Document:

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                                                                   EXHIBIT 10.18

                         VIKING GAS TRANSMISSION COMPANY

                               OPERATING AGREEMENT

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                                TABLE OF CONTENTS

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ARTICLE I - DEFINITIONS
         Section 1.01 - Definitions ..............................................................................1
ARTICLE II - REPRESENTATIONS
         Section 2.01 - Viking's Representations .................................................................2
         Section 2.02 - Operator's Representations ...............................................................2
ARTICLE III - OBLIGATIONS OF OPERATOR
         Section 3.01 - Operator's Responsibilities ..............................................................2
         Section 3.02 - Operator's and Other's Records ...........................................................4
         Section 3.03 - Operator's Indemnity .....................................................................5
         Section 3.04 - Viking's Indemnity .......................................................................5
         Section 3.05 - Insurance ................................................................................6
ARTICLE IV - EMPLOYEES, CONSULTANTS AND SUBCONTRACTORS
         Section 4.01 - Operator's Employees, Consultants and Subcontractors .....................................6
         Section 4.02 - Standards for Employees ..................................................................7
         Section 4.03 - Consultants and Subcontractors ...........................................................7
ARTICLE V - FINANCIAL, ACCOUNTING AND BILLING PRACTICES
         Section 5.01 - Accounting and Compensation ..............................................................7
         Section 5.02 - Budgets...................................................................................8
         Section 5.03 - Disputed Charges .........................................................................8
         Section 5.04 - Rate Reviews .............................................................................9
         Section 5.05 - Audit ....................................................................................9
ARTICLE VI - INDEPENDENT CONTRACTOR
         Section 6.01 - Independent Contractor ...................................................................9
ARTICLE VI I - INTELLECTUAL PROPERTY
         Section 7.01 - Inventions and Copyrights ...............................................................10
         Section 7.02 - Confidentiality .........................................................................10
ARTICLE VII - TERM
         Section 8.01 - Term ....................................................................................10
         Section 8.02 - Upon Termination ........................................................................10
ARTICLE IX - ACCOUNTING AND TAXES
         Section 9.01 - Fiscal Year .............................................................................11
         Section 9.02 - Location of Records .....................................................................11
         Section 9.03 - Books of Account ........................................................................11
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         Section 9.04 - Annual Financial Statements .............................................................11
         Section 9.05 - Tax Returns..............................................................................11
         Section 9.06 - Governmental Reports ....................................................................12
         Section 9.07 - Inspection of Facilities and Records ....................................................12
         Section 9.08 - Deposit of Funds ........................................................................12
ARTICLE X - LAW OF THE CONTRACT AND ARBITRATION
         Section 10.01 - Law of the Contract ....................................................................12
         Section 10.02 - Arbitration ............................................................................12
ARTICLE XI - FORCE MAJEURE
         Section 11.01 - Effect of Force Majeure ................................................................13
         Section 11.02 - Nature of Force Majeure ................................................................14
         Section 11.03 - Non-Force Majeure Situations ...........................................................14
         Section 11.04 - Resumption of Normal Performance .......................................................15
         Section 11.05 - Strikes and Lockouts ...................................................................15
ARTICLE XII - MISCELLANEOUS
         Section 12.01 - Amendment ..............................................................................15
         Section 12.02 - Waivers ................................................................................15
         Section 12.03 - Severability............................................................................15
         Section 12.04 - Governmental Bodies ....................................................................15
         Section 12.05 - Entirety ...............................................................................16
         Section 12.06 - Recitals ...............................................................................16
         Section 12.07 - Remedies Cumulative ....................................................................16
         Section 12.08 - Conflicts ..............................................................................16
         Section 12.09 - Reporting ..............................................................................16
         Section 12.10 - Operating and Maintenance Plan .........................................................16
         Section 12.11 - Operator's Office.......................................................................16
         Section 12.12 - Attorneys' Fees ........................................................................16
         Section 12.13 - Counterpart Execution  .................................................................17
ARTICLE XIII - NOTICES
         Section 13.01 - Notices ................................................................................17
ARTICLE XIV - ASSIGNMENTS
         Section 14.01 - Assignability ..........................................................................18
         Section 14.02 - Successors and Assigns .................................................................18
         Section 14.03 - Effective Date .........................................................................18
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EXHIBIT A - ACCOUNTING PROCEDURE

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                               OPERATING AGREEMENT

         This Agreement dated as of the ____ day of January, 2003, by and
between Viking Gas Transmission Company, a Delaware Corporation, ("Viking"), and
Northern Plains Natural Gas Company, a Delaware Corporation ("Operator"). Viking
and Operator are sometimes referred to collectively herein as the "parties" and
individually as a "party".

RECITALS

         WHEREAS, Viking desires to engage Operator to operate the Line (as
defined herein) in accordance with the terms and conditions set forth in this
Agreement; and

         WHEREAS, Operator is willing and able to operate the Line in accordance
with the terms and conditions set forth in this Agreement.

         NOW THEREFORE, in consideration of the representations, covenants and
premises hereinafter set forth the parties agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

SECTION 1.01 - DEFINITIONS

         Except as otherwise indicated by the context, all capitalized terms
used in this Agreement including this Article, the recitals and the exhibits
attached hereto, shall have the meanings set forth below:

         (a)      "Accounting Procedure" shall mean the accounting procedure set
                  forth in Exhibit "A" hereto.

         (b)      "Certified Public Accountants" shall mean a firm of
                  independent public accountants selected from time to time by
                  the Partnership Policy Committee.

         (c)      "Line" shall mean the interstate gas pipeline and related
                  facilities owned by Viking, which extends from a point near
                  Emerson, Manitoba to its terminus near Marshfield, Wisconsin,
                  and any extensions, expansions, additions, betterments or
                  renewals thereof.

         (d)      "Partnership Policy Committee" shall mean the Partnership
                  Policy Committee provided for in Section 6.1 of the Amended
                  and Restated

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                  Agreement of Limited Partnership of Northern Border Partners,
                  L.P. dated as of October 1, 1993.

         (e)      "Required Accounting Practice" shall mean the accounting rules
                  and regulations, if any, at the time prescribed by the
                  regulatory body or bodies under the jurisdiction of which
                  Viking is at the time operating and, to the extent of matters
                  not covered by such rules and regulations, generally accepted
                  principles of accounting at the time prevailing for companies
                  engaged in a business similar to that of Viking.

                                   ARTICLE II

                                 REPRESENTATIONS

SECTION 2.01 - VIKING'S REPRESENTATIONS

         Viking shall cooperate with Operator, including reimbursing Operator on
a timely basis for all reasonable costs, including overhead, administrative and
general expenses incurred by the Operator and overhead, administrative and
general expenses incurred by the Operator's parent and affiliates in rendering
their services in order to facilitate the services to Viking specified herein.

