender
under the terms hereof, or to any other obligation whatsoever of
Lender under the terms hereof; and, Lender shall not be required to
make any advance to Borrower at a time that any of Borrower or the
Guarantors are then in default on any obligation to Lender, or in
default hereunder or under any instrument executed pursuant hereto.

SECTION TWO: FUNDING AND ADVANCES

2.01 Funding. Advances on the line of credit shall be made as and
when requested by Borrower; provided Borrower shall not be entitled
to any advances which would cause the principal balance on the said
Note to exceed the amount of credit then available (as such has
been reduced) on the line of credit.


SECTION THREE: SECURITY, GUARANTEES

3.01 Collateral. The line of credit provided hereunder and all
other indebtedness now or hereafter owing by Borrower to Lender
shall be secured by first liens on all present and future contracts
and contract rights for the transportation of hydrocarbons related
to and pertaining to those eight pipeline systems described on
EXHIBIT "B" hereto attached, and all contracts and contract rights
for the purchase and/or sale of hydrocarbons in the Clemens Dome
and Conway pipeline systems described on EXHIBIT "B", and all
accounts receivable now or hereafter owing to Borrower arising out
of or related to said contracts. 

3.02 Guarantees. All amounts now or hereafter owing to Lender by
Borrower shall be jointly and severally guaranteed by each of the
Guarantors on a form of guaranty normally used by Lender. 

3.03 Negative Pledge.  For so long as any indebtedness remains
owing by Borrower to Lender under the line of credit, Borrower
agrees that it will keep the pipeline systems described on EXHIBIT
"B" free and clear of all liens and encumbrances, and will not
pledge or mortgage said pipeline systems to any third party. 
Borrower warrants and represents that said pipeline systems are
free and clear of all liens and encumbrances.
SECTION FOUR: FURTHER COVENANTS, CONDITIONS AND REPRESENTATIONS 

4.01 Representations. In addition to the other covenants and
representations herein, Borrower makes the following
representations, covenants, or agreements to Lender, which
representations, covenants, or agreements Borrower covenants to
keep during the time that any indebtedness to be loaned to Borrower
pursuant hereto remains unpaid (including renewals and extensions),
to-wit: 

(a)That it is a corporation duly organized and existing under the
laws of the State of Nevada;

(b)That it is authorized to execute this Agreement and the various
instruments to be executed pursuant hereto;

(c)That it has corporate authority and power to own its property
and conduct its business as it is currently carried on;

(d)That the performance of its obligations under this Agreement
will not conflict with any provision of law, nor with the Articles
of Incorporation and Bylaws of the corporation, nor with any
contractual agreement binding on the corporation; 

(e)That it will pay all taxes, assessments and other liabilities,
as and when same become due except as they are contested in good
faith; 

(f)That it will not become a party to any merger or consolidation
except as approved in writing by Lender; and

(g) Except for loans to or guarantee of loans to a subsidiary, that
it will not become a guarantor or surety, or pledge its credit on 
any undertaking of another, or make any loans or advances to any
other, except trade credit extended in the normal course of
business.

4.02 Financial Condition. Each of the Borrower and the Guarantors
represents that, at the present time, it or he is not a party to
any material pending or threatened litigation, nor a party to any
proceeding or action for the assessment or collection of a material
amount of additional taxes, and that it or he does not know of any
material contingent liabilities not provided for or disclosed in
the financial statements heretofore provided Lender.  Each of
Borrower and the Guarantors also represents to Lender that the
latest financial statements furnished heretofore to Lender fairly
represent its or his financial condition for the period as of the
date stated, all in accordance with generally accepted accounting
principles consistently applied; and that no substantial adverse
changes have occurred since the date of the last financial
statement furnished to Lender. 

4.03 Financial Statements of Borrower. Borrower shall keep proper
books of record and account in which complete and correct entries
shall be made of Borrower's transactions in accordance with
generally accepted accounting principles and shall furnish or cause
to be furnished to Lender unaudited quarterly financial statements
within forty-five (45) days after the end of each month, and a
yearly audited financial statement within ninety (90) days of the
end of the fiscal year, such financial statements to be certified
by the chief financial officer of Borrower. Each such financial
statement shall include a balance sheet, cash flow statement and
contingent liabilities, and be in a form suitable to the Lender. 

4.04 Tax Returns. A copy of each Federal income tax return of
Borrower shall be furnished to Lender within 30 days after such is
filed.

4.05 Financial Statements of Guarantors. Each of the Guarantors
shall furnish Lender within one hundred twenty (120) days after the
end of each year financial statements, prepared in accordance with
generally accepted accounting principles, relative to each
Guarantor individually. Each such financial statement shall include
a balance sheet, cash flow statement and contingent liabilities,
shall be in a form suitable to the Lender, and shall be signed by
the Guarantor.

SECTION FIVE: DEFAULT

5.01 Events of Default. In addition to any other provision for
acceleration of maturity contained in notes and collateral
instruments to be executed by Borrower, Lender at its election may
declare all sums owing by Borrower immediately due and payable upon
the happening of any of the following events: 

(a)Lender shall determine that any material representation or
warranty by Borrower or by any Guarantor herein or elsewhere
contained, or any material representation or warranty contained in
any collateral instruments required hereunder shall not be correct
in any respect; 

(b)Default by Borrower or by any Guarantor in the payment of any
obligation owing Lender;

(c)Failure of Borrower or any Guarantor to timely perform any act
or duty or furnish any report required under the terms of this
Agreement or under the terms of any note, security agreement or
other instrument to be executed pursuant hereto; or

(d)Failure of Borrower to effect a reduction of principal
indebtedness by reason of a decrease in the line of credit as
required in SECTION 1.03 hereof.

SECTION SIX: MISCELLANEOUS

6.01 Survival of Representations.  All representations, covenants
or warranties of Borrower and any Guarantor shall survive the
execution and delivery of this Agreement and any notes, security
agreements or other instruments executed and delivered pursuant
hereto; and no investigation by Lender, nor information it might
have determined from any other source available to it, shall
diminish or otherwise affect the right of Lender to rely on such
representations and warranties and to enforce same.

6.02 Non-Merger. The covenants contained in the instruments made a
part hereof by reference which are to be executed from time to time
in connection with this loan are expressly adopted as covenants
between the parties hereto as a part of this Agreement. The
provisions of this Agreement shall not be merged into the execution
of any note, mortgage or other instrument executed pursuant hereto,
but shall continue to define the relationship of the parties hereto
even after the execution of such instruments. The covenants
contained in this Agreement are not in lieu of covenants contained
in the instruments to be executed in connection herewith even
though they may pertain to the same subject matters; rather, said
covenants shall be cumulative of each other and shall be construed
so as to not result in a conflict of terms, if possible, and only
if a conflict cannot be so avoided will it then be considered that
the express provisions of this Agreement shall be given controlling
effect.

6.03 Assignability. The rights of Borrower hereunder shall not be
assignable without the express prior written consent of Lender.
Lender shall have the right to assign its rights hereunder and
assign any and all notes executed in favor of Lender hereunder, as
well as the right to assign undivided interests therein. 

