Exhibit 10.14
"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 (*)."
NATURAL GAS LIQUIDS PURCHASE AGREEMENT
THIS NATURAL GAS LIQUIDS PURCHASE AGREEMENT (this "Agreement") is made
and entered into effective the 1st day of February, 2002, by and between DYNEGY
LIQUIDS MARKETING AND TRADE, a Delaware partnership with offices at ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter referred to as "Dynegy"),
and TEXACO EXPLORATION AND PRODUCTION INC. ("TEPI"), a Delaware corporation with
offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and TEXACO NATURAL GAS INC.
("TNGI"), a Delaware corporation with offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, but only to the extent TNGI continues to control the NGLs (as such
term is defined hereinafter) owned by Four Star Oil and Gas Company ("Four
Star") (TEPI and TNGI are sometimes hereinafter collectively referred to as
"Texaco").
WITNESSETH:
WHEREAS, Texaco has quantities of NGLs available for sale from certain gas
processing plants and fractionation plants that it desires to sell to Dynegy,
and Dynegy desires to purchase such NGLs from Texaco.
NOW, THEREFORE, in consideration of the premises and for the mutual benefit
of the Parties as well as for other good and valuable consideration, Dynegy and
Texaco agree as follows:
ARTICLE I
DEFINITIONS
1.1 As used in this Agreement, the following terms shall have the following
meanings:
ACCOUNTING PERIOD shall mean a period of one (1) month commencing at
12:01 a.m. local time on the first day of a calendar month and ending
at 12:01 a.m. local time on the first day of the next succeeding month.
AFFILIATE shall mean any Person that directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common
control with the Person specified. The term "control" (including the
terms "controlled by" or "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through
ownership, by contract, or otherwise. Any Person shall be deemed to be
an Affiliate of any specified Person if such Person owns 50% or more of
the voting securities of the specified Person, if the specified Person
owns 50% or more of the voting securities of such Person, or if 50% or
more of the voting securities of the specified Person and such Person
are under common control.
ALTERNATE INDEX shall have the meaning specified in Section 5.3 of this
Agreement.
BANKRUPTCY EVENT shall mean the occurrence of one or more of the
following events with respect to a Party: (A) the entry of a decree or
order for relief against a Party by a court of competent jurisdiction
in any involuntary case brought against a Party under any bankruptcy
insolvency or other similar law (collectively, "Debtor Relief Laws")
generally affecting the rights of creditors and relief of debtors now
or hereafter in effect, (B) the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator, or other similar agent
under applicable Debtor Relief Laws for a Party or for any substantial
part of its assets or property, (C) the ordering of the winding up or
liquidation of a Party's affairs, (D) the filing of a petition in any
such involuntary bankruptcy case, which petition remains undismissed
for a period of 180 days or which is not dismissed or suspended
pursuant to Section 305 of the Federal Bankruptcy Code (or any
corresponding provision of any future United States bankruptcy law),
(E) the commencement by a Party of a voluntary case under any
applicable Debtor Relief Law now or hereafter in effect, (F) the
consent by a Party to the entry of an order for relief in an
involuntary case under any such law or to the appointment of or the
taking of possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar agent under any applicable
Debtor Relief Laws for a Party or for any substantial part of its
assets or property, or (G) the making by a Party of any general
assignment for the benefit of its creditors.
BARREL shall mean forty-two (42) U.S. Gallons.
BASE RATE shall mean the lesser of (i) two percent (2%) above the per
annum rate of interest announced from time to time as the "prime rate"
for commercial loans by Bank One, Chicago, as such "prime rate" may
change from time to time, or (ii) the maximum applicable non-usurious
rate of interest.
BUSINESS DAY shall mean a day on which Federal Reserve member banks in
New York City are open for business.
COMPONENT(S) shall mean the individual hydrocarbon constituents of Raw
NGL Mix, including, but not limited to, Propane, Normal Butane,
Isobutane, Natural Gasoline and Ethane.
DAY OR DAILY (and day or daily) shall mean a twenty-four (24) hour
period commencing 12:01 a.m. local time and extending until 12:01 a.m.
local time on the following day.
DELIVERY POINT(S) shall have the meaning specified in Section 6.2 of
this Agreement.
DISPUTE NOTICE shall have the meaning specified in Section 13.2 of this
Agreement.
EFFECTIVE DATE shall mean February 1, 2002.
EPO DELIVERY POINTS shall have the meaning specified in Section 4.2.1
of this Agreement.
2
ETHANE shall mean a liquid hydrocarbon stream which meets the ethane
specifications set forth in Exhibit "A", or the ethane specifications
of the fractionator where such Fractionated NGL is produced, if
fractionated at a stand-alone fractionator.
FRACTIONATED NGLS shall mean liquid hydrocarbons fractionated from Raw
NGL Mix, including, but not limited to, Propane, Normal Butane,
Isobutane, Natural Gasoline and Ethane.
GALLON shall mean the unit of volume used for the purpose of
measurement of liquid. One (1) U.S. liquid Gallon contains two hundred
thirty-one (231) cubic inches when the liquid is at a temperature of
sixty degrees ▇▇▇▇▇▇▇▇▇▇ (▇▇ ▇▇▇. F) and at the vapor pressure of the
liquid being measured.
ISOBUTANE shall mean a liquid hydrocarbon stream which meets the
isobutane specifications set forth in Exhibit "A", or the isobutane
specifications of the fractionator where such Fractionated NGL is
produced, if fractionated at a stand-alone fractionator.
MONTH OR MONTHLY (and month or monthly) shall mean a period commencing
at 12:01 a.m. local time on the first day of a calendar month and
extending until 12:01 a.m. local time on the first day of the next
succeeding calendar month.
MIXED BUTANE shall mean a liquid hydrocarbon stream which meets the
specifications of the pipeline utilized to transport same or, if trucks
are utilized to transport such Mixed Butanes, the mixed butane
specifications set forth in Exhibit "A".
NATURAL GASOLINE shall mean a liquid hydrocarbon stream which meets the
natural gasoline specifications set forth in Exhibit "A", or the
natural gasoline specifications of the fractionator where such
Fractionated NGL is produced, if fractionated at a stand-alone
fractionator.
NETBACK PRICE shall mean the price obtained by Dynegy in an arm's
length sale of NGLs to a third Person who is not an Affiliate of
Dynegy, or in a sale under an existing TEPI or TNGI contract
administered by Dynegy as TEPI's or TNGI's agent, less Transportation
Costs and/or T&F Costs that are reasonably incurred in connection
therewith.
DYNEGY DEFICIENCY QUANTITY shall have the meaning specified in Section
14.1 of this Agreement.
NEW TAXES shall mean any Taxes enacted and effective after the
Effective Date, including that portion of any Taxes or New Taxes that
constitutes an increase either in rate or breadth of coverage.
NGL shall mean Raw NGL Mix, if delivered to Dynegy from a gas
processing plant, or Fractionated NGLs, if delivered to Dynegy from a
fractionator.
NORMAL BUTANE shall mean a liquid hydrocarbon stream which meets the
normal butane specifications set forth in Exhibit "A", or the normal
butane specifications of the
3
fractionator where such Fractionated NGL is produced, if fractionated
at a stand-alone fractionator.
OFFSPEC NGLS shall have the meaning specified in Section 7.1 of this
Agreement.
PARTY shall mean individually either Texaco or Dynegy (including their
respective successors and permitted assigns), collectively, the
"PARTIES."
PERSON shall mean any individual, corporation, partnership, limited
liability company, association, joint venture, trust, or other
organization of any nature or kind.
PROPANE shall mean a liquid hydrocarbon stream which meets the propane
specifications set forth in Exhibit "A", or the propane specifications
of the fractionator where such Fractionated NGL is produced, if
fractionated at a stand-alone fractionator.
RAW NGL MIX shall mean the mixed liquid hydrocarbon stream produced at
a gas processing plant and delivered to Dynegy at the Delivery Point at
the tailgate of said plant meeting the specifications of the pipeline
utilized to transport same or, if trucks are utilized to transport such
Raw NGL Mix, such Raw NGL Mix shall meet the demethanized raw product
specifications set forth in Exhibit "A".
TAXES shall mean any and all ad valorem, property, occupation,
severance, production, extraction, first use, conservation, Btu or
energy, gathering, transport, pipeline, utility, gross receipts, gas or
oil revenue, gas or oil import, privilege, sales, use, consumption,
excise, lease, transaction, environmental, and other taxes,
governmental charges, duties, licenses, fees, permits, and assessments.
T&F COSTS shall mean all Transportation Costs and the costs and
expenses incurred in connection with the receipt and fractionation of
NGLs received by Dynegy from Texaco or that would have been incurred if
fractionated, including any loss allowance imposed at the applicable
fractionator. Fractionation of Texaco's NGLs at any facility other
than the EPO Fractionator (as defined in Section 4.2) shall be subject
to separate negotiations, the final decision of which shall be agreed
upon by Texaco. T&F costs shall include any shrinkage and loss
allowance, if any, charged by the pipeline and/or fractionator utilized
to transport and fractionate, as applicable, Texaco's Raw NGL Mix
and/or Fractionated NGLs.
TRANSPORTATION COSTS shall mean all costs and expenses reasonably
incurred in connection with the transportation of NGL(s) hereunder,
including, without limitation, pipeline, rail car, barges, and truck
costs, NGL losses that occur during transportation for reasons other
than the negligence or willful misconduct of Dynegy and all costs and
expenses reasonably incurred in loading, unloading, transporting,
terminaling, storing (if required), and handling such NGLs. With
respect to barges, trucks and any other modes of transportation owned
by Dynegy or its Affiliates, the applicable Transportation Costs shall
not exceed the fair market value of the use of such modes of
transportation in transporting NGLs hereunder. In those situations when
it is necessary to transport NGLs
4
by truck or rail cars to a pipeline receipt point, such costs shall be
included as part of the Transportation Costs. It is understood and
agreed that Transportation Costs shall not include any portion of
Dynegy's general and administrative costs and expenses.
YEAR (and year) shall mean a period of twelve (12) consecutive months
commencing from the Effective Date.
1.2 Other Definitions. Other terms may be defined elsewhere in the text of
this Agreement and shall have the meanings indicated throughout this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Texaco hereby represents and warrants to Dynegy that on and as of the
date hereof:
(a) It has all requisite corporate power and authority to carry on
the business in which it is engaged and to perform its
respective obligations under this Agreement;
(b) The execution and delivery of this Agreement have been duly
authorized and approved by all requisite corporate action;
(c) It has all the requisite corporate power and authority to
enter into this Agreement and perform its obligations
hereunder;
(d) The execution and delivery of this Agreement does not, and
consummation of the transactions contemplated herein will not,
violate any of the material provisions of its organizational
documents, any material agreement pursuant to which Texaco or
its properties are bound or, to its knowledge, any material
laws applicable to Texaco; and
(e) This Agreement is valid, binding, and enforceable against it
in accordance with its terms, subject to bankruptcy,
moratorium, insolvency, and other laws generally affecting
creditor's rights and general principles of equity (whether
applied in a proceeding in a court of law or equity).
2.2 Dynegy hereby represents and warrants to Texaco that on and as of
the date hereof:
(a) It has all requisite power and authority to carry on the
business in which it is engaged and to perform its respective
obligations under this Agreement;
(b) The execution and delivery of this Agreement have been duly
authorized and approved by all requisite partnership action;
5
(c) It has all the requisite power and authority to enter into
this Agreement and perform its obligations hereunder;
(d) The execution and delivery of this Agreement does not, and
consummation of the transactions contemplated herein will not,
violate any of the material provisions of its organizational
documents, any material agreement pursuant to which Dynegy or
its properties are bound or, to its knowledge, any material
laws applicable to Dynegy; and
(e) This Agreement is valid, binding, and enforceable against it
in accordance with its terms, subject to bankruptcy,
moratorium, insolvency, and other laws generally affecting
creditor's rights and general principles of equity (whether
applied in a proceeding in a court of law or equity).
ARTICLE III
TERM
3.1 Unless otherwise provided herein, this Agreement shall remain in full
force and effect from February 1, 2002 through August 31, 2006 (the "Primary
Term"), and shall continue in effect from year to year thereafter unless
terminated by either Party hereto at the end of the Primary Term or any yearly
anniversary thereafter by giving the other Party at least ninety (90) days, but
not more than one hundred twenty (120) days, advance written notice of its
intention to so terminate.
3.2 Notwithstanding Section 3.1 above, this Agreement may be terminated as
follows:
(a) By the non-defaulting Party, upon thirty (30) days written
notice to the other Party, after it has been determined
through the dispute resolution procedures of Article XIII that
a Material Default has occurred in the performance of a
Party's obligations hereunder (it being understood that, for
purposes of the foregoing, "Material Default" shall mean that
the arbitrators have determined that (i) in consequence of
such default, the objectives of this Agreement are not being
met and (ii) the defaulting Party failed to take the steps
necessary to accomplish such objectives);
(b) In the event either Party is dissolved (unless the successor
to such dissolved Party or its assets is an Affiliate of
Texaco or Dynegy, Inc.);
(c) If a Bankruptcy Event occurs with respect to either Party; or
(d) By Texaco as provided in Section 11.2 of this Agreement.
3.3 Upon the termination of this Agreement, any monies due and owing either
Party shall be paid to the other Party pursuant to the terms hereof and any
refunds due either Party shall be made at the earliest possible time, and in any
event no later than sixty (60) days after the
6
expiration or termination of this Agreement. All audit rights shall survive for
the period prescribed by Section 11.6.
