TENGASCO INC
THROUGHPUT AGREEMENT BETWEEN TENGASCO
<DOCUMENT>
<TYPE>EX-10.16(B)
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>THROUGHPUT AGREEMENT BETWEEN TENGASCO
                              PIPELINE CORPORATION AND EDWARD W.T. GRAY III
<TEXT>


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                                EXHIBIT 10.16(b)



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                              THROUGHPUT AGREEMENT

       This Throughput Agreement is being executed and entered into by Tengasco
Pipeline Corporation ("TPC"), and Edward W. T. Gray, III ("Gray") this 16 day of
August, 2000.

       Pursuant to that certain Loan Agreement between TPC and Edward W. T.
Gray, III dated as of August 16, 2000, and related documents as the same may be
amended from time to time ("Loan Agreement"), Gray and other similarly situated
persons are making available to TPC, a wholly owned subsidiary of Tengasco,
Inc., a loan in the aggregate principal amount of 5.6 million dollars, a portion
of which is being loaned by Gray and that portion being referred to herein as
the "Loan," to provide financing for the construction of TPC's Swan
Creek-Kingsport natural gas pipeline ("Pipeline"). As an additional
consideration for Gray's agreement to make the Loan to TPC, TPC has agreed that
Gray shall be entitled to participate in the revenue associated with the
operation of the Pipeline to the extent described in this Agreement.

       NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt and sufficiency of which are acknowledged
hereby, TPC agrees as follows:

       Throughput Revenue Participation. Effective as of the commencement of
operations by the Pipeline, and each month thereafter until the Loan is paid in
full, TPC shall be liable for the payment to Gray of Gray's Proportional Part of
a total Throughput Fee of ten cents ($0.10) per MMBtu of natural gas delivered
through the Pipeline. The Proportional Part of the total ten-cent Throughput Fee
that Gray entitled to receive under this Agreement is that portion of the
ten-cent fee equal to the ratio of the Loan being made by Gray to the total of
all amounts loaned to TPC for this pipeline financing, currently $5.6.million.
The volumes delivered through the Pipeline shall be determined on a monthly
basis and shall equal the sum of all volumes delivered at delivery points on the
pipeline, net of line losses and fuel.

       Default. In the event of any failure by TPC to perform, or cause the
performance of, any of its obligations under this Agreement, in addition to any
and all other remedies available to Gray under this Agreement, the failure will
constitute an Event of Default under the Loan Agreement.

       Enforcement Action. In the event Gray is required to take legal action
against TPC to enforce their right to any payments due under this Agreement or
to enforce the performance by TPC of any other obligations under this Agreement,
Gray shall be entitled to recover from TPC all of the costs and expenses of such
legal action including without limitation attorneys fees and court costs.

       Term. Unless earlier terminated by Gray in its sole discretion, this
Agreement shall continue in full force and effect for so long as the Loan
remains unpaid. When at any time the Loan is paid, this Agreement shall
terminate without any further action by TPC or by Gray and Gray shall release
all liens upon the Pipeline in accordance with the Loan Agreement.


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       Notices and Payments. Unless changed by written notice, all payments,
volume information, notices or other communications to Gray shall be sent to the
following address:

             3 New Street
             Remsenburg, NY 11960

       Miscellaneous.

       (a) Successors. The provisions of this Agreement shall be binding upon
       and shall inure to the benefit of the parties hereto and their respective
       legal representatives, successors, and assigns. Gray may not assign this
       Agreement without written consent of TPC, which consent may not be
       unreasonably withheld.

       (b) Rights Cumulative; No Waiver. The rights granted Gray under this
       Agreement or the Loan Agreement or allowed by law or equity shall be
       cumulative and may be exercised at any time and from time to time. No
       failure on the part of Gray to exercise, and no delay in exercising, any
       right shall be construed or deemed to be a waiver thereof, nor shall any
       single or partial exercise by Gray of any right preclude any other future
       exercise thereof or the exercise of any other right.

       (c) Severance. If any provision of this Agreement or any application of
       any provision shall have been declared invalid, illegal or unenforceable
       by any court or agency of competent jurisdiction, such declaration shall
       not affect or impair the validity, legality and enforceability of any
       other provisions of this Agreement or of the Loan Agreement or any other
       application of such provisions.

       (d) Amendment. This Agreement may not be amended, modified or changed,
       nor shall any waiver of any provision hereof be effective, except by an
       instrument in writing signed by the party against whom enforcement of the
       amendment, modification, change, or waiver is sought.

       (e) Choice of Law. This Agreement shall be governed by and construed in
       accordance with the laws of the State of Tennessee.

       (f) Interpretation. All terms not otherwise defined in this Agreement
       shall have the meanings ascribed to them in the Loan Agreement.

       (g) Counterparts. This document may be executed in counterparts, all of
       which executed counterparts shall together constitute a single document.
       Signature and acknowledgment pages may be detached from the counterparts
       and attached to a single copy of this document to physically form one
       document.



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       IN WITNESS WHERE0F, Gray and TPC have executed this Agreement as of the
       day and year first above written.

                                         TENGASCO PIPELINE CORPORATION

                                         BY: /s/ Robert M. Carter
                                            ------------------------------------
                                               Robert M. Carter, President


                                        /s/ Edward W. P. Gray
                                        ----------------------------------------
                                        Edward W. P. Gray



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