6.04 Non-Waiver. No delay on the part of Lender or its assigns in
the exercise of any rights shall operate as a waiver, nor shall any
single or partial exercise of any right preclude the other or
additional exercise of any right. In the event of any default,
Lender may enforce its security interests as to such collateral as
it may elect. Its election to foreclose its lien on a particular
collateral shall not be a waiver of its right to foreclose its lien
in any other collateral. Only when all indebtedness owing Lender by
Borrower has been fully paid will Lender ever be required to
release any collateral.

6.05 Amendment. This Agreement shall not be amended except in
writing signed by the parties.

6.06 Other Documents. In addition to the instruments specifically
mentioned herein, Borrower shall execute and deliver such other and
further documents deemed necessary by Lender to evidence and secure
the indebtedness of Borrower to Lender contemplated herein, and to
otherwise effect the transactions herein contemplated. 

6.07 Expenses. Borrower agrees to pay all reasonable expenses and
fees, including attorneys' fees, incurred by Lender in connection
with the making of the loan referred to herein as well as all other
reasonable expenses incurred by Lender in connection herewith. 

6.08 Certificates. Prior to the first advance hereunder, Borrower
shall furnish Lender certified copies of resolutions adopted by its
Board of Directors authorizing or ratifying Borrower's entering
into this Agreement and the transactions herein contemplated; and
shall also furnish a certificate of good standing from the State
Comptroller.

6.09 Binding. This Agreement shall be binding on the parties
hereto, and their respective heirs, representatives, successors and
assigns; and shall inure to the benefit of Borrower and of Lender
and Lender's successors and assigns. 

EXECUTED in multiple originals the date first set forth above. 

THIS WRITTEN LOAN AGREEMENT AND THE PROMISSORY NOTES, SECURITY
AGREEMENTS, GUARANTY AGREEMENTS AND OTHER LOAN DOCUMENTS EXECUTED
BY THE PARTIES REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

BORROWER:                                LENDER:
MIDCOAST ENERGY RESOURCES, INC.          AMERICAN NATIONAL BANK



By:                                       By:
     Stevens G. Herbst                       Charles A. Brett
     Executive Vice President                Senior Lending Officer

GUARANTORS:



Stevens G. Herbst



Kenneth B. Holmes, Jr.



Dan C. Tutcher

<PAGE>
                               EXHIBIT "A"

              PIPELINE SYSTEMS OF MIDCOAST ENERGY RESOURCES, INC.


DESCRIPTION OF PIPELINE SYSTEMS:

1. Burnet (Long Mountain) - A 7,000 ft. pipeline, located in Burnet
County, Texas, which connects a Seminole Pipeline Company LPG
mainline pump station to Lone Star Gas Company's intrastate gas
pipeline, through which 100% of Seminole's gas requirements are
met.

2. Cat Springs - A 8,500 ft. pipeline, located in Austin County,
Texas, which connects a Seminole Pipeline Company LPG mainline pump
station to Tennessee Gas Pipeline Company's interstate gas
pipeline, through which 100% of Seminole's gas requirements are
met.

3. Clemens Dome - A 500 ft. pipeline, located in Brazoria County,
Texas, which connects a Seminole Pipeline Company LPG mainline pump
station to Phillips Natural Gas Company's Seagas Pipeline, through
which 100% of Seminole's gas requirements are met.

4. Stratton Ridge - A 8,500 ft. pipeline, located in Brazoria
County, Texas, which connects a Seminole Pipeline Company LPG
mainline pump station to Amoco Natural Gas Company's intrastate gas
pipeline, through which 100% of Seminole's gas requirements are
transported.

5. Turkey Creek (Beasley) - A 15 mile pipeline, located in Fort
Bend County, Texas which delivers 100% of the gas requirements of
a Seminole Pipeline Company LPG mainline pump station from the Gulf
Coast Natural Gas Gathering pipeline.  The system also sells small
volumes of gas to a local rice farmer.  In addition, the system
gathers, transports, and redelivers certain volumes of gas to Gulf
Coast Natural Gas Company.

6. Owens Corning - A 3,300 ft. pipeline, located in Wyandotte
County, Kansas, which connects the Owens Corning Fiberglas Plant to
Williams Natural Gas Company's interstate gas pipeline, through
which 100% of Owens Corning's gas requirements are transported.

7. Conway - A 50 ft. pipeline, located in Rice County, Kansas,
which connects a MAPCO, Inc. LPG Fractionator to Williams Natural
Gas Company's interstate gas pipeline through which 100% of MAPCO's
Conway Fractionation Facility gas requirements are met.
8. Westlake Pipeline - A 1.3 mile pipeline, located in Calcasieu
Parish, Louisiana, which connects Sabine Pipeline, in Lake Charles,
Louisiana, to Westlake Petrochemical's HDPE manufacturing facility.
<PAGE>
                         REVOLVING CREDIT AGREEMENT


This Agreement, made this 31st day of October, 1995, among AMERICAN
NATIONAL BANK ("Lender"), and MIDCOAST ENERGY RESOURCES, INC.
("Borrower"), whose address is 1100 Louisiana, Suite 3030, Houston,
Texas 77002 and STEVENS G. HERBST, KENNETH B. HOLMES, JR. and DAN
C. TUTCHER (the "Guarantors"); WITNESSETH:

SECTION ONE: LINE OF CREDIT

1.01 Amount. Subject to the further terms and provisions hereof,
Lender agrees to and does hereby grant to and establish in favor of
Borrower a reducing line of credit under which Lender shall be
committed to make loans or advances to Borrower from time to time. 
The line of credit shall initially be in the amount of
$1,250,000.00; however on December 1, 1995 and on the first day of
each month thereafter the amount of available credit on the line of
credit shall reduce by $20,833.00 per month.

1.02 Term.  The term of the line of credit shall be until November
1, 1998, and on and after such date the Borrower shall not be
entitled to any further advances on the line of credit; and on such
date shall repay all amounts then owing on the line of credit.

1.03 Repayment. Principal advanced and owing under the line of
credit shall be repayable in accordance with the terms hereof, but
in any event on November 1, 1998.  Also, on the first day of each
month the Borrower shall make such principal payment, if any, as
may be necessary to cause the outstanding principal balance to not
exceed the amount of credit then available, as reduced on such
date. Interest accrued and owing on advanced and unpaid principal
shall be due and payable monthly on the first day of each month and
at maturity. In order to evidence the obligation to repay Lender
all advances, together with interest thereon, made by Lender
pursuant to the said line of credit, Borrower shall execute and
deliver to Lender a promissory note in the form attached hereto as
EXHIBIT "A".  The line of credit shall be repaid in accordance with
such note. 

1.04 Interest Rate. All amounts advanced hereunder on the line of
credit loan shall bear interest, prior to maturity from the date
advanced until repaid, at a variable rate which is to be determined
from time to time and which is equal to one and one-half percent
(1.5%) per annum above the Lender's "base rate" as such base rate
changes from time to time, not to exceed the legal maximum that may
be paid by Borrower, and as otherwise set forth in the said form of
promissory note. After maturity, all unpaid principal and all past
due interest shall bear interest until paid at the rate set forth
in said note. 

