EXECUTIVE SEVERANCE AGREEMENT
                         by and between
                                
                 Midcoast Energy Resources, Inc.
                               and
                         Duane S. Herbst
                                
                    Effective August 15, 1997
                                
                                
                                
                                
                                

                        TABLE OF CONTENTS

Article
Section                                                     Page

 1              Definitions                                  1

 2              Severance Benefits

       2.1      Right to Severance Benefits                  5
       2.2      Description of Severance Benefits            6
        2.3       Termination for Total and Permanent  Disability
6
       2.4      Termination for Retirement or Death          6
        2.5       Termination for Cause or by the Executive Other
7
                Than for Good Reason
       2.6      Notice of Termination                        7

 3              Form and Timing of Severance Benefits

       3.1      Form and Timing of Severance Benefits        7
       3.2      Withholding of Taxes                         7

 4              Golden Parachute Tax Gross-Up and Tax Indemnity

        4.1       Severance  Benefits to  be  Grossed-Up  by  the
Company         7
        4.2       Procedure  for Establishing  the  Tax  Gross-Up
Payment         8
       4.3      Subsequent Imposition of Excise Tax          8

 5              The Company's Payment Obligation

       5.1      Payment Obligations Absolute                 8
       5.2      Contractual Rights to Benefits               9

 6              Term of Agreement                            9

 7              Legal Remedies

       7.1      Payment of Legal Fees                        9
       7.2      Arbitration                                  9

 8              Successors

       8.1      Company's Successors                        10
       8.2      Executive's Successors                      10

                   TABLE OF CONTENTS (Cont'd)

Article
Section                                                     Page

 9              Miscellaneous

       9.1      Employment Status                           10
       9.2      Beneficiaries                               10
       9.3      Entire Agreement                            10
       9.4      Gender and Number                           11
       9.5      Severability                                11
       9.6      Modification                                11
       9.7      Applicable Law                              11
                  EXECUTIVE SEVERANCE AGREEMENT

THIS  AGREEMENT is made and entered into this 15th day of August,
1997,  by  and between Midcoast Energy Resources Inc., a   Nevada
corporation  with its principal office at 1100 Louisiana  Street,
Suite  2950,  Houston, Texas 77002 (the "Company") and  Duane  S.
Herbst (the "Executive").


                      W I T N E S S E T H:

WHEREAS,  the  Company believes there is the possibility  that  a
Change-in-Control of the Company may arise in the future;

WHEREAS, in the event of a prospective Change-in-Control  of  the
Company,  the Company believes it imperative that it be  able  to
rely  on  the Executive to continue in the Executive's  position,
provide advice that is in the best interests of the Company,  and
act  without  being distracted by the personal uncertainties  and
risks created by the possibility of a Change-in-Control;

WHEREAS, the Company and the Executive desire to enter into  this
Agreement  whereby  severance  benefits  will  be  paid  to   the
Executive  if a Change-in-Control of the Company occurs  and  the
Executive's employment is consequently actually or constructively
terminated   by   the   Company  or  its  successor   under   the
circumstances described herein;

NOW,  THEREFORE, to induce the Executive to remain in the  employ
of  the  Company, and for other good and valuable  consideration,
the Company and the Executive agree as follows:

                                
                     Article 1.  Definitions

Whenever used in this Agreement, the following capitalized  terms
shall have the meanings set forth below:

       (a) "Agreement" means this Executive Severance Agreement.

       (b)  "Base Salary" means the salary of record paid to  the
     Executive as annual salary, excluding amounts received under
     incentive or other bonus plans, whether or not deferred.

       (c) "Beneficial Owner" shall have the meaning ascribed  to
     such term in Rule 13d-3 of the General Rules and Regulations
     under the Exchange Act.

       (d)   "Beneficiary"   means  the   persons   or   entities
     designated or deemed designated by the Executive pursuant to
     Section 9.2.

       (e) "Board" means the Board of Directors of the Company.