3.4 Termination of this Agreement hereunder shall be cumulative of any
other rights or remedies that the terminating Party may have in connection with
such termination, including, but not limited to, damages and injunctive
relief.
ARTICLE IV
QUANTITY
4.1 During the term of this Agreement, unless Dynegy is excused from
purchasing NGLs, or Texaco is excused from selling NGLs pursuant to the terms
and provisions hereof or in Exhibits "B", "C" or "D", Texaco agrees to sell
to Dynegy, and Dynegy agrees to purchase from Texaco, all of Texaco's right,
title and interest in the NGLs produced at the processing or fractionation
plants (the "Plants") listed in Exhibits "B", "C" and "D" which are attached
hereto and made a part hereof, not otherwise committed to Dynegy or any of
its Affiliates ("Texaco's NGLs"), provided, however, this Agreement shall not
be deemed a dedication of leases or properties behind such Plants and nothing
contained herein shall prevent or preclude Texaco from selling or otherwise
disposing of any interest it has in (a) the leases or properties behind such
plants or (b) the plants themselves. Notwithstanding the foregoing, any
transfers of leases and/or interest from Texaco to Chevron U.S.A. Inc. or any
of its Affiliates shall remain subject to this Agreement. It is understood
and agreed that TNGI and TEPI shall not be required to sell to Dynegy
pursuant to this Agreement any NGLs that are committed to an agreement in
effect prior to the Effective Date hereof between TNGI or TEPI and any third
party (a "Pre-existing Agreement"), it being further understood and agreed
that Dynegy will administer any such Pre-existing Agreements on behalf of
TNGI or TEPI and will be entitled to receive from TNGI a mutually agreeable
administration fee for administering each such agreement until such agreement
is either (a) terminated, or (b) assigned to Dynegy (with Dynegy's consent),
at which point the NGLs previously committed to such Pre-existing Agreement
shall be sold to Dynegy under this Agreement.
4.2 The provisions of this Section 4.2 are applicable only to Raw NGL Mix
produced at one or more of the Plants and delivered for fractionation to the
fractionator operated by Enterprise Products Operating Company ("EPO") situated
in Mont Belvieu, Texas (the "EPO Fractionator").
4.2.1 Texaco and Dynegy acknowledge that (i) the Raw NGL Mix produced at
one or more of the Plants may be dedicated and/or delivered to the EPO
Fractionator, (ii) with respect to such Raw NGL Mix fractionated at the EPO
Fractionator, Texaco will retain title to such Raw NGL Mix, cause such Raw NGL
Mix to be fractionated at the EPO Fractionator and cause the resulting
Fractionated NGLs to be delivered to Dynegy, at Dynegy's election, at the
tailgate of the EPO Fractionator, at the outlet of the storage facility utilized
in connection with the operation of the EPO Fractionator, or at any delivery
point where Texaco has the right to receive Fractionated NGLs from the EPO
Fractionator (the "EPO Delivery Points"), and (iii) for product distribution
purposes, Texaco will designate Dynegy to act as Texaco's agent under the
agreement governing the fractionation of Texaco's Raw NGL Mix at the EPO
Fractionator
7
pursuant to a mutually agreeable agency agreement. Such agency agreement will
grant to Dynegy the broadest authority that Texaco can grant related to the
distribution of Fractionated NGLs. As agent, Dynegy will be required to use the
same care in acting on Texaco's behalf that Dynegy would use in conducting its
own commercial activities. Until such time as (y) the agency agreement
referenced in (iii) above is entered into and (z) the operator of the EPO
Fractionator acknowledges Dynegy's rights under such agency agreement, Texaco
will continue to perform scheduling and logistic functions associated with the
Raw NGL Mix fractionated at the EPO Fractionator and will sell to Dynegy the
Fractionated NGLs produced from Texaco's Raw NGL Mix at the EPO Delivery Points.
During this time period, Texaco will provide full time day-to-day distribution
assistance to Dynegy sufficient to insure Dynegy's ability to effectively market
the Fractionated NGLs and maximize the distribution options in a manner
consistent with industry trading practices in Mont Belvieu, Texas.
4.2.2 Until such time as the agency agreement referenced in Section 4.2.3
below is fully effective, in order to determine the volumes of NGLs sold to
Dynegy each month, on or prior to the 25th day of the month during the month
NGLs are to be delivered to Dynegy hereunder (the "Month of Nomination"), Texaco
shall nominate in writing or by e-mail to Dynegy the total volumes of each
Fractionated NGL Texaco expects to deliver to Dynegy at the EPO Delivery Points
during such month (the "Nominated Volumes"). If the 25th day of the month falls
on a day that is not a Business Day, such nominations shall be made on the
immediately preceding Business Day prior to such non-Business Day. If the actual
volumes of Fractionated NGLs delivered to Dynegy during a particular Month of
Nomination are more or less than the Nominated Volumes applicable for such Month
of Nomination, the volumes in excess of, or less than, the Nominated Volumes
will be sold to or purchased from Dynegy in a balancing transaction, based on
the applicable price during the month immediately following the Month of
Nomination.
4.2.3 If, upon the sale of Texaco's interest in the EPO Fractionator,
Texaco is able to make Dynegy its agent under the new agreement governing the
fractionation of Texaco's Raw NGL Mix and the delivery of the Fractionated NGLs
resulting therefrom, Dynegy and Texaco will enter into a mutually acceptable
agency agreement pursuant to which Dynegy will be responsible for coordinating
all movements of Raw NGL Mix from the field plant locations through the
appropriate pipelines and gathering systems and scheduling the Raw NGL Mix to
the EPO Fractionator. Dynegy will also be responsible for arranging with the
operator of the EPO Fractionator for Dynegy to take title to, and custody of,
the Fractionated NGLs downstream of the fractionator, at which point Dynegy will
purchase the Finished Product from Texaco as provided above. As agent, Dynegy
will be required to use the same care in acting on Texaco's behalf that Dynegy
would use in conducting its own commercial activities. Dynegy will not receive
any additional payment for these agency services beyond those fees set forth in
this Agreement.
4.2.4 Notwithstanding anything in this Agreement to the contrary, it is
understood and agreed that the quantity of NGLs fractionated in the EPO
Fractionator and purchased each month by Dynegy from Texaco pursuant to this
Agreement will be the Fractionated NGLs available for sale at the tailgate of
the EPO Fractionator. It is further understood and agreed that Dynegy shall not
be responsible for any prior month adjustments to Texaco's allocated volumes of
Raw NGL
8
'Confidential Treatment Requested'
Mix and/or Fractionated NGLs due to plant reallocations, true-ups or for any
other reasons outside of Dynegy's control. Each Party shall notify the other
Party immediately of any such adjustments and the Parties will take appropriate
actions to verify the accuracy thereof and contest any adjustments that do not
appear to be justified.
4.3 Texaco and Dynegy acknowledge that the marketing of Texaco's Raw NGL
Mix and Fractionated NGLs by Dynegy is mutually beneficial to both parties.
Accordingly, Texaco and Dynegy agree that, if in the future Texaco has
uncommitted Raw NGL Mix and/or Fractionated NGLs not otherwise subject to this
Agreement available for sale, Texaco and Dynegy will endeavor in good faith
determine the appropriate exhibit and/or pricing basis for such uncommitted Raw
NGL Mix and/or Fractionated NGLs and, if an agreement is reached, shall amend
this Agreement accordingly.
4.4 The Parties shall use every reasonable effort to deliver and receive,
as applicable, NGLs on a ratable daily basis.
ARTICLE V
PRICE
5.1 Except as otherwise provided herein, Dynegy shall pay TEPI for the NGLs
purchased from TEPI hereunder as follows:
(a) For the volumes of NGLs produced at the Plants listed in
Exhibit "B", and delivered to Dynegy at the applicable
Delivery Point at (i) the tailgate of such Plants for
subsequent transportation by pipeline or for exchange to Mont
Belvieu, Texas, or (ii) at the EPO Delivery Points, a price
* equal to the [REDACTED] as quoted by the Oil Price
Information Service ("OPIS") for Mont Belvieu, Texas
(Non-TET) for the month in which NGLs are delivered to
Dynegy, less (1) applicable T&F Costs and distribution fees
charged by the fractionator and/or storage operator
("Distribution Fees"), unless Fractionated NGLs are
delivered to Dynegy at the EPO Delivery Points, in which
case the T&F Costs and Distribution Fees will be paid
* directly by TEPI, and (2) an administration fee of [REDACTED]
per gallon. Notwithstanding the foregoing, (y) Ethane shall
* be priced based on the [REDACTED] as quoted by OPIS
(Non-TET) at Mont Belvieu, Texas, when the Raw NGL Mix
produced at the Plants is fractionated at the EPO
Fractionator, but otherwise shall be priced based on
* [REDACTED] as quoted by OPIS (Non-TET) at Mont Belvieu, if,
for any reason, the Raw NGL Mix is fractionated at Cedar
Bayou Fractionators in Mont Belvieu, Texas, and (z) Propane
* shall be priced based on [REDACTED] as quoted by OPIS at
Mont Belvieu (TET), unless such Propane can not be delivered
into TET for any reason outside of Dynegy's control, in
which event, such Propane shall be priced based on the
* [REDACTED] as quoted by OPIS at Mont Belvieu, Texas
(Non-TET). Dynegy agrees to notify TEPI as soon as reasonably
9
'Confidential Treatment Requested'
possible whenever Propane can not be delivered into TET for
any reason outside of Dynegy's control.
(b) For the volumes of NGLs produced and delivered to Dynegy at
the tailgate of the Maysville or ▇▇▇▇▇▇▇ Draw Plants, and
immediately resold into a local market, the price shall be
* [REDACTED] of the Netback Price. Dynegy shall not make local
sales from any of the Plants listed in Exhibit "B" other
than the Maysville and ▇▇▇▇▇▇▇ Draw Plants, or substantially
increase the percentage of available NGLs sold into local
markets from the Maysville or ▇▇▇▇▇▇▇ Draw Plants, unless
Dynegy in good faith expects such sales to produce a better
economic result for TEPI, after all associated costs and
fees paid to Dynegy, than the Mont Belvieu alternative and
TEPI has given its written consent to such additional local
market sales as hereinafter provided. If Dynegy becomes
aware of an opportunity to make local sales of NGLs from the
Plants listed on Exhibit "B" other than the Maysville and
▇▇▇▇▇▇▇ Draw Plants, or to increase local sales from the
Maysville or ▇▇▇▇▇▇▇ Draw Plants, at a price expected to
produce more net revenue for TEPI than the price referenced
in Section 5.1(a), Dynegy shall advise TEPI of such
opportunity and TEPI shall determine whether its other
contractual commitments and other considerations permit it
to take advantage of the local market opportunity. As to any
such additional local market sales entered into by Dynegy
with TEPI's written consent, the price payable to TEPI
* hereunder shall be [REDACTED] of the Netback Price. In the
event actual experience over any twelve month period
beginning after the Effective Date shows that such local
sales from any Plant listed on Exhibit "B" do not produce
better economic results for TEPI, TEPI may revoke or reduce
the local sale authority previously granted for any Plant
with a Mont Belvieu sale option; provided that any existing
third party commitments made by Dynegy may be honored during
their remaining term. Should TEPI exercise its option to
require such a reduction, during the Primary Term of this
Agreement, in local sales volume from the Maysville or
▇▇▇▇▇▇▇ Draw Plants below the Historical Annual Gallons
stipulated in the table below, Dynegy will be compensated by
TEPI for the resulting reduction in Dynegy's expected
revenues, according to the following formula:
* [REDACTED]
Where:
AP = the payment due to Dynegy for the 12-month period
following any revocation of local sales authority by TEPI
HAG = Historical Annual Gallons of local sales from Maysville
and ▇▇▇▇▇▇▇ Draw, which for purposes of this formula are
stipulated to be as follows:
PLANT PRODUCT HISTORICAL ANNUAL
GALLONS
-----------------------------------------------------------------------------------------------------
10
'Confidential Treatment Requested'
-----------------------------------------------------------------------------------------------------
* Maysville Isobutane [REDACTED]
-----------------------------------------------------------------------------------------------------
* Maysville Normal Butane [REDACTED]
-----------------------------------------------------------------------------------------------------
* Maysville Field Grade Butane [REDACTED]
-----------------------------------------------------------------------------------------------------
* Maysville Natural Gasoline [REDACTED]
-----------------------------------------------------------------------------------------------------
* Maysville Propane [REDACTED]
-----------------------------------------------------------------------------------------------------
* ▇▇▇▇▇▇▇ Draw Natural Gasoline [REDACTED]
-----------------------------------------------------------------------------------------------------
* ▇▇▇▇▇▇▇ Draw Propane [REDACTED]
-----------------------------------------------------------------------------------------------------
NAG = the gallons of each NGL product anticipated to be sold
in the local market during the immediately succeeding twelve
month period as a result of and in accordance with TEPI's
revocation or reduction of local sales authority, which shall
be calculated by subtracting from the total gallons of each
NGL product sold in the local market during the immediately
preceding twelve month period, the volumes of each NGL product
affected by TEPI's reduction and/or revocation of local sales
authority. If all of the volumes of a particular NGL product
are affected by such reduction or revocation, the volumes so
affected shall be based on the gallons of such NGL product
sold in the local market during the immediately preceding
twelve month period.
