"Pages where confidential treatment has been requested are marked 'Confidential
Treatment Requested.' The redacted material has been separately filed with the
Commission, and the appropriate section has been marked at the appropriate place
and in the margin with a star (*)."
Exhibit 10.13
OPERATING AGREEMENT
BETWEEN
▇▇▇▇▇▇ PETROLEUM COMPANY,
LIMITED PARTNERSHIP
AND
CHEVRON PIPE LINE COMPANY
THIS AGREEMENT is made and entered into as of September 1, 1996 by and between,
▇▇▇▇▇▇ Petroleum Company, Limited Partnership, a Delaware limited partnership
(hereinafter referred to as "Company"), and Chevron Pipe Line Company, a
Delaware Corporation (hereinafter referred to as "Operator").
WHEREAS, Company is the owner of certain petroleum products pipeline facilities
("Facilities") more particularly identified in Attachment II and Attachment III;
and
WHEREAS, Company does not have a working staff to operate the Facilities and
desires to engage Operator in these respects;
NOW, THEREFORE, in the consideration of the premises and mutual covenants
contained in this Agreement, Company and Operator agree as follows:
Section 1. DEFINITIONS
As used in this Agreement, the following words and terms shall have the meanings
set forth:
"Accounting Procedure" means the accounting procedure set forth in Attachment I,
hereof.
"AFE" means an approval for expenditure in the form approved by Company.
"Affiliate" of another Party means a company that beneficially owns, directly or
indirectly, more than fifty percent of the voting stock of such Party or another
company whose voting stock in turn is more than fifty percent owned by such
company.
"Agreement" means this Operating Agreement together with all Attachments.
"Capital Commitment Budget" means the capital budget as further described in
Section 5A. of this Agreement.
"Capital Expenditure Forecast" means the capital expenditure forecast as
further described in Section 5B. of this Agreement.
"Cash Operating Costs" means amounts payable to Operator under Section 3 of this
Agreement.
"Confidential Information" means any information relating to the identity of
shippers using the Facilities, the nature, kind, quantity, destination or
consignee or routing of Products using the Facilities, or any other information
which is in writing and has been labeled by Company as confidential.
Confidential Information shall not include any information which is acquired by
Operator in the course of its activities outside of the scope of this Agreement
or which becomes part of the public knowledge or literature without breach of
this Agreement.
"Costs" means all costs charged to the Company as provided in the Accounting
Procedure.
"Expenditure Authorities" means the expenditure authorities described in
Section 6. of this Agreement.
"Facilities" means the facilities identified in Attachment II and Attachment III
hereto.
"Force Majeure" means an occurrence not within the control of the party and
which by the exercise of reasonable efforts such party is unable to prevent or
overcome, and shall include, but not be limited to, acts of God, strikes,
lockouts, or other industrial disturbances, acts of the public enemy, wars,
blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes,
fires, storms, floods, washouts, hurricanes, storm warnings requiring evacuation
of facilities, arrests or restraints of the government, either federal or state,
civil or military, civil disturbances, explosions, sabotage, breakage or
accident to equipment, machinery or lines of pipe, extreme heat or cold weather,
freezing of machinery, equipment or lines of pipe, electric power shortages,
inability of any Party to obtain necessary materials and supplies, inability of
any Party to obtain necessary permits and/or permissions due to existing or
future rules, orders, laws or governmental authorities (both federal, state and
local), temporary cleaning or testing of facilities, temporary failure of
supply, or any other causes, whether of the kind herein enumerated or otherwise,
which were not reasonably foreseeable on the effective date of this Agreement,
and which are not within the control of the Party claiming suspension and which
such Party is unable to overcome by the exercise of due diligence. The term
"Force Majeure" shall also include those instances in which either Party hereto
is required to furnish materials and supplies for the purpose of constructing
and maintaining facilities or is required to secure permits or permission from
any governmental agency to enable such Party to acquire, or the delays on the
part of such Party in acquiring, at reasonable cost and after the exercise of
due diligence, such materials and supplies, permits and permissions. It is
understood and agreed that the settlement of strikes or lockouts shall be
entirely within the discretion of the Party having the difficulty, and that the
above requirement that any Force Majeure shall be remedied with all reasonable
dispatch shall
-2-
not require the settlement of strikes or lockouts by acceding to the demands
of opposing parties when such course is inadvisable in the discretion of the
Party having difficulty. The term "Force Majeure" shall also include any such
event occurring with respect to the facilities or services of either
Operator's or Company's third-party suppliers or customers delivering or
receiving any product, fuel, feedstock, or other substance necessary to the
continuous operation of either Party's plants or facilities or performance of
such Party's obligations, and shall also include curtailment or interruption
of deliveries or service by such third-party suppliers or customers as a
result of (i) another event of Force Majeure or (ii) a breach by such
third-party under the applicable agreement(s).
"Insurance Manual Rates" means the published insurance industry recognized
computations of standard accepted insurance rates.
"Major Maintenance Budget" means the major maintenance budget as further
described in Section 5C. of this Agreement.
"Operating Expense Budget" means the operating expense forecast as further
described in Section 5D. of this Agreement.
"Operator" means Chevron Pipe Line Company acting in its capacity as operator of
Facilities hereunder.
"Parties" or "Party" means the Operator and/or Company.
"Products" means, without restriction natural gas or gas liquids, or product
derived from petroleum.
"Year" means a calendar year.