       (f)  "Cause"  shall  be determined by the  Board  (by  the
     affirmative  vote of not less than three-quarters  (3/4)  of
     the  entire  membership of the Board on the terms  described
     below), in good faith, and shall mean the occurrence of  any
     one or more of the following:

               (i)     The willful and continued failure  by  the
          Executive  to  substantially  perform  the  Executive's
          duties (other than any such failure resulting from  the
          Executive's  Disability) after  a  written  demand  for
          substantial performance has been delivered by the Board
          to  the  Executive  that  specifically  identifies  the
          manner  in  which the Board believes that the Executive
          has not substantially performed the Executive's duties,
          and  the Executive fails to remedy such failure  within
          thirty  (30) calendar days after receiving such notice;
          or

               (ii)    The  Executive's conviction (including  by
          trial,  plea of guilty or plea of nolo contendere)  for
          committing  an  act of fraud, embezzlement,  theft,  or
          other act constituting a felony; or
          
               (iii)      The  Executive's  willful  engaging  in
          misconduct   which  is  demonstrably   and   materially
          injurious to the Company.  No act, or failure  to  act,
          on  the  Executive's part shall be considered "willful"
          unless  done,  or omitted to be done, by the  Executive
          not  in  good faith and without reasonable belief  that
          the  Executive's  action or omission was  in  the  best
          interest of the Company.

          Notwithstanding the foregoing, the Executive shall  not
     be deemed to have been terminated for Cause unless and until
     there shall have been delivered to the Executive a copy of a
     resolution duly adopted by the affirmative vote of not  less
     than  three-quarters (3/4) of the entire membership  of  the
     Board  at  a  meeting of the Board called and held  for  the
     purpose  of  making  a determination of  whether  Cause  for
     termination exists (after reasonable notice to the Executive
     and  an opportunity for the Executive to be heard before the
     Board),  finding  in the good faith that  Cause  exists  and
     specifying the particulars thereof in detail.

       (g) "Change-in-Control" of the Company shall be deemed  to
     have  occurred as of the first day that any one or  more  of
     the  following  events occurs on or following the  Effective
     Date of this Agreement:

               (i)  Any  Person  (other  than  those  Persons  in
          control  of the Company on the Effective Date  of  this
          Agreement,   a  trustee  or  other  fiduciary   holding
          securities  under  an  employee  benefit  plan  of  the
          Company,  or a corporation owned directly or indirectly
          by the stockholders of the Company in substantially the
          same  proportions as their ownership of  stock  of  the
          Company)  becomes  the Beneficial  Owner,  directly  or
          indirectly,  of securities of the Company  representing
          twenty  percent  (20%) or more of the  combined  voting
          power of the Company's then outstanding securities; or

               (ii)   During  any  period of two (2)  consecutive
          years  (not including any period prior to the Effective
          Date  of  this Agreement), individuals who were members
          of  the Board at the beginning of such period (and  any
          new   Director   whose  election   by   the   Company's
          stockholders  was  approved  by  a  vote  of  at  least
          two-thirds (2/3) of the Directors then still in  office
          who  either  were  Directors at the beginning  of  such
          period or whose election or nomination for election was
          so  approved)  cease  for any reason  to  constitute  a
          majority thereof; or

               (iii) The stockholders of the Company approve: (A)
          a  plan of complete liquidation of the Company, (B)  an
          agreement  for  the  sale  or  disposition  of  all  or
          substantially  all  the  Company's  assets,  or  (C)  a
          merger, consolidation, or reorganization of the Company
          with  or involving any other corporation, other than  a
          merger,  consolidation,  or reorganization  that  would
          result   in  the  voting  securities  of  the   Company
          outstanding  immediately prior  thereto  continuing  to
          represent (either by remaining outstanding or by  being
          converted  into  voting  securities  of  the  surviving
          entity)  at  least fifty percent (50%) of the  combined
          voting power of the securities of the Company (or  such
          surviving  entity) outstanding immediately  after  such
          merger, consolidation, or reorganization; or

               (iv)  The  Board  determines  in  its   sole   and
          absolute   discretion   that   there   has    been    a
          Change-in-Control of the Company.