APG = Assumed Price per Gallon, which for purposes of this
formula is stipulated to be as follows:
PRODUCT ASSUMED PRICE PER GALLON
-----------------------------------------------------------------------------------------------------
* Isobutane [REDACTED]
-----------------------------------------------------------------------------------------------------
* Normal Butane [REDACTED]
-----------------------------------------------------------------------------------------------------
* Field Grade Butane [REDACTED]
-----------------------------------------------------------------------------------------------------
* Natural Gasoline [REDACTED]
-----------------------------------------------------------------------------------------------------
* Propane [REDACTED]
-----------------------------------------------------------------------------------------------------
As soon as possible after the end of any twelve month period
following an election by TEPI to require a reduction in local
sales volumes from the referenced Plants, Dynegy shall invoice
TEPI for any compensatory payment due to Dynegy under this
Section, and payment shall be made by TEPI, subject to Section
11.3 hereof, within 30 days after receipt of Dynegy's invoice.
Dynegy may continue to calculate and invoice TEPI for such
compensatory payments on an annual basis during the Primary
Term of this Agreement unless TEPI subsequently authorizes
local sales from such Plants at a level at least as high as
the Historical Monthly Gallons stipulated above. Any payments
calculated under this formula shall be prorated for any
calculation period that includes less than twelve months due
to the expiration of the Primary Term.
(c) For any volumes of NGLs delivered to Dynegy at the applicable
Delivery Point at the tailgate of the Plants listed in Exhibit
* "C", [REDACTED] of (i) the Netback Price, if such NGLs are
immediately sold by Dynegy into a local market, or (ii) a
* price equal to [REDACTED] as quoted by OPIS for
11
'Confidential Treatment Requested'
Mont Belvieu, Texas (Non-TET), less T&F Costs to and at Mont
* Belvieu, Texas, less an administrative fee of [REDACTED] per
Gallon, if such Raw NGL Mix or Fractionated NGLs are stored
by Dynegy for its own account during the applicable delivery
month. Dynegy shall use every reasonable effort to obtain
the highest Netback Price for any NGLs sold at a Netback
Price.
(d) For any exchanges of Raw NGL Mix, the Price will be determined
based on the location where Dynegy receives Fractionated NGLs,
less all applicable T&F costs, less any exchange fees paid by
Dynegy, plus any exchange fees received by Dynegy, less
* an administrative fee of [REDACTED] per Gallon.
(e) TEPI shall remain responsible for any exchange and/or delivery
imbalances until such time as the TEPI exchange agreements are
assigned to Dynegy, and subsequent to such assignment, Dynegy
shall be responsible for all exchange and/or delivery
imbalances accruing subsequent to the assignment.
5.2 Except as otherwise provided herein, Dynegy shall pay TNGI for NGLs
produced by Four Star and delivered to Dynegy under this Agreement a price as
set forth on Exhibit "D".
5.3 With respect to the Raw NGL Mix delivered by or on behalf of Texaco to
Dynegy, the prices set forth in Sections 5.1 or 5.2 above shall be based on the
Components contained in the Raw NGL Mix delivered to Dynegy at the tailgate of
the applicable processing Plant, less applicable T&F costs and other fees as
set forth in Section 5.1 above.
5.4 If for any reason the OPIS index for a particular NGL should cease to
be published, the Parties shall promptly and in good faith endeavor to negotiate
a mutually satisfactory Alternate Index or substitute methodology for
calculating the price for such NGL (the "Alternate Index"). If, on or before
thirty (30) days after the index used to determine the price ceases to be
published, the Parties are unable to agree on an Alternate Index upon which to
base the calculation of the price, the Parties shall submit such determination
to dispute resolution in accordance with the provisions of Article XIII of this
Agreement, which arbitration procedure will determine the Alternate Index. From
the date on which the index price used to determine the price for a particular
NGL ceases to be available until the Alternate Index is determined, the price
for such NGL shall be the average of the prices in effect (or that would have
been in effect) during the twelve (12) months preceding the month in which the
index upon which the price was based ceased to be available, which price shall
be effective until the effective date of the Alternate Index determined as set
forth in this Section 5.3. Upon the determination of an Alternate Index, the
price will be adjusted retroactively to the date on which the index upon which
the price previously was based ceased to be available, plus interest thereon at
the Base Rate.
5.5 In the event conditions change such that this Agreement causes, or
could reasonably be expected to cause, a material long term economic or
operational hardship to either Party, upon the written request of either Party,
Texaco and Dynegy shall meet to renegotiate in good faith such burdensome terms
and provisions so as to make them fair and equitable. Such renegotiations shall
occur within thirty (30) days of the date of the non-requesting Party's receipt
12
of such written request for such renegotiations. If the Parties are unable to
agree on new provisions to replace such burdensome terms and provisions within
ninety (90) days of the nonrequesting Party's receipt of such written request,
the matter shall be submitted to the dispute resolution procedures set forth in
Article XIII hereof. It is understood and agreed that the rights granted in this
Section 5.5 can only be used by a Party to commence good faith renegotiations
once during each year during the term hereof. If new or revised provisions are
agreed upon under this Section 5.5, whether by renegotiation, arbitration, or
otherwise, such new or revised provisions shall be effective as of, and shall,
if necessary, be made retroactive to, the date on which the notice commencing
renegotiations under this Section 5.5 was given. In the event such new or
revised provisions are determined to be effective retroactively and result in
money owing from one Party to the other, such amount owing shall bear interest
at the Base Rate.
ARTICLE VI
DELIVERIES
6.1 The NGLs to be sold by Texaco hereunder shall be delivered by Texaco
(or at Texaco's direction) to Dynegy or to Dynegy's designated representative
for the account of Dynegy, at the Delivery Points (as defined in Section 6.2).
6.2 The point(s) of delivery for NGLs sold and delivered hereunder
(hereinafter the "Delivery Point(s)") shall be determined as follows:
(a) In the event delivery is to be to or from a pipeline, the
Delivery Point shall be located, and delivery of NGLs shall be
deemed to occur, at the point at which such NGLs pass the
pipeline meter. If pipeline delivery is by in-line inventory
transfer, delivery shall be deemed to occur on the date and
time that the relevant pipeline carrier advises Texaco and
Dynegy, by product transfer order, book transfer, or letter of
transfer, that NGLs have been transferred to Dynegy's account,
and the Delivery Point shall be the location of the NGLs in
the pipeline of the pipeline carrier on the day and time that
such in-line transfer of NGLs is deemed to occur. The Parties
hereto understand and agree that Dynegy has no control over
the operations of the pipeline carrier and therefore cannot
control when NGLs are transferred to Dynegy's account by the
pipeline carrier, or if such a transfer will, in fact, occur.
(b) In the event delivery is to be by or into a rail car, truck,
or barge owned, operated, leased, or hired by Dynegy, the
Delivery Point shall be located, and delivery of NGLs shall be
deemed to occur, at the point at which the NGLs pass from the
flange connecting the loading facility to Dynegy's owned,
operated, leased, or hired rail car, truck, or barge whether
said rail car, truck, or barge is loaded by Texaco or Dynegy
directly or on behalf of Texaco or Dynegy through Texaco's or
Dynegy's agent.
(c) Consistent with contractual commitments that now exist or may
be made in the future by Texaco, the Delivery Point for all
NGLs attributable to the Plants listed on Exhibit "B" shall be
the EPO Delivery Points, except where (i) certain NGLs
13
were committed to other contracts or locations by Texaco prior
to the Effective Date, (ii) local sales from such Plants are
specifically authorized on Exhibit "B", or (iii) Texaco, after
the Effective Date, consents in writing to alternate
arrangements for such NGLs
6.3 Title to and risk of loss (other than those losses described in Section
6.4 (f) of this Agreement) associated with the NGLs delivered hereunder shall
pass from Texaco to Dynegy upon the commencement of the delivery of such NGLs at
the Delivery Points. Nothing contained in this Section 6.3 shall in any way
affect Dynegy's rights as set forth in Article VII or Texaco's indemnity set
forth in Section 7.2 of this Agreement. Except as otherwise provided in Section
7.2 of this Agreement, Dynegy shall indemnify and save Texaco harmless against
any claims for damages and losses arising from injuries to persons or property
attributable to the NGLs delivered hereunder after delivery thereof has been
made to Dynegy; conversely, Texaco shall indemnify and hold Dynegy harmless
against any claims for damages and losses arising from injuries to persons or
property attributable to the NGLs prior to delivery. In addition, each of the
Parties (Dynegy and Texaco) hereto shall indemnify and hold the other harmless
from any losses and damages arising out of the operations conducted hereunder by
such indemnifying Party to the extent resulting from the negligent acts or
willful misconduct of such indemnifying Party, its agents or its employees.
6.4 The following rules shall be applicable to the transportation and
loading of NGLs at the Delivery Point(s) situated at facilities neither owned
nor operated by Dynegy:
(a) The loading of NGLs at the applicable Delivery Point(s) shall
be performed in accordance with schedules mutually agreed to
by the Parties.
(b) If rail cars subject to payment of demurrage or any other
similar charges to a third Person not affiliated with either
Party are used to transport NGLs from the Delivery Point, the
Party responsible for loading such cars agrees to load or
cause to be loaded and start the relevant cars on the return
trip in accordance with the detention policy of the owner or
operator of such rail car equipment and such Party further
agrees to pay any and all such charges that may be due
thereunder.
(c) Texaco shall be liable for the payment of invoices from the
railroad for demurrage and hazardous materials storage charges
incurred by Dynegy as the prepaid shipper due to Texaco's
inability to receive a rail car and/or have a rail car placed
on Texaco's siding, unless such charges are incurred as a
result of Dynegy's negligence.
(d) If Dynegy's owned or leased trucks are used to transport NGLs
from the Delivery Point, Texaco agrees to load such trucks
upon arrival at the Delivery Point, and Texaco's failure to do
so in a timely manner shall render Texaco liable to Dynegy for
any actual damages incurred as a result of such delay.
Notwithstanding the foregoing, Texaco shall have the right
to refuse to load any truck that fails to meet Department of
Transportation or other applicable laws, rules, regulations or
standards.
14
(e) For NGLs purchased hereunder (other than in the situation when
a Netback Price is paid which will be based on actual volumes
sold), Texaco will be liable for all tank car shortages
claimed by Dynegy in excess of one percent (1%) of the net
Gallons reflected on the ▇▇▇▇ of lading and acknowledged by
the railroad agent's signature prior to unloading; provided,
however, that such shortages, if any, are reported in writing
to Texaco within seventy two (72) hours after delivery by the
carrier and prior to the unloading of the shipment in which
the relevant shortage occurs. Dynegy shall ask Texaco for
permission to unload, and Texaco, at its expense, shall have
the right to inspect each car at its destination within forty
eight (48) hours after receipt of written notice of such
shortage. All demurrage charges arising from the failure of
Texaco to release the car for unloading within such
forty-eight (48) hour period shall be paid by Texaco.
Similarly, Texaco shall be liable for all truck shortages
claimed by Dynegy in excess of three percent (3%) of the net
Gallons reflected on the ▇▇▇▇ of lading; provided, however,
that such shortages, if any, are noted on the delivery ticket
and acknowledged by the truck driver's signature prior to
unloading. The failure of Dynegy to observe this provision or
any action by Dynegy which impedes identification of an
alleged defect shall operate as a waiver of Dynegy's rights to
make any such claim.
6.5 Notwithstanding anything contained herein to the contrary, Texaco shall
be allowed to consolidate its deliveries of NGLs behind one or more Delivery
Points so long as (i) sufficient notice is provided Dynegy and (ii) such
consolidation does not result in an economic or operational hardship on Dynegy.
ARTICLE VII
QUALITY
7.1 All NGLs sold by Texaco and purchased by Dynegy hereunder shall meet
the applicable specifications as referenced in the definitions in Article I of
this Agreement of each type of NGL and shall not contain any contaminates or
other deleterious substances. Except as otherwise provided in Section 7.2,
Dynegy shall have the right to reject any NGLs which fail to meet such quality
specifications ("Offspec NGL"). All costs associated with the return, disposal
and/or treatment of Offspec NGL shall be borne by Texaco.
7.2 Should the NGLs delivered hereunder to Dynegy, or to Dynegy's
designated representative for the account of Dynegy, fail at any time to conform
to the applicable specifications, either Party shall notify the other Party of
any such failure, and Texaco immediately shall undertake and diligently pursue
such acts as may be necessary to correct such failure so as to deliver NGLs
conforming to such specifications; but nothing contained in this Article VII
shall be construed to limit Dynegy's right, at any time and from time to time,
to reject any NGL not conforming to said specifications and to refuse or suspend
receipt until it is established to Dynegy's reasonable satisfaction that
subsequent deliveries of NGLs will conform to said specifications.
