Exhibit 10.8
PIPELINE LIQUIDS TRANSPORTATION AGREEMENT
This Pipeline Liquids Transportation Agreement ("Agreement") is made and
entered into this ____ day of ______, 2002, by and between MARKWEST ENERGY
APPALACHIA, L.L.C., a Delaware limited partnership ("MEA"), and MARKWEST
HYDROCARBON, INC., a Delaware corporation ("MarkWest"). MEA and MarkWest may
be referred to individually as "Party", or collectively as "Parties".
Section 1. SCOPE OF AGREEMENT AND GENERAL TERMS AND CONDITIONS.
MarkWest agrees to deliver, or cause to be delivered, Raw Make, as defined
below, to MEA, and MEA agrees to receive and transport that Raw Make to MEA's
Siloam Fractionation facility, all in accordance with this Agreement. This
Agreement does not apply to Raw Make and Plant Products covered by that
certain Natural Gas Liquids Transportation And Fractionation Agreement
(Maytown), between MarkWest and MEA, of even date herewith. This Agreement
incorporates and is subject to all of the General Terms and Conditions
attached hereto, together with any other Exhibits attached hereto.
Section 2. EFFECTIVE DATE. The date on which the obligations and
duties of the Parties shall commence, being the "Effective Date", shall be
_______________, 2002.
Section 3. TERM. This Agreement shall remain in full force and
effect from the Effective Date through December 31, 2015 (the "Primary
Term"), and shall continue thereafter on a year-to-year basis until
terminated by either Party by providing at least 60 days written notice to
the other Party in advance of the termination of the Primary Term or of any
one-year extension thereof.
Section 4. FEES AND CONSIDERATION.
A. As full consideration for the services provided by MEA, MarkWest
shall pay the following fees and MEA shall make the following deliveries:
i. For the transportation of Raw Make by MEA, MarkWest shall
pay MEA a Transportation Fee equal to the gallons of Raw Make
delivered to MEA at the Receipt Point(s) multiplied by $*.
ii. A portion of each of the Transportation Fee shall be subject
to annual adjustments. *% of the Transportation Fee, shall be
adjusted on an annual basis in proportion to the percentage change,
from the preceding year, in the Producer Price Index for oil and Gas
field services (SIC 138) as published by the Department of Labor
("PPI"). The adjustment of the Fees shall be made effective
January 1 of each year, and shall reflect the percentage change in
the PPI as it existed for the immediately preceding January from the
PPI for the second immediately preceding January.
iii. MEA shall deliver the Raw Make transported for MarkWest to
the Redelivery Point.
B. During the Primary Term of this Agreement or any extension thereof,
MarkWest (i) shall not seek to challenge the level of the Transportation
Fee before any regulatory
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*Denotes Confidential Portion Omitted and
Filed Separately with the Commission
authorities of the federal government or of any state in which the
facilities of the Pipeline are located; (ii) shall not seek to invoke
the jurisdiction of any such regulatory authorities with regard to the
Transportation Fee; and (iii) shall not encourage, assist, or support
any other person in invoking the jurisdiction of any such regulatory
authorities with regard to the Transportation Fee.
Section 5. NOTICES. All notices, statements, invoices or other
communications required or permitted between the Parties shall be in writing
and shall be considered as having been given if delivered by mail, courier,
hand delivery, or facsimile to the other Party at the designated address or
facsimile numbers. Normal operating instructions can be delivered by
telephone or other agreed means. Notice of events of Force Majeure may be
made by telephone and confirmed in writing within a reasonable time after the
telephonic notice. Monthly statements, invoices, payments and other
communications shall be deemed delivered when actually received. Either
Party may change its address or facsimile and telephone numbers upon written
notice to the other Party:
MarkWest:
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Contract Administration
Fax: (303)
MEA:
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Contract Administration
Fax: (303)
Section 6. EXECUTION. This Agreement may be executed in any number
of counterparts, each of which shall be considered and original, and all of
which shall be considered one instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date
first set forth above.
MARKWEST HYDROCARBON, INC.
By:
---------------------------
Name:
Title:
MARKWEST ENERGY APPALACHIA, L.L.C.