       (h)  "Code"  means the Internal Revenue Code of  1986,  as
     amended, and shall include regulations promulgated under the
     Code.

       (i)  "Committee" means the Compensation Committee  of  the
     Board  or  any  other committee appointed by  the  Board  to
     perform the functions of the Compensation Committee.

       (j)  "Company"  means Midcoast Energy  Resources,  Inc.  a
     Nevada corporation (including any and all subsidiaries),  or
     any successor thereto as provided in Article 8.

       (k) "Disability" means:

               (i)     The mental or physical disability,  either
          occupational   or  non-occupational  in  cause,   which
          satisfies   the  definition  of  "total  and  permanent
          disability"  in the disability policy or plan  provided
          by the Corporation covering the Executive; or

               (ii)    If no such policy or plan is then covering
          the Executive, a physical or mental infirmity which, as
          determined  by  the  Committee,  in  good  faith,  upon
          receipt  of  and  in  reliance on sufficient  competent
          medical  advice from one or more individuals,  selected
          by   the   Committee,   who  are  qualified   to   give
          professional  medical  advice, prevents  the  Executive
          from substantially performing his duties.

       (l)  "Effective  Date" means the date  this  Agreement  is
     approved  by the Board or by the Committee if duly empowered
     by  the  Board  to  so  act, or such  other  date  as  shall
     designate in its resolution approving this Agreement.

       (m)  "Effective  Date of Termination" means  the  date  on
     which  a  Qualifying  Termination occurs  which  causes  the
     payment of Severance Benefits hereunder.

       (n)  "Exchange Act" means the Securities Exchange  Act  of
     1934, as amended.

       (o) "Executive" means Duane S. Herbst.

       (p)  "Good  Reason" means any event or condition described
     in   Subsections  (i)  through  (ix)  below   which   occurs
     simultaneous with or after a Change-in-Control:

               (i)     A change in the Executive's status, title,
          position   or  responsibilities  (including   reporting
          responsibilities) which, in the Executive's  reasonable
          judgment, represents an adverse change from his status,
          title,   position  or  responsibilities  as  in  effect
          immediately  prior  thereto;  the  assignment  to   the
          Executive  of any duties or responsibilities which,  in
          the  Executive's reasonable judgment, are  inconsistent
          with  his  status, title, position or responsibilities;
          or  any  removal of  the Executive from or  failure  to
          reappoint  or  reelect the Executive  to  any  of  such
          offices  or  positions held by the Executive  prior  to
          such  Change-in-Control, except in connection with  the
          termination   of   his   employment   for   Disability,
          Retirement, Cause, as a result of his death or  by  the
          Executive other than for Good Reason;

               (ii)    A reduction in the Executive's Base Salary
          or any failure to pay the Executive any compensation or
          benefits to which the Executive is entitled within five
          (5) days of the date due;

               (iii)  A failure to increase the Executive's  Base
          Salary at least annually at a percentage of Base Salary
          no  less  than  the average percentage increase  (other
          than   increases   resulting   from   the   Executive's
          promotion)  granted to the Executive during  the  three
          (3)  full years ended prior to a Change-in-Control  (or
          such  lesser  number  of full years  during  which  the
          Executive was employed), unless such failure occurs  in
          connection  with  the failure of the  Company  and  the
          acquiring company to increase the base salary  for  the
          fiscal  year  in  which  such failure  occurs  for  all
          executive-level employees;

               (iv)  The Company's requiring the Executive to  be
          based  at any place outside the City of Corpus Christi,
          Texas;

               (v)     The failure by the Company to (A) continue
          in  effect  (without reduction in benefit level  and/or
          reward  opportunities)  any  material  compensation  or
          employee  benefit  plans  in which  the  Executive  was
          participating     immediately     prior     to      the
          Change-in-Control, unless a substitute  or  replacement
          plan  has been implemented which provides substantially
          identical compensation and benefits to the Executive;

               (vi)  The insolvency or the filing (by any  party,
          including the Company) of a petition for the bankruptcy
          of the Company;

               (vii)   Any material breach by the Company of  any
          provision of this Agreement or any employment agreement
          between the Executive and the Company;

               (viii)      Any  purported  termination   of   the
          Executive's  employment for Cause by the Company  which
          is not for Cause; or

               (ix)  The  failure  of the Company  to  obtain  an
          agreement,  satisfactory  to the  Executive,  from  any
          successor or assign of the Company to assume and  agree
          to perform this Agreement.