SECTION 2.02 - OPERATOR'S REPRESENTATIONS

         Operator represents that in performing the responsibilities set forth
in Article III, it shall carry out such responsibilities or shall cause
contractors selected to carry out such responsibilities with the same degree of
diligence and care that Operator would exercise if operating its own property in
a sound, workmanlike and prudent manner and it shall comply, and shall require
all contractors to comply, with all relevant laws, statutes, ordinances, safety
codes, regulations and rules applicable to the operation of the Line.

                                   ARTICLE III

                             OBLIGATIONS OF OPERATOR

SECTION 3.01 - OPERATOR'S RESPONSIBILITIES

         Operator, subject to budget authorizations by the Partnership Policy
Committee, shall perform administrative services and procure and furnish all
materials, equipment, services, supplies and labor necessary for the design,

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construction, operation and maintenance of the Line including, without
limitation, the following:

         (a)      provide the day-to-day management supervision, operating and
                  maintenance services, administrative and related services to
                  Viking, including, without limitation, legal, accounting,
                  engineering, planning, budgeting, public relations, human
                  resources, purchasing, treasury, finance, technical services,
                  insurance administration, tax services and regulatory matters;

         (b)      make reports to and consult with the Partnership Policy
                  Committee in the form and at the times requested by the
                  Partnership Policy Committee;

         (c)      except as otherwise provided by applicable governmental
                  regulations, retain all charts, records, books of account, tax
                  returns, plans, designs, studies and reports and other
                  documents related to the design, construction, operation and
                  maintenance of the Line for a period of at least three (3)
                  years from the date of completion of the activity to which
                  such records relate;

         (d)      except as delegated to Operator's parent and affiliates,
                  purchase materials, equipment and supplies in the name of
                  Viking necessary for the design, construction, operation and
                  maintenance of the Line and sell or exchange such materials,
                  equipment and supplies;

         (e)      except as delegated to Operator's parent and affiliates,
                  purchase, option or otherwise acquire in the name of Viking
                  rights-of-way, land in fee and permits necessary for
                  construction, operation and maintenance of the Line; resist
                  the perfection of any liens against Viking property and, to
                  the extent permitted by law, hold Viking property free from
                  all liens;

         (f)      review with and advise Viking regarding engineering plans and
                  outlines for all necessary design of improvements, additions
                  or replacements of the Line;

         (g)      supervise and report to Viking regarding readings of all
                  measuring equipment required in connection with the Line;

         (h)      review the qualifications of and retain outside consultants,
                  contractors, and other services;

         (i)      utilize, as Operator deems necessary, the services of its
                  parent and affiliates, provided that such services are
                  utilized on terms materially no less favorable to Viking than
                  those prevailing at

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                  the time for comparable services of unaffiliated independent
                  persons or entities.

         (j)      prepare and file all administrative forms or reports
                  (including any regulatory filings, Viking tax returns, safety
                  reports, operating reports and any other reports required)
                  with governmental and other agencies required for the
                  construction and day-to-day operations of the Line; all
                  reports in connection with emergency or unusual circumstances
                  shall be made as expeditiously as reasonably possible;

         (k)      make immediate reports to Viking of all unusual or significant
                  occurrences in relation to the Line, regardless of whether or
                  not such reports have been required pursuant to Section
                  3.01(b);

         (l)      make recommendations to Viking as required by the Partnership
                  Policy Committee for the proposed budgets required for the
                  Line and operations in connection therewith for the next
                  calendar year or portion thereof;

         (m)      provide an adequate number of qualified supervisory and
                  professional and craft personnel to perform the obligations
                  contemplated hereunder;

         (n)      require all contractors, vendors and suppliers to perform
                  their services in accordance with sound, prudent and
                  workmanlike industry practices;

         (o)      have or provide custody of funds, notes, drafts, acceptances,
                  commercial paper and other securities belonging to Viking;
                  keep funds belonging to Viking on deposit in one or more
                  banking institutions as approved by the Partnership Policy
                  Committee; and, subject to direction by the Partnership Policy
                  Committee, invest available funds in the manner provided for
                  by the Partnership Policy Committee, disburse such funds, and
                  keep appropriate records in connection with all the above
                  transactions.

         (p)      meet the standard of care set forth in Section 2.02.

SECTION 3.02 - OPERATOR'S AND OTHER'S RECORDS

         All of the books, records, charts and other documents prepared and
retained by Operator in connection with the obligations set forth in Section
3.01 shall, as provided in Section 5.05, be made available during normal
business hours to Viking or their respective representatives to permit them to

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audit and verify the accuracy of any statement, billing, charge or computation
made by Operator in connection with this Agreement. Operator shall obtain
similar rights from contractors, consultants and suppliers performing in
connection with the Line and, to the extent reasonably possible, obtain similar
rights for Viking.

SECTION 3.03 - OPERATOR'S INDEMNITY

         Operator shall indemnify and hold harmless Viking, its employees or
agents from and against:

         (a)      all actions or failures to act by Operator which are not in
                  accordance with the terms of this Agreement or an express
                  direction by Viking;

         (b)      claims for non-payment of any and all contributions,
                  withholding deductions or taxes measured by the wages,
                  salaries or compensation paid to persons employed by Operator
                  in connection herewith.

SECTION 3.04 - VIKING'S INDEMNITY

         (a)      Viking shall indemnify and save harmless the Operator against
                  all actions, claims, demands, costs and liabilities arising
                  out of the acts (or failure to act) of Operator in good faith
                  within the scope of its authority in the course of Viking's
                  business and Operator shall not be liable for any obligations,
                  liabilities, or commitments incurred by or on behalf of Viking
                  as a result of any such acts (or failure to act). Operator
                  shall not be indemnified for its willful misconduct.

         (b)      Any and all claims, damages or causes of action in favor of
                  anyone other than Viking arising out of the construction,
                  operation, maintenance, upkeep, repair, replacement,
                  improvement and expansion of the Line which are not covered by
                  insurance pursuant to Section 3.05 shall be settled or
                  litigated and defended by Operator in accordance with its best
                  judgment and discretion when (i) the amount involved is less
                  than a ceiling amount to be established by the Partnership
                  Policy Committee; (ii) no injunctive or similar relief is
                  sought; and (iii) no criminal sanction is sought; otherwise,
                  such decision shall be made by the Partnership Policy
                  Committee, and any settlement or defense thereof shall be
                  controlled by the Partnership Policy Committee.

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SECTION 3.05 - INSURANCE

         (a)      At all times during the term of this Agreement, Operator shall
                  carry and maintain in force the insurance coverages set forth
                  in Exhibit "B" hereto. Operator shall require that all of its
                  contractors, subcontractors or consultants engaged in any
                  aspect of the operations hereunder or exposed to the risk of
                  any of the operations hereunder carry and maintain insurance
                  coverages commensurate with risks involved in accordance with
                  Operator's established operating practices.