Section 2. OPERATIONS
Operator agrees to operate, maintain and repair the Facilities, and any
modifications or improvements thereof, and to perform any other duties as may be
requested by Company. Company does hereby authorize and empower Operator, on
behalf of Company, to do and perform or cause to be done and performed by others
any and all acts and things which Operator shall, in the exercise of its
discretion and judgment, deem necessary or advisable for the operation,
maintenance, and repair of such Facilities in accordance with the Expenditure
Authorities of Section 6, to the end that the Facilities may be used in a safe,
efficient and economical manner for receipt, delivery, measurement and
transportation of Products. Without limiting the foregoing, Operator shall:
-3-
A. perform such mechanical activities as may be required to receive, deliver,
transport and/or otherwise handle Products tendered to and accepted into the
Facilities.
B. submit to Company recommended budgets and other information as set forth
in Section 5. hereof.
C. purchase or cause to be purchased for and in the name of Company
materials, supplies and services necessary for the operation of the
Facilities in accordance with the budgets approved by Company (or as
otherwise approved under this Agreement);
D. maintain surveillance of the Facilities, periodically inspect the
Facilities for damage or other conditions which could affect the safe,
efficient and economical operation of the Facilities, and perform such
repairs to the Facilities as requested by Company or as required;
E. act as representative for Company in contacts with government agencies
relating to the physical operation, maintenance and repair of the Facilities,
where required by laws, rules, regulations, orders, permit conditions, or
right-of-way agreements;
F. prepare, maintain and implement operating manuals, monitoring programs,
contingency plans and training programs satisfying all applicable laws,
rules, regulations, orders and any other requirements of governmental
authorities together with such other operating procedures or manuals as
Company may require;
G. prepare run tickets, daily status reports and other appropriate accounting
materials to document custody transfer and receipt of Products, and sample
and measure Products received and delivered to verify quality and quantity as
operations may require;
H. prepare appropriate surveillance, operating and maintenance reports to
document the performance of the Facilities;
I. file, store and maintain in a manner such that they shall be available for
periodic inspection by Company all as-built drawings or descriptions of the
Facilities, construction and maintenance records, inspection and testing
records, operating procedures and manuals, custody transfer documents, and
such other records (all collectively "records") as may be necessary or
appropriate to the operation, maintenance and repair of Facilities, or
required by applicable laws, rules, regulations, orders and any other
requirements of governmental authorities, or requested by Company. All of
such records shall remain the property of Company;
-4-
J. to the extent applicable, prepare and file all tariffs subject to approval
of Company;
K. keep correct and complete accounts of all non-transportation related
receipts and disbursements made on the Company's behalf.
L. attend, upon request, meetings of Company, or, whenever otherwise
required by Company, prepare and distribute reports of all financial
transactions involving the Company hereunder;
M. subject to approval of Company make all statutory and regulatory filings
required of the Company, including without limitation, all permit
applications, and filings with the Federal Energy Regulatory Commission and
state Public Utilities Commissions, Department of Transportation, or other
regulatory agencies having jurisdiction over Company; and
N. provide equipment, materials and services as legally required or as Company
may from time to time request, for discharge prevention and response for
Products and/or hazardous substances. These services shall include, but not
be limited to preparation, submission, and finalization of discharge
prevention and/or contingency plans for Products and/or hazardous substances,
and preparation for, prevention of, response to and/or cleaning up of any
discharge or threatened discharge of Products and/or hazardous substances.
Without limiting the foregoing, Operator shall serve as response action
contractor for Company; and,
O. Provide right-of-way services relating to Facilities.
Notwithstanding the foregoing, Operator shall not perform any transportation
related revenue collection or accounting services on behalf of Company.
Operator agrees to perform all services hereunder in a manner consistent with
the usual and customary practices, codes and standards in the pipeline industry
(including specifically the Federal Energy Regulatory Commission, state Public
Utilities Commissions as well as applicable Department of Transportation and
American National Standards Institute) and in accordance with all valid and
applicable laws, rules, regulations, orders and any other requirements of
governmental authorities. Operator in its capacity as Operator pursuant to this
Agreement, shall assume no other liability to Company except in the case of
Operator's own gross negligence or willful misconduct. Operator shall furnish or
arrange for the necessary personnel to efficiently perform such services. None
of such personnel shall be employees or agents of Company, statutory or
otherwise.
-5-
Section 3. PAYMENT FOR OPERATOR SERVICES
A. Company shall pay and Operator shall receive as full and complete
compensation for the performance of Operator's services as
Operator hereunder, the sum of the amounts becoming due as
described and authorized in Attachment I, Accounting Procedure.
Company shall make payment in the time and manner specified
herein. To the extent incurred in the performance of services
hereunder, amounts of such payment to Operator are hereinafter
collectively referred to as Cash Operating Costs.
B. Within the month immediately following the previous month of
service, Operator shall invoice Company for the actual Cash
Operating Costs for the immediately prior month. Company shall
pay to Operator the amount of such invoice, payable upon receipt.
Section 4. ACCOUNTING
Operator shall maintain accurate accounts of all expenditures and liabilities
incurred by it in operating, maintaining and repairing the Facilities and shall
render a monthly statement to Company of all such expenditures and liabilities.
The failure to include any item in the current monthly statement rendered for
the month in which the same was incurred or expended shall not preclude such
item from being brought forward and included in any subsequent monthly
statement. All books, records and accounts shall be open to inspection and audit
by Company or Company's authorized representatives at all reasonable times
during business hours.
Section 5. BUDGETS AND FORECASTS
On or before November 1 of each year, Operator shall prepare and submit to
Company for review, approval, or modification the following annual budgets and
forecasts:
A. Capital Commitment Budget
The Capital Commitment Budget shall consist of an itemization of
commitments for each capital project equal to or in excess of $25,000
(large projects) and a combined total of all Items less than $25,000
(small projects) for the following calendar year. Supporting
justification shall be included for each large project.