By:
---------------------------
Name:
Title:
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GENERAL TERMS AND CONDITIONS
ATTACHED TO AND MADE A PART OF THAT CERTAIN
PIPELINE LIQUIDS TRANSPORTATION AGREEMENT
BETWEEN
MARKWEST HYDROCARBON, INC., AS "MARKWEST"
AND
MARKWEST ENERGY APPALACHIA, L.L.C., AS "MEA"
DATED:
ARTICLE 1: DEFINITIONS
ACCOUNTING PERIOD. The period commencing at 8:00 a.m., Eastern Time, on
the first day of a calendar month and ending at 8:00 a.m., Eastern Time, on
the first day of the next succeeding month.
FORCE MAJEURE. Any cause or condition not within the reasonable control
of the Party claiming suspension and which by the exercise of reasonable
diligence, such Party is unable to prevent or overcome.
FRACTIONATION AGREEMENT. That certain Fractionation, Storage and Loading
Agreement between MarkWest and MEA, of even date herewith.
INCIDENTAL LOSSES OR GAINS. The incidental losses incurred in MEA's
facilities, or the losses or gains incurred due to variations in measurement
equipment.
INDEMNIFYING PARTY AND INDEMNIFIED PARTY. As defined in Article 8, below.
LOSSES. Any actual loss, cost, expense, liability, damage, demand, suit,
sanction, claim, judgment, lien, fine or penalty which are incurred by the
applicable Indemnified Party on account of injuries (including death) to any
person or damage to or destruction of any property, sustained or alleged to
have been sustained in connection with or arising out of the matters for
which the Indemnifying Party has indemnified the applicable Indemnified Party.
MEA PLANTS. Gas processing and extraction plants, owned and/or operated
by MEA.
PIPELINE. The liquids transportation pipelines owned or leased by MEA for
transporting liquefied hydrocarbons from their respective extraction plants
to Siloam.
RAW MAKE. A combined stream of propane and heavier liquefied
hydrocarbons, including incidental ethane.
RECEIPT POINT. The inlet flanges of the Pipeline at or near the tailgate
of the applicable MEA Plants, where MarkWest delivers, or causes to be
delivered, Raw Make for transportation hereunder.
REDELIVERY POINT. The inlet flange of the Raw Make metering facilities of
MEA at or near Siloam.
SILOAM. MEA's Siloam fractionation facility located near South Shore,
Kentucky, including any treating equipment, Products separation and
fractionation vessels, all above ground Products storage vessels and all
below ground Products storage caverns and facilities, and associated
condensing, heating, pumping, conveying, and other equipment and
instrumentation; including all structures associated with those facilities;
and, all Products loading facilities, including railcar loading, truck
loading and barge loading facilities and including all easements,
rights-of-way, and other property rights pertaining to the construction and
operation of those facilities; wherever those facilities, structures,
easements, rights-of-way, and other property rights are located.
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ARTICLE 2: MARKWEST COMMITMENTS
2.1. MarkWest hereby commits and agrees to deliver at the applicable
Receipt Points all of MarkWest's Raw Make acquired from the MEA Kenova Gas
Extraction facility, and such of MarkWest's Raw Make as it desires to deliver
from MEA's ▇▇▇▇▇▇▇ Gas Extraction facility, or from other extraction plants
or sources in the Appalachian region as agreed upon by the Parties.
ARTICLE 3: OPERATION OF MEA'S FACILITIES
3.1. MEA shall, at its sole cost, risk, and expense, maintain and operate
the Pipeline to transport MarkWest's Raw Make from the Receipt Points to the
Redelivery Point.
3.2 All Incidental Losses and Gains incurred in the Pipeline shall be
for the benefit or detriment, as applicable, of MarkWest.
ARTICLE 4: QUALITY
4.1. RAW MAKE QUALITY.
A. The Raw Make transported under this Agreement shall be of a quality
that, when fractionated, will result in products meeting the specifications
set forth in Exhibit A, attached to the Fractionation Agreement.
B. Should any of the Raw Make fail to meet the above specifications,
then:
i. MEA may take receipt of the non-conforming Raw Make, and
that receipt shall not be construed as a waiver or change of
standards for future Raw Make deliveries; or
ii. MEA may, at its sole discretion, cease receiving the
non-conforming Raw Make, and shall notify MarkWest that it has, or
will, cease receiving the non-conforming Raw Make.
ARTICLE 5: MEASUREMENT EQUIPMENT AND PROCEDURES AND ANALYSES
5.1. RAW MAKE. Raw Make shall be measured at the Receipt Point(s) as
follows:
A. MEA shall measure the weight of the Raw Make delivered hereunder
using either turbine or coriolis mass flow meters installed, operated and
maintained in accordance with GPA Standard 8182-latest edition and/or API
Manual of Petroleum Measurement Standards Draft Standard, Measurement of
Single-Phase, Intermediate and Finished Hydrocarbon Fluids by Coriolis
Meters-latest edition.