         (b)      The premiums for insurance coverages for which Operator is
                  responsible under this section shall be a reimbursable cost
                  pursuant to Section 5.01(b).

         (c)      Operator may carry and maintain such other insurance for its
                  own account as it may deem necessary, but in the event other
                  insurance is carried, Operator agrees to waive and agrees to
                  have its insurers waive any rights of subrogation they may
                  have against Viking, or its affiliates, parent of any of them,
                  and/or their directors, officers, employees, servants or
                  agents.

         (d)      With respect to claims and losses for damage, injury or
                  destruction of property which is a part of the Line, which
                  property is covered by insurance other than insurance provided
                  for in Section 3.05(a), it is agreed that neither Operator nor
                  Viking shall have any rights of recovery against one another,
                  nor against the affiliates of each, nor the insurers of any of
                  them, and their rights of recovery are mutually waived. All
                  such policies of insurance purchased to cover the Line or any
                  part thereof, or the operation (in any respect) of the Line or
                  any part thereof, or any gas transported or handled therein,
                  shall be endorsed properly to effectuate this waiver of
                  recovery.

                                   ARTICLE IV

                   EMPLOYEE'S, CONSULTANTS AND SUBCONTRACTORS

SECTION 4.01 - OPERATOR'S EMPLOYEES, CONSULTANTS AND SUBCONTRACTORS

         Operator shall employ or retain and have supervision over the persons
(including consultants and professional service providers or other

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organizations) required by Operator to perform its duties and responsibilities
hereunder in an efficient and economically prudent manner. Operator shall pay
all reasonable expenses in connection therewith, including compensation,
salaries, wages and overhead and administrative expense incurred by Operator's
parent and affiliates, and, if applicable, social security taxes, workers'
compensation insurance, retirement and insurance benefits and other such
expenses. Subject to the provisions of Section 6.2 of the Amended and Restated
Agreement of Limited Partnership of Northern Border Partners, L.P. dated as of
October 1, 1993, the compensation for Operator's employees shall be determined
by Operator. All authorized expenses pursuant to this Section shall be
reimbursed to Operator by Viking as provided in the Accounting Procedure.

SECTION 4.02 - STANDARDS FOR EMPLOYEES

         All employees, workmen, foremen and supervisors ("employees") engaged
or directed by Operator to perform Operator's obligations under this Agreement
shall be duly qualified and experienced to perform such obligations. Operator
shall at all times enforce strict discipline and maintain good order among such
employees, and shall require such employees to comply with all relevant laws,
statutes, ordinances, safety codes, regulations and rules applicable to the
operation of the Line.

SECTION 4.03 - CONSULTANTS AND SUBCONTRACTORS

         The provisions of Sections 4.02 shall be applicable to any contractors,
consultants and/or subcontractors retained in connection herewith.

                                    ARTICLE V

                   FINANCIAL, ACCOUNTING AND BILLING PRACTICES

SECTION 5.01 - ACCOUNTING AND COMPENSATION

         (a)      Operator shall keep a full and complete account of all costs,
                  expenses and expenditures incurred by it in connection with
                  its obligations hereunder in the manner set forth in the
                  Accounting Procedure.

         (b)      Operator shall be reimbursed by Viking for all reasonable and
                  proper costs, expenses and expenditures paid by it for Viking
                  at the rate and in the manner set forth in the Accounting
                  Procedure; provided, however, that costs incurred by the
                  Operator under

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                  Section 3.03 shall not be reimbursed by Viking. It is the
                  intent of the parties that Operator shall carry out its
                  services hereunder on a fully reimbursed basis without profit
                  or loss. To the extent that a deviation from this standard
                  occurs, appropriate adjustments will promptly be made.

         (c)      To the extent that Operator enters into activities other than
                  the discharge of its responsibilities as Operator, Operator
                  shall separately account for such costs, expenses and
                  expenditures and Viking shall not be billed for such costs,
                  expenses, or expenditures.

SECTION 5.02 - BUDGETS

         On or before each November 1, Operator shall prepare and submit for
approval by the Partnership Policy Committee an estimate of capital expenditures
and operating income and expenses which Operator anticipates for the next
calendar year. Except as the Partnership Policy Committee may otherwise direct,
the budget approved by the Partnership Policy Committee and then in effect shall
constitute authorization of Operator to incur the expenditures contained in such
budget.

SECTION 5.03 - DISPUTED CHARGES

         Viking may, within the time provided in the Accounting Procedure, take
written exception to any bill or statement rendered by Operator for any
expenditure or any part thereof, on the ground that the same was not a
reasonable, authorized, and proper cost incurred by Operator in connection with
the operation, maintenance, upkeep or repair of the Line. Viking shall
nevertheless pay in full when due the amount of all statements submitted by
Operator. Such payment shall not be deemed a waiver of the right of Viking to
recoup any contested portion of any bill or statement. However, if the amount as
to which such written exception is taken or any part thereof is ultimately
determined by Viking not to be a reasonable, authorized, and proper expense
incurred by Operator in connection with the operation, maintenance, upkeep or
repair of the Line, such amount or portion thereof (as the case may be) shall be
refunded by Operator to Viking together with interest thereon at an annual rate
(which in no event shall be higher than the maximum rate permitted by applicable
law) equal to the prime rate charged by Citibank of New York, or its successor
entity, from time to time to responsible commercial and

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industrial borrowers during the period from the date of payment by Viking to the
date of refund by Operator.

SECTION 5.04 - RATE REVIEWS

         Operator shall review from time-to-time the rates and fees charged for
transportation services and recommend to Viking revision in such rates and fees
as necessary to reflect increased or decreased costs or other changes in the
conditions of service in order to assure that all costs are reflected in the
tariffs of Viking.

SECTION 5.05 - AUDIT

         Viking or its designated representatives, after fifteen (15) days'
notice in writing to Operator, shall have the right during normal business hours
to audit, at its own expense, all books and records of Operator as well as the
relevant books of account of Operator's contractors relating to the construction
and operation of the Line. Such audits shall not be commenced more often than
twice each calendar year. Viking shall have two (2) years after the close of a
calendar year in which to make an audit of Operator's records for such calendar
year. Absent fraud or intentional concealment or misrepresentation by Operator
or its employees, and except for any adjustments which may arise from FERC
compliance audits, Operator shall neither be required nor permitted to adjust
any item unless a claim therefor is presented or adjustment is initiated within
two (2) years after the close of the calendar year in which the statement
therefor is rendered, and in the absence of such timely claims or adjustments,
the bills and statements rendered shall be conclusively established as correct;
provided, however, this shall not prevent adjustment resulting from physical
inventory of the Line.

                                   ARTICLE VI

                             INDEPENDENT CONTRACTOR

SECTION 6.01 - INDEPENDENT CONTRACTOR

         (a)      In performing services pursuant to this Agreement, Operator
                  shall be an independent contractor and not an employee, agent
                  or servant of Viking and this Agreement does not create any
                  partnership or joint venture between Viking and the Operator.

