EXHIBIT 10.13(i)
HATTIESBURG - 1A
ADDITIONAL 100,000 SUBSCRIBED
IN PHASE 1A
GAS STORAGE CONTRACT
BY AND BETWEEN
ENDEVCO INDUSTRIAL GAS SALES COMPANY
AND
MISSISSIPPI VALLEY GAS COMPANY
DATED
08/24/90
PHASE IA
TABLE OF CONTENTS
FIRM STANDBY GAS STORAGE CONTRACT
I. CONDITIONS PRECEDENT..................................................................... 2
II. ACQUISITION AND CONSTRUCTION............................................................. 3
III. GAS TO BE STORED AND DELIVERED........................................................... 3
IV. SCHEDULING............................................................................... 5
V. POINT(S) OF DELIVERY AND REDELIVERY...................................................... 6
VI. TERM..................................................................................... 6
VII. RATES.................................................................................... 7
VIII. NOTICES ................................................................................. 9
IX. GENERAL TERMS AND CONDITIONS............................................................. 9
X. MISCELLANEOUS............................................................................ 10
Exhibit "A"
General Terms and Conditions
I. DEFINITIONS.............................................................................. 1
II. QUALITY.................................................................................. 2
III. PRESSURE................................................................................. 3
IV. TITLE AND RISK OF LOSS.................................................................. 3
V. MEASUREMENT............................................................................. 4
VI. ▇▇▇▇▇▇▇▇ AND PAYMENTS .................................................................. 5
VII. TAXES ................................................................................. 6
VIII. REGULATORY BODIES ...................................................................... 7
IX. FORCE MAJEURE........................................................................... 8
X. DEFAULT AND TERMINATION ................................................................ 9
Exhibit "B"
Point(s) of Delivery and Redelivery
GAS STORAGE CONTRACT
THIS GAS STORAGE CONTRACT (hereinafter referred to as the "Contract")
is made and entered into as of the 24th day of August, 1990, by and between
ENDEVCO INDUSTRIAL GAS SALES COMPANY, a Delaware corporation, (herein referred
to as "Company"), operator of the Storage Facilities (as defined below) and
managing general partner of the Hattiesburg Gas Storage Company, the owner of
the said Storage Facilities, and MISSISSIPPI VALLEY GAS COMPANY, a Mississippi
corporation (herein referred to as "Customer").
W I T N E S S E T H:
WHEREAS, Company is the operator of certain underground gas storage
facilities located near Petal, Mississippi (hereinafter referred to as the
"Storage Facilities") which initially have (or will have upon completion) a
usable storage capacity of approximately 2.2 billion cubic feet ("Phase I"); and
WHEREAS, subject to the terms hereof, as a result of interest by
existing storage customers and additional parties in obtaining storage services,
in addition to that available in the initial phase of the project ("Phase I")
and in a shorter time frame than contemplated through a Phase II operation (the
leaching of a new cavern on the existing properties), Company desires to enlarge
the Storage Facilities by approximately one billion cubic feet of additional
usable storage capacity by acquiring an additional underground storage cavern
located on properties not previously acquired by Company, and converting said
cavern into gas storage service and incorporating the same into the Storage
Facilities (said acquisition and expansion to be referred to as "Phase IA"); and
WHEREAS, Customer desires to contract for a portion of the additional
capacity to be added in Phase IA to the Storage Facilities, and desires that
Company receive, on a firm basis, at the Points of Delivery herein specified,
certain quantities of gas from the pipeline facilities of Transcontinental Gas
Pipe Line Corporation ("Transco") and/or Tennessee Gas Pipeline Company
("Tennessee") for the purpose of injecting and storing such gas for Customer or
for its account in such Storage Facilities, and that Company redeliver such gas,
on a firm basis, into the facilities of said pipeline companies at the Points of
Redelivery herein specified; and
WHEREAS, Company desires to perform such services for Customer, all to
be provided pursuant and subject to the terms and conditions hereof;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, together with other good and valuable consideration, the receipt and
sufficiency of which are hereby
acknowledged and confessed by both parties hereto, Company and Customer hereby
agree as follows:
ARTICLE I
CONDITIONS PRECEDENT
1.1 The obligations of Company under this Contract shall be
subject to the occurrence of each of the following conditions precedent, the
satisfaction of which must be acceptable to Company in its sole discretion:
(a) Company shall have obtained all permits,
authorizations, certificates and approvals, as deemed necessary or
desirable by Company, from all appropriate local, state or federal
agencies having jurisdiction over the construction, operation or rates
charged for services, to enable Company to perform its obligations and
receive the benefits provided for herein;
(b) Company shall have received executed gas storage
contracts with other storage customers, on terms and conditions
substantially similar to those contained herein, under which all
storage customers (including Customer hereunder) are committed to
contract, in the aggregate, for a quantity of daily deliverability
(defined as the "MDWQ" in Article I to the General Terms and Conditions
attached hereto as Exhibit "A") from the additional storage cavern to
be added to the Storage Facilities under Phase IA, which is equal to or
greater than 80,000 MMBtu per day; and
(c) Company shall have acquired the properties
(including, without limitation, the additional cavern to be
incorporated into the Storage Facilities in said Phase IA expansion) on
terms and conditions satisfactory to Company and, shall have arranged
all necessary funding and financing for such expansion on terms
acceptable to Company.
1.2 Company shall use its best efforts and be diligent in seeking
the satisfaction of each of the above-referenced conditions precedent. However,
the conditions set forth in section 1.1 above shall not be deemed to have been
satisfied unless and until Company notifies Customer in writing of the
satisfaction of all of the same. In the event that Company has not provided
Customer notice of the satisfaction of all of the above-referenced conditions by
5:00 p.m. on March 31, 1991, then Customer shall have the right to terminate
this Contract without further liability hereunder upon thirty (30) days prior
written notice; provided, however, that should Company give Customer written
notice of the satisfaction of such conditions within thirty (30) days following
its receipt of Customer's notice of termination, as herein provided, then
customer's notice of termination shall be null and void and this Contract shall
continue in accordance with its terms.