Notwithstanding the foregoing, Dynegy shall not have the right to reject (a)
Offspec NGLs produced at and delivered from a processing or fractionation plant
operated by Dynegy, unless caused by Texaco's negligence, or (b) Offspec NGLs
that can be sold by Dynegy
15
in the normal course of business under terms that do not result in adverse
economic consequences to Dynegy. The term of this Agreement shall not be
extended by the length of time of any period or periods when deliveries have
been rejected, refused, or suspended as provided for herein. The knowing
acceptance by Dynegy of Offspec NGL shall constitute a waiver by Dynegy of any
and all other rights and remedies available to Dynegy under this Agreement or
otherwise with respect to Texaco's tender of such Offspec NGL, and all risk of
loss, damage or liability arising out of Dynegy's ownership, control,
possession, or use of such Offspec NGLs shall pass to and be borne by Dynegy. If
it is subsequently determined that Dynegy unknowingly accepted Offspec NGLs, the
Parties will mutually agree upon a discounted price for such Offspec NGLs to
reflect their diminution in value, if any, from NGLs meeting the specifications
hereof. If the Parties are unable to agree on a mutually acceptable discount
price for such Offspec NGLs, the matter shall be subjected to the dispute
resolution procedures set forth in Article XIII hereof Texaco agrees to
INDEMNIFY and HOLD HARMLESS Dynegy, its Affiliates, and their respective
officers, directors, employees, agents, and contractors, from all actual losses,
costs, expenses, claims (including, without limitation, personal injury or
property damage claims), damages, and causes of action, including, without
limitation, reasonable attorneys' fees and costs of court (collectively, the
"Losses") incurred by Dynegy, such Persons, or such Affiliates arising out of,
or in any way associated with, the delivery to Dynegy of NGLs that fail to meet
the applicable specifications and which are unknowingly accepted by Dynegy.
Notwithstanding the foregoing, Dynegy shall not be entitled to a discounted
price for (a) any Offspec NGLs produced at and delivered from a processing or
fractionation plant owned and/or operated by Dynegy if, immediately prior to the
Effective Date of this Agreement, such Dynegy owned or operated plant was
producing, or if not then producing, was capable of producing, NGLs that meet
the applicable specifications, unless caused by Texaco's negligence, or (b)
Offspec NGLs that can be sold by Dynegy in the normal course of business under
terms that do not result in adverse economic consequences to Dynegy.
7.3 From time to time during the term hereof, Dynegy may request Texaco to
provide certain NGLs that exceed the normal specifications as set forth in
Exhibit "A" ("Purity NGLs"). The Parties acknowledge that providing such Purity
NGLs may be to the mutual benefit of both Parties and that neither Party should
suffer an economic loss as a result thereof.
ARTICLE VIII
WARRANTY OF TITLE
8.1 Texaco warrants title to all NGLs sold and delivered by it to Dynegy,
and further warrants that Texaco has the right to sell such NGLs and that such
NGLs are free from all liens, mortgages, security interests, encumbrances and
adverse claims or other charges. Texaco shall be responsible for paying all
royalties, production payments, payments to other working interest owners,
overriding royalties, taxes, license fees or other charges on the NGLs (other
than taxes, license fees or other charges applicable to Dynegy's share of the
NGLs) and Texaco agrees to and does hereby indemnify and save Dynegy (including
its directors, officers, employees, agents, representatives, affiliates and
subsidiaries) harmless from and against any and all claims, suits, causes of
action, debts, accounts, damages, losses, costs and expenses (including
reasonable attorney's fees) arising out of or in any way connected with (i) any
adverse title and/or warranty claims to the NGLs, or (ii) the payment of
royalties, overriding royalties, production payments
16
and payments to other working interest owners, if any. THERE ARE, HOWEVER, NO
OTHER WARRANTIES OF ANY KIND WHATSOEVER, EITHER EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE,
MERCHANTABILITY, CONFORMITY TO MODELS OR SAMPLES, OR OTHERWISE, AND ALL SUCH
WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED BY Texaco AND EXCLUDED FROM THIS
AGREEMENT.
ARTICLE IX
TAXES
9.1 Texaco shall be liable for and shall pay, or cause to be paid, or
reimburse Dynegy, if Dynegy has paid, all Taxes applicable to the processing of
gas and the recovery of the NGLs sold hereunder upstream of the Delivery
Point(s). If Dynegy is required to remit such Tax, the amount thereof shall be
deducted from any sums becoming due to Texaco hereunder and shall be itemized on
the statement provided by Dynegy in accordance with Section 11.1. Dynegy shall
be liable for and shall pay, cause to be paid, or reimburse Texaco, if Texaco
has paid, all Taxes applicable to the sale and/or delivery of NGLs hereunder at
and downstream of the Delivery Point(s) including any Taxes imposed or collected
by a taxing authority with jurisdiction over Dynegy, provided, however, when
laws, ordinances or regulations permit or impose upon Texaco the obligation to
collect or pay Taxes applicable to the sale and/or delivery of NGL hereunder at
the Delivery Point, Texaco shall collect all such Taxes from Dynegy, which shall
be in addition to the applicable Price, and remit the same to the appropriate
governmental authority, unless Dynegy furnishes a certificate of exemption.
TEXACO SHALL INDEMNIFY, DEFEND, AND HOLD DYNEGY HARMLESS FROM AND AGAINST ANY
LIABILITY WITH RESPECT TO THE TAXES FOR WHICH TEXACO IS LIABLE AND DYNEGY SHALL
INDEMNIFY, DEFEND, AND HOLD TEXACO HARMLESS FROM AND AGAINST ANY LIABILITY WITH
RESPECT TO THE TAXES FOR WHICH DYNEGY IS LIABLE.
9.2 Each Party will notify the other of the enactment of any New Taxes as
promptly as practical after it obtains knowledge thereof. It is understood and
agreed that the enactment of any material New Taxes shall constitute a hardship
under the provisions of Section 5.4 above.
9.3 To claim an exemption from payment of a Tax, a Party shall provide a
certificate of exemption or other reasonably satisfactory evidence of exemption
from any Tax, and each Party agrees to cooperate with the other Party in
obtaining any such exemption. In addition, Dynegy has provided Texaco with, and
Texaco acknowledges receipt of, the disclosure statement from Dynegy (as set
forth in Section 4101 of the Internal Revenue Code of 1986).
ARTICLE X
MEASUREMENT AND ANALYSES
10.1 On all deliveries into or out of rail cars, the quantity shall be
determined by official tank car capacity tables or slip tube gauges in
accordance with GAS PROCESSORS ASSOCIATION ("GPA") PUBLICATION 8162, latest
revision. On all deliveries into or out of truck equipment, quantities shall be
determined by meter, rotary gauge, weighing, or other measuring
17
devices that meet industry standards, in accordance with GPA PUBLICATIONS
8162 AND 8186, latest revision. On all deliveries into or out of pipelines,
quantities shall be determined by pipeline meter in accordance with the
American Petroleum Institute ("API") Manual of Petroleum Measurement
Standards. For raw make mixtures, volumes of the Components shall be
determined (where practical) on a mass (pound) measurement basis in
accordance with the latest edition of GPA PUBLICATIONS 8173 AND 8182. On all
deliveries into or out of shore tanks, quantities shall be determined either
by meter or gauge from a static tank in accordance with the API Manual of
Petroleum Measurement Standards and based upon the practice of the relevant
terminal. All quantities shall be corrected to standard conditions of sixty
degrees ▇▇▇▇▇▇▇▇▇▇ (▇▇ ▇▇▇. F) and equilibrium vapor pressure in accordance
with the API Manual of Petroleum Measurement Standards, Chapter 14, Section
B. The quantity and quality of NGLs covered by this Agreement shall be
measured according to the current versions of the applicable standards of API
and the American Society for Testing Materials, if available. Each Party
shall be entitled to have its representatives present during all loadings,
unloadings, tests, and measurements involving NGLs delivered hereunder. If
the Parties cannot agree on measurement or quality tests results, the
measurements and quality tests required to determine the volume of receipts
or shipments or the conformity of the NGLs delivered to the specifications
set forth herein shall be made by an independent inspector selected jointly
by the Parties, the cost of which shall be shared equally by the Parties.
ARTICLE XI
BILLING AND PAYMENT
11.1 By not later than thirty (30) days following the month NGLs are
produced in a gas processing or fractionation plant operated by Dynegy or
fifteen (15) Business Days after Dynegy's receipt of the Operator's Statement or
other applicable statements covering delivery of the NGLs to Dynegy at the
Delivery Points, setting forth the required actual (as opposed to estimated)
volume information, or ten (10) days following the end of the month in which
NGLs are sold in the situation where a Netback Price is applicable, Dynegy shall
provide Texaco with a statement setting forth the volumes of NGLs received, the
price or Netback Price, as applicable, of such NGLs, the amount due Texaco for
such NGLs, and such other information and detail as may be mutually agreeable to
the Parties, along with payment for such NGLs, which shall be remitted by wire
transfer of funds into an account designated by Texaco. If the day on which any
payment is due is not a Business Day, then the relevant payment shall be due
upon the immediately preceding Business Day, except if such payment due date is
a Sunday or Monday, then the relevant payment shall be due upon the immediately
succeeding Business Day. Dynegy's statements rendered hereunder shall itemize
separately the NGLs owned by Four Star, controlled by TNGI, and sold under this
Agreement. TNGI shall provide to Dynegy, on a timely basis, such information as
may be necessary to facilitate preparation of such itemized statements.
11.2 If either Party should fail to remit any amounts in full when due as
required hereunder, or if any adjustments are made under this Agreement,
including, without limitation, adjustments as the result of the conclusion of
any audits or as a result of the resolution of a billing dispute, interest on
the unpaid portion shall accrue from the date upon which such payment should
have been made hereunder until paid in full at the Base Rate. All such accrued
interest shall be added to the amount reflected as being owed hereunder by
either Dynegy or
18
Texaco, as the case may be, on the next invoice or by separate invoice. In
addition, if Dynegy falls to pay any amount due, as reflected in Dynegy's
statement, within ten (10) days after the due date, or if Dynegy fails to
provide a statement as required by Section 11. 1 above, Texaco shall have the
right, upon written notice to Dynegy, to (i) immediately suspend any further
deliveries of NGLs until such statement has been provided and all amounts due,
including interest at the Base Rate, have been paid, and (ii) to provide notice
to Dynegy that this Agreement shall terminate if such statement is not provided
and the payment default has not been cured within sixty (60) days after the date
such written notice is received by Dynegy.
11.3 If a good faith dispute arises as to the amount payable in any
statement, the amount not in dispute shall be paid. If either Party elects to
withhold any payment otherwise due as a consequence of the good faith dispute,
the withholding Party shall provide the other Party with written notice of its
reasons for withholding payment, and shall simultaneously place the disputed
amount into an escrow account at a mutually acceptable commercial bank, pending
resolution of the dispute. Any such dispute shall be resolved in accordance with
the dispute resolution procedures of Article XIII. The performance of both
Parties under this Agreement shall continue pending the outcome of such
procedures. If it is subsequently determined, whether by mutual agreement of the
Parties or otherwise, that the withholding Party is required to pay all or any
portion of the disputed amounts to the other Party, the withholding Party, in
addition to paying over such amounts, shall also pay interest accrued on such
amounts from the original due date through the date actually paid, at the Base
Rate.
11.4 No retroactive adjustments may be made for any overcharge or
undercharge after a period ending twenty-four (24) months from the end of the
month in which the NGL invoice or statement forming the basis of the overcharge
or undercharge was delivered or not delivered, as the case may be, unless a
claim for such adjustment shall have been presented prior to the end of such
period. Any payment with respect to a retroactive adjustment shall include an
amount equal to interest on all amounts past due from the original due date
through the date actually paid at the Base Rate, except in instances where
neither Party knew that the overcharge or undercharge occurred, in which case
interest shall run from the date of demand for payment.
11.5 Either Party, upon notice in writing to the other, shall have the
right at reasonable' hours to audit the accounts and records of the other Party,
and any relevant records of third parties as to which a Party hereto has the
right to grant access, relating to the accounting or billing under the
provisions of any article hereof; provided, however, that the auditing Party
must take written exception to and make claim upon the other Party for all
discrepancies disclosed by said audit within twenty-four (24) months of the
rendition of any statement or invoice forming the basis of such claim. Such
audit shall be conducted by the auditing Party's representative or auditor at
the auditing Party's expense.
11.6 ALL DISPUTES ARISING UNDER THIS ARTICLE XI THAT ARE NOT OTHERWISE
RESOLVED AS PROVIDED HEREIN SHALL BE SUBMITTED TO THE DISPUTE RESOLUTION
PROCEDURES AS SET FORTH IN ARTICLE XIII HEREOF. TO THE EXTENT THAT ANY SUCH
UNRESOLVED DISPUTE HAS NOT BEEN SUBMITTED TO SUCH DISPUTE RESOLUTION PROCEDURES
WITHIN TWENTY-FIVE (25)
19
MONTHS AFTER THE EVENT CAUSING THE DISPUTE IS DISCOVERED OR REASONABLY SHOULD
HAVE BEEN DISCOVERED, THE PARTY ASSERTING THE CLAIM IN DISPUTE SHALL BE DEEMED
TO HAVE WAIVED ANY SUCH CLAIM AND ALL RIGHTS HEREUNDER WITH RESPECT THERETO.
11.7 All payments will be made without set off or counterclaim; provided,
however, that upon a Party's (the "defaulting Party") failure to make payment of
undisputed amounts on the due date, the other Party (the "non-defaulting Party")
may, at its option and in its sole discretion, set off against any amounts owed
to the defaulting Party, any amounts owed by the defaulting Party under this
Agreement or otherwise. The obligations of the non-defaulting Party and the
defaulting Party under this Agreement in respect of such amounts shall be deemed
satisfied and discharged to the extent of any such set off. The non-defaulting
Party will give the defaulting Party notice of any set off made under this
Section 11.7 as soon as practicable after the set off is made, provided that
failure to give such notice shall in no way affect the validity of the set off
ARTICLE XII
FORCE MAJEURE
12.1 In the event either Party is rendered unable, wholly or in part, by
Force Majeure to carry out its obligations under this Agreement, other than the
obligation to make payment of money due hereunder, it is agreed that upon such
Party's giving notice and reasonably full particulars of such Force Majeure in
writing to the other Party after the occurrence of the cause relied on, then the
obligations of the Party giving such notice, so far as and to the extent that
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 so far as possible be remedied with all reasonable dispatch. This
Agreement shall not be terminated by reason of any such cause, but shall remain
in full force and effect, and this Agreement shall not be extended regardless of
such curtailment or cessation.