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         (b)      Operator shall comply with all relevant laws, statutes,
                  ordinances, safety codes, regulations and rules applicable to
                  the operation of the Line.

                                   ARTICLE VII

                              INTELLECTUAL PROPERTY

SECTION 7.01 - INVENTIONS AND COPYRIGHTS

         Any inventions, whether patentable or not, developed or invented or
copyrightable material, developed by Operator or its employees during the
performance of services under this Agreement shall, unless otherwise directed,
be assigned to Viking, which shall have the exclusive right to the exploitation
thereof.

SECTION 7.02 - CONFIDENTIALITY

         Because the information and knowledge gained during the performance of
services hereunder may consist of valuable proprietary information, the misuse
or disclosure of which could cause substantial damage to Viking, any and all
information obtained by Operator in performance of its obligations hereunder
shall be held in strict confidence by Operator, its employees or agents except
as needed to comply with the purposes of this Agreement. Any contracts entered
into by Operator related to its obligations under this Agreement shall contain a
provision which similarly restricts the use and disclosure of such information.

                                  ARTICLE VIII

                                      TERM

SECTION 8.01 - TERM

         This Agreement shall be effective as of January 1, 2003 and shall
continue for a term of five (5) years, and thereafter on a year-to-year basis
unless terminated on six (6) months prior written notice by either party hereto.

SECTION 8.02 - UPON TERMINATION

         Termination of this Agreement shall not relieve either party from
paying amounts of money due hereunder which were due prior to or become due
after or as a result of such termination.

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                                   ARTICLE IX

                              ACCOUNTING AND TAXES

SECTION 9.01 - FISCAL YEAR

         The fiscal year of Viking shall be the calendar year.

SECTION 9.02 - LOCATION OF RECORDS

         The books of account for Viking shall be kept and maintained at the
principal office of Viking or at such other place as the Partnership Policy
Committee shall determine.

SECTION 9.03 - BOOKS OF ACCOUNT

         The books of account for Viking shall be:

         (a)      maintained on an accrual basis in accordance with Required
                  Accounting Practice; and

         (b)      audited by the Certified Public Accountants at the end of each
                  fiscal year.

SECTION 9.04 - ANNUAL FINANCIAL STATEMENTS

         As soon as practicable following the end of each fiscal year of Viking,
the Operator shall prepare and deliver to the Partnership Policy Committee a
profit and loss statement, a statement of changes in financial position for such
fiscal year, and a balance sheet as of the end of such fiscal year, together
with a report thereon of the Certified Public Accountants.

SECTION 9.05 - TAX RETURNS

         As soon as practicable following the end of each fiscal year of Viking,
the Operator shall prepare and deliver to the Partnership Policy Committee
federal, state and local income tax returns and supporting accounting and tax
information and schedules for such fiscal year. Matters of tax policy for Viking
shall be the responsibility of, and ultimately determined by the Partnership
Policy Committee.

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SECTION 9.06 - GOVERNMENTAL REPORTS

         Operator, on behalf of Viking, shall prepare and file all reports
prescribed by the FERC and any other commission or governmental agency having
jurisdiction.

SECTION 9.07 - INSPECTION OF FACILITIES AND RECORDS

         Each member of the Partnership Policy Committee shall have the right at
all reasonable times during usual business hours to inspect the facilities of
Viking and to examine and make copies of the books of account and other records
of Viking. Such right may be exercised through any agent or employee of such
member of the Partnership Policy Committee designated in writing by it or by an
independent public accountant, petroleum engineer, attorney or other consultant
so designated. That member of the Partnership Policy Committee shall bear all
costs and expenses incurred in any examination for such member's account.

SECTION 9.08 - DEPOSIT OF FUNDS

         Funds of Viking shall be deposited in such banks or other depositories
as shall be designated by the Partnership Policy Committee.

                                    ARTICLE X

                       LAW OF THE CONTRACT AND ARBITRATION

SECTION 10.01 - LAW OF THE CONTRACT

         This Agreement and all other agreements relating thereto shall be
construed and interpreted under the laws of the State of Nebraska.

SECTION 10.02 - ARBITRATION

         (a)      In the event that the parties are unable to agree on any of
                  the matters set forth herein, except as provided in Section
                  5.03, either Viking or Operator may upon written notice call
                  for submission of such matter to arbitration. The party
                  requesting arbitration shall set forth in such notice in
                  adequate detail the issues to be arbitrated, and within ten
                  (10) days from the receipt of such notice, the other party may
                  set forth in adequate detail additional related issues to be
                  arbitrated. If arbitration is

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                  invoked by either party, the decision of the arbitrators shall
                  be final and binding upon both parties.

         (b)      Such binding arbitration shall be conducted by a person or
                  entity knowledgeable and experienced in pipeline operations
                  matters. In the event the parties are unable to agree upon
                  such person or entity, they shall then each select a person or
                  entity having the qualifications set forth above, and such
                  persons or entities selected shall mutually agree upon a
                  similarly qualified third person or entity to complete the
                  arbitration panel. In the event that the persons selected by
                  the parties are unable to agree on a third member of the panel
                  within sixty (60) days after their selection, such person
                  shall be designated by the American Arbitration Association or
                  such other person the parties mutually agree upon. Upon final
                  selection of the entire panel, such panel shall, as
                  expeditiously as possible, render a decision on the matter
                  submitted for arbitration.

         (c)      Upon the determination of any such dispute, the arbitrators
                  shall bill the costs attributable to such binding arbitration
                  to the party whose position they determine is farthest away
                  from the actual decision rendered; provided, however, that the
                  arbitrators shall be empowered to apportion such costs between
                  the parties if they deem it appropriate.

         (d)      It is the intent of the parties that the matters agreed upon
                  to be arbitrated be decided as set forth herein and they shall
                  not seek to have this Article X rendered unenforceable or to
                  have such matter decided in any other way.

                                   ARTICLE XI

                                  FORCE MAJEURE

SECTION 11.01 - EFFECT OF FORCE MAJEURE

         In the event that either Viking or Operator is rendered unable, by
reason of an event of force majeure, to perform, wholly or in part, any
obligation or commitment set forth in this contract, then upon such party's
giving notice and full particulars of such event as soon as practicable after
the occurrence thereof, the obligations of both parties, except for unpaid

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financial obligations arising prior to such event of force majeure, shall be
suspended to the extent and for the period of such force majeure condition.