1.05 Conditions Precedent. The performance of every covenant to be
performed by Borrower and Guarantors, and the truth of every
representation made by Borrower and Guarantors, shall be a
condition precedent to each and every advance to be made by Lender
under the terms hereof, or to any other obligation whatsoever of
Lender under the terms hereof; and, Lender shall not be required to
make any advance to Borrower at a time that any of Borrower or the
Guarantors are then in default on any obligation to Lender, or in
default hereunder or under any instrument executed pursuant hereto.

SECTION TWO: FUNDING AND ADVANCES

2.01 Funding. Advances on the line of credit shall be made as and
when requested by Borrower; provided Borrower shall not be entitled
to any advances which would cause the principal balance on the said
Note to exceed the amount of credit then available (as such has
been reduced) on the line of credit.

SECTION THREE: SECURITY, GUARANTEES

3.01 Collateral. The line of credit provided hereunder and all
other indebtedness now or hereafter owing by Borrower to Lender
shall be secured by first liens on all present and future contracts
and contract rights for the transportation of hydrocarbons related
to and pertaining to those eight pipeline systems described on
EXHIBIT "B" hereto attached, and all contracts and contract rights
for the purchase and/or sale of hydrocarbons in the Clemens Dome
and Conway pipeline systems described on EXHIBIT "B", and all
accounts receivable now or hereafter owing to Borrower arising out
of or related to said contracts. 

3.02 Guarantees. All amounts now or hereafter owing to Lender by
Borrower shall be jointly and severally guaranteed by each of the
Guarantors on a form of guaranty normally used by Lender. 

3.03 Negative Pledge.  For so long as any indebtedness remains
owing by Borrower to Lender under the line of credit, Borrower
agrees that it will keep the pipeline systems described on EXHIBIT
"B" free and clear of all liens and encumbrances, and will not
pledge or mortgage said pipeline systems to any third party. 
Borrower warrants and represents that said pipeline systems are
free and clear of all liens and encumbrances.

SECTION FOUR: FURTHER COVENANTS, CONDITIONS AND REPRESENTATIONS 

4.01 Representations. In addition to the other covenants and
representations herein, Borrower makes the following
representations, covenants, or agreements to Lender, which
representations, covenants, or agreements Borrower covenants to
keep during the time that any indebtedness to be loaned to Borrower
pursuant hereto remains unpaid (including renewals and extensions),
to-wit: 

(a)That it is a corporation duly organized and existing under the
laws of the State of Nevada;

(b)That it is authorized to execute this Agreement and the various
instruments to be executed pursuant hereto;

(c)That it has corporate authority and power to own its property
and conduct its business as it is currently carried on;

(d)That the performance of its obligations under this Agreement
will not conflict with any provision of law, nor with the Articles
of Incorporation and Bylaws of the corporation, nor with any
contractual agreement binding on the corporation; 

(e)That it will pay all taxes, assessments and other liabilities,
as and when same become due except as they are contested in good
faith; 

(f)That it will not become a party to any merger or consolidation
except as approved in writing by Lender; and

(g)Except for loans to or guarantee of loans to a subsidiary, that
it will not become a guarantor or surety, or pledge its credit on 
any undertaking of another, or make any loans or advances to any
other, except trade credit extended in the normal course of
business.

4.02 Financial Condition. Each of the Borrower and the Guarantors
represents that, at the present time, it or he is not a party to
any material pending or threatened litigation, nor a party to any
proceeding or action for the assessment or collection of a material
amount of additional taxes, and that it or he does not know of any
material contingent liabilities not provided for or disclosed in
the financial statements heretofore provided Lender.  Each of
Borrower and the Guarantors also represents to Lender that the
latest financial statements furnished heretofore to Lender fairly
represent its or his financial condition for the period as of the
date stated, all in accordance with generally accepted accounting
principles consistently applied; and that no substantial adverse
changes have occurred since the date of the last financial
statement furnished to Lender. 

4.03 Financial Statements of Borrower. Borrower shall keep proper
books of record and account in which complete and correct entries
shall be made of Borrower's transactions in accordance with
generally accepted accounting principles and shall furnish or cause
to be furnished to Lender unaudited quarterly financial statements
within forty-five (45) days after the end of each month, and a
yearly audited financial statement within ninety (90) days of the
end of the fiscal year, such financial statements to be certified
by the chief financial officer of Borrower. Each such financial
statement shall include a balance sheet, cash flow statement and
contingent liabilities, and be in a form suitable to the Lender. 

4.04 Tax Returns. A copy of each Federal income tax return of
Borrower shall be furnished to Lender within 30 days after such is
filed.

4.05 Financial Statements of Guarantors. Each of the Guarantors
shall furnish Lender within one hundred twenty (120) days after the
end of each year financial statements, prepared in accordance with
generally accepted accounting principles, relative to each
Guarantor individually. Each such financial statement shall include
a balance sheet, cash flow statement and contingent liabilities,
shall be in a form suitable to the Lender, and shall be signed by
the Guarantor.

SECTION FIVE: DEFAULT

5.01 Events of Default. In addition to any other provision for
acceleration of maturity contained in notes and collateral
instruments to be executed by Borrower, Lender at its election may
declare all sums owing by Borrower immediately due and payable upon
the happening of any of the following events: 

(a)Lender shall determine that any material representation or
warranty by Borrower or by any Guarantor herein or elsewhere
contained, or any material representation or warranty contained in
any collateral instruments required hereunder shall not be correct
in any respect; 

(b)Default by Borrower or by any Guarantor in the payment of any
obligation owing Lender;

(c)Failure of Borrower or any Guarantor to timely perform any act
or duty or furnish any report required under the terms of this
Agreement or under the terms of any note, security agreement or
other instrument to be executed pursuant hereto; or

(d)Failure of Borrower to effect a reduction of principal
indebtedness by reason of a decrease in the line of credit as
required in SECTION 1.03 hereof.

SECTION SIX: MISCELLANEOUS

6.01 Survival of Representations.  All representations, covenants
or warranties of Borrower and any Guarantor shall survive the
execution and delivery of this Agreement and any notes, security
agreements or other instruments executed and delivered pursuant
hereto; and no investigation by Lender, nor information it might
have determined from any other source available to it, shall
diminish or otherwise affect the right of Lender to rely on such
representations and warranties and to enforce same.

6.02 Non-Merger. The covenants contained in the instruments made a
part hereof by reference which are to be executed from time to time
in connection with this loan are expressly adopted as covenants
between the parties hereto as a part of this Agreement. The
provisions of this Agreement shall not be merged into the execution
of any note, mortgage or other instrument executed pursuant hereto,
but shall continue to define the relationship of the parties hereto
even after the execution of such instruments. The covenants
contained in this Agreement are not in lieu of covenants contained
in the instruments to be executed in connection herewith even
though they may pertain to the same subject matters; rather, said
covenants shall be cumulative of each other and shall be construed
so as to not result in a conflict of terms, if possible, and only
if a conflict cannot be so avoided will it then be considered that
the express provisions of this Agreement shall be given controlling
effect.

6.03 Assignability. The rights of Borrower hereunder shall not be
assignable without the express prior written consent of Lender.
Lender shall have the right to assign its rights hereunder and
assign any and all notes executed in favor of Lender hereunder, as
well as the right to assign undivided interests therein. 

