Exhibit 10.32
EXECUTION COPY
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SERVICES AND SUPPLY AGREEMENT
BETWEEN
XXXXX REFINING & MARKETING, INC.
AND
PORT XXXXXX XXXXX COMPANY L.P.
August 19, 1999
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TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS 2
Section 1.1 Definitions......................................................... 2
Section 1.2 Other Definitional Provisions....................................... 2
ARTICLE 2. GENERAL SCOPE OF XXXXX R&M RESPONSIBILITIES................................... 2
ARTICLE 3. ANCILLARY EQUIPMENT; SUPPLY AND SERVICES...................................... 3
Section 3.1 Crude Supply Management Services.................................... 3
Section 3.2 Docking, Pipeline Delivery, Handling and Storage of Crude Deliveries 4
Section 3.3 Supply of Other Ancillary Equipment Feedstocks...................... 4
Section 3.4 Operation of Ancillary Equipment.................................... 5
Section 3.5 Processing of Xxxxx R&M Products.................................... 5
Section 3.6 Title to Product Streams from Ancillary Equipment................... 6
Section 3.7 Disposition of Product Streams from Ancillary Equipment............. 6
ARTICLE 4. XXXXX COMPLEX; SUPPLY AND SERVICES............................................ 6
Section 4.1 Operation of Xxxxx Complex.......................................... 6
Section 4.2 Processing of Xxxxx R&M Products; Xxxxx............................. 7
Section 4.3 Processing of Xxxxx R&M Products; Hydrocracker...................... 7
Section 4.4 Supply and Delivery of Other Feedstocks to Xxxxx Complex............ 8
Section 4.5 Title to Product Streams from Xxxxx Complex......................... 9
Section 4.6 Disposition of Product Streams from Xxxxx Complex................... 9
ARTICLE 5. GENERAL SERVICES AND SUPPLIES................................................. 9
Section 5.1 Construction Management............................................. 9
Section 5.2 Contract Management................................................. 9
Section 5.3 Maintenance Services................................................ 10
Section 5.4 Operation and Maintenance of Xxxxx Equipment........................ 10
Section 5.5 Utility Services.................................................... 11
Section 5.6 Waste Management and Wastewater Services............................ 12
Section 5.7 Support Services.................................................... 13
Section 5.8 Personnel and Management Services................................... 13
Section 5.9 Spare Parts......................................................... 14
Section 5.10 Catalysts, Chemicals and Consumables................................ 14
Section 5.11 Quantity and Quality Control........................................ 14
Section 5.12 Environmental, Health and Safety Services........................... 16
Section 5.13 Insurance Coverage.................................................. 16
Section 5.14 Licensing, Permits and Approvals.................................... 16
Section 5.15 Sulfur Recovery..................................................... 17
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ARTICLE 6. ANNUAL BUDGET AND OPERATING PLAN.............................................. 17
Section 6.1 Annual Budget....................................................... 17
Section 6.2 Operating Adjustments............................................... 18
Section 6.3 Quarterly Reports................................................... 19
ARTICLE 7. PRICING AND PAYMENT........................................................... 20
Section 7.1 Pricing of Services and Supplies.................................... 20
Section 7.2 Net Pricing and Statements.......................................... 20
Section 7.3 Payment Procedure................................................... 20
Section 7.4 Alternative Pricing................................................. 20
Section 7.5 Recordkeeping; Right to Audit; Access to Books and Records.......... 21
Section 7.6 Interest Rate for Late Payments..................................... 21
ARTICLE 8. DEFAULTS, REMEDIES AND TERMINATION............................................. 22
Section 8.1 Xxxxx R&M's Right to Terminate...................................... 22
Section 8.2 Xxxxx Company's Right to Terminate and Other Remedies............... 22
Section 8.3 Termination Option.................................................. 23
Section 8.4 Non-Exclusive Remedies; Specific Performance........................ 23
ARTICLE 9. TERM, AND COMMENCEMENT OF SERVICES............................................ 23
Section 9.1 Effectiveness; Term................................................. 23
Section 9.2 End of Term Obligations............................................. 23
ARTICLE 10. REPRESENTATIONS AND WARRANTIES................................................ 24
Section 10.1 Representations and Warranties of the Xxxxx Company................. 24
Section 10.2 Representations and Warranties of Xxxxx R&M......................... 25
ARTICLE 11. FURTHER AGREEMENTS............................................................ 26
Section 11.1 Intellectual Property; Confidentiality.............................. 26
Section 11.2 Force Majeure....................................................... 26
Section 11.3 Cooperation with Other Parties...................................... 26
Section 11.4 Site Access......................................................... 26
Section 11.5 Indemnity........................................................... 26
Section 11.6 Dispute Resolution.................................................. 27
Section 11.7 Taxes............................................................... 28
Section 11.8 Title to Property................................................... 28
Section 11.9 Subcontractors...................................................... 29
ARTICLE 12. MISCELLANEOUS................................................................. 29
Section 12.1 Relationship of Parties............................................. 29
Section 12.2 Third Party Beneficiaries........................................... 29
Section 12.3 Xxxxx R&M Warranties................................................ 30
Section 12.4 No Indirect Damages................................................. 30
Section 12.5 Assignments......................................................... 30
Section 12.6 Amendments.......................................................... 31
Section 12.7 Notices............................................................. 31
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Section 12.8 GOVERNING LAW....................................................... 32
Section 12.9 Submission to Jurisdiction; Forum Selection......................... 32
Section 12.10 Appointment of Agent for Service of Process......................... 33
Section 12.11 No Waiver........................................................... 33
Section 12.12 Counterparts........................................................ 33
Section 12.13 Integration......................................................... 33
Section 12.14 Severability........................................................ 33
Section 12.15 Headings............................................................ 33
Section 12.16 WAIVER OF JURY TRIAL................................................ 34
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APPENDIX A -- DEFINITIONS
SCHEDULES
Schedule 3.1 Crude Supply Management Services
Schedule 3.2 Dock, Pipeline and Storage Services
Schedule 3.3 Ancillary Equipment Feedstock Supply
Schedule 3.5 Xxxxx Processing Fee -- Ancillary Equipment
Schedule 4.1 Xxxxx Company Employees
Schedule 4.2 Xxxxx R&M Processing Fee -- Xxxxx
Schedule 4.3 Xxxxx R&M Processing Fee -- Hydrocracker
Schedule 4.4 Hydrogen Supply Services
Schedule 5.1 Construction Management Services
Schedule 5.3 Maintenance Services
Schedule 5.5.1 Electricity
Schedule 5.5.2 Steam
Schedule 5.5.3 Natural and Fuel Gas
Schedule 5.5.4 Water
Schedule 5.5.5 Compressed Air
Schedule 5.5.6 Nitrogen
Schedule 5.5(b) Utility Meters
Schedule 5.6 Waste Management and Wastewater Treatment Services
Schedule 5.7.1 Sulfur and Coke Transport Service
Schedule 5.7.2 Broad Band and Network Computing Services
Schedule 5.7.3 Radio and Phone Services
Schedule 5.7.4 Analytical Laboratory and Custody Transfer Services
Schedule 5.7.5 Security Services
Schedule 5.7.6 Other Support Service
Schedule 5.8.1 Operations Services
Schedule 5.8.2 Engineering Services
Schedule 5.8.3 Human Resources Services
Schedule 5.8.4 Accounting Services
Schedule 5.8.5 Administrative Services
Schedule 5.9 Xxxxx Company Spares
Schedule 5.10 Catalyst and Caustic
Schedule 5.12.1 Environmental, Health and Safety Services
Schedule 5.12.2 Emergency Response Services
Schedule 5.13 Insurance
Schedule 5.14 Licenses, Permits and Approvals
Schedule 6.1 Annual Budget and Operating Plan
EXHIBITS
Exhibit A Base Case Financial Model
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AGREEMENT FOR SUPPLY AND SERVICES, dated as of August 19, 1999,
between Xxxxx Refining & Marketing, Inc., a Delaware corporation ("Xxxxx R&M")
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and Port Xxxxxx Xxxxx Company L.P., a Delaware limited partnership (the "Xxxxx
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Company").
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RECITALS
WHEREAS, the Xxxxx Company has entered into an EPC Contract with the
Contractor for the construction of the Xxxxx Complex;
WHEREAS, the Xxxxx Company is causing the Xxxxx Complex to be
constructed on land within the Refinery leased from Xxxxx R&M, which Xxxxx
Complex is intended to have at least the Xxxxx Complex Design Capacity;
WHEREAS, the Xxxxx Company has leased the Ancillary Equipment located
within the Refinery, which Ancillary Equipment is being upgraded to have the
Crude Design Capacity to permit the production of at least the minimum volume of
feedstocks for the Xxxxx Complex to operate at the Xxxxx Complex Design
Capacity;
WHEREAS, the Xxxxx Company, pursuant to the Long-Term Oil Supply
Agreement, has access to Maya Crude Oil for processing through the Heavy Oil
Processing Facility;
WHEREAS, Xxxxx R&M has access to additional crude oil and other
feedstreams necessary to operate the Ancillary Equipment at the Crude Design
Capacity and the Xxxxx Complex at the Xxxxx Complex Design Capacity;
WHEREAS, the Xxxxx Company desires to deliver and Xxxxx R&M desires to
purchase the Required Product Mix under the Product Purchase Agreement;
WHEREAS, the Xxxxx Company requires supplies and services in order to
operate the Ancillary Equipment and the Xxxxx Complex and to produce the
Required Product Mix;
WHEREAS, Xxxxx R&M has the necessary technical and operational
capacity to deliver the such supplies and to provide such services required to
operate the Ancillary Equipment and the Xxxxx Complex; and
WHEREAS, the obligations of Xxxxx R&M and the rights of the Xxxxx
Company hereunder will be assigned to the Financing Parties as security in order
to finance the construction of the Xxxxx Complex.
NOW THEREFORE, for and in consideration of the mutual covenants,
premises and agreements set forth herein, and good and valuable consideration,
the receipt, sufficiency and adequacy of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
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ARTICLE 1. DEFINITIONS
Section 1.1 Definitions. Except as contained in this Section 1.1 or
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as otherwise defined herein, the capitalized terms used herein shall have the
respective meanings assigned thereto in Appendix A. For all purposes of this
Services and Supply Agreement, the following terms shall have the following
meanings:
"Applicable Price" means, with respect to each Service or Supply to be
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provided by Xxxxx R&M hereunder during any monthly period, the total
reimbursable cost or fee due and payable by the Xxxxx Company to Xxxxx R&M for
such Service or Supply determined in accordance with the formula set forth under
the heading "Applicable Price" on the Schedule relating to such Service or
Supply, provided that to the extent any Service or Supply is not described in a
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Schedule, the "Applicable Price" for such Service or Supply shall equal the
Permitted Reimbursable Expenses incurred by Xxxxx R&M in providing such Service
or Supply.
Section 1.2 Other Definitional Provisions.
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(a) The words "hereof," "herein", "hereto" and "hereunder" and words
of similar import when used in this Services and Supply Agreement shall refer to
this Services and Supply Agreement as a whole and not to any particular
provision of this Services and Supply Agreement, and Article, Section and
Schedule references are to this Services and Supply Agreement unless otherwise
specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
ARTICLE 2. GENERAL SCOPE OF XXXXX R&M RESPONSIBILITIES
Xxxxx R&M shall operate, manage and maintain all components of the
Ancillary Equipment and the Xxxxx Complex and perform all other necessary
services (all of the foregoing, collectively, the "Services") and provide all
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necessary feedstocks and other materials (collectively, the "Supplies"), other
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than matters expressly stated herein to be the obligations of the Xxxxx Company,
in order to generate the Required Product Mix on a continuous basis during the
term of this Services and Supply Agreement. Xxxxx R&M shall provide the
Services and Supplies in a prudent and efficient manner in compliance with the
following:
(a) Applicable Law;
(b) Prudent Industry Practice;
(c) requirements of applicable Warranties;
(d) applicable equipment manufacturers' recommended maintenance
procedures;
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(e) the Operating Manuals, the Maintenance and Instruction Manuals
and the Mechanical Catalogs (each as defined in the EPC Contract);
(f) the EPC Contract and the other Project Documents; and
(g) the Financing Documents.
ARTICLE 3. ANCILLARY EQUIPMENT; SUPPLY AND SERVICES
Section 3.1 Crude Supply Management Services. (a) Xxxxx R&M shall
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coordinate the scheduling and execution of deliveries of the Contract Quantity
of Xxxxx Company Maya to the Heavy Oil Processing Facility on behalf of the
Xxxxx Company in accordance with the Long-Term Oil Supply Agreement and the
specifications set forth in Schedule 3.1.
(b) To the extent that the Xxxxx Company does not have access under
the Long-Term Oil Supply Agreement to the volume of Maya Crude Oil required for
start-up and operation of the Heavy Oil Processing Facility during the Start-up
Period, Xxxxx R&M shall supply the Xxxxx Company with the additional volume of
Maya Crude Oil required for start-up and operation of the Heavy Oil Processing
Facility during such period and shall coordinate the scheduling and execution of
deliveries of such crude oil to the Heavy Oil Processing Facility on behalf of
the Xxxxx Company, in accordance with the specifications set forth in Schedule
3.1. The Xxxxx Company shall reimburse Xxxxx R&M for the purchase price of such
crude oil and any reasonable administrative fees, financing fees or capital
allocation costs incurred by Xxxxx R&M in procuring such crude oil by Xxxxx R&M.
(c) Xxxxx R&M shall procure on behalf of the Xxxxx Company one or
more contracts for the supply of light crude oil necessary for the processing of
Xxxxx Company Maya and shall coordinate the scheduling and execution of
deliveries of such crude oil to the Heavy Oil Processing Facility on behalf of
the Xxxxx Company, in accordance with the specifications set forth in Schedule
3.1.
(d) Should the supply of Maya Crude Oil pursuant to the Long-Term Oil
Supply Agreement become unavailable for any reason, Xxxxx R&M shall procure on
behalf of the Xxxxx Company one or more alternative supplies of Maya Crude Oil
in amounts substantially equivalent to the Contract Quantity. Xxxxx R&M shall
coordinate the scheduling and execution of deliveries of such Maya Crude Oil to
the Heavy Oil Processing Facility in accordance with the specifications set
forth in Schedule 3.1.
(e) In connection with its obligations under this Section 3.1, Xxxxx
R&M shall engage tankers on behalf, and at the expense, of the Xxxxx Company for
the shipment of Xxxxx Company Maya and Xxxxx Company light crude oil. All
shipping contracts in connection therewith shall be entered into directly by the
Xxxxx Company. Xxxxx R&M shall ensure that all
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such shipments of Xxxxx Company Maya and Xxxxx Company light crude oil are
adequately covered by marine cargo, casualty and other required insurance. In
addition, in connection with such shipping, Xxxxx R&M shall ensure that prior to
arrival at the Refinery Xxxxx Xxxx will not be commingled with any shipment of
Xxxxx Company Maya and Xxxxx R&M light crude oil will not be commingled with any
shipment of Xxxxx Company light crude oil.
(f) To the extent that any Xxxxx R&M-owned crude oil is delivered to
the Refinery by the same pipeline as Xxxxx Company-owned crude oil of the same
type, title to such commingled crude oil shall be allocated in accordance with
the respective volume of crude oil purchased by Xxxxx R&M or the Xxxxx Company
as evidenced by the bills of lading for such shipments.
(g) Xxxxx R&M shall not grant any Lien on Xxxxx R&M-owned crude oil
that is to be commingled with Xxxxx Company-owned crude oil at the Refinery,
other than purchase money security interests necessary to secure the purchase
price of such Xxxxx R&M-owned crude oil.
Section 3.2 Docking, Pipeline Delivery, Handling and Storage of Crude
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Deliveries. (a) Xxxxx R&M shall provide all docking, pipeline, handling and
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storage services necessary for the delivery of Xxxxx Company Maya and other
Xxxxx Company light crude oil to the Heavy Oil Processing Facility, in
accordance with the specifications set forth in Schedule 3.2.
(b) For the term of this Services and Supply Agreement, Xxxxx R&M
shall (i) maintain the Marine Dock and Terminaling Agreement (as such term is
defined in the Common Security Agreement) in effect and comply with all of its
material obligations thereunder and (ii) make advance payments to Sun Pipe Line
Company every thirty (30) days in amounts equal to the maximum amount that Xxxxx
R&M estimates, in its reasonable good faith judgment, will be due and payable by
Xxxxx R&M to Sun Pipe Line Company pursuant to the Marine Terminaling Agreement
in the next succeeding thirty (30) days.
Section 3.3 Supply of Other Ancillary Equipment Feedstocks. (a)
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Xxxxx R&M shall coordinate the scheduling and execution of deliveries of
Hydrogen needed to process Xxxxx Company Maya and light crude oil through the
Ancillary Equipment on behalf of the Xxxxx Company in accordance with the
Hydrogen Supply Agreement and shall otherwise perform the Xxxxx Company's
obligations (other than payment to obligations) and exercise its rights under
the Hydrogen Supply Agreement, in accordance with Schedule 4.3.
(b) Xxxxx R&M shall supply and the Xxxxx Company shall purchase all
other feedstocks (including any additional hydrogen not available to the Xxxxx
Company under the Hydrogen Supply Agreement) necessary for the processing of
Xxxxx Company Maya and Xxxxx Company light crude oil through the Ancillary
Equipment and Xxxxx R&M shall deliver such products to the Ancillary Equipment,
in accordance with the specifications set forth in Schedule 3.3 and Schedule
4.4.
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(c) Xxxxx R&M shall maintain the Xxxxx Hydrogen Supply Contract in
effect for the term of this Services and Supply Agreement and shall comply with
all of its material obligations thereunder.
Section 3.4 Operation of Ancillary Equipment. Xxxxx R&M shall
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operate and maintain the Ancillary Equipment and manage the processing of Maya
Crude Oil and other feedstreams thereby on behalf of itself and the Xxxxx
Company.
Section 3.5 Processing of Xxxxx R&M Products. (a) Prior to the
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Start-up Date, Xxxxx R&M shall have the right to process Xxxxx R&M-owned crude
oil through the Ancillary Equipment; provided that (i) all operating expenses
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related thereto shall be for the account of, and exclusively paid by, Xxxxx R&M
and (ii) the processing of Xxxxx R&M-owned crude oil pursuant to this clause (a)
shall (x) in no way interfere with the timely performance of the Lessor
Ancillary Equipment Upgrade, the construction of the Xxxxx Complex by the
Contractor or the achievement of the Guranteed Values by the Guaranteed
Performance Dates (as such terms are defined in the EPC Contract) or (y) not
adversely affect the reliability or the useful life of the Ancillary Equipment.
The parties agree that consideration for the processing rights granted Xxxxx R&M
under this Section 3.5(a) has been given to the Xxxxx Company in the form of a
reduction in the rent payable that would otherwise be payable pursuant to
Section 13.1(a)(i) of the Ancillary Equipment Site Lease.
(b) After Final Completion, subject to the terms and conditions
hereinafter set forth, Xxxxx R&M shall have the right (the "Excess Crude
Capacity Option") each calendar quarter during the term of this Service and
Supply Agreement to require the Xxxxx Company to process Xxxxx R&M-owned crude
oil and other feedstreams equal to the Excess Crude Capacity for each day during
such calendar quarter.
(c) If Xxxxx R&M shall not have given the Xxxxx Company written
notice at least thirty days prior to any calendar quarter that it does not
intend to exercise its Excess Crude Capacity Option for the succeeding calendar
quarter, Xxxxx R&M shall be deemed to have exercised such right and shall pay
the Xxxxx Company for the processing of Xxxxx R&M-owned crude oil and other
feedstreams equal to the Excess Crude Capacity for each day during such calendar
quarter in accordance with the formulas set forth on Schedule 3.5.
(d) If Xxxxx R&M chooses not to exercise its Excess Crude Capacity
Option in any calendar quarter, the Xxxxx Company may sell such processing right
(or portion of such right) to an alternative purchaser and Xxxxx R&M agrees to
provide such alternative purchaser and/or the Xxxxx Company with such Services
and Supplies hereunder as may be required to process crude oil and other
feedstreams for such party through the Ancillary Equipment.
(e) If Xxxxx R&M chooses to exercise its Excess Crude Capacity Option
in any calendar quarter, the Xxxxx Company agrees to process Xxxxx R&M-owned
crude oil and other feedstreams through the Ancillary Equipment or through any
other appropriate equipment to which the Xxxxx Company may have access, provided
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that (i) if the Xxxxx Company chooses to process such Xxxxx R&M-owned crude oil
and other feedstreams through the Ancillary
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Equipment, such processing will not interrupt, reduce or otherwise materially
interfere with the processing of Xxxxx Company Maya during such calendar quarter
or (ii) if the Xxxxx Company chooses to process such Xxxxx R&M-owned crude oil
and other feedstreams through alternative equipment, such processing will not
materially affect the expected product yields from such crude oil and other
feedstreams.
Section 3.6 Title to Product Streams from Ancillary Equipment. Title
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to product streams resulting from the processing of Xxxxx Company Maya and other
Xxxxx Company-owned crude oil through the Ancillary Equipment shall be
determined on a pro rata basis in proportion to the relative volume of Xxxxx
Company-owned crude oil and other crude oil processed through the Ancillary
Equipment for Xxxxx R&M (or for other third parties if Xxxxx R&M does not
exercise its Excess Crude Capacity Option), in accordance with the
specifications and formulas under the heading "Quantity" on the Schedules to the
Product Purchase Agreement (it being understood that Xxxxx R&M shall have title
to those product streams resulting from the processing of Xxxxx R&M-owned
feedstreams through the Ancillary Equipment pursuant to Section 3.5).
Section 3.7 Disposition of Product Streams from Ancillary Equipment.
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(a) Xxxxx R&M shall determine the portion, if any, of Xxxxx Company-
owned VGO and Xxxxx R&M-owned VGO produced by the Crude Unit that is required to
fill the remaining Excess Hydrocracker Capacity of the Hydrocracker on any day
in accordance with the provisions of Section 4.3 and shall manage the delivery
of any such VGO to the Hydrocracker on behalf of the Xxxxx Company and itself.
(b) Xxxxx R&M shall manage the delivery of VTBs from the Ancillary
Equipment to the Xxxxx on behalf of the Xxxxx Company and itself.
(c) Xxxxx R&M shall manage the delivery of all Products from the
Ancillary Equipment (including all Xxxxx Company-owned VGO not delivered to the
Hydrocracker pursuant to clause (a) above) that are to be sold under the
Products Purchase Agreement in accordance with such agreement.
(d) Xxxxx R&M shall deliver all other Xxxxx R&M-owned product streams
(other than VTBs and VGO to be delivered to the Xxxxx Complex) to the battery
limits of the Ancillary Equipment and shall take possession and control all such
Xxxxx R&M-owned product streams delivered to the battery limits of the Ancillary
Equipment.
ARTICLE 4. XXXXX COMPLEX; SUPPLY AND SERVICES
Section 4.1 Operation of Xxxxx Complex.
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(a) The Xxxxx Company shall employ the roster of personnel with the
job descriptions listed on Schedule 4.1; provided, however, that the Xxxxx
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Company may reduce the
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number of such employees to the extent (i) that changes in technology or
automation opportunities allow a reduced number of Xxxxx Company to perform such
job descriptions in a more cost effective manner and (ii) permitted by the
Financing Documents.
(b) Xxxxx R&M shall supervise and train the employees referred to in
clause (a) above and shall otherwise operate and maintain the Xxxxx Complex and
manage the processing of VTBs, VGO, LCO and other feedstreams thereby on behalf
of the Xxxxx Company.
(c) Xxxxx R&M shall operate the Xxxxx Complex in accordance with all
of the terms and conditions set forth in the EPC Contract.
Section 4.2 Processing of Xxxxx R&M Products; Xxxxx. (a) Subject to
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the terms and conditions hereinafter set forth and to Section 6.2(d), Xxxxx R&M
shall have the right (the "Excess Xxxxx Capacity Option") each calendar quarter
during the term of this Service and Supply Agreement to require the Xxxxx
Company to process Xxxxx R&M-owned VTBs and other feedstreams equal to the
Excess Xxxxx Capacity each day during such calendar quarter.
(b) If Xxxxx R&M shall not have given the Xxxxx Company written
notice at least thirty days prior to any calendar quarter that it does not
intend to exercise its Excess Xxxxx Capacity Option for the succeeding calendar
quarter, Xxxxx R&M shall be deemed to have exercised such right and shall pay
the Xxxxx Company for the processing of VTBs and other feedstreams equal to the
Excess Xxxxx Capacity each day during such calendar quarter in accordance with
the formula set forth on Schedule 4.2.
(c) If Xxxxx R&M chooses not to exercise its Excess Xxxxx Capacity
Option in any calendar quarter, the Xxxxx Company may sell such processing right
(or portion of such right) to an alternative purchaser and Xxxxx R&M agrees to
provide such alternative purchaser and/or the Xxxxx Company with such Services
and Supplies hereunder as may be required to process VTBs and other feedstreams
for such party through the Xxxxx.
(d) If Xxxxx R&M chooses to exercise its Excess Xxxxx Capacity Option
in any calendar quarter, the Xxxxx Company agrees to process Xxxxx R&M-owned
VTBs and other feedstreams through the Xxxxx or through any other appropriate
equipment to which the Xxxxx Company may have access, provided that (i) if the
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Xxxxx Company chooses to process such Xxxxx R&M-owned feedstreams through the
Xxxxx, such processing will not interrupt, reduce or otherwise materially
interfere with the processing of Xxxxx Company VTBS during such calendar quarter
or (ii) if the Xxxxx Company chooses to process such Xxxxx R&M-owned feedstreams
through alternative equipment, such processing will not materially affect the
expected product yields from such feedstreams.
Section 4.3 Processing of Xxxxx R&M Products; Hydrocracker. (a)
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Subject to the terms and conditions hereinafter set forth, Xxxxx R&M shall have
the right (the "Excess Hydrocracker Capacity Option") each calendar quarter
during the term of this Service and Supply Agreement to require the Xxxxx
Company to process Xxxxx R&M-owned feedstreams up to an amount equal to the
Excess Hydrocracker Capacity each day during such calendar quarter.
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(b) If Xxxxx R&M shall not have given the Xxxxx Company written
notice at least thirty days prior to any calendar quarter that it does not
intend to exercise its Excess Hydrocracker Capacity Option for the succeeding
calendar quarter, Xxxxx R&M shall be deemed to have exercised such right and
shall pay the Xxxxx Company for the processing of Xxxxx R&M-owned feedstreams
during such calendar quarter in accordance with the formulas set forth on
Schedule 4.3.
(c) If Xxxxx R&M chooses to exercise its Excess Hydrocracker Capacity
Option in any calendar quarter, the Xxxxx Company agrees to process the volume
of Xxxxx R&M-owned LCO, VGO and other feedstreams designated by Xxxxx R&M each
day up to the Excess Hydrocracker Capacity for such day through the Hydrocracker
or through any other appropriate equipment to which the Xxxxx Company may have
access, provided that (i) if the Xxxxx Company chooses to process such Xxxxx
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R&M-owned feedstreams through the Hydrocracker, such processing will not
interrupt, reduce or otherwise materially interfere with the processing of Xxxxx
Company VGO produced by the Xxxxx during such calendar quarter or (ii) if the
Xxxxx Company chooses to process such Xxxxx R&M-owned feedstreams through
alternative equipment, such processing will not materially affect the expected
product yields from such feedstreams. To the extent that Xxxxx R&M does not
exercise its right to use all Excess Hydrocracker Capacity on any day during
such calendar quarter, Xxxxx R&M shall ensure that pro rata portions of Xxxxx
Company-owned and Xxxxx R&M-owned VGO produced by the Crude Unit on such day are
used to fill the remaining Excess Hydrocracker Capacity of the Hydrocracker.
Xxxxx R&M shall pay the Xxxxx Company for all such Xxxxx R&M-owned VGO processed
by the Hydrocracker in accordance with the formulas set forth on Schedule 4.3.
(d) If Xxxxx R&M chooses not to exercise its Excess Hydrocracker
Capacity Option in any calendar quarter, the Xxxxx Company may sell such
processing right (or portion of such right) to an alternative purchaser or
direct Xxxxx R&M to ensure that the Excess Hydrocracker Capacity (or any portion
thereof) is used to process Xxxxx Company VGO produced by the Crude Unit. In
either case, Xxxxx R&M shall provide the Xxxxx Company and/or such alternative
purchaser with such Services and Supplies hereunder as may be required to
process VGO or other feedstreams for such party through the Hydrocracker.
Section 4.4 Supply and Delivery of Other Feedstocks to Xxxxx Complex.
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(a) Xxxxx R&M shall coordinate the scheduling and execution of
deliveries of Hydrogen needed to process Xxxxx Company-owned VTBs and VGO by the
Xxxxx Complex on behalf of the Xxxxx Company in accordance with the Hydrogen
Supply Agreement and shall otherwise perform the Xxxxx Company's obligations
(other than payment to obligations) and exercise its rights under the Hydrogen
Supply Agreement, in accordance with Schedule 4.4.
(b) Xxxxx R&M shall supply and the Xxxxx Company shall purchase all
other feedstocks (including any additional hydrogen not available under the
Hydrogen Supply Agreement) necessary to process Xxxxx Company-owned VTBs, VGO
and other feedstreams through the Xxxxx Complex and shall manage the delivery of
such products to the Xxxxx Complex, in accordance with the specifications set
forth in Schedule 4.4.
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(c) Xxxxx R&M shall provide at its expense all hydrogen and other
feedstocks necessary to process any Xxxxx R&M-owned VTBs, LCO and other
feedstreams through the Xxxxx Complex and shall deliver such products to the
Xxxxx Complex.
Section 4.5 Title to Product Streams from Xxxxx Complex. Title to
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product streams resulting from the processing of Xxxxx Company-owned VTBs and
VGO through the Xxxxx Complex shall be determined on a pro rata basis in
proportion to the relative volume of Xxxxx Company-owned VTBs and VGO and other
VTBs and VGO processed by the Xxxxx Complex for Xxxxx R&M (or for other third
parties if Xxxxx R&M has not exercised its Excess Xxxxx Capacity Option and/or
its Excess Hydrocracker Capacity Option, as the case may be), in accordance with
the specifications and formulas under the heading "Quantity" on the Schedules to
the Product Purchase Agreement (it being understood that Xxxxx R&M shall have
title to any product streams resulting from the processing of Xxxxx R&M-owned
LCO and other Xxxxx R&M-owned product streams through the Xxxxx Complex pursuant
to Section 4.2).
Section 4.6 Disposition of Product Streams from Xxxxx Complex. (a)
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Xxxxx R&M shall coordinate and manage the delivery of Xxxxx Company Products
from the Xxxxx Complex, in accordance with the Product Purchase Agreement.
(b) Xxxxx R&M shall deliver all Xxxxx R&M-owned product streams from
the Xxxxx Complex to the battery limits of the Xxxxx Complex and shall take
possession and control all such Xxxxx R&M-owned product streams delivered to the
battery limits of the Xxxxx Complex.
ARTICLE 5. GENERAL SERVICES AND SUPPLIES
Section 5.1 Construction Management.
-----------------------
(a) Xxxxx R&M (i) shall manage and supervise the construction of the
Xxxxx Complex by the Contractor and cooperate with the Independent Engineer to
ensure the construction of the Xxxxx Complex in accordance with the EPC Contract
and (ii) shall fulfill all obligations, and perform all functions, of the Xxxxx
Company under the EPC Contract, other than payment obligations of the Xxxxx
Company thereunder including, without limitation, those listed on Schedule 5.1
hereto.
(b) Without limiting the generality of the foregoing clause, Xxxxx
R&M agrees to schedule, coordinate, manage and perform all start-up and
performance testing obligations of the Xxxxx Company under the EPC Contract and
take such other steps as are necessary to cause the Xxxxx Complex to achieve the
Guaranteed Values by the Guaranteed Performance Dates (as such terms are defined
in the EPC Contract).
Section 5.2 Contract Management. (a) Xxxxx R&M shall supervise and
-------------------
monitor the performance by counterparties (other than itself) to all Xxxxx
Company contracts (other than the Financing Documents) and the Xxxxx Company's
relationships with such parties,
10
including, without limitation, (i) the adequacy and timeliness of the
performance by such counterparties, (ii) timely assertion of the Xxxxx Company's
rights under such contracts, (iii) enforcement of contractor, subcontractor and
vendor warranties and guaranties in connection therewith, and (iv) management of
dispute resolution and/or litigation in connection therewith.
(b) Xxxxx R&M's performance of its obligations under clause (a) above
shall be subject to the on-going supervision and control of the Xxxxx Company.
In connection with its obligations under Section 6.3, Xxxxx R&M shall provide
the Xxxxx Company quarterly reports describing actions taken by Xxxxx R&M in the
previous calendar quarter in connection with the performance of its obligations
under clause (a) above.
Section 5.3 Maintenance Services
--------------------
(a) In compliance with Applicable Law and Prudent Industry Practice,
Xxxxx R&M shall provide all maintenance services, materials and labor necessary
and advisable to efficiently operate and maintain the Heavy Oil Processing
Facility and the on-going production of the Required Product Mix, including,
without limitation, the services specified on Schedule 5.3. The Xxxxx Company
shall pay for such Services in accordance with the pricing formula set forth in
Schedule 5.3. Notwithstanding the foregoing, the parties agree that certain
capital repairs and similar maintenance services with respect to the Ancillary
Equipment shall be provided at the expense of Xxxxx R&M pursuant to Section 9.1
of the Ancillary Equipment Lease.
(b) Xxxxx R&M shall regularly update and implement an equipment
upgrade, repair and preventive maintenance program with respect to the Heavy Oil
Processing Facility that meets the requirements of (i) Applicable Law, (ii) the
Permits, (iii) specifications of equipment manufacturers, (iv) the
recommendations of the Contractor and (v) the Financing Documents.
(c) Notwithstanding the foregoing provisions of this Section 5.3,
Xxxxx R&M shall not be required to fund or commit to fund any capital
expenditures in connection with its obligations under this Section 5.3 that are
in excess of amounts available in the Xxxxx Company's Major Maintenance Account
(as such term is defined in the Financing Documents), unless the Xxxxx Company
has demonstrated that it is capable of compensating Xxxxx R&M for such capital
expenditures and that payment of such compensation is permitted under the
Financing Documents.