SECTION 11.02 - NATURE OF FORCE MAJEURE

         The term "force majeure" as employed in this Agreement shall mean acts
of God, strikes, lockouts or industrial disputes or disturbances, civil
disturbances, arrests and restraint from rulers of people, interruptions by
government or court orders, present and future valid orders, decisions or
rulings of any governmental entity having proper jurisdiction, acts of the
public enemy, wars, riots, blockades, insurrections, inability to secure labor
or inability to secure materials, including inability to secure materials by
reason of allocations promulgated by authorized governmental agencies epidemics,
landslides, lightning, earthquakes, fire, storms, floods, washouts, inclement
weather which necessitates extraordinary measures and expense to construct
facilities and/or maintain operations, explosions, breakage or accident to
machinery or lines of pipe, freezing of wells or pipelines inability to obtain
or delays in obtaining easements or rights-of-way, the making of repairs or
alterations to wells, pipelines or plants, partial or entire failure of gas
supply or any other cause, whether of the kind herein enumerated or otherwise,
not reasonably within the control of the party claiming force majeure.

SECTION 11.03 - NON-FORCE MAJEURE SITUATIONS

         Neither Operator nor Viking shall be entitled to the benefit of the
provisions of Section 11.01 under the following circumstances:

         (a)      To the extent that the failure was caused by the party
                  claiming suspension having failed to remedy the condition by
                  taking all reasonable acts, short of litigation, if such
                  remedy requires litigation, and having failed to resume
                  performance of such commitments or obligations with reasonable
                  dispatch;

         (b)      If the failure was caused by lack of funds, or with respect to
                  the payment of any amount or amounts then due hereunder;

         (c)      To the extent that the failure was caused or contributed to by
                  the negligence of Operator or the Partnership and such
                  negligence shall be the cause of such failure.

                                       14
<PAGE>
SECTION 11.04 - RESUMPTION OF NORMAL PERFORMANCE

         Should there be an event of force majeure affecting performance
hereunder, such events shall be remedied with all reasonable dispatch to insure
resumption of normal performance.

SECTION 11.05 - STRIKES AND LOCKOUTS

         Settlement of strikes and lockouts shall be entirely within the
discretion of the party affected, and the requirement in Section 11.04 that any
event of force majeure shall be remedied with all reasonable dispatch shall not
require the settlement of strikes or lockouts by acceding to the demands of the
persons or entities directly or indirectly involved in such strikes or lockouts
when such course is inadvisable in the discretion of the party having such
difficulty.

                                   ARTICLE XII

                                  MISCELLANEOUS

SECTION 12.01 - AMENDMENT

         This Agreement shall only be amended by an instrument in writing
executed by both parties.

SECTION 12.02 - WAIVERS

         A waiver by a party at any time of its rights with respect to a default
under this Agreement, or with respect to any other matter in connection with
this Agreement, shall not be deemed a waiver with respect to any other or
subsequent default or matter.

SECTION 12.03 - SEVERABILITY

         If any provision of this Agreement shall be invalid or unenforceable to
any extent, the remainder of this Agreement shall not be affected thereby and
shall be enforced to the greatest extent permitted by law.

SECTION 12.04 - GOVERNMENTAL BODIES

         This Agreement is subject to all valid orders, rules and regulations of
any governmental body having jurisdiction over the parties hereto, or this
Agreement.

                                       15
<PAGE>
SECTION 12.05 - ENTIRETY

         This Agreement contains the entire agreement between the parties and
except as stated herein there are no oral promises, agreements or warranties
affecting it.

SECTION 12.06 - RECITALS

         For the purpose of interpreting this Agreement, the Recitals shall be
considered incorporated herein as if set forth in full.

SECTION 12.07 - REMEDIES CUMULATIVE

         Remedies provided under the provisions of this Agreement shall be
cumulative and, except as to the agreement for binding arbitration contained in
Article X hereof, shall be in addition to the remedies provided by law or in
equity.

SECTION 12.08 - CONFLICTS

         In the event there is any conflict between this Agreement and any
schedule or subsequent agreement referred to herein, the provisions hereof shall
be deemed controlling.

SECTION 12.09 - REPORTING

         Operator shall report to the Partnership Policy Committee.

SECTION 12.10 - OPERATING AND MAINTENANCE PLAN

         Operator shall submit to Viking for approval an operating and
maintenance plan for the Line, as required by the Minimum Federal Safety
Standards, Part 192, of the Department of Transportation.

SECTION 12.11 - OPERATOR'S OFFICE

         Operator may select the location of its office or offices to perform
its obligation hereunder.

SECTION 12.12 - ATTORNEYS' FEES

         Should any litigation be commenced between the parties concerning any
provision of this Agreement or the rights and duties hereunder, the party
prevailing in such litigation shall be entitled, in addition to such other
relief as may be granted in such proceeding, to a reasonable sum as and for

                                       16
<PAGE>
their attorneys' fees in such litigation, which sum shall be determined in such
litigation or in a separate action for such purpose.

SECTION 12.13 - COUNTERPART EXECUTION

         This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together constitute one and
the same instrument.

                                  ARTICLE XIII

                                     NOTICES

SECTION 13.01 - NOTICES

         Unless herein provided to the contrary, any notice called for in this
Agreement shall be in writing and shall be considered as having been given if
delivered personally or by mail or telegraph with all postage or charges
prepaid, to either Viking or Operator at the places designated. Routine
communication, including monthly statements and payments shall be considered as
duly delivered when mailed by ordinary mail. Normal operating instructions can
be made by telephone. Unless changed, the addresses of the parties are as
follows.

         "OPERATOR"        NORTHERN PLAINS NATURAL GAS COMPANY
                                   13710 FNB Parkway
                                   Omaha, Nebraska 68154-5200

         "VIKING"          VIKING GAS TRANSMISSION COMPANY
                                   13710 FNB Parkway
                                   Omaha, Nebraska 68154-5200

Any notice given to Viking under this Agreement shall be promptly transmitted by
it to the Partnership Policy Committee.

                                       17
<PAGE>
                                   ARTICLE XIV

                                   ASSIGNMENT

SECTION 14.01 - ASSIGNABILITY

         As to the assignment of this Agreement:

         (a)      This Agreement shall not be assigned by either Viking or
                  Operator without the written consent of the other.

         (b)      Consent to assignment hereunder shall not be unreasonably
                  withheld by either party hereto.

SECTION 14.02 - SUCCESSORS AND ASSIGNS

         This Agreement and all of the obligations and rights herein established
shall extend to and be binding upon and shall inure to the benefit of the
respective successors and assigns of the respective parties hereto.

SECTION 14.03 - EFFECTIVE DATE

         Any assignment hereunder shall be effective on the first day of the
month following the month during which the assignment is completed.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written.

NORTHERN PLAINS NATURAL GAS COMPANY           VIKING GAS TRANSMISSION COMPANY

/s/ JERRY L. PETERS                           /s/ WILLIAM R. CORDES
------------------------------------          ----------------------------------
NAME:  JERRY L. PETERS                        NAME:  WILLIAM R. CORDES
TITLE: VICE PRESIDENT AND TREASURER           TITLE: PRESIDENT

                                       18
<PAGE>
                                    EXHIBIT A

                                       TO

                               OPERATING AGREEMENT

                              ACCOUNTING PROCEDURE

                                    ARTICLE I

                               GENERAL PROVISIONS

1.01     STATEMENTS AND BILLINGS. Operator may bill Viking on the first day of
         each month for the estimated costs and expenses for the month and any
         adjustment which may be necessary to correct prior estimated billings
         to actual. Such bills will be summarized by appropriate classifications
         indicative of the nature thereof.