12.2 The term "Force Majeure" as used herein shall mean acts of God,
strikes, lockouts, or other industrial disturbances, acts of the public enemy,
wars, blockades, insurrections, riots, epidemics, landslides, lightning,
earthquakes, fires, tornadoes, hurricanes, or storms, tornado, hurricane, or
storm warnings which in any Parties' judgment require the precautionary shutdown
of a gas processing plant or other related facilities, floods, washouts, 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, freezing of machinery, equipment, ▇▇▇▇▇, or lines of
pipe, electric power shortages, failure of pipelines or carriers to transport,
partial or entire failure of ▇▇▇▇▇, 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 (including, but not limited to, scheduled gas processing
facility turnarounds and shutdowns for safety maintenance), shutdowns due to
explosion or other extraordinary incident, or any other causes, whether of the
kind herein enumerated or otherwise, 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. It is understood and agreed that the settlement of
strikes or lockouts shall be entirely
20
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 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 event of Force Majeure occurring with respect to the facilities or
services of either Texaco's or Dynegy's third Party suppliers or customers
delivering or receiving any product, fuel, feedstock, or other substance
necessary to the 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 an event of Force Majeure.
ARTICLE XIII
DISPUTE RESOLUTION PROCEDURES
-----------------------------
13.1 Any dispute arising out of or relating to this Agreement shall be
resolved in accordance with the procedures specified in this Article XIII, which
shall be the sole and exclusive procedures for the resolution of any such
disputes, and the Parties hereby expressly waive all rights to have any such
disputes heard before a court of law, except the right to enforce an arbitration
award as described hereinafter.
13.2 The Parties shall attempt in good faith to resolve any dispute arising
out of or relating to this Agreement promptly by negotiation between executives
who have authority to settle the controversy and who are at a higher level of
management than the persons with direct responsibility for administration of
this contract. Any Party may give the other Party written notice of any dispute
(a "Dispute Notice") not resolved in the normal course of business. Within 15
days after delivery of a Dispute Notice, the receiving Party shall submit to the
other a written response. The Dispute Notice and the response shall include (a)
a statement of each Party's position and a summary of arguments supporting that
position, and (b) the name and title of the executive who will represent that
Party and of any other person who will accompany the executive. Within 30 days
after delivery of the disputing Party's Dispute Notice, the executives of both
Parties shall meet at a mutually acceptable time and place, and thereafter as
often as they reasonably deem necessary, to attempt to resolve the dispute. All
reasonable requests for information made by one Party to the other will be
honored. All negotiations pursuant to this clause are confidential and shall be
treated as compromise and settlement negotiations for purposes of applicable
rules of evidence.
13.3 If the dispute has not been resolved by negotiation within 45 days
after delivery of the disputing Party's Dispute Notice, or if the Parties failed
to meet within 30 days, the Parties shall endeavor to settle the dispute by
mediation under the then current CPR Mediation Procedure. Unless otherwise
agreed, the Parties will select a mediator from the CPR Panels of Distinguished
Neutrals.
13.4 Any dispute arising out of or relating to this contract including the
breach, termination or validity thereof which has not been resolved by a
non-binding procedure as provided herein within 90 days after the initiation of
such procedure, shall be settled by arbitration in accordance with the CPR Rules
for Non-Administered Arbitration in effect on the date of this agreement, by
three arbitrators, none of whom shall be appointed by either Party;
21
provided, however, that if either Party will not participate in a non-binding
procedure, the other may initiate arbitration before expiration of the above
period. The arbitration shall be governed by the Federal Arbitration Act, 9
U.S.C. Sections 1-16, and judgment upon the award rendered by the
arbitrator(s) may be entered by any court having jurisdiction thereof. The
place of arbitration shall be Houston, Texas. The arbitrator(s) are not
empowered to award damages in excess of compensatory damages and each Party
expressly waives and foregoes any right to punitive, exemplary or similar
damages unless a statute requires that compensatory damages be increased in
specified manner.
13.5 The statute of limitations of the State of Texas applicable to the
commencement of a lawsuit shall apply to the commencement of an arbitration
hereunder, except that no defenses shall be available based upon the passage of
time during any negotiation or mediation called for by the preceding paragraphs
of this Article XIII, which shall be deemed to have commenced on the date the
receiving Party receive a Dispute Notice from the disputing Party.
ARTICLE XIV
LIMITATION OF DAMAGES
---------------------
14.1 Unless performance is excused by another provision of this Agreement,
if Dynegy fails to accept delivery of all quantities of NGLs tendered by Texaco
that Dynegy is obligated to receive during the term of this Agreement, Dynegy
shall pay to Texaco, within ten (10) days after Dynegy's receipt of Texaco's
invoice therefor, an amount equal to the sum of the following amounts: (a) the
arithmetic product obtained by multiplying (i) the difference between the
quantity of NGLs actually accepted by Dynegy and the quantity of NGLs tendered
by Texaco (the "Dynegy Deficiency Quantity") by (ii) the positive difference, if
any, obtained by subtracting from the price that Dynegy would have otherwise
paid as provided herein, an amount derived from (1) the price obtained by Texaco
in an arms-length sale to a third party of a quantity of NGLs sold by Texaco, up
to or equal to the amount of the Dynegy Deficiency Quantity, less (2)
incremental transportation and storage costs incurred by Texaco; PLUS (b) an
amount, as liquidated damages, equal to one quarter of one cent per Gallon
($0.0025/Gallon) multiplied by the Dynegy Deficiency Quantity to cover Texaco's
administrative and operational costs and expenses.
14.2 FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF
DAMAGES IS PROVIDED IN THIS AGREEMENT, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES
SHALL BE THE SOLE AND EXCLUSIVE REMEDY HEREUNDER, AND THE OBLIGOR'S LIABILITY
SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR
DAMAGES ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED
HEREIN, THE OBLIGOR'S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY,
EXCLUDING LOST PROFITS, AND SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY HEREUNDER, AND ALL OTHER REMEDIES OR DAMAGES ARE WAIVED. IN NO
EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY UNDER ANY PROVISION OF
THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, ANY INDEMNITY PROVISION HEREOF)
FOR PUNITIVE OR
22
EXEMPLARY DAMAGES IN TORT OR CONTRACT. EXCEPT AS EXPRESSLY PROVIDED HEREIN,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY UNDER ANY PROVISION OF THIS
AGREEMENT FOR CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES. THE PRECEDING
SENTENCE SHALL NOT BE CONSTRUED AS LIMITING THE OBLIGATION OF EITHER PARTY
HEREUNDER TO INDEMNIFY THE OTHER PARTY AGAINST CLAIMS ASSERTED BY THIRD
PARTIES, INCLUDING, BUT NOT LIMITED TO, THIRD PARTY CLAIMS FOR CONSEQUENTIAL,
INCIDENTAL, OR INDIRECT DAMAGES, BUT EXCLUDING CLAIMS FOR SUCH DAMAGES UNDER
ARTICLE IX. TO THE EXTENT ANY PAYMENT REQUIRED TO BE MADE PURSUANT TO ANY
PROVISION OF THIS AGREEMENT IS AGREED BY THE PARTIES TO CONSTITUTE LIQUIDATED
DAMAGES, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE
TO DETERMINE, AND THAT SUCH PAYMENT CONSTITUTES A REASONABLE APPROXIMATION OF
THE AMOUNT OF SUCH DAMAGES.
ARTICLE XV
MISCELLANEOUS
-------------
15.1 This Agreement and the operations hereunder shall be subject to the
valid and applicable federal and state laws and the valid and applicable
orders, laws, local ordinances, rules, and regulations of any local, state or
federal authority having jurisdiction, but nothing contained herein shall be
construed as a waiver of any right to question or contest any such order,
laws, rules, or regulations in any forum having jurisdiction in the premises.
If any provision of this Agreement is held to be illegal, invalid, or
unenforceable under the present or future laws effective during the term of
this Agreement, (i) such provision will be fully severable, (ii) this
Agreement will be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part of this Agreement, and
(iii) the remaining provisions of this Agreement will remain in full force
and effect and will not be affected by the illegal, invalid, or unenforceable
provision or by its severance from this Agreement. Furthermore, in lieu of
such illegal, invalid, or unenforceable provision, there will be added
automatically as a part of this Agreement a provision similar in terms to
such illegal, invalid, or unenforceable provision as may be possible and as
may be legal, valid, and enforceable. If a provision of this Agreement is or
becomes illegal, invalid, or unenforceable in any jurisdiction, the foregoing
event shall not affect the validity or enforceability in that jurisdiction of
any other provision of this Agreement nor the validity or enforceability in
other jurisdictions of that or any other provision of this Agreement.
15.2 THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES ARISING OUT
OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED, AND PERFORMED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, AS THE SAME MAY BE AMENDED
FROM TIME TO TIME, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW
PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF TEXAS.
23
15.3 This Agreement, including, without limitation, all exhibits hereto,
integrates the entire understanding between the Parties with respect to the
subject matter covered and supersedes all prior understandings, drafts,
discussions, or statements, whether oral or in writing, expressed or implied,
dealing with the same subject matter. This Agreement may not be amended or
modified in any manner except by a written document signed by both Parties
that expressly amends this Agreement. No waiver by Texaco or Dynegy of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver unless expressly provided. No waiver shall be
effective unless made in writing and signed by the Party to be charged with
such wavier. The delay or failure on the part of a Party to insist, in any
one instance or more, upon strict performance of any of the terms or
conditions of this Agreement, or to exercise any right or privilege herein
conferred, shall not be construed as a waiver of any such terms, conditions,
rights or privileges, and the same shall continue and remain in full force
and effect.
15.4 The terms, covenants and conditions of this Agreement shall inure
to and be binding upon the Parties hereto and their successors and permitted
assigns; provided, however, that neither Party may assign this Agreement in
whole or in part without the prior written consent of the other Party, which
consent shall not be unreasonably withheld, and provided further, that either
Party may assign its rights hereunder to any Affiliate without the approval
of the other Party, but any such assignment shall in no way relieve or
release such assigning Party from any obligations hereunder, whether accrued
or unaccrued, unless agreed to in writing by the non-assigning Party; further
provided that each Party may, for collateral purposes, mortgage, pledge,
encumber or grant a security interest in or a lien on its interest in this
Agreement and/or its rights hereunder to any commercial bank, trustee or
other Person acting on behalf of any such commercial bank without the consent
of the other Party. Any transfer or assignment in violation of this Section
shall be void.
15.5 Dynegy acknowledges that there may be hazards associated with the
loading, unloading, transporting, handling, or use of the NGL sold hereunder,
which may require that warning be communicated to or other precautionary
action taken with all Persons handling, coming into contact with, or in any
way concerned with the NGLs sold hereunder. Dynegy assumes as to its
employees, independent contractors, and subsequent purchasers of the NGLs
sold hereunder all responsibility for all such necessary warnings or other
precautionary measures relating to hazards to Person and property associated
with the NGLs sold hereunder and, furthermore, Dynegy shall defend at its own
expense, indemnify fully and hold harmless Texaco and its parents,
subsidiaries and Affiliates and its and their agents, officers, directors,
employees, representatives, successors and assigns from and against any and
all liabilities; losses; damages; demands; claims; penalties; fines; actions;
suits; legal, administrative or arbitration or alternative dispute resolution
proceedings; judgments, orders, directives, injunctions, decrees or awards of
any jurisdiction; costs and expenses (including, but not limited to,
reasonable attorneys' fees and related costs) arising out of or in any manner
related to Dynegy's failure to provide necessary warnings or other
precautionary measures in connection with the NGLs sold hereunder.
24
15.6 Except as otherwise provided herein, each Party reserves to itself
all rights, set-offs, counterclaims, and other remedies and/or defenses which
such Party is or may be entitled to arising from or out of this Agreement or
as otherwise provided by law.
15.7 Confidentiality Provisions.
(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 any third Person without the
express written consent of the other Party hereto. Disclosures
of Confidential Information otherwise prohibited by this
Section 15.7 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 information to a
third Person (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). "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, financial 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 (w)
becomes generally available to the public at the time of
disclosure to the other Party, or (x) after the time of
disclosure to the other Party, was generally made available to
the public without breach of this Agreement, or (y) the Person
receiving the information can show was rightfully in its
possession at the time of disclosure, or (z) 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 Party whose information was
disclosed.
(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 15.7,
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.
25
(c) The Parties hereto acknowledge that independent legal counsel,
certified public accountants, or other consultants or
independent contractors of a Party (collectively, "Outside
Consultants") may, from time to time, be provided with a copy
of this Agreement if, in the judgment of the disclosing Party,
the information contained in this Agreement is necessary to
the performance of such Outside Consultants' duties.
Accordingly, the Parties agree that such disclosure does not
require consent by the other Party, provided that any such
Outside Consultants agree to be bound by the provisions of
this Section 15.7.