          Additionally,  any event described in  Subsections  (i)
     through    (ix)   above   which   occurs    prior    to    a
     Change-in-Control,   but  which  the  Executive   reasonably
     demonstrates (A) was at the request of a third party who has
     indicated  an intention or taken steps reasonably calculated
     to  effect  a  Change-in-Control (a "Third Party"),  or  (B)
     otherwise arose in connection with, or in anticipation of  a
     Change-in-Control, shall constitute Good Reason for purposes
     of  this Agreement notwithstanding that it occurred prior to
     the Change-in-Control.

       (q)  "Person" shall have the meaning ascribed to such term
     in  Section 3(a)(9) of the Exchange Act and used in Sections
     13(d)  and 14(d) thereof, including a "group" as defined  in
     Section 13(d).

       (r)  "Qualifying Termination" means the termination of the
     Executive's  employment with the Company for either  of  the
     following reasons:

          (i)    The Executive resigns for Good Reason; or

          (ii)    The  Company terminates the Executive  for  any
     reason other than for Cause.

       (s) "Retirement" means:

          (i)      The   Executive's  voluntary  termination   of
     employment   with  the  Company  at  or  following   "normal
     retirement age" (as defined in the Company's retirement plan
     covering the Executive) or,

          (ii)    If  there  is  no  such plan,  the  Executive's
     voluntary termination of employment with the Company  at  or
     following age 65.

       (t)  "Severance Benefits" means the compensation described
     in Section 2.2 and Article 4.


                 Article 2.  Severance Benefits

2.1. Right to Severance Benefits.

       (a)  The  Executive shall be entitled to receive from  the
     Company the Severance Benefits described in Section  2.2  if
     there  has been a Change-in-Control of the Company  and  if,
     within  eighteen (18) calendar months thereafter (except  as
     provided in the flush language at the end of Section  1(p)),
     the  Executive's employment with the Company  shall  end  by
     reason of a Qualifying Termination.

       (b)  The  Executive shall not be entitled to receive  such
     Severance Benefits if the Executive is terminated for Cause,
     if  the Executive resigns other than for Good Reason, or  if
     his  employment  with the Company ends  due  to  his  death,
     Retirement or Disability (refer to Sections 2.3 to 2.5 for a
     summary  of severance compensation payable to the  Executive
     in  connection with a termination of employment for any such
     reason).

2.2. Description of Severance Benefits.  If the Executive becomes
     entitled  to  receive  Severance Benefits,  as  provided  in
     Sections  2.1,  the  Company shall pay  to  or  provide  the
     Executive with the following:

       (a)  An  amount equal to three (3) times the highest  rate
     of  the Executive's annual Base Salary in effect at any time
     up to and including the Effective Date of Termination.

       (b)  An  amount equal to three (3) times the  greater  of:
     (i)  the  Executive's average annual bonus earned  over  the
     last  three  (3) years as reflected, or as would  have  been
     reflected,  in  the  Executive  Compensation  table  of  the
     Company's  annual proxy statement, or (ii)  the  Executive's
     target  bonus established for the bonus plan year  in  which
     the Executive's Effective Date of Termination occurs.

       (c)  An amount equal to the Executive's unpaid Base Salary
     and  accrued, unused vacation through the Effective Date  of
     Termination.