Supporting justification will not be required for small projects.
B. Capital Expenditure Forecast
The Capital Expenditure Forecast shall identify separately all
expenditures for capital items from prior budgets which are not
yet complete and all capital items
-6-
anticipated to be approved in the pending budget. Large projects
shall be listed individually and small projects may be combined.
The forecast shall indicate expenditures by quarter for the
following calendar year and indicate any appropriate carryover in
subsequent years.
C. Major Maintenance Budget
The Major Maintenance Budget shall consist of an itemization of
each maintenance project equal to or in excess of $ 25,000 (large
projects) and a combined total of all items less than $ 25,000
each (small projects) for the following calendar year. Supporting
justification shall be included for each large project.
D. Operating Expense Budget
The Operating Expense Budget shall identify for the following
calendar year the expected Operating Expenses including Direct
Costs, Management Fee, and Major Maintenance items.
Company may at any time supplement or amend the budgets and forecasts as
necessary to carry out the purposes of this Agreement.
Section 6. EXPENDITURE AUTHORITIES
A. Projects or Expenses not Exceeding $ 25,000
The Operator shall have the authority to make expenditures for
any individual capital project, major maintenance project or
operating expense not exceeding $ 25,000 to the extent that
Operator deems such expenditures necessary and appropriate for
the operation or maintenance of the Facilities. The sum of any
such expenditures may not, during any Year, exceed the amounts
indicated for all such projects or expenses in the budget which
has been approved by Company for that Year.
B. Projects or Expenses in Excess of $ 25,000
The Operator shall have the authority to make expenditures for
any individual capital project, major maintenance project or
operating expense in excess of $25,000 if such project or expense
was specifically identified in an approved budget and Company has
approved an AFE for the project. The amount of the Operator's
authority under this subsection may be overrun by the greater of
10% or $10,000 without seeking prior approval by Company;
provided, however that such overrun does not cause any of the
Capital Expenditure Forecast, Major
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'Confidential Treatment Requested'
Maintenance Forecast or Operating Expense Forecast approved by the
Company to be exceeded.
C. Emergencies
In an emergency, the Operator may take such actions and make such
expenditures as may be reasonably necessary, under laws, rules,
regulations, orders or good industry practices, in order to cure
such emergency. This shall be true whether or not the expenditure
is within an approved budget or the action has prior approval of
Company. In the event of such an emergency, the Operator shall
give telephone notice or otherwise contact Company as soon as
practicable and advise it of the circumstances of such emergency,
the actions taken or proposed and the expenditures made,
incurred, committed, or proposed. All expenditures made pursuant
to this Section 6.C. shall be treated as Cash Operating Costs
hereunder.
Section 7. TERM
This Agreement shall take effect as of the day and year first above written
* and shall continue until [REDACTED]
Upon termination of this Agreement, Company shall pay Operator the amounts
chargeable to Company hereunder as of the date of termination which have not
already been paid by Company; Company shall also reimburse Operator for the
full amount of any obligations or commitments Operator has made in the
interest of performing the services hereunder in accordance with the annual
budget and any approved projects which were not paid by Company prior to the
date of such termination or, if agreeable to Operator, Company may assume
such obligations or commitments. Upon termination of this Agreement,
Operator shall turn over to Company all records, data, and information
pertaining to operations hereunder, as well as materials, equipment,
facilities, and operating supplies on hand which had been purchased by
Company or in its name. Termination of this Agreement shall not affect the
rights and privileges or duties, liabilities and obligations of either Party
which arose or accrued prior to the date of termination.
Section 8. INSURANCE
Operator shall procure and maintain all insurance required by applicable law
or regulation for operation of the Facilities, including but not limited to
Workers' Compensation and Employer's Liability Insurance in accordance with
all applicable state, federal, and maritime laws. Where permitted, Operator
may fulfill its Workers' Compensation obligations by approved self-insurance
and shall charge Company its actual costs of self-insurance which shall not
exceed Insurance Manual Rates applicable to such operations in the place
where the same are performed.
-▇-
▇▇▇▇▇ will maintain its own insurance for loss or damage. No other insurance
shall be carried by Operator for the account of Company without prior approval
from Company.
Section 9. INDEMNITY
Company ("Indemnitor") shall indemnify and save harmless Operator, its
affiliates, agents and employees ("Indemnitees") in its or their role as
Operator from and against any and all loss, damage, injury, liability, expense
(including reasonable attorney's fees), and claims thereof which arise from any
injury to or death of a person, including third parties, Indemnitor, its agents
or employees, but excluding Indemnitees, from loss of or damage to property or
from penalties imposed or proceedings brought by government agencies, resulting
directly or indirectly from any operations under or pursuant to this Agreement,
including, but not limited to, the use of equipment provided by others. The
indemnity provided by Indemnitor shall remain in full force and effect
regardless of the passive, active or concurrent negligence of, and regardless of
whether liability without fault is imposed or sought to be imposed on, one or
more of the Indemnitees. However, such indemnity shall not be given effect to
the extent that such indemnity is void or otherwise unenforceable under
applicable law in effect or validly retroactive to the date of the Agreement.
Further excepted from such indemnity shall be any such loss, damage, injury,
liability or claim which is the result of the gross negligence or willful
misconduct of an Indemnitee. Operator shall give Company immediate notice of any
suit brought against Operator with respect to which Company is or may be
obligated to indemnify Operator hereunder.