(d) Each Party will be deemed solely responsible and liable for
the actions of its employees, Outside Consultants, officers,
and agents for maintaining the confidentiality commitments of
this Section 15.7, but will be required in that regard only to
exercise such care in maintaining the confidentiality of the
Confidential Information as such Party normally exercises in
preserving the confidentiality of its other commercially
sensitive information.
15.8 Nothing contained in this Agreement shall be construed to create an
association, trust, partnership, or joint venture or impose a trust or
partnership duty, obligation, or liability on or with regard to either Party.
15.9 In construing this Agreement, the following principles shall be
followed:
(a) no consideration shall be given to the fact or presumption
that one Party had a greater or lesser hand in drafting this
Agreement;
(b) examples shall not be construed to limit, expressly or by
implication, the matter they illustrate;
(c) the word "includes" and its syntactical variants mean
"includes, but is not limited to" and corresponding
syntactical variant expressions; and
(d) the plural shall be deemed to include the singular and vice
versa, as applicable.
15.10 EACH PARTY EXECUTING THIS AGREEMENT HEREBY WAIVES ITS RESPECTIVE
RIGHTS, IF ANY, UNDER THE DECEPTIVE TRADE PRACTICES--CONSUMER PROTECTION ACT,
SECTION 17.41 ET SEQ., TEXAS BUSINESS & COMMERCE CODE, A LAW THAT GIVES
CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY
OF ITS OWN SELECTION, EACH PARTY EXECUTING THIS AGREEMENT VOLUNTARILY
CONSENTS TO THIS WAIVER. IN ADDITION, EACH PARTY EXECUTING THIS AGREEMENT
HEREBY REPRESENTS AND WARRANTS TO THE OTHER PARTY THAT (i) SUCH PARTY'S LEGAL
COUNSEL WAS NOT DIRECTLY OR INDIRECTLY IDENTIFIED, SUGGESTED, OR SELECTED BY
THE OTHER PARTY OR BY AN AGENT OF SUCH OTHER PARTY, AND (ii) NEITHER PARTY
EXECUTING THIS AGREEMENT IS IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION.
26
15.11 Any notice or other communication provided for in this Agreement
or any notice which either Party may desire to give to the other shall be in
writing and shall be deemed to have been properly given if and when sent by
facsimile transmission, delivered by hand; or, if sent by mail, upon deposit
in the United States mail, either U.S. Express Mail, registered mail, or
certified mail, with all postage fully prepaid; or, if sent by courier, by
delivery to a bonded courier with charges paid in accordance with the
customary arrangements established by such courier, in each case addressed to
the Parties at the following addresses:
If to Dynegy: DYNEGY LIQUIDS MARKETING AND TRADE
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President--Marketing
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Senior Vice President & General Counsel
DYNEGY LIQUIDS MARKETING AND TRADE
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Texaco: NOTICES AND CORRESPONDENCE
Texaco Exploration and Production, Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
STATEMENTS
Chevron U.S.A. Inc.
▇.▇. ▇▇▇ ▇
▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇
Attention: Section 980
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
27
PAYMENTS SHALL BE MADE BY WIRE TRANSFER TO:
Chevron U.S.A. Production Company
Account No. ▇▇▇▇▇▇▇
First National Bank of Chicago--Chicago, IL
ABA Ref. No. 071 000 013
Notices, Correspondence and Payments shall be directed to TNGI
for itself and as representative for TEPI.
or at such other address as either Party shall designate by written notice to
the other. A notice sent by facsimile shall be deemed to have been received
by the close of the Business Day following the day on which it was
transmitted and confirmed by transmission report or such earlier time as
confirmed orally or in writing by the receiving Party. Notice by U.S. Mail,
whether by U.S. Express Mail, registered mail or certified mail, or by
overnight courier shall be deemed to have been received by the close of the
second Business Day after the day upon which it was sent, or such earlier
time as is confirmed orally or in writing by the receiving Party. Routine
operating notices may be transmitted by electronic mail, as may other
communications where electronic mail is specifically authorized by other
provisions of this Agreement. Any Party may change its address or facsimile
number by giving notice of such change in accordance with herewith.
15.12 No director, employee, or agent of either Party shall give or
receive any commission, fee, rebate, gift, or entertainment of significant
cost or value in connection with this Agreement. Any mutually agreeable
representative(s) authorized by either Party may audit the applicable records
of the other Party solely for the purpose of determining whether there has
been compliance with this section, but no more often than once during each
year during the term hereof.
15.13 Each Party shall provide the other Party such reports as may be
mutually agreeable to both Parties. Each Party shall maintain such records
and accounts as may be necessary to the performance of its respective duties
and obligations hereunder, in accordance with good business practices.
15.14 This Agreement is for the sole benefit of the Parties and their
respective successors and permitted assigns, and shall not inure to the
benefit of any other Person whomsoever, it being the intention of the Parties
that no third Person shall be deemed a third Party beneficiary of this
Agreement.
15.15 Each Party shall take such acts and execute and deliver such
documents in form and substance reasonably satisfactory to each of them, in
order to effectuate the purposes of this Agreement.
[End of document--signatures on next page]
28
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement the
day and year first above written.
DYNEGY LIQUIDS MARKETING
AND TRADE
BY: DYNEGY MIDSTREAM SERVICES,
LIMITED PARTNERSHIP, General
Partner of Dynegy Liquids Marketing
and Trade
BY: DYNEGY MIDSTREAM G.P., INC.,
General Partner of Dynegy Midstream
Services, Limited Partnership
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Title: Sr. Vice President Liquids Trading
----------------------------------
TEXACO EXPLORATION AND
PRODUCTION INC.
By: /s/ [ILLEGIBLE]
------------------------------------
Name: [ILLEGIBLE]
----------------------------------
Title: Vice President
---------------------------------
TEXACO NATURAL GAS INC.
By: /s/ ▇.▇. ▇▇▇▇
------------------------------------
Name: ▇.▇. ▇▇▇▇
----------------------------------
Title: Manager Midstream
Executive Vice President
---------------------------------
SIGNATURE PAGE TO
NATURAL GAS LIQUIDS PURCHASE AGREEMENT
BETWEEN TEXACO EXPLORATION AND PRODUCTION, INC., TEXACO
NATURAL GAS INC., AND DYNEGY LIQUIDS MARKETING AND TRADE
29
EXHIBIT "A"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
NATURAL GAS
LIQUIDS PURCHASE AGREEMENT BETWEEN TEXACO EXPLORATION AND
PRODUCTION, INC., TEXACO NATURAL GAS INC., AND DYNEGY LIQUIDS
MARKETING AND TRADE
INDEX OF THE SPECIFICATIONS
---------------------------
FOR NGLS PURCHASED BY DYNEGY
----------------------------
Number Name
------ ----
S-101 Demethanized Raw Product--Trucked
S-104 Propane-Butane Mix
S-105 Butane-Natural Gasoline
S-200 80-20 Ethane-Propane Mix
S-202 Purity Ethane
S-300 Propane
S-400 Normal Butane
S-401 Isobutane
S-402 Mixed Butanes
S-500 Normal Pentane
S-501 Isopentane
S-600 Natural Gasoline
S-601 Hexanes Plus
EXHIBIT "B"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
NATURAL GAS LIQUIDS PURCHASE
AGREEMENT BETWEEN TEXACO EXPLORATION AND PRODUCTION, INC., TEXACO NATURAL GAS
INC., AND DYNEGY LIQUIDS MARKETING AND TRADE
TEPI NGL SALES TO DYNEGY
(Mont Belvieu Option)
--------------------------------------------------------
PLANT/SOURCE STATE PRICING LOCATION *1
--------------------------------------------------------
Rangely ▇▇▇▇▇ CO Mont Belvieu
--------------------------------------------------------
Buckeye C(2) NM Mont Belvieu
--------------------------------------------------------
▇▇▇▇▇▇ NM Mont Belvieu
--------------------------------------------------------
Eunice-Monument NM Mont Belvieu
--------------------------------------------------------
▇▇▇▇▇ *2 OK Mont Belvieu
--------------------------------------------------------
Maysville *2, *3 OK Mont Belvieu or local sales
--------------------------------------------------------
Bradford Ranch TX Mont Belvieu
--------------------------------------------------------
Garden City TX Mont Belvieu
--------------------------------------------------------
▇▇▇▇▇▇▇▇▇ TX Mont Belvieu
--------------------------------------------------------
▇▇▇▇▇▇▇ TX Mont Belvieu
--------------------------------------------------------
Ozona TX Mont Belvieu
--------------------------------------------------------
Seminole Hess TX Mont Belvieu
--------------------------------------------------------
▇▇▇▇▇▇ - Denver TX Mont Belvieu
--------------------------------------------------------
▇▇▇▇▇▇ - ODC TX Mont Belvieu
--------------------------------------------------------
OPAL WY Mont Belvieu
--------------------------------------------------------
▇▇▇▇▇▇▇ Draw *3 WY Mont Belvieu or local sales
--------------------------------------------------------
*1 If for any reason outside of Dynegy's control, Raw NGL Mix is not capable of
being fractionated at Mont Belvieu, the price for such Raw NGL Mix as set
forth in this agreement shall not apply. In such event, the appropriate
index and/or basis differential for such Raw NGL Mix will be mutually agreed
to by the parties.
*2 As to these facilities, Dynegy shall have the right to cause the Raw NGL Mix
to fractionated either at ▇▇▇▇▇▇ or at Mont Belvieu. The price for the Raw
NGL Mix produced at these facilities shall be the Mont Belvieu based price
irrespective of whether the Raw NGL Mix is actually fractionated at Mont
Belvieu or ▇▇▇▇▇▇.
*3 Dynegy may make local sales of NGLs from these facilities as provided for in
Section 5.1(b) of the
Natural Gas Liquids Purchase Agreement.
4 With the exception of the Plants addressed in Notes 2 and 3 above, Dynegy
shall not cause Raw NGL Mix produced from the Plants listed on this Exhibit
and purchased by Dynegy hereunder to be fractionated at any location other
than the EPO Fractionator without first obtaining Texaco's prior written
consent.
EXHIBIT "C"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
NATURAL GAS LIQUIDS PURCHASE
AGREEMENT BETWEEN TEXACO EXPLORATION AND PRODUCTION, INC., TEXACO NATURAL GAS
INC., AND DYNEGY LIQUIDS MARKETING AND TRADE
TEPI NGL SALES TO DYNEGY
(Local Sales Only)
----------------------------------------------------------
PLANT / SOURCE STATE MARKET PRODUCTS
----------------------------------------------------------
ANETH* UT Sale at Tailgate Y-grade
----------------------------------------------------------
OLD OCEAN TX Sale at Tailgate Purity
----------------------------------------------------------
PEGASUS TX Sale at Tailgate Y-grade
----------------------------------------------------------
PEGASUS TX Sale at Tailgate Ethane
----------------------------------------------------------
PEGASUS TX Sale at Tailgate Propane
----------------------------------------------------------
▇▇▇▇▇▇ CREEK CO Sale at Tailgate Y-grade
----------------------------------------------------------
*Production from Aneth Plant is to be sold under this Agreement only until
alternate arrangements are made by TEPI (expected to occur approximately June
1, 2002).
DEMETHANIZED RAW PRODUCT
TRUCK TRANSPORT SPECIFICATION
S-101
Effective Date: 3/1/96
Product characteristics with test methods are herein specified for any
demethanized raw material of natural gas liquids transported by insulated
tank trucks for receipt by Dynegy.
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
----------------------- ----------- -------------- ---------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume Predominantly Ethane, Propane
Butanes & Natural Gasoline
(Pentanes & Heavier) GPA 2177
Methane & Ethylene 2.0 of Ethane
Ethylene 1.0 of Ethane
Propylene 5.0 of Propane ASTM D-2163
Butylene 1.0 of Butanes
2. PRODUCT VAPOR PRESSURE 275 psig ASTM D-1267
3. LOADING TEMPERATURE
Minimum Product Loading
Temperature, DEG. F 0
4. CORROSION
Copper Strip@ 100 DEG. F 1-b ASTM D-1838
(Invalid if additive or
inhibitor is used.)
Corrosion Additive or
Inhibitor, PPM by Weight 1 Applicable Industry
Practices
5. TOTAL SULFUR
PPM by Weight in Liquid 150 ASTM D-3246
6. CARBON DIOXIDE
PPM by Weight in Liquid 1000 GPA 2177
7. DRYNESS No Free Water Visual
8. PENTANES & HEAVIER No Color Visual using white
cup method
Perform the Saybolt color test after
weathering sample to 70 DEG. F if white
cup indicates possible color.
COLOR
Saybolt No. Plus 25 ASTM D-156
DISTILLATION
End Point DEG. F 375 ASTM D-216
9. ODORIZATION
This product shall not be odorized.
10. DELETERIOUS SUBSTANCES (PPM BY WEIGHT IN LIQUID)
COS 1
Ammonia 1
Fluorides 1
PRODUCT ACCOUNTING
For accounting purposes, methane and ethylene shall be considered ethane,
propylene shall be considered propane, and butylenes shall be considered
normal butane within the above listed specification limits.
Any excess of these hydrocarbon components above the specification limits
shall not be accounted for.
METHANOL
Shippers should reduce methanol levels to the lowest practical level.
Injection rates above the minimum are expensive and wasteful and methanol can
destroy catalyst beds in downstream operations.