       (d)  A  continuation of any Company-provided or  sponsored
     life  insurance and healthcare-related benefits under  which
     the Executive and/or the Executive's family is covered as of
     the effective date of the Change-in-Control.  These benefits
     shall   be   provided  by  the  Company  to  the   Executive
     immediately upon the Effective Date of Termination and shall
     continue to be provided for thirty-six (36) months from  the
     Effective  Date  of  Termination;  such  benefit  shall   be
     provided to the Executive at the same premium cost,  and  at
     the  same coverage level, as in effect as of the Executive's
     Effective Date of Termination; and any such benefit shall be
     discontinued prior to the end of the thirty-six  (36)  month
     period  if  the  Executive receives a substantially  similar
     benefit  from  a subsequent employer, as determined  by  the
     Committee in good faith.

2.3. Termination for Total and Permanent Disability.  Following a
     Change-in-Control  of  the  Company,  if   the   Executive's
     employment  is  terminated due to  Disability,  the  Company
     shall pay the Executive the Executive's full Base Salary and
     accrued,  unused  vacation through  the  Effective  Date  of
     Termination,   at  the  rate  then  in  effect,   plus   the
     Executive's  additional compensation and benefits,  if  any,
     shall   be  determined  in  accordance  with  the  Company's
     retirement,  insurance,  and  other  applicable  plans   and
     programs  then  in  effect, and the Company  shall  have  no
     further obligations to the Executive under this Agreement.

2.4. Termination   for   Retirement  or   Death.    Following   a
     Change-in-Control  of  the  Company,  if   the   Executive's
     employment is terminated by reason of Retirement  or  death,
     the  Company  shall pay the Executive the  Executive's  full
     Base  Salary  and  accrued,  unused  vacation  through   the
     Effective  Date of Termination, at the rate then in  effect,
     plus  the  Executive's additional compensation and benefits,
     if any, shall be determined in accordance with the Company's
     retirement,  survivor's  benefits,  insurance,   and   other
     applicable programs of the Company then in effect,  and  the
     Company  shall have no further obligations to the  Executive
     under this Agreement.

2.5. Termination  for Cause or by the Executive  Other  Than  for
     Good  Reason.  Following a Change-in-Control of the Company,
     if  the Executive's employment is terminated either  (i)  by
     the  Company  for  Cause, or (ii) by the Executive  for  any
     reason  other  than Good Reason, the Company shall  pay  the
     Executive  the  Executive's full Base  Salary  and  accrued,
     unused  vacation through the Effective Date of  Termination,
     at  the rate then in effect, plus all other amounts to which
     the Executive is entitled under any compensation and benefit
     plans of the Company, at the time such payments are due, and
     the  Company  shall  have  no  further  obligations  to  the
     Executive under this Agreement.

2.6. Notice of Termination.  Any termination by the Executive for
     any reason or by the Company for Cause shall be communicated
     by Notice of Termination to the other party. For purposes of
     this  Agreement,  a  "Notice of Termination"  shall  mean  a
     written notice which shall indicate the specific termination
     provision in this Agreement relied upon, and shall set forth
     in  reasonable detail the facts and circumstances claimed to
     provide   a   basis  for  termination  of  the   Executive's
     employment under the provision so indicated.


        Article 3.  Form and Timing of Severance Benefits

3.1. Form  and  Timing  of  Severance  Benefits.   The  Severance
     Benefits described in Sections 2.2(a), (b), and (c) shall be
     paid  in cash to the Executive in a single lump sum as  soon
     as  practicable following the Effective Date of Termination,
     but in no event beyond fifteen (15) days from such Date.

3.2. Withholding of Taxes.  The Company shall withhold  from  any
     amounts  payable  under this Agreement all  Federal,  state,
     city, or other taxes as legally shall be required.


   Article 4.  Golden Parachute Tax Gross-Up and Tax Indemnity

4.1. Severance Benefits to be Grossed-Up by the Company.

       (a)  When  Severance Benefits Are to  be  Grossed-Up.   If
     Severance  Benefits payable to the Executive plus any  other
     benefits  realized by the Executive in connection  with  the
     Change-in-Control  of the Company (in the  aggregate  "Total
     Payments") would, in whole or in part, constitute an "excess
     parachute payment" the Company shall pay to the Executive in
     cash  an  amount equal to the "tax gross-up"  as  determined
     below  with  respect to the Executive's Severance  Benefits.
     The  term "excess parachute payment" shall have the meaning,
     and shall be valued, as provided in the Code.