Operator shall indemnify and save harmless Company, its affiliates, agents and
employees in its or their role as owner of Facilities from and against all loss,
damage, injury, liability, expense (including reasonable attorney's fees), and
claims thereof which arise from any injury to or death of agents or employees of
Operator, or from loss of or damage to property of Operator resulting directly
or indirectly from any operations under or pursuant to this Agreement. The
indemnity provided by Operator shall remain in full force and effect regardless
of the passive, active or concurrent negligence of, and regardless of whether
liability without fault is imposed or sought to be imposed on Company. However,
such indemnity shall not be given effect to the extent that such indemnity is
void or otherwise unenforceable under applicable law in effect or validly
retroactive to the date of this Agreement. Further excepted from such indemnity
shall be any such loss, damage, injury, liability or claim which is the result
of the gross negligence or willful misconduct of Company. Company shall give
Operator immediate notice of any suit brought against Company with respect to
which Operator is or may be obligated to indemnify Company hereunder.
Section 10. CONFIDENTIALITY
A. Each Party agrees that it will maintain this Agreement, all terms and
conditions of this Agreement and all other Confidential Information (as
hereinafter defined) in strictest confidence and that it will not cause or
permit disclosure of Confidential Information to
-9-
any third Party without the express written consent of the other Party
hereto. Disclosures of Confidential Information otherwise prohibited by
this Section 10 may be made by either Party: (i) to the extent necessary
for such Party to enforce its rights hereunder against the other Party;
(ii) to the extent a Party is contractually or legally bound to disclose
financial information to a third Party (such as a shareholder or
commercial lender); (iii) only to the extent to which a Party hereto is
required to disclose all or part of this Agreement by a statute or by the
order of a Court, agency, or other governmental body exercising
jurisdiction over the subject matter hereof, by order, by regulations, or
by other compulsory process (including, but not limited to, deposition,
subpoena, interrogatory, or request for production of documents); (iv) to
the extent required by the applicable regulations of a securities or
commodities exchange; or (v) to an Affiliate (but only if such Affiliate
agrees to be bound by the provisions of this Section 10). "Confidential
Information" shall mean any information proprietary to either Party and
maintained by it in confidence or as a trade secret, including, without
limitation, business plans and strategies, proprietary software, financing
statements, customer or client lists, personnel records, analysis of
general energy market conditions, sales, transportation and service
contracts and the commercial terms thereof, relationships with current
and potential business partners, supplies customers, service providers
and financial sources, data base contents and valuable information of a
like nature relating to the business of such Party. It is understood and
agreed that Confidential Information shall not include information of a
Party that (i) was generally available to the public at the
time of disclosure to the other Party, (ii) after the time of disclosure
to the other Party, becomes generally available to the public, (iii) the
Party receiving the information can know that the information was in its
possession at the time of disclosure, or (iv) was rightfully acquired by
the recipient from third Persons who did not themselves obtain such
information under a confidentiality or other similar agreement with the
disclosing Party.
B. If either Party is or becomes aware of a fact, obligation, or circumstance
that has resulted or may result in a disclosure of Confidential Information
authorized by this Section 10, it shall so notify the other Party promptly
and shall provide documentation or an explanation of such disclosure as
soon as it is available. Each Party further agrees to cooperate to the
fullest extent in seeking confidential status to protect any Confidential
Information so disclosed.
C. The Parties hereto acknowledge that independent legal counsel may, from
time to time, be provided with a copy of this Agreement and agree that
such disclosure does not require consent by the other Party, provided that
such counsel agrees to be bound by the provisions of this Section 10.
D. Each Party will be deemed solely responsible and liable for the actions of
its employees, independent contractors, officers, agents and Affiliates
for maintaining the confidentiality commitments of this Section 10, but
will be required in that regard only to exercise such care in maintaining
the confidentiality of the Confidential Information as such Party
-10-
normally exercises in preserving the confidentiality of its other
commercially sensitive information.
Section 11. FORCE MAJEURE
A delay in or failure of performance of either Party hereto shall not constitute
default, nor shall either Party be held liable for loss or damage arising from
such delay or failure to the extent such delay, failure, loss or damage is
caused by Force Majeure.
The Party claiming Force Majeure as an excuse for delay in or failure of
performance shall immediately notify the other Party of the event and any steps
being taken to remove the impediment to performance.
Force Majeure shall not prevent either Party from terminating this Agreement
under Section 7.
Section 12. ASSIGNMENT
This Agreement shall be binding upon and shall inure to the benefit of the
successors and assigns of the Parties hereto; provided, however, that such
Agreement and the obligations of the Parties hereunder shall not be assignable
by either Party hereto without the express prior written consent of the other
Party hereto, except that any Party may assign this Agreement without consent,
including the performance thereof, in whole or in part to (1) an Affiliate of
the Party or the Party's shareholders; (ii) the successor of all or
substantially all the Party's business and assets; or (iii) a corporation which
such Party may merge into or be consolidated in. An assignment hereunder shall
not be effective unless and until the assignee agrees to be bound by all the
terms and conditions of this Agreement. Further, no assignment hereunder shall
relieve the assignor of any duties, liabilities or obligations accruing
hereunder before the effective date of the assignment. Any assignments
prohibited hereunder shall be void. This Agreement shall not be assignable by
operation of law and shall not become an asset in any bankruptcy or receivership
proceedings.