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1.3 Should Company determine at any time that such conditions can
not be satisfied within a reasonable time and at a reasonable expense, Company
shall have the continuing right to terminate this Contract without further
liability hereunder, upon providing written notice to Customer. Company may not
discriminate as between the termination of this Contract in accordance with this
Section 1.3 and the termination of all other storage contracts with other
customers contracting for capacity in the Phase IA expansion. The termination by
Company of this Contract in accordance with this Section 1.3 shall only be made
in connection with the termination of all of the other contracts with other
customers as referenced in Section 1.1(b) above.
ARTICLE II
CONSTRUCTION
Within thirty (30) days after the satisfaction of all of the conditions
set forth in Article I, Company shall commence the construction and development
of Phase IA of the Storage Facilities and shall provide Customer written notice
of the commencement of construction and the date upon which Company anticipates
that such facilities will be operational. Upon completion of construction,
including testing, as required by all applicable federal, state and/or
applicable codes, and all other matters required for operation, Company shall
provide Customer written notice that said facilities are fully operational and
shall state in such notice a date upon which Company will be ready to receive
gas for storage, which date shall be not less than ten (10) days following such
notice (such date to be hereinafter referred to as the "Commencement Date"). If
the Commencement Date does not occur on or before December 1, 1991, or such
later date as may be agreed upon, (subject to a day for day extension for delays
caused by an event(s) of "force majeure" as herein defined) either party shall
have the right to terminate this Contract, without further liability or
obligation to the other party hereunder, by providing the other party thirty
(30) days prior written notice. Notwithstanding the foregoing, in the event that
Customer gives notice of termination in accordance with the above and,
thereafter, Company provides written notice to Customer stating a Commencement
Date which will occur prior to the expiration of such thirty (30) day period,
then, Customer's notice of termination shall be void and of no further force or
effect and this Contract shall continue in accordance with its terms, provided
that service commences hereunder on the Commencement Date stated in such notice.
ARTICLE III
GAS TO BE STORED AND DELIVERED
3.1 Subject to the terms and provisions of this Contract, Company
agrees to reserve for service to Customer a portion of the capacity in Phase IA
of the Storage Facilities. The capacities so reserved for Customer shall be
sufficient to enable Customer to inject gas into, withdraw gas from, and store
gas in the Storage
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Facilities, in quantities up to the maximum quantities set forth below:
(i) a maximum daily withdrawal quantity ("MDWQ") of 10,000 MMBtu
per day;
(ii) a maximum daily injection quantity ("MDIQ") of 5,000 MMBtu per
day;
(iii) a maximum capacity in the Storage Facilities ("MQS") equal to
100,000 MMBtu.
3.2 Customer shall tender or cause to be tendered to Company at
the Point(s) of Delivery any gas which Customer desires to have injected into
storage hereunder. Customer shall also receive or cause to be received gas
requested to be withdrawn from storage at the Point(s) of Redelivery upon tender
for redelivery by Company.
3.3 Subject to the operating conditions of the pipelines
delivering or receiving gas for Customer's account, Company shall receive gas
for injection from Customer at the Point(s) of Delivery and redeliver gas to
Customer at the Point (s) of Redelivery as scheduled by Customer from time to
time; provided that Company shall not be obligated to receive for injection any
quantity of gas if the injection of the same would cause the quantity of gas
stored in the Storage Facilities for Customer's account ("Customer's Gas Storage
Inventory") to exceed Customer's MQS as stated above; nor shall Company be
obligated at any time to deliver more gas to Customer than Customer has in its
then-current Customer's Gas Storage Inventory.
3.4 Company shall not be obligated to receive, at any Point of
Delivery for injection, or to redeliver, at any Point of Redelivery, any
quantity of gas when the quantity of gas tendered for delivery to Company or
requested by Customer to be redelivered, together with all other volumes of gas
tendered for delivery to Company at any such Point of Delivery, or requested for
redelivery at such Point of Redelivery, is less than 5,000 MMBtu per day in the
aggregate.
3.5 In addition to the maximum daily rates of injection and
withdrawal as specified above in Section 3.1, Company shall use its best efforts
to accommodate requests of Customer to inject or withdraw gas at greater rates
of flow and, at such Point (s) of Delivery or Point(s) or Redelivery in addition
to those specified on Exhibit "B" annexed hereto, at such times as such
additional capacities are not required for service to other firm storage
customers. Any such additional services shall be provided at the rates stated in
Section 7.1(c) and 7.1(d), as may be amended by Section 7.1(e), only as
capacities are available. All such services shall be provided on a pro-rata
basis to all firm storage customers, without obligation or liability for
interruption by Company as to any withdrawals or injections in excess of the
maximums reserved for Customer. Additional withdrawals and/or
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injections will be made only to the extent that Customer has gas in storage to
be withdrawn, or unfilled capacity in the Storage Facilities reserved as part of
Customer's MQS as stated herein.
ARTICLE IV
SCHEDULING
4.1 At any time during any day when Customer desires Company to
receive and inject gas into, or to withdraw and deliver gas from the Storage
Facilities, Customer shall give verbal notice in accordance with Section 4.2 of
this Article to Company's dispatcher, specifying the quantity of gas to be
injected or withdrawn and the appropriate Points of Delivery or Points of
Redelivery, as applicable. Customer shall make available and tender any gas to
be injected hereunder and shall receive and accept delivery, upon tender by
Company, any gas requested to be withdrawn from storage. The quantity of gas
stored in the Storage Facilities for the account of Customer shall be increased
or decreased upon injection or withdrawal of gas from storage, as applicable.
Customer shall not (unless otherwise agreed by Company), on an hourly basis,
tender for injection, nor shall Company be obligated to receive gas for
injection or to withdraw and deliver gas from storage, at rates of flow in
excess of 1/24 of Customer's MDIQ or MDWQ, respectively.