Section 5.4 Operation and Maintenance of Xxxxx Equipment.
--------------------------------------------
(a) In compliance with Applicable Law and Prudent Industry Practice,
throughout the term of this Services and Supply Agreement Xxxxx R&M shall
operate and maintain all pipelines, interconnections and other Xxxxx Equipment
as necessary for the efficient operation of the Heavy Oil Processing Facility
and the on-going production of the Required Product Mix. Without limiting the
generality of the foregoing, Xxxxx R&M shall provide all maintenance services,
equipment improvements, personnel and other resources that are necessary for the
Xxxxx Equipment to (i) generate the feedstocks for the Heavy Oil Processing
Facility that
11
this Services and Supply Agreement contemplates will be generated by the Xxxxx
Equipment, (ii) process intermediate products from the Heavy Oil Processing
Facility into saleable products, (iii) continue to operate the remainder of the
Refinery and produce intermediate and saleable products and (iv) otherwise
provide the Services and Supplies that this Services and Supply Agreement
contemplates will be provided by Xxxxx Equipment.
(b) Xxxxx R&M shall coordinate the scheduling and performance of all
necessary maintenance, including turnarounds and unscheduled unit shutdowns, at
the Refinery to ensure on-going production of the Required Product Mix.
Section 5.5 Utility Services. (a) Xxxxx R&M shall provide the
----------------
following utility services, each in accordance with the more detailed
description on the Schedule referenced opposite such Service on the chart below,
to the Xxxxx Company for the operation of the Heavy Oil Processing Facility. The
Xxxxx Company shall reimburse Xxxxx R&M for the cost of each such Service
(except for potable water, the cost for which is included in the rents payable
by the Xxxxx Company under the Xxxxx Complex Ground Lease and the Ancillary
Equipment Site Lease) in accordance with the formulas set forth in the Schedule
relating thereto:
Utility Schedule
------- --------
Electricity Schedule 5.5.1
Steam Schedule 5.5.2
Natural and Fuel Gas Schedule 5.5.3
Water Schedule 5.5.4
Compressed Air Schedule 5.5.5
Nitrogen Schedule 5.5.6
Notwithstanding anything in the foregoing to the contrary, in the event the
Xxxxx Hydrogen Supply Agreement is terminated or expires prior to its stated
term, (i) the Xxxxx Company shall have no obligation to purchase its full
requirements for electricity or steam from Xxxxx R&M and (ii) to the extent that
the Xxxxx Company purchases any portion of its requirements of steam and
electricity from Air Products pursuant to the Hydrogen Supply Agreement, Xxxxx
R&M shall provide the Xxxxx Company with any additional steam or electricity
required for operation of the Heavy Oil Processing Facility and the Xxxxx
Company shall reimburse Xxxxx R&M for the costs of such Services in accordance
with the formulas set forth in Schedule 5.5.1 or Schedule 5.5.2, as the case may
be.
(b) In order to properly measure each Service provided to the Xxxxx
Complex pursuant to clause (a) above, Xxxxx R&M shall (i) utilize the meter(s)
or calculation method, as the case may be, described under the heading
"Metering/Measurement Methodology for Services to the Xxxxx Complex" on the
Schedule relating to such Service and/or Schedule 5.5(b), as the case may be,
(ii) operate and maintain all metering devices described on such Schedules and
(iii) test the accuracy of such meters and the calculation methods in accordance
with its regular practices.
12
(c) If any test described in clause (b)(iii) of this Section 5.5
discloses that any metering device or calculation method related to the Services
provided pursuant to clause (a) above is materially inaccurate, Xxxxx R&M shall
(i) promptly take such steps as necessary to correct such inaccuracy by
calibrating the applicable meters and/or adjusting the applicable calculation
method and (ii) adjust charges (except with respect to potable water) to the
Xxxxx Company under Article 7 in order to compensate for the effect of such
inaccuracy on any charges related to the period extending back to the prior
accuracy test. For the purpose of calculating the amount of such adjustment,
the parties agree to assume that the inaccuracy occurred at the midpoint in time
between the prior accuracy test and the current accuracy test; provided,
--------
however, that if the time that such inaccuracy occurred can be ascertained by
-------
Prudent Industry Practice, the amount of the applicable adjustment shall be
based on such time.
(d) Xxxxx R&M shall preserve all its original test data, charts and
other records related to testing and measurements described in this Section for
a period of at least two years and make such records available, together with
calculations therefrom, for inspection or verification by the Xxxxx Company.
(e) Should Xxxxx R&M determine, in its reasonable judgment, that
additional and/or replacement meters are necessary to more accurately measure
the utilities described in this Section 5.5, it shall propose a metering upgrade
plan as part of the Annual Budget and Operating Plan for the Heavy Oil
Processing Facility.
(f) The agreement and obligation of Xxxxx R&M to provide electric
utilities and electric service, natural gas and gas service and potable water
and water service under this Section 5.5 and sanitary sewage service under
Section 5.6 (each a "Regulated Utility") to the Xxxxx Company is incident to,
-----------------
dependent upon and inseparable from the landlord/tenant relationship established
by the Xxxxx Complex Ground Lease and the Ancillary Site Equipment Lease, and
such obligation shall continue only for the Xxxxx Complex Ground Lease Term and
the Ancillary Site Lease Term, respectively, and the existence of such
landlord/tenant relationships between Xxxxx R&M as landlord and the Xxxxx
Company as tenant under such leases. The provisions of this Services and Supply
Agreement and the Ancillary Equipment Operating Fee are intended only to provide
a mechanism for Xxxxx R&M to recover from the Xxxxx Company the costs of
providing such Regulated Utilities described herein (and it is not intended that
Xxxxx R&M shall make a profit by providing such utilities or utility services).
The Xxxxx Company acknowledges, understands and agrees that none of the
Regulated Utilities provided by Xxxxx R&M to the Xxxxx Company may be sold or
resold by the Xxxxx Company, and none of such Regulated Utilities may be used by
any other party or for any purposes other than in connection with its tenancies
under the Xxxxx Complex Ground Lease and the Ancillary Site Equipment Lease,
respectively.
Section 5.6 Waste Management and Wastewater Services. Xxxxx R&M
----------------------------------------
shall provide all collection, processing, treatment, transportation, storage,
disposal and recycling of waste generated by the Heavy Oil Processing Facility
and all rain water runoff, cooling tower blow down, sanitary sewage, recovered
oil, recovered residuals and all other hazardous and solid
13
waste originating at the Heavy Oil Processing Facility in accordance with
Schedule 5.6. The Xxxxx Company shall reimburse Xxxxx R&M for the costs of such
Services (except sanitary sewage service, the costs for which are included in
the rents payable by the Xxxxx Company under the Xxxxx Complex Ground Lease and
the Ancillary Equipment Site Lease) in accordance with the formulas set forth in
Schedule 5.6.
Section 5.7 Support Services. Xxxxx R&M shall provide the following
----------------
additional support services, each as more particularly described on the Schedule
opposite such Service on the chart below, as necessary for the operation of the
Heavy Oil Processing Facility. The Xxxxx Company shall pay for each such
Service in accordance with the pricing formulas set forth in the Schedule
relating to such Service:
Support Service Schedule
--------------- --------
Sulfur and Coke Transport Service Schedule 5.7.1
Broad Band and Network Computing Services Schedule 5.7.2
Radio and Phone Services Schedule 5.7.3
Analytical Laboratory and
Custody Transfer Services Schedule 5.7.4
Security Services Schedule 5.7.5
Other Support Service Schedule 5.5.6
Section 5.8 Personnel and Management Services.
---------------------------------
(a) Xxxxx R&M shall hire or provide all additional labor (other than
Xxxxx Company employees) required to operate the Xxxxx Complex and all labor and
professional, supervisory and management personnel as are required to operate
the Ancillary Equipment and to otherwise perform its obligations hereunder
including, without limitation, personnel required to provide the following
Services, each more particularly described on the Schedule referenced opposite
such Service on the chart below:
Operations Services Schedule 5.8.1
Engineering Services Schedule 5.8.2
Human Resources Services Schedule 5.8.3
Accounting Services Schedule 5.8.4
Administrative Services Schedule 5.8.5
(b) All personnel described in clause (a) above shall be employees of
Xxxxx R&M for all purposes, including compensation, payroll, income and other
tax liabilities, pension contributions, insurance and workers compensation.
Xxxxx R&M shall ensure that all key personnel are qualified and experienced in
operating facilities such as the Refinery.
(c) To the extent the Xxxxx Company requires additional personnel to
fulfill its obligation under clause (a) of Section 4.1, Xxxxx R&M shall assist
the Xxxxx Company in
14
hiring and training personnel that are qualified and experienced in operating
facilities such as the Refinery.
Section 5.9 Spare Parts.
-----------
(a) Pursuant to the Xxxx of Sale, the Xxxxx Company is purchasing the
spare parts listed on Schedule 5.9 from Xxxxx R&M (the "Existing Spare Parts").
--------------------
In accordance with Section 2.38 of the EPC Contract and its obligations under
Sections 5.1 and 5.2, Xxxxx R&M shall procure additional spare parts on behalf
of the Xxxxx Company or instruct the Contractor to purchase such spare parts on
behalf of the Xxxxx Company (all such spare parts together with the Existing
Spare Parts, the "Xxxxx Company Spare Parts"). Xxxxx R&M shall use its best
-------------------------
efforts to ensure that all purchases of Xxxxx Company Spare Parts are made at
competitive rates. At all times during the term of this Services and Supply
Agreement, Xxxxx R&M shall maintain a complete inventory of all Xxxxx Company
Spare Parts and shall manage and store such spare parts in a manner that ensures
that the Xxxxx Company Spare Parts are at all time separate from the Common
Spare Parts and identifiable as property of the Xxxxx Company. The Xxxxx
Company shall reimburse Xxxxx R&M for all Xxxxx Company Spare Parts procured by
Xxxxx R&M.
(b) Xxxxx R&M shall acquire, manage and store all other spare parts
necessary for the operation of the Heavy Oil Processing Facility and the
performance of Xxxxx R&M's obligations hereunder (the "Common Spare Parts").
------------------
The Xxxxx Company shall reimburse Xxxxx R&M for the cost of Common Spare Parts
utilized in connection with the Xxxxx Complex.
(c) Xxxxx R&M shall (i) ensure that all Xxxxx Company Spare Parts are
new and that all spare parts described in this Section 5.9, including Xxxxx
Company Spare Parts, are of good quality and free from defects, (ii) utilize all
such spare parts in accordance with manufacturer and supplier warranties and
recommendations, and (iii) assign to the Xxxxx Company any warranties it obtains
in procuring Xxxxx Company Spare Parts and other spare parts or equipment that
are utilized in connection with the Xxxxx Complex.
Section 5.10 Catalysts, Chemicals and Consumables. Xxxxx R&M shall
------------------------------------
supply all catalysts, chemicals and other consumable materials necessary for the
operation of the Heavy Oil Processing Facility and the performance of its
obligations hereunder, including, without limitation those more particularly
described on Schedule 5.10. The Xxxxx Company shall pay Xxxxx R&M for such
materials, in accordance with the pricing formulas set forth in Schedule 5.10.
Section 5.11 Quantity and Quality Control.
----------------------------
(a) In order to properly measure each product to be delivered under
this Services and Supply Agreement and the Product Purchase Agreement in
accordance with Prudent Industry Practice, Xxxxx R&M shall (i) utilize the
meter(s) or calculation method, as the case may be, described under the headings
"Quantity" and "Quantity Measurement" on the Schedules to the Product Purchase
Agreement or the heading "Metering/Measurement Methodology" on the
15
Schedules to the Services and Supply Agreement relating to such product, (ii)
operate and maintain all metering devices described on such Schedules and (iii)
test the accuracy of such meters and the calculation methods as described in
clause (d) below.
(b) Xxxxx R&M shall implement, manage and maintain a system of
quality control and sampling to ensure that each product delivered under this
Services and Supply Agreement complies with (i) the specifications in the
Schedules and (ii) the Product Purchase Agreement, as the case may be.
(c) Every three days, Xxxxx R&M shall provide the Xxxxx Company with
the product quantity and quality information necessary for the Xxxxx Company to
xxxx Xxxxx R&M under Section 4.2 of the Product Purchase Agreement.
(d) In accordance with its regular practices, Xxxxx R&M shall test
the accuracy of the meters and calculation methods described in clause (a) above
through a combination of field verifications of meters and material balances of
Refinery units. The Xxxxx Company may from time to time request Xxxxx R&M to
conduct additional accuracy tests, at the Xxxxx Company's expense. If any
material inaccuracy is disclosed by any such test, Xxxxx R&M shall (i) promptly
take such steps as necessary to correct such inaccuracy by calibrating meters
and/or adjusting the applicable calculation method and (ii) as applicable,
adjust charges to the Xxxxx Company under Article 7 and/or provide the Xxxxx
Company the information to adjust charges to Xxxxx R&M under Section 4.2 of the
Products Purchase Agreement in order to compensate for the effect of such
inaccuracy on any charges related to the period extending back to the prior
accuracy test. For the purpose of calculating the amount of such adjustment, the
parties agree to assume that the inaccuracy occurred at the midpoint in time
between the prior accuracy test and the current accuracy test; provided,
--------
however, that if the time that such inaccuracy occurred can be ascertained by
-------
Prudent Industry Practice, the amount of the applicable adjustment shall be
based on such time.
(e) Xxxxx R&M shall preserve all its original test data, charts and
other records related to the quantity and quality measurements described in this
Section for a period of at least two years and make such records available,
together with calculations therefrom, for inspection or verification by the
Xxxxx Company.
(f) Should Xxxxx R&M determine, in its reasonable judgment, that
additional and/or replacement meters are necessary to more accurately measure
the Products, it shall propose a metering upgrade plan as part of the Annual
Budget and Operating Plan for the Heavy Oil Processing Facility.
(g) To the extent that any meters described on the Exhibits to the
Product Purchase Agreement are designated "XX-XXX", the Xxxxx Company and Xxxxx
R&M shall promptly replace such designation with meter identification numbers
upon completion of design engineering relating to such meter.
16
Section 5.12 Environmental, Health and Safety Services.
-----------------------------------------
(a) Xxxxx R&M shall be solely responsible for initiating, maintaining
and supervising all environmental, health and safety precautions and programs in
connection with the construction, operation and maintenance of the Heavy Oil
Processing Facility and the performance of its duties hereunder and shall
maintain the safety of the Heavy Oil Processing at a level consistent with
Applicable Law and Prudent Industry Practice, in accordance with Schedule
5.12.1.
(b) Xxxxx R&M shall provide the emergency response services described
on Schedule 5.12.2. If an emergency conditions arises, Xxxxx R&M may take
whatever steps it deems necessary and/or appropriate consistent with Prudent
Industry Practice and Applicable Law to preserve and protect any portion of the
Refinery and persons at the Refinery and to overcome the emergency condition,
restore the Refinery and continue performance of its duties hereunder. To the
extent such emergency action involves the Heavy Oil Processing Facility, the
Xxxxx Company will reimburse Xxxxx R&M for its pro rata share of expenses
incurred in connection with such action, in accordance with Schedule 5.12.2.
Section 5.13 Insurance Coverage.
------------------
(a) Xxxxx R&M shall purchase and maintain, on behalf of the Xxxxx
Company, the insurance coverage specified in Schedule 5.13 for the Heavy Oil
Processing Facility. Xxxxx R&M shall cause such insurance coverage to (i) be
available at such times and in such amounts as required by the Financing
Documents, (ii) comply in form and substance to the requirements of the
Financing Documents, including, without limitation, the naming of Financing
Parties as mortgagees, additional insureds and loss payees, as appropriate, on
each insurance policy obtained pursuant to this clause (a) and (iii) provide an
insurer's waiver of subrogation in favor of each insured party thereunder.
(b) The Xxxxx Company shall reimburse Xxxxx R&M for its share of
costs associated with insurance coverage obtained pursuant to clause (a) above
according to the pricing formulas set forth in Schedule 5.13.
Section 5.14 Licensing, Permits and Approvals.
--------------------------------
(a) Xxxxx R&M shall investigate, determine, procure, pay for and
maintain in effect, including all renewals and updating thereof, any and all
professional licenses, other Permits, or governmental approvals necessary for
continuous operation of the Heavy Oil Processing Facility including, without
limitation, those listed on Schedule 5.14.
(b) To the extent that any Permits are necessary for the continuous
operation of the Xxxxx Complex, Xxxxx R&M shall, to the extent permitted by
Applicable Law, (i) procure such Permits in the Xxxxx Company's name or (ii)
ensure that such Permits are freely assignable by Xxxxx R&M to the Xxxxx Company
and, subsequently, to the Financing Parties. With respect to any Permits
currently held by Xxxxx R&M that are necessary for the continuous operation of
17
the Xxxxx Complex that are not assignable under Applicable Law, Xxxxx R&M agrees
to use its best efforts to ensure that such Permits are procured in the Xxxxx
Company's name.
(c) The Xxxxx Company shall reimburse Xxxxx R&M for its share of
costs associated with any licenses, Permits or approvals obtained pursuant to
clause (a) above in accordance with the pricing formula set forth in Schedule
5.14.
(d) The Xxxxx Company hereby agrees not to exercise its right,
pursuant to its air emissions permit No. 6825Z and PSD-TX-492 issued by the
Texas Natural Resource Conservation Commission (the "Standby Permit"), to
activate the Standby Permit to cover the entire Refinery, including the
Ancillary Equipment, unless activating the Standby Permit is required to allow
the Xxxxx Company to continue operation of the Xxxxx Complex. If the Xxxxx
Company activates the Standby Permit, the Xxxxx Company shall cooperate with
Xxxxx R&M, at Xxxxx R&M's sole cost and expense, to modify the Standby Permit to
the extent necessary to obtain air emission permits for the Xxxxx Equipment;
provided that no such modification shall impair or restrict the right of the
--------
Xxxxx Company to operate the Heavy Oil Processing Facility at the greater of its
design capacity or its then actual capacity.
Section 5.15 Sulfur Recovery Services.
------------------------
(a) To the extent, at any time, the Sulfur Plant is unable to process
sulfur produced by the processing of Xxxxx Company-owned feedstreams through the
Ancillary Equipment, the Hydrocracker and the Xxxxx, Xxxxx R&M shall provide the
Xxxxx Company with alternative sulfur recovery services.
(b) In exchange for the provision of sulfur recovery services by
Xxxxx R&M pursuant to clause (a) of this Section 5.15, to the extent, at any
time, the Xxxxx R&M-owned sulfur recovery units at the Refinery are unable to
process sulfur produced by the processing of the Xxxxx R&M-owned feedstreams at
the Refinery, the Xxxxx Company agrees to the processing of Xxxxx R&M-owned
sulfur through the Sulfur Plant to the extent that capacity is available at the
Sulfur Plant.
(c) Xxxxx R&M shall coordinate the sulfur recovery activities
described in this Section 5.15.
ARTICLE 6. ANNUAL BUDGET AND OPERATING PLAN; REPORTING
Section 6.1 Annual Budget and Operating Plan.
--------------------------------
(a) The Annual Budget and Operating Plan for the first Operating Year
shall be the budget attached hereto as Schedule 6.1, as the same may be amended
by mutual consent, subject to any approval rights of the Financing Parties or
Independent Engineer set forth in the Financing Documents.
18
(b) Sixty (60) calendar days prior to the start of each Operating
Year, other than the first Operating Year, Xxxxx R&M shall prepare and submit to
the Xxxxx Company, the Financing Parties and the Independent Engineer, for their
review and comment, a proposed annual budget and operating plan for such year
which Annual Budget and Operating Plan shall be substantially in the form of
Schedule 6.1 and include, without limitation, (i) detailed line items of the
anticipated revenues and expenses relating to the operation of the Heavy Oil
Processing Facility for such year and (ii) the scheduled maintenance shutdown(s)
of units comprising the Heavy Oil Processing Facility during such year.
(c) Subject to any approval rights of the Financing Parties or
Independent Engineer set forth in the Financing Documents, the Xxxxx Company
shall accept or object to all or any portion of the proposed Annual Budget and
Operating Plan within thirty (30) calendar days of receipt thereof. If the Xxxxx
Company objects to any portion of such proposed Annual Budget and Operating
Plan, the Xxxxx Company and Xxxxx R&M shall attempt in good faith to agree to an
Annual Budget and Operating Plan. If the Xxxxx Company and Xxxxx R&M have not
reached agreement on the Annual Budget and Operating Plan for any Operating Year
prior to the first day of such Operating Year, the Annual Budget and Operating
Plan in effect for such Operating Year shall be the same as the Annual Budget
and Operating Plan for the immediately preceding calendar year (with each item
on the budget adjusted based on a percentage change in the U.S. Consumer Price
Index, in each case, from the date the Annual Budget and Operating Plan then in
effect was approved) until a new Annual Budget and Operating Plan is approved.
Section 6.2 Operating Adjustments.
---------------------
(a) Xxxxx R&M may modify the operations of the Ancillary Equipment or
the Xxxxx Complex at its discretion so long as such modification does not (i) in
any way impede production of the Required Product Mix, (ii) cause an increase in
the reimbursable costs of the Xxxxx Company that are payable hereunder that is
not offset by a corresponding increase in revenues under the Product Purchase
Agreement, (iii) adversely affect the reliability of or the useful life of
either the Xxxxx Complex or the Ancillary Equipment, or (iv) otherwise have a
material adverse effect on the Xxxxx Company, the Xxxxx Complex, the Ancillary
Equipment or the Refinery (including, without limitation, a material adverse
effect on the ability of the Xxxxx Company to pay its Senior Debt Obligations
when they become due and payable or to prepay Senior Debt in accordance with the
Base Case Financial Model).
(b) The Xxxxx Company and Xxxxx R&M agree to modify the Schedules
when and to the extent necessary in connection with adjustments permitted by
this Section 6.2. In the event of any such adjustments, Xxxxx R&M shall notify
the Xxxxx Company as soon as reasonably possible, and the parties shall
cooperate to effect the intent of this Section.
(c) To the extent Xxxxx R&M determines, in its reasonable business
judgment and in conformity with Prudent Industry Practices, that it is
economically and technically prudent to process Xxxxx Company feedstreams
through another Xxxxx R&M processing unit at the Refinery which has
substantially the same processing capabilities as a unit comprising the Heavy
Oil Processing Facility, Xxxxx R&M may substitute the processing capacity of
such unit with the
19
other Xxxxx R&M unit so long as (i) a substantially equivalent volume of Xxxxx
R&M feedstreams are processed through the unit comprising the Ancillary
Equipment, (ii) the Xxxxx Processing Fees shall be calculated as if the Xxxxx
Company feedstreams were processed through the Heavy Oil Processing Facility
unit, and (iii)Xxxxx R&M believes in its reasonable good faith judgment that the
result of such exchange of processing capacities will be to maximize the
profitability of the Refinery as a whole in a manner (A) that is mutually
beneficial to Xxxxx R&M and the Xxxxx Company and (B) that does not maximize the
profitability of Xxxxx R&M at the expense of the Xxxxx Company.
(d) To the extent that operational difficulties cause Actual Crude
Capacity for any day to be less than Crude Design Capacity, Xxxxx R&M shall use
commercially reasonable efforts to procure alternative Xxxxx feedstocks on
behalf of itself and the Xxxxx Company in order operate the Xxxxx at Actual
Xxxxx Capacity and preserve the relative processing capacities of Xxxxx R&M and
the Xxxxx Company as would exist if the Ancillary Equipment were operating at
Crude Design Capacity. In such event, the Xxxxx Company shall reimburse Xxxxx
R&M for all Permitted Reimbursable Expenses incurred by Xxxxx R&M in procuring
such feedstocks on behalf of the Xxxxx Company and the Excess Xxxxx Capacity for
such day shall be deemed to equal the volume necessary to preserve the relative
processing capacities of Xxxxx R&M and the Xxxxx Company as would exist if the
Ancillary Equipment were operating at Crude Design Capacity.
To the extent that such operating difficulties involve the Crude Unit,
Xxxxx R&M shall use commercially reasonable efforts to procure alternative
feedstocks for the other units comprising the Ancillary Equipment on behalf of
itself and the Xxxxx Company in order operate such units at their actual
capacities and preserve the relative processing capacities of Xxxxx R&M and the
Xxxxx Company as would exist if the Crude Unit were operating at Crude Design
Capacity. In such event, the Xxxxx Company shall reimburse Xxxxx R&M for all
Permitted Reimbursable Expenses incurred by Xxxxx R&M in procuring such
feedstocks on behalf of the Xxxxx Company and the capacity of such units
available for processing Xxxxx R&M feedstreams pursuant to Section 3.5 hereof
for such day shall be deemed to equal the volume necessary to preserve the
relative processing capacities of Xxxxx R&M and the Xxxxx Company as would exist
if the Crude Unit were operating at Crude Design Capacity.
Section 6.3 Quarterly Reports. Xxxxx R&M shall, within forty five
-----------------
(45) calendar days after the end of each of the first three calendar quarters of
each year and within ninety (90) days after the end of each calendar year,
submit a report to the Xxxxx Company, the Financing Parties and the Independent
Engineer summarizing the actual operating activities at the Heavy Oil Processing
Facility during that quarter or year, as the case may be, including, without
limitation, the feedstream mixes and volumes utilized and such other operation
information as may be reasonably requested by the Xxxxx Company the Financing
Parties or the Independent Engineer.
20
ARTICLE 7. PRICING AND PAYMENT
Section 7.1 Pricing of Services and Supplies.
--------------------------------
(a) The Xxxxx Company shall pay Xxxxx R&M the Applicable Price for
each Service and Supply provided by Xxxxx R&M to the Xxxxx Company hereunder
(except for potable water and sanitary sewage services as provided in Sections
5.5 and 5.6, respectively).
(b) Xxxxx R&M shall pay the Xxxxx Company the Xxxxx Processing Fee
for the processing services provided by the Xxxxx Company to Xxxxx R&M
hereunder.
Section 7.2 Net Pricing and Statements.
--------------------------
(a) Xxxxx R&M shall deliver to the Xxxxx Company an itemized
statement substantially in the form of Exhibit A hereto (the "Reconciliation
--------------
Statement") showing computation of the following for the prior monthly period:
---------
(i) a calculation of the Applicable Price for each Service and
Supply provided by Xxxxx R&M to the Xxxxx Company during such period;
(ii) a calculation of the Xxxxx Processing Fee for such period;
and
(iii) the difference obtained as a result of subtracting the
amount in 7.2(a)(i) from the amount in 7.2(a) (ii), as such difference
may be adjusted from time to time pursuant to clause (d) Section 5.11.
(b) The Reconciliation Statement shall be considered an invoice to
the Xxxxx Company of the amount computed in clause (a)(iii) above which shall be
paid in accordance with Section 7.3.
Section 7.3 Payment Procedure. Payments due under this Article 7
-----------------
shall be made pursuant to Reconciliation Statements to be rendered by Xxxxx R&M
to the Xxxxx Company on the eleventh (11/th/) Business Day of each month and to
be paid on the twentieth (20/th/) calendar day of each month.
Section 7.4 Alternative Pricing.
-------------------
(a) If a change in Applicable Law requires Xxxxx R&M to make capital
expenditures or change its operating procedures in a manner that directly
results in a material increase in the cost of providing the Services and
Supplies hereunder, then upon the written request of Xxxxx R&M the parties shall
meet to negotiate in good faith an equitable adjustment or adjustments to the
pricing of Services and Supplies hereunder (or an adjustment to the rents
payable under the Xxxxx Complex Ground Lease and/or the Ancillary Equipment Site
Lease, respectively, with respect to the provision of potable water or sanitary
sewage service); provided, however, that no such adjustment or adjustments shall
-------- -------
become effective unless or until Xxxxx
21
R&M has demonstrated to the satisfaction of the Xxxxx Company (and such other
parties as required under the Financing Documents) that such adjustment or
adjustments shall not (i) have a material adverse effect on the ability of the
Xxxxx Company to pay its Senior Debt Obligations when they become due or payable
and (ii) become effective until approved by the Independent Engineer.
(b) In the event that either party hereto determines in good faith
judgment that the provisions set forth under the heading "Applicable Price" on
the Schedule relating to any Service or Supply hereunder does not accurately
reflect the actual cost of providing such Service or Supply (for any reason
other than a change in Applicable Law), then upon written request of such party
the parties shall meet to negotiate in good faith an equitable adjustment or
adjustments to the pricing of such Services or Supply to reflect the actual cost
of providing such Service or Supply (and to preserve the profit component, if
any, of such price); provided, however, that such adjustment or adjustments
-------- -------
shall not (i) have a material adverse effect on the ability of the Xxxxx Company
to pay its Senior Debt Obligations when they become due or payable and (ii)
become effective until approved by the Independent Engineer.
(c) To the extent that any expansion of operations of Xxxxx R&M at
the Refinery (including, without limitation, the operation of the existing Xxxxx
R&M cokers after the Start-up Date) causes the Applicable Price of any Service
to be provided pursuant to Sections 5.5 or 5.6 to increase, Xxxxx R&M shall
reduce the amounts charged the Xxxxx Company for such Service so that the
Applicable Price of such Service shall conform to the pricing that would have
been in effect if such expansion had not occurred.
(d) Any disputes with respect to the foregoing shall be resolved in
accordance with Section 11.6 below.
Section 7.5 Recordkeeping; Right to Audit; Access to Books and
--------------------------------------------------
Records.
-------
(a) Xxxxx R&M shall, in accordance with good business practices, keep
and maintain such books, records, accounts and other documents as may be
necessary to the performance of its obligations hereunder and which are
sufficient to reflect accurately and completely all amounts which form the basis
for Reconciliations Statements. Such records shall include receipts, memoranda,
vouchers, inventories, and accounts of every kind and nature pertaining to the
accounting for the Services and Supplies, as well as complete summaries and
reports setting forth in reasonably detail all reimbursable expenses incurred.
(b) The Xxxxx Company shall have the right to audit all costs
incurred by Xxxxx R&M for which Xxxxx R&M seeks payment hereunder and shall have
the right to inspect and examine, during regular business hours and on not less
than five (5) days notice to Xxxxx R&M all records maintained pursuant to clause
(a) above.
Section 7.6 Interest Rate for Late Payments. All amounts payable
-------------------------------
hereunder if not paid when due will accrue interest daily at the annual rate of
interest announced from time to time for dollars by The Chase Manhattan Bank,
N.A. at its offices located in New York, New
22
York as its prime commercial interest rate for U.S. Dollar-denominated loans
originated in the United States plus two percent (2%) calculated from the due
date of such payment until the date of payment.
ARTICLE 8. DEFAULTS, REMEDIES AND TERMINATION
Section 8.1 Xxxxx R&M's Right to Terminate. The failure of the Xxxxx
------------------------------
Company to pay any amount due hereunder in excess of $250,000 which remains
uncured for a period of five (5) consecutive days from the date when payment of
such amount is due shall constitute a Xxxxx Company default hereunder.
If a Xxxxx Company default shall occur and be continuing, Xxxxx R&M
after having given the Xxxxx Company and the Financing Parties ninety (90) days
prior written notice may terminate this Services and Supply Agreement upon the
Xxxxx Company's and/or the Financing Parties' subsequent failure to cure such
default within such ninety (90) day cure period.
Section 8.2 Xxxxx Company's Right to Terminate and Other Remedies.
-----------------------------------------------------
Each of the following shall constitute a Xxxxx R&M default hereunder:
(a) Failure by Xxxxx R&M to pay any amount due hereunder in excess of
$250,000 on the date when payment of such amount is required, which continues
uncured for a period of five (5) consecutive days;
(b) Failure by Xxxxx R&M to perform substantially any material
obligation hereunder, which failure continues uncured for a period of thirty
(30) consecutive days;
(c) Commencement of insolvency, receivership, reorganization or
bankruptcy proceedings by or against Xxxxx R&M, which are not dismissed within
60 days;
(d) Any material representation or warranty of Xxxxx R&M herein that
continues uncured for a period of sixty (60) consecutive days;
(e) Default by Xxxxx R&M under Section 6.2 to the Product Purchase
Agreement; and
(f) Failure by Xxxxx R&M to perform substantially any material
obligation under the Ancillary Equipment Site Lease or the Xxxxx Complex Ground
Lease, which failure continues uncured for a period of thirty (30) consecutive
days.
Upon the occurrence of a Xxxxx R&M default hereunder and subject to
such consent as may be required under the Financing Documents, the Xxxxx Company
may take any of the following actions, provided that with respect to a default
--------
pursuant to clause (a) or (b) of this Section 8.2, the Xxxxx Company shall have
first given Xxxxx R&M sixty (60) days notice and
23
opportunity to cure such default and Xxxxx R&M shall have failed to cure such
default in its entirety within such sixty (60) day cure period: (x) terminate
this Services and Supply Agreement, and/or (y) exercise any or all remedies
available to it at law or in equity.
Section 8.3 Termination Option. Notwithstanding anything to the
------------------
contrary herein and subject to such consent as may be required under the
Financing Documents, this Services and Supply Agreement shall terminate at the
option of either party hereto should Final Completion (as such term is defined
in the EPC Contract) and completion of the Lessor Ancillary Equipment Upgrade
not occur on or before March 1, 2002 or such later date for completion of
construction of the Heavy Oil Processing Facility as may be contemplated by the
Financing Documents.
Section 8.4 Non-Exclusive Remedies; Specific Performance.
--------------------------------------------
(a) None of the provisions in this Article 8 are intended to be
exclusive of, or to limit, any rights available to either party at law or in
equity.
(b) Each of the parties hereto acknowledges and agrees that (i)
monetary damages may be an inadequate remedy for a breach of any of the
provisions of this Services and Supply Agreement, (ii) in addition to being
entitled to exercise all of its rights granted by law, including recovery of
damages, the other party shall therefore be entitled to specific performance of
the other party's obligations under this Services and Supply Agreement and (iii)
in the event of any action for specific performance it shall waive the defense
that a remedy at law would be adequate.
ARTICLE 9. TERM, AND COMMENCEMENT OF SERVICES
Section 9.1 Effectiveness; Term. This Services and Supply Agreement
-------------------
shall become effective on the date hereof and shall continue in effect until the
earlier of (a) the date on which this Services and Supply Agreement is
terminated pursuant to Article 8, and (b) the date of that is thirty (30) years
after the date hereof.
Section 9.2 End of Term Obligations.