6.04 Non-Waiver. No delay on the part of Lender or its assigns in
the exercise of any rights shall operate as a waiver, nor shall any
single or partial exercise of any right preclude the other or
additional exercise of any right. In the event of any default,
Lender may enforce its security interests as to such collateral as
it may elect. Its election to foreclose its lien on a particular
collateral shall not be a waiver of its right to foreclose its lien
in any other collateral. Only when all indebtedness owing Lender by
Borrower has been fully paid will Lender ever be required to
release any collateral.

6.05 Amendment. This Agreement shall not be amended except in
writing signed by the parties.

6.06 Other Documents. In addition to the instruments specifically
mentioned herein, Borrower shall execute and deliver such other and
further documents deemed necessary by Lender to evidence and secure
the indebtedness of Borrower to Lender contemplated herein, and to
otherwise effect the transactions herein contemplated. 

6.07 Expenses. Borrower agrees to pay all reasonable expenses and
fees, including attorneys' fees, incurred by Lender in connection
with the making of the loan referred to herein as well as all other
reasonable expenses incurred by Lender in connection herewith. 

6.08 Certificates. Prior to the first advance hereunder, Borrower
shall furnish Lender certified copies of resolutions adopted by its
Board of Directors authorizing or ratifying Borrower's entering
into this Agreement and the transactions herein contemplated; and
shall also furnish a certificate of good standing from the State
Comptroller.

6.09 Binding. This Agreement shall be binding on the parties
hereto, and their respective heirs, representatives, successors and
assigns; and shall inure to the benefit of Borrower and of Lender
and Lender's successors and assigns. 

EXECUTED in multiple originals the date first set forth above. 

THIS WRITTEN LOAN AGREEMENT AND THE PROMISSORY NOTES, SECURITY
AGREEMENTS, GUARANTY AGREEMENTS AND OTHER LOAN DOCUMENTS EXECUTED
BY THE PARTIES REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

BORROWER:                            LENDER:
MIDCOAST ENERGY RESOURCES, INC.      AMERICAN NATIONAL BANK


By:                                  By:
   Stevens G. Herbst                     Charles A. Brett
   Executive Vice President              Senior Lending Officer

GUARANTORS:


Stevens G. Herbst<PAGE>
                             SECURITY AGREEMENT


Date:    October 31, 1995    

A.         PARTIES

      1. Debtor:    MIDCOAST ENERGY RESOURCES, INC.                
                  Check one: [    ] individual  [     ] partnership 
[ X  ] corporation  [    ] other

      2. Address: 1100 Louisiana, Suite 3030, Houston, Texas 77002  
 Address shown is [    ] place of business  [  X ] chiefexecutive office 
 (if more than one place of business)  [    ] residence

      3. Secured Party:   AMERICAN NATIONAL BANK       
      4. Address: 100 American Bank Plaza, Corpus Christi, Texas 78475
      (Information concerning this security interest may be obtained
          at the office of the Secured Party shown above).

B.         AGREEMENT

      Subject to the applicable terms of this Security Agreement,
      Debtor grants to Secured Party a security interest in the
      collateral to secure the payment of the obligations.  A carbon,
      photographic, or other reproduction of this Security Agreement
      may be filed as a financing statement.

C.         OBLIGATIONS

      1.        The following are the obligations secured by this Agreement:

           a.         All past, present, and future advances, of whatever,
                      type, by Secured Party to Debtor, and extensions and
                      renewals thereof.

           b.         All existing and future liabilities of whatever type, of
                      Debtor to Secured Party, and including (but not limited
                      to) liability for overdrafts and as indorser and surety.

           c.         All costs incurred by Secured Party to obtain, preserve,
                      and enforce this security interest, collect the
                      obligation, and maintain and preserve the collateral,
                      including (but not limited to) taxes, assessments,
                      insurance premiums, repairs, reasonable attorney's fees
                      and legal expenses, feed, rent, storage costs, and
                      expenses of sale.

           d.         Interest on the above amounts, as agreed between Secured
                      Party and Debtor, or if no such agreement, at the maximum
                      rate permitted by law.

2.         List notes included in the obligations as of the date of this
Agreement (show date and amount):

   Revolving Credit Promissory Note of even date in the principal 
                     amount of $1,250,000.00.

D.COLLATERAL

1.The security interest is granted in the following collateral:

All present and future contracts and contract rights for the
transportation of hydrocarbons related to and pertaining to those
eight pipeline systems described on EXHIBIT "A" hereto attached,
and all present and future contracts and contract rights for the
purchase and/or sale of hydrocarbons in the Clemens Dome and Conway
pipeline systems described on EXHIBIT "A", and all accounts
receivables now or hereafter owing to Borrower arising out of or
related to said contracts; and all proceeds of the foregoing.

E.AGREEMENTS OF DEBTOR

1.Debtor will: take adequate care of the collateral; insure the
collateral for such hazards and in such amounts as Secured Party
directs, policies to be satisfactory to Secured Party; pay all
costs necessary to obtain, preserve, and enforce this security
interest, collect the obligation, and preserve the collateral,
including (but not limited to) taxes, assessments, insurance
premiums, repairs, reasonable attorneys' fees and legal expenses,
feed, rent, storage costs, and expenses of sale; furnish Secured
Party with any information on the collateral requested by Secured
Party; allow Secured Party to inspect the collateral, and inspect
and copy all records relating to the collateral and the obligation;
sign any papers furnished by Secured Party which are necessary to
obtain and maintain this security interest; assist Secured Party in
complying with the Federal Assignment of Claims Act, where
necessary to enable Secured Party to become an assignee under such
Act; take necessary steps to preserve the liability of account
debtors, obligors, and secondary parties whose obligations are part
of the collateral; transfer possession of all instruments,
documents, and chattel paper which are part of the collateral to
Secured Party immediately, or as to those hereafter acquired,
immediately following acquisition; perfect a security interest
(using a method satisfactory to Secured Party) in goods covered by
chattel paper which is part of the collateral; notify Secured Party
of any change occurring in or to the collateral, or in any fact or
circumstance warranted or represented by Debtor in this agreement
or furnished to Secured Party, or if any event of default occurs.

2.Debtor will not (without Secured Party's consent): remove the
collateral from the locations specified herein; allow the
collateral to become an accession to other goods; sell,
lease,otherwise transfer, manufacture, process, assemble, or
furnish under contracts of service, the collateral, except goods
identified herein as inventory; allow the collateral to be affixed
to real estate, except goods identified herein as fixtures.

3.Debtor warrants: no financing statement has been filed with
respect to the collateral, other than relating to this security
interest; Debtor is absolute owner of the collateral, and it is not
encumbered other than by this security interest (and the same will
be true of collateral acquired hereafter when acquired); none of
the collateral is affixed to real estate or an accession to other
goods, nor will collateral acquired hereafter be affixed to real
estate or an accession to other goods when acquired,unless Debtor
has furnished Secured Party the consents or disclaimers necessary
to make this security interest valid against persons holding
interests in the real estate or other goods; all account debtors
and obligors, whose obligations are part of the collateral, are to
the extent permitted by law prevented from asserting against
Secured Party any claims or defenses they have against sellers, or
can be so prevented by Secured Party taking action provided by law
for such purposes.