       (b)   "Tax  Gross-Up"  Defined.  The term  "tax  gross-up"
     means  the  sum  of  the  (i)  excise  tax  imposed  on  the
     Executive's Severance Benefits pursuant to Sections 280G and
     4999  of the Code, plus (ii) federal, state and local income
     taxes payable by the Executive with respect to the Company's
     payment  of such excise tax, plus (iii) federal,  state  and
     local employment taxes payable by the Executive with respect
     to  the  Company's  payment of such excise  tax,  plus  (iv)
     iterations  of  income and employment  taxes  on  (ii)  plus
     (iii).

       (c)   Guidance  for Interpreting and Applying  Article  4.
     The  objective of Article 4 is for the Company  to  pay  the
     Executive a cash payment to place the Executive in the  same
     net  after-tax position as if no portion of the  Executive's
     Severance Benefits were subject to the excise tax imposed by
     Sections 280G and 4999 of the Code.  This Article 4 shall be
     interpreted and applied accordingly.

4.2.   Procedure for Establishing the Tax Gross-Up Payment.
          
               (a)         Within   sixty  (60)  days   following
          delivery of the Notice of Termination (as described  in
          Section  2.6) or notice by the Company to the Executive
          of  its  belief that there is a payment or benefit  due
          the  Executive which will result in a "excess parachute
          payment"  as defined in Section 280G of the  Code,  the
          Executive  and  the Company, at the Company's  expense,
          shall  obtain the opinion of such legal counsel,  which
          need  not be unqualified, as the Executive may  choose,
          which  sets  forth:  (i) the amount of the  Executive's
          "annualized  includible  compensation  for   the   base
          period"  (as defined in Code Section 280G(d)(1));  (ii)
          the  present  value  of the Total Payments;  (iii)  the
          amount  and  present  value of  any  "excess  parachute
          payment";  (iv)  the amount of the  Code  Section  4999
          excise  tax  payable  with respect to  the  Executive's
          Severance  Benefits, and (v) the  amount  of  the  "tax
          gross-up"  payment as defined above.   The  opinion  of
          such legal counsel shall be supported by the opinion of
          a certified public accounting firm and, if necessary, a
          firm  of recognized executive compensation consultants.
          Such opinion shall be binding upon the Company and  the
          Executive.
     
               (b)        The  provisions of this Section 4.2(b),
          including   the  calculations,  notices,  and   opinion
          provided  for herein shall be based upon the conclusive
          presumption  that:  (i) the compensation  and  benefits
          provided  for  in  Section  2.2  and  (ii)  any   other
          compensation  earned  prior to the  Effective  Date  of
          Termination by the Executive pursuant to the  Company's
          compensation programs (if such payments would have been
          made in the future in any event, even though the timing
          of such payment is triggered by the Change-in-Control),
          are reasonable.

4.3. Subsequent  Imposition of Excise Tax.   If,  notwithstanding
     compliance with the provisions of Sections 4.1 and  4.2,  it
     is  ultimately determined by a court or pursuant to a  final
     determination  by  the  Internal Revenue  Service  that  any
     portion  of  the  Total  Payments  is  considered  to  be  a
     "parachute  payment," subject to excise  tax  under  Section
     4999  of  the  Code,  which was not  contemplated  to  be  a
     "parachute  payment" at the time of payment,  the  Executive
     shall  be  entitled  to  receive a  lump  sum  cash  payment
     sufficient to place the Executive in the same net  after-tax
     position,  computed by using the Executive's marginal  total
     tax  rate  for  the  year in which the payment  contemplated
     under this Section 4.3 is made.