-----------------------
Upon the expiration or termination, for whatever reason, of this
Services and Supply Agreement:
(a) Xxxxx R&M shall cooperate with the Xxxxx Company to enable it to
continue operation of the Xxxxx Complex, reclaim goods, equipment and materials,
and otherwise effectuate the smooth transition of operations of the Xxxxx
Complex to the Xxxxx Company or a new manager engaged by the Xxxxx Company;
(b) The Xxxxx Company shall have the right, in its sole discretion,
directly to assume and become liable for any contracts or obligations that Xxxxx
R&M may have undertaken
24
with third parties in connection with the Services or provision of the Supplies
(other than any contracts or obligations related to the provision of electric
utilities or electric service), and Xxxxx R&M shall execute all documents and
take all other reasonable steps requested by the Xxxxx Company which may be
required to assign to and vest in the Xxxxx Company all rights, benefits,
interest and title in connection with such contracts or obligations;
(c) Xxxxx R&M shall deliver to the Xxxxx Company all materials and
documents that are the Xxxxx Company property including, without limitation, the
property referred to in Section 11.8; and
(d) Xxxxx R&M and the Xxxxx Company shall cooperate to amend their
respective Permits to reallocate their respective rights thereunder as necessary
for the Xxxxx Company to continue operation the Heavy Oil Processing Facility
and Xxxxx R&M to continue operation of the Xxxxx Equipment.
ARTICLE 10. REPRESENTATIONS AND WARRANTIES
Section 10.1 Representations and Warranties of the Xxxxx Company.
---------------------------------------------------
The Xxxxx Company represents and warrants to Xxxxx R&M that:
(a) The Xxxxx Company is a limited partnership duly formed and
validly existing under the laws of the State of Delaware; the Xxxxx Company has
the power and authority to own its assets and to transact the business in which
it is now engaged or proposed to be engaged in; and the Xxxxx Company is duly
qualified to do business in each jurisdiction in which the character of the
properties owned by it therein or in which the transaction of its business makes
such qualification necessary.
(b) The execution, delivery and performance by the Xxxxx Company of
this Services and Supply Agreement has been duly authorized by all necessary
corporate action and does not and will not: (1) require any further consent or
approval of the members of the Xxxxx Company; (2) contravene the Xxxxx Company's
partnership agreement or limited partnership certificate; (3) violate any
provision of any law, rule, regulation, order, writ, judgment, decree,
determination, or award presently in effect having applicability to the Xxxxx
Company; (4) result in a breach of or constitute a default under any indenture
or loan or credit agreement or any other agreement, lease or instrument to which
the Xxxxx Company is a party or by which it or its properties may be bound or
affected; (5) result in, or require, the creation or imposition of any lien,
upon or with respect to any of the properties now owned or hereafter acquired by
the Xxxxx Company; or (6) cause the Xxxxx Company to be in default under any
such law, rule, regulation, order, writ, judgment, injunction, decree,
determination, or award or any such indenture, agreement, lease or instrument.
(c) This Services and Supply Agreement is in full force and effect
and is the legal, valid, and binding obligation of the Xxxxx Company,
enforceable against the Xxxxx
25
Company in accordance with its terms, except to the extent that such enforcement
may be limited by applicable bankruptcy, moratorium, insolvency or other similar
laws affecting creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
Section 10.2 Representations and Warranties of Xxxxx R&M.
-------------------------------------------
Xxxxx R&M represents and warrants to the Xxxxx Company that:
(a) Xxxxx R&M is a corporation duly formed and validly existing under
the laws of Delaware; Xxxxx R&M has the corporate power and authority to own its
assets and to transact the business in which it is now engaged or proposed to be
engaged in; and Xxxxx R&M is duly qualified to do business in each jurisdiction
in which the character of the properties owned by it therein or in which the
transaction of its business makes such qualification necessary.
(b) The execution, delivery and performance by Xxxxx R&M of this
Services and Supply Agreement has been duly authorized by all necessary
corporate action and does not and will not: (1) require any further consent or
approval of the members of Xxxxx R&M; (2) contravene Xxxxx R&M's certificate of
incorporation or by laws, (3) violate any provision of any law, rule,
regulation, order, writ, judgment, decree, determination, or award presently in
effect having applicability to Xxxxx R&M; (4) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which Xxxxx R&M is a party or by which
it or its properties may be bound or affected; (5) result in, or require, the
creation or imposition of any lien, upon or with respect to any off the
properties now owned or hereafter acquired by Xxxxx R&M; or (6) cause Xxxxx R&M
to be in default under any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination, or award or any such indenture, agreement,
lease or instrument.
(c) This Services and Supply Agreement is in full force and effect
and is the legal, valid, and binding obligation of Xxxxx R&M enforceable against
Xxxxx R&M in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, moratorium, insolvency, or
other similar laws affecting creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
(d) Xxxxx R&M has all the required skills and capacity necessary to
provide and shall diligently provide the Services and Supplies in a timely and
professional manner, utilizing sound operation principles, project management
procedures and supervisory procedures, all in accordance with Applicable Law,
Prudent Industry Practice and the Base Case Financial Model.
26
ARTICLE 11. FURTHER AGREEMENTS
Section 11.1 Intellectual Property; Confidentiality. Xxxxx R&M agrees
--------------------------------------
to be bound by all confidentiality agreements and all agreements with respect to
intellectual property rights contained in the other Project Documents.
Section 11.2 Force Majeure.
-------------
(a) If an Event of Force Majeure causes a material adverse effect on
a party's ability to carry out its obligations hereunder, other than the
obligation to pay money, such party shall give to the other party prompt notice
of such Event of Force Majeure with reasonably full particulars thereof, and any
such obligations so far as they are affected by such Event of Force Majeure
shall be suspended during but not longer than the continuance of such Event of
Force Majeure and such further period thereafter as shall be reasonable in the
circumstances.
(b) As soon as practicable after giving notice under clause (a) above
the claiming party shall provide to the other party confirmation of the
particulars required to be given under clause (a) above.
(c) Nothing in this Section 11.2 shall suspend, excuse or delay any
party's obligation to pay hereunder.
(d) The non-performing party shall use reasonable diligence to remedy
its inability to perform or to minimize the impact of the Event of Force Majeure
as quickly as possible.
Section 11.3 Cooperation with Other Parties. Xxxxx R&M shall
------------------------------
reasonably cooperate with the Xxxxx Company, the Independent Engineer and the
Financing Parties in connection with the Financing Documents and/or any
refinancing thereof including, without limitation, the furnishing of such
information, the giving of such certificates and the furnishing of a reasonable
consent and such reasonable opinions of counsel and other matters as the Xxxxx
Company, the Independent Engineer or the Financing Parties may reasonably
request in connection with the transactions contemplated hereby or by the
Financing Documents.
Section 11.4 Site Access. The Xxxxx Company hereby grants to Xxxxx
-----------
R&M a continuing license to use the portions of the Refinery owned or leased by
the Xxxxx Company (the "Xxxxx Company Site") to the extent necessary to perform
------------------
its obligations hereunder.
Section 11.5 Indemnity.
---------
(a) The Xxxxx Company shall protect, indemnify, defend and hold
harmless Xxxxx R&M, and Xxxxx R&M shall protect, indemnify, defend and hold
harmless the Xxxxx Company and the Financing Parties, together with in each case
the respective indemnitee's directors, officers, employees and agents (including
but not limited to affiliates and their employees) from and against all
liabilities, damages, losses, penalties, claims, judgments,
27
awards, costs, expenses (including reasonable legal fees and any fines or
assessments charged against it), demands, suits and proceedings of any nature
whatsoever for death, injury or property damage that arise out of or are in any
manner connected with the negligence or willful misconduct of that party in its
performance of this Services and Supply Agreement.
(b) Each party's obligations with respect to claims and suits covered
by this Section are subject to the conditions that (i) the indemnitee gives the
indemnitor reasonably prompt notice of any such claim or suit, (ii) the
indemnitee cooperates in the defense of any such claim or suit and (iii) the
indemnitor has sole control of the defense and settlement to the extent of the
indemnitor's liability for any such claim or suit, provided that indemnitor
--------
shall confirm in writing its obligation to indemnify the indemnitee with respect
to all costs and expenses with respect to such claim or suit. Nothing contained
in this clause (b), however, shall preclude the indemnitee from (x) being
represented by its own counsel at its own expense or (y) participating in the
settlement if the claimed relief is non-monetary in nature.
(c) The Xxxxx Company hereby agrees that, notwithstanding any
provision herein to the contrary, with respect to any loss that is or would be
covered by the policies of insurance specified in Section 5.13, Xxxxx R&M shall
first seek to recover insurance proceeds under such policies, through submission
of a claim and exercise of good faith efforts over the ensuing sixty (60) day
period toward recovery of damages hereunder.
Section 11.6 Dispute Resolution.
------------------
(a) In the event of any dispute arising out of or in connection with
the Services and Supply Agreement, Xxxxx R&M or the Xxxxx Company may notify the
other party of the nature of the dispute and the parties shall, in good faith
and using all reasonable efforts, seek to settle the dispute amicably through
negotiation between senior executives. Within twenty (20) days after delivery of
such notice, such senior executives shall meet at a mutually acceptable time and
place, and thereafter as often as reasonably deemed necessary, to exchange
relevant information and to attempt to resolve the dispute. All discussions
pursuant to this clause (a) shall be confidential and shall be treated as
compromise and settlement negotiations for all purposes including the admission
of evidence in any subsequent arbitration. If the matter has not been resolved
within sixty (60) days of the delivery of notice of the dispute, or if the
parties fail to meet within the twenty-day period referred to above, either
party may initiate arbitration of the dispute pursuant to the terms of clause
(b) of this Section.
(b) All disputes arising out of or in connection with the Services
and Supply Agreement shall be settled finally by arbitration under rules
applicable to arbitrations of the American Arbitration Association (the "AAA
---
Rules") in effect at such time. The arbitration shall take place in New York
-----
City. Subject to the provisions of paragraph (c) below, the arbitral tribunal
shall consist of three arbitrators, one designated by each of the parties and
the third, who shall be the chairman of the tribunal, selected by agreement of
the two designated arbitrators. In the event the two arbitrators fail to agree
on the selection of the chairman, the chairman shall be selected in accordance
with ABB Rules. The substantive law applicable to the subject matter of the
arbitration shall be the law indicated in Section 12.8. Copies of the request
for arbitration
28
and the answer thereto shall be served by a party on the other party in
accordance with Section 12.7. Subject to paragraph (c) below, the award of the
arbitral tribunal shall be rendered within one hundred eighty (180) days from
signature or approval of the terms of reference, subject to extension for good
cause only. The award shall be final and binding on the parties, and may be
confirmed or embodied in any order or judgment of any court of competent
jurisdiction.
(c) In the case of any claim for damages in a principal amount of two
hundred fifty thousand U.S. dollars (U.S.$250,000) or less, (i) the claim shall
be resolved by a sole arbitrator selected in accordance with AAA Rules, (ii) the
terms of reference shall be signed and any hearing of the matter shall be held
within one hundred twenty (120) days following the later of service of the
answer and transmission of the file to the arbitrator, and (iii) the arbitrator
shall render the award within thirty (30) days after the hearing or, in the
event a hearing is not held, signature or approval of the terms of reference,
subject extension for good cause only.
Section 11.7 Taxes.
-----
(a) The Xxxxx Company shall be responsible for payment of or
reimbursement of the cost to Xxxxx R&M of (i) all duties and all real property,
personal property, sales, use, municipal or VAT, and other like taxes, in each
case assessed against the Xxxxx Complex and (ii) its pro rata share of all
duties and all real property, personal property, sales, use, municipal or VAT,
and other like taxes, in each case assessed against the Ancillary Equipment.
(b) Xxxxx R&M shall use commercially reasonable efforts to minimize
the tax obligations arising out of or associated with this Services and Supply
Agreement, the Ancillary Equipment or the Xxxxx Complex and shall assist the
Xxxxx Company in (i) applying for available tax exemptions including, without
limitation, a Texas direct pay permit and (ii) preparing and submitting any
exemption certificates required under the clause (a) above. When obtained, the
Xxxxx Company shall issue Xxxxx R&M its Texas direct pay permit for the
provisions of Services and Supplies hereunder. If, for any reason, during the
term of this Services and Supply Agreement, the Xxxxx Company provides Xxxxx R&M
products or services which are subject to Texas sales and use tax, Xxxxx R&M
shall provide it Texas direct pay permit to the Xxxxx Company.
(c) Each party shall be solely responsible for payment of any
federal, state or local taxes based on upon or measured by such party's income.
Section 11.8 Title to Property.
-----------------
(a) Title to all materials, equipment, supplies, consumables, spare
parts and other items purchased or obtained by Xxxxx R&M in connection with
performance of the Services related to, and provision of the Supplies for, the
Xxxxx Complex shall pass immediately to and vest in the Xxxxx Company upon
passage of title from the vendor or supplier thereof.
(b) All materials and documents prepared or developed by Xxxxx R&M or
its employees, representatives or contractors in connection with performance of
the Services related
29
to, and provision of Supplies for, the Xxxxx Complex, including all manuals,
data, designs, drawings, plans, specifications, reports, and accounts shall
become the property of the Xxxxx Company when prepared, and Xxxxx R&M and its
contractors.
Section 11.9 Subcontractors.
--------------
(a) Xxxxx R&M shall have the right to subcontract any portion of the
Services to be provided hereunder and enter into supply agreements with third
parties in connection with the provision of Supplies hereunder. Xxxxx R&M shall
assure that its subcontractors, subcontracts and supply agreements comply with
all pertinent provisions of this Services and Supply Agreement.
(b) Xxxxx R&M shall remain responsible for all of its obligations
under this Supply and Service Agreement regardless of whether a subcontract or
supply agreement is made or whether Xxxxx R&M relies upon any subcontractor to
any extent. Xxxxx R&M's use of subcontractors for the performance of its
obligations hereunder shall in no way increase Xxxxx R&M's rights or diminish
Xxxxx R&M's liabilities hereunder with respect to the Xxxxx Company and this
Services and Supply Agreement shall be as though Xxxxx R&M had itself performed
such obligations.
(c) The Xxxxx Company shall not be deemed by virtue of any
subcontract entered into by Xxxxx R&M in connection herewith to have any
contractual obligation to or relationship with any subcontractor of Xxxxx R&M.
ARTICLE 12. MISCELLANEOUS
Section 12.1 Relationship of Parties.
-----------------------
(a) Nothing in this Services and Supply Agreement shall be deemed to
constitute either party hereto a partner, joint venturer, agent or legal
representative of the other party or to create any fiduciary relationship
between or among the parties.
(b) Xxxxx R&M shall at all times be deemed an independent contractor
with respect to the provision of Services and Supplies and neither it nor any of
its employees or the employees of any of its subcontractors shall be considered
an agent, servant or employee of the Xxxxx Company.
Section 12.2 Third Party Beneficiaries. (a) The Financing Parties
-------------------------
are intended third party beneficiaries of this Services and Supply Agreement and
the representations, warranties, covenants and agreements of the parties hereto
are made for the benefit of, and may be relied upon by, the Financing Parties.
30
(b) Except as otherwise provide in this Section 12.2, the rights and
obligations created hereunder shall apply exclusively to the parties hereto and
their successors and permitted assigns, and no right shall be created in any
third party by reason of this Services and Supply Agreement or separate act or
action taken independently by either party.
Section 12.3 Xxxxx R&M Warranties.
--------------------
(a) Xxxxx R&M warrants that at time of delivery, each product that
Xxxxx R&M supplies to the Xxxxx Company hereunder shall meet its respective
specifications set forth herein and in the Schedule in all material respects.
XXXXX R&M DOES NOT MAKE, AND EXPRESSLY DISCLAIMS, ANY OTHER WARRANTIES
WHATSOEVER WITH RESPECT TO THE PRODUCTS TO BE SUPPLIED BY XXXXX R&M HEREUNDER,
INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
(b) Xxxxx R&M hereby assigns any assignable warranties made by third
party suppliers for any products supplied by it hereunder. Xxxxx R&M shall
cooperate with the Xxxxx Company in claims made by the Xxxxx Company against any
third party suppliers regardless of any warranty rights. The Xxxxx Company
hereby releases Xxxxx R&M from claims arising from a breach of such third party
warranties.
(c) Xxxxx R&M warrants that each Service or Supply provided by Xxxxx
R&M to the Xxxxx Company hereunder shall meet its respective specifications set
forth herein and in the Schedules in all material respects and shall meet the
practices Xxxxx R&M generally uses to perform similar functions at other United
States refinery facilities it owns and operates. XXXXX R&M DOES NOT MAKE, AND
EXPRESSLY DISCLAIMS, ANY OTHER WARRANTIES WHATSOEVER WITH RESPECT TO THE
SERVICES AND SUPPLIES TO BE PROVIDED BY XXXXX R&M HEREUNDER, INCLUDING WITHOUT
LIMITATION ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
Section 12.4 No Indirect Damages. Notwithstanding anything to the
-------------------
contrary herein, in no event shall either party be liable for consequential,
incidental, indirect, special or punitive damages hereunder including, without
limitation, any damages measured by the principal amount of the Xxxxx Company's
obligations under the Financing Documents.
Section 12.5 Assignments.
-----------
(a) Xxxxx R&M shall not assign its rights hereunder without the prior
written consent of the Xxxxx Company and the Financing Parties. The Xxxxx
Company may assign its rights hereunder to the Financing Parties, as collateral
security for its obligations under the Financing Documents, but otherwise shall
not assign its rights hereunder without the prior written consent of Xxxxx R&M
and the Financing Parties. Xxxxx R&M hereby expressly authorizes the Financing
Parties, or the Collateral Trustee acting on behalf of the Financing Parties, as
a secured party, to exercise all rights of the Xxxxx Company under this Services
and Supply Agreement and to subsequently assign such rights in connection
therewith.
31
(b) This Services and Supply Agreement shall be binding upon and
shall inure to the benefit of, the successors and permitted assigns of Xxxxx R&M
and the Xxxxx Company.
(c) This Services and Supply Agreement shall inure to the benefit of
the Collateral Trustee, the Financing Parties and any subsequent transferee or
assignee thereof.
(d) Notwithstanding anything to the contrary herein, no assignment of
the rights of the Xxxxx Company with respect to the Regulated Utilities to any
Person shall be effective unless and until the rights of the Xxxxx Company under
the Xxxxx Complex Ground Lease and the Ancillary Equipment Site Lease are
assigned to such Person.
Section 12.6 Amendments. No amendment, modification or alteration of
----------
the terms hereof shall be binding unless the same is in writing and duly
executed by each of the parties hereto.
Section 12.7 Notices. Any notice, request, consent, waiver or other
-------
communication required or permitted hereunder shall be effective only if it is
in writing and personally delivered by hand or by overnight courier or sent by
certified or registered mail, postage prepaid, return receipt requested,
addressed as follows:
If to Xxxxx R&M:
Xxxxx Refining & Marketing, Inc.
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
If to the Xxxxx Company:
Port Xxxxxx Xxxxx Company L.P.
Port Xxxxxx Refinery
0000 X. Xxxxxxx Xxxxx
Office Number 36
Port Xxxxxx, Texas 77640
Attention: X.X. Xxxx
(or if sent by U.S. Mail:
Port Xxxxxx Xxxxx Company L.P.
X.X. Xxx 000
Xxxx Xxxxxx, Xxxxx 00000-0000
Attention: X.X. Xxxx)
32
Any such notice, request, consent, waiver or other communication
required or permitted hereunder, whether to Xxxxx R&M or the Xxxxx Company,
shall also be personally delivered by hand or by overnight courier or sent by
certified or registered mail, postage prepaid, return receipt requested, to the
Collateral Trustee on behalf of the Financing Parties, addressed as follows:
Bankers Trust Company
Corporate Trust & Agency Services
Xxxx Xxxxxx Xxxxxx, 0/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx XxXxxxxxx
Section 12.8 GOVERNING LAW. THE PLACE OF EXECUTION, DELIVERY OR
-------------
PERFORMANCE OF THIS SERVICES AND SUPPLY AGREEMENT OR OF THE DOMICILE OF THE
PARTIES HERETO NOTWITHSTANDING, THIS SERVICES AND SUPPLY AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS SERVICES AND SUPPLY AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT MATTERS AFFECTING THE
OBLIGATION OF XXXXX R&M TO PROVIDE ELECTRIC UTILITIES OR ELECTRIC SERVICE,
NATURAL GAS OR GAS SERVICE, POTABLE WATER OR WATER SERVICE OR SANITARY SEWAGE
SERVICES TO THE XXXXX COMPANY, INCLUDING THE ENFORCEMENT OF REMEDIES WITH
RESPECT THERETO, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
Section 12.9 Submission to Jurisdiction; Forum Selection.
-------------------------------------------
(a) Each of the parties hereto submits to the non-exclusive
jurisdiction of the courts of the State of New York, the State of Texas and the
courts of the United States of America located in the State of New York and the
State of Texas over (i) any suit, action or proceeding with respect to this
Services and Supply Agreement or the transactions contemplated hereby if not
settled by arbitration pursuant to Section 11.6 above and (ii) the enforcement
of any arbitral award issued pursuant to Section 11.6 above.
(b) Except for an arbitration award under Section 11.6 hereof, any
suit, action or proceeding with respect to this Services and Supply Agreement or
the transactions contemplated hereby, or the enforcement of any arbitral award
in connection therewith, may be brought only in the courts of the State of New
York or the courts of the United States of America located in the State of New
York, in each case located in the Borough of Manhattan, City of New York, State
of New York. Each of the parties hereto waives any objection that it may have to
the
33
venue of such suit, action or proceeding in any such court or that such suit,
action or proceeding in such court was brought in an inconvenient court and
agrees not to plead or claim the same.
Section 12.10 Appointment of Agent for Service of Process. Each
-------------------------------------------
party hereto irrevocably appoint CT Corporation, at 0000 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, as its authorized agent in the State of New York upon which process
may be served in any suit, action or proceeding with respect to this Services
and Supply Agreement or the transactions contemplated hereby, and agrees that
service of process upon such agent, and written notice of said service to such
party by the person serving the same to the address provided in Section 12.7,
shall be deemed in every respect effective service of process upon such party in
any such suit or proceeding. Each party hereto further agrees to take any and
all action as may be necessary to maintain such designation and appointment of
such agent in full force and effect so long as this Services and Supply
Agreement is in effect pursuant to Section 9.1.
Section 12.11 No Waiver. The waiver of either party of a default or
---------
breach of any provision of this Services and Supply Agreement by the other party
shall not operate or be construed to operate as a waiver of any subsequent
defaults or breaches of the same or different kind. The failure of a party to
exercise any rights hereunder in a particular instance shall not operate as a
waiver of such party's right to exercise the same or different rights in
subsequent instances. The making or acceptance of a payment by either party
with knowledge of the existence of a default or breach shall not operate or be
construed to operate as a waiver of any default or breach.
Section 12.12 Counterparts. This Services and Supply Agreement may
------------
be executed by one or more of the parties to this Services and Supply Agreement
on any number of separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. Delivery of
an executed signature page of this Services and Supply Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof.
Section 12.13 Integration. This Services and Supply Agreement and
-----------
the other Project Documents represent the agreement of the Xxxxx Company and
Xxxxx R&M with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Xxxxx Company or Xxxxx R&M
relative to subject matter hereof not expressly set forth or referred to herein
or in the other Project Documents.
Section 12.14 Severability. Any provision of this Services and
------------
Supply Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 12.15 Headings. Captions and headings in this Services and
--------
Supply Agreement are for reference only and do not constitute a part of the
substance of this Services and Supply Agreement.
34
Section 12.6 WAIVER OF JURY TRIAL. THE XXXXX COMPANY AND XXXXX R&M
--------------------
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS SERVICES AND SUPPLY AGREEMENT OR ANY OTHER
PROJECT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have caused this Services and Supply Agreement to be signed by their respective
officers thereunto duly authorized as of the day and year first set forth above.
XXXXX REFINING & MARKETING, INC.
By: /s/ Xxxxx X. Xxxxx
--------------------------------------
Name: Xxxxx X. Xxxxx
Title: Executive Vice President and
Chief Financial Officer
PORT XXXXXX XXXXX COMPANY L.P.
By: SABINE RIVER HOLDING CORP., as
General Partner
By: /s/ Xxxxx X. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
Title: Executive Vice President and
Chief Financial Officer
APPENDIX A-DEFINITIONS TO THE:
Services and Supply Agreement
Product Purchase Agreement
Xxxxx Complex Ground Lease
Ancillary Equipment Site Lease
Transfer and Assignment Agreement
General Provisions
------------------
The following terms shall have the following meanings for all purposes of
the Services and Supply Agreement, the Product Purchase Agreement, Xxxxx Complex
Ground Lease, the Ancillary Equipment Site Lease and the Transfer and Assignment
Agreement, each referred to below, unless otherwise defined in such agreements
or the context thereof shall otherwise require, and such meanings shall be
equally applicable to both the singular and the plural forms of the terms herein
defined. In the case of any conflict between the provisions of this Appendix A
and the provisions of the main body of any of the above agreements, the
provisions of the main body of such agreement shall control the construction of
such agreement.
Unless the context otherwise requires, references to (i) agreements shall
include sections, schedules, exhibits and appendices thereto and shall be deemed
to mean and include such agreement (and sections, schedules, exhibits and
appendices) as the same may be amended, supplemented and otherwise modified from
time to time, (ii) parties to agreements or government agencies shall be deemed
to include the permitted successors and assigns of such parties and the
successors and assigns of such agencies and (iii) laws or regulations shall be
deemed to mean such laws or regulations as the same may be amended from time to
time and any superseding laws or regulations covering the same subject matter.
"Actual Xxxxx Capacity" means with respect to the Xxxxx, its capacity, from
---------------------
time to time, to process feedstreams.
"Actual Crude Capacity" means with respect to the Ancillary Equipment, its
---------------------
capacity, from time to time, to process crude oil.
"Actual Hydrocracker Capacity" means with respect to the Hydrocracker, its
----------------------------
capacity, from time to time, to process gas oil.
"Adjacent Refinery Property" means the land described on Exhibit B to the
--------------------------
Xxxxx Complex Ground Lease and also on Exhibit C to the Ancillary Equipment Site
Lease.
"Amine Treating Unit" means the amine treating unit to be constructed
-------------------
at the Refinery and designated ATU 7841.
"Ancillary Equipment" means, collectively, the Crude Unit and the other
-------------------
processing units described on Exhibit B to the Ancillary Equipment Site Lease.
"Ancillary Equipment Easement" has the meaning given such term in Section
----------------------------
2.2 of the Ancillary Equipment Site Lease.
2
"Ancillary Equipment Operating Fee" has the meaning given such term in
---------------------------------
Section 13.2(b) of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site" has the meaning given such term in Section 2.1
------------------------
of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site Initial Term" means the period commencing on the
-------------------------------------
August 19, 1999 and ending on August 19, 2029.
"Ancillary Equipment Site Lease" means the Ancillary Equipment Site Lease
------------------------------
and Easement Agreement, dated as of August 19, 1999, between Xxxxx R&M and the
Xxxxx Company.
"Ancillary Equipment Site Leasehold" has the meaning given such term in
----------------------------------
Section 2.1 of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site Lease Term" has the meaning given such term in
-----------------------------------
Article XX of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site Renewal Term" means each period following the end
-------------------------------------
of the Ancillary Equipment Initial Term with respect to which Lessee has the
option to renew the Ancillary Equipment Site Lease pursuant to Article XX of the
Ancillary Equipment Site Lease.
"Ancillary Equipment Upgrade Contract" means the Reimbursable Contract for
------------------------------------
Engineering, Procurement and Construction, dated as of March 24, 1998, between
Xxxxx R&M and the Contractor, as amended by Amendment No. One, dated as of
August 19, 1999, as further amended, supplemented or otherwise modified from
time to time.
"Annual Budget and Operating Plan" means, for any Operating Year, the
--------------------------------
budget and operating plan in effect pursuant to Section 6 of the Services and
Supply Agreement.
"Applicable Law" means, collectively, (i) all Permits and (ii) all laws,
--------------
treaties, ordinances, judgments, decrees, injunctions, writs, orders and
stipulations of any court, arbitrator or governmental agency or authority and
statutes, rules, regulations, orders and interpretations thereof of any federal,
state, county, municipal, regional, environmental or other governmental body,
instrumentality, agency, authority, court or other body applicable from time to
time to the Refinery, the operation or maintenance of the Refinery, or the
performance of any obligations under the Xxxxx R&M Agreements, any other Project
Document or any other agreement entered into in connection therewith.
"Appraisal Procedure" with respect to any renewal option of any lease,
-------------------
means a procedure whereby two independent Qualified Appraisers, one appointed by
the lessor and one by the lessee, shall agree upon the value, period, amount or
determination then the subject of an appraisal, as follows: If either the
lessor or the lessee shall determine that a value, period or amount of
determination to be determined under such lease or any related document cannot
timely be established by agreement, such party shall appoint its Qualified
Appraiser and give
3
notice thereof to the other party, which shall appoint its Qualified Appraiser
within 10 days thereafter. If such other party does not appoint its Qualified
Appraiser within such ten day period, the determination of the first Qualified
Appraiser made within 20 days thereafter shall be conclusive and binding on the
lessor and the lessee. If within 20 days after appointment of the second of the
two Qualified Appraisers, such Qualified Appraisers are unable to agree upon the
value, period, amount or determination in question, they jointly shall appoint a
third Qualified Appraiser within 10 days thereafter, or, if they do not do so,
either the lessor or the lessee may request the American Arbitration Association
office in Houston, Texas (or if no such office exists at such time, the American
Arbitration Association office in New York, New York), or any organization
successor thereto, to appoint the third Qualified Appraiser from a panel of
arbitrators knowledgeable on the subject of refinery land and asset valuations
in the Texas Gulf Coast area. The decision of the third Qualified Appraiser
shall be given within 20 days after his appointment. If three Qualified
Appraisers shall be so appointed, the average of all three determinations shall
be conclusive and binding on the lessor and the lessee unless the determination
of one Qualified Appraiser is disparate from the middle determination by more
than twice the amount by which the third determination is disparate from the
middle determination, in which case the determination of the most disparate
Qualified Appraiser shall be excluded and the average of the remaining two
determinations shall be conclusive and binding on the lessor and the lessee.
The obligation to pay the fees and expenses of Qualified Appraisers incurred in
connection with any Appraisal Procedure shall be divided equally between the
lessor and the lessee.
"Auxiliary Facilities" has the meaning given such term in Article VI of the
--------------------
Xxxxx Complex Ground Lease.
"Auxiliary Rights" has the meaning given such term in Article VI of the
----------------
Xxxxx Complex Ground Lease.
"Available Xxxxx Company Maya" means, for any day, the sum of (a) the
----------------------------
Contract Quantity for such day, plus (b) the extent, if any, that the Available
----
Xxxxx Company Maya for the preceding day exceeds the Actual Crude Capacity for
such preceding day.
"Available Xxxxx Company VTBs" means, for any day, the sum of (a) the Xxxxx
----------------------------
Company VTBs produced by the Crude Unit on such day, plus (b) the extent, if
----
any that Available Xxxxx Company VTBs for the preceding day exceeds Actual Xxxxx
Capacity for such preceding day.
"Base Case Financial Model" shall mean the financial model described on
-------------------------
Exhibit A to the Services and Supply Agreement.
"BPD" has the meaning given such term in the Long-Term Oil Supply
---
Agreement.
"Business Day" means any day other than Saturday, Sunday or a legal holiday
------------
in the United States of America.
4
"Xxxxx Equipment" means all Xxxxx Refinery Property other than the
---------------
Ancillary Equipment.
"Xxxxx Hydrogen Supply Contract" means the Product Supply Agreement, dated
------------------------------
as of August 1, 1999, between Xxxxx R&M and Air Products, Inc.
"Xxxxx Xxxx" means Maya Crude Oil purchased by Xxxxx R&M.
----------
"Xxxxx Processing Fee" means, for any monthly period, the total fees due
--------------------
the Xxxxx Company from Xxxxx R&M for processing services provided pursuant to
Sections 3.5, 4.2 and 4.3.
"Xxxxx R&M" means Xxxxx Refining & Marketing, Inc., a Delaware corporation.
---------
"Xxxxx R&M Agreements" means, collectively, (i) the Services and Supply
--------------------
Agreement, (ii) the Product Purchase Agreement, (ii) the Xxxxx Complex Ground
Lease and (iv) the Ancillary Equipment Site Lease.
"Xxxxx Refinery Property" means all real and personal property owned by
-----------------------
Xxxxx R&M and located at the Refinery.
"Xxxxx" means the delayed xxxxx to be constructed at the Refinery and
-----
designated DCU 843.
"Xxxxx Company" means Port Xxxxxx Xxxxx Company L.P., a Delaware limited
-------------
partnership.
"Xxxxx Company Crude Oil Volume" means, on any day, the volume, stated in
------------------------------
BPD, of Xxxxx Company-owned crude oil processed through the Crude Unit.
"Xxxxx Company Maya" means Maya Crude Oil purchased by the Xxxxx Company.
------------------
"Xxxxx Complex" means, collectively, the Xxxxx, the Hydrocracker, the
-------------
Sulfur Plant, the Sour Water Stripper, the Amine Treating Unit and the Xxxxx
Complex Offsites.
"Xxxxx Complex Design Capacity" means with respect to the Xxxxx Complex,
-----------------------------
its nameplate capacity, stated in BPD, to process feedstocks.
"Xxxxx Complex Ground Lease" means the Xxxxx Complex Ground Lease and
--------------------------
Blanket Easement Agreement, dated as of August 19, 1999, between Xxxxx R&M and
the Xxxxx Company.
"Xxxxx Complex Ground Lease Term" has the meaning given such term in
-------------------------------
Article XX of the Xxxxx Complex Ground Lease.
5
"Xxxxx Complex Initial Term" means the period commencing on August 19, 1999
--------------------------
and ending on August 19, 2029.
"Xxxxx Complex Leasehold" has the meaning given such term in Section 2.1 of
-----------------------
the Xxxxx Complex Ground Lease.
"Xxxxx Complex Offsites" means, collectively, (a) the control room, flare,
----------------------
cooling tower, sulfur loading facilities and power station no. 6 that are being
constructed pursuant to the EPC Contract and (b) the xxxxx feed tank nos. 108
and 109 that are being modified pursuant to the EPC Contract.