B. MEA shall measure the composition of the Raw Make delivered
hereunder using a chromatograph installed, operated and maintained in
accordance with GPA Standard 2165-latest edition, GPA Standard 2145-latest
edition, GPA Standard 2261-latest edition, GPA Standard 2177-latest edition
and the manufacturer's specifications and standards. Factors for hexanes and
heavier shall be in accordance with Table IV of GPA Standard 2261-latest
edition or determined by periodic samples taken by the MEA. Samples shall be
taken at intervals not to exceed 20 minutes. The arithmetic average of the
samples during a day shall be deemed to be the Raw Make Composition for such
day.
C. The weight of each Raw Make component shall be converted to
gallons at 60DEG.F in accordance with GPA Standard 8173-latest edition and
GPA Standard 2145-latest edition.
ARTICLE 6: PAYMENTS
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6.1. MEA shall provide MarkWest with a statement explaining fully how all
consideration due under the terms of this Agreement was determined not later
than the 15th day of the Accounting Period following the Accounting Period
for which the consideration is due.
6.2. Any sums due MEA under this Agreement shall be paid no later than
the last day of the Accounting Period in which the statement under Section
6.1 was received.
6.3. Either Party, on 10 days prior written notice, shall have the right
at its expense, at reasonable times during business hours, to audit the books
and records of the other Party to the extent necessary to verify the accuracy
of any statement, measurement, computation, charge, or payment made under or
pursuant to this Agreement. A Party electing to audit ("Auditing Party")
shall complete its audit within 3 months following the date on which the
books and records of the other Party ("Audited Party") are first made
available for inspection following the Auditing Party's notice of audit.
Within that 3-month period, the Auditing Party shall submit, in writing, all
exceptions disclosed by the audit to the Audited Party. The Audited Party
shall have 30 days following receipt of the exceptions in which to respond in
writing to the exceptions. If the Audited Party fails to respond within that
30-day period, the exceptions shall be deemed accepted and appropriate
adjustments and settlements shall be made and, as applicable, paid. If the
Parties are unable to reach agreement as to any exceptions to which the
Audited Party timely responded within 30 days of the Audited Party's
response, then either Party may submit the matter to arbitration in
accordance with the provisions in Article 9.
ARTICLE 7: FORCE MAJEURE
7.1. In the event a Party is rendered unable, wholly or in part, by Force
Majeure, to carry out its obligations under this Agreement, other than the
obligation to make any payments due hereunder, the obligations of that Party,
so far as they are affected by Force Majeure, shall be suspended from the
inception and during the continuance of the inability, and the cause of the
Force Majeure, as far as possible, shall be remedied with commercially
reasonable diligence. The Party affected by Force Majeure shall provide the
other Party with written notice of the Force Majeure event, with reasonably
full detail of the Force Majeure within a reasonable time after the affected
Party learns of the occurrence of the Force Majeure event. The settlement of
strikes, lockouts, and other labor difficulty shall be entirely within the
discretion of the Party having the difficulty and nothing herein shall
require the settlement of strikes, lockouts, or other labor difficulty.
ARTICLE 8: LIABILITY AND INDEMNIFICATION
8.1. As among the Parties hereto, MarkWest and any of its designees shall
be in custody, control and possession of the Raw Make hereunder, until the
Raw Make is delivered to MEA at the Receipt Point.
8.2. As among the Parties hereto, MEA and any of its designees shall be
in custody, control and possession of the Raw Make hereunder after Raw Make
is delivered at the Receipt Point.
8.3. Each Party ("Indemnifying Party") hereby covenants and agrees with
the other Party, and its affiliates (except for the Indemnifying Party
itself), and each of their directors, officers and employees ("Indemnified
Parties"), that except to the extent caused by the Indemnified Parties' gross
negligence or willful conduct, the Indemnifying Party shall protect, defend,
indemnify and hold harmless the Indemnified Parties from, against and in
respect of any and all Losses incurred by the Indemnified Parties to the
extent those Losses arise from or are related to: (a) the
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Indemnifying Party's facilities; or (b) the Indemnifying Party's possession
and control of the Raw Make or Products, as applicable.
ARTICLE 9: MISCELLANEOUS
9.1. The failure of any Party hereto to exercise any right granted
hereunder shall not impair nor be deemed a waiver of that Party's privilege
of exercising that right at any subsequent time or times.