1.02     PAYMENT BY VIKING. Viking shall pay all bills presented in the
         Operating Agreement on or before the 15th day after the billing date.
         If payment is not made within such time, the unpaid balance shall bear
         interest until paid at a rate (which in no event shall be higher than
         the maximum rate or rates permitted by applicable law) equal to the
         prime rate charged by the Citibank of New York, or its successor
         entity, from time to time to responsible commercial and industrial
         borrowers; provided, however, that if employees of Operator are
         responsible for writing Viking's checks and Viking has sufficient funds
         to make payment, no interest charge shall be imposed for late payment.
         Payment by or on behalf of Viking shall not be deemed a waiver of the
         right to recoup any amount in question.

1.03     ADJUSTMENTS. Except for any adjustments which may arise from FERC
         Compliance Audits, payment of any such bills shall not prejudice the
         right of Viking to protest or question the correctness thereof;
         provided however, all bills and statements rendered to Viking by
         Operator during any calendar year shall conclusively be presumed to be
         true and correct after 24 months following the end of any such calendar
         year, unless

                                      A-1
<PAGE>
         prior to the end of said 24 month period Viking takes written exception
         thereto and makes claim on Operator for adjustment; provided, however,
         this shall not prevent adjustment resulting from physical inventory of
         the Line. No adjustment favorable to Operator shall be made unless it
         is made within the same prescribed period.

1.04     FINANCIAL RECORDS. Operator shall maintain accurate books and records
         in accordance with the Federal Energy Regulatory Commission's Uniform
         System of Accounts for Class A and B natural gas companies or any
         successor system thereto covering all of Operator's actions under this
         Operating Agreement.

                                   ARTICLE II

                      CAPITAL ITEMS AND CONSTRUCTION COSTS

         Except for items included in a previously approved budget, prior to the
acquisition of any property, real or personal, costing more than a ceiling
amount to be established by the Partnership Policy Committee in the name or on
behalf of Viking which under the accounting rules and regulations, if any, at
the time prescribed by the regulatory body or bodies under the jurisdiction of
which Viking is at the time operating, might be capitalized, Operator shall
prepare and submit to Viking a forecast of the cost of all such property. Upon
approval of such forecast by Viking, Operator shall have authority to purchase
such property in Viking's name or in Operator's name for the benefit of Viking
without further approval or action by Viking. To the extent Operator owns
property necessary or desirable for the operation and maintenance of the Line
which (i) under the accounting rules and regulations, if any, at the time
prescribed by the regulatory body or bodies under the jurisdiction of which
Viking is at the time operating, might be capitalized, (ii) Operator in its sole
discretion is willing to transfer for consideration to Viking, and (iii) can be
transferred by Operator to Viking free and clear of all prior liens and
encumbrances, Operator, if approved by Viking, may so transfer such property to
Viking and charge Viking the net book value thereof as reflected on the books of
Operator on the date of transfer.

                                      A-2
<PAGE>
                                   ARTICLE III

                        COSTS, EXPENSES AND EXPENDITURES

         Subject to the limitations hereinafter prescribed and the provisions of
the Operating Agreement to which this Accounting Procedure is an exhibit,
Operator shall charge Viking for all costs and expenses incurred by Operator
(except those costs incurred under Section 3.03 of the Operating Agreement) in
connection with the performance of the responsibilities set forth in Article III
of the Operating Agreement, including without limitation, the administration,
planning, accounting, design, construction, operation, maintenance, or
abandonment of the Line (hereinafter collectively referred to as "Operation of
the Line"). Such costs and expenses shall include, without limitation, the
following:

3.01     RENTALS. All rentals paid by Operator.

3.02     LABOR COSTS.

         (a)      Salaries and wages of employees of Operator and Operator's
                  parent and affiliates providing services in connection with
                  the Operation of the Line and, in addition, amounts paid as
                  salaries and wages of others temporarily employed in
                  connection therewith. Cost of holiday, vacation, sickness,
                  jury service and other fringe benefits and customary
                  allowances paid to persons whose salaries and wages are
                  chargeable under this paragraph (a).

         (b)      Expenditures or contributions made pursuant to assessments
                  imposed by governmental authority which are applicable to
                  salaries, wages and costs chargeable under paragraph (a)
                  above. The reasonable cost of plans for employees' group life
                  insurance, hospitalization, disability, pension, retirement,
                  savings and other benefit plans, applicable to labor costs
                  chargeable under paragraph (a) above.

3.03     REIMBURSABLE EXPENSES OF EMPLOYEES. Reasonable personal expenses of
         employees whose salaries and wages are chargeable under Section 3.02(a)
         of this Exhibit A. As used herein, the term "personal expenses" shall
         mean the usual out-of-pocket expenditures incurred by employees in the
         performance of their duties and for which such employees are
         reimbursed.

                                      A-3
<PAGE>
         Operator shall maintain documentation for such expenses in accordance
         with the standards of the Internal Revenue Service.

3.04     MATERIAL, EQUIPMENT AND SUPPLIES. It is contemplated that all material;
         equipment and supplies will be owned by Viking and purchased or
         furnished for its account. So far as is reasonably practical and
         consistent with efficient and economical operation, only such material
         shall be obtained for the Line as may be required for immediate use,
         and the accumulation of surplus stock shall be avoided. To the extent
         reasonably possible, Operator shall take advantage of discounts
         available by early payments and pass such benefits on to Viking.
         Material, equipment and supplies furnished by Operator, if any, shall
         be priced at cost plus carrying costs to be established by Operator
         based on actual experience.

3.05     TRANSPORTATION. Transportation of employees, equipment and material and
         supplies necessary for the Operation of the Line. It is anticipated
         that all transportation equipment will be owned by Viking; provided,
         however, any automobiles, airplanes and trucks owned or obtained from
         Operator's parent or affiliates by Operator and approved for use for
         the Operation of the Line will be billed to Viking at reasonable rates
         based on Operator's actual costs.

3.06     SERVICES.

         (a)      The cost of contract services and utilities procured from
                  outside sources.

         (b)      Use and services of vehicles, equipment and facilities
                  furnished by Operator as provided in Section 3.05 of this
                  Exhibit A.

3.07     LEGAL EXPENSES AND CLAIMS. All costs and expenses of handling,
         investigating and settling litigation or claims arising by reason of
         the Operation of the Line or necessary to protect or recover any Line
         property, including, but not limited to, attorney's fees, court costs,
         cost of investigation or procuring evidence and any judgments paid or
         amounts paid in settlement or satisfaction of any such litigation or
         claims. Operator shall credit Viking for judgments received or amounts

                                      A-4
<PAGE>
         received in settlement of litigation, with respect to any claim
         asserted on behalf of Viking.