"Xxxxx Complex Renewal Term" means each period following the end of the
--------------------------
Initial Term with respect to which Lessee has the option to renew the Xxxxx
Complex Ground Lease pursuant to Article XX of the Xxxxx Complex Ground Lease.
"Xxxxx Complex Site" has the meaning give such term in Section 2.1(a) of
------------------
the Xxxxx Complex Ground Lease.
"Xxxxx Design Capacity" means with respect to the Xxxxx, its nameplate
---------------------
capacity, stated in BPD, to process feedstocks.
"Collateral Trustee" means the collateral trustee granted a security
------------------
interest, on behalf of the Financing Parties, in the Senior Debt pursuant to the
Financing Documents and any successor collateral trustee thereunder.
"Common Security Agreement" means the Common Security Agreement, dated as
-------------------------
of August 19, 1999, among the Xxxxx Company, the Funding Company, Sabine,
Neches, Bankers Trust Company, as Collateral Trustee and Depositary Bank,
Deutsche Bank AG, New York Branch, as Administrative Agent, Winterthur
International Insurance Company Limited, as Oil Payment Insurers Administrative
Agent and HSBC Bank USA, as Capital Markets Trustee,
"Contract Quantity" means (a) for any day when the Long-Term Oil Supply
-----------------
Agreement is in effect and PMI has not reduced the volume of Maya available to
the Xxxxx Company pursuant thereto, the "Contract Quantity" in effect on such
day pursuant to the Long-Term Oil Supply Agreement or such lesser amount of Maya
Crude Oil as may be purchased thereunder pursuant to Section 8.2 of the Long-
Term Oil Supply Agreement, and (b) for any other day, the amount of Maya Crude
Oil sufficient to operate the Xxxxx at eighty percent of Actual Xxxxx Capacity.
"Contractor" means Xxxxxx Xxxxxxx USA Corporation, a Delaware corporation.
----------
"Crude Design Capacity" means with respect to the Ancillary Equipment, its
---------------------
nameplate capacity, stated in BPD, to process heavy crude oil.
6
"Crude Unit" means the crude unit and vacuum tower located at the Refinery
----------
and collectively designated AVU-146.
"CRU 1344 Hydrotreater" means the naphtha hydrotreater located at the
---------------------
Refinery and designated CRU 1344.
"Easements" has the meaning given such term in Section 2.2 of the Xxxxx
---------
Complex Ground Lease.
"EPC Contract" means the Contract for Engineering, Procurement and
------------
Construction Services, dated as of July 12, 1999, between the Xxxxx Company and
the Contractor, as amended, supplemented or otherwise modified from time to
time.
"Event of Force Majeure" means any event or circumstance if (i) such event
----------------------
or circumstance is beyond the reasonable control of the affected party and (ii)
such event or circumstance is not the direct or indirect result of a party's
negligence or the failure of such party to perform any of its obligations under
the applicable Xxxxx R&M Agreement, including, without limitation:
1. any interruption or cessation in delivery of Xxxxx Company Maya to the
Refinery, whether or not due to an event of force majeure under the
Long-Term Oil Supply Agreement;
2. acts of God, epidemic, earthquake, landslide, lightning, fire,
explosion, accident, tornado, drought, blight, famine, flood, hurricane,
or other extraordinary weather conditions more severe than those
experienced at any time in the last thirty (30) years for the geographic
area of the Refinery;
3. acts of a public enemy, war (declared or undeclared), blockade,
insurrection, riot or civil disturbance, sabotage, quarantine, or any
exercise of the power of eminent domain, police power, condemnation or
other taking by or on behalf of any public, quasi-public or private
entity;
4. laws, rules, regulations, orders, judgments or other acts of any
foreign, federal, state or local court, administrative agency,
governmental body or authority;
5. strikes, boycotts or lockouts, except any such strike, boycott or
lockout that is not national or industry-wide that involves the
employees of Xxxxx R&M; and
6. a partial or entire interruption or other failure of (a) the supply of
electricity, water, wastewater treatment, steam, hydrogen or other
utilities
7
to the Refinery or any part thereof, or (b) pipeline service, ship or
barge service, dock access or usage or other transportation facilities.
"Excess Xxxxx Capacity" means, for any day, the extent that Actual Xxxxx
---------------------
Capacity for such day exceeds the capacity necessary for the Xxxxx to process
the Available Xxxxx Company VTBs for such day.
"Excess Xxxxx Capacity Option" has the meaning given such term in Section
----------------------------
4.2(a) of the Services and Supply Agreement.
"Excess Crude Capacity" means, for any day, the extent that Actual Crude
---------------------
Capacity for such day exceeds the capacity necessary for the Ancillary Equipment
to process the Available Xxxxx Company Maya for such day and the light crude oil
necessary to process such Available Xxxxx Company Maya.
"Excess Crude Capacity Option" has the meaning given such term in Section
----------------------------
3.5(b) of the Services and Supply Agreement.
"Excess Hydrocracker Capacity" means, for any day, the extent that Actual
----------------------------
Hydrocracker Capacity for such day exceeds the capacity necessary for the
Hydrocracker to process Xxxxx Company VGO produced by the Xxxxx on such day.
"Excess Hydrocracker Capacity Option" has the meaning given such term in
-----------------------------------
Section 4.3(a) of the Services and Supply Agreement.
"Fair Market Rental Value" shall mean, with respect to any land and/or
------------------------
equipment to be leased pursuant to a lease, the value, which shall not in any
event be less than zero, that would be obtained in an arm's length transaction
for cash between an informed and willing lessee and an informed and willing
lessor, neither of whom is under any compulsion to lease, for the use of such
land and/or equipment for a given period, without regard, in the case of land,
(i) to the value of any equipment or improvements that are not included in such
lease but which are located on such land, (ii) to the value of any reversionary
interest of the lessor in any equipment or improvements located on such land,
whether or not included in such lease, or (iii) to the highest and best use of
such land.
"Final Completion" has the meaning given such term in the EPC Contract.
----------------
"Financial Close" means the date when the initial funding of the Senior
---------------
Debt has occurred.
"Financing Documents" has the meaning given such term in the Common
-------------------
Security Agreement.
"Financing Parties" means any lender or note purchaser that may at any time
-----------------
be party to the Financing Documents and any trustee or agent acting on their
behalf.
8
"Funding Company" means Port Xxxxxx Finance Corp., a Delaware corporation.
---------------
"GFU 241" means the distillate hydrotreater located at the Refinery and
-------
designated GFU 241.
"GFU 242" means the distillate hydrotreater located at the Refinery and
-------
designated GFU 242.
"GFU 243" means the distillate hydrotreater located at the Refinery and
-------
designated GFU 243.
"Guaranteed Values" has the meaning given such term in the EPC Contract.
-----------------
"Heavy Oil Processing Facility" means, collectively, the Xxxxx Complex and
-----------------------------
the Ancillary Equipment.
"Hydrocracker" or "HCU 942" means the hydrocracker to be constructed at the
------------ -------
Refinery and designated HCU 942.
"Hydrogen" means hydrogen purchased by the Xxxxx Company pursuant to the
--------
Hydrogen Supply Agreement.
"Hydrogen Supply Agreement" means the Supply Agreement, dated as of
-------------------------
August 1, 1999, between the Xxxxx Company and Air Products, Inc.
"Independent Engineer" means Xxxxxx & Xxxxx, Inc., or successor thereto
--------------------
appointed pursuant to the Financing Documents.
"Inflation Factor" shall mean, for any month, (a) the most current Producer
----------------
Price Index published by the U.S. Department of Labor, Bureau of Statistics,
divided by, (b) the Producer Price Index on August 19, 1999.
----------
"Labor Costs" shall mean, with respect to any service provided by Xxxxx
-----------
R&M, all reasonable direct labor costs of Xxxxx R&M in performing such service
including wages, salaries, overtime charges, reasonable and customary bonuses,
payroll insurance and taxes and holidays, vacations, group medical, dental and
life insurance and other employee benefits.
"LCO" means light cycle oil.
---
"Lessor Ancillary Equipment Upgrade" shall have the meaning given such term
----------------------------------
in Section 6.1 of the Ancillary Equipment Site Lease.
"Lien" any mortgage, security interest, pledge, hypothecation, encumbrance
----
or lien (statutory or other) of any kind or nature whatsoever.
9
"Long-Term Oil Supply Agreement" means the Maya Crude Oil Sale Agreement,
------------------------------
dated as of March 10, 1998, between PMI and Xxxxx R&M, as amended by the First
Amendment and Supplement to the Maya Crude Oil Sales Agreement, dated as of
August 19, 1999, and as assigned by Xxxxx R&M to the Xxxxx Company pursuant to
the Long-Term Oil Supply Agreement Assignment.
"Long-Term Oil Supply Agreement Assignment" means the Assignment of the
-----------------------------------------
Long-Term Oil Supply Agreement, dated as of August 19, 1999, by Xxxxx R&M to the
Xxxxx Company.
"Maya Crude Oil" means Mexican crude oil of the "Maya" type, as more
--------------
particularly described in the Long-Term Oil Supply Agreement and, to the extent
necessary, such alternative crude oil(s) and/or other feedstock(s) that may be
used to produce the Required Product Mix.
"Neches" mean Neches River Holding Corp., a Delaware corporation.
------
"Operating Year" means (i) the period beginning on the Start-up Date and
--------------
ending on the last day of the calendar year in which the Start-up Date occurs
and (ii) each calendar year thereafter. All annual amounts set forth in the
Xxxxx R&M Agreements shall be adjusted pro rata for the first Operating Year.
"Performance Test Standards" has the meaning given such term in the EPC
--------------------------
Contract.
"Permit" means any valid waiver, exemption, variance, franchise, permit,
------
authorization, license or similar order of or from any federal, state, county,
municipal, regional, environmental or other governmental body, instrumentality,
agency, authority, court or other body having jurisdiction over the Refinery,
the Xxxxx Complex or the Ancillary Equipment or the performance of any
obligation under any Xxxxx R&M Agreement, any Project Document or any other
agreement in connection therewith.
"Permitted Liens" means (i) the respective rights and interests created by
---------------
or under the Financing Documents and the Project Documents, (ii) Liens for Taxes
that either are not delinquent or are being contested in good faith and by
appropriate proceedings diligently conducted, so long as such proceedings do not
(a) involve a substantial risk of foreclosure, forfeiture, loss or sale of any
portion of the Xxxxx Refinery Property subject to the Ancillary Equipment Site
Lease or the Xxxxx Complex Ground Lease or interest therein, (b) interfere with
the use, possession or disposition of any Xxxxx Refinery Property subject to the
Ancillary Equipment Site Lease or the Xxxxx Complex Ground Lease or interest
therein or (c) interfere with the payment of rent under the Ancillary Equipment
Site Lease or the Xxxxx Complex Ground Lease; (iii) materialmen's, mechanics',
workmen's, repairmen's, employees', carriers', warehousemen's and other like
Liens arising in the ordinary course of business for amounts that either are not
more than 30 days past due or are being contested in good faith by appropriate
proceedings, so long as such proceedings satisfy the conditions for the
continuation of
10
proceedings to contest Taxes set forth in clause (ii) above; (iv) Liens of any
of the types referred to in clauses (ii) and (iii) above that have been bonded
for the full amount in dispute (or as to which other security arrangements
reasonably satisfactory to the Collateral Trustee have been made); (v) Liens
securing judgments, decrees or orders of any court (i) that are not currently
dischargeable or (ii) that have been discharged or stayed or appealed within
thirty (30) days after the date of such judgment, decree or order (in the case
of a stay or appeal, during the period of such stay or appeal); (vi) other Liens
that would not impair (x) the ability of the Xxxxx Company or its successors,
assigns or subtenants to operate the Xxxxx Complex in accordance with the Base
Case Financial Model or (y) any of the security interests granted, or to be
granted, by the Xxxxx Company to the Financing Parties pursuant to the Financing
Documents, (vii) with respect to the Ancillary Equipment Site Lease, the Liens
listed on Schedule I thereto; and (viii) with respect to the Xxxxx Complex
Ground Lease, the Liens listed on Schedule I thereto.
"Permitted Reimbursable Expenses" shall mean, with respect to any service
-------------------------------
provided by Xxxxx R&M, any reasonable expense or expenditure incurred in
performance of such service including, without limitation, (i) Labor Costs, (ii)
purchases of spare parts, tools, equipment, consumables, materials and other
supplies necessary for performance of such service and (iii) direct cost of
subcontract labor or services needed to perform such service.
"Person" an individual, partnership, corporation, business trust, joint
------
stock company, trust, unincorporated association, joint venture, governmental
authority or other entity of whatever nature.
"PMI" means P.M.I. Comercio Internacional, S.A. de C.V., a corporation
---
organized under the laws of Mexico.
"Product Purchase Agreement" means the Product Purchase Agreement, dated as
--------------------------
of August 19, 1999, between Xxxxx R&M and the Xxxxx Company, as amended,
supplemented or otherwise modified from time to time.
"Products" means each product described under the heading "Product" on
--------
Exhibits A-1 through A-42 to the Product Purchase Agreement.
"Project Documents" means, collectively, the Services and Supply Agreement,
-----------------
the Product Purchase Agreement, the Long-Term Oil Supply Agreement, the EPC
Contract, the Xxxxx Complex Ground Lease, the Ancillary Equipment Site Lease and
the Hydrogen Supply Agreement.
"Prudent Industry Practice" means those practices, methods, equipment,
-------------------------
specifications and standards of safety and performance, as the same may change
from time to time, as are commonly used in refinery facilities in the United
States of a type and size similar to the Refinery.
"Qualified Appraiser" means an appraisal firm with a national reputation
-------------------
and experience in appraising facilities of a nature and type similar to the
Refinery.
11
"Reconciliation Statement" has the meaning given such term in Section
------------------------
7.2(a) of the Services and Supply Agreement.
"Refinery" means, collectively, the existing oil refinery owned by Xxxxx
--------
R&M located in Port Xxxxxx, Texas, the Ancillary Equipment and the Xxxxx
Complex.
"Regulated Utilities" has the meaning given such term in Section 5.5(f) of
-------------------
the Services and Supply Agreement.
"Required Product Mix" means, from time to time, the quantity and quality
--------------------
specifications of products to be produced by the Heavy Oil Processing Facility
pursuant to Section 2.2 of the Product Purchase Agreement.
"Sabine" means Sabine River Holding Corp., a Delaware corporation.
------
"Senior Debt" has the meaning given such term in the Common Security
-----------
Agreement.
"Senior Debt Obligations" means the obligations to pay principal and
-----------------------
interest on the disbursed Senior Debt, and all commissions, fees, indemnitees,
prepayment premiums and other amounts payable to the senior lenders under the
Financing Documents.
"Services" has the meaning set forth in Section 2.1 of the Services and
--------
Supply Agreement.
"Services and Supply Agreement" means the Services and Supply Agreement,
-----------------------------
dated as of August 19, 1999, between Xxxxx R&M and the Xxxxx Company, as
amended, supplemented or otherwise modified from time to time.
"Sour Water Stripper" means the sour water stripper to be constructed at
-------------------
the Refinery and designated SWS-8747.
"Standards" means, in addition to any other standards set forth in the EPC
---------
Contract, the technical requirements of the Project Documents, generally
accepted standards of professional care, skill, diligence and competence
applicable to engineering and construction and project management practices,
good refinery and petrochemical industry practices for oil refineries of similar
size, type and design to the Refinery, manufacturer's specifications and
warranty requirements and all Applicable Laws.
"Start-up Date" means the date on which hydrocarbons are first introduced
-------------
into the Xxxxx Complex for the processing of test runs under the EPC Contract.
"Start-up Period" means the period from the Start-up Date until Final
---------------
Completion.
12
"Sulfur Plant" means the sulfur plant to be constructed at the Refinery and
------------
designated SRU 545.
"Supplies" has the meaning set forth in Section 2.1 of the Services and
--------
Supply Agreement.
"Tax" means, with respect to any site or parcel of land and the
---
improvements thereon, all real estate taxes and assessments, including
substitutes therefor or supplements thereto, assessed upon, levied against or
imposed on such land and improvements located thereon which accrue and are due
and payable during the term of the Xxxxx Complex Ground Lease. Notwithstanding
anything to the contrary contained herein, the term "Taxes" shall not include
any franchise, income, corporation, inheritance, succession, gift, estate,
realty transfer, capital or other tax which may be charged or assessed against
Lessor or any income, excess profit or revenue tax or any other tax which may be
assessed against or become a lien upon the Xxxxx Complex Site or the rent
accruing therefrom.
"Total Crude Oil Volume" means, for any day, the total daily volume, stated
----------------------
in BPD, of crude oil processed by the Crude Unit.
"Transfer and Assignment Agreement" means the Transfer and Assignment
---------------------------------
Agreement, dated as of August 19, 1999, between Xxxxx R&M and the Xxxxx Company,
as amended, supplemented or otherwise modified from time to time.
"VGO" means vacuum gas oil.
---
"VTBs" means vacuum tower bottoms.
----
"Warranties" means the requirements of all warranties and guarantees
----------
applicable to equipment and structures constituting the Xxxxx Complex or
the Ancillary Equipment provided by the Contractor, subcontractors,
vendors,suppliers or others.
Schedule 3.1
Services and Supply Agreement
CRUDE SUPPLY MANAGEMENT SERVICES
7. Scope.
-----
1.1. Long-Term Oil Supply Agreement
Xxxxx R&M shall administer the Long-Term Oil Supply Agreement on
behalf of the Xxxxx Company and perform all the Xxxxx Company's
obligations (other than payment obligations) and exercise its rights
thereunder including, without limitation, the following:
a. providing quarterly progress reports to PMI with respect to (i)
construction under the EPC Contract and (ii) the Ancillary
Equipment Upgrade
b. providing PMI timely notice of the occurrence of events of
force majeure or other occurrences that may affect the Xxxxx
Company's ability to perform its material obligations under the
Long-Term Oil Supply Agreement
c. furnishing monthly lifting programs to PMI (including, without
limitation, the quantity of Maya to be delivered each month and
the tankers that are to deliver such Maya) and cooperating with
PMI to agree on actual monthly lifting programs for deliveries
of Maya to the Refinery, all in accordance with Section 21.1 of
the Long-Term Oil Supply Agreement
d. engagement of tankers on behalf of the Xxxxx Company for
delivery of Maya
e. cooperate with PMI (i) to determine if an alternative pricing
mechanism is required if so notified by PMI pursuant to Section
10.2 of the Long-Term Oil Supply Agreement and (ii) if so, to
determine the parameters of such mechanism
f. monitor and keep records of on-going calculations of the
Differential Guarantee, Quarterly Shortfalls and Quarterly
Surpluses (each as defined in the Long-Term Oil Supply
Agreement)
1.2 Other Crude Oil Contracts
x. Xxxxx R&M shall administer and perform all the Xxxxx Company's
obligations (other than payment obligations) and exercise its
rights under all other crude oil contracts procured on behalf
of the Xxxxx Company pursuant to Section 3.1 of the Services
and Supply Agreement.
-13-
Schedule 3.1
Services and Supply Agreement
x. Xxxxx R&M shall procure, negotiate and administer such contracts
in a manner that ensures the timely delivery to the Refinery of
the volumes and types of crude oil necessary for the on-going
production of the Required Product Mix.
8. Applicable Price.
----------------
2.1 The Xxxxx Company shall reimburse Xxxxx R&M for all Permitted
Reimbursable Expenses (other than Labor Costs) incurred by Xxxxx R&M
in connection with providing crude supply management services to the
Xxxxx Company, including, without limitation, those expenses described
in 3.1 below. The allocation of Labor Costs incurred by Xxxxx R&M in
providing crude supply management services to the Xxxxx Company shall
be included in the charges to the Xxxxx Company under Section 5.8 of
the Services and Supply Agreement.
2.2 In addition, the Xxxxx Company shall pay Xxxxx R&M a handling fee of
$0.03 for each barrel of Xxxxx Company-owned crude oil delivered to
the Refinery.
9. Additional Terms.
----------------
3.1 Xxxxx R&M shall pass through charges to the Xxxxx Company for the
following Permitted Reimbursable Expenses associated with the
transportation of crude, including without limitation, the following
fees:
Customs Fees
MPA Fees
Harbor Maintenance
Merchandising Processing Fee
3.2 The Xxxxx Company is expected to be billed directly (as part of
invoice for payment for crude oil purchases) by the applicable third
party for certain expenses associated with the transportation of
crude, including, without limitation, charges related to the
following:
Marine Freight
Freight
OPA
Lightering
Marine Losses
Insurance
Inspection
Pipeline Tariffs (excluding CPAP)
Pipeline Losses
Pour Depressant
-14-
Schedule 3.1
Services and Supply Agreement
Viscosity Surcharge
Superfund Tax
State Tax
Oil Spill Fees
-15-
Schedule 3.2
Services and Supply Agreement
DOCK, PIPELINE AND STORAGE SERVICES
1. Scope.
-----
1.1. Xxxxx R&M shall provide and coordinate all dock, pipeline and spot
storage services needed to bring Maya and other Xxxxx Company crude
oil to the Heavy Oil Processing Facility. As of the date hereof,
Xxxxx R&M intends to provide such services by means of the following:
a. the Xxxxx R&M-owned docks (the "Xxxxx Docks") and tank farms;
b. the dock owned by Sunoco, Inc. located in Nederland, Texas
(the "Sun Dock") and the related storage facilities ("Sun
Storage");
c. the Refinery pipeline system (the "Refinery Pipeline);
d. the pipeline system located at 0000 Xxxx Xxxx Xxxxxx Xxxx,
Xxxxxxxx, Xxxxx and commonly know as the Xxxxx Station and the
related storage facilities (the "Xxxxx Station"); and
e. other third party pipeline and terminal services.
1.2 Xxxxx R&M shall manage and coordinate vessel activities at the Xxxxx
Docks and the Sun Dock as necessary for the delivery of Maya and
other Xxxxx Company crude oil, including, without limitation,
scheduling vessels, arranging berthing, vessel tie-up and release,
connecting loading and unloading systems, furnishing standby and
safety operators, taking product samples, operating the spill
prevention system, preparing bills of lading and other required
documentation and hiring tankermen and independent inspectors.
1.3 Xxxxx R&M shall manage and coordinate all other vessel and pipeline
activities necessary for the delivery of Xxxxx Company crude oil to
the Heavy Oil Processing Facility, including, without limitation,
scheduling vessels, pipelines, arranging berthing, vessel tie-up and
release, connecting loading/unloading systems, furnishing
standby/safety operators, taking product samples, operating spill
prevention system and preparing bills of lading and other required
documentation including the hiring of tankermen and independent
inspectors.
1.4 Xxxxx R&M shall maintain the Xxxxx Dock facilities in a condition
suitable to meet the shipping requirements of the Xxxxx Company and
manage priority of Xxxxx Dock usage in a manner consistent therewith.
Schedule 3.2
Services and Supply Agreement
2. Applicable Price.
----------------
2.1 Sun Dock to Refinery
For each barrel of Xxxxx Company crude oil delivered to the Refinery
through the Sun Dock each month, the Xxxxx Company shall pay Xxxxx
R&M the Sun Dock Fee plus the CPAP Tariff I during such month.
----
Where:
"Sun Dock Fee" means, for any month, the price per barrel
charged Xxxxx R&M for use of the Sun Dock by Sunoco Oil, Inc.
"CPAP Tariff I" means, for any month, the per barrel tariff
charged Xxxxx R&M by CPAP for crude oil delivered from the Sun
Dock known as the "Xxxxx Crude Petroleum Tariff"(origin
Nederland).
2.2 Sun Storage
For each barrel of Xxxxx Company crude oil stored at Sun Storage each
month, the Xxxxx Company shall pay Xxxxx R&M the Sun Spot Fee for
each fifteen day period that such crude oil is stored at Sun Storage.
Where:
"Sun Spot Fee" means, for any month, the price per barrel
charged by Sunoco, Inc. for each fifteen day period that crude
oil is stored at the Sun Storage.
2.3 Xxxxx Docks to Refinery (including interim storage, if necessary)
For each barrel of Xxxxx Company crude oil delivered to the Refinery
through the Xxxxx Docks each month, the Xxxxx Company shall pay Xxxxx
R&M the Sun Dock Fee plus the CPAP Tariff I.
----
2.4 Third Party Pipelines to Refinery (including interim storage, if
necessary)
For each barrel of Xxxxx Company crude oil delivered to the Refinery
through Xxxxx Station from sources other than the Xxxxx Docks or the
Sun Dock each month, the Xxxxx Company shall pay Xxxxx R&M the CPAP
Tariff II.
Where:
"CPAP Tariff II" means, for any month, the price per barrel
charged Xxxxx R&M by CPAP during such month for crude oil
delivered from Xxxxx
-2-
Schedule 3.2
Services and Supply Agreement
Station to the Refinery from sources other than the Xxxxx
Docks or the Sun Dock and known as the "Xxxxx Crude Petroleum
Tariff" (origin Xxxxx Station).
3. Additional Terms.
----------------
The following are the applicable rates, as of the date hereof, for the
various fees to be charged the Xxxxx Company by Xxxxx R&M hereunder.
3.1 Sun Dock Fee: 7 cents/bbl for the first 70,000 BPD then 6
cents/bbl for each barrel over 70,000 BPD.
3.2 Sun Spot Fee 9.5 cents/bbl (for fifteen days)
3.3 CPAP Tariff I 23 cents/bbl.
3.4 CPAP Tariff II 11 cents/bbl.
-3-
Schedule 3.3
Services and Supply Agreement
CRUDE UNIT FEEDSTOCK SUPPLY
1. Scope.
-----
1.1. Xxxxx R&M shall supply the Xxxxx Company's requirements of overhead
liquid from GFU 244 to AVU 146 ("Overhead Liquid") which is expected
to have the following specifications:
Property Typical Test Method
-------- ------- -----------
API Gravity 41.1 Typical ASTM D-1298
1.2 Xxxxx R&M shall supply the Xxxxx Company's requirement of refinery
slop oil to AVU 146 ("Slop Oil").
2. Measurement
-----------
2.1 Overhead Liquid
Xxxxx R&M shall sell and Xxxxx Company shall purchase the "Xxxxx
Company Share" of the total input of this Overhead Liquid to AVU
146. The Xxxxx Company Share is defined as the total input of this
Overhead Liquid multiplied by the Xxxxx Company Crude Oil Volume
divided by the Total Crude Oil Volume.
2.2 Slop Oil
Xxxxx R&M shall sell and Xxxxx Company shall purchase the "Xxxxx
Company Share" of the total input of this Feedstock to AVU 146. The
Xxxxx Company Share is defined as the total input of this Feedstock
multiplied by the Xxxxx Company Crude Oil Volume divided by the
Total Crude Oil Volume.
3. Applicable Price
----------------
3.1 Overhead Liquid
The arithmetic average of the high/low Xxxxx'x Oilgram Price Report
U. S. Gulf Coast Waterborne posting for spot purchases of No. 2 (0.2
wt% S diesel) for each publication day less 3.0 cents/gallon
multiplied by the quantity of the Overhead Liquid delivered on that
day.The price for non-publication day deliveries shall be the
arithmetic average of the prices for the last proceeding publication
day and the next following publication day.
3.2 Slop Oil
The volume weighted average price of crude oil charged to AVU 146
for each day multiplied by the quantity of the Feedstock delivered
on that day.
Schedule 3.3
Services and Supply Agreement
4. Delivery Point/Risk of Loss:
---------------------------
4.1 Overhead Liquid
This Overhead Liquid shall be delivered by pipeline to the Xxxxx
Company and risk of loss shall pass at the battery limits of AVU 146.
4.2 Slop Oil
This Feedstock shall be delivered by pipeline to the Xxxxx Company
and risk of loss shall pass at the battery limits of AVU 146.
5. Quantity Measurement:
--------------------
5.1 Overhead Liquid
Quantity measurements shall be taken at the battery limits of AVU 146
utilizing a meter to be designated upon completion of design
engineering.
5.2 Slop Oil
Quantity measurements shall be calculated by changes in Refinery Slop
inventory utilizing standard yield accounting methods.
6. Quality Measurement
-------------------
6.1 Overhead Liquid
Grab samples shall be taken as needed.
6.2 Slop Oil
None.
-2-
Schedule 3.5
Services and Supply Agreement
XXXXX PROCESSING FEE -- ANCILLARY EQUIPMENT
Xxxxx R&M shall pay the Xxxxx Company for the processing of Xxxxx R&M-owned
crude oil each day according to the following formula:
Crude Unit Fee + GFU 243 Fee + GFU 242 Fee + CRU 1344 Hydrotreater Fee
Where:
1. Crude Unit Fee Definitions
--------------------------
"Xxxxx R&M Crude Fraction" means, for any day, (i) Excess
------------------------
Crude Capacity on such day, divided by (ii) Actual Crude Capacity on
----------
such day.
"Crude Unit Fee" means, for any day, the sum of (i) Crude
--------------
Unit Fixed, (ii) Crude Unit Non-Fuel Variable, (iii) Crude Unit Fuel
Variable and (iv) Crude Unit Electricity Variable.
"Crude Unit Fixed" means, for any day, (i) 250,000
----------------
multiplied by (ii) Xxxxx R&M Crude Fraction for such day, multiplied
------------- ----------
by (iii) $0.421, multiplied by (iv) the Inflation Factor for such
-- -------------
day.
"Crude Unit Non-Fuel Variable" means, for any day, (i)
----------------------------
Excess Crude Capacity for such day, multiplied by (ii) $0.005,
-------------
multiplied by (iv) the Inflation Factor for such day.
-------------
"Crude Unit Fuel Variable" means, for any day, (i) Excess
------------------------
Crude Capacity for such day, multiplied by (ii) $0.239, multiplied
------------- ----------
by (iii) (x) the Current Period Fuel Price, divided by (y) $2.24.
-- ----------
"Crude Unit Electricity Variable" means, for any day, (i)
-------------------------------
Excess Crude Capacity for such day, multiplied by (ii) $0.016,
-------------
multiplied by (iii) (x) the Current Period Electricity Price,
-------------
divided by (y) $0.029.
----------
Schedule 3.5
Services and Supply Agreement
2. GFU 243 Fee Definitions
-----------------------
"Actual GFU 243 Capacity" means, for any day, the capacity,
-----------------------
stated in BPD, of GFU 243 to process feedstreams.
"Xxxxx R&M GFU 243 Capacity" means, for any day, (i) Actual
--------------------------
XXX 000 Xxxxxxxx, xxxx, (xx) the capacity necessary for GFU 243 to
----
process Xxxxx Company feedstreams from the Crude Unit on such day
"Xxxxx R&M GFU 243 Fraction" means, for any day, (i) Xxxxx
R&M GFU 243 Capacity for such day, divided by (ii) Actual GFU 243
----------
Capacity on such day.
"GFU 243 Fee" means, for any day, the sum of (i) GFU 243
------- ---
Fixed, (ii) GFU 243 Non-Fuel Variable, (iii) GFU 243 Fuel Variable
and (iv) GFU 243 Electricity Variable.
"GFU 243 Fixed" means, for any day, (i) 43,000 multiplied
------------- ----------
by (ii) Xxxxx R&M GFU 243 Fraction for such day, multiplied by
-- -------------
(iii) $0.380, multiplied by (iv) the Inflation Factor for such day.
-------------
"GFU 243 Non-Fuel Variable" means, for any day, (i) Xxxxx
-------------------------
R&M GFU 243 Capacity for such day, multiplied by (ii) $0.094,
-------------
multiplied by (iii) the Inflation Factor for such day.
-------------
"GFU 243 Fuel Variable" means, for any day, (i) Xxxxx R&M
---------------------
GFU 243 Capacity for such day, multiplied by (ii) $0.330, multiplied
------------- ----------
by (iii) (x) the Current Period Fuel Price, divided by (y) $2.24.
-- ----------
"GFU 243 Electricity Variable" means, for any day, (i) Xxxxx
----------------------------
R&M GFU 243 Capacity for such day, multiplied by (ii) 0.042,
-------------
multiplied by (iii) (x) the Current Period Electricity Price,
-------------
divided by (y) $0.029.
----------
6. GFU 242 Fee Definitions
-----------------------
"Actual GFU 242 Capacity" means, for any day, the capacity,
-----------------------
stated in BPD, of GFU 242 to process feedstreams.
"Xxxxx R&M GFU 242 Capacity" means, for any day, (i) Actual
--------------------------
GFU 242 Capacity, less (ii) the capacity necessary for GFU 242 to
----
process Xxxxx Company feedstreams from the Crude Unit on such day.
"Xxxxx R&M GFU 242 Fraction" means, for any day, (i) Xxxxx
--------------------------
R&M GFU 242 Capacity for such day, divided by (ii) Actual GFU 242
----------
Capacity on such day.
-2-
Schedule 3.5
Services and Supply Agreement
"GFU 242 Fee" means, for any day, the sum of (i) GFU 242
-----------
Fixed, (ii) GFU 242 Non-Fuel Variable, (iii) GFU 242 Fuel Variable and
(iv) GFU 242 Electricity Variable.
"GFU 242 Fixed" means, for any day, (i) 32,000 multiplied
------------- ----------
by (ii) Xxxxx R&M GFU 242 Fraction for such day, multiplied by (iii)
-- -------------
$0.386, multiplied by (iv) the Inflation Factor for such day.
-------------
"GFU 242 Non-Fuel Variable" means, for any day, (i) Xxxxx
-------------------------
R&M GFU 242 Capacity for such day, multiplied by (ii) $0.017,
-------------
multiplied by (iii) the Inflation Factor for such day.
-------------
"GFU 242 Fuel Variable" means, for any day, (i) Xxxxx R&M
---------------------
GFU 242 Capacity for such day, multiplied by (ii) $ 0.342,
-------------
multiplied by (iii) (x) the Current Period Fuel Price, divided by
------------- ----------
(y) $2.24.
"GFU 242 Electricity Variable" means, for any day, (i) Xxxxx
----------------------------
R&M GFU 242 Capacity for such day, multiplied by (ii) $0.014,
-------------
multiplied by (iii) (x) the Current Period Electricity Price,
-------------
divided by (y) $0.029.
----------
7. CRU 1344 Hydrotreater Fee Definitions
-------------------------------------
"Actual CRU 1344 Hydrotreater Capacity" means, for any day,
-------------------------------------
the capacity, stated in BPD, of CRU 1344 Hydrotreater to process
feedstreams.