F.RIGHTS OF SECURED PARTY

Secured Party may, in its discretion, after default: terminate, on
notice to Debtor, Debtor's authority to sell, lease, otherwise
transfer, manufacture, process or assemble, or furnish under
contracts of service, inventory collateral, or any other collateral
as to which such permission has been given; require Debtor to give
possession or control of the collateral to Secured Party; indorse
as Debtor's agent any instruments or chattel paper in the
collateral; notify account debtors and obligors on instruments to
make payment direct to Secured Party; contact account debtors
directly to verify information furnished by Debtor; take control of
proceeds and use cash proceeds to reduce any part of the
obligation; take any action Debtor is required to take or otherwise
necessary to obtain, preserve, and enforce this security interest,
and maintain and preserve the collateral, without notice to Debtor,
and add costs of same to the obligation (but Secured Party is under
no duty to take any such action); release collateral in its
possession to Debtor, temporarily or otherwise; take control of
funds generated by the collateral, such as dividends, interest, and
proceeds or refunds from insurance, and use same to reduce any part
of the obligation; vote any stock which is part of the collateral,
and exercise all other rights which an owner of such stock may
exercise; waive any of its rights hereunder without such waiver
prohibiting the later exercise of the same or similar rights;
revoke any permission or waiver previously granted to Debtor.

G.MISCELLANEOUS

The rights and privileges of Secured Party shall inure to its
successors and assigns.  All representations, warranties, and
agreements of Debtor are joint and several if Debtor is more than
one and shall bind Debtor's personal representatives, heirs,
successors, and assigns. Definitions in the Uniform Commercial Code
apply to words and phrases in this agreement; if Code definitions
conflict, Article 9 definitions apply.  Debtor waives presentment,
demand, notice of dishonor, protest, and extension of time without
notice as to any instruments and chattel paper in the collateral. 
Notice mailed to Debtor's address in Item A2, or to Debtor's most
recent changed address on file with Secured Party, at least five
(5) days prior to the related action (or, if the Uniform Commercial
Code specifies a longer period, such longer period prior to the
related action), shall be deemed reasonable.

H.DEFAULT

1.Any of the following is an event of default: failure of Debtor to
pay any note in the obligation in accordance with its terms, or any
other liability in the obligation on demand, or to perform any act
or duty required by this agreement; falsity of any warranty or
representation in this agreement when made; substantial change in
any fact warranted or represented in this agreement; involvement of
Debtor in bankruptcy or insolvency proceedings, death, dissolution,
or other termination of Debtor's existence; merger or consolidation
of Debtor with another; substantial loss, theft, destruction, sale,
reduction in value, encumbrance of, damage to, or change in the
collateral; modification of any contract, the rights to which are
part of the collateral; levy on, seizure, or attachment of the
collateral; judgment against Debtor; filing any financing statement
with regard to the collateral, other than relating to this security
interest; Secured Party's belief that the prospect of payment of
any part of the obligation, or the performance of any part of this
agreement, is impaired.

2.When an event of default occurs, the entire obligation becomes
immediately due and payable at Secured Party's option without
notice to Debtor, and Secured Party may proceed to enforce payment
of same and exercise any and all of the rights and remedies
available to a secured party under the Uniform Commercial Code as
well as all other rights and remedies. When Debtor is in default,
Debtor, upon demand by Secured Party,shall assemble the collateral
and make it available to Secured Party at a place reasonably
convenient to both parties.  Debtor is entitled to any surplus and
shall be liable to Secured Party for any deficiency.

I.FIRST AND PRIOR LIEN

This security interest grants to Secured Party, a first and prior
lien to secure the payment of the notes and obligations listed
herein, and extensions and renewals thereof.  If Secured Party
disposes of the collateral following default, the proceeds of such
disposition available to satisfy the indebtedness shall be applied
first to the notes herein, and renewals and extension thereof, in
the order of execution, and there after to all remaining
indebtedness and obligations secured hereby, in the order in which
such remaining indebtedness and obligations were executed or
contracted.  For the purpose of this paragraph, an extended or
renewed note will be considered executed on the date of the
original note.<PAGE>
 
                       NON-STANDARD FINANCING STATEMENT


1.DEBTOR'S NAME & ADDRESS:       2.SECURED PARTY'S NAME & ADDRESS:

Midcoast Energy Resources, Inc.   American National Bank      
1100 Louisiana, Suite 3030        100 American Bank Plaza               
Houston, Texas 77002              Corpus Christi, Texas 78475                 


3.         THIS FINANCING STATEMENT COVERS THE FOLLOWING TYPES OR ITEMS
OF PROPERTY:

      All present and future contracts and contract rights for the
      transportation of hydrocarbons related to and pertaining to those
      eight pipeline systems described on EXHIBIT "A" hereto attached,
      and all present and future contracts and contract rights for the
      purchase and/or sale of hydrocarbons in the Clemens Dome and
      Conway pipeline systems described on EXHIBIT "A", and all
      accounts receivables now or hereafter owing to Borrower arising
      out of or related to said contracts; and all proceeds of the
      foregoing.


DEBTOR:

MIDCOAST ENERGY RESOURCES, INC.



By:                                                          
     Stevens G. Herbst
     Executive Vice President
<PAGE>
            CONTINUING UNLIMITED GUARANTY AGREEMENT


1. The undersigned (hereinafter called "Guarantor") for good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and to induce AMERICAN NATIONAL BANK
(hereinafter called "Lender"), with offices at Corpus Christi,
Texas, at its option, at any time or from time to time, to loan
monies or otherwise extend credit with or without security, to or
for the account of MIDCOAST ENERGY RESOURCES, INC. (hereinafter
called "Borrower"), and at the special insistence and request of
Lender, Guarantor hereby unconditionally guarantees the prompt
payment, at the said office of Lender in Nueces County, Texas, when
due of the following (hereinafter called the "Indebtedness"):

All indebtedness, obligations and liabilities of any kind of the
Borrower to the Lender (and also to others to the extent of
participations granted them by the Lender), now outstanding or
owing or which may hereafter be executed or incurred, directly
between the Borrower and the Lender or acquired outright, as a
participation, conditionally or as collateral security from another
by the Lender, absolute or contingent, joint and/or several,
secured or unsecured, due or not due, arising by operation of law
or otherwise, or direct or indirect, including indebtedness,
obligations and liabilities to the Lender of the Borrower as a
member of any partnership, syndicate, association or other group,
and whether incurred by the Borrower as principal, surety,
endorser, guarantor, accommodation party or otherwise, and
including, but not limited to, principal, interest, and costs of
collection including attorneys' fees.

2. This guaranty is an absolute, completed and continuing one, and
no notice of the Indebtedness or any extension of credit already or
hereafter contracted by or extended to the Borrower need be given
to the Guarantor.  Borrower and Lender may rearrange, extend and/or
renew from time to time any or all of the Indebtedness without
notice to the Guarantor and in such event Guarantor will remain
fully bound hereunder on such Indebtedness regardless of the number
of rearrangements, renewals and extensions. The Guarantor hereby
expressly waives marshalling of assets and liabilities, sale in
inverse order of alienation, presentment, demand, protest, notice
of intention to accelerate maturity, notice of acceleration of
maturity, and notice of protest and dishonor on any and all forms
of such Indebtedness, and also notice of acceptance of this
guaranty, acceptance on the part of Lender being conclusively
presumed by its request for this guaranty and delivery of the same
to it.