Section 13. NOTICES
Any notice, request, consent, approval or other similar communication of a
routine nature required or permitted under this Agreement shall be in writing
(including facsimile) and shall be deemed to have been properly given or
delivered to a Party when delivered personally to the person designated below to
receive such communication for each Party or when sent by telegram or United
States mail with postage prepaid and properly addressed to the Party to whom
given. Any such notice or other communication sent or mailed shall be deemed
given at the time it is received by the office of the individual to whom sent.
For purposes hereof the proper addresses
-11-
of the Parties (unless otherwise designated in writing which each Party may
do from time to time) shall be as follows:
If to Company:
▇▇▇▇▇▇ Petroleum Company, Limited Partnership
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President _______________
Telecopy: (713) 507-_________
with a copy to:
Vice President & General Counsel
▇▇▇▇▇▇ Petroleum Company, Limited Partnership
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Operator:
Chevron Pipe Line Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Corridor Team Leader
Section 14. GOVERNING LAW
The validity, nature, obligations, effect and construction of this Agreement
shall be governed by the laws of the State of Texas.
Section 15. ATTACHMENTS
Attachment I, Attachment II, and Attachment III attached hereto are incorporated
in and made a part of this Agreement. In the event of any inconsistency between
the Attachments and this Agreement, the Agreement shall control.
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Section 16. GIFTS PROHIBITED
The Parties shall maintain complete and accurate records in connection with any
commission, fee, rebate, gift or entertainment of significant cost or value in
connection with the performance of this Agreement and all transactions related
thereto for at least twenty-four months from the date of invoice to Company and
Operator. No director, officer, employee or agent of any Party hereto shall
give or receive any commission, fee, rebate, gift or entertainment of
significant cost or value in connection with the performance of this Agreement.
Section 17. FEDERAL COMPLIANCE
A. Insofar as applicable hereto, each Party hereto shall comply with
Executive Order No. I1246, as amended by Executive Order No.
I1375, and the rules and regulations issued thereunder, to ensure
that applicants are employed, and that employees are treated
during employment without regard to their race, creed, color, sex
or national origin. Also, if applicable, each Party hereto shall
comply with all provisions of the Vietnam Era Veterans'
Readjustment Assistance Act of 1974 and the rules and regulations
issued thereunder, including 41 C.F.R., Chapter 60, Part 60-250.
Each Party hereto shall also, if applicable, comply with all
provisions of the Rehabilitation Act of 1973, and the rules and
regulations issued thereunder including 41 C.F.R., Chapter 60,
Part 60-74. Operator agrees and covenants that none of its
employees or employees of its subcontractors who provide services
to Company pursuant to this Agreement are unauthorized aliens as
defined in the Immigration Reform and Control Act of 1986. All
acts, orders, rules and regulations hereinabove referred to are
hereby incorporated by reference unless this Agreement is
excepted by appropriate federal law, rules, regulations or orders.
B. Company and Operator shall comply with all laws and regulations
applicable to Company and Operator relating to Facilities
hereunder, including but not limited to any regulations of the
United States Department of Transportation applicable to
facilities operated by Company that are connected to or a part of
Facilities hereunder.
Section 18. SECTION HEADINGS
The headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
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Section 19. WAIVER
No waiver by either Party of any breach of any of the terms and conditions
contained in this Agreement shall be construed as a waiver of any subsequent
breach of the same or any other terms or conditions.
Section 20. ENTIRE AGREEMENT
This Agreement and its Exhibits constitute the sole and entire Agreement among
the Parties pertaining to the subject matter hereof. Effective as of the
commencement of the term hereof, this Agreement supersedes and cancels any and
all other prior or contemporaneous oral or written agreements or understandings
between or assumed by the Parties or any of them with respect to the foregoing
matters or any part thereof. No amendments to this Agreement shall be effective
unless in writing and executed by a duly authorized representative of each
Party.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first above written.
COMPANY,
▇▇▇▇▇▇ PETROLEUM COMPANY,
LIMITED PARTNERSHIP
BY: ▇▇▇▇▇▇ PETROLEUM, G.P., INC.
ITS GENERAL PARTNER
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------
Its: PRESIDENT
-----------------------------
OPERATOR,
CHEVRON PIPE LINE COMPANY
By: /s/ [ILLEGIBLE]
-----------------------------
Its: ASSISTANT SECRETARY
-----------------------------
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'Confidential Treatment Requested'
ATTACHMENT I
OPERATING AGREEMENT
ACCOUNTING PROCEDURE
1. DEFINITIONS
Unless defined otherwise below, terms used in this Accounting Procedure
shall have the same meaning as defined in the Agreement.
"Management Fee" means the management fees referenced in Section 2.B.
of this Attachment.
"Person" means any individual, partnership, association, trust,
corporation, government authority or other entity.
"Personal Expenses" means travel expenses and other reasonable
reimbursable expenses of employees in the operation and maintenance of
Facilities and in any other activities required of the Operator pursuant
to this Agreement; Operator's Affiliate(s) and employees covered under
the Management Fee, when such Affiliates and employees perform
activities pursuant to this Agreement.
2. COSTS
A. DIRECT COSTS
Operator shall charge Company with the following items to the
extent such charges are incurred for the operation and maintenance
of Facilities and in any other activities required of the Operator
pursuant to the Agreement:
1. LABOR AND BENEFITS
a. Salaries and wages of Operator's employees (or employees
of Operator's Affiliate) directly assigned to the
operation and maintenance of Facilities, including that
portion of such employees' time related to ancillary
activities such as training required by Operator, and in
any other activities required of the Operator pursuant to
the Agreement.
b. Overhead related to direct labor salaries and wages, to
* be calculated as [REDACTED] of the amount provided for in
A.1.a. above.