"Xxxxx R&M CRU 1344 Hydrotreater Capacity" means, for any
----------------------------------------
day, (i) Actual CRU 1344 Hydrotreater Capacity, less, (ii) the
----
capacity necessary for CRU 1344 Hydrotreater to process Xxxxx
Company feedstreams from the Crude Unit on such day
"Xxxxx R&M CRU 1344 Hydrotreater Fraction" means, for any
----------------------------------------
day, (i) Xxxxx R&M CRU 1344 Hydrotreater Capacity for such day,
divided by (ii) Actual CRU 1344 Hydrotreater Capacity for such day.
----------
"CRU 1344 Hydrotreater Fee" means, for any day, the sum of
-------------------------
(i) CRU 1344 Hydrotreater Fixed, (ii) CRU 1344 Hydrotreater Non-Fuel
Variable, (iii) CRU 1344 Hydrotreater Fuel Variable and (iv) CRU 1344
Hydrotreater Electricity Variable.
"CRU 1344 Hydrotreater Fixed" means, for any day, (i) 51,500
---------------------------
multiplied by (ii) Xxxxx R&M CRU 1344 Hydrotreater Fraction for such
-------------
day, multiplied by (iii) $0.231, multiplied by (v) the Inflation
------------- -------------
Factor for such day.
-3-
Schedule 3.5
Services and Supply Agreement
"CRU 1344 Hydrotreater Non-Fuel Variable" means, for any
---------------------------------------
day, (i) Xxxxx R&M CRU 1344 Hydrotreater Capacity, (ii) $0.020,
multiplied by (iii) the Inflation Factor for such day.
-------------
"CRU 1344 Hydrotreater Fuel Variable" means, for any day,
-----------------------------------
(i) Xxxxx R&M CRU 1344 Hydrotreater Capacity for such day,
multiplied by (ii) $0.159, multiplied by (iii) (x) the Current
------------- -------------
Period Fuel Price, divided by (y) $2.24.
----------
"CRU 1344 Hydrotreater Electricity Variable" means, for any
------------------------------------------
day, (i) Xxxxx R&M CRU 1344 Hydrotreater Capacity for such day,
multiplied by (ii) $0.012, multiplied by (iii) (x) the Current
------------- -------------
Period Electricity Price, divided by (y) $0.029.
----------
8. General Definitions
-------------------
"Current Period Fuel Price" means, for any day, the MMBTU
-------------------------
Price (as defined in Schedule 5.5.3) for the month in which such day
occurs.
"Current Period Electricity Price" means, for any day, the
--------------------------------
KWH Price (as defined in Schedule 5.5.1) for the month in which such
day occurs.
-4-
Schedule 4.1
Services and Supply Agreement
XXXXX COMPANY EMPLOYEES
1. Nineteen (19) Xxxxx - Front-End Operators
Responsible for operating the charge/heater/fractionation/tank field
sections of the Xxxxx in a safe, environmentally sound, and efficient
manner. This individual concentrates on the daily activities of operation.
His/her input is required to resolve problems and optimize the facility
along with the engineers and supervision of the facility. Daily duties
include monitoring, documenting, and adjusting process variables to achieve
the above. The functional operator assignments include Head Operators (4),
Board Operators (4), Outside Operators (8) and Pool Operators (3).
2. Eight (8) Xxxxx - Xxxx Cutters
Responsible for operating the coke cutting operations of the Xxxxx in a
safe, environmentally sound, and efficient manner. This individual
concentrates on the daily activities of operation. His/her input is
required to resolve problems and optimize the facility along with the
engineers and supervision of the facility. Daily duties include drum
opening/closing and coke cutting.
3. Nineteen (19) Hydrocracker/Sulfur Plant Operators
Responsible for operating the charge/heater/reactor/fractionation sections
of the Hydrocracker and Sulfur Plant in a safe, environmentally sound, and
efficient manner. This individual concentrates on the daily activities of
operation. His/her input is required to resolve problems and optimize the
facility along with the engineers and supervision of the facility. Daily
duties include monitoring, documenting, and adjusting process variables to
achieve the above. The functional operator assignments include Head
Operators (4) Board Operators (4), Outside Operators (8) and Pool Operators
(3).
4. One (1) Accounting Manager
Responsible for (i) for the accounting and administration of the
intercompany agreements between Xxxxx R&M and the Xxxxx Company and all
Financing Documents, (ii) reviewing and approving draft invoices and
issuing final invoices to Xxxxx R&M under the Services and Supply Agreement
and the Product Purchase Agreement, (iii) making payments due to third
parties under the Financing Documents and the Project Documents, (v)
cooperating with any required third party audits, (vi) performing all Xxxxx
Company reporting and recordkeeping requirements under the Financing
Documents, the Project Document and Applicable Law, (vii) administering
Xxxxx Company payroll, (viii) administering all other general accounting
activities of the Xxxxx Company including, without limitation, (a)
maintaining general ledger balance sheet and expense accounts pertaining to
the Heavy Oil Processing Facility, (b) processing and payment of invoices
Schedule 4.1
Services and Supply Agreement
created by operation of the Heavy Oil Processing Facility and (c) ensuring
that all Federal and State Tax guidelines are incorporated.
Based on information to be provided to the Xxxxx Company by Xxxxx R&M, the
accounting manager will also be responsible for the following:
a. Quantifying and documenting feedstocks to and Products from each
Heavy Oil Processing Facility. Attaching value to each of these
feedstocks and Products based on applicable fees in the Services
and Supply Agreement and the Product Purchase Agreement.
Monitoring all the laboratory data for such feedstocks and
Products.
b. Monitoring and quantifying each Service provided to the Xxxxx
Company by Xxxxx R&M.
c. Providing reconciliation analysis of the Xxxxx Company's
inventory, fixed assets and authorization for expenditures for
capital or turnaround documentation.
d. Preparing and distributing monthly cost analysis
e. Providing planning and budgeting guidelines and participating in
preparation of the Annual Budget and Operating Plan.
f. Coordinating the preparation and approval of unaudited quarterly
and audited annual financial statements.
-2-
Schedule 4.2
Services and Supply Agreement
XXXXX PROCESSING FEE -- XXXXX
Xxxxx R&M shall pay the Xxxxx Company for the processing of Xxxxx R&M-owned
feedstreams each day according to the following formula:
Xxxxx Fixed + Xxxxx Non-Fuel Variable + Xxxxx Fuel Variable + Xxxxx
Electricity Variable
Where:
"Xxxxx R&M Xxxxx Fraction" means, for any day, (i) (x) Actual
------------------------
Xxxxx Capacity on such day, less (y) Excess Xxxxx Capacity on such
----
day, divided by (ii) Actual Xxxxx Capacity on such day.
-------
"Xxxxx Fixed" means, for any day, (i) 80,000 multiplied by
----------- -------------
(ii) Xxxxx R&M Xxxxx Fraction for such day, multiplied by (iii)
-------------
$4.114, multiplied by (iv) the Inflation Factor for such day.
-------------
"Xxxxx Non-Fuel Variable" means, for any day, (i) Excess Xxxxx
-----------------------
Capacity for such day, multiplied by (ii) $0.045, multiplied by
------------- -------------
(iii) the Inflation Factor for such day.
"Xxxxx Fuel Variable" means, for any day, (i) Excess Xxxxx
-------------------
Capacity for such day, multiplied by (ii) $0.483, multiplied by
------------- -------------
(iii) (x) the Current Period Fuel Price, divided by (y) $2.24.
----------
"Xxxxx Electricity Variable" means, for any day, (i) Excess
--------------------------
Xxxxx Capacity for such day, multiplied by (ii) $0.216, multiplied
------------- ----------
by (iii) (x) the Current Period Electricity Price, divided by (y)
-- ----------
$0.029.
"Current Period Fuel Price" means, for any day, the MMBTU
-------------------------
Price (as defined in Schedule 5.5.3) for the month in which such day
occurs.
"Current Period Electricity Price" means, for any day, the KWH
--------------------------------
Price (as defined in Schedule 5.5.1) for the month in which such day
occurs.
Schedule 4.3
Services and Supply Agreement
XXXXX PROCESSING FEE -- HYDROCRACKER
Xxxxx R&M shall pay the Xxxxx Company for the processing of Xxxxx R&M-owned
feedstreams each day according to the following formula:
Hydrocracker Fixed + Hydrocracker Non-Fuel Variable + Hydrocracker Fuel
Variable + Hydrocracker Electricity Variable
Where:
"Actual Hydrocracker Capacity" means, for any day, the
----------------------------
capacity, stated in BPD, of the Hydrocracker to process feedstreams.
"Xxxxx R&M Hydrocracker Capacity" means, for any day, the
-------------------------------
volume of Xxxxx R&M-owned feedstreams, stated in BPD, processed by the
Hydrocracker on such day pursuant to Section 4.3 of the Services and
Supply Agreement.
"Xxxxx R&M Hydrocracker Fraction" means, for any day, (i)
-------------------------------
Xxxxx R&M Hydrocracker Capacity on such day, divided by (ii) Actual
-------
Hydrocracker Capacity on such day.
"Hydrocracker Fixed" means, for any day, (i) 35,000 multiplied
------------------ ----------
by (ii) Xxxxx R&M Hydrocracker Fraction for such day, multiplied by
-- -------------
(iii) $4.888, multiplied by (iv) the Inflation Factor for such day.
-------------
"Hydrocracker Non-Fuel Variable" means, for any day, (i) Xxxxx
------------------------------
R&M Hydrocracker Capacity for such day, multiplied by (ii) $0.221,
-------------
multiplied by (iii) the Inflation Factor for such day.
-------------
"Hydrocracker Fuel Variable" means, for any day, (i) Xxxxx R&M
--------------------------
Hydrocracker Capacity for such day, multiplied by (ii) $0.430,
-------------
multiplied by (iii) (x) the Current Period Fuel Price, divided by
------------- ----------
(y) $2.24.
"Hydrocracker Electricity Variable" means, for any day, (i)
---------------------------------
Xxxxx R&M Hydrocracker Capacity for such day, multiplied by (ii)
-------------
$0.308, multiplied by (iii) (x) the Current Period Electricity
-------------
Price, divided by (y) $0.029.
----------
"Current Period Fuel Price" means, for any day, the MMBTU
-------------------------
Price (as defined in Schedule 5.5.3) for the month in which such day
occurs.
"Current Period Electricity Price" means, for any day, the KWH
--------------------------------
Price (as defined in Schedule 5.5.1) for the month in which such day
occurs.
Schedule 4.4
Services and Supply Agreement
HYDROGEN SUPPLY SERVICES
1. Scope.
-----
1.1 Xxxxx R&M shall administer the Hydrogen Supply Agreement on behalf of
the Xxxxx Company and otherwise perform the Xxxxx Company's
obligations (other than payment obligations) and exercise its rights
thereunder including, without limitation, the following:
1. ordering the rate of flow and production of hydrogen needed by
the Xxxxx Company for operation of the Heavy Oil Processing
Facility and, as necessary, requesting changes to such rates from
time to time.
2. coordinating scheduled maintenance shutdowns and other
maintenance activities at the Refinery and the Hydrogen Plant
with Air Products, Inc.
3. monitoring compliance with required contract specifications for
hydrogen delivered under the agreement including, without
limitation, requesting additional analyses of batch samples and
rejecting or waiving non-compliance with contract
specifications.
4. monitoring the measurement and metering of hydrogen quantities
delivered under the agreement including, without limitation,
inspecting meters and other measurement equipment, witnessing
recalibrations and challenging the accuracy of meters and other
measurement equipment by requesting that the accuracy of such
meters and other equipment be tested.
1.2 Xxxxx R&M shall supply the Xxxxx Company's first requirements for
hydrogen ("Xxxxx High Pressure Hydrogen") for use at the Xxxxx
Complex. Xxxxx High Pressure Hydrogen shall be delivered to the Xxxxx
Company for use in HCU 942 from the Spill Stream Hydrogen System
owned and operated by Air Products for Xxxxx R&M up to the maximum
capacity of the Spill Stream Hydrogen System estimated to be 6.0
MMSCF/X. Xxxxx High Pressure Hydrogen shall meet the following
specifications:
Property Specification Test Method
-------- ------------- -----------
Hydrogen 99.9% Mole Minimum UOP-539
1.3 Xxxxx R&M shall supply the Xxxxx Company's additional requirements
for hydrogen ("Xxxxx Hydrocracker Purge Hydrogen") for use at the
Xxxxx Complex. Xxxxx Hydrocracker Purge Hydrogen shall be delivered
to the Xxxxx Company for use in DCU 843 Naphtha Hydrotreater from the
High Pressure Hydrogen Purge
Schedule 4.4
Services and Supply Agreement
Gas from HCU 942. Xxxxx Hydrocracker Purge Hydrogen shall meet the
following specifications:
Property Specification Test Method
-------- ------------- -----------
Hydrogen 80.0% Mole Minimum UOP-539
Higher 500 BTU/SCF Typical UOP-539
Heating Value
1.4 Xxxxx R&M shall supply the Xxxxx Company's requirements for hydrogen
("Xxxxx Low Pressure Hydrogen") for use at the Ancillary Equipment and
GFU 241. Xxxxx Low Pressure Hydrogen shall be delivered to the
Ancillary Equipment and GFU 241 from the Xxxxx Hydrogen Gathering
System. Xxxxx Low Pressure Hydrogen shall meet the following
specifications:
Property Specification Test Method
-------- ------------- -----------
Hydrogen 70.0% Mole Minimum UOP-539
Higher 650 BTU/SCF Typical UOP-539
Heating Value
2. Meters/Measurement.
------------------
2.1 Xxxxx High Pressure Hydrogen
Xxxxx High Pressure Hydrogen quantity measurements shall be taken at
the Spill Stream Hydrogen System meter owned and operated by Air
Products for Xxxxx R&M.
2.2 Xxxxx Hydrocracker Purge Hydrogen
Xxxxx Hydrocracker Purge Hydrogen is calculated as a portion of the
Total Hydrocracker Purge Hydrogen which quantity shall be measured at
DCU 843 meter FE-3636. The Xxxxx Hydrocracker Purge Hydrogen is
calculated as follows:
Xxxxx Hydrocracker
Purge Hydrogen = Total Hydrocracker Purge Hydrogen * (Light Cycle
Oil to HCU 942 + Heavy Gas Oil from DCU 843 to HCU
942 * (1 - Xxxxx Company Crude Oil Volume / Total
Crude Oil Volume) + Heavy Gas Oil from AVU 146 to
HCU 942 * (1 - Xxxxx Company Crude Oil Volume /
Total Crude Oil Volume )) / (Light Cycle Oil to
HCU 942 + Heavy Gas Oil from DCU 843 to HCU 942 +
Heavy Gas Oil from AVU 146 to HCU 942)
-2-
Schedule 4.4
Services and Supply Agreement
Where:
Light Cycle Oil to HCU 942, Heavy Gas Oil from DCU 843 to HCU 942,
Heavy Gas Oil from AVU 146 to HCU 942, Xxxxx Company Crude Oil Volume,
and Total Crude Oil Volume are defined in Exhibit A-18 of the Product
Purchase Agreement.
2.3 Xxxxx Low Pressure Hydrogen
Xxxxx R&M Low Pressure Hydrogen quantity measurements shall be
calculated for the Ancillary Equipment and GFU 241 as follows:
2.3.1 Xxxxx Company GFU 241 Hydrogen
Xxxxx Company GFU 241 Hydrogen is calculated as a portion of
the Total GFU 241 Make-up Hydrogen which quantity shall be
measured at GFU 241 meter FI-105M. The Xxxxx Company GFU 241
Hydrogen is calculated as follows:
Xxxxx Company GFU
241 Hydrogen = Total GFU 241 Make-up Hydrogen * Xxxxx
Company Crude Oil Volume / Total Crude
Oil Volume
Where:
Xxxxx Company Crude Oil Volume and Total Crude Oil Volume are
defined in the Product Purchase Agreement.
2.3.1 Xxxxx Company GFU 242 Hydrogen
Xxxxx Company GFU 242 Hydrogen is calculated as a portion of
the Total GFU 242 Make-up Hydrogen which quantity shall be
measured at GFU 242 meter FI-205M. The Xxxxx Company GFU 242
Hydrogen is calculated as follows:
Xxxxx Company GFU
242 Hydrogen = Total GFU 242 Make-up Hydrogen * Total
Feed to GFU 242 - Unfinished Jet from
AVU 146 drawn from inventory * Xxxxx
Company Crude Oil Volume / Total Crude
Oil Volume
Where:
-3-
Schedule 4.4
Services and Supply Agreement
Total Feed to GFU 242, Unfinished Jet from AVU 146 drawn from
inventory, Xxxxx Company Crude Oil Volume, and Total Crude Oil
Volume are defined in Exhibit A-33 of the Product Purchase
Agreement.
2.3.3 Xxxxx Company GFU 243 Hydrogen
Xxxxx Company GFU 243 Hydrogen is calculated as a portion of
the Total GFU 243 Make-up Hydrogen which quantity shall be
measured at GFU 243 meter FIC-143. The Xxxxx Company GFU 243
Hydrogen is calculated as follows:
Xxxxx Company GFU
243 Hydrogen = Total GFU 243 Make-up Hydrogen *
((Total Volume of Diesel from AVU 146 -
Diesel Charge Volume to GFU 241 + Total
Volume of Light Gas Oil from DCU 843 ) *
Xxxxx Company Crude Oil Volume / Total
Crude Oil Volume - Xxxxx Company Share
of the Excessed Unfinished Diesel ) /
Total Charge Volume to GFU 243
Where:
Total Feed to GFU 243, Total Volume of Diesel from AVU 146,
Diesel Charge Volume to GFU 241, Total Volume of Light Gas Oil
from DCU 843, Xxxxx Company Share of the Excessed Unfinished
Diesel, Xxxxx Company Crude Oil Volume, and Total Crude Oil
Volume are defined in Exhibit A-37 of the Product Purchase
Agreement.
2.3.4 Xxxxx Company 1344 Naphtha Hydrotreater Hydrogen
Xxxxx Company 1344 Naphtha Hydrotreater Hydrogen is calculated
as a portion of the Total 1344 Naphtha Hydrotreater Make-up
Hydrogen which quantity shall be measured at 1344 Naphtha
Hydrotreater meter FR-857. The Xxxxx Company 1344 Naphtha
Hydrotreater Hydrogen is calculated as follows:
Xxxxx Company 1344
Naphtha
Hydrotreater
Hydrogen = Total 1344 Naphtha Hydrotreater Make-up
Hydrogen * (Xxxxx Naphtha to Naphtha
Hydrotreater 1344 + Total Unfinished
Naphtha - Excessed Unfinished Naphtha) *
Xxxxx Company
-4-
Schedule 4.4
Services and Supply Agreement
Crude Oil Volume / Total Crude Oil Volume /
(Total Naphtha Hydrotreater Feed )
Where:
Total Naphtha Hydrotreater Feed Xxxxx Naphtha to Naphtha
Hydrotreater 1344, Total Unfinished Naphtha, Excessed
Unfinished Naphtha, Xxxxx Company Crude Oil Volume, and Total
Crude Oil Volume are defined in Exhibit A-26 of the Product
Purchase Agreement.
3. Delivery Point/Risk of Loss.
----------------------------
3.1 Xxxxx High Pressure Hydrogen
Xxxxx High Pressure Hydrogen shall be delivered by pipeline and
title to, and risk of loss for, such hydrogen shall pass to the
Xxxxx Company at the battery limit of Air Products Hydrogen
Plant.
3.2 Xxxxx Hydrocracker Purge Hydrogen
Xxxxx Hydrocracker Purge Hydrogen shall be delivered by pipeline
and title to, and risk of loss for, such hydrogen shall pass to
the Xxxxx Company at the battery limit of HCU 942.
3.3 Xxxxx Low Pressure Hydrogen
Xxxxx Low Pressure Hydrogen shall be delivered by pipeline and
title to, and risk of loss for, such hydrogen shall pass to the
Xxxxx Company at the battery limit of each unit described in the
Ancillary Equipment Lease and GFU 241.
4. Applicable Price.
----------------
4.1 Hydrogen Supply Contract
The Xxxxx Company shall pay Xxxxx R&M for all Permitted
Reimbursable Expenses incurred by Xxxxx R&M each month in
administering the Hydrogen Supply Contract.
4.2 Xxxxx High Pressure Hydrogen
-5-
Schedule 4.4
Services and Supply Agreement
The Xxxxx Company shall pay Xxxxx R&M for Xxxxx High Pressure
Hydrogen supplied to the Xxxxx Company each month the actual cost
paid for hydrogen under contract with Air Products.
4.3 Xxxxx Hydrocracker Purge Hydrogen
The Xxxxx Company shall pay Xxxxx R&M for contained hydrogen in
the Xxxxx Hydrocracker Purge Hydrogen supplied to the Ancillary
Equipment and GFU 241 each month the actual cost paid for
hydrogen under contract with Air Products. For the balance of the
contents in the Xxxxx Hydrocracker Purge Hydrogen, the Xxxxx
Company shall pay Xxxxx R&M the weighted average delivered cost
of natural gas purchased by Xxxxx R&M in dollars per MMBTU.
4.4 Xxxxx Low Pressure Hydrogen
The Xxxxx Company shall pay Xxxxx R&M for contained hydrogen in
the Xxxxx Low Pressure Hydrogen supplied to the Ancillary
Equipment each month the actual cost paid for hydrogen under
contract with Air Products. For the balance of the contents in
the Xxxxx Low Pressure Hydrogen, the Xxxxx Company shall pay
Xxxxx R&M the weighted average delivered cost of natural gas
purchased by Xxxxx R&M in dollars per MMBTU.
4.5 Power Charges and Credits.
4.5.1 Power Charges
The Xxxxx Company shall pay Xxxxx R&M for power consumed by Air
Products' for the manufacture and delivery of High Pressure
Hydrogen supplied to the Xxxxx Company each month. The monthly
Power Charge is composed of a Capacity Charge, an operations and
maintenance charge (O&M Charge), and a Fuel Charge as follows:
Pc\\n\\ = (CC + OM\\n\\)* ACF\\n\\ / 0.95 * TKWH\\n\\ /
GKWH\\n\\ + FC\\n\\ * (TKWH\\n\\ -FALKWH\\n\\)
Where:
Pc\\n\\ = The Power Charge for billing month n.
CC = The monthly Capacity Charge of $321,333.
Om\\n\\ = The O&M Charge as calculated pursuant to Section
5.1.3 for billing month n.
ACF\\n\\ = The Average Capacity Factor calculated on a
rolling average basis for the most recent 36 month
period, including the current billing month n, or
for the actual number of billing months since the
Commencement Date, in accordance to Section 5.1.1.
-6-
Schedule 4.4
Services and Supply Agreement
TKWH\\n\\ = The total KWH consumed by Air Products' 4.16 kV
loads as measured at the Air Products' 4.16 kV
switchgear for all hourly periods in billing month
n including those hourly periods when generator
CG-500 is not operating.
Fc\\n\\ = The Fuel Charge as calculated pursuant to Section
5.1.4 for billing month n.
GKWH\\n\\ = The gross KWH delivered by Air Products at the
Generator Terminal during billing month n.
FALKWH\\n\\ = The total KWH consumed by Air Products' Facility
Auxiliary Load as determined in accordance with
Section 5.1.2 during billing month n.
Commencement Date shall have the meaning given such term in
Section 2.1 of the Hydrogen Supply Agreement.
Generator Terminal shall mean Air Products' KW and KWH metering
point located in Air Products' 13.8 kV switchgear for Air
Products' gas turbine generator where the gross output of the gas
turbine generator unit is measured.
4.5.2 Average Capacity Factor
The Average Capacity Factor shall be calculated at the end of
each billing month as follows:
ACF\\n\\ = ((GKWH\\n\\ - (FALKWH\\n\\) / (Committed
Capacity- Facility Auxiliary Load) / (BMH
Where:
[GKWH\\n\\ = The cumulative sum of GKWH\\n\\ delivered by
Air Products for the most recent 36 billing
month period, including the current billing
month n, or for the actual number of billing
months since the Commencement Date if less
than 36 billing months have elapsed since
the Commencement Date.
[FALKWH\\n\\= The cumulative sum of FALKWH\\n\\ consumed
by Air Products for the most recent 36
billing month period, including the current
billing month n, or for the actual number of
billing months since the Commencement Date
if less than 36 billing months have elapsed
since the Commencement Date.
[BMH = The sum of (1) the total number of hourly
periods in the most recent 36 billing
months, including the current billing
-7-
Schedule 4.4
Services and Supply Agreement
month n, or for the actual number of billing
months since the Commencement Date if less
than 36 billing months have elapsed since the
Commencement Date less (2) the number of
hourly periods in the above billing months
when Air Products was excused from delivering
power due to events of Force Majeure or Xxxxx
R&M being unable to receive power from Air
Products at the Delivery Point due to
maintenance, testing, or forced outages.
For avoidance of doubt, any partial hourly period is counted
as one full hourly period for purposes of this calculation.
Notwithstanding the foregoing, the Average Capacity Factor
for the first twelve billing months following the
Commencement Date shall be deemed to be 95 percent. Beginning
with the thirteenth billing month following the Commencement
Date and for each billing month thereafter, the actual
Average Capacity Factor will be calculated. In the event that
the actual Average Capacity Factor calculated for the first
twelve (12) billing months is greater or less than ninety-
five percent (95%), Xxxxx R&M shall retroactively adjust the
Power Charge payments Xxxxx R&M received for the first twelve
(12) billing months.
4.5.3 Monthly Facility Auxiliary Load
The Facility Auxiliary Load shall include all load connected to
Air Products' 4.16 KV electrical distribution system except for
the electric load associated with (i) Air Products' two hydrogen
compressors (CM-250A and CM-250B), (ii) Air Products' spill gas
compressor (CM-255), and (iii) a fixed allowance of 32 KW per
hour for all auxiliary loads required to operate Air Products'
two hydrogen compressors and spill gas compressor. The KWH
consumed by the Facility Auxiliary Load each billing month is
calculated as follows:
FALKWH\\n\\ = TKWH\\n\\ - (CAKWH\\n\\ + CBKWH\\n\\ + SGKWH\\n\\
+ (32 KW * ABMH\\n\\))
Where:
FALKWH\\n\\ = The total KWH consumed by the Facility Auxiliary
Load for billing month n.
TKWH\\n\\ = The total KWH consumed by Air Products' 4.16 KV
loads as measured at the Air Products' 4.16 KV
switchgear for all hourly periods in billing month
n excluding those hourly periods when generator
CG-500 is not operating.
CAKWH\\n\\ = The total KWH consumed by Air Products' product
hydrogen compressor, plant load CM-250A, for all
hourly periods in billing
-8-
Schedule 4.4
Services and Supply Agreement
month n excluding those hourly periods when
generator CG-500 is not operating.
CBKWH\\n\\ = The total KWH consumed by Air Products' product
hydrogen compressor, plant load CM-250B, for all
hourly periods in billing month n excluding those
hourly periods when generator CG-500 is not
operating.
SGKWH\\n\\ = The total KWH consumed by Air Products' spill gas
compressor, plant load CM-255for all hourly
periods in billing month n excluding those hourly
periods when generator CG-500 is not operating.
ABMH\\n\\ = The adjusted number of hourly periods in billing
month n excluding those hourly periods when
generator CG-500 is not operating.
Initially, the Facility Auxiliary Load is deemed to be 950 KW.
4.5.4 O&M Charge
The O&M Charge shall be adjusted each month after the
Commencement Date and for the duration of this contract in
accordance with the following formula:
Om\\n\\ = OM\\0\\ x [0.16 x LI\\n\\/LI\\c\\ + .16 x P\\n\\/P\\c\\
+ .34 x L\\n\\/L\\c\\ + .34 x PPI\\n\\/PPI\\c\\]]
Where:
Om\\n\\ = O&M Charge for billing month n
OM\\0\\ = $207,333/mo.
Li\\n\\ = Labor Index for billing month n
Li\\c\\ = Labor Index at the Commencement Date
P\\n\\ = Parts Index for billing month n
P\\c\\ = Parts Index for August 1998
PPI\\n\\ = PPI for billing month n.
PPI\\c\\ = PPI at the Commencement Date
L\\n\\ = Employment Cost Index for billing month n.
L\\c\\ = Employment Cost Index at the Commencement Date.
4.5.5 Fuel Charge
The Fuel Charge shall be adjusted each month after the
Commencement Date and for the duration of this contract based on
the average cost of natural gas consumed by the Facility in
accordance with the following formula:
-9-
Schedule 4.4
Services and Supply Agreement
Fc\\n\\ = FC\\0\\ x (NG\\n\\/NG\\0\\)
Where:
Fc\\n\\ = Fuel Charge for billing month n
FC\\0\\ = $0.0074/KWH
Ng\\n\\ = Average cost of natural gas for the Facility
in billing month n
NG\\0\\ = $2.25/MMBTU
"Facility" shall mean the designed, fabricated, and installed
equipment necessary for Air Products to manufacture hydrogen for the
Xxxxx Company on a leased site as described in the Xxxxx Hydrogen
Supply Agreement.
4.5.6 Power Credits
To the extent Air Products consumes electric power for compression
of hydrogen supplied into the Pipeline Network, Xxxxx R&M shall
credit the Xxxxx Company for such power, whether such power was
produced by Air Products or, during periods of gas turbine generator
shutdown, provided by Xxxxx R&M to Air Products. The credit shall
be calculated monthly on the basis of a specific power in KWH/MSCF,
for hydrogen compression, in accordance with the following:
Pipeline hydrogen compression credit = 1.184 KWH/MSCF x MSCF\\n\\ x
CPC\\n\\
Where:
MSCF\\n\\ = Quantity of hydrogen in MSCF compressed and supplied
into the Pipeline Network for billing month n.
CPC\\n\\ = Cost of power in $/KWH for billing month n; if supplied
by Air Products, to be based PC\\n\\ divided by the sum
of GKWH\\n\\ minus FALKWH\\n\\, or if supplied by Xxxxx
R&M, Xxxxx R&M's incremental cost for power for each
billing day.
"Pipeline Network" shall mean the pipeline system connected to the
Facility and constructed, owned, or operated by Air Products or its
affiliates, which is used to transport hydrogen in Texas.
4.6. Taxes.
------
The Xxxxx Company shall reimburse Xxxxx R&M for payments made by
Xxxxx R&M to Air Products for taxes, charges and fees pursuant to
Section 12 of the Xxxxx Hydrogen Supply Agreement.
-10-
Schedule 5.1
Services and Supply Agreement
CONSTRUCTION MANAGEMENT SERVICES
1. Scope.
-----
In accordance with its obligations under Section 5.1 of the Services and
Supply Agreement, Xxxxx R&M shall administer the EPC Contract on behalf of
the Xxxxx Company and otherwise perform (or ensure that Xxxxx Company
employees perform) the Xxxxx Company's obligations (other than payment
obligations) and exercise its rights thereunder including, without
limitation, the following:
a. performing Start-up (as defined in the EPC Contract)
activities
b. supporting Start-up and performance testing under the EPC
Contract by making available and operating all testing and
laboratory equipment, tools, machinery and vehicles (including
trucks, mobile cranes, loaders, forklifts and other rolling
stock) necessary for normal operation of the Xxxxx Complex
c. providing water and temporary utilities, at such times and in
such quantities as required for Contractor's prosecution of the
EPC Contract
d. providing Contractor with initial drafts of the Operating Manuals
(as defined in the EPC Contract) for the Xxxxx Complex
e. performing the Xxxxx Company's obligations with respect to spare
parts under Section 2.38 of the EPC Contract
f. reviewing and approving Applications for Payment (as defined in
the EPC Contract) in cooperation with the Independent Engineer
g. providing operations and maintenance personnel for Start-up and
Performance Testing (as defined in the EPC Contract)
h. providing all necessary feedstreams for operation of the Xxxxx
Complex during Start-up and Performance Testing
i. preparing and delivering the Start-up Protocol (as defined in the
EPC Contract) to the Contractor and the Independent Engineer 90
days prior to Mechanical Completion (as defined in the EPC
Contract) and cooperating to develop a final Start-up Protocol
prior to Mechanical Completion
j. reviewing and approving each Notice of Mechanical Completion,
Notice of Xxxxx Completion and Notice of Final Completion
submitted by the Contractor (as each term is defined in the EPC
Contract) together with the Independent Engineer
Schedule 5.1
Services and Supply Agreement
k. initiating necessary Change Orders (as defined in the EPC
Contract) and reviewing and approving Change Orders requested by
the Contractor
2. Applicable Price.
-----------------
The Xxxxx Company shall pay Xxxxx R&M $2,700,000 on (i) the date (the
"Initial Payment Date") that is the later of (y) the first anniversary of
the Start-up Date and (z) January 1, 2002 for providing the Services
described in this Schedule, (ii) the date that is one year after the
Initial Payment Date and (iii) the date that is two years after the Initial
Payment Date.