3. Guarantor authorizes Lender, without notice or demand and
without affecting Guarantor's liability hereunder, to take and hold
security for the payment of this guaranty and/or the Indebtedness
guaranteed, and exchange, enforce, waive and release any such
security; and to apply such security and direct the order or manner
of sale thereof as Lender in its discretion may determine; and to
obtain a guaranty of the Indebtedness from any one or more other
persons, corporations or entities whomsoever and at any time or
times to enforce, waive, rearrange, modify, limit or release such
other persons, corporations or entities from their obligations
under such guaranties. If at any time there be other debt of
Borrower to Lender not guaranteed hereby, then Lender may apply all
amounts realized by Lender from Borrower, from other guarantors or
from collateral to such other debt.  Provided, if a particular
instrument (such as a guaranty or security agreement) expressly
requires application of amounts received by Lender different than
permitted under the preceding sentence, then such amounts shall be
applied as provided in such instrument.

4. Guarantor waives any right to require Lender to (a) proceed
against the Borrower or (b) proceed against or exhaust any security
held to secure the Indebtedness, or (c) exercise any right of set-
off against Borrower, or (d) pursue any other remedy in Lender's
power whatsoever.  Guarantor waives any defense arising by reason
of any disability, lack of corporate authority or power, or other
defense of the Borrower or of any other guarantor of the
Indebtedness, and shall remain liable hereon regardless of whether
Borrower or any other guarantor be found not liable thereon for any
reason. Until all the Indebtedness shall have been paid in full,
Guarantor shall have no right of subrogation, and waives any right
to enforce any remedy which Lender now has or may hereafter have
against the Borrower, and waives any benefit of and any right to
participate in any security now or hereafter held by Lender.

5. In addition to the other obligations of Guarantor imposed by
this Guaranty Agreement, Guarantor agrees to pay the costs of
collection, including reasonable attorneys' fees, incurred by
Lender in collection of the Indebtedness from Guarantor.

6. Guarantor hereby grants to the Lender a right of set-off (which
right of set-off herein granted shall be in addition to and not in
lieu of any other right of set-off Lender may have) against the
balance of every deposit account (whether interest bearing or non-
interest bearing and whether a demand deposit or time deposit), now
or hereafter existing, of the Guarantor with the Lender and any
other claim of the Guarantor against the Lender, now or hereafter
existing.  The grant of the above right of set-off shall not in
anywise limit or be construed as limiting Lender to collect payment
of any liability of Guarantor incurred hereby only by way of set-
off, but it is expressly understood and provided that all such
liability shall constitute the absolute and unconditional
obligation of Guarantor.  Guarantor hereby subordinates all
indebtedness owing to the Guarantor from Borrower to all
Indebtedness of Borrower to Lender, and shall not attempt to set
off or reduce any obligations to Lender because of such
indebtedness. The Guarantor further subordinates any lien or
security interest that he may have on any collateral or security of
the Borrower or any other party to the liens and security interests
on said collateral and security in favor of the Lender. Upon an
event of default on the Indebtedness and for so long as such
default exists, Guarantor agrees not to accept any payment on the
subordinated indebtedness nor realize upon any collateral therefor.
If the Guarantor should receive any such payment, satisfaction or
security for indebtedness of the Borrower to the Guarantor in
violation of the terms hereof, the Guarantor agrees forthwith to
deliver the same to the Lender in the form received, endorsed or
assigned as may be appropriate for application on account of, or as
security for, the Indebtedness, and until so delivered, agree to
hold the same in trust for the Lender.

7. The term of this Agreement shall be for five years from the date
hereof and for so long thereafter as any of the Indebtedness
existing at the end of said five years, together with interest and
costs of collection thereafter accruing on and with respect to such
Indebtedness existing at the end of said five years, remains
outstanding and unpaid; and, it is agreed that such interest and
costs of collection accruing after the end of said five years is
also part of the Indebtedness guaranteed hereunder. It is further
agreed that maturity of the Indebtedness, as such may be extended
from time to time by agreement between Lender and Borrower as
aforesaid, shall be the same with respect to Guarantor as with
respect to Borrower.

8. Notwithstanding anything herein or in any notes, contracts,
agreements or other instruments of Borrower to the contrary,
Guarantor is not obligated to and shall never be required to pay
interest on amounts owing by Borrower to Lender in excess of the
maximum permissible to be paid by a guarantor of the Indebtedness
under applicable law; and if payment by Guarantor of the
Indebtedness of Borrower shall involve transcending the limit of
validity prescribed by law for a guarantor, then, ipso facto, the
obligation to be fulfilled shall be reduced as to Guarantor to the
limit of such validity.

9. Guarantor warrants to Lender that Guarantor has independent
means of obtaining financial and other information about Borrower,
and agrees that Guarantor has not been induced to sign this
guaranty by reason of information regarding Borrower furnished by
Lender, and agrees that Lender shall not in the future be required
to furnish Guarantor with any information regarding Borrower nor
notify Guarantor of any adverse changes as to Borrower's financial
condition or otherwise.

10. This Guaranty does not supersede, cancel, amend, discharge or
limit any other guaranty or similar obligation of Guarantor in
favor of Lender, but this Guaranty is in addition to and cumulative
of any other such guaranty.  Guarantor's liability hereunder shall
be joint and several with the liability of Borrower and all
endorsers and other sureties and guarantors whether or not the
liability of other sureties and guarantors may be limited.  This
guaranty is and shall be in every particular available to the
successors and assigns of Lender and is and shall always be fully
binding upon the heirs, successors and legal representatives of
Guarantor.

Dated the 31st day of October, 1995. 

GUARANTOR:


                                                                       
Stevens G. Herbst, Individually
<PAGE>
             CONTINUING UNLIMITED GUARANTY AGREEMENT

1. The undersigned (hereinafter called "Guarantor") for good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and to induce AMERICAN NATIONAL BANK
(hereinafter called "Lender"), with offices at Corpus Christi,
Texas, at its option, at any time or from time to time, to loan
monies or otherwise extend credit with or without security, to or
for the account of MIDCOAST ENERGY RESOURCES, INC. (hereinafter
called "Borrower"), and at the special insistence and request of
Lender, Guarantor hereby unconditionally guarantees the prompt
payment, at the said office of Lender in Nueces County, Texas, when
due of the following (hereinafter called the "Indebtedness"):

All indebtedness, obligations and liabilities of any kind of the
Borrower to the Lender (and also to others to the extent of
participations granted them by the Lender), now outstanding or
owing or which may hereafter be executed or incurred, directly
between the Borrower and the Lender or acquired outright, as a
participation, conditionally or as collateral security from another
by the Lender, absolute or contingent, joint and/or several,
secured or unsecured, due or not due, arising by operation of law
or otherwise, or direct or indirect, including indebtedness,
obligations and liabilities to the Lender of the Borrower as a
member of any partnership, syndicate, association or other group,
and whether incurred by the Borrower as principal, surety,
endorser, guarantor, accommodation party or otherwise, and
including, but not limited to, principal, interest, and costs of
collection including attorneys' fees.