4.2 Customer shall notify Company at least eight (8) hours in
advance of any requested change in the daily or hourly rate of flow for
injections or withdrawals of gas hereunder. Company may waive any part of the
eight (8) hour notice upon request if, in Company's reasonable judgement,
operating conditions permit such waiver. Customer shall notify Company
immediately of any circumstance which causes or will cause the deliveries to or
receipts from Company to be different from those requested. Notices provided in
this Article may be verbal, followed by a written confirmation delivered via
telecopy, overnight mail, first class U.S. mail, or hand- delivery when such
written confirmation is requested by either party. Customer shall provide notice
of any changes in deliveries to or receipts from Company to all applicable
transporting pipelines and shall be responsible for, and shall indemnify and
hold Company harmless from, any and all liabilities and expenses resulting from
Customer's failure to notify all applicable transporting pipelines of any such
changes.
4.3 In the event that an imbalance occurs on the pipeline to or
from which such gas is delivered or received, which imbalance results from
Company's failure to tender the quantities of gas scheduled for delivery from
storage, or accept delivery of the quantities of gas scheduled for injection
into storage and tendered for delivery by Customer, all in accordance with and
subject to this Contract, Company shall reimburse Customer for any imbalance
penalty due and rightfully owing to the pipeline receiving or delivering the gas
at such Point(s) of Delivery or Point(s) of Redelivery, which was caused by
Company's failure to accept or deliver gas. In the event that Company is unable
to receive or
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deliver gas as required by this Contract and in accordance with the request of
Customer as provided above, Company shall notify Customer as soon as practicable
following any failure to receive or tender such gas and, Customer shall, as soon
as practicable following receipt of such notice, notify and change nominations
and scheduling with all pipelines and other parties delivering or receiving gas
to be delivered to or withdrawn from storage for Customer. Customer shall take
all reasonable actions to prevent or minimize any imbalances from occurring.
Customer and Company will diligently work to correct any imbalance so caused
prior to the end of the applicable balancing period.
ARTICLE V
POINT(S) OF DELIVERY AND REDELIVERY
5.1 The Point(s) of Delivery for all gas to be tendered by
Customer to Company for injection into the Storage Facilities shall be as
specified on Exhibit "B" attached hereto, and the maximum daily quantity of gas
which Company is obligated to receive from Customer at each individual Point of
Delivery shall not exceed the maximum stated thereon.
5.2 The Point(s) of Redelivery for all gas to be tendered by
Company to Customer for redelivery pursuant to the terms hereof shall be as
specified on Exhibit "B", attached hereto, and the maximum quantities of gas
which Company is obligated to redeliver to Customer at each such Point of
Redelivery shall not exceed the maximum stated thereon.
ARTICLE VI
TEEM
6.1 This Contract shall be effective as of the date set forth at
the outset hereof and shall continue in full force and effect for a primary term
which shall end as of the end of the primary term of the gas storage contracts
between Company and firm gas storage customers which contracted for service in
Phase I, i.e., such primary term being a period of fifteen (15) years following
the initial operation of the Storage Facilities (Phase I). Following the primary
term, this Contract shall continue from year to year unless and until terminated
effective at the end of said primary term or the end of any year thereafter by
either party upon not less than twelve (12) months prior written notice.
6.2 Upon expiration hereof, Company agrees that in the event that
gas storage services are still being provided in the Storage Facilities by
Company, or any assignee of Company as provided for herein, to other customers,
then, Customer shall have the right and option to continue to receive storage
services from Company, or such assignee of Company, pursuant to terms and
conditions, and for rates and charges substantially similar to those being
offered to said other customers by Company, or such assignee of Company, at the
time of such expiration.
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ARTICLE VII
RATES
7.1 Commencing as of the Commencement Date, and continuing
thereafter for a period ending at the end of the tenth (10th) year following
Company's initial operation of the Storage Facilities (in Phase I) (the "Initial
Pricing Period"), and thereafter unless adjusted in accordance with the terms
hereof, further Customer shall pay to Company each month the following charges:
7.1(a) A storage charge ("D(1)") of twenty and one-half
cents ($0.205) multiplied by Customer's MQS amount specified in this
Agreement; plus
7.1(b) A deliverability charge ("D(2)") of fifty-eight cents
($0.58) multiplied by Customer's MDWQ amount; plus
7.1(c) One cent ($0.01) for each MMBtu of gas received by
Company for injection into storage hereunder and one cent ($0.01) for
each MMBtu of gas redelivered by Company to Customer hereunder; plus
7.1(d) Customer's pro-rata share of the cost of gas consumed
in the operation of the Storage Facilities, such to be pro rated among
all customers based upon the quantities of gas injected and withdrawn
by each customer during each month. The parties agree that this cost
may change from time to time and Customer shall continue to bear its
pro rata share of such cost. Company shall endeavor to operate the
Storage Facilities in an efficient manner so as to limit the gas
consumed to that quantity reasonably required. Each month, Company
shall provide Customer a statement showing its prorata share of such
quantity and the cost of the gas consumed in the operation of Storage
Facilities, along with the necessary supporting workpapers showing the
total quantity and cost of gas so consumed and the proration
calculations. Customer shall have the option, exercisable upon thirty
(30) days prior written notice at any time during the term hereof, to
thereafter (during the term hereof) supply its pro-rata share of gas
consumed, as opposed to reimbursing Company in accordance herewith. In
the event that Customer elects to provide its pro-rata share of the
fuel used hereunder, then, following such election, Company shall
establish and maintain an account (the "Fuel Account") with Customer.