          Article 5.  The Company's Payment Obligation

5.1. Payment Obligations Absolute.

               (i)      The  Company's  obligation  to  make  the
          Severance  Payments and the arrangements  provided  for
          herein  shall be absolute and unconditional, and  shall
          not   be  affected  by  any  circumstances,  including,
          without    limitation,   any   offset,    counterclaim,
          recoupment,  defense, or other right which the  Company
          may  have  against the Executive or anyone  else.   All
          amounts payable by the Company shall be final, and  the
          Company  shall not seek to recover all or any  part  of
          such payment from the Executive or from whomsoever  may
          be entitled thereto, for any reasons whatsoever, except
          as may be consistent with Section 2.2(d).

               (ii)    The  Executive shall not be  obligated  to
          seek  other  employment in mitigation  of  the  amounts
          payable  or  arrangements made under any  provision  of
          this  Agreement, and the obtaining of  any  such  other
          employment  shall in no event effect any  reduction  of
          the   Company's  obligations  to  make  the   Severance
          Payments  and  arrangements required to be  made  under
          this  Agreement,  except  to  the  extent  provided  in
          Section 2.2(d).

5.2. Contractual  Rights to Severance Benefits.   This  Agreement
     establishes  and vests in the Executive a contractual  right
     to the Severance Benefits to which the Executive is entitled
     hereunder.  However, nothing herein contained shall  require
     or  be  deemed  to  require, or prohibit  or  be  deemed  to
     prohibit,  the Company to segregate, earmark,  or  otherwise
     set  aside any funds or other assets, in trust or otherwise,
     to   provide  for  any  payments  to  be  made  or  required
     hereunder.


                  Article 6.  Term of Agreement

6.1     Term.  This Agreement will commence on the Effective Date
     and  shall continue in effect for eighteen (18) months,  the
     last  day of which shall be the "Expiration Date".  However,
     at  the  end  of  such eighteen (18) month  period  and,  if
     extended, at the end of each additional year thereafter, the
     term  of this Agreement shall be extended automatically  for
     one  (1)  additional year, unless the Board or the Committee
     (as is consistent with Section 1(i)) delivers written notice
     three  (3) months prior to the end of such term, or extended
     term,  to  the  Executive, that the Agreement  will  not  be
     extended.  In such case, the Agreement will terminate at the
     end of the term, or extended term, then in progress.

          However, in the event a Change-in-Control occurs during
     the  original  or  any  extended term, this  Agreement  will
     remain  in  effect  for the longer of:   (i)  eighteen  (18)
     months  beyond  the  month in which  such  Change-in-Control
     occurred;  or  (ii)  until all obligations  of  the  Company
     hereunder  have  been  fulfilled, and  until  all  Severance
     Benefits required hereunder have been paid to the Executive.
                                
                                
                   Article 7.  Legal Remedies

7.1. Payment  of Legal Fees.  To the extent permitted by law  and
     except as provided in Section 7.2, the Company shall pay all
     legal  fees, costs of litigation, prejudgment interest,  and
     other expenses incurred in good faith by the Executive as  a
     result  of  the  Company's refusal to provide the  Severance
     Benefits to which the Executive becomes entitled under  this
     Agreement.

7.2. Arbitration.  The Executive shall have the right and  option
     to  elect  (in  lieu of litigation) to have any  dispute  or
     controversy  arising  under  or  in  connection  with   this
     Agreement settled be arbitration, conducted before  a  panel
     of  three (3) arbitrators sitting in a location selected  by
     the  Executive  within  two hundred  (200)  miles  from  the
     location of his job with the Company, in accordance with the
     rules  of  the  American  Arbitration  Association  then  in
     effect.   Judgment  may  be entered  on  the  award  of  the
     arbitrator  in  any  court having proper jurisdiction.   All
     expenses  of  such  arbitration,  including  the  fees   and
     expenses of the counsel for the Executive, shall be borne by
     the Company.