PROPANE-BUTANE MIXTURE
SPECIFICATION
S-104
Effective Date: 3/1/96
Product characteristics with test methods are herein specified for
propane-butane mixtures received by Dynegy.
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
----------------------- --------- --------- -----------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume Predominantly Propane, Isobutane &
Normal Butane
Ethane 2.0 of Propane ASTM D-2597
Propylene 1.0 of Propane ASTM D-2163
Butylene 1.0 of Isobutane
Pentanes & Heavier 2.0 of Butanes
2. CORROSION
Copper Strip @ 100 DEG. F 1-b ASTM D-1838
(Invalid if additive or
inhibitor is used.)
Corrosion Additive or
Inhibitor, PPM by Weight 1 Applicable Industry Practices
3. TOTAL SULFUR
PPM by Weight in Liquid 150 ASTM D-3246
4. VOLATILE RESIDUE
95% Evaporated, Temperature, DEG.F +36 ASTM D-1837
5. DRYNESS No Free Water Visual
6. CARBONYL SULFIDE
PPM by Weight in Liquid 2 Field - Length of
(Field test invalid if Stain Tube
C4+ exceeds 1.0 LV%) Lab - UOP 212 or UOP 791
Lab-Gas Chromatography with
Flame Photometric Detector
7. HYDROGEN SULFIDE
PPM by Weight in Liquid 1 Field - Length of Stain Tube.
(Lab test required if field Lab - Gas Chromatography
test is positive.) with Flame Photometric Detector
THE FOLLOWING TESTS ARE OPTIONAL, DEPENDING
UPON PRODUCT SOURCE:
--------------------------------------------
8. AMMONIA (PPM BY WEIGHT IN LIQUID)
PPM by Weight in Liquid 1 Field - Length of Stain Tube
Lab - UOP 430
9. FLUORIDES (PPM BY WEIGHT IN LIQUID)
PPM by Weight in Liquid as 1 Field - Length of
Monatomic Fluorine Stain Tube
Lab-UOP 619-83
10. PENTANES & HEAVIER No Color Visual using white cup
(For C5+ > 2% LV) method
Perform the following Saybolt color test
after weathering sample to 70 DEG. F if
white cup indicates possible color.
COLOR
Saybolt No. Plus 25 ASTM D-156
DISTILLATION
End Point, DEG. F 375 ASTM D-216
PRODUCT ACCOUNTING
For accounting purposes, ethane and propylene shall be considered propane,
butylenes shall be considered normal butane, and pentanes and heavier shall be
considered normal butane within the above listed specification limits. Any
excess of these hydrocarbon components above the specification limits shall not
be accounted for.
NOTE: The test method for Item 4 is not necessary if an adequate
compositional analysis is available which indicates compliance with this
requirement.
BUTANE-NATURAL GASOLINE MIXTURE
SPECIFICATION
S-105
Effective Date: 3/1/96
Product characteristics with test methods are herein specified for
butane-natural gasoline mixtures received by Dynegy.
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
----------------------- --------- --------- -----------------
1. COMPOSITION Predominantly Isobutane, ASTM E-260
Percent by Liquid Volume Normal Butane & Natural
Gasoline (Pentanes &
Heavier) GPA 2177
ASTM D2597
Propane 3.0 of Isobutane
Butylene 1.0 of Isobutane
2. CORROSION
Copper Strip @ 100 DEG. F 1-b ASTM D-1838
(Invalid if additive or
inhibitor is used.)
Corrosion Additive or Applicable Industry
Inhibitor, PPM by Weight 1 Applicable Industry
Practices
3. TOTAL SULFUR
PPM by Weight in Liquid 150 ASTM D-3246
or Gas Chromatography
with Flame Photometric
Detection
4. DRYNESS No Free Water Visual
5. AMMONIA
PPM by Weight in Liquid 1 Field - Length of
Stain Tube
LaB - UOP 430
6. HYDROGEN SULFIDE
PPM by Weight in Liquid 1 Field - Length of
(Lab test required if field Stain Tube
test is positive) Lab - Gas Chromatography
with Flame Photometric
Detection
7. PENTANES & HEAVIER No Color Visual using
(Only if C5+ > 2 LV%) White Cup Method
Perform the Saybolt color test
after weathering sample to 70 DEG. F
if white cup test indicates possible
color.
COLOR
Saybolt No. Plus 25 ASTM D-156
DISTILLATION
End Point, DEG. F 375 ASTM D-216
8. FLUORIDES
PPM by weight in liquid 1
PRODUCT ACCOUNTING
For accounting purposes, propane shall be considered isobutane and butylenes
shall be considered normal butane within the above listed specification limits.
Any excess of these hydrocarbon components above the specification limits shall
not be accounted for.
ETHANE-PROPANE
80-20 MIXTURE
SPECIFICATION
S-200
Effective Date: 3/1/96
Product characteristics with test methods are herein specified for
ethane-propane 80-20 mixtures received by Dynegy.
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
----------------------- --------- --------- -----------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume
Methane (Percent of Ethane) 2.0 GPA ▇▇▇▇
▇▇▇▇▇▇▇▇ (Percent of Ethane) 1.0
Methane, Ethane & Ethylene 78.0 82.0
Propane, Propylene & Butanes 18.0 22.0 ASTM D-2163
Propylene 1.0
Butanes 0.8
2. CORROSION
Copper Strip @ 100 DEG. F 1-b ASTM D-1838
(Invalid if additive or
inhibitor is used.)
Corrosion Additive or
Inhibitor, PPM by Weight 1 Applicable Industry
Practices
3. TOTAL SULFUR
PPM by Weight in Liquid 120 ASTM D-3246
4. DRYNESS No Free Water Visual
5. CARBON DIOXIDE
PPM by Weight in Liquid 1,000 GPA 2177
PRODUCT ACCOUNTING
For accounting purposes, methane and ethylene shall be considered ethane,
propylene and butanes shall be considered propane within the above listed
specification limits.
Any excess of these hydrocarbon components above the specification limits shall
not be accounted for.
PURITY ETHANE SPECIFICATION
S-202
Effective Date: 3/1/96
Product characteristics with test methods are herein specified for purity ethane
received by Dynegy.
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
----------------------- --------- --------- -----------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume
Methane 3.0 ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ 95.0 100.0
Ethylene 1.0
Heavier than Ethane 3.5 ASTM D-2163
Propylene 1.0
2. CORROSION
Copper Strip @ 100 DEG. F 1-b ASTM D-1838
(Invalid if additive or
inhibitor is used.)
Corrosion Additive or
Inhibitor, PPM by Weight 1 Applicable Industry
Practices
3. TOTAL SULFUR
PPM by Weight in Liquid 30 ASTM D-3246
4. DRYNESS No Free Water Visual
5. CARBON DIOXIDE
PPM by Weight in Liquid 1,000 GPA 2177
PRODUCT ACCOUNTING
For accounting purposes, methane and ethylene shall be considered ethane,
propylene and butanes shall be considered propane within the above listed
specification limits.
Any excess of these hydrocarbon components above the specification limits shall
not be accounted for.
PROPANE
SPECIFICATION
S-300
Effective Date: 3/1/96
Product characteristics with test methods are herein specified for propane
received by Dynegy. This product meets the requirement of the GPA HD-5
propane specification.
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
------------------------- ----------- ------------------- ---------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume Ethane As limited by other
components & vapor
pressure.
Propane 90.0 100
Propylene 5.0 ASTM D-2163
Butanes & Heavier 2.5
2. VAPOR PRESSURE
Psig @ 100 DEG. F 208 ASTM D-1267
3. CORROSION
Copper Strip @ 100 DEG. F 1-b ASTM D-1838
(Invalid if additive or
inhibitor is used.) Corrosion
Additive or Inhibitor, PPM by Weight 1 Applicable Industry Practices
4. TOTAL SULFUR
PPM by Weight in Liquid 120 ASTM D-3246
5. HYDROGEN SULFIDE
PPM by Weight in Liquid 1 Field-Length of Stain Tube
(Lab test required if field test is positive.) Lab Chromatography with
Flame Photometric Detector
6. CARBONYL SULFIDE
PPM by Weight in Liquid 2 Field-Length of
(Field test invalid if C(4)+ exceeds Stain Tube
1.0 LV%) (Lab test required if Lab-UOP 212 or UOP 791
field test is positive.) Lab-Gas Chromatography with
Flame Photometric Detector
7. NON-VOLATILE RESIDUE
a) Milliliters @ 100 DEG. F 0.05 ASTM D-2158
b) Oil Stain Pass
THE FOLLOWING TESTS ARE OPTIONAL, DEPENDING UPON THE PRODUCT SOURCE:
8. DRYNESS
Freeze Valve, Seconds 60 (Note 2) ASTM D-2713
9. VOLATILE RESIDUE
95% Evaporated-Temperature, DEG. F -37 ASTM D-1837
10. AMMONIA
PPM by Weight in Liquid 1 Field-Length of
Stain Tube
Lab - UOP 430
11. FLUORIDES
PPM by Weight in Liquid as 5 Field-Length of Stain Tube
Monatomic Fluorine Lab-UOP-619-83
12. OTHER DELETERIOUS SUBSTANCES (PPM BY WEIGHT IN LIQUID)
Includes but not limited to 1 Gas chromatography with flame
(Isoprene, Butadiene, Vinyl ionization or electron
Chloride, glycol, amine, caustic) capture detection or other
industry accepted methods
NOTES: (1) The test methods for items 2 and 7 are not necessary if a
compositional analysis is available which indicates compliance with
these requirements.
(2) The addition of methanol in the distribution system should be on a
spot basis and must not exceed a rate of 5 gallons per 10,000
gallons of product.
NORMAL BUTANE
SPECIFICATION
S-400
Effective Date: 3/1/96
Product characteristics with test methods are herein specified for normal
butane received by Dynegy.
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
------------------------- ----------- ------------------- ---------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume
Isobutane and Lighter 5.0 ASTM D-2163
Butylene (Percent of N.Butane) 1.0
N. Butane & Butylene 95.0 100 GPA 2165
Pentanes & Heavier 2.0
2. VAPOR PRESSURE
Psig @ 100 DEG. F 50 ASTM D-1267
3. CORROSION
Copper Strip @100 DEG. F 1-b ASTM D-1838
(Invalid if additive
or inhibitor is used.)
Corrosion Additive or
Inhibitor, PPM by Weight 1 Applicable Industry
Practices
4. TOTAL SULFUR
PPM by Weight in Liquid 140 ASTM D-3246
5. VOLATILE RESIDUE
95% Evaporated-Temperature, DEG. F +36 ASTM D-1837
6. DRYNESS No Free Water Visual
NOTE: The test methods for Items 2 and 5 are not necessary if a compositional
analysis indicates compliance with these requirements.
ISOBUTANE
SPECIFICATION
S-401
Effective Date: 3/1/96
Product characteristics with test methods are herein specified for isobutane
received by Dynegy.
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
------------------------- ----------- ------------------- ---------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume
Propane, Propylene and Lighter 3.0 ASTM D-2163
Isobutane 96.0 100
Butylene, Normal Butane
& Heavier 4.0
2. VAPOR PRESSURE
Psig @ 100 DEG. F 62 ASTM D-1267
3. CORROSION
Copper Strip @ 100 DEG. F 1-b ASTM D-1838
(Invalid if additive or
inhibitor is used.)
Corrosion Additive or
Inhibitor, PPM by Weight 1 Applicable Industry
Practices
4. TOTAL SULFUR
PPM by Weight in Liquid 140 ASTM D-3246
5. VOLATILE RESIDUE
95% Evaporated-Temperature DEG. F +16 ASTM D-1837
6. DRYNESS No Free Water Visual
NOTE: The test methods for Items 2 and 5 are not necessary if an adequate
compositional analysis is available which indicates compliance with these
requirements.
MIXED BUTANES
SPECIFICATION
S-402
Effective Date: 3/1/96
Product characteristics with test methods are herein specified for commercial
butane received by Dynegy.
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
------------------------- ----------- ------------------- ---------------
1. COMPOSITION Predominately Isobutane ASTM E-260
Percent by Liquid Volume & Normal Butane
Propane 3.0 of Isobutane ASTM D-2163
Butylene 1.0 of Isobutane
Pentanes & Heavier 2.0 of Butanes
2. VAPOR PRESSURE
Psig @ 100 DEG. F 70 ASTM D-1267
3. CORROSION
Copper Strip @ 100 DEG. F 1-b ASTM D-1838
(Invalid if additive or
inhibitor is used.)
Corrosion Additive or
Inhibitor, PPM 1 Applicable Industry
Practices
4. TOTAL SULFUR
PPM by Weight in Liquid 140 ASTM D-3246
3. VOLATILE RESIDUE
95% Evaporated, Temperature, DEG. F +36 ASTM D-1837
6. DRYNESS No Free Water Visual
7. BUTADIENE
Percent by Liquid Volume 0.5 Gas Chromatography
PRODUCT ACCOUNTING
For Accounting purposes, propane shall be considered isobutane, butylenes
shall be considered normal butane, and pentanes and heavier shall be
considered normal butane within the above listed specification limits.
Any excess of these hydrocarbon components above the specification limits
shall not be accounted for.
NOTE: The test methods for Items 2 and 5 are not necessary if an adequate
compositional analysis is available which indicates compliance with these
requirements.
NORMAL PENTANE
SPECIFICATION
S-500
Effective Date: 3/1/96
Product characteristics with test methods are herein specified for normal
pentane received by Dynegy.