Initially, one and one-half percent (1 1/2%) of all gas delivered to
Company at the Points of Delivery hereunder shall be retained by
Company and credited to the Fuel Account. Customer shall not pay any
injection, withdrawal or storage fee as to any volumes retained by
Company. At the close of each month, Company shall debit the Fuel
Account with Customer's pro-rata share of the fuel gas. From time to
time during the term hereof, Company shall have the right, upon
providing Customer ten (10) days' prior written notice, to adjust the
quantity of gas to be retained by Company and credited to the Fuel
Account in
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order to reflect actual quantities of gas consumed in the operation of
the Storage Facilities and, to cause the Fuel Account to be as near to
zero as is practicable on a monthly basis. Within thirty (30) days
following the termination hereof, Company shall deliver gas to
Customer, or Customer shall deliver gas to Company, as is necessary to
cause the Fuel Account to equal zero. Company shall report the status
of the Fuel Account as of the end of the previous month with each
monthly statement. Customer shall have the right to deliver to Company
the maximum capacities set forth in Section 3.1(iii) in addition to the
gas delivered by Customer for credit to the Fuel Account.
7.1(e) The fees payable for each MMBtu of gas delivered to
Company for injection and for each MMBtu of gas redelivered to Customer
hereunder, as provided for in section 7.1(c), shall be subject to
adjustment, upon application to and approval by the appropriate
regulatory commission, to reflect increases or decreases in the cost of
maintenance, supplies and other variable expenses incurred by Company
in performing the services hereunder. Customer shall have the right to
contest any increase sought hereunder before the appropriate regulatory
commission. No such adjusted fee shall exceed, however: (i) the fee
herein provided; multiplied by (ii) the sum of one (1) plus the
percentage change in the Gross National Product Implicit Price Deflator
(the "Index") for the December of the then-current calendar year as
compared to such Index for December, 1990.
7.2 Notwithstanding the above, in the event that Company's rates
and charges to its Phase I customers are decreased within the Initial Pricing
Period, as described above, then the rates and charges payable hereunder shall
also be decreased such that the rates and charges for service hereunder shall
equal the rates and charges payable by said customers in Phase I.
7.3 The charges payable hereunder for the remainder of the term
hereof following the expiration of the Initial Pricing Period, as described in
Section 7.1, may be redetermined by the appropriate regulatory body in
accordance with this Section 7.3. Company shall have the right, upon its
election, or shall be obligated, upon request of Customer, to submit
cost-of-service information to the appropriate regulatory authority for a review
of the rates charged hereunder and to request a determination by such regulatory
authority of a rate for the remaining term hereof. Customer shall have the right
to take part in such proceedings and to contest the proposed rates to the full
extent allowed. Company shall provide Customer not less than thirty (30) days
prior written notice of Company's intent to file for a new rate as herein
provided. In the event that the rates resulting from such redetermination are in
excess of one hundred and ten percent (110%) of the rates specified in Section
7.1, then Customer shall have the right to terminate this Contract upon sixty
(60) days' prior written notice; provided, however, that during such sixty (60)
day period following the
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receipt of Customer's notice, Company shall have the option, without obligation,
to agree to charge Customer rates which do not exceed one hundred and ten
percent (110%) of the rates set forth in Section 7.1 and, in such event, this
Contract shall continue for the remaining term. Company shall provide Customer
written notice of any such election before the expiration of said sixty (60) day
period and, shall therein specify the rate to be charged hereunder.
ARTICLE VIII
NOTICES
8.1 Whenever any notice, request, demand, statement or payment is
required or permitted to be given under any provision of this Contract, unless
expressly provided otherwise, such shall be in writing, signed by or on behalf
of the person giving the same, and shall be deemed to have been given and
received upon the actual receipt (including the receipt of a telecopy or
facsimile of such notice) at the address of the parties as follows:
Company:
For Notices: Endevco Industrial Gas Sales Company
8080 N. Central Expressway
Twelfth Floor, Lock ▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
For Payments: Endevco Industrial Gas Sales Company
P. 0. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Customer: Mississippi Valley Gas Company
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: RATE DEPARTMENT
8.2 Operating communications made by telephone or other mutually
agreeable means shall be confirmed in writing or by telecopy within two (2) days
following same if requested by either party. To facilitate such operating
communications on a daily basis, lists of names, telephone and telecopy numbers
of appropriate operating personnel shall be exchanged by and between Company and
Customer before commencement of service under this Contract. Such lists shall be
updated from time to time if changed.
8.3 The addresses of the parties may be revised upon written
notice given in accordance herewith, designating in such writing the new address
of the party so affected.
ARTICLE IX
GENERAL TERMS AND CONDITIONS
The General Terms and Conditions attached hereto as Exhibit "A" are
hereby incorporated herein and made a part of this
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Contract as if fully set forth herein. Any conflict or inconsistency, either in
construction or interpretation, between the terms hereof and the General Terms
and Conditions attached hereto shall be resolved in favor of the terms hereof.
ARTICLE X
MISCELLANEOUS
10.1 Headings. The subject headings of the articles and sections of
this Contract are intended for the sole purpose of convenient reference and are
not intended, nor shall the same be construed, to be a part of this Contract or
considered in any interpretation hereof.
10.2 Amendment. Neither this Contract nor any provisions hereof may
ever be amended, changed, modified or supplemented except by an agreement in
writing, duly executed by the party to be charged with the same.
10.3 Waiver. No failure by either party to enforce the performance
of any obligation of the other party under this Contract shall operate as a
waiver of such obligation or default, or as a waiver of any other right or
default, whether of a like or different character.
10.4 Choice of Law. As to all matters of construction and
interpretation, this Contract shall be interpreted, construed and governed by
the laws of the State of Texas.
10.5 Succession. Either party may assign its rights, titles or
interests hereunder to any individual, bank, trustee, company or corporation as
security for any note, notes, bonds or other obligations or securities of such
assignor, but not otherwise, without the written consent of the other party
hereto, which consent shall not be unreasonably withheld. No assignment provided
for hereunder shall in any way operate to enlarge, alter or change any
obligation of the other party hereto nor shall the assignee be relieved of its
obligations hereunder without the express written consent of the non-assigning
party.
10.6 Right of Examination. Both Company and Customer shall have the
right to examine, at any reasonable time, the books, records, charts and any
operating data of the other to the extent reasonably necessary to verify the
accuracy of any statement, chart or computation made under or pursuant to the
provisions of this Contract. All books, records and charts related to any
statement, charge or computation made hereunder shall be retained and available
for review or inspection for a period of two years.