-2-
Schedule 5.3
Services and Supply Agreement
MAINTENANCE SERVICES
1. Scope.
-----
1.1 Routine Repair and Preventative Maintenance
Xxxxx R&M shall provide (or engage third party subcontractors to
provide) all repair and preventative maintenance (including necessary
materials and labor) of a regular nature that must be performed
periodically and on an ongoing basis to maintain the Heavy Oil
Processing Facility including, without limitation, the services
described below.
a. Cleaning Slab Services
Removal of equipment from processing units for cleaning at Xxxxx
R&M-owned cleaning slabs at the Refinery including (i) removing
such equipment from its unit, (i) draining it of all free
liquids, (iii) transporting it to a Xxxxx R&M cleaning slab, (iv)
cleaning it so that acidic or caustic substances are neutralized,
flammable or explosive substances are eliminated and hydrocarbon
sludges or other hazardous materials are removed and the
equipment is otherwise thoroughly clean, (iv) disposing of the
resulting waste in accordance with Applicable Law and (v) re-
installing such equipment into its unit.
b. Shop Services
Repair and maintenance work performed by (i) Xxxxx R&M employees
at one of the various Xxxxx R&M-owned and operated maintenance
shops located at the Refinery including, without limitation,
Xxxxx R&M's central shop, machine shop, instrument/electrical
shop and sandblasting/cleaning shop, or (ii) third party
subcontractors at maintenance shops located outside the Refinery.
c. Maintenance Supervision
Supervision of maintenance personnel for the Xxxxx Company
including, (i) monitoring operations and working with the
operations personnel described on Schedule 5.8.1 to plan,
schedule, and set maintenance priorities, (ii) assisting in the
development and execution of preventative and predictive
maintenance practices, (iii) supervising maintenance mechanics on
a daily basis including oversight of the maintenance resource
pool of electricians, machinists, pipefitters, welders,
boilermakers and other crafts.
d. Fixed Equipment Analysis
Schedule 5.3
Services and Supply Agreement
Monitoring, collecting data regarding and documenting the
condition of the Heavy Oil Processing Facility's stationary
equipment (including piping, vessels, and structural steel)
including, without limitation (i) maintaining an inspection
database of information, (ii) reviewing such data, (iii)
developing recommendations for equipment repair and improvement
and (iv) inspecting on-going repairs to assure applicable
industry standards are followed.
e. Rotating Equipment Analysis
Monitoring and improving the performance of each unit's rotating
equipment to assure reliability and uptime of rotating equipment,
including, without limitation, (i) routinely perform data
collection of vibration and operational performance, (ii)
analyzing such data, and (iii) making recommendations for repair
and improvements.
f. DCS Technology Support
Maintenance of the Xxxxx Company's distributed control equipment
including, without limitation, (i) interacting with unit
operators to generate and tune simple control loops and (ii)
working with the Xxxxx R&M control engineers in maintaining and
improving the overall performance of the Heavy Oil Processing
Facility's process control systems.
g. Rolling Stock Services
Provision of tractors, trucks, frontloaders, cherry pickers,
exchange pickers or other vehicles necessary for performing the
maintenance services described in this Schedule.
1.2 Maintenance Turnarounds, Unit Shutdowns and Other Capital Maintenance
a. As part of the Annual Budget and Operating Plan, Xxxxx R&M shall
provide the Xxxxx Company with a schedule of planned maintenance
shutdowns in the next Operating Year for any unit comprising the
Heavy Oil Processing Facility.
x. Xxxxx R&M shall assess the on-going need for additional unplanned
maintenance shutdowns and capital maintenance of units comprising
the Heavy Oil Processing Facility.
x. Xxxxx R&M shall perform (or engage third party subcontractors to
perform) all scheduled and unscheduled maintenance shutdowns and
other capital maintenance of the Heavy Oil Processing Facility.
1.3 Janitorial and Grounds Services
-2-
Schedule 5.3
Services and Supply Agreement
x. Xxxxx R&M shall provide (or engage third party subcontractors to
provide) all janitorial type services at the Heavy Oil Processing
Facility
x. Xxxxx R&M shall maintain (or engage third party subcontractors to
maintain) all grounds, yards and roads located on the Xxxxx
Complex Site and the Ancillary Equipment Site.
2. Applicable Price.
----------------
2.1 Xxxxx Complex
a. The Xxxxx Company shall reimburse Xxxxx R&M for the direct costs
of all materials and other supplies and all subcontract labor or
services necessary for performance of the maintenance services
described herein each month for the Xxxxx Complex and the Xxxxx
Complex Site.
b. The Xxxxx Company shall reimburse Xxxxx R&M for the Labor Cost of
all hourly Xxxxx R&M maintenance personnel necessary for the
performance of maintenance services described herein each month
for the Xxxxx Complex and the Xxxxx Complex Site. For the purpose
of this Schedule Labor Costs shall be deemed to equal a rate per
hour equal to (i) for any month prior to and including December
2000, $36.00 and (ii) for any other month, $36.00, multiplied by
-------------
the Inflation Factor.
c. For all supervisory and management services provided by Xxxxx R&M
related to maintenance services for the Xxxxx Complex described
herein each month, the Xxxxx Company shall pay Xxxxx R&M (i) for
any month after the Start-up Date and prior to and including
December 2000, $62,500.00 and (ii) for any month thereafter,
$62,500.00, multiplied by the Inflation Factor.
-------------
2.2 Ancillary Equipment
Consideration for maintenance services provided by Xxxxx R&M to the
Xxxxx Company related to the Ancillary Equipment and the Ancillary
Equipment Site is included in the Ancillary Equipment Operating Fee,
except to the extent that Xxxxx R&M is required to perform capital
maintenance with respect to the Ancillary Equipment in order to comply
with a change in Applicable Law. In such case, the Xxxxx Company shall
pay Xxxxx R&M for its share of all Permitted Reimbursable Expenses
incurred by Xxxxx R&M in performing all such unscheduled capital
maintenance related to the Ancillary Equipment. The Xxxxx Company's
share of such Permitted Reimbursable Expenses shall be determined in
accordance with Section 7.4(a) of the Services and Supply Agreement.
-3-
Schedule 5.5.1
Services and Supply Agreement
ELECTRICITY SERVICES
13. Scope.
-----
x. Xxxxx Complex
Supply of electric energy requirements of the Xxxxx Company for use at
the Xxxxx Complex.
b. Ancillary Equipment
Supply of electric energy requirements of the Xxxxx Company for use
at the Ancillary Equipment.
14. Metering/Measurement Methodology for Services to the Xxxxx Complex.
------------------------------------------------------------------
3. 2.1 The following meters to be installed pursuant to the EPC Contract
shall be used to measure the number of kilowatt (1000 xxxxx)
hours ("KWH") of electricity that are delivered to each distinct
area of the Xxxxx Complex:
i. Main power station number 6
Meters located at:
a. Air Products Steam Methane Reformer
b. Gulf States #1 transformer
c. Gulf States #2 transformer
ii. DCU 843 Xxxxx area main facilities.
Switch Gear -- 843-SG-01
iii. HCU 942 Hydrocracker/SRU 545 Sulfur Plant/SWS 8747 Sour Water
Stripper/ATU 7814 Amine Treating Unit
Switch Gear -- 942-SG-01
iv. Xxxxx feed charge-pumps for tanks 108 and 109 and the Xxxxx Complex
cooling tower
Substation 261
5. Flare No. 23 and other offsites
Schedule 5.5.1
Services and Supply Agreement
Electricity delivered to flare no. 23 and other offsites comprising
the Xxxxx Complex and not described above shall be measured by
subtracting metered usage in numbers 2 through 4 above from metered
usage in number 1 above.
2.2 Xxxxx R&M shall read the Xxxxx Complex meters described in 2.1 above
to determine the total KWH usage of the Xxxxx Complex for each month
(the "Monthly Xxxxx Complex Electricity Usage"); provided, however,
-------- -------
that at any time when such meters are not functioning the Monthly
Xxxxx Complex Electricity Usage shall be determined (a) for any month
prior to three full calendar months after Final Completion, based on
the "typical" or expected usages described in the following chart, or
(b) for any other month, based on the average Monthly Xxxxx Complex
Electricity Usage for the prior three calendar months.
--------------------------------------------------------------------------------
Electrical Produced (Consumed), KWSD (68 oF)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Consumption
--------------------------------------------------------------------------------
XXXXX COMPANY UNITS Typical Quantity Per Cent Usage
--------------------------------------------------------------------------------
SRU 545 (2,128) 2.09
--------------------------------------------------------------------------------
DCU 843 (20,550) 20.20
--------------------------------------------------------------------------------
HCU 942 (13,326) 13.10
--------------------------------------------------------------------------------
ATU 7841 (223) 0.22
--------------------------------------------------------------------------------
SWS 8747 (194) 0.19
--------------------------------------------------------------------------------
Sour Water Tank 78 (154) 0.15
--------------------------------------------------------------------------------
C.T. 432 (602) 0.59
--------------------------------------------------------------------------------
FLARE 23 (50) 0.05
--------------------------------------------------------------------------------
Resid Tanks 108/109 (999) 0.98
--------------------------------------------------------------------------------
Sub Total (38,226) 37.57
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ANCILLARY EQUIPMENT UNITS
--------------------------------------------------------------------------------
AVU 146 (6,154) 6.05
--------------------------------------------------------------------------------
GFU 242 (731) 0.72
--------------------------------------------------------------------------------
GFU 243 (2,007) 1.97
--------------------------------------------------------------------------------
Cooling Tower 136--SMR (200) 0.20
--------------------------------------------------------------------------------
XXX 0000 (715) 0.70
--------------------------------------------------------------------------------
Pump House 41 (559) 0.55
--------------------------------------------------------------------------------
Offsites--P.S. and B.H.'s (6,593) 6.48
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Sub Total (16,959) 16.67
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
-5-
--------------------------------------------------------------------------------
OTHER XXXXX UNITS
--------------------------------------------------------------------------------
GFU 241 (971) 0.95
--------------------------------------------------------------------------------
GFU 244 (3,506) 3.45
--------------------------------------------------------------------------------
HFAU 443 (1,205) 1.18
--------------------------------------------------------------------------------
SRU 543/544 (2,380) 2.34
--------------------------------------------------------------------------------
FCCU 1241 (2,246) 2.21
--------------------------------------------------------------------------------
CRU 1344 (7,499) 7.37
--------------------------------------------------------------------------------
XXXX 0000 (1,483) 1.46
--------------------------------------------------------------------------------
Offsites (11,315) 11.12
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Xxxxx Sub Total (30,604) 30.08
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Xxxxx Company Plus Xxxxx R&M (85,789) 84.32
Sub Total
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CHEVRON CCC/PADC (5,781) 5.68
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Refinery Plus CCC Sub Total (91,570) 90.00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
HT PSA Off Gas (920) 0.90
--------------------------------------------------------------------------------
AIR PRODUCTS (9,255) 9.10
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total Facility Consumption (101,745) 100.00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Production or Purchases
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
XXXXX R&M GENERATORS 43,498 42.75
--------------------------------------------------------------------------------
AIR PRODUCTS 40,200 39.51
--------------------------------------------------------------------------------
PURCHASED--ENTERGY 18,047 17.74
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total Production or Purchased 101,745 100.00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net 0
--------------------------------------------------------------------------------
-6-
Schedule 5.5.1
Services and Supply Agreement
15. Applicable Price.
----------------
x. Xxxxx Complex
The Xxxxx Company shall pay Xxxxx R&M for the actual cost of providing
electric energy services to the Xxxxx Complex each month based on the
following formula:
(KWH Price * Monthly Xxxxx Complex Electricity Usage) +
Incremental Demand Charge
Where:
"KWH Price" means, for any month, the price per KWH charged Xxxxx
R&M for electricity provided to Xxxxx R&M by Air Products, Inc. in
such month.
"Incremental Demand Charge" means, for any month, the difference
between (i) the demand charge for standby electricity services
provided to Xxxxx R&M by Entergy Corp. for use at the Refinery in
such month, less (ii) the average monthly demand charge for
----
standby electricity services provided to Xxxxx R&M by Entergy
Corp. for use at the Refinery for one year period prior the date
hereof.
b. Ancillary Equipment
Consideration for electric energy provided by Xxxxx R&M to the
Xxxxx Company for use at the Ancillary Equipment is included in
the Ancillary Equipment Operating Fee.
Required Billing Information.
----------------------------
Xxxxx R&M shall provide the following information as an attachment to its
monthly Reconciliation Statements:
a. Total KWH measured through each Xxxxx Complex meter.
b. Calculation of the Incremental Demand Charge and current KWH Price
c. Total amount due from Xxxxx Company for electric energy provided to
the Xxxxx Complex
-7-
Schedule 5.5.2
Services and Supply Agreement
STEAM SERVICES
1. Scope.
-----
x. Xxxxx R&M shall supply the full steam requirements of the Xxxxx
Company for use at the Heavy Oil Processing Facility. Such steam is
expected to have the typical properties and specifications set forth
in the Turnkey Specifications and the chart in 2.2 below.
x. Xxxxx R&M shall take delivery of all excess steam not consumed during
operation of the Heavy Oil Processing Facility and route such steam to
other units at the Refinery.
c. Metering/Measurement Methodology for Services to the Xxxxx Complex.
------------------------------------------------------------------
a. Meters to be installed pursuant to the EPC Contract and described on
Schedule 5.5(b) shall be used to measure the number of pounds per hour
of actual steam that are delivered to the Xxxxx Complex and returned
to Xxxxx R&M which will then be converted to pounds of Standard Steam
("MLBS SS"). "Standard Steam" is a measure used to express the value
of steam of differing temperatures and pressures in a uniform way. It
shall be determined by multiplying the pounds of actual steam supplied
by the standard steam factor for the relevant poundage as described
below under 5.
2.2 Xxxxx R&M shall read the applicable Xxxxx Complex meters described on
Schedule 5.5(b) on the last day of every month to determine the total
pounds of actual steam usage of the Xxxxx Complex for such month and
convert such poundage to MLBS SS (the "Monthly Xxxxx Complex Steam
Usage") and the total actual pounds of steam returned to Xxxxx R&M
from the Xxxxx Complex in such month and convert such poundage to MLBS
SS (the "Monthly Xxxxx Complex Return Steam"); provided, however, that
-------- -------
at any time when such meters are not functioning the Monthly Xxxxx
Complex Steam Usage shall be determined (a) for any month prior to
three full calendar months after Final Completion, based on the
"typical" or expected usages described in the following chart, or (b)
for any other month, based on the average Monthly Xxxxx Complex Steam
Usage for the prior three calendar months.
Schedule 5.5.2
Services and Supply Agreement
Steam Produced (Consumed), M Pounds/Hour
----------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
XXXXX COMPLEX UNITS 850 650 PSIG, 500 PSIG, 225 PSIG, 170 PSIG, 125 PSIG, 50 PSIG, 15 PSIG, Net Mlbs of Percent
PSIG, Actual Actual Actual Actual Actual Actual Actual SS/hour Usage
-----------------------------------------------------------------------------------------------------------------------------------
SRU 545 115.8 (25.4) 76.3 (2.0) 182.6
-----------------------------------------------------------------------------------------------------------------------------------
DCU 843 (130.1) 21.1 (149.8)
-----------------------------------------------------------------------------------------------------------------------------------
HCU 942 2.5 (9.6) (5.5)
-----------------------------------------------------------------------------------------------------------------------------------
ATU 7841 (63.4)
-----------------------------------------------------------------------------------------------------------------------------------
SWS 8747 (53.8)
-----------------------------------------------------------------------------------------------------------------------------------
C.T. 432 (41.4) 41.4
-----------------------------------------------------------------------------------------------------------------------------------
FLARE 23 (1.0)
-----------------------------------------------------------------------------------------------------------------------------------
OFFSITES 74.8 55.4
-----------------------------------------------------------------------------------------------------------------------------------
Sub Total (11.8) (56.3) 75.3 (2.0) (12.2) (0.4%)
-----------------------------------------------------------------------------------------------------------------------------------
ANCILLARY UNITS
-----------------------------------------------------------------------------------------------------------------------------------
AVU 146 (207.0) (137.2) (11.7) 23.9 (378.7)
-----------------------------------------------------------------------------------------------------------------------------------
GFU 242 (21.0) (43.0) (21.0) (82.2)
-----------------------------------------------------------------------------------------------------------------------------------
GFU 243 (54.2) (93.6) 14.8 (147.3)
-----------------------------------------------------------------------------------------------------------------------------------
XXXX 0000 (117.7) (127.8) (35.5) 82.1 (247.3)
-----------------------------------------------------------------------------------------------------------------------------------
Offsites (30.0) (27.5)
-----------------------------------------------------------------------------------------------------------------------------------
Sub Total (192.9) (207.0) (431.6) (68.2) 120.8 (883.0) (27.6%)
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxx R&M UNITS
-----------------------------------------------------------------------------------------------------------------------------------
GFU 241 (18.2) (23.7)
-----------------------------------------------------------------------------------------------------------------------------------
GRU 244 (300.2) 49.0 61.4 (285.8)
-----------------------------------------------------------------------------------------------------------------------------------
HFAU 443 (19.9) (77.8) (168.9) (197.7)
-----------------------------------------------------------------------------------------------------------------------------------
SRU 543/544 139.0 (201.9) (34.0) 29.0 (18.9)
-----------------------------------------------------------------------------------------------------------------------------------
FCCU 1241 (687.9) (399.0) 465.1 133.8 (887.7)
-----------------------------------------------------------------------------------------------------------------------------------
CRU 1344 90.1 (63.7) 0.1 58.9
-----------------------------------------------------------------------------------------------------------------------------------
Offsites (30.0)
-----------------------------------------------------------------------------------------------------------------------------------
Sub Total (936.1) (260.0) 49.0 153.1 (34.0) (6.0) (1,382.3) (43.2%)
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxx R&M BOILERS 768.0 790.0 3.0 3.0 (31.0) 2,137.8
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxx R&M Sub Total 768.0 (339.0) (467.0) 0.0 52.0 (275.5) (102.2) 83.8 (127.5)
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxx Company Plus 768.0 (350.8) (467.0) 0.0 52.0 (331.8) (26.9) 81.8 (139.7)
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxx R&M Sub Tiak
-----------------------------------------------------------------------------------------------------------------------------------
CHEVRON CCC/PADC (768.0) (114.0) (8.0) (252.0) (24.0) (1,526.7) (47.7%)
-----------------------------------------------------------------------------------------------------------------------------------
Refinery Plus CCC
Sub Total 0.0 (464.8) (475.0) 0.0 52.0 (583.8) (26.9) 57.8 (1,666.4)
-----------------------------------------------------------------------------------------------------------------------------------
DESTEC 388.0 504.4
Destec + Refinery +
CCC Sub Total 0.0 (76.8) (475.0) 0.0 52.0 (583.8) (26.9) 57.8 (1,162.0)
-----------------------------------------------------------------------------------------------------------------------------------
AIR PRODUCTS 443.5 (23.0) 555.5
-----------------------------------------------------------------------------------------------------------------------------------
Total 0.0 366.7 (475.0) 0.0 52.0 (606.8) (26.9) 57.8 (12.7) (0.4%)
------------------------------------------------------------------------------------------------------------------------------------
Net Producers of 100.0%
-----------
3. Applicable Price.
----------------
x. Xxxxx Complex
The Xxxxx Company shall pay Xxxxx R&M for the actual cost of providing
steam services to the Coker Complex each month based on the following
formula:
Average Monthly Refinery Steam Cost * (Monthly Coker Complex Steam
Usage - Monthly Coker Complex Return Steam).
Where:
"Average Monthly Refinery Steam Cost" means for any month, (a) the total
costs in dollars incurred by Clark R&M for the purchase, production and
distribution of
-2-
Schedule 5.5.2
Services and Supply Agreement
steam at the Refinery during such month, divided by (b) the Total MLBS
----------
SS Distributed during such month.
"Total MLBS SS Distributed" means the total MLBS SS of steam
distributed between Clark R&M, affiliates of Clark R&M, Chevron
Chemical Company and affiliates of Chevron Chemical Company at the
Refinery and the adjacent facilities owned by Chevron Chemical Company
or the affiliates thereof.
b. Ancillary Equipment
Consideration for steam services provided by Clark R&M to the Coker
Company for use at the Ancillary Equipment is included in the
Ancillary Equipment Operating Fee.
4. Required Billing Information.
----------------------------
Clark R&M shall provide the following information as an attachment to its
monthly Reconciliation Statements:
a. Total actual steam measured through each Coker Complex meter described
above and conversion of such poundage to MLBS SS.
b. Calculation of the Average Monthly Refinery Steam Cost and the Total
MLBS SS Distributed
c. Total amount due from Coker Company for steam services provided to the
Coker Complex
5. Additional Terms.
----------------
5.1 Standard Steam Conversion Factors
---------------------------------
To convert steam to Standard Steam, the number of pounds of actual
steam shall be multiplied by the relevant standard steam factor.
-3-
Schedule 5.5.2
Services and Supply Agreement
Poundage of Steam Standard Steam Factor
----------------- ---------------------
850 1.463
650 1.3
500 1.25
225 1.098
170 0.986
125 0.915
50 0.741
15 0.596
5.2 Standard Steam Definition
-------------------------
The steam accounting system at the Refinery is based on energy
content. All actual pounds of steam are converted to Standard
Steam. All costs (from the appropriate cost centers in Clark
R&M's accounting system) in producing steam are then divided by
the pounds of Standard Steam.
One pound of Standard Steam is defined as the steam at the
conditions whereby ten pounds of steam generate 1 KWH of
electricity at 100% efficiency when exhausted through a turbine
to a pressure of 2.5" mercury absolute.
The Standard Steam conversion factors are then calculated as
illustrated in the following example.
(1) 850 PSIG, 800F steam at 100% efficiency requires
6.837 pounds of actual steam to generate a KWH of
electricity
(2) The Standard Steam factor equals 10 (the theoretical
steam rate of Standard Steam) divided by 6.837 (the
theoretical steam rate of 850 PSIG, 800F steam), or
1.463.
This means 100,000 pounds of 850 PSIG, 800F steam would equal
146,300 pounds of Standard Steam.
The energy basis for Standard Steam factors can be calculated by
the following formula:
Standard Steam Factor (energy basis) =
Ha - 568.409 Ea + 5.777
-----------------------
341.275
Where:
Ha = Enthalpy of actual steam (BTUs/lb)
-4-
Schedule 5.5.2
Services and Supply Agreement
Ea = Entropy of actual steam (BTUs/lb F)
The basis for this formula is that enthalpy versus entropy for
steam-water mixture at 2.5" mercury absolute is a straight line
for values of entropy of 1.34 to 1.96 BTUs/lb F.
-5-
Schedule 5.5.3
Services and Supply Agreement
NATURAL AND FUEL GAS SERVICES
1. Scope.
-----
a. Clark R&M shall supply the natural gas and fuel gas requirements of
the Coker Company for use at the Heavy Oil Processing Facility. Such
natural gas and fuel gas is expected to have the typical properties
and specifications set forth in the Turnkey Specifications and the
charts in 2 below.
1.2 Clark R&M shall take delivery of all natural gas and fuel gas not
consumed during operation of the Heavy Oil Processing Facility.
1.3 The Coker Company shall pay Clark R&M for the amount of natural gas
and fuel gas consumed by each unit of the Heavy Oil Processing
Facility and not returned to Clark R&M.
1.4 Pursuant to the Product Purchase Agreement, Clark R&M is purchasing
the fuel gas produced during operation of the units comprising the
Heavy Oil Processing Facility net of fuel gas supplied to such units.
2. Metering/Measurement Methodology for Services to the Coker Complex.
------------------------------------------------------------------
a. Monthly Natural Gas Consumption
Meters to be installed pursuant to the EPC Contract and described on
Schedule 5.5(b) shall be used to measure the millions of British
thermal units ("MMBTUs") of natural gas that are delivered to and
consumed by the Coker Complex each month ("Monthly Natural Gas
Consumption"); provided, however, that at any time when such meters
-------- -------
are not functioning the Monthly Coker Natural Gas Consumption Usage
shall be determined (a) for any month prior to three full calendar
months after Final Completion, based on the "typical" or expected
usages described in the following chart, or (b) for any other month,
based on the average Monthly Natural Gas Consumption for the prior
three calendar months.
Schedule 5.5.3
Services and Supply Agreement
Consumed, MMBTU's/Hr.--HHV
--------------------------
-------------------------------------------------------------------------------------------------------------
Process Description Typical Volume Percent Usage
-------------------------------------------------------------------------------------------------------------
COKER COMPLEX UNITS
SRU 545 77.5
DCU 843 37.1
HCU 942 7.8
ATU 7841 0
SWS 8747 0
C.T. 432 0
FLARE 23 0.19
DCU 843 Charge Tanks 0.01
Sub Total 123 2.6%
ANCILLARY EQUIPMENT UNITS
AVU 146 66
GFU 242 61.9
GFU 243 3.3
SGRU 1242 7.3
PRORATED, NG to Mix Drum 557
Sub Total 696 14.7%
Clark R&M UNITS
GFU 241 42.4
GFU 244 15.0
HFAU 443 42.0
SRU 543/4 62.2
FCCU 1241 36.0
CRU 1344 17.0
Miscellaneous 13.0
PRORATED, NG to Mix Drum 613.6
Reduced consumption (75.0)
Sub Total 766.2 16.2%
Clark R&M BOILERS 706 14.9%
Clark R&M Sub Total 2,168.1
Coker Complex Plus Clark R&M Sub Total 2291
CHEVRON CCC/PADC 295 6.2%
Refinery Plus CCC Sub Total 2,585.7
AIR PRODUCTS 2,156.0 45.5%
Total 4,741.7 100.0%
b. Monthly Fuel Gas Consumption
Meters to be installed pursuant to the EPC Contract and described on
Schedule 5.5(b) shall be used to measure the MMBTUs of fuel gas
delivered to and consumed by, the Coker Complex each month ("Monthly
Fuel Gas Consumption"); provided, however, that at any time when such
-------- -------
meters are not functioning the Monthly Fuel Gas Consumption shall be
determined (a) for any month prior to three full calendar months after
Final Completion, based on the "typical" or expected usages described
in the following chart, or (b) for any other month, based on the
average Monthly Fuel Gas Consumption for the prior three calendar
months.
-2-
Schedule 5.5.3
Services and Supply Agreement
Production (Consumption), MMBTU's/HR. (HHV)
-------------------------------------------
------------------------------------------------------------------------------------------------------------
Process Description Typical Volume Percent Usage
------------------------------------------------------------------------------------------------------------
COKER COMPANY UNITS
SRU 545 0.0
DCU 843 452.3
HCU 942 0.0
ATU 7841 0.0
SWS 8747 0.0
C.T. 432 0.0
FLARE 23 0.0
DCU 843 Charge Tanks 0.0
HT PSA (30.5)
Sub Total 421.8 (36.0%)
ANCILLARY EQUIPMENT UNITS
AVU 146 (597.4)
GFU 242 5.8
GFU 243 83.6
SGRU 1242 266.7
Sub Total (241.3) 20.6%
Clark R&M UNITS
GFU 241 53.9
GFU 244 157.8
HFAU 443 (83.4)
FCCU 1241 480.3
CRU 1344 (351.4)
Reduced production (129.0)
Miscellaneous consumption (34.0)
Sub Total 94.2 (8.0%)
Clark R&M BOILERS (1,737.0) 148.3%
Clark R&M Sub Total (1,884.1)
Coker Company Plus Clark R&M Sub Total (1,462.3)
CHEVRON CCC/PADC 519.0 (44.3%)
Refinery Plus CCC Sub Total (943.3)
AIR PRODUCTS
Refinery Fuel to SMR (228.0) 19.5%
Total (1,171.3) 100.0%
3. Applicable Price.
----------------
a. Coker Complex
The Coker Company shall pay Clark R&M for the actual cost of
providing natural gas and fuel gas services to the Coker Complex each month
based on the following formula:
MMBTU Price * Monthly MMBTU Usage
Where:
"MMBTU Price" means, for any month the sum of (i) Gulf Coast NG for
such month, plus (ii) $.015.
----
Schedule 5.5.3
Services and Supply Agreement
"Gulf Coast NG" means, for any month, the average Houston Ship
Channel (Large) Quote stated in MMBTUs in Inside FERCS Gas Market
Report (Trends in Spot Price Indicators) .
"Monthly MMBTU Usage" means for any month the sum of (a) Monthly
Natural Gas Consumption, and (b) Monthly Fuel Gas Consumption.
b. Ancillary Equipment
Consideration for natural and fuel gas services provided by Clark
R&M to the Coker Company for use at the Ancillary Equipment is
included in the Ancillary Equipment Operating Fee.
4. Required Billing Information.
----------------------------
Clark R&M shall provide the following information as an attachment to
its monthly Reconciliation Statements:
4.1 Total MMBTUs of natural gas and fuel gas delivered each unit of the
Coker Complex.
4.2 Total MMBTUs of natural gas and fuel gas produced by each unit of
the Coker Complex.
4.3 Calculation of the Monthly MMBTU Usage
4.4 Gulf Coast NG
4.5 Total amount due from Coker Company for natural gas and fuel gas
provided to the Coker Complex
-4-
Schedule 5.5.4
Services and Supply Agreement
WATER SERVICES.
5. Scope.
-----
a. Supply of the Coker Company's requirements for the following
types of water for use at the Heavy Oil Processing Facility.
a. Boiler Feedwater
"Boiler Feedwater" means a combination of untreated water
and condensed steam meeting the specifications therefor set
forth in the Turnkey Specifications and under the heading
"BFW" on the chart in 4 below.
b. Filtered Water
"Filtered Water" means Clarified Water (as defined below)
that has been filtered to remove particulate matter and
meeting the specifications therefor set forth in the
Turnkey Specifications and under the heading "Filtered
Water" on the chart in 4 below.
c. Clarified Water
"Clarified Water" means untreated water purchased by Clark
R&M from the Lower Neches Valley Authority and meeting the
specifications therefor set forth in the Turnkey
Specifications and under the heading "Clarified Water" on
the chart in 4 below.
d. Potable Water
"Potable Water" means drinking water purchased by Clark R&M
from the City of Port Arthur.
e. Fire Water
"Fire Water" means Clarified Water used for fire fighting
purposes and purchased by Clark R&M from the City of Port
Arthur.
f. Demineralized Water
"Demineralized Water" means Clarified Water that has been
treated to remove particulate matter and meeting the
specifications therefor set forth in the Turnkey
Specifications and under the heading "Demineralized Water"
on the chart in 4 below.
Schedule 5.5.4
Services and Supply Agreement
b. Offtake of all condensed steam ("Condensate") from
operation of the Heavy Oil Processing Facility.
6. Metering/Measurement Methodology for Services to the Coker Complex
------------------------------------------------------------------
The meters to be installed pursuant to the EPC Contract and described on
Schedule 5.5(b) shall be used to measure the thousands of gallons ("MGALs")
of each type of water that are delivered to the Coker Complex each month
and the MGALs of Condensate that are produced by the Coker Company each
month (the "Monthly Condensate MGALs"); provided, however, that at any time
-------- -------
when such meters are not functioning the Monthly Condensate MGALs shall be
determined (a) for any month prior to three full calendar months after
Final Completion, based on the "typical" or expected usages described in
the chart in number 4 below, or (b) for any other month, based on the
average Monthly Condensate MGALs for the prior three calendar months.
7. Applicable Price.
----------------
a. Coker Complex
The Coker Company shall pay Clark R&M for the supply of each type of
water described above to the Coker Complex each month according to the
following formula:
Boiler Feedwater Cost + Filtered Water Cost + Clarified Water
Cost + Demineralized Water Cost - Condensate Payment.
Where:
a. Boiler Feedwater Cost
The "Boiler Feedwater Cost" each month shall be determined
according to the following formula:
Average Monthly Refinery Boiler Feedwater Cost * Monthly
Boiler Feedwater MGALs
Where:
"Average Monthly Refinery Boiler Feedwater Cost" means, for any
month, (a) the actual costs in dollars incurred by Clark R&M for
the provision of Boiler Feedwater throughout the Refinery, divided
-------
by (b) the MGALs of Boiler Feedwater distributed in such month
--
throughout the Refinery.
-2-
Schedule 5.5.4
Services and Supply Agreement
"Monthly Boiler Feedwater MGALs" means, for any month the total
metered MGALs of Boiler Feedwater distributed to the Coker
Complex in such month; provided, however, that at any time when
-------- -------
such meters are not functioning the Monthly Boiler Feedwater
MGALs shall be determined (a) for any month prior to three full
calendar months after Final Completion, based on the "typical" or
expected usages described in the chart in 4 below, or (b) for any
other month, based on the average Monthly Boiler Water MGALs for
the prior three calendar months.
b. Filtered Water Cost
The "Filtered Water Cost" each month shall be determined
according to the following formula:
Average Monthly Refinery Filtered Water Cost * Monthly Filtered
Water MGALs
Where:
"Average Monthly Refinery Filter Water Cost" means, for any
month, (a) the actual costs in dollars incurred by Clark R&M for
the provision of Filtered Water throughout the Refinery, divided
-------
by (b) the total MGALs of Filtered Water distributed in such
--
month throughout the Refinery.
"Monthly Filtered Water MGALs" means, for any month the total
metered MGALs of Filtered Water distributed to the Coker Complex
in such month; provided, however, that at any time when such
-------- -------
meters are not functioning the Monthly Filtered Water MGALs shall
be determined (a) for any month prior to three full calendar
months after Final Completion, based on the "typical" or expected
usages described in the chart in 4 below, or (b) for any other
month, based on the average Monthly Filtered Water MGALs for the
prior three calendar months. provided, however, that at any time
-------- -------
when the applicable meters are not functioning the Monthly
Filtered Water MGALs shall be determined based on the "typical"
or expected usages described in the chart in 4 below.
c. Clarified Water Cost
The "Clarified Feedwater Cost" each month shall be determined
according to the following formula:
Average Monthly Refinery Clarified Water Cost * Monthly Clarified
Water MGALs
Where:
-3-
Schedule 5.5.4
Services and Supply Agreement
"Average Monthly Refinery Clarified Water Cost" means, for any
month, (a) the actual costs in dollars incurred by Clark R&M for
the provision of Clarified Water (including Fire Water)
throughout the Refinery, divided by (b) the total MGALs of
----------
Clarified Water distributed in such month throughout the
Refinery.
"Monthly Clarified Water MGALs" means, for any month the total
metered MGALs of Clarified Water distributed to the Coker
Complex in such month; provided, however, that at any time when
-------- -------
such meters are not functioning the Monthly Clarified Water
MGALs shall be determined (a) for any month prior to three full
calendar months after Final Completion, based on the "typical"
or expected usages described in the chart in 4 below, or (b) for
any other month, based on the average Monthly Clarified Water
MGALs for the prior three calendar months.
d. Potable Water Cost
The cost of Potable Water provided to the Coker Company each
month for use in connection with operation of the Coker Complex
and the Ancillary Equipment is included in the rent payable under
the Coker Complex Ground Lease and the Ancillary Equipment Site
Lease, respectively.
e. Demineralized Water Cost
The "Demineralized Feedwater Cost" each month shall be determined
according to the following formula:
Average Monthly Refinery Demineralized Water Cost * Monthly
Demineralized Water MGALs
Where:
"Average Monthly Refinery Demineralized Water Cost" means, for
any month, (a) the actual costs in dollars incurred by Clark R&M
for the provision of Demineralized Water throughout the Refinery,
divided by (b) the total MGALs of Demineralized Water distributed
----------
in such month throughout the Refinery.