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
------------------------- ----------- ------------------- ---------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume
Isopentane & Lighter 5.0 GPA 2165
Normal Pentane 90 100 ASTM ▇-▇▇▇▇
▇▇▇▇▇▇▇ than Normal Pentane 7.0
2. VAPOR PRESSURE
Psi @ 100 DEG. F, ▇▇▇▇ 17 ASTM D-323
3. CORROSION
Copper Strip @ 100 DEG. F 1-b ASTM D-1838
(Invalid if additive or
inhibitor is used.)
Corrosion Additive or
Inhibitor, PPM by Weight 1 Applicable Industry
Practices
4. DRYNESS No Free Water Visual
5. TOTAL SULFUR
PPM by Weight in Liquid 150 ASTM D-3246
or Gas Chromatography
with Flame Photometric
Detection
ISOPENTANE
SPECIFICATION
S-501
Effective Date: 3/1/96
Product characteristics with test methods are herein specified for isopentane
received by Dynegy.
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
----------------------------- --------- --------- ---------------
1. COMPOSITION
Percent by Liquid Volume ASTM E-260
Normal Butane & Lighter 5.5 ASTM D-2597
Isopentane 94.0 100 GPA 2165
Neopentane 2.0
Normal Pentane & Heavier 4.0
2. VAPOR PRESSURE
Psi @ 100 DEG. F, ▇▇▇▇ 22 ASTM D-323
3. CORROSION
Copper Strip @ 100 DEG. F 1-b ASTM D-1838
(Invalid if additive or
inhibitor is used.)
Corrosion Additive or
Inhibitor, PPM by Weight 1 Applicable Industry
Practices
4. DRYNESS No Free Water VISUAL
5. TOTAL SULFUR
PPM by Weight in Liquid 150 ASTM D-3246
or Gas Chromatography
with Flame Photometric
Detection
NATURAL GASOLINE
SPECIFICATION
S-600
Effective Date: 3/1/96
Product characteristics with test methods are herein specified for natural
gasoline received by Dynegy.
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
---------------------------------- --------- --------- ---------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume
Butanes & Lighter 3.0 GPA 2165
Pentanes & Heavier 97 100
2. VAPOR PRESSURE
Psi @ 100 DEG. F, ▇▇▇▇ 16 ASTM D-323
3. CORROSION
Copper Strip @ 104 DEG. F 1-b ASTM D-130
(Invalid if additive or
inhibitor is used.)
Corrosion Additive or
Inhibitor, PPM by Weight 1 Applicable Industry
Practices
4. DOCTOR TEST Negative GPA 1138
5. DRYNESS No Free Water Visual
6. COLOR plus 25 No Color Field White Cup Method
Lab-ASTM D-156
7. DISTILLATION
End Point, DEG. F 375 ASTM D-216
NOTE: The test methods for Items 2 and 7 are not necessary if an adequate
compositional analysis is available which indicates compliance with these
requirements.
An RVP of 16 Psi as set forth in Item 2 will be acceptable as long as
the state and federal laws, rules and regulations allow for same. If the
allowed RVP changes, these specifications shall change accordingly.
HEXANES PLUS
SPECIFICATION
S-601
Effective Date: 3/1/96
Product characteristics with test methods are herein specified for hexanes plus
received by Dynegy.
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
---------------------------------- --------- --------- ---------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume
Normal Pentane and Lighter 5.0
Heavier than Normal Pentane 95.0 100 GPA 2165
2. VAPOR PRESSURE
Psi @ 100 DEG. F, ▇▇▇▇ 8 ASTM D-323
3. CORROSION
Copper Strip @ 100^ DEG. F 1-b ASTM D-130
(Invalid if additive or
inhibitor is used.)
Corrosion Additive or
Inhibitor, PPM by Weight 1 Applicable Industry
Practices
4. DRYNESS No Free Water VISUAL
5. DISTILLATION ENDPOINT 375 DEG. F ASTM D-216
EXHIBIT "B"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
NATURAL GAS LIQUIDS PURCHASE
AGREEMENT BETWEEN TEXACO EXPLORATION AND PRODUCTION, INC., TEXACO NATURAL GAS
INC., AND DYNEGY LIQUIDS MARKETING AND TRADE
TEPI NGL SALES TO DYNEGY
(Mont Belvieu Option)
PLANT/SOURCE STATE PRICING LOCATION *1
---------------- ------ -------------------
Rangely ▇▇▇▇▇ CO Mont Belvieu
Buckeye C0(2) NM Mont Belvieu
▇▇▇▇▇▇ NM Mont Belvieu
Eunice-Monument NM Mont Belvieu
▇▇▇▇▇ *2 OK Mont Belvieu
Maysville *2, *3 OK Mont Belvieu or local sales
Bradford Ranch TX Mont Belvieu
Garden City TX Mont Belvieu
Goldsmith TX Mont Belvieu
▇▇▇▇▇▇▇ TX Mont Belvieu
Ozona TX Mont Belvieu
Seminole Hess TX Mont Belvieu
▇▇▇▇▇▇ - Denver TX Mont Belvieu
▇▇▇▇▇▇ - ODC TX Mont Belvieu
OPAL WY Mont Belvieu
▇▇▇▇▇▇▇ Draw *3 WY Mont Belvieu or local sales
*1 If for any reason outside of Dynegy's control, Raw NGL Mix is not capable of
being fractionated at Mont Belvieu, the price for such Raw NGL Mix as set
forth in this agreement shall not apply. In such event, the appropriate
index and/or basis differential for such Raw NGL Mix will be mutually agreed
to by the parties.
*2 As to these facilities, Dynegy shall have the right to cause the Raw NGL Mix
to fractionated either at ▇▇▇▇▇▇ or at Mont Belvieu. The price for the Raw
NGL Mix produced at these facilities shall be the Mont Belvieu based price
irrespective of whether the Raw NGL Mix is actually fractionated at Mont
Belvieu or ▇▇▇▇▇▇.
*3 Dynegy may make local sales of NGLs from these facilities as provided for in
Section 5.1(b) of the
Natural Gas Liquids Purchase Agreement.
*4 With the exception of the Plants addressed in Notes 2 and 3 above, Dynegy
shall not cause Raw NGL Mix produced from the Plants listed on this Exhibit
and purchased by Dynegy hereunder to be fractionated at any location other
than the EPO Fractionator without first obtaining Texaco's prior written
consent.
EXHIBIT "C"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
NATURAL GAS LIQUIDS PURCHASE
AGREEMENT BETWEEN TEXACO EXPLORATION AND PRODUCTION, INC., TEXACO NATURAL GAS
INC., AND DYNEGY LIQUIDS MARKETING AND TRADE
TEPI NGL SALES TO DYNEGY
(Local Sales Only)
PLANT/SOURCE STATE MARKET PRODUCTS
-------------- ----- ------ --------
ANETH* UT Sale at Tailgate Y-grade
OLD OCEAN TX Sale at Tailgate Purity
PEGASUS TX Sale at Tailgate Y-grade
PEGASUS TX Sale at Tailgate Ethane
PEGASUS TX Sale at Tailgate Propane
▇▇▇▇▇▇ CREEK CO Sale at Tailgate Y-grade
*Production from Aneth Plant is to be sold under this Agreement only until
alternate arrangements are made by TEPI (expected to occur approximately June 1,
2002).
'Confidential Treatment Requested'
EXHIBIT "D"
Attached to and made a part of that certain
Natural Gas Liquids Purchase Agreement between
Texaco Exploration and Production, Inc., Texaco Natural Gas Inc.,
and Dynegy Liquids Marketing and Trade
TNGI NGL SALES TO DYNEGY (FOUR STAR VOLUMES)
For NGLs produced by Four Star and delivered by TNGI to Dynegy under this
Agreement, the pricing shall be as follows:
(a) For the volumes of NGLs produced at the ▇▇▇▇▇ NORTH AND SAN ▇▇▇▇
PLANTS, and delivered to Dynegy at the applicable Delivery Point at (i) the
tailgate of such Plants for subsequent transportation by pipeline or for
exchange to Mont Belvieu, Texas, or (ii) at the EPO Delivery Points, a
* price equal to [REDACTED] as quoted by the Oil Price Information Service
("OPIS") for Mont Belvieu, Texas (Non-TET) for the first Business Day of
the month in which NGLs are delivered to Dynegy, less (1) applicable T&F
Costs and distribution fees charged by the fractionator and/or storage
operator ("Distribution Fees"), unless Fractionated NGLs are delivered to
Dynegy at the EPO Delivery Points, in which case the T&F Costs and
Distribution Fees will be paid directly by Texaco, and (2) an
* administration fee of [REDACTED] per gallon. Notwithstanding the
* foregoing, (y) Ethane shall be priced based on [REDACTED] as quoted by
OPIS (Non-TET) at Mont Belvieu, Texas, for the first Business Day of the
month in which Raw NGL Mix produced at the Plants is fractionated at the
EPO Fractionator and such Ethane is delivered to Dynegy, but otherwise
* shall be priced based on [REDACTED] as quoted by OPIS (Non-TET) at Mont
Belvieu for the first Business Day of the month in which such Raw NGL Mix
produced at the Plants is fractionated, if, for any reason, the Raw NGL
Mix is fractionated at Cedar Bayou Fractionators in Mont Belvieu, Texas,
* and (z) Propane shall be priced based on [REDACTED] as quoted by OPIS at
Mont Belvieu (TET) for the first Business Day of the month in which such
Propane is delivered to Dynegy, unless such Propane can not be delivered
into TET for any reason outside of Dynegy's control, in which event, such
* Propane shall be priced based on [REDACTED] as quoted by OPIS at Mont
Belvieu, Texas (Non-TET) for the first Business Day of the month such
Propane is delivered to Dynegy. Dynegy agrees to notify Texaco as soon as
reasonably possible whenever Propane can not be delivered into TET for any
reason outside of Dynegy's control.
(b) For the volumes of NGLs produced at the ▇▇▇▇▇▇▇ Plant, and delivered to
Dynegy at the applicable Delivery Point at (i) the tailgate of such Plant
for subsequent transportation by pipeline or for exchange to Mont Belvieu,
* Texas, or (ii) at the EPO Delivery Points, a price equal to [REDACTED] as
quoted by the Oil Price Information Service ("OPIS") for Mont Belvieu,
Texas (Non-TET) on the first Business Day of the month in which NGLs are
delivered to Dynegy, less (1) applicable T&F Costs and distribution fees
charged by the fractionator and/or
1
'Confidential Treatment Requested'
storage operator ("Distribution Fees"), unless Fractionated NGLs are
delivered to Dynegy at the EPO Delivery Points, in which case the T&F Costs
and Distribution Fees will be paid directly by Texaco, and (2) an
* administration fee of [REDACTED] per gallon. Notwithstanding the
* foregoing, (y) Ethane shall be priced based on [REDACTED] as quoted by OPIS
(Non-TET) at Mont Belvieu, Texas, for the first Business Day of the month
in which Raw NGL Mix produced at the Plant is fractionated at the EPO
* Fractionator, but otherwise shall be priced based on [REDACTED] as quoted
by OPIS (Non-TET) at Mont Belvieu for the first Business Day of the month
in which such Raw NGL Mix produced at the Plant if fractionated, if, for
any reason, the Raw NGL Mix is fractionated at Cedar Bayou Fractionators in
* Mont Belvieu, Texas, and (z) Propane shall be priced based on [REDACTED] as
quoted by OPIS at Mont Belvieu (TET) for the first Business Day of the
month such Propane is delivered to Dynegy, unless such Propane can not be
delivered into TET for any reason outside of Dynegy's control, in which
* event, such Propane shall be priced based on [REDACTED] as quoted by OPIS
at Mont Belvieu, Texas (Non-TET) for the first Business Day of the month
such Propane is delivered to Dynegy. Dynegy agrees to notify Texaco as
soon as reasonably possible whenever Propane can not be delivered into
TET for any reason outside of Dynegy's control.
(c) For any volumes of NGLs delivered to Dynegy at the applicable Delivery
* Point at the tailgate of the Hatters Pond Plant, [REDACTED] of the
* Netback Price, less an administration fee of [REDACTED] per gallon. It is
understood and agreed that TNGI shall not be obligated to sell Natural
Gasoline to Dynegy and Dynegy shall not be obligated to purchase Natural
Gasoline from TNGI for as long as such Natural Gasoline is sold by TNGI to
either Equiva or any of TNGI's affiliates. Notwithstanding the foregoing,
with respect to Propane, for as long as the Exchange Agreement between TNGI
and Enterprise Products Operating Company (which will be assigned to
Dynegy) remains in force and effect, the price payable by Dynegy to TNGI
* shall be equal to [REDACTED] as quoted by the Oil Price Information
Service ("OPIS") for Hattiesburg, Mississippi, for the first Business Day
of the month in which Propane is delivered to Dynegy, less (1) the
* exchange differential payable to Enterprise, (2) [REDACTED] per gallon
for storage considerations and inconsistencies in product movements and
* (3) an administration fee of [REDACTED] per gallon.
Note: It is understood and agreed that TNGI currently has the right to market
NGLs produced by Four Star Oil and Gas Company under a separate marketing
agreement between TNGI and Four Star. In the event that such agreement is
terminated prior to termination of this Agreement, TNGI shall have no further
obligations to deliver Four Star NGLs to Dynegy hereunder. TNGI shall notify
Dynegy as soon as possible of any such termination of its Four Star marketing
agreement.
2