3.08     TAXES. All taxes of every kind and nature assessed or levied upon or
         incurred in connection with the Operation of the Line or on the Line or
         other property of Viking and which taxes have been paid by the Operator
         for the benefit of Viking or in connection with the Operation of the
         Line, including charges for late payment arising from extensions of the
         time for filing which are caused by Viking.

3.09     INSURANCE. Net of any returns, refunds, or dividends, all premiums paid
         and expenses incurred for insurance required to be carried under the
         Operating Agreement.

3.10     PERMITS, LICENSES AND BOND. Cost of permits, licenses and bond premiums
         necessary in the performance of Operator's duties.

3.11     OVERHEAD, ADMINISTRATIVE AND GENERAL EXPENSE. All overhead,
         administrative and general expenditures of Operator and Operator's
         parent and affiliates incurred in connection with the Operation of the
         Line.

                                      A-5<PAGE>
                                                                     EXHIBIT 4.2

                               FIRST AMENDMENT TO

             SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

         THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this "Amendment") is made and entered into this 9th day of August,
2002, by and among FLEET CAPITAL CORPORATION, a Rhode Island corporation (in its
individual capacity, "Fleet"), successor in interest by assignment to Shawmut
Capital Corporation ("Shawmut"), SOUTHWEST BANK OF TEXAS, N.A., a national
banking association ("Southwest"); WHITNEY NATIONAL BANK, a national banking
association ("Whitney"); (Fleet, Whitney and Southwest being referred to herein
collectively as the "Lenders"), Fleet as Agent for the Lenders (the "Agent");
AQUATICA, INC. ("Aquatica"), a Louisiana corporation; CANYON OFFSHORE, INC.
("Canyon"), a Texas corporation; CAL DIVE INTERNATIONAL, INC., a Minnesota
corporation ("Cal Dive") and ENERGY RESOURCE TECHNOLOGY, INC., a Delaware
corporation ("ERT") (Cal Dive, ERT, Aquatica and Canyon being referred to
individually and collectively as the "Borrower").

                                    RECITALS

         A. The Borrower, the Agent and the Lenders entered into that certain
Second Amended and Restated Loan and Security Agreement (as amended, modified
and supplemented from time to time, the "Loan Agreement"), dated as of February
22, 2002.

         B. The Borrower, the Agent and the Lenders have agreed to amend the
Loan Agreement to, among other things, modify the defined terms and modify a
financial covenant based upon the terms and conditions set forth in this
Amendment.

         NOW THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:

                                    ARTICLE I
                                   DEFINITIONS

         1.01 Capitalized terms used in this Amendment are defined in the Loan
Agreement, as amended hereby, unless otherwise stated.

                                   ARTICLE II
                                   AMENDMENTS

         2.01 AMENDMENTS TO DEFINED TERMS.

                  (a) The definition of "Applicable Margin Amount" in Section
         1.1 of the Loan Agreement, is hereby amended to read as follows:

<PAGE>

                           "Applicable Margin Amount - at any time with respect
                  to all Eurodollar or Base Rate Loans, the basis points as set
                  forth in the table below.

                                APPLICABLE MARGIN

<Table>
<Caption>
Cash Flow Leverage Ratio                   Eurodollar                 Base Rate
<S>                                        <C>                        <C>
        <1.75                                  125                     -25.0
  >or = to 1.75 < 2.00                         150                       0.0
  >or = to 2.00 < 2.25                         175                      25.0
  >or = to 2.25 < 2.50                         200                      50.0
  >or = to 2.50 < 2.75                         225                      75.0
  >or = to 2.75 < 3.00                         250                     100.0
     >or = to 3.00                             275                     125.0"
</Table>

                  (b) Section 1.1 of the Loan Agreement is hereby amended and
         restated in its entirety to read as follows:

                  "Income From Operations - with respect to any fiscal period,
                  means the Consolidated EBITDA of the Borrower, less (a)
                  Unfunded Capital Expenditures, (b) accrued Taxes for such
                  period (excluding deferred taxes, which shall be deducted from
                  Income From Operations for the quarter in which they are due
                  and payable), and (c) any plug and abandonment obligations, as
                  permitted by Section 8.2(c) (viii) below, which are paid to
                  entities not related to Borrower and which are not offset by
                  payments from such unrelated entities for such services."

         2.02 AMENDMENT TO FINANCIAL COVENANTS. Section 8.3(a) of the Loan
Agreement is hereby amended and restated in its entirety to read as follows:

                           "(a) Cash Flow Leverage Test. The Borrower will not
                  permit its Cash Flow Leverage Ratio to be greater than 3.25 to
                  1.00."

                                   ARTICLE III
                              CONDITIONS PRECEDENT

         3.01 CONDITIONS TO EFFECTIVENESS. The effectiveness of this Amendment
is subject to the satisfaction of the following conditions precedent, unless
specifically waived in writing by the Agent:

                  (a) The Agent shall have received this Amendment, duly
         executed by each Borrower;

                                       2
<PAGE>

                  (b) The Agent shall have received a company general
         certificate from each Borrower certified by the Secretary or Assistant
         Secretary of each Borrower acknowledging (A) that such Borrower's Board
         of Directors has adopted, approved, consented to and ratified
         resolutions which authorize the execution, delivery and performance by
         such Borrower of this Amendment and all other documents and agreements
         contemplated herein, and (B) the names of the officers of such Borrower
         authorized to sign this Amendment and all other documents and
         agreements contemplated herein (including the certificates contemplated
         herein) together with specimen signatures of such officers,

                  (c) The representations and warranties contained herein and in
         the Loan Agreement and the other Loan Documents shall be true and
         correct as of the date hereof, as if made on the date hereof,

                  (d) No Default or Event of Default shall have occurred and be
         continuing, unless such Default or Event of Default has been
         specifically waived in writing by the Agent; and

                  (e) All corporate proceedings taken in connection with the
         transactions contemplated by this Amendment and all documents,
         instruments and other legal matters incident thereto shall be
         satisfactory to the Agent and its legal counsel.

                                   ARTICLE IV
                  RATIFICATIONS, REPRESENTATIONS AND WARRANTIES

         4.01 RATIFICATIONS. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Loan Agreement and the other Loan Documents, and, except as
expressly modified and superseded by this Amendment, the terms and provisions of
the Loan Agreement and the other Loan Documents are ratified and confirmed and
shall continue in full force and effect. The Borrower, the Agent and the Lenders
agree that the Loan Agreement and the other Loan Documents, as amended hereby,
shall continue to be legal, valid, binding and enforceable in accordance with
their respective terms.