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c. Operator's cost of all payroll taxes, and benefits and
allowances and any other payment paid or contributed by
the Operator which is measured by Operator's employees'
compensation; the above to include without limitation
F.I.C.A., Operator's cost of holiday, vacation, sickness
and disability and other customary allowances, Operator's
current costs of established plans for employees' group
life insurance, hospitalization, retirement, stock
purchase, and other benefit plans of a like nature. Such
costs will be charged on a percentage assessment rate on
the amount of salaries and wages chargeable to the
Company under Paragraph 1.a. of this Section. The
percentage assessment rate shall be based on the
Operator's actual cost experience for the preceding
quarter and adjusted for any known modification.
2. EMPLOYEE EXPENSES
a. Reasonable Personal Expenses of those employees whose
salaries and wages are chargeable to the Company under
Paragraph 1.a. of this Section, and for which expenses the
employees are reimbursed under the Operator's usual
practices.
b. Reasonable Personal Expenses of those employees whose
activities are chargeable to the Company through the
Management Fee described in Section 2.B. of this
Attachment I, when such activities are required of the
Operator pursuant to the Agreement and for which expenses
are reimbursed under the Operator's usual practices.
3. MATERIALS AND SUPPLIES
Material purchased or furnished by Operator for use in the
operation and maintenance of Facilities shall be charged to
the Company at the price paid by Operator after deduction of
all discounts received. Cost of warehousing and handling
material shall be chargeable to the Company. The accumulation
of surplus stocks shall be avoided, and if surplus stocks are
accumulated, such stocks shall be timely disposed of. Proceeds
from such disposition shall be credited to the Company at the
time they are received by Operator. Operator does not warrant
the material furnished. In the case of material found to be
defective, or returned to a vendor or the Operator for any
other reason, Operator shall credit the Company when
adjustment is received by Operator.
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4. CONTRACTS AND SERVICES
The cost of contracts and subcontracts, contract services
(including those for technical personnel), professional
consultants, equipment, and utilities employed in the
operation and maintenance of the Facilities under the general
direction of Operator.
5. EQUIPMENT FURNISHED BY OPERATOR
a. Use of equipment owned by Operator at rates commensurate
with costs of ownership and operation. Such rates shall
include costs of maintenance, repairs, other operating
expense, insurance, taxes, depreciation, and interest on
unrecovered investment at the prime rate charged by the
Citibank N.A. of New York, New York on ninety day loans
to substantial and responsible commercial borrowers, or
the maximum rate charged by law, whichever is less. In
lieu of rates based on costs of ownership and operation
of equipment, Operator may elect to use average
commercial rates prevailing in the immediate area of
Company facilities.
b. Whenever requested, Operator shall inform Company in
advance of the rates it proposes to charge.
6. LEGAL EXPENSES
Expenses of investigating litigation or claims, incurred in or
resulting from the operation and maintenance of Facilities
under the Agreement; provided, however that no direct charge
for services of Operator's legal staff or fees or expense of
attorneys shall be made unless previously agreed to by
Company. All other legal expense incurred by Operator
hereunder is considered to covered by the overhead provisions
of Section 2.B. below, unless otherwise agreed to by Company.
7. TAXES
All taxes of every kind and nature assessed or levied upon, or
in connection with the Company operations, property or
Facilities and which have been paid for the benefit of
Company, excluding any income or franchise taxes.
8. INSURANCE
In accordance with Section 8 of the Agreement, net premiums
paid for insurance required by law or by the Company to be
carried for operation,
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maintenance and repair of Facilities and for the protection of
the Company.
9. COMMUNICATIONS
Costs of purchasing, leasing, installing, operating, and
maintaining communications equipment and services necessary
for the conduct of Facilities' operation and maintenance.
10. ECOLOGICAL AND ENVIRONMENTAL
Costs incurred for the benefit of the Company as a result of
statutory regulation for archeological and geophysical surveys
relative to the identification and protection of cultural
resources, or other ecological surveys as may be required by
regulatory authority. Also, costs to provide or have available
pollution containment and removal equipment, plus costs of
actual control, cleanup and resulting responsibilities of oil
spills as required by applicable laws and regulations.
11. PERMITS AND RIGHT-OF-WAY
Costs incurred in obtaining or maintaining permits, licenses,
leases, certificates, rights-of-way, easements, and other
similar items necessary for the operation or maintenance of
the Facilities.
12. DISMANTLING, REMOVAL, AND RESTORATIVE COSTS
Costs incurred for dismantling, removal, and restoration of
Company property to the extent such costs are incurred.
13. RENTALS
Rentals paid by Operator for the benefit of the Company in the
conduct of Facilities' operation and maintenance.
14. OTHER EXPENDITURES
Any other expenditures directly attributable to Facilities'
operation and maintenance not covered and dealt with in the
foregoing provisions of this Section 2.A., and which are
incurred by the Operator in the necessary and proper conduct
of Facilities' operation and maintenance, and which are:
(a) within the scope of the Agreement and
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(b) are included in the approved operating budget.
15. DISCOUNTS AND ALLOWANCES
Operator shall take advantage of and credit to the Company all
cash and trade discounts, freight allowances and equalization.
annual volume and other allowances, credits, salvages,
commissions, insurance discount dividends and retrospective
premium adjustments, and other such items which accrue.