10.7 Entire Agreement. This Contract contains the entire agreement
and understanding of the parties hereto with respect to the subject matter
hereof and, there are no agreements, understandings or representations, either
oral or in writing, except as set forth herein.
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10.8 Authority. Company and Customer each hereby represents and
warrants that it has the full right, power and authority to enter into this
Contract, and that this Contract will not violate the provisions of any other
contract or agreement to which it is a party.
10.9 Effect on Prior Storage Contract. The parties hereto are also
parties to that certain Gas Storage Contract dated February 21, 1990 providing
for storage services in Phase I of the Storage Facilities. The parties
acknowledge that the Phase IA expansion made the subject hereof does not affect
or implement the adjustments to the fees payable for Phase I services, as set
forth in Section 6.2 of such contract; nor does it increase, decrease or
otherwise affect Customer's priority rights to contract for additional capacity
which may be added to the Storage Facilities by leaching an additional cavern on
the properties initially acquired by Company (Phase II) as provided in Section
9.1 of such contract.
IN WITNESS WHEREOF, the parties have executed this Contract in one or
more copies or counterparts, each of which shall constitute and be an original
of this Contract effective between the parties as of the date first-above
written.
COMPANY:
ATTEST: ENDEVCO INDUSTRIAL GAS SALES COMPANY
-s- [ILLEGIBLE] By: -s- [ILLEGIBLE]
-------------------------------- -----------------------------
Assistant Corporate Secretary Its: [ILLEGIBLE]
-----------------------------
CUSTOMER:
ATTEST: MISSISSIPPI VALLEY GAS COMPANY
-s- [ILLEGIBLE] By: -s- ▇.▇ ▇▇▇▇▇▇
-------------------------------- -----------------------------
Secretary Its: PRES.
-----------------------------
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EXHIBIT "A"
TO GAS STORAGE CONTRACT BETWEEN
ENDEVCO INDUSTRIAL GAS SALES COMPANY
AND MISSISSIPPI VALLEY GAS COMPANY
DATED AUGUST 24, 1990
GENERAL TERMS AND CONDITIONS
These General Terms and Conditions ("General Terms") are attached to
and incorporated into the above-referenced GAS STORAGE CONTRACT between ENDEVCO
INDUSTRIAL GAS SALES COMPANY (herein referred to as "Company") and MISSISSIPPI
VALLEY GAS COMPANY, a Mississippi corporation (herein referred to as
"Customer").
ARTICLE I
DEFINITIONS
For the purposes of this Contract, unless expressly stated otherwise,
the following definitions shall be applicable.
1.1 The term "Btu" shall mean British Thermal Units.
1.2 A "day" shall mean the twenty-four (24) hour period beginning
at 7:00 a.m. Jackson, Mississippi time on each calendar day and ending at 7:00
a.m. Jackson, Mississippi time on the following calendar day.
1.3 "Contract" shall mean the above-referenced Gas Storage
Contract together with these General Terms and all other attachments hereto or
thereto.
1.4 The term "gas" shall mean natural gas in its natural state,
produced from ▇▇▇▇▇, including casinghead gas produced with crude oil, natural
gas from gas ▇▇▇▇▇ and residue gas resulting from processing both casinghead gas
and gas well gas.
1.5 The term "Mcf" shall mean one thousand (1,000) cubic feet at a
pressure of fifteen and twenty-five thousandths (15.025) psia and at a
temperature of sixty degrees (60 degrees) Fahrenheit.
1.6 The term "MMBtu" shall mean 1,000,000 Btu.
1.7 A "month" shall mean that period of time beginning at 7:00
a.m. Jackson, Mississippi time on the first day of a calendar month and ending
at 7:00 a.m. Jackson, Mississippi time on the first day of the following
calendar month; provided, that, the first month hereunder shall commence on the
first day of the calendar month in which the Commencement Date occurs, and the
last month hereunder shall end on the date that this Contract terminates.
General Terms - Page 1
1.8 "Point(s) of Delivery" shall mean the point or points, as
identified on Exhibit "B" of the Contract, at which gas is received by Company
for injection into storage.
1.9 "Point(s) of Redelivery" shall mean the point or points, as
identified on Exhibit "B" of the Contract, at which gas is tendered by Company
to Customer for delivery from storage.
1.10 The term "psia" shall mean pounds per square inch absolute.
1.11 The term "psig" shall mean pounds per square inch gauge.
1.12 "Storage Facilities" shall be as defined in the "WHEREAS"
clauses of the Contract.
1.13 The term "year" shall mean a period of twelve (12) consecutive
months.
ARTICLE II
QUALITY
The gas delivered by either party to the other hereunder shall meet the
quality specifications of the transporting pipeline which receives or delivers
such gas at the Point(s) of Delivery or Redelivery and shall, in addition, be of
such quality that it shall meet the following specifications, if such standards
are more stringent:
a. Be commercially free of dust, gum, gum-forming constituents,
gasoline, and other solid and/or liquid matter, including but
not limited to water, gas treating chemicals and well
completion fluids and debris, which may become separated from
the gas during transportation thereof.
b. Contain not more than one quarter (1/4) grain of hydrogen
sulphide per one hundred (100) cubic feet, as determined by
the cadmium sulfate quantitative test, nor more than nine (9)
grains of total sulfur per one hundred (100) cubic feet.
c. The gas delivered hereunder shall not contain more than
two-tenths of one percent (0.2%) by volume of oxygen, and
shall not contain more than two percent (2%) by volume of
carbon dioxide; and shall not contain more than two percent
(2%) by volume of nitrogen.
d. Have a heating value of not less than nine hundred eighty
(980) Btu's per cubic feet.
General Terms - Page 2
e. Have a temperature of not more than one hundred twenty degrees
Fahrenheit (120 degrees F), nor less than forty degrees
Fahrenheit (40 degrees F).
f. Have been dehydrated by any method other than the use of a
calcium chloride as desiccant, for removal of entrained water
in excess of seven (7) pounds of water per million (1,000,000)
cubic feet of gas.