                     Article 8.  Successors

8.1     Company's  Successors.   The  Company  will  require  any
     successor (whether direct or indirect, by purchase,  merger,
     consolidation, or otherwise) of all or substantially all  of
     the business and/or assets of the Company or of any division
     or  subsidiary  thereof to expressly  assume  and  agree  to
     perform  the  Company's obligations under this Agreement  in
     the  same  manner  and to the same extent that  the  Company
     would be required to perform them if no such succession  had
     taken  place.   Failure  of  the  Company  to  obtain   such
     assumption and agreement prior to the effective date of  any
     such  succession  shall be a breach of  this  Agreement  and
     shall entitle the Executive to compensation from the Company
     or successor entity in the same amount and on the same terms
     as  the  Executive  would be entitled to  hereunder  if  the
     Executive  had  terminated his employment with  the  Company
     voluntarily   for   Good  Reason.   For  the   purposes   of
     implementing  the  foregoing, the date  on  which  any  such
     succession  becomes effective shall be deemed the  Effective
     Date of Termination.

8.2  Executive's Successors.  This Agreement shall inure  to  the
     benefit of and be enforceable by the Executive's personal or
     legal     representatives,    executors,     administrators,
     successors, heirs, distributees, devisees, and legatees.  If
     the  Executive  should die while any amount would  still  be
     payable   to  the  Executive  hereunder  had  the  Executive
     continued  to  live,  all  such  amounts,  unless  otherwise
     provided herein, shall be paid in accordance with the  terms
     of  this Agreement, to the Executive's Beneficiary.  If  the
     Executive  has  not named a Beneficiary, then  such  amounts
     shall  be paid to the Executive's devisee, legatee, or other
     designee,  or  if  there  is  no  such  designee,   to   the
     Executive's estate.


                    Article 9.  Miscellaneous

9.1. Employment   Status.    The  Executive   and   the   Company
     acknowledge that, except as may be provided under any  other
     agreement  between  the  Executive  and  the  Company,   the
     employment  of  the Executive by the Company is  "at  will,"
     and,  prior  to  the  effective date of a  Change-in-Control
     (except  as  provided in the flush language at  the  end  of
     Section 1(p)), may be terminated by either the Executive  or
     the Company at any time.

9.2. Beneficiaries.   The  Executive may designate  one  or  more
     persons   or  entities  as  the  primary  and/or  contingent
     Beneficiaries  of  any  Severance  Benefits  owing  to   the
     Executive under this Agreement.  Such designation must be in
     the  form  of a signed writing acceptable to the  Committee.
     The  Executive  may make or change such designation  at  any
     time.

9.3. Entire   Agreement.   This  Agreement  contains  the  entire
     understanding of the Company and the Executive with  respect
     to the subject matter hereof.

9.4. Gender  and Number. Except where otherwise indicated by  the
     context,  any masculine term used herein also shall  include
     the feminine, the plural shall include the singular, and the
     singular shall include the plural.

9.5. Severability.  In the event any provision of this  Agreement
     shall  be  held  illegal  or invalid  for  any  reason,  the
     illegality  or  invalidity shall not  affect  the  remaining
     parts of the Agreement, and the Agreement shall be construed
     and  enforced as if the illegal or invalid provision had not
     been included.  Further, the captions of this Agreement  are
     not  part  of the provisions hereof and shall have no  force
     and effect.

9.6. Modification.   No  provision  of  this  Agreement  may   be
     modified,  waived,  or discharged unless such  modification,
     waiver,  or discharge is agreed to in writing and signed  by
     the Executive and by authorized member of the Committee,  or
     by   the  respective  parties'  legal  representatives   and
     successors.

9.7. Applicable Law.  To the extent not preempted by the laws  of
     the  United States, the laws of the state of Texas shall  be
     the   controlling  law  in  all  matters  relating  to  this
     Agreement.


  IN  WITNESS  WHEREOF, the parties have executed this  Agreement
on this 15th day of
August, 1997.


Executive
          Midcoast Energy Resources, Inc.



By:
Duane                          S.                          Herbst
Dan C. Tutcher, President & CEO




ATTEST:Midcoast Energy Resources, Inc.


(Corporate Seal)


By:
      Duane S. Herbst, Secretary