B. MANAGEMENT FEE
The purpose of this Section 2.B. is to provide for the
reimbursement of Operator's overhead in conjunction with services
rendered. Operator shall charge the Company as follows to cover any
portion of costs and expenses resulting from the performance of
services for Facilities not otherwise chargeable under Section 2.A.
herein:
1. OPERATOR'S MANAGEMENT FEE
Operator shall receive as an annual charge, hereinafter
referred to as "Operator's Management Fee" to cover all of
Operator's overhead and indirect costs incurred in the
performance of services for the Facilities. Such Operator's
management duties hereunder shall not be subcontracted by
Operator to any other entity, without prior approval of
Company. The Operator's Management Fee shall be established
pursuant to the Operating Expense Budget submitted and
approved annually under Section 5 of the Operating Agreement.
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ATTACHMENT II
PIPELINE FACILITIES
1. SHELL CHEM. GRADE PROPYLENE (▇▇▇▇▇▇ "b"):
This 6" line runs from the Warrengas Term. @ Galena Park to Arco Jct. where
it ties into an 8" line that is leased from Shell. The segment leased from
Shell runs from Arco Jct. to the Shell tie-in @ ▇▇▇▇▇▇ St.
- (3.27 mi.) 17,291' of 6",.219 w.t.,1960, (▇▇▇▇▇▇ Pet.) This line
segment includes 794' of pipe leased from Arco Pipe Line Co. for the
Houston Ship Channel Crossing, referenced as the #11-8" line in the Arco
Tunnel.
- (1.6 mi.)8,530' of 8",no w.t.,1942, (Shell Lease Line)
2. ARCO JCT. LINE (▇▇▇▇▇▇ "c"):
This 6" line runs from Arco Jct. to Warrengas and carries various LPG'S.
- (2.82 mi.)14,870' of 6",.219 w.t.,1954 This line segment includes 753' of
pipe leased from Arco Pipe Line Co. for the Houston Ship Channel
Crossing, referenced as the #2-6" line in the Arco Tunnel.
3. GATX LINE ("c"LATERAL):
This 6" line runs from the Warrengas Terminal, under the Ship Channel and
through GATX to a connection on the Utility Line/South Route at the Port
Terminal R.R. It is used deliver various LPG'S to GATX and Crown Pet.
- (1.84 mi.)9,714' of 6",.280 w.t.,1987
4. UTILITY LINE (SOUTH ROUTE FROM GATX CONNECTION TO ARCO JCT.):
This 6" line is used for deliveries to Crown Pet. and as the loop back to
Warrengas Terminal from Arco Jct. through the GATX Line. (also called Arco
Jct. to Mobil in Feedstock Man.)various LPG'S
- (2.86 mi.)15,079' of 6",.250 w.t.,1954
5. SOUTH ROUTE (▇▇▇▇▇▇ "d" AND BAYTOWN "c")
This is a 6"/8" line from ▇▇▇▇▇▇ Mont Belvieu through Baytown and the Exxon
BOP Plant, to the Warrengas Galena Park Terminal. The channel crossing at
Warrengas is made through an 8" line laid in ▇▇▇▇ (▇▇-▇▇▇▇▇▇▇▇▇▇ project)
along the GATX east fenceline and the east property line of Huntco Steel then
through one of the five lines installed in the Ship Channel Project. This
line in conjunction with the Deer Park to Texas City line delivers isobutane
from Warrengas Terminal to the Amoco and Marathon Plants in Texas City.
- (27.2 mi.)143,625' of 6"/8",.280 w.t.,1954 (▇▇▇▇▇▇ South Route)
6. CEDAR BAYOU DOCK LINE:
This is an idle 8" line that is tied into the South Route @ approx. M.P. 2
and runs southeast of Hwy. 146 to the old Mobay Plant and then west a short
distance to the ▇▇▇▇▇▇ Cedar Bayou Dock.
- (3.7 mi.)19,552' of 8",.250 w.t.,1956
-▇▇-
▇. ▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇▇ "▇" LINE):
This is an 8" line that runs north and west from the ▇▇▇▇▇▇ Terminal @ Mt.
Belvieu to the San Jacinto River Crossing at the Lyondell Refinery, and enters
the Warrengas Terminal from the north. This line is used to deliver various LPG
Products.
- (24.22 mi.)127,869' of 8",.250 w.t.,1957
8. PHIBRO LINE:
This 4" line runs from Arco Jct. through the Lyondell-Citgo Refinery, under
▇▇▇▇ Bayou and terminates in the Phibro Plant. This line is currently leased
to Phibro and the lease agreement stipulates that they be responsible for the
operation and maintenance of this system.
- (2.5 mi.)13,151' of 4",.188 w.t.,1956
9. 6" PHIBRO LINE:
This 6" line runs from Arco Jct. through the Lyondell-Citgo Refinery, under
▇▇▇▇ Bayou and terminates in the Phibro Plant. Various LPG'S
- (2.5 mi.)13,151' of 6",.280 w.t.,1956
10. FANNETT TO PT. ACRES (OLD FRIO PIPELINE):
This is an 8" line that runs from the Fannett Terminal to Pt. Acres.
- (16.18 mi.) 85405' of 8",.250 w.t.,1958
11. TENNECO LINE (TO NITEMARE JCT.):
This 8" line runs from the ▇▇▇▇▇▇ Mt. Belvieu Terminal, north along Hwy. 146
to Nitemare Jct. It is used to deliver and receive various LPG Products.
- (1.01 mi.)5,316' of 8",.322 w.t.,1977
12. ARCO #1 LINE (TO NITEMARE JCT.):
This is a 6" line that runs from the ▇▇▇▇▇▇ Mt. Belvieu Terminal, north along
Hwy. 146 to Nitemare Jct. It is used to deliver and receive LPG Products.