ARTICLE III
PRESSURE
Company shall deliver gas to Customer from storage hereunder at
pressures sufficient to enter the transporting pipeline's facilities at the
Point(s) of Redelivery against the operating pressures maintained in such
pipeline from time to time, provided that Company shall not be required to
deliver gas at pressures in excess of 960 psig. Customer shall deliver gas to
Company for injection at the Point(s) of Delivery at the pressures as may be
available from time to time in the transporting pipeline's facilities at such
points, but in no event shall such pressures be less than 550 psig or greater
than Company's maximum allowable operating pressure.
ARTICLE IV
TITLE AND RISK OF LOSS
4.1 Title to the natural gas stored by Company and delivered to
Customer hereunder shall, at all times, be in Customer and, except as provided
in Section 4.2 Company makes no warranty of title whatsoever. Customer warrants
for itself, its successors and assigns, that it will have, at the time of
delivery, good title or valid right to deliver such gas for storage hereunder.
Customer warrants for itself, its successors and assigns, that the gas it
delivers hereunder shall be free and clear of all liens, encumbrances, or claims
whatsoever; and that it shall indemnify Company and save it harmless from all
claims, actions, damages, costs and expenses arising directly or indirectly from
or with respect to the title to gas tendered to Company hereunder.
4.2 Company warrants that it shall neither cause nor allow any
cloud or encumbrance of any nature to arise by, through or under Company with
respect to Customer's title to any gas tendered to Company for storage, and
agrees to redeliver such gas pursuant to this Contract free from all liens and
adverse claims arising by, through or under Company, and that it will indemnify,
defend, protect, and save Customer harmless from all claims, suits, actions,
damages, costs and expenses arising directly or indirectly from the same.
4.3 As between Customer and Company: Customer shall be in control
and possession of the gas prior to delivery to company for injection at the
Point(s) of Delivery and after redelivery by
General Terms - Page 3
company to Customer at the Point(s) of Redelivery, and, shall indemnify, defend
and hold Company harmless from any damage or injury caused thereby except for
damages and injuries caused by the negligence of Company; and, Company shall be
in control and possession of the gas after the receipt of the same for injection
at the Point(s) of Delivery and until redelivery by Company to Customer at the
Point(s) of Redelivery, and, shall indemnify, defend and hold Customer harmless
from any damage or injury caused thereby, except for damages and injuries caused
by the negligence of Customer. The risk of loss for all gas injected into,
stored in and withdrawn from the Storage Facilities shall be and remain with the
party having control and possession of the gas as herein provided.
ARTICLE V
MEASUREMENT
5.1 The unit of volume for measurement of gas delivered hereunder
shall be one (1) cubic foot of gas at a base temperature of sixty degrees
Fahrenheit (60 degrees F) and at an absolute pressure of fifteen and twenty-five
thousandths (15.025) pounds per square inch. All fundamental constants,
observations, records, and procedures involved in determining and/or verifying
the quantity and other characteristics of gas delivered hereunder shall, unless
otherwise specified herein, be in accordance with the standards prescribed in
American Gas Association ("A.G.A.") Gas Measurement Committee Report No. 3, as
now and from time to time amended or supplemented. All measurements of gas shall
be determined by calculation into terms of such unit. All quantities given
herein, unless expressly stated otherwise, are in terms of such unit.
Notwithstanding the foregoing, it is agreed that, for all purposes, the Btu
content of the gas received and delivered by Company hereunder shall be measured
on an "as delivered" basis rather than a fully saturated or "wet" basis.
5.2 Company, at its sole expense, shall install, maintain and
operate, or cause to be installed, maintained and operated, the measurement
facilities required hereunder. Said measurement facilities shall be so equipped
with orifice meters, recording gauges, or other types of meters of standard make
and design commonly acceptable in the industry, as to accomplish the accurate
measurement of gas delivered hereunder. The changing of charts, calibrating and
adjustment of meters shall be done by Company or its agent.
5.3 The accuracy of Company's measuring equipment shall be
verified by Company at least once in each thirty (30) day period. If either
party desires a special test of any measuring equipment, it will promptly notify
the other party and the parties shall then cooperate to secure a prompt
verification of the accuracy of such equipment. The expenses of any such special
test, if requested by Customer, shall be borne by Customer if the measuring
equipment tested is found to be accurate within the limit of plus or minus
General Terms - Page 4
two percent (2%) of error. For the purposes of measurement and meter
calibration, the atmospheric pressure shall be assumed to be fourteen and
seventy-three hundredths (14.73) pounds per square inch, irrespective of
variations in natural atmospheric pressure from time to time. Company and
Customer, upon request, shall have the right to be present at any test of any
measuring equipment, including any check measuring equipment installed by
Customer at its sole expense.
5.4 If, upon testing, the metering equipment is found to be
inaccurate, in the aggregate, by two percent (2%) or more, either plus or minus,
registration thereof and any payment based upon such registration shall be
corrected at the rate of such inaccuracy for any period of inaccuracy which is
definitely known or agreed upon, or if not known or agreed upon, then for a
period extending back one-half (1/2) of the time elapsed since the day of the
last calibration, not exceeding, however, forty-five (45) days. Following any
test, any metering equipment found to be inaccurate to any degree shall be
adjusted immediately to measure accurately; however, if any inaccuracy is less
than two percent (2%), all prior readings and measurements shall be deemed to
be accurate and no adjustments to any prior reading shall be made. If, for any
reason, any meter is registering inaccurately or is out of service or out of
repair so that the quantity of gas delivered through such meter cannot be
ascertained or computed from the readings thereof, the quantity of gas so
delivered during such period shall be estimated and agreed upon by the parties
hereto upon the basis of the best available data determined:
a. by using the registration of any check measuring equipment, if
installed and registering accurately, or in the absence of
(a);
b. by correcting the error if the percentage of error is
ascertainable by calibration, test, or mathematical
calculation, or in the absence of both (a) and (b);
c. by estimating the quantity of gas deliveries by deliveries
during preceding periods under similar conditions when the
meter was registering accurately.