2. This guaranty is an absolute, completed and continuing one, and
no notice of the Indebtedness or any extension of credit already or
hereafter contracted by or extended to the Borrower need be given
to the Guarantor.  Borrower and Lender may rearrange, extend and/or
renew from time to time any or all of the Indebtedness without
notice to the Guarantor and in such event Guarantor will remain
fully bound hereunder on such Indebtedness regardless of the number
of rearrangements, renewals and extensions. The Guarantor hereby
expressly waives marshalling of assets and liabilities, sale in
inverse order of alienation, presentment, demand, protest, notice
of intention to accelerate maturity, notice of acceleration of
maturity, and notice of protest and dishonor on any and all forms
of such Indebtedness, and also notice of acceptance of this
guaranty, acceptance on the part of Lender being conclusively
presumed by its request for this guaranty and delivery of the same
to it.

3. Guarantor authorizes Lender, without notice or demand and
without affecting Guarantor's liability hereunder, to take and hold
security for the payment of this guaranty and/or the Indebtedness
guaranteed, and exchange, enforce, waive and release any such
security; and to apply such security and direct the order or manner
of sale thereof as Lender in its discretion may determine; and to
obtain a guaranty of the Indebtedness from any one or more other
persons, corporations or entities whomsoever and at any time or
times to enforce, waive, rearrange, modify, limit or release such
other persons, corporations or entities from their obligations
under such guaranties. If at any time there be other debt of
Borrower to Lender not guaranteed hereby, then Lender may apply all
amounts realized by Lender from Borrower, from other guarantors or
from collateral to such other debt.  Provided, if a particular
instrument (such as a guaranty or security agreement) expressly
requires application of amounts received by Lender different than
permitted under the preceding sentence, then such amounts shall be
applied as provided in such instrument.

4. Guarantor waives any right to require Lender to (a) proceed
against the Borrower or (b) proceed against or exhaust any security
held to secure the Indebtedness, or (c) exercise any right of set-
off against Borrower, or (d) pursue any other remedy in Lender's
power whatsoever.  Guarantor waives any defense arising by reason
of any disability, lack of corporate authority or power, or other
defense of the Borrower or of any other guarantor of the
Indebtedness, and shall remain liable hereon regardless of whether
Borrower or any other guarantor be found not liable thereon for any
reason. Until all the Indebtedness shall have been paid in full,
Guarantor shall have no right of subrogation, and waives any right
to enforce any remedy which Lender now has or may hereafter have
against the Borrower, and waives any benefit of and any right to
participate in any security now or hereafter held by Lender.

5. In addition to the other obligations of Guarantor imposed by
this Guaranty Agreement, Guarantor agrees to pay the costs of
collection, including reasonable attorneys' fees, incurred by
Lender in collection of the Indebtedness from Guarantor.

6. Guarantor hereby grants to the Lender a right of set-off (which
right of set-off herein granted shall be in addition to and not in
lieu of any other right of set-off Lender may have) against the
balance of every deposit account (whether interest bearing or non-
interest bearing and whether a demand deposit or time deposit), now
or hereafter existing, of the Guarantor with the Lender and any
other claim of the Guarantor against the Lender, now or hereafter
existing.  The grant of the above right of set-off shall not in
anywise limit or be construed as limiting Lender to collect payment
of any liability of Guarantor incurred hereby only by way of set-
off, but it is expressly understood and provided that all such
liability shall constitute the absolute and unconditional
obligation of Guarantor.  Guarantor hereby subordinates all
indebtedness owing to the Guarantor from Borrower to all
Indebtedness of Borrower to Lender, and shall not attempt to set
off or reduce any obligations to Lender because of such
indebtedness. The Guarantor further subordinates any lien or
security interest that he may have on any collateral or security of
the Borrower or any other party to the liens and security interests
on said collateral and security in favor of the Lender. Upon an
event of default on the Indebtedness and for so long as such
default exists, Guarantor agrees not to accept any payment on the
subordinated indebtedness nor realize upon any collateral therefor.
If the Guarantor should receive any such payment, satisfaction or
security for indebtedness of the Borrower to the Guarantor in
violation of the terms hereof, the Guarantor agrees forthwith to
deliver the same to the Lender in the form received, endorsed or
assigned as may be appropriate for application on account of, or as
security for, the Indebtedness, and until so delivered, agree to
hold the same in trust for the Lender.

7. The term of this Agreement shall be for five years from the date
hereof and for so long thereafter as any of the Indebtedness
existing at the end of said five years, together with interest and
costs of collection thereafter accruing on and with respect to such
Indebtedness existing at the end of said five years, remains
outstanding and unpaid; and, it is agreed that such interest and
costs of collection accruing after the end of said five years is
also part of the Indebtedness guaranteed hereunder. It is further
agreed that maturity of the Indebtedness, as such may be extended
from time to time by agreement between Lender and Borrower as
aforesaid, shall be the same with respect to Guarantor as with
respect to Borrower.

8. Notwithstanding anything herein or in any notes, contracts,
agreements or other instruments of Borrower to the contrary,
Guarantor is not obligated to and shall never be required to pay
interest on amounts owing by Borrower to Lender in excess of the
maximum permissible to be paid by a guarantor of the Indebtedness
under applicable law; and if payment by Guarantor of the
Indebtedness of Borrower shall involve transcending the limit of
validity prescribed by law for a guarantor, then, ipso facto, the
obligation to be fulfilled shall be reduced as to Guarantor to the
limit of such validity.

9. Guarantor warrants to Lender that Guarantor has independent
means of obtaining financial and other information about Borrower,
and agrees that Guarantor has not been induced to sign this
guaranty by reason of information regarding Borrower furnished by
Lender, and agrees that Lender shall not in the future be required
to furnish Guarantor with any information regarding Borrower nor
notify Guarantor of any adverse changes as to Borrower's financial
condition or otherwise.

10. This Guaranty does not supersede, cancel, amend, discharge or
limit any other guaranty or similar obligation of Guarantor in
favor of Lender, but this Guaranty is in addition to and cumulative
of any other such guaranty.  Guarantor's liability hereunder shall
be joint and several with the liability of Borrower and all
endorsers and other sureties and guarantors whether or not the
liability of other sureties and guarantors may be limited.  This
guaranty is and shall be in every particular available to the
successors and assigns of Lender and is and shall always be fully
binding upon the heirs, successors and legal representatives of
Guarantor.

Dated the 31st day of October, 1995. 

GUARANTOR:
                                                                         
                                                                
Kenneth B. Holmes, Jr., Individually<PAGE>
  
                  CONTINUING UNLIMITED GUARANTY AGREEMENT

1. The undersigned (hereinafter called "Guarantor") for good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and to induce AMERICAN NATIONAL BANK
(hereinafter called "Lender"), with offices at Corpus Christi,
Texas, at its option, at any time or from time to time, to loan
monies or otherwise extend credit with or without security, to or
for the account of MIDCOAST ENERGY RESOURCES, INC. (hereinafter
called "Borrower"), and at the special insistence and request of
Lender, Guarantor hereby unconditionally guarantees the prompt
payment, at the said office of Lender in Nueces County, Texas, when
due of the following (hereinafter called the "Indebtedness"):

           All indebtedness, obligations and liabilities of any kind
           of the Borrower to the Lender (and also to others to the
           extent of participations granted them by the Lender), now
           outstanding or owing or which may hereafter be executed
           or incurred, directly between the Borrower and the Lender
           or acquired outright, as a participation, conditionally
           or as collateral security from another by the Lender,
           absolute or contingent, joint and/or several, secured or
           unsecured, due or not due, arising by operation of law or
           otherwise, or direct or indirect, including indebtedness,
           obligations and liabilities to the Lender of the Borrower
           as a member of any partnership, syndicate, association or
           other group, and whether incurred by the Borrower as
           principal, surety, endorser, guarantor, accommodation
           party or otherwise, and including, but not limited to,
           principal, interest, and costs of collection including
           attorneys' fees.

