AMENDATORY AGREEMENT


This  Amendment is entered into this 26th day of July,  1996,  between  SOUTHERN
NATURAL GAS COMPANY ("Company") and Chattanooga Gas Company ("Shipper").

                                  WITNESSETH:

WHEREAS,  Company and Shipper  are  parties to a firm  transportation  agreement
dated November 1, 1994, (#904470) as amended March 1, 1995, under Company's Rate
Schedule  FT  ("Agreement")  for an  aggregate  quantity of 7,949 Mcf per day of
Transportation Demand for separately stated terms; and

WHEREAS,  Company and Shipper have had discussions regarding an extension of the
primary term for a portion of the  Transportation  Demand under the Agreement as
more specifically provided for herein;

NOW  THEREFORE,  in  consideration  of the premises and the mutual  benefits and
covenants contained herein, the parties agree as follows:

I . Section 4.1 of the FT  Agreement  shall be deleted in its  entirety  and the
following Section 4.1 substituted therefor.

"Subject to the provisions  hereof,  this Agreement shall become effective as of
the date  first  hereinabove  written  and shall be in full force and effect for
primary terms through the following  dates: (a) April 30, 2007 for 3,300 Mcf per
day of Transportation  Demand, and shall continue and remain in force and effect
for successive terms of one year each thereafter,  unless and until cancelled by
either party giving 180 days written  notice to the other party prior to the end
of the primary term or any yearly extension  thereof;  and (b) February 28, 2000
for 4,649 Mcf per day of Transportation Demand, and shall continue and remain in
force and effect for successive terms of one year each thereafter if the parties
mutually  agree in writing to each such yearly  extension at least 60 days prior
to the end of the primary term or subsequent yearly extension."

2. Except as  provided  herein,  the  Agreement  shall  remain in full force and
effect as written.

3. This Amendment is subject to all applicable,  valid laws,  orders,  rules and
regulations of any governmental  entity having  jurisdiction over the parties or
the subject matter hereof.

4. This  Amendment  shall be binding on the parties'  respective  successors and
assigns.







WHEREFORE,   the  parties  have  executed  this  Amendment  through  their  duly
authorized representatives to be effective as of the date first written above.

ATTEST:                                   SOUTHERN NATURAL GAS COMPANY

By:      /S/ illegible signature          By:      /S/  William G. Cope
Title:   Asst. Secretary                  Title:   Director - Customer Services

ATTEST:                                   CHATTANOOGA GAS COMPANY

By:      /S/  Anne C. Tkacs               By:      /S/  James S. Thomas, Jr.
Title:   General Attorney                 Title:   Asst. Sec.













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