- (1.02 mi.)5,402' of 6",.250 w.t.,1956
13. DOW PRODUCTS LATERAL:
This 6" lateral runs northwest from the ▇▇▇▇▇▇ Mt. Belvieu Terminal, and ties
into a Dow Pipeline approx. 1,000' northwest of ▇▇▇▇▇▇▇ ▇▇. and the S.P.RR
Tracks. This line is in E.P. Mix Service.
- (1.01 mi.)5,319' of 6",.432 w.t.,1972
14. 6"MAG. LINE (NITEMARE JCT.):
This is a 6" line that runs from the ▇▇▇▇▇▇ Mt. Belvieu Terminal, north along
Hwy. 146 to nitemare jct. It is used to deliver and receive various LPG
products.
- (1.02 mi.)5,421' of 6",.250 w.t.,1958
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15. 6" OXYCHEM TIE-IN (PLACID LINE):
This is a 6" line that runs from the ▇▇▇▇▇▇ Mt. Belvieu Terminal, north to
the Oxychem meter sta. on F.M. 1942 and ▇▇▇▇▇▇▇▇▇▇ ▇▇.
- (1.7 mi.)9.016' of 6",.280 w.t.. 1979
16. 6" ARCO BLACK LAKE LINE (PLACID LINE):
This line and the Oxychem line run parallel north to the entrance of the old
Placid Refinery. This line is used for LPG's.
- (2.3 mi.)12.098' of 6",.280 w.t., 1979
17. 4" TEXAS PETRO-CHEM LPG LATERAL:
This is a short lateral that runs from Arco Jct. to a Texas Petro-Chem line,
within the Lyondell-Citgo Refinery. Various LPG'S
- (.1 mi.) 829' of 4",.237 w.t.,
18. 4" UNOCAL LATERAL(INACTIVE)
This lateral is tied into the old LPG Gathering System east of Fannett Term.
- (1.08 mi.)5,686' of 4",.237 w.t.,1989
21. 8"NATURAL GAS PIPELINE WARRENGAS TERMINAL ("A" LINE):
This line is used to transport fuel gas from a gas utility to the Warrengas
Terminal at Galena Park.
- (1.79 mi.)9,439' of 8",.250 w.t.,1946
22. 6"/8" DEER PARK TO TEXAS CITY (STERLING) ISOBUTANE
(ACQUIRED FROM CHEV CHEM IN 1996)
The Texas City deliveries are made through a section of the former 8"/6" Chevron
Chemical ethylene system, Texas City Leg. This segment was converted from
ethylene to Iso Butane service in April 1995 and is tied into the South Route at
sta.+ 197+90.
- (27.35 mi.)144,436' of 8",.250 w.t.,1978 (CCCT.C. Leg to T.C. PRS)
- (2.44 mi.)12,864' of 6",.280 w.t.,1952 (CCC T.C. PRS to Sterling)
23. 8"/6" ▇▇▇▇▇▇-▇▇▇▇ LINE
This is a new connection that, when completed, will provide a dedicated line
from ▇▇▇▇▇▇ Mt. Belvieu to ▇▇▇▇'▇ Meter Facility. Approx. 6,000' of new 8"
was recently laid from ▇▇▇▇▇▇ north along Hwy. 146, then west along F.M. 1942
to tie into an existing 6,820' segment of idle 6" Placid Line. From the
tie-in point approx. 3,500' of the idle 6" will be used to connect to ▇▇▇▇.
- (1.19 mi.)6,281' of 8".322 w.t.,1995 (new lay)
- (.66 mi.)3,500' of 6",.280 w.t.,1979 (idle segment to be used)
- (.63 mi.)3,320' of 6",.280 w.t.,1979 (idle 6" not used)
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25. 8" CEDAR BAYOU TO ▇▇▇▇▇▇ LPG
(FROM LINE # 27 CONNECTION TO ▇▇▇▇▇▇ MT. BELVIEU)
This line is connected to Line # 27 on the east side of Cedar Bayou at the HL&P
corridor. The line runs northeast within the CPL 200' ROW, crosses the Southern
Pacific RR. (2 8"lines in a 24"casing.1 spare line) then enters the ▇▇▇▇▇▇
Property at the west fenceline. The line runs north along the fence to a point
just past the west gate, where it enters a swab trap and ties into the 8"sch.80
plant piping that ▇▇▇▇▇▇ installed through the pipe rack.
- (.79 mi.)4,158' of 8",.312 w.t. 1991 (CPL installed section)
26. 20" LPG IMPORT PIPELINE (ACQUIRED FROM CPL IN 1996)
A 20" OD x 0.344" wall thickness pipeline that runs 25.3 miles in ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ Counties from Warrengas - Galena Park to ▇▇▇▇▇▇ Mont Belvieu Terminal
Storage Facility. Built in 1977. There are no intermediate connections or pump
stations on this pipeline. ▇▇▇▇▇▇ furnishes pumping equipment at Galena Park and
Mont Belvieu.
27. 8" PRODUCTS PIPELINE (ACQUIRED FROM CPL IN 1996)
An 8" OD x 0.250" wall thickness pipeline that runs 23.5 miles in ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ Counties from Warrengas Galena Park - to Chevron Chemical Cedar Bayou
Plant with one interconnection to a ▇▇▇▇▇▇-owned pipeline at Cedar Bayou. Built
in 1957. Pumping is furnished by ▇▇▇▇▇▇ at Galena Park and by Chevron Chemical
at Cedar Bayou.
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ATTACHMENT III
MAP OF FACILITIES
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