"Monthly Demineralized Water MGALs" means, for any month the
total metered MGALs of Demineralized Water distributed to the
Coker Complex in such month; provided, however, that at any time
-------- -------
when such meters are non functioning the Monthly Demineralized
Water MGALs shall be determined (a) for any month prior to three
full calendar months after Final Completion,
-4-
Schedule 5.5.4
Services and Supply Agreement
based on the "typical" or expected usages described in the
chart in 4 below, or (b) for any other month, based on the
average Monthly Demineralized Water MGALs for the prior
three calendar months.
f. Condensate Payment
The "Condensate Payment" each month shall be determined according
to the following formula:
Average Monthly Refinery Boiler Feedwater Cost * Monthly
Condensate MGALs
4.
-5-
Schedule 5.5.4
Services and Supply Agreement
4. Additional Terms.
----------------
Water Produced (Consumed)
---------------------------
COKER COMPLEX UNITS Clarified Filtered Demin Zeolite BFW Condensate Fire Potable Waste
Water, Water, Water, Water, Water Water Water,
Mlbs/Hr Mlbs/Hr. Mlbs/Hr Mlbs/Hr GPM
----------------------------------------------------------------------------------------------------------------------------------
SRU 545 (193.0) (193.0) 43.2 18.0
----------------------------------------------------------------------------------------------------------------------------------
DCU 843 (50.0) (68.0) 63.0 25.0
----------------------------------------------------------------------------------------------------------------------------------
HCU 942 (146.0) (84.0) 25.0
----------------------------------------------------------------------------------------------------------------------------------
ATU 7841 63.4 18.0
----------------------------------------------------------------------------------------------------------------------------------
SWS 8747 53.8 267.0
----------------------------------------------------------------------------------------------------------------------------------
C.T. 432 (492.0) 72.0
----------------------------------------------------------------------------------------------------------------------------------
FLARE 23 (23.0) (23.0)
----------------------------------------------------------------------------------------------------------------------------------
OFFSITES 10.0
----------------------------------------------------------------------------------------------------------------------------------
Sub Total (542.0) 0.0 (193.0) 0.0 (430.0) 116.4 435.0
----------------------------------------------------------------------------------------------------------------------------------
Percent Usage Coker Company 6.6% 0.0% (26.9%) 0.0% 12.6% (3325.7%) #DIV/0! #DIV/0! 7.4%
----------------------------------------------------------------------------------------------------------------------------------
ANCILLARY EQUIPMENT
----------------------------------------------------------------------------------------------------------------------------------
AVU 146 103.7 420.0
----------------------------------------------------------------------------------------------------------------------------------
GFU 242 33.9 25.0
----------------------------------------------------------------------------------------------------------------------------------
GFU 243 41.7 0.0
----------------------------------------------------------------------------------------------------------------------------------
SGRU 1242 142.0 50.0
----------------------------------------------------------------------------------------------------------------------------------
Offsites--PH 41 30.0
----------------------------------------------------------------------------------------------------------------------------------
Sub Total 0.0 0.0 0.0 0.0 0.0 351.3 495.0
----------------------------------------------------------------------------------------------------------------------------------
Percent Usage Ancillary 0.0% 0.0% 0.0% 0.0% 0.0% (10037.1%) #DIV/0! #DIV/0! 8.5%
----------------------------------------------------------------------------------------------------------------------------------
Clark R&M UNITS
----------------------------------------------------------------------------------------------------------------------------------
GFU 241 9.2 25.0
----------------------------------------------------------------------------------------------------------------------------------
GFU 244 (10.0) 59.4 25.0
----------------------------------------------------------------------------------------------------------------------------------
HFAU 443 114.1 62.0
----------------------------------------------------------------------------------------------------------------------------------
SRU 543/544 (140.0) (52.0) 100.0
----------------------------------------------------------------------------------------------------------------------------------
FCCU 1241 (228.0) (228.0) 237.4 90.0
----------------------------------------------------------------------------------------------------------------------------------
CRU 1344 (58.0) (186.0) 0.0 100.0
----------------------------------------------------------------------------------------------------------------------------------
SWS 8746 52.0 233.0
----------------------------------------------------------------------------------------------------------------------------------
Cleaning Slab 27.0
----------------------------------------------------------------------------------------------------------------------------------
P.S 194 60.0
----------------------------------------------------------------------------------------------------------------------------------
Cooling Tower Blowdown 800.0
----------------------------------------------------------------------------------------------------------------------------------
Offsites-PH 136 99.4
----------------------------------------------------------------------------------------------------------------------------------
No. 2 WTP 20.0
----------------------------------------------------------------------------------------------------------------------------------
Firewater Make-up (250.0) 250.0
----------------------------------------------------------------------------------------------------------------------------------
Fire Water to Sewer 400.0
for Cooling
----------------------------------------------------------------------------------------------------------------------------------
Scaltech 50.0
----------------------------------------------------------------------------------------------------------------------------------
Storm Water Tank, 2,500.0
T-1912
----------------------------------------------------------------------------------------------------------------------------------
Clark R&M Boilers (171.0) (1,687.0) (1,389.0)
----------------------------------------------------------------------------------------------------------------------------------
Filtered Water to Ref. (2,001.0)
Dist.
----------------------------------------------------------------------------------------------------------------------------------
To Filtered Water (3,936.0) 3,936.0
----------------------------------------------------------------------------------------------------------------------------------
To Demin./Zeolite (725.0) 422.0 303.0
System
----------------------------------------------------------------------------------------------------------------------------------
To SMR (718.0) 718.0
Reject (389.0) (42.0)
----------------------------------------------------------------------------------------------------------------------------------
Sub Total (6,480.0) 450.0 911.0 65.0 (2,241.0) (869.5) 4,492.0
----------------------------------------------------------------------------------------------------------------------------------
Percent Usage Clark R&M 79.3% 100.0% 126.9% 100.0% 65.8% 24842.9% #DIV/0! #DIV/0! 76.8%
----------------------------------------------------------------------------------------------------------------------------------
Clark Subtotal 450.0 911.0 65.0 (2,241.0) (518.2) 4,987.0
----------------------------------------------------------------------------------------------------------------------------------
Coker Company & Clark R&M (7,022.0) 450.0 718.0 65.0 (2,671.0) (401.8) 5,422.0
Sub
----------------------------------------------------------------------------------------------------------------------------------
CHEVRON CCC/PADC (900.0) 0.0 0.0 (65.0) 0.0 340.0 425.0
----------------------------------------------------------------------------------------------------------------------------------
Percent Usage Chevron 11.0% 0.0% 0.0% (100.0%) 0.0% (9714.3%) #DIV/0! #DIV/0! 7.3%
----------------------------------------------------------------------------------------------------------------------------------
Refinery Plus CCC (7,922.0) 450.0 718.0 0.0 (2,671.0) (61.8) 5,847.0
Sub Total
----------------------------------------------------------------------------------------------------------------------------------
DESTEC (450.0) 0.0 0.0 0.0 0.0 0.0
----------------------------------------------------------------------------------------------------------------------------------
Percent Usage Destec 0.0% (100.0%) 0.0% 0.0% 0.0% 0.0% #DIV/0! #DIV/0! 0.0%
----------------------------------------------------------------------------------------------------------------------------------
Ref. Plus CCC Plus (7,922.0) 450.0 718.0 0.0 (2,671.0) (61.8) 5,847.0
Destec
----------------------------------------------------------------------------------------------------------------------------------
AIR PRODUCTS (245.0) 0.0 (718.0) 0.0 (735.0) 58.3
----------------------------------------------------------------------------------------------------------------------------------
Percent Usage Air Products 3.0%
----------------------------------------------------------------------------------------------------------------------------------
Net (8,167.0) 450.0 718.0 65.0 (3,406.0) (3.5) 0.0 0.0 5,847.0
----------------------------------------------------------------------------------------------------------------------------------
Total Percent Usage 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% #DIV/0! #DIV/0! 100.0%
-6-
Schedule 5.5.5
Services and Supply Agreement
COMPRESSED AIR SERVICES
1. Scope.
-----
a. Supply of the full compressed air requirements of the Coker Company
for use at the Coker Complex. Such compressed air shall meet the
specifications set forth in the Turnkey Specifications.
b. Supply of the full compressed air requirements of the Coker Company
for use at the Ancillary Equipment.
2. Metering/Measurement Methodology for Services to the Coker Complex.
The meters to be installed pursuant to the EPC Contract and described on
Schedule 5.5(b) shall be used to measure the thousands of standard cubic
feet ("MSCF") of compressed air are delivered to the Coker Complex each
month (the "Monthly Coker Complex MCSF").
3. Applicable Price.
----------------
a. Coker Complex
The Coker Company shall pay Clark R&M for the actual cost of providing
compressed air to the Coker Complex each month based on the following
formula:
Total Average Refinery Compressed Air Cost * Monthly Coker
Complex MSCF
Where:
"Total Average Refinery Compressed Air Cost" means, for any month
(a) the actual costs in dollars incurred by Clark R&M for the
production and distribution of compressed air at the Refinery in
such month, divided by (b) the total amount, expressed in MSCF,
----------
of compressed air distributed throughout the Refinery in such
month.
b. Ancillary Equipment
Consideration for compressed air provided by Clark R&M to the Coker
Company for use at the Ancillary Equipment is included in the
Ancillary Equipment Operating Fee.
Schedule 5.5.5
Services and Supply Agreement
4. Required Billing Information.
----------------------------
Clark R&M shall provide the following information as an attachment to its
monthly Reconciliation Statements:
4.1 Total MSCF of compressed air measured through each Coker Complex
meter.
4.2 Calculation of the Total Average Refinery Compressed Air Costs
4.3 Total amount due from Coker Company for compressed air provided to the
Coker Complex
-2-
Schedule 5.5.6
Services and Supply Agreement
NITROGEN SERVICES
1. Scope.
-----
a. Supply of the full nitrogen requirements of the Coker Company for use
at the Coker Complex meeting the following specifications:
Component Specification
--------- --------------
Nitrogen and inerts 99.999 Mole % minimum
Oxygen 10.0 ppm maximum
8.0 ppm minimum
Moisture (dew point) - 80[degrees] Fahrenheit or below
b. Supply of the full nitrogen requirements of the Coker Company for use
at the Ancillary Equipment.
2. Metering/Measurement Methodology for Services to the Coker Complex.
The meters to be installed pursuant to the EPC Contract and described on
Schedule 5.5(b) shall be used to measure the volume of nitrogen, expressed
in thousands of standard cubic feet ("MSCF"), that are delivered to the
Coker Complex each month (the "Monthly Coker Complex MCSF").
3. Applicable Price.
----------------
a. Coker Complex
The Coker Company shall pay Clark R&M for the actual cost of providing
nitrogen to the Coker Complex each month based on the following
formula:
(Total Average Refinery Nitrogen Cost * Monthly Coker Complex
MSCF) + Coker Complex Nitrogen Distribution Allocation
Where:
"Total Average Refinery Nitrogen Cost" means, for any month, (a)
the total dollar charges in such month to Clark R&M for nitrogen
supplied to the Refinery by third party suppliers, divided by (b)
----------
the Monthly Refinery MSCF.
"Monthly Refinery MSCF" means, for any month, the total volume of
nitrogen, expressed in MSCF, purchased by Clark R&M from third
party suppliers and distributed through the Nitrogen Distribution
System (as defined in 5 below) in such month.
Schedule 5.5.5
Services and Supply Agreement
"Coker Company Nitrogen Distribution Allocation" means, for
any month (a) the total costs in dollars incurred by Clark R&M in
such month to maintain the Nitrogen Distribution System (as
defined below), multiplied by (b) the ratio of (i) Monthly Coker
-------------
Complex MSCF to (ii) Monthly Refinery MSCF.
b. Ancillary Equipment
Consideration for nitrogen provided by Clark R&M to the Coker Company
for use at the Ancillary Equipment is included in the Ancillary
Equipment Operating Fee.
4. Required Billing Information.
----------------------------
Clark R&M shall provide the following information as an attachment to its
monthly Reconciliation Statements:
4.1 Total MSCF of nitrogen measured through each Coker Complex meter.
4.2 Calculation of Total Average Refinery Nitrogen Cost and Coker Complex
Nitrogen Distribution Allocation.
4.3 Total amount due from Coker Company for nitrogen provided to the Coker
Complex
5. Additional Terms.
----------------
As used herein "Nitrogen Distribution System" means the interconnective
piping system owned by Clark R&M and used to distribute nitrogen to Clark
R&M and its affiliates (including the Coker Company).
-2-
Schedule 5.5(b)
Services and Supply Agreement
UTILITY METERS
The Coker Company and Clark R&M agree to promptly complete the following
tables upon completion of design engineering by the Contractor related to
the applicable meters.
ATU-7841
----------------------------------------------------------------------------------------------------------
Schedule Utility Description Movement Flow Meter Drawing
----------------------------------------------------------------------------------------------------------
Diagram # STREAM Source/Destination number Number
--------- ------ ------------------ ----- ------
7841/4623/
----------------------------------------------------------------------------------------------------------
5.5.5 AIR
----------------------------------------------------------------------------------------------------------
6 Plant Air frm Offsites A401
----------------------------------------------------------------------------------------------
6 Instrument Air frm Offisites A401
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
5.5.6 NITROGEN
----------------------------------------------------------------------------------------------------------
1 Nitrogen frm Offsites A401
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
5.5.2 STEAM
----------------------------------------------------------------------------------------------------------
2 MP (125 psig) Steam frm SWS-8747 A400
----------------------------------------------------------------------------------------------
2 50 psig Steam frm SWS-8747 A400
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
5.5.4 WATER
----------------------------------------------------------------------------------------------------------
3 50 psig Condensate to SWS-8747 A400
----------------------------------------------------------------------------------------------
3 Pumped Condensate frm SWS-8747 A400
----------------------------------------------------------------------------------------------
7 Filtered Water frm Offisites A401
----------------------------------------------------------------------------------------------
7 Clarified Water frm Offisites A401
----------------------------------------------------------------------------------------------
5 Cooling Water Supply frm Offsites A401
----------------------------------------------------------------------------------------------
5 Cooling Water Return to Offsites A401
----------------------------------------------------------------------------------------------
7 Potable Water frm Offisites A401
----------------------------------------------------------------------------------------------------------
5.5.1 ELECTRIC
----------------------------------------------------------------------------------------------------------
N/A Electric from Clark from PP6 to ATU-7841 3 N/A
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Note 1: Cooling Tower services all Coker Complex
Note 2: Natural Gas and Fuel Gas Meter are Reference in the Product
Purchase Agreements for Coker Complex
Schedule 5.5(b)
Services and Supply Agreement
SRU-545
--------------------------------------------------------------------------------------------------------------------------------
Schedule Utility Description Movement Flow Meter Drawing
--------------------------------------------------------------------------------------------------------------------------------
Diagram # STREAM Source/Destination number Number
--------- ------ ------------------ ------ ------
--------------------------
5.5.5 AIR
--------------------------------------------------------------------------------------------------------------------------------
6 Plant Air
-----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
5.5.6 NITROGEN
--------------------------------------------------------------------------------------------------------------------------------
1 Nitrogen
-----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
5.5.2 STEAM
--------------------------------------------------------------------------------------------------------------------------------
2 650 psig Superheated Steam FI-1846 0041
-----------------------------------------------------------------------------------------------------------------
2 50 psig steam from SCOT WHB FI-1681 0034
-----------------------------------------------------------------------------------------------------------------
2 50 psig Steam from Cond - Tr1 FI-1161 0021
-----------------------------------------------------------------------------------------------------------------
2 50 psig Steam from Cond - Tr2
-----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
5.5.4 WATER
--------------------------------------------------------------------------------------------------------------------------------
3 LP BFW to Condenser - Tr1 FI-1160 0021
-----------------------------------------------------------------------------------------------------------------
3 LP BFW to Condenser - Tr2
-----------------------------------------------------------------------------------------------------------------
3 LP BFW to SCOT WFB FI-1680 0034
-----------------------------------------------------------------------------------------------------------------
3 HP BFW to 650# WHB - Tr1 FI-1090 0018
-----------------------------------------------------------------------------------------------------------------
3 HP BFW to 650# WHB - Tr2
-----------------------------------------------------------------------------------------------------------------
3 HP BFW to Incinerator Boiler FI-1840 0042
-----------------------------------------------------------------------------------------------------------------
3 HP BFW to Desuperheater FI-1845 0041
-----------------------------------------------------------------------------------------------------------------
Quench Water Makeup 0036
-----------------------------------------------------------------------------------------------------------------
Amine Makep Water 0032
-----------------------------------------------------------------------------------------------------------------
SCOT ATU SOUR Water FI-1771 0039
-----------------------------------------------------------------------------------------------------------------
7 Clarified Water
-----------------------------------------------------------------------------------------------------------------
7 Filtered Water
-----------------------------------------------------------------------------------------------------------------
5 Cooling Water Supply
-----------------------------------------------------------------------------------------------------------------
5 Cooling Water Return
-----------------------------------------------------------------------------------------------------------------
7 Potable Water
--------------------------------------------------------------------------------------------------------------------------------
5.5.1 ELECTRIC
--------------------------------------------------------------------------------------------------------------------------------
N/A Electric from Clark from PP6 to SRU-545 3 N/A
--------------
Note 1: Cooling Tower services all Coker Complex
Note 2: Natural Gas and Fuel Gas Meter are Reference in the
Product Purchase Agreements for Coker Complex
-2-
Schedule 5.5(b)
Services and Supply Agreement
HCU-942
---------------------------------------------------------------------------------------------------------------------------------
Schedule Utility Description Movement Flow Meter Drawing
---------------------------------------------------------------------------------------------------------------------------------
Diagram # STREAM Source/Destination number Number
--------- ------- ------------------ ------ ------
4612-2--50-
-----------------------------
5.5.5 AIR
---------------------------------------------------------------------------------------------------------------------------------
6 Plant Air frm Offsites 062
-------------------------------------------------------------------------------------------------------------
6 Instrument Air frm DCU-843 063
-------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
5.5.6 NITROGEN
---------------------------------------------------------------------------------------------------------------------------------
1 Nitrogen frm DCU-843 FI-3026 063
---------------------------------------------------------------------------------------------------------------------------------
5.5.2 STEAM
---------------------------------------------------------------------------------------------------------------------------------
2 HP (650 psig) Steam frm Offsites FI-3300 074
-------------------------------------------------------------------------------------------------------------
2 MP (125 psig) Steam frm Offsites FI-3325 075
-------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
5.5.4 WATER
---------------------------------------------------------------------------------------------------------------------------------
3 Condensate to Offsites 076
-------------------------------------------------------------------------------------------------------------
3 Surf. Cond. Condensate to Offsites FI-3670 088
-------------------------------------------------------------------------------------------------------------
5 Cooling Water Sup/Ret frm Offsites 065
-------------------------------------------------------------------------------------------------------------
7 Clarified Water frm DCU-843 067
-------------------------------------------------------------------------------------------------------------
7 Filter Water frm DCU-843 067
-------------------------------------------------------------------------------------------------------------
3 HP Boiler Feed Water frm Offsites FI-3276 073
-------------------------------------------------------------------------------------------------------------
7 Potable Water frm Offsites 067
-------------------------------------------------------------------------------------------------------------
Sour Water frm DCU-843 054
-------------------------------------------------------------------------------------------------------------
Sour Water frm SRU-545 054
-------------------------------------------------------------------------------------------------------------
Sour Water to Tank 78 FC-2801 054
---------------------------------------------------------------------------------------------------------------------------------
5.5.1 ELECTRIC
---------------------------------------------------------------------------------------------------------------------------------
N/A Electric from Clark from PP6 to HCU-942 3 N/A
-------------------------------------------------------------------------------------------------------------
N/A Electric from Clark from PP6 to Cooling Twr 4 N/A
-------------------------------------------------------------------------------------------------------------
-------------------------------------------- ---------------------------------
Note 1: Cooling Tower services all Coker Complex
Note 2: Natural Gas and Fuel Gas Meter are Reference in the
Product Purchase Agreements for Coker Complex
-3-
Schedule 5.5(b)
Services and Supply Agreement
DCU-843
-----------------------------------------------------------------------------------------------------------------------------------
Schedule Utility Description Movement Flow Meter Drawing
-----------------------------------------------------------------------------------------------------------------------------------
Diagram # STREAM Source/Destination number Number
--------- ------ ------------------ ------ ------
4611-2-50-
-------------------------------
5.5.5 AIR
-----------------------------------------------------------------------------------------------------------------------------------
6 Plant Air to DCU-843 FE-3615 171
------------------------------------------------------------------------------------------------------------------
6 Instrument Air to DCU-843 171
------------------------------------------------------------------------------------------------------------------
6 Plant Air to HCU-942 172
------------------------------------------------------------------------------------------------------------------
6 Instrument Air to HCU-942 172
------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
5.5.6 NITROGEN
-----------------------------------------------------------------------------------------------------------------------------------
1 Nitrogen to DCU-843 FE-3616 171
------------------------------------------------------------------------------------------------------------------
1 Nitrogen to HCU-942 172
------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
5.5.2 STEAM
-----------------------------------------------------------------------------------------------------------------------------------
2 MP (125 psig) Steam to/from DCU-843 FE-3623 171
------------------------------------------------------------------------------------------------------------------
2 HP (650 psig) Steam to DCU-843 FE-3624 171
------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
5.5.4 WATER
-----------------------------------------------------------------------------------------------------------------------------------
5 Cooling Water Supply to DCU-843 FE-3621 171
------------------------------------------------------------------------------------------------------------------
5 Cooling Water Return frm DCU-843 171
------------------------------------------------------------------------------------------------------------------
3 High Pressure BFW to DCU-843 FE-3637 172
------------------------------------------------------------------------------------------------------------------
3 Medium Pressure BFW to DCU-843 FE-3638 172
------------------------------------------------------------------------------------------------------------------
3 High Pressure Condensate to Deaerator FE-3639 172
------------------------------------------------------------------------------------------------------------------
3 Low Pressure Condensate to Deaerator FE-3640 172
------------------------------------------------------------------------------------------------------------------
7 Oily Water to WWTU F? 171
------------------------------------------------------------------------------------------------------------------
9 Phenolic Sour Water to HCU-942 FE1853,1992 172
------------------------------------------------------------------------------------------------------------------
7 Potable Water to DCU-843 171
------------------------------------------------------------------------------------------------------------------
7 Clarified Water to DCU-843 FE-3620 171
------------------------------------------------------------------------------------------------------------------
7 Filtered Water to DCU-843 FE-3620 171
------------------------------------------------------------------------------------------------------------------
7 Clarified Water to HCU-942 172
------------------------------------------------------------------------------------------------------------------
7 Filtred Water to HCU-942 172
-----------------------------------------------------------------------------------------------------------------------------------
5.5.1 ELECTRIC
-----------------------------------------------------------------------------------------------------------------------------------
N/A Electric from Clark from PP6 to DCU-843 2 N/A
------------------------------------------------------------------------------------------------------------------
N/A Electric from Clark from PP6 to Feed Tanks 4 N/A
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
Note 1: Cooling Tower services all Coker Complex
Note 2: Natural Gas and Fuel Gas Meter are Reference in the
Product Pruchase Agreements for Coker Complex
SWS-8747
-4-
Schedule 5.5(b)
Services and Supply Agreement
-----------------------------------------------------------------------------------------------------------------------------------
Schedule Utility Description Movement Flow Meter Drawing
-----------------------------------------------------------------------------------------------------------------------------------
Diagram # STREAM Source/Destination number Number
--------- ------ ------------------ ------ ------
8747/4622/
-----------------------------------------------------------------------------------------------------------------------------------
5.5.5 AIR
-----------------------------------------------------------------------------------------------------------------------------------
6 Plant Air frm Offsites A401
------------------------------------------------------------------------------------------------------------------
6 Instrument Air frm Offisites A401
-----------------------------------------------------------------------------------------------------------------------------------
5.5.6 NITROGEN
-----------------------------------------------------------------------------------------------------------------------------------
1 Nitrogen frm Offsites A401
-----------------------------------------------------------------------------------------------------------------------------------
5.5.2 STEAM
-----------------------------------------------------------------------------------------------------------------------------------
2 MP (125 psig) Steam to SWS 8747 FI-1033 A400
------------------------------------------------------------------------------------------------------------------
2 50 psig Steam to SWS 8747 FI-1032 A400
-----------------------------------------------------------------------------------------------------------------------------------
5.5.4 WATER
-----------------------------------------------------------------------------------------------------------------------------------
3 50 psig Condensate frm SWS 8747 A400
------------------------------------------------------------------------------------------------------------------
3 Pumped Condensate to SWS 8747 A400
------------------------------------------------------------------------------------------------------------------
7 Clarified Water frm Offisites A401
------------------------------------------------------------------------------------------------------------------
5 Cooling Water Supply frm Offsites A401
------------------------------------------------------------------------------------------------------------------
5 Cooling Water Return to Offsites A401
------------------------------------------------------------------------------------------------------------------
7 Potable Water frm Offisites A401
-----------------------------------------------------------------------------------------------------------------------------------
5.5.1 ELECTRIC
-----------------------------------------------------------------------------------------------------------------------------------
N/A Electric from Clark from PP6 to SWS-8747 3 N/A
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
Note 1: Cooling Tower services all Coker Complex
Note 2: Natural Gas and Fuel Gas Meter are Reference in the
Product Pruchase Agreements for Coker Complex
-5-
Schedule 5.6
Services and Supply Agreement
WASTE MANAGEMENT AND WASTEWATER TREATMENT SERVICES
5. 1. Scope.
-----
Collection, processing, treatment, transportation, storage, disposal and
recycling of all waste generated by the Heavy Oil Processing Facility and
all rain water runoff, cooling tower blow down, sanitary sewage (but the
cost of sanitary sewage service is included in the rent payable under the
Coker Complex Ground Lease and the Ancillary Equipment Site Lease,
respectively), recovered oil, recovered residuals and all other hazardous
and solid waste originating at the Heavy Oil Processing Facility ("Waste
Management and Wastewater Treatment Services").
1.1 Wastewater Treatment Services
Clark R&M shall provide wastewater treatment services to the Coker
Company through operation of the following four systems of Clark R&M's
waste water treatment facility at the Refinery (the "WWTF").
f. Waste Treatment System ("WTS")
A contaminant based unit that is the main treatment facility at
the Refinery. It handles treatment of all flow from the Dirty
Water Collection System (defined below) and the dry weather
Surface Drainage System (defined below) and all cooling tower
blowdown at the Refinery.
g. Dirty Water Collection System ("DWCS")
All equipment at the Refinery used for collection and convergence
of dirty water to the WTS, including all pumping, tanks, piping,
and reservoirs.
h. Surface Drainage System ("SDS")
This system handles all surface drainage at the Refinery and
currently consist of Clark R&M's pump house no. 15 and tanks nos.
1912 and 1913.
d. Oil Recovery Unit ("ORU")
This system handles recovered oil, recovered residuals and
hazardous and solid wastes (including, without limitation, slop
oil emulsions) from the WTS and vacuum trucks.
1.2. Waste Management System ("WMS")
Clark R&M shall utilize its WMS to provide waste management services
for the Heavy Oil Processing Facility including, without limitation,
all labor, equipment, vehicles, administration, contract manpower and
other resources necessary for
Schedule 5.6
Services and Supply Agreement
spill response, spill site remediation and the collection, storage,
treatment, transportation and disposal of non-hazardous and hazardous
waste.
6. Metering/Measurement Methodology for Services to the Coker Complex.
------------------------------------------------------------------
2.1 WTS
a. The monthly usage of the WTS by the Coker Complex ("Monthly WTS
Allocation") shall be deemed to equal sixteen percent (16%) of
the total monthly usage of the WTS.
b. Pursuant to Section 7.4(b) of this Services and Supply Agreement,
from time to time, the parties may modify the Monthly WTS
Allocation based on their best efforts to determine the actual
dirty water volume attributable to the Coker Complex.
2.2 DWCS
The monthly usage of the DWCS by the Coker Complex (the "Monthly DWCS
Allocation") shall be deemed to equal twenty five percent (25%) of the
total monthly usage of the DWCS.
2.3 SDS
The monthly usage of the SDS by the Coker Complex (the "Monthly SDS
Allocation") shall equal (i) 47.7 (which is the total number of acres
occupied by the Coker Complex), divided by (ii) 2300 (which is the
----------
total number of acres drained by Clark R&M's pump house no. 15 located
at the Refinery).
2.4 ORU
a. The monthly usage of the ORU by the Coker Complex (the "Monthly
ORU Allocation") shall be deemed to equal twenty five percent
(25%) of the total monthly usage of the ORU.
b. Pursuant to Section 7.4(b) of this Services and Supply Agreement,
from time to time, the parties shall use their best efforts to
modify the Monthly ORU Allocation based on the actual volume of
slop oil emulsions, solids, recovered oil, recovered residuals,
vacuum truck deliveries and other wastes handled by the ORU and
attributable to the Coker Complex.
2.5 Waste Management System
a. The monthly usage of the WMS by the Coker Complex (the "Monthly
WMS Allocation") shall be deemed to equal 15% of the total usage
of the WMS.
-2-
Schedule 5.6
Services and Supply Agreement
b. Pursuant to Section 7.4(b) of this Services and Supply
Agreement, from time to time, the parties may modify the Monthly
WMS Allocation based on their best efforts to determine actual
waste volume attributable to the Coker Complex.
3. Applicable Price.
----------------
3.1 Coker Complex
c. WTS
The Coker Company shall pay Clark R&M for providing Waste
Management and Wastewater Treatment Services at the WTS each
month according to the following formula:
Total WTS Cost * Monthly WTS Allocation
Where:
"Total WTS Cost" means, for any month, the sum of (i) all
Permitted Reimbursable Expenses incurred by Clark R&M in
operating its waste water treatment unit designated WWTU 8743 at
the Refinery and (ii) without duplication, all Permitted
Reimbursable Expenses incurred by Clark R&M associated with the
treatment of dirty water at the Refinery and the processing of
oil, recovered oil, recovered residuals, emulsions, oily solids
and oily sludge generated at the WTS.
d. DWCS
The Coker Company shall pay Clark R&M for providing Waste
Management and Wastewater Treatment Services at the DWCS each
month according to the following formula:
Total DWCS Cost * Monthly DWCS Allocation
Where:
"Total DWCS Cost" means, for any month, all Permitted
Reimbursable Expenses incurred by Clark R&M in operating the
DWCS.
e. SDS
The Coker Company shall pay Clark R&M for providing Waste
Management and Wastewater Treatment Services at the SDS each
month according to the following formula:
-3-
Schedule 5.6
Services and Supply Agreement
Total SDS Cost * Monthly SDS Allocation
Where:
"Total SDS Cost" means, for any month, the Permitted
Reimbursable Expenses incurred by Clark R&M in operating the
SDS.
f. ORU
The Coker Company shall pay Clark R&M for providing Waste
Management and Wastewater Treatment Services at the ORU each
month according to the following formula:
Total ORU Cost * Monthly ORU Allocation
Where:
"Total ORU Cost" means, for any month, the Permitted
Reimbursable Expenses incurred by Clark R&M in operating the
ORU.
WMS
The Coker Company shall pay Clark R&M for providing Waste
Management and Waste Water Treatment Services described above
under 1.2 each month according to the following formula:
Total WMS Cost * Monthly WMS Allocation
Where:
"Total WMS Cost" means, for any month, the Permitted
Reimbursable Expenses incurred by Clark R&M in operating its
WMS.
3.2 Ancillary Equipment
Consideration for Waste Management and Wastewater Services provided by
Clark R&M to the Coker Company for use at the Ancillary Equipment is
included in the Ancillary Equipment Operating Fee.
7.
-4-
Schedule 5.7.1
Services and Supply Agreement
SULFUR AND COKE TRANSPORT SERVICES
1. Scope.
-----
1.1 Truck Weighing
Clark R&M shall maintain and operate truck scales at the Refinery
for the purposes of weighing sulfur trucks on behalf of the Coker
Company.
1.2 Rail Services
Clark R&M shall provide all railroad services necessary to
transport petroleum coke and sulfur from the Heavy Oil Processing
Facility, including, without limitation, (i) receiving inbound
railcars from serving railroad carriers, sorting and weighing
such cars and delivering them to the Coker Complex or Ancillary
Equipment, as the case may be; (ii) receiving outbound rail cars
from the Coker Complex and the Ancillary Equipment, sorting and
weighing such cars and delivering them to serving railroad
carriers; and (iii) providing switching to facilitate loading,
unloading and maintenance activities for such railcars.
1.3 Coker Handling
Clark R&M shall provide all coke handling services necessary to
transport petroleum coke to the delivery point for such Product
under the Product Purchase Agreement.
2. Applicable Price.
----------------
The cost to Clark R&M of providing sulfur and coke transport Services to
the Coker Company is reflected in the purchase price of such Products under
the Product Purchase Agreement.
Schedule 5.7.2
Services and Supply Agreement
BROAD BAND AND NETWORK COMPUTING SERVICES
1. Scope.
-----
1.1 Clark R&M shall install all necessary coaxial cable connections
and television sets for Coker Company control rooms in order to
connect the Coker Company and its employees to the broad band
closed circuit televisions network at the Refinery which provides
video information throughout the Refinery, including, without
limitation, a bulletin board system, doppler radar, safety
information and information on operations meetings.
1.2 Clark R&M shall provide network computing services to the Coker
Company, including without limitation:
a. Installation of cable connections and desktop computers with
appropriate office software at the Coker Company's business
office and control room locations
b. Connection to Clark R&M's local area network, wide area
network, intranet, internet, e-mail system and the Refinery
information system.
1.3 Clark R&M shall provide routine hardware repairs, system problem
isolation and resolution, help desk service, network
administration and management, computer backup services and
testing for the Coker Company's broad band and computer network
connections and all equipment, hardware and software related
thereto.
2. Applicable Price.
----------------
2.1. The Coker Company shall reimburse Clark R&M for Permitted Reimbursable
Expenses in connection with equipment procurement and installation of
(a) the broad band cable connections for the Coker Company and (b)
desktop computer(s) and software and installation of the cable
connection(s) for the Coker Company.
2.2 The Coker Company shall pay Clark R&M the following fee each
month for all services provided by Clark R&M pursuant to 1.3
above: (a) for any month after the equipment described in 1.1 and
1.2 above is installed and connected and prior to and including
December 2000, $2100.00 and (b) for any month thereafter,
$2100.00, multiplied by the Inflation Factor.