2. This guaranty is an absolute, completed and continuing one, and
no notice of the Indebtedness or any extension of credit already or
hereafter contracted by or extended to the Borrower need be given
to the Guarantor.  Borrower and Lender may rearrange, extend and/or
renew from time to time any or all of the Indebtedness without
notice to the Guarantor and in such event Guarantor will remain
fully bound hereunder on such Indebtedness regardless of the number
of rearrangements, renewals and extensions. The Guarantor hereby
expressly waives marshalling of assets and liabilities, sale in
inverse order of alienation, presentment, demand, protest, notice
of intention to accelerate maturity, notice of acceleration of
maturity, and notice of protest and dishonor on any and all forms
of such Indebtedness, and also notice of acceptance of this
guaranty, acceptance on the part of Lender being conclusively
presumed by its request for this guaranty and delivery of the same
to it.

3. Guarantor authorizes Lender, without notice or demand and
without affecting Guarantor's liability hereunder, to take and hold
security for the payment of this guaranty and/or the Indebtedness
guaranteed, and exchange, enforce, waive and release any such
security; and to apply such security and direct the order or manner
of sale thereof as Lender in its discretion may determine; and to
obtain a guaranty of the Indebtedness from any one or more other
persons, corporations or entities whomsoever and at any time or
times to enforce, waive, rearrange, modify, limit or release such
other persons, corporations or entities from their obligations
under such guaranties. If at any time there be other debt of
Borrower to Lender not guaranteed hereby, then Lender may apply all
amounts realized by Lender from Borrower, from other guarantors or
from collateral to such other debt.  Provided, if a particular
instrument (such as a guaranty or security agreement) expressly
requires application of amounts received by Lender different than
permitted under the preceding sentence, then such amounts shall be
applied as provided in such instrument.

4. Guarantor waives any right to require Lender to (a) proceed
against the Borrower or (b) proceed against or exhaust any security
held to secure the Indebtedness, or (c) exercise any right of set-
off against Borrower, or (d) pursue any other remedy in Lender's
power whatsoever.  Guarantor waives any defense arising by reason
of any disability, lack of corporate authority or power, or other
defense of the Borrower or of any other guarantor of the
Indebtedness, and shall remain liable hereon regardless of whether
Borrower or any other guarantor be found not liable thereon for any
reason. Until all the Indebtedness shall have been paid in full,
Guarantor shall have no right of subrogation, and waives any right
to enforce any remedy which Lender now has or may hereafter have
against the Borrower, and waives any benefit of and any right to
participate in any security now or hereafter held by Lender.

5. In addition to the other obligations of Guarantor imposed by
this Guaranty Agreement, Guarantor agrees to pay the costs of
collection, including reasonable attorneys' fees, incurred by
Lender in collection of the Indebtedness from Guarantor.

6. Guarantor hereby grants to the Lender a right of set-off (which
right of set-off herein granted shall be in addition to and not in
lieu of any other right of set-off Lender may have) against the
balance of every deposit account (whether interest bearing or non-
interest bearing and whether a demand deposit or time deposit), now
or hereafter existing, of the Guarantor with the Lender and any
other claim of the Guarantor against the Lender, now or hereafter
existing.  The grant of the above right of set-off shall not in
anywise limit or be construed as limiting Lender to collect payment
of any liability of Guarantor incurred hereby only by way of set-
off, but it is expressly understood and provided that all such
liability shall constitute the absolute and unconditional
obligation of Guarantor.  Guarantor hereby subordinates all
indebtedness owing to the Guarantor from Borrower to all
Indebtedness of Borrower to Lender, and shall not attempt to set
off or reduce any obligations to Lender because of such
indebtedness. The Guarantor further subordinates any lien or
security interest that he may have on any collateral or security of
the Borrower or any other party to the liens and security interests
on said collateral and security in favor of the Lender. Upon an
event of default on the Indebtedness and for so long as such
default exists, Guarantor agrees not to accept any payment on the
subordinated indebtedness nor realize upon any collateral therefor.
If the Guarantor should receive any such payment, satisfaction or
security for indebtedness of the Borrower to the Guarantor in
violation of the terms hereof, the Guarantor agrees forthwith to
deliver the same to the Lender in the form received, endorsed or
assigned as may be appropriate for application on account of, or as
security for, the Indebtedness, and until so delivered, agree to
hold the same in trust for the Lender.

7. The term of this Agreement shall be for five years from the date
hereof and for so long thereafter as any of the Indebtedness
existing at the end of said five years, together with interest and
costs of collection thereafter accruing on and with respect to such
Indebtedness existing at the end of said five years, remains
outstanding and unpaid; and, it is agreed that such interest and
costs of collection accruing after the end of said five years is
also part of the Indebtedness guaranteed hereunder. It is further
agreed that maturity of the Indebtedness, as such may be extended
from time to time by agreement between Lender and Borrower as
aforesaid, shall be the same with respect to Guarantor as with
respect to Borrower.

8. Notwithstanding anything herein or in any notes, contracts,
agreements or other instruments of Borrower to the contrary,
Guarantor is not obligated to and shall never be required to pay
interest on amounts owing by Borrower to Lender in excess of the
maximum permissible to be paid by a guarantor of the Indebtedness
under applicable law; and if payment by Guarantor of the
Indebtedness of Borrower shall involve transcending the limit of
validity prescribed by law for a guarantor, then, ipso facto, the
obligation to be fulfilled shall be reduced as to Guarantor to the
limit of such validity.

9. Guarantor warrants to Lender that Guarantor has independent
means of obtaining financial and other information about Borrower,
and agrees that Guarantor has not been induced to sign this
guaranty by reason of information regarding Borrower furnished by
Lender, and agrees that Lender shall not in the future be required
to furnish Guarantor with any information regarding Borrower nor
notify Guarantor of any adverse changes as to Borrower's financial
condition or otherwise.

10. This Guaranty does not supersede, cancel, amend, discharge or
limit any other guaranty or similar obligation of Guarantor in
favor of Lender, but this Guaranty is in addition to and cumulative
of any other such guaranty.  Guarantor's liability hereunder shall
be joint and several with the liability of Borrower and all
endorsers and other sureties and guarantors whether or not the
liability of other sureties and guarantors may be limited.  This
guaranty is and shall be in every particular available to the
successors and assigns of Lender and is and shall always be fully
binding upon the heirs, successors and legal representatives of
Guarantor.

Dated the 31st day of October, 1995. 
GUARANTOR:

                                                                              
Dan C. Tutcher, Individually