9.2. This Agreement shall be governed by, construed, and enforced in
accordance with the laws of the State of Colorado without regard to choice of
law principles.
9.3. This Agreement shall extend to and inure to the benefit of and be
binding upon the Parties, and their respective successors and assigns,
including any assigns of MarkWest's Interests covered by this Agreement. No
assignment of this Agreement shall be binding on either of the Parties until
the first day of the Accounting Period following the date a certified copy of
the instrument evidencing that sale, transfer, assignment or conveyance has
been delivered to the other Party. Further, each assigning Party shall
notify its assignee of the existence of this Agreement and obtain a
ratification of this Agreement prior to such assignment. No assignment by
either Party shall relieve that Party of its continuing obligations and
duties hereunder without the express consent of the other Party.
9.4. Any change, modification or alteration of this Agreement shall be in
writing, signed by the Parties; and, no course of dealing between the Parties
shall be construed to alter the terms of this Agreement.
9.5 This Agreement, including all exhibits and appendices, contains the
entire agreement between the Parties with respect to the subject matter
hereof, and there are no oral or other promises, agreements, warranties,
obligations, assurances, or conditions precedent, affecting it.
9.6 NO BREACH OF THIS AGREEMENT OR CLAIM FOR LOSSES UNDER ANY INDEMNITY
OBLIGATION CONTAINED IN THIS AGREEMENT SHALL CAUSE ANY PARTY TO BE LIABLE
FOR, NOR SHALL LOSSES INCLUDE, ANY DAMAGES OTHER THAN ACTUAL AND DIRECT
DAMAGES, AND EACH PARTY EXPRESSLY WAIVES ANY RIGHT TO CLAIM ANY OTHER
DAMAGES, INCLUDING, WITHOUT LIMITATION, CONSEQUENTIAL, SPECIAL, INDIRECT,
PUNITIVE OR EXEMPLARY DAMAGES.
9.7 DISPUTE RESOLUTION. Any dispute arising under this Agreement
("Arbitrable Dispute") shall be referred to and resolved by binding
arbitration in Denver, Colorado, by three (3) arbitrators, in accordance with
the rules and procedures of the Judicial Arbiter Group ("JAG"); and, to the
maximum extent applicable, the Federal Arbitration Act (Title 9 of the United
States Code). If there is any inconsistency between this Section and any
statute or rules, this Section shall control. Arbitration shall be initiated
within the applicable time limits set forth in this Agreement and not
thereafter or if no time limit is given, within the time period allowed by
the applicable statute of limitations, by one party ("Claimant") giving
written notice to the other party ("Respondent") and to JAG, that the
Claimant elects to refer the Arbitrable Dispute to arbitration, and that the
Claimant has appointed an arbitrator, who shall be identified in such notice.
The Respondent shall notify the Claimant and JAG within thirty (30) Days
after receipt of Claimant's notice, identifying the arbitrator the Respondent
has appointed. The two (2) arbitrators so chosen shall select a third
arbitrator within thirty (30) Days after the second arbitrator has been
appointed (upon failure of a party to act within the time specified for
naming an arbitrator, such arbitrator shall be appointed by the
administrator's designee). MarkWest shall pay the compensation and expenses
of the
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arbitrator named by or for it, MEA shall pay the compensation and expenses of
the arbitrator named by or for it, and MarkWest and MEA shall each pay
one-half of the compensation and expenses of the third arbitrator. All
arbitrators must be neutral parties who have never been officers, directors,
employees, contractors or agents of the parties or any of their Affiliates,
must have not less than ten (10) years experience in the oil and gas
industry, and must have a formal financial/accounting, engineering or legal
education. The parties shall have all rights of discovery in accordance with
the Federal Rules of Civil Procedure. The hearing shall be commenced within
thirty (30) Days after the selection of the third arbitrator. The parties
and the arbitrators shall proceed diligently and in good faith in order that
the arbitral award shall be made as promptly as possible. The
interpretation, construction and effect of this Agreement shall be governed
by the laws of Colorado, and to the maximum extent allowed by law, in all
arbitration proceedings the laws of Colorado shall be applied, without regard
to any conflicts of laws principles. All statutes of limitation and of
repose that would otherwise be applicable shall apply to any arbitration
proceeding. The tribunal shall not have the authority to grant or award
indirect or consequential damages, punitive damages or exemplary damages.
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