         4.02 REPRESENTATIONS AND WARRANTIES. Each Borrower hereby represents
and warrants to the Agent and the Lenders that (a) the execution, delivery and
performance of this Amendment and any and all other Loan Documents executed or
delivered in connection herewith have been authorized by all requisite corporate
action on the part of such Borrower and will not violate the Articles or
Certificate of Incorporation or Bylaws of such Borrower; (b) presently effective
resolutions of such Borrower's Board of Directors authorize the execution,
delivery and performance of this Amendment and any and all other Loan Documents
executed and/or delivered in connection herewith; (c) the representations and
warranties contained in the Loan Agreement, as amended hereby, and any other
Loan Document are true and correct on and as of the date hereof and on and as of
the date of execution hereof as though made on and as of each such date; (d) no
Default or Event of Default under the Loan Agreement, as amended hereby, has
occurred and is continuing, unless such Default or Event of Default has been
specifically waived in writing by the Agent on behalf of the Lenders; (e) each
Borrower is in full compliance with all

                                       3
<PAGE>

covenants and agreements contained in the Loan Agreement and the other Loan
Documents, as amended hereby; and (f) each Borrower has not amended its Articles
or Certificate of Incorporation or its Bylaws since the date of the Loan
Agreement, except for such amendments, if any, which are attached as exhibits to
the certificates referred to in Section 3.01(b) above.

                                    ARTICLE V
                            MISCELLANEOUS PROVISIONS

         5.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in the Loan Agreement or any other Loan Document, including,
without limitation, any document furnished in connection with this Amendment,
shall survive the execution and delivery of this Amendment and the other Loan
Documents in accordance with Section 7.3 of the Loan Agreement, and no
investigation by the Agent or Lenders or any closing shall affect the
representations and warranties or the right of the Agent or the Lenders to rely
upon them.

         5.02 REFERENCE TO LOAN DOCUMENTS. Each of the Loan Agreement and the
other Loan Documents, and any and all other agreements, documents or instruments
now or hereafter executed and delivered pursuant to the terms hereof or pursuant
to the terms of the Loan Documents, as amended hereby, are hereby amended so
that any reference in the Loan Agreement and such other Loan Documents to any
other Loan Document shall mean a reference to the Loan Documents as amended
hereby.

         5.03 EXPENSES OF LENDER. As provided in the Loan Agreement, the
Borrower agrees to pay on demand all costs and expenses incurred by the Agent
and the Lenders in connection with the preparation, negotiation, and execution
of this Amendment and the other Loan Documents executed pursuant hereto and any
and all amendments, modifications, and supplements thereto, including, without
limitation, the costs and fees of the Agent's legal counsel, and all costs and
expenses incurred by the Agent and the Lenders in connection with the
enforcement or preservation of any rights under the Loan Agreement, as amended
hereby, or any other Loan Document, including, without limitation, the costs and
fees of the Agent's and the Lenders' legal counsel.

         5.04 SEVERABILITY. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

         5.05 SUCCESSORS AND ASSIGNS. This Amendment is binding upon and shall
inure to the benefit of the Agent, the Lenders and the Borrower and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Agent.

         5.06 COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.

                                       4
<PAGE>

         5.07 EFFECT OF WAIVER. No consent or waiver, express or implied, by the
Agent or Lenders to or for any breach of or deviation from any covenant or
condition by the Borrower shall be deemed a consent to or waiver of any other
breach of the same or any other covenant, condition or duty.

         5.08 HEADINGS. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.

         5.09 APPLICABLE LAW. THIS AMENDMENT HERETO SHALL BE DEEMED TO HAVE BEEN
MADE AND TO BE PERFORMABLE IN AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.

         5.10 FINAL AGREEMENT. THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS,
EACH AS AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HERE, OF ON THE DATE THIS AMENDMENT IS EXECUTED.
THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS AMENDED HEREBY, MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. NO
MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS
AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY BORROWERS AND
LENDER.

         5.11 RELEASE. EACH BORROWER HEREBY ACKNOWLEDGES THAT AS OF THE DATE
HEREOF IT HAS NO DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND
OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL
OR ANY PART OF ITS LIABILITY TO REPAY THE "OBLIGATIONS" OR TO SEEK AFFIRMATIVE
RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM LENDER. THE BORROWER HEREBY
VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE AGENT AND THE
LENDERS, THEIR PREDECESSORS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, SUCCESSORS
AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION,
DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN,
ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR
CONDITIONAL, AT LAW OR IN EQUITY (EXCEPT FOR POSSIBLE CLAIMS, DEMANDS, ACTIONS,
CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES AND LIABILITIES CAUSED BY THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE AGENT OR THE LENDERS, THEIR
PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS), ORIGINATING IN WHOLE
OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH SUCH BORROWER
MAY NOW OR HEREAFTER HAVE AGAINST THE AGENT OR THE LENDERS, THEIR PREDECESSORS,
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS), IF ANY, AND
IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION
OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY "LOANS", INCLUDING,
WITHOUT

                                       5
<PAGE>

LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR
RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE
OF ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT OR OTHER LOAN DOCUMENTS, AND
NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT.

              [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                       6
<PAGE>

         IN WITNESS WHEREOF, this Amendment has been executed as of August 9,
2002.

                                       CAL DIVE INTERNATIONAL, INC.

                                       By: /s/ A. WADE PURSELL
                                          --------------------------------------
                                       Name: A. Wade Pursell
                                       Title: Senior Vice President & CFO

                                       ENERGY RESOURCE TECHNOLOGY, INC.

                                       By: /s/ A. WADE PURSELL
                                          --------------------------------------
                                       Name: A. Wade Pursell
                                       Title: Senior Vice President & Treasurer

                                       AQUATICA, INC.

                                       By: /s/ A. WADE PURSELL
                                          --------------------------------------
                                       Name: A. Wade Pursell
                                       Title: Vice President & Treasurer

                                       CANYON OFFSHORE, INC.

                                       By: /s/ A. WADE PURSELL
                                          --------------------------------------
                                       Name: A. Wade Pursell
                                       Title: Vice President & Treasurer

                                       FLEET CAPITAL CORPORATION, as Agent for
                                       the Lenders

                                       By: /s/ E. JAMES BECKEMEIER
                                          --------------------------------------
                                       Name: E. James Beckemeier
                                       Title: Vice President

                                       7
<PAGE>

                                       FLEET CAPITAL CORPORATION

                                       By: /s/ E. JAMES BECKEMEIER
                                          --------------------------------------
                                       Name: E. James Beckemeier
                                       Title: Vice President

                                       SOUTHWEST BANK OF TEXAS, N.A.

                                       By: /s/ PAUL W. COLE
                                          --------------------------------------
                                       Name: Paul W. Cole
                                       Title: Vice President

                                       WHITNEY NATIONAL BANK

                                       By: /s/ HARRY C. STAHEL
                                          --------------------------------------
                                       Name: Harry C. Stahel
                                       Title: Senior Vice President

                                       8

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