5.5 The measurement hereunder shall be corrected for deviation
from ▇▇▇▇▇'▇ Law at the pressure and temperature under which gas is delivered
hereunder.
ARTICLE VI
▇▇▇▇▇▇▇▇ AND PAYMENTS
6.1 On or before the tenth (10th) day of each month, Company shall
render to Customer a statement for the preceding month properly identifying the
applicable Point(s) of Delivery and Point(s) of Redelivery and showing the total
quantity of gas received from and delivered to Customer hereunder, the amount
due
General Terms - Page 5
therefor, the amount of Customer's gas in storage as of the close of such month
and information sufficient to explain and support any adjustments made by
Company (in accordance with section 6.3 below) in determining the amount billed.
6.2 Customer shall pay Company the full amount reflected on the
statements rendered within fifteen (15) days of its receipt of same. If the
fifteenth (15th) day shall fall upon a weekend or legal holiday, then such
payment shall be made on the first regular business day following such fifteenth
(15th) day. In the event that Customer fails to pay such amounts when due,
interest shall accrue on all unpaid amounts from the date due until paid at a
rate of interest equal to the lesser of: (i) the rate of interest quoted as the
"prime rate" of NCNB Texas National Bank -- Dallas, Texas to its largest and
most credit-worthy commercial customers; or (ii) the highest legal rate of
interest allowed by law.
6.3 In the event an error is discovered in the amount billed in any
statement rendered by Company, such error shall be adjusted within thirty (30)
days of the discovery of the error. In the event a dispute arises as to the
amount payable in any statement rendered, Customer shall pay the amount shown
payable to Company in the statement which is not in dispute. Any overcharges
collected by Company pursuant to this section 6.3 shall be remitted to Customer,
with interest, calculated as provided in section 6.2, from the date such
overcharges are received by Company until repaid. Such payment shall not be
deemed to be a waiver of the right by Customer to recoup any overpayment. All
statements shall be considered final, and any and all objections thereto shall
be deemed waived, unless made in writing within twenty-four (24) months of
Customer's receipt thereof.
ARTICLE VII
TAXES
7.1 Subject to the provisions of Section 7.3, Customer agrees to pay to
Company, by way of reimbursement, within fifteen (15) days of receipt of an
invoice for same (pro-rated among all customers), all new taxes enacted and
levied or imposed upon Company after the Commencement Date and, any increases in
existing taxes which may be made effective after the Commencement Date, which
arise out of the gas storage services provided hereunder. In the event that any
additional taxes or increases in taxes are imposed with respect to the storage
of gas hereunder and, should Company elect not to challenge the same, then
Customer shall be subrogated to Company's rights to challenge same.
7.2 The term "taxes" as used herein, shall mean all taxes which are now
in existence or which may in the future be levied upon Company, or its
facilities or the storage of gas hereunder and arising out of the gas storage
services to be provided hereunder including, but not limited to, street and
alley rental tax, licenses, fees and any other taxes, charges or fees of any
kind
General Terms - Page 6
levied, assessed or made by any governmental authority on the act, right or
privilege of transporting, handling or delivering gas or using Company's Storage
Facilities, which is measured by the volume, heating value, value of the gas, or
any fee in respect to the gas or the storage,transportation or other handling
thereof (excluding, however, real property, ad valorem, capital stock, income or
excess profit taxes, or general franchise taxes imposed on corporations on
account of their corporate existence or on their right to do business within the
state as a foreign corporation and similar taxes).
7.3 Customer shall not be obligated to reimburse Company pursuant to
Section 7.1 in any year in an amount in excess of five percent (5%) of the
cumulative total of the monthly demand charges paid by Customer to Company in
such year. In the event that the total of the increases in taxes and additional
taxes exceed such five percent (5%) amount, then Company shall have the option
of paying the same or of seeking a determination from the appropriate regulatory
agency that such additional taxes or increases in taxes are prudent and
appropriate for inclusion in Company's rates. Subject to the following
provisions, in the event that such regulatory agency determines that such
additional and increased taxes including, without limitation, those in excess of
said five percent (5%) amount, are appropriate for inclusion, Customer shall
have the option of either paying such approved rate increases or terminating
this Contract, upon providing Company sixty days' prior written notice;
provided, however, that upon receipt of Customer's notice of termination,
Company shall have the option, without obligation, to charge Customer an
increased amount which does not exceed such five percent (5%) amount and, in
such event, Customer's notice of termination shall be of no force or effect and
this Contract shall continue in accordance with its terms. Company shall provide
Customer written notice of any such election within such sixty (60) day period.
Customer shall be given notice and shall have the right to participate in such
rate determination and oppose the appropriateness of including the additional or
increased taxes in Company's rates.
ARTICLE VIII
REGULATORY BODIES
This Contract is subject to all present and future valid laws and
lawful orders of all regulatory bodies now or hereafter having jurisdiction of
either or both the parties; and should either of the parties, by force of any
such law or regulation imposed at any time during the term of this Contract, be
rendered unable, wholly or in part, to carry out its obligations under this
Contract, other than Customer's obligation to make payments due hereunder then,
this Contract shall continue nevertheless and shall then be deemed modified to
conform with the requirements of such law or regulation. Notwithstanding the
above, this Contract shall not be deemed to be so modified if such law or
regulation substantially and materially prohibits Company from providing
services to
General Terms - Page 7
Customer hereunder substantially in accordance with the terms set forth in this
Contract and, in such event, Company and Customer shall negotiate in good faith
to amend the terms of this Contract such that such law or regulation may be
complied with and both Company and Customer will continue to receive the rights
and benefits herein provided. This Contract is expressly made subject to any and
all tariff and other filings made by Company and approved by any federal or
state regulatory body provided, that Company will not, without Customer's
consent, seek to alter the firm character of the storage services herein
provided or to reduce the term of this Contract. In the event that any
regulatory body having jurisdiction over this Contract prohibits Company from
collecting rates for the services provided hereunder which are at least equal to
the rates and charges provided for in this Contract, then Company shall have the
right to terminate this Contract. In the event that any regulatory body having
jurisdiction requires Company to collect rates for services provided hereunder
which are in excess of the rates herein provided, then Customer shall have the
right to terminate this Contract.
ARTICLE IX
FORCE MAJEURE
9.1 In the event of either party hereto being rendered unable, wholly
or in part, by force majeure to carry out its obligations under this Contract,
other than to make payments hereunder (except as provided in section 9.3 below),
the obligations of the party, as far as they are affected by such force majeure,
shall be suspended during the continuance of any inability so caused, but for no
longer period, and such cause shall as far as possible be remedied with all
reasonable dispatch. The party so affected by such event of force majeure shall
give written notice, including reasonably full particulars of such force
majeure, in writing or by telegraph to the other party as soon as possible but
in no event more than ten (10) days after the occurrence of the cause so relied
upon.
9.2 The term "force majeure" as employed herein shall mean, without
limitation, acts of God, strikes, lockouts, or other industrial disturbances,
acts of the public enemy, wars, blockades, insurrection, riots, epidemics,
landslides, lightning, earthquakes, fires, storms, floods, washouts, arrest and
restraints of governments and people, civil disturbances, explosions, breakage
and/or accidents to machinery or lines or pipe, freezing of lines of pipe,
inability to obtain or delay in obtaining rights-of-way, material, supplies,
labor or permits, or refusal by pipelines, which are transporting on Customer's
behalf, to receive or deliver gas hereunder. 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 requirements that any force
majeure shall be remedied with all reasonable dispatch shall not require the
settlement of strikes or lockouts by acceding to the demands of any opposing
party when such course is
General Terms - Page 8
inadvisable in the discretion of the party having the difficulty. Company shall
utilize all reasonable efforts to design, operate and maintain its facilities in
a manner which minimizes the potential for freezing of ▇▇▇▇▇ or lines of pipe.
9.3 In the event that Company is, due to an event of force majeure, as
herein defined, unable to provide storage services, in whole or in part, under
this Contract, then the obligation of Customer to make payment of demand charges
hereunder shall thereafter be waived or reduced proportionately until service is
again made available hereunder.
ARTICLE X
DEFAULT AND TERMINATION
10.1 If either party hereto shall fail to perform any of the covenants
or obligations imposed upon it by virtue of this Contract (except where such
failure shall be excused under any of the provisions hereof), then in such event
the other party may, at its option, terminate this Contract by proceeding as
follows: the party not in default shall cause a written notice to be served upon
the party in default, stating specifically the cause for terminating this
Contract and declaring it to be the intention of the party giving the notice to
terminate the same; whereupon, the party in default shall have thirty (30) days
after receipt of the aforesaid notice in which to remedy or remove the cause or
causes of default stated in the notice of termination. If, within said period of
thirty (30) days, the party in default does so remedy and remove said cause or
causes, and fully indemnifies the party not in default, then such notice shall
be nullified and this Contract shall continue in full force and effect. In the
event the party in default does not so remedy and remove the cause or causes of
default, or does not fully indemnify the party giving the notice for such
party's actual damages as a result of such default within said period of thirty
(30) days, then this Contract shall become null and void from and after the
expiration of said period; provided, however, that if such default be remedied
but no indemnification therefor has been made due to a bona fide dispute between
the parties as to the amount thereof, then this Contract shall not terminate,
but the party not in default shall have the right to seek recovery of its actual
damages as provided by law. Any termination for breach of this Contract shall be
carried out strictly in accordance with this section. Nothing in this Section
10.1 shall be construed to limit in any way the remedies available to either
party for breach of this Contract except for the right to terminate.
10.2 Any cancellation of this Contract pursuant to the provisions of
this Article X shall be without prejudice to the right of the party not in
default to collect any amounts then due it and without waiver of any other
remedy to which the party not in default may be entitled.
General Terms - Page 9
10.3 In the event of termination, cancellation or expiration of this
Contract and, upon such occurrence, there is gas in storage for Customer's
account, this Contract shall continue in force and effect for the sole purpose
of withdrawal and delivery of and payment for storage services for said gas for
an additional ninety (90) days.
END OF GENERAL TERMS
General Terms - Page 10
EXHIBIT "B"
TO GAS STORAGE CONTRACT BETWEEN
ENDEVCO INDUSTRIAL GAS SALES COMPANY
AND MISSISSIPPI VALLEY GAS COMPANY
DATED AUGUST 24,1990
Maximum Quantity
POINT(S) OF DELIVERY (In MMBtu's)
-------------------- ----------------
Interconnection between the Storage 5,000
Facilities and the pipeline facilities
of Transco in ▇▇▇▇▇▇▇▇▇ County,
Mississippi
Interconnection between the Storage 5,000
Facilities and the pipeline facilities
of Tennessee in ▇▇▇▇▇▇▇ County,
Mississippi
Gas may be scheduled for delivery at either or both of the Points of Delivery,
in quantities up to the maximum quantities indicated for each such point, but
the cumulative total of deliveries at both Points of Delivery shall not exceed
the MDIQ stated in the Contract, unless otherwise agreed by Company.
POINT(S) OF DELIVERY (In MMBtu's)
-------------------- ------------
Interconnection between the Storage 10,000
Facilities and the pipeline facilities
of Transco in ▇▇▇▇▇▇▇▇▇ County,
Mississippi
Interconnection between the Storage 10,000
Facilities and the pipeline facilities
of Tennessee in ▇▇▇▇▇▇▇ County,
Mississippi
Gas may be scheduled for delivery at either or both of the Points of Redelivery,
in quantities up to the maximum quantities indicated for each such point, but
the cumulative total of deliveries at both Points of Redelivery shall not exceed
the MDWQ stated in the Contract, unless otherwise agreed by Company.