-------------
Schedule 5.7.3
Services and Supply Agreement
RADIO AND PHONE SERVICES
1. Scope.
-----
1.1 Trunked Radio Services
a. Clark R&M shall maintain (through a third party service
provider) and operate the radio antenna, computers, repeater
stations, mobile units and base stations used in connection
with the Refinery's 800 megaherz Federal Communications
Commission license (collectively, the "Trunked Radio
System").
b. Clark R&M shall provide the Coker Company with access to the
Trunked Radio System. Such access shall be limited to the
business purposes of the Coker Company and its affiliates.
c. Clark R&M shall procure all necessary portable 800 megahertz
radios on behalf of the Coker Company and provide on-going
repair and maintenance (through a third party service
provider) for such radios.
d. Trunked Radio Services and related portable radio services
are currently provided under Clark R&M's service contract
with Motorola Communications, Inc. All radios used by the
Coker Company shall be added to the inventory covered by
this service agreement.
1.2 Telephone Services
Clark R&M shall provide all labor for routine hardware and
software repairs, system problem isolation and resolution, cable
installation, telephone installation, PBX administration and
management, backup services, help desk services and testing for
the telephone environment at the Coker Complex and the business
offices of the Coker Company.
2. Applicable Price.
----------------
2.1 Trunked Radio Services
a. The Coker Company shall reimburse Clark R&M for the purchase
price of each radio procured on behalf of the Coker Company.
b. The Coker Company shall pay Clark R&M the following fee for
all other Services described in 1.1 above each month: (a)
for any month after the Start-up Date and prior to and
including
Schedule 5.7.3
Services and Supply Agreement
December 2000, $670.00 and (b) for any month thereafter,
$670.00, multiplied by the Inflation Factor.
-------------
c. Upgrades to the Trunked Radio System agreed upon mutually by
Clark R&M and Coker Company to increase the reliability of
the system, the Coker Company will be responsible for a
percentage of the cost of any upgrade performed to increase
the reliability of the Trunked Radio System, provided that,
--------
prior to initiating such upgrade Clark R&M and the Coker
Company have agreed to (i) the undertaking of such upgrade,
(ii) the estimated cost of such upgrade and (iii) a
percentage sharing of such cost based on the number of
radios used by each party at such time.
2.2 Telephone Services
a. The Coker Company shall reimburse Clark R&M for all
Permitted Reimbursable Expenses incurred by Clark R&M in
connection with installation of phone lines at the Coker
Complex and the procurement of telephones and other
equipment in connection therewith on behalf of the Coker
Company.
b. The Coker Company shall pay Clark R&M the following fee for
all other Services described in 1.2 above each month: (a)
for any month after the Coker Company telephone environment
described in 1.2 above is installed and prior to and
including December 2000, $500.00 and (b) for any month
thereafter, $500.00, multiplied by the Inflation Factor.
-------------
-2-
Schedule 5.7.4
Services and Supply Agreement
ANALYTICAL LABORATORY AND CUSTODY TRANSFER SERVICES
1. Scope.
-----
1.1 Analytical Laboratory Services
a. Clark R&M shall provide analytical laboratory services to
the Coker Company in a manner substantially similar to the
manner that such services have been provided at the Refinery
in the past.
b. Clark R&M shall provide (i) the analytical tests identified
in the Schedules to the Product Purchase Agreement under the
heading "Test Method" and (ii) such other tests that are
necessary to determine the quantity and quality of Products
produced by the Heavy Oil Processing Facility or to which
the parties otherwise mutually agree (collectively, "Coker
Company Lab Tests").
c. Clark R&M shall furnish the Coker Company with the results
obtained from all Coker Company Lab Tests within the same
time frame as results from similar tests have historically
been provided, typically 4 to 8 hours for routine tests and
typically 60 minutes for rush tests. The Coker Company (or
a party acting on behalf of the Coker Company) shall have
the right to audit the procedures used to perform each Coker
Company Lab Tests and to recommend changes thereto and to
the number and types of tests performed.
1.2 Custody Transfer Services
Clark R&M shall provide all other services related to
quantification of hydrocarbon receipts or deliveries,
coordination of third party inspections and maintain appropriate
procedures for Clark R&M and Coker Company employees to follow to
ensure accurate Product measurement.
2. Applicable Price.
----------------
2.1 Coker Complex
a. The Coker Company shall pay Clark R&M the following fee
analytical lab services provided under 1.1 above for the
Coker Complex: (a) for any month after the Start-up Date and
prior to and including December 2000, $35,000 and (ii) for
any month thereafter, $35,000, multiplied by the Inflation
-------------
Factor.
b. The Coker Company shall also reimburse Clark R&M for a
proportional share of the costs of any laboratory equipment
purchased for performing Coker Complex testing.
c. The Coker Company shall pay Clark R&M the following fee for
providing custody transfer services described under 1.2
above related to the Coker Complex: (a) for any month after
the Start-up Date and prior to and including December 2000,
$11,700 and (ii) for any month thereafter, $11,700,
multiplied by the Inflation Factor.
-------------
2.2 Ancillary Equipment
Consideration for analytical lab provided by Clark R&M to the Coker
Company related to the Ancillary Equipment and the Ancillary Equipment
Site is provided for in the Ancillary Equipment Operating Fee.
-2-
Schedule 5.7.5
Services and Supply Agreement
SECURITY SERVICES
1. Scope.
-----
1.1. Clark R&M security personnel will monitor entrance and access to
the Refinery to ensure the safety and security of all Coker
Company and Clark R&M employees.
1.2 Clark R&M security personnel will also ensure compliance with
Foreign Trade Zone regulations.
2. Applicable Price.
----------------
The Coker Company shall pay Clark R&M the following fee for security
services provided each month: (a) for any month prior to and including
December 2000, $25,000 and (b) for any month thereafter, $25,000,
multiplied by the Inflation Factor.
-------------
Schedule 5.7.6
Services and Supply Agreement
OTHER SUPPORT SERVICES
1. Scope.
-----
1.1 Procurement and Contract Services
Clark R&M shall manage the day to day procurement of
equipment, materials, supplies and services provided to the
Coker Company by Clark R&M and use commercially reasonable
efforts to ensure that related procurement charges are
separately allocated to each unit comprising the Heavy Oil
Processing Facility and identifiable from any other charges to
Clark R&M.
1.2 Open Stores
Clark R&M shall coordinate and maintain open stores for
standard materials or equipment needed for operation of the
Heavy Oil Processing Facility (other than Coker Company Spare
Parts) either to be made readily available at Clark R&M's on-
site Refinery warehouse or at a reasonably accessible vendor
site.
1.3 General Supplies
Clark R&M shall maintain adequate supplies for the day to day
operation of the Heavy Oil Processing Facility including,
without limitation, janitorial supplies, lubricants, office
and copier supplies, toiletries, and specialty detergents
1.4 Warehousing
Clark R&M shall maintain segregated storage facilities for
Coker Company Spare Parts as required by Section 5.9(a) of the
Services and Supply Agreement. These warehousing facilities
shall be on either Refinery property or off-site warehousing
facilities depending on specialty storage requirements per the
equipment manufacturer specifications.
2. Applicable Price.
----------------
The Coker Company shall pay Clark R&M the following fee for providing the
Services described in this Schedule: (a) for any month prior to and
including December 2000, $24,000 and (b) for any month thereafter, $24,000,
multiplied by the Inflation Factor.
-------------
Schedule 5.8.1
Services and Supply Agreement
OPERATIONS SERVICES
1. Scope.
-----
1.1 Operations Oversight
A Clark R&M operations manager shall be responsible for the
safe, environmentally sound, and profitable operation of the
Heavy Oil Processing Facility. Such individual (or
individuals) shall be responsible for (i) monitoring key
operational and organizational variables to assure that
adequate procedures, processes, and personnel are in place to
accomplish and set operational goals for the Heavy Oil
Processing Facility, (ii) asset management, including
monitoring and assuring the assets under his/her control are
operated and maintained in good working order in regards to
Prudent Industry Practices, (iii) optimization, including
working with other Refinery groups to assure units are
optimized to achieve the greatest return on investment and
(iv) personnel, including managing personnel associated with
the Coker Company in regards to performance and staffing.
1.2. Shift Supervision
a. A Clark R&M shift supervisor shall have primary
responsibility for the following related to the Heavy Oil
Processing Facility: (i) shift process coordination,
(ii) operation and maintenance, (iii) unit coordination
of products and feedstocks and (iv) initial response for
incidents. Such position shall be staffed continuously,
during off-hours and weekends.
b. Three Clark R&M process operating supervisors shall
supervise all unit operators at the Heavy Oil Processing
Facility to accomplish unit and Refinery objectives.
Such individuals shall assure that each unit is operated
in a safe, environmentally sound, and efficient manner
and shall monitor day to day operations, coordinate with
planning and scheduling groups, set maintenance
priorities, and manage unit operating personnel.
1.3 Feed and Product Scheduling
A Clark R&M feed and product scheduler shall have primary
responsibility for product inventory logistics that are
required to manage feedstocks, intermediates and finished
products for the Heavy Oil Processing Facility. Such
individual (or individuals) shall (a) monitor and /track feed
and product inventories, (b) schedule feed and product
movements based on input from the Clark R&M's planning and
economics group, and (c) serve as the primary contact with
product sales personnel in order to monitor current market
statistics.
2. Applicable Price.
----------------
2.1 Coker Complex
Schedule 5.8.1
Services and Supply Agreement
a. The Coker Company shall pay Clark R&M the following fee
for providing the Services described in 1.1 above related
to the Coker Complex: (a) for any month after the Start-up
Date and to and including December 2000, $11,700 and (b)
for any month thereafter, $11,700, multiplied by the
Inflation Factor . -------------
b. The Coker Company shall pay Clark R&M the following fee
for providing the Services described in 1.1 above related
to the Coker Complex: (a) for any month after the Start-up
Date and prior to and including December 2000, $22,500 and
(b) for any month thereafter, $22,500, multiplied by
-------------
the Inflation Factor.
c. The Coker Company shall pay Clark R&M the following fee
for providing the Services described in 1.1 above related
to the Coker Complex: (a) for any month after the Start-
up Date and prior to and including December 2000, $4,200
and (b) for any month thereafter, $4,200, multiplied by
-------------
the Inflation Factor.
2.2 Ancillary Equipment
Consideration for operations services provided by Clark R&M to
the Coker Company related to the Ancillary Equipment and the
Ancillary Equipment Site is provided for in the Ancillary
Equipment Operating Fee.
-2-
Schedule 5.8.2
Services and Supply Agreement
ENGINEERING SERVICES
1. Scope.
-----
Clark R&M engineers shall provide the following services:
1.1 Technical Support and Capital Planning
a. Provide oversight to ensure that engineering and industry
standards are followed at the Heavy Oil Processing
Facility
b. Complete routine technical inspections in accordance with
industry practice to help maintain unit reliability, plan
future turnarounds and capital upgrades at the Heavy Oil
Processing Facility
1.2 Optimization and Scheduling
a. Run unit models with input from Refinery optimization
group to set optimal process targets to achieve the
highest profitability
b. Review current and future feed and product markets,
current operating parameters and product specifications,
and set operating targets
c. Provide data to schedule operating rates and product
specification targets
1.3 Design, Drafting, Reproduction and Record Management
a. Provide engineering oversight/supervision necessary to
improve unit reliability and throughput.
b. Provide engineering design complete with calculations and
material/equipment selections consistence with most cost
effect technology and material available.
c. Provide drafting/graphics services required to capture and
convey engineering designs to construction, operation, and
maintenance forces. Maintain life cycle process safety
information (PSI) and drawings necessary to meet the needs
of the business and comply with the requirements of OSHA
1910.119.
d. Provide reproduction and distribution services for text
(8.5 x 11) through large format (E size) engineering
drawings and maps.
e. Maintain a central engineering file to meet the needs of
the business and comply with the requirements of OSHA
1910.119.
1.4 Project Management and Reliability Support
Schedule 5.8.2
Services and Supply Agreement
a. Provide management of Services to be provided by Clark
R&M pursuant to Section 5.3 of the Services and Supply
Agreement.
b. Identify and resolve problems
c. Perform mechanical failure investigations.
d. Provide technical input for improving the long-term
reliability of the Heavy Oil Processing Facility.
e. Liaison with project management and project safety
management to plan for and execute major maintenance and
capital planning for the Heavy Oil Processing Facility.
1.5 Process and Control Engineering
a. Provide supplemental management support to process
engineering and optimization for Heavy Oil Processing
Facility.
b. Monitor and track unit performance by developing key
performance parameters.
c. Work with the operating supervisors and unit operators to
improve performance, develop improvement projects, and
develop and accomplish long term goals.
d. Provide control engineering including monitoring and
developing process control configurations to optimize
and maximize the utilization of the Coker Company's
assets.
e. Monitor and track computer control equipment and
instrumentation performance including simple loop and
advanced control software, and tracking and continually
improving system uptimes.
f. Interact with unit operational and maintenance personnel,
the optimization group at the Refinery and other
engineering personnel.
1.6 Engineering Studies and Strategic Planning
Provide long-term planning for management of the Heavy Oil
Processing Facility and analysis of performance of the Heavy
Oil Processing Facility.
2. Applicable Price.
----------------
2.1 Coker Complex
-2-
Schedule 5.8.2
Services and Supply Agreement
a. The Coker Company shall reimburse Clark R&M for all
Permitted Reimbursable Expenses incurred by Clark R&M in
utilizing outside professional services and consultants
necessary for the performance of engineering support
services related to the Coker Complex each month
b. The Coker Company shall pay Clark R&M the following fee
for the performance of all other engineering support
services related to the Coker Complex: (i) for each month
after the Start-up Date and prior to and including
December 2000, $50,000 and (ii) for each month
thereafter, $50,000, multiplied by the Inflation Factor.
-------------
2.2 Ancillary Equipment
Consideration for engineering services provided by Clark R&M
to the Coker Company related to the Ancillary Equipment and
the Ancillary Equipment Site is provided for in the Ancillary
Equipment Operating Fee.
-3-
Schedule 5.8.3
Services and Supply Agreement
HUMAN RESOURCES
1. Scope.
-----
Clark R&M shall provide the following human resource functions for the
benefit of Coker Company employees:
1.1 Labor Management
Negotiate and administer collective bargaining agreements for
represented employees of the Coker Company.
1.2 Payroll Administration
Oversee the full payroll process for Coker Company delivering
accuracy and timeliness by ensuring process system
effectiveness.
1.3 Employee Training
Ensure regulatory compliance and requisite skills training for
Coker Company employees associated with the safe and efficient
operation of the Coker Complex.
1.4 Benefits
Administer benefits for Coker Company employees in accordance
with applicable benefit plans for both exempt/non-exempt and
represented wage classifications.
1.5 Employee Relations
Handle daily human resources activities as required for
employees of Coker Company including, without limitation,
recruitment, litigation, wages, administration of collective
bargaining agreements, employee activities and other human
resources functions.
1.6 Medical Services
Provide pre-employment physicals, drug and alcohol screens,
and assessment that employees are "fit for duty" when
reporting back to work after illness or injury.
2. Applicable Price.
----------------
The Coker Company shall pay Clark R&M for providing human resource services
each month according to the following formula:
Schedule 5.8.3
Services and Supply Agreement
Direct Coker Company Cost + Refinery Human Resources Cost *
Coker Company Employees
-----------------------
Refinery Employees
Where:
"Direct Coker Company Cost" means, for any month, Permitted
Reimbursable Expenses incurred by Clark R&M and directly
attributable to human resource functions provided exclusively
for the Coker Company or its employees including, without
limitation, recruitment agency fees for recruitment of Coker
Company employees, litigation relating exclusively to actions
of Coker Company employees and relocation expenses for Coker
Company employees.
"Refinery Human Resources Costs" means, for any month, the
difference between (a) the Permitted Reimbursable Cost
incurred by Clark R&M in providing the human resource
functions described above for Clark R&M and its affiliates
(including the Coker Company) at the Refinery, minus (b)
-----
Direct Coker Company Cost.
"Coker Company Employees" means, for any month, the average
number of individuals employed by the Coker Company.
"Refinery Employees" means, for any month, the sum of (a) the
average number of individuals employed by the Coker Company in
such month and (b) the average number of individuals employed
by Clark R&M and it affiliates (other than the Coker Company)
that are designated Refinery employees.
-2-
Schedule 5.8.4
Services and Supply Agreement
ACCOUNTING SERVICES
1. Scope.
-----
Clark R&M shall provide the following accounting services in connection
with performance of its obligations under the Services and Supply
Agreement:
1.1. Billing Information
a. Products
Provide the Coker Company with all information necessary to (i)
quantify and document feedstocks to and Products from each Heavy
Oil Processing Facility unit, (ii) attach value to each of these
feedstocks and Products based on applicable fees in the Services
and Supply Agreement and the Product Purchase Agreement and (iii)
monitor all the laboratory data for such feedstocks and Products.
b. Services
Provide the Coker Company with all information necessary
to monitor and quantify each Service provided to the
Coker Company by Clark R&M
c. Invoices
Provide the Coker Company with drafts of invoices in
connection with payments to be made by Clark R&M to the
Coker Company pursuant to the Product Purchase Agreement.
1.2 General Accounting Information
Provide the Coker Company with information necessary to (i)
ensure that all Federal and State Tax guidelines are
incorporated into its accounting activities and (ii) prepare
reconciliation analysis of the its inventory, fixed assets and
authorization for expenditures for capital or turnaround
documentation.
1.3 Financial Reporting, Budget Coordination and Strategic Planning
Provide the Coker Company with drafts of monthly cost
analysis, planning and budgeting guidelines and the Annual
Budget and Operating Plan in a timely manner.
1.4 Yield Accounting
a. Maintain the Refinery inventory system database on
process unit meters and tank strapping data for the
purpose of documentation and reporting of
Schedule 5.8.4
Services and Supply Agreement
Coker Company charges and yields, product inventories and
receipts and deliveries including, without limitation,
the tracking of product receipt or delivery documentation
of marine vessels, pipeline movements, rail cars and
deliveries by truck.
b. Provide governmental reporting services for the Coker
Company including, without limitation, to the Department
of Energy, the American Petroleum Institute, the Bureau
of the Census, and the Texas Railroad Commission relative
to Heavy Oil Processing Facility production and product
movements.
c. Track, reconcile and allocate distributed utilities
provided to the Coker Company pursuant to Section 5.5 of
the Services and Supply Agreement.
d. Provide specialty reporting including the capture and
reporting volumes related to any technology licenses held
by the Coker Company or otherwise related to the on-going
operation of the Heavy Oil Processing Facility.
1.5 Foreign Trade Zone
Administer all Foreign Trade Zone Subzone activities related
to the Heavy Oil Processing Facility including, without
limitation, (a) maintaining U.S. Customs Service and Foreign
Trade Zone Board Compliance Status, (b) providing weekly,
monthly and annual reporting, entries or submissions to the
appropriate governmental agencies, (c) maintaining inventory
control recordkeeping system records, (d) providing oversight
for the operational activities that are required to maintain
Foreign Trade Zone Subzone Status for the Heavy Oil Processing
Facility and (e) preparing such documentation as required for
optimizing Foreign Trade Zone Subzone benefits for the Heavy
Oil Processing Facility as required by Applicable Laws.
1.6 Property Tax Reporting and Management
Administer all property tax activities on behalf of the Coker
Company, including, without limitation maintaining asset or
contractor records for the purpose of filing annual tax
renditions and optimizing abatement benefits as required by
local, State and Federal laws
.
2. Applicable Price.
----------------
The Coker Company shall pay Clark R&M the following fee for providing
accounting services described in this Schedule: (a) for any month prior to
and including December 2000, $38,400 and (b) for any month thereafter,
$38,400, multiplied by the Inflation Factor.
-------------
-2-
Schedule 5.8.5
Services and Supply Agreement
ADMINISTRATIVE SERVICES
1. Scope.
-----
Administrative and professional personnel from the headquarters office of
Clark R&M shall perform the following obligations of Clark R&M under the
Services and Supply Agreement.
1.1 Refining Support
a. Financial Services
Assisting the Coker Company accounting manager with
preparation of internal and external financial reporting and
analysis including, without limitation, providing such
accounting manager with information needed to prepare income
statements and balance sheets and providing market pricing
for yields and inventory and providing working capital
management.
b. Supply and Trading
Negotiation and execution of legal contracts necessary to
acquire crude oil and feedstocks to operate the Heavy Oil
Processing Facility and coordinating with plant personnel
to optimize supply of the Coker Company's requirements of
crude oil and feedstocks.
c. Emergency, Health & Safety
General legal and administrative support of Refinery
programs and liaison with governmental agencies that are
required for the Coker Company to comply with Applicable
Laws and provide guidelines for long-term planning for
compliance.
d. Executive Management
Clark R&M's Chief Operating Officer is responsible for
the oversight of profitable operation of the Heavy Oil
Processing Facility and shall provide strategic direction
that supports operational and organizational variables to
assure that resources, processes, and personnel are in
place to accomplish the Annual Budget and Operating Plan
for the Coker Company.
e. Business Development
Work with plant personnel that support the optimization
of Coker Complex units and the Ancillary Equipment
providing analytical support
Schedule 5.8.5
Services and Supply Agreement
and industry benchmark studies and identification of
opportunities to optimize asset utilization.
1.2 Corporate Services
a. Income, Franchise, Sales & Use or Property Taxes
Responsible for ensuring (i) performance of Clark R&M's
obligations under Section 11.7 of the Services and Supply
Agreement and (ii) compliance by the Coker Company with all
reporting and other requirements of applicable state, local
and Federal tax laws.
b. General Insurance
Responsible for ensuring performance of Clark R&M's
obligations under Section 5.13 of the Services and Supply
Agreement.
c. Information Systems
Provide direction and systems support insuring year 2000
compliance and technology standards are followed to
manage information requirements of the Coker Company.
d. Investor and Public Relations
Provide specialty reporting and communication to the
Securities and Exchange Commission and any necessary
Public Notice and Liaison to Investors of the Coker
Company Assets.
e. Executive Management
Clark R&M's Chief Executive Officer and Chief Financial
Officer shall be responsible for providing for the
support of refining infrastructure to help insure the
profitable operation of the Heavy Oil Processing Facility
and shall provide strategic direction for financial
management and organizational variables to assure that
resources, processes, and personnel are in place to
accomplish the Annual Budget and Operating Plan for the
Coker Company.
f. Financial Services
Providing information needed by Coker Company for overall
consolidation of inter-company agreements for public
financial reporting of the Coker Company related to the
Heavy Oil Processing Facility.
2. Applicable Price.
----------------
-2-
Schedule 5.8.5
Services and Supply Agreement
The Coker Company shall pay Clark R&M the following fee for the
support services described in this Schedule: (a) for any month prior to and
including December 2000, $60,000 and (b) for any month thereafter, $60,000,
multiplied by the Inflation Factor.
-------------
-3-
Schedule 5.9
Services and Supply Agreement
COKER COMPANY SPARE PARTS
NONE.
Schedule 5.10
Services and Supply Agreement
CATALYST, CHEMICALS AND CONSUMABLES
1. Scope.
-----
1.1. Coker Complex
a. Chemicals and Catalyst
Clark R&M shall provide the Coker Company's requirement of
chemicals and catalyst including, without limitation, the
following (or the commercial equivalent thereof):
SRU 545 Description Estimated Quantity
------- ----------- ------------------
---------------------------------------------------------------------------------------------------------
No. 1 Claus Reactor Alcoa S-501 117,600 lbs. (density 50lb/ft.3)-4 year life
---------------------------------------------------------------------------------------------------------
No. 2 Claus Reactor Alcoa S-201 108,200 lbs. (density 46 lb/ft.3)-4 year life
---------------------------------------------------------------------------------------------------------
No. 3 Claus Reactor Alcoa S-201 108,200 lbs. (density 46 lb/ft.3)-4 year life
---------------------------------------------------------------------------------------------------------
SCOT Catalyst Criterion 534 75,000 lbs (density 47 lb/ft.3)-4 year life
---------------------------------------------------------------------------------------------------------
Amine Solvent Huntsman MDEA 183,600 pounds (45% concentration) inventory
unit
10,000 lbs./year make-up, (0.8 lbs/MMSCF of
treated gas)
BFW Polymer Betz AP 0200 500 gallons
BFW O2 Scavenger Betz OS 2001 500 gallons
---------------------------------------------------------------------------------------------------------
BFW Neutralizing Betz NA 2440 500 gallons
amine
ATU 7841 Description Estimated Quantity
-------- ----------- ------------------
---------------------------------------------------------------------------------------------------------
Amine Solvent Huntsman MDEA 1.1 million pounds (45% concentration) to
inventory unit
DCU 843 Description Estimated Quantity
------- ----------- ------------------
---------------------------------------------------------------------------------------------------------
Silica Removal Alumina Based 160,000 lbs (density 36.4 lb/ft.3) once per year
Reactor Only
---------------------------------------------------------------------------------------------------------
Di-olefin Reactor Ni-Mo Alumina 30,000 lbs. (density 37.5 lb/ft.3) every two years
Based
---------------------------------------------------------------------------------------------------------
Amine Solvent Huntsman MDEA 164,000 pounds (45% concentration) to inventory
unit.
79,000 lbs./year make-up, (0.8 lbs./mmscf of
treated gas and 0.8 lbs./1,000 gals., circulating
treated liquid)
Caustic US Filter ARI- 190 Pounds per hour
Regeneration 100L or ARI-100
catalyst EXL
---------------------------------------------------------------------------------------------------------
Antifoam Silicon Betz Antifoam 2,000 gallons per year (2,000 gallon tank)
---------------------------------------------------------------------------------------------------------
De-emulsifier Betz De-emulsifier 3,250 gallons per year (500 gallon tote tank)
---------------------------------------------------------------------------------------------------------
Schedule 5.10
Services and Supply Agreement
HCU 942 Description Estimated Quantity/1/
------- ----------- ---------------------
---------------------------------------------------------------------------------------------------------
Chevron Catalyst SA 5517 6,000 pounds - every two years
---------------------------------------------------------------------------------------------------------
Chevron Catalyst ICR 122 Z5B 15,600 pounds - every two years
---------------------------------------------------------------------------------------------------------
Chevron Catalyst ICR 132 NAQ 19,500 pounds - every two years
---------------------------------------------------------------------------------------------------------
Chevron Catalyst ICR 135 KAQ 16,200 pounds - every two years
---------------------------------------------------------------------------------------------------------
Chevron Catalyst ICR 141 L32 88,200 pounds - every two years
---------------------------------------------------------------------------------------------------------
Chevron Catalyst ICR 141 L34 333,000 pounds - every two years
---------------------------------------------------------------------------------------------------------
Chevron Catalyst ICR 141 L38 108,000 pounds - every two years
---------------------------------------------------------------------------------------------------------
Chevron Catalyst ICR 154 KF 97,200 pounds - every two years
---------------------------------------------------------------------------------------------------------
Chevron Catalyst ICR 210L 93,500 pounds - every two years
---------------------------------------------------------------------------------------------------------
Chevron Catalyst ICR 114 ZF 45,900 pounds - every two years
---------------------------------------------------------------------------------------------------------
Amine Solvent Huntsman MDEA 270,000 pounds (45% concentration) to inventory
unit
3,600 lbs./year make-up, (0.8 lbs./mmscf of
treated gas).
---------------------------------------------------------------------------------------------------------
Catalyst Treatment Tri Butyl Amine 12,300 gallons every two years
---------------------------------------------------------------------------------------------------------
Catalyst Treatment Di-Methy Di-Sulfide 120,000 pounds every two years
---------------------------------------------------------------------------------------------------------
1. The catalyst amounts listed include an additional 5% contingency and have
been rounded to the nearest whole drum or sack. These amounts will be precisely
defined upon loading the reactors.
b. Caustic
Clark R&M shall provide the Coker Company's requirement of
fresh caustic necessary for treatment of the Coker C3/C4
stream and shall provide for the disposal of spent caustic
from the Coker.
-2-
Schedule 5.10
Services and supply Agreement
The expected specifications of fresh caustic to be supplied
by Clark R&M are described in the following table:
Fresh Caustic Properties
Component Element Basis Specification
------------------ --------------- ------ -------------
Sodium Oxide Na\\2\\O % 38.0 - 39.5
Sodium Hydroxide NaOH % 49.00 - 51.0
Sodium Chloride NaCl % 1.10 Max
Sodium Carbonate Na\\2\\CO\\3\\ % 0.20 Max
Sodium Sulfate Na\\2\\SO\\4\\ % 0.05 Max
Sodium Chlorate NaClO\\3\\ % 0.30 Max
Iron Fe ppm 10 Max
The following are the expected qualities of spent caustic from
the Coker:
Spent Caustic Properties
Component Element Basis Composition
--------- ------- ----- -----------
Water H\\2\\O Wt. % 82.8
Sodium Hydroxide NaOH Wt. % 6.9
Sodium Thiosulfate Na\\2\\S\\2\\O\\3\\ Wt. % 5.2
Sodium Carbonate Na\\2\\CO\\3\\ Wt. % 5.1
Di-Sulfide Oil DSO Wt. % Trace
1.2 Ancillary Equipment
Clark R&M shall provide all chemicals, catalyst, caustic and
other consumables required for the on-going operation of the
Ancillary Equipment.
2. Metering/Measurement Method for Supply to the Coker Complex.
-----------------------------------------------------------
2.1 Chemicals and Catalyst
The amount of catalyst or chemicals supplied to the Coker Company
for use at the Coker Complex each month shall be the amount of such
catalyst or chemicals actually purchased by Clark R&M in such month
for use in Coker Complex units.
2.2 Caustic
-3-
Schedule 5.10
Services and Supply Agreement
The actual amount of fresh caustic supplied to the Coker Company
each month for use at the Coker Complex shall be measured by
gauging Tank 6790 located on DCU 843 each time fresh caustic is
received from the fresh caustic system at the Refinery.
3. Applicable Price.
----------------
3.1 Coker Complex
a. Chemicals and Catalyst
The Coker Company shall reimburse Clark R&M for all Permitted
Reimbursable Expenses incurred each month by Clark R&M in
providing chemicals and catalyst to the Coker Complex.
b. Caustic
The Coker Company shall pay Clark R&M for fresh caustic
supplied to the Coker Complex each month according to the
following formula:
Average Monthly Refinery Caustic Cost * Monthly Coker
Complex Usage
Where:
"Average Monthly Refinery Caustic Cost" means, for any
month (a) the actual costs incurred by Clark R&M in
purchasing, blending and delivering caustic for all
Refinery units in such month, divided by (b) the
----------
total volume of caustic supplied to Refinery units
in such month.
"Monthly Coker Complex Usage" means, for any month, the
metered usage of caustic by the Coker Complex units in
such month.
Consideration for disposal of spent caustic by Clark R&M is
included in the fees payable under Schedule 5.6 (Waste
Management and Waste Water Services)
3.2 Ancillary Equipment
Consideration for chemicals, catalyst, caustic and other
consumables provided by Clark R&M for the operation of the
Ancillary Equipment is provided for in the Ancillary Equipment
Operating Fee.
-4-
Schedule 5.12.1
Services and Supply Agreement
ENVIRONMENTAL, HEALTH AND SAFETY SERVICES
1. Scope.
-----
1.1 Safety
Clark R&M shall provide safety and industrial hygiene support to
the Coker Company including, without limitation, safety
procedures, hygiene monitoring, injury recordkeeping, mandatory
employee training incident investigation, monitoring of
operations, OSHA and Texas Department of Health compliance
planning and budgeting, government agency liaisons during
inspections, enforcement actions and hearings, acquisition of all
required Permits and licenses, implementation and maintenance of
a structured safety process including internal audits and
inspections.
1.2 Process Safety Management ("PSM")
Clark R&M shall provide overall OSHA PSM compliance coordination
and oversight services for the Heavy Oil Processing Facility and
shall implement and maintain a structured PSM compliance program
that addresses (a) employee participation, (b) process safety
information, (c) process hazard analysis, (d) operating
procedures, (e) training, (f) contractor safety, (g) pre-start up
safety review, (h) mechanical integrity of units, (i) "hot work"
Permits, (j) management of change, (k) incident investigation,
(l) emergency planning and response, (m) compliance audits and
(o) trade secrets.
1.3 Environmental
Clark R&M shall provide environmental compliance coordination and
oversight services for the Heavy Oil Processing Facility
including, without limitation, regulatory and legislative
tracking, compliance planning and budgeting necessary to meet
current and future Environmental Protection Agency, Texas Natural
Resource Conservation Commission, Department of Transportation
and U.S. Coast Guard rules and regulations, mandatory employee
training, securing Permits and licenses, arranging for
performance tests, analyses and other measurements required by
Applicable Law, handling recordkeeping and reporting, providing
government agency liaisons during inspections, enforcement
actions and hearings and internal inspections and internal
audits.
2. Applicable Price.
----------------
2.1 Coker Complex
a. The Coker Company shall pay Clark R&M the following fee for
providing environmental, health and safety services the Coker
Company related to the Coker Complex each month: (i) for any
month prior to and
Schedule 5.12.1
Services and Supply Agreement
including December 2000, $22,900 and (ii) for any month
thereafter, $22,900, multiplied by the Inflation Factor
-------------
b. The Coker Company shall pay, or reimburse Clark R&M for, all
fees in connection with the procurement or renewal of any
Permits or other governmental approvals related solely to the
operation of the Coker Complex or the existence of the Coker
Company.
2.2 Ancillary Equipment
Consideration for environmental, health and safety services provided
by Clark R&M in connection with the operation of the Ancillary
Equipment is provided for in the Ancillary Equipment Operating Fee.
-2-
Schedule 5.12.2
Services and Supply Agreement
EMERGENCY RESPONSE SERVICES
1. Scope.
-----
1.1 General
a. Clark R&M shall maintain and operate (i) the underground
piping and distribution system, pumping system, post
indicator valves, hydrants, fire monitors, deluge systems
and related equipment for the purpose of delivering Fire
Water (as defined below) throughout the Refinery (the
"Fire Water System") and (ii) medical response equipment,
hazardous release equipment, spill response equipment,
fire trucks, ambulances, hazmat vans, communications
vans, extinguishers, hose carts, self-contained breathing
apparatus ("SCBA") equipment and other equipment
necessary or desirable to respond to emergencies at the
Refinery (together with the Fire Water System, "Emergency
Response Equipment").
b. Clark R&M shall supply the Coker Company with raw water
that has been pumped into the Fire Water System to a
nominal pressure of 100 psig ("Fire Water") for fire
control and other purposes.
c. Clark R&M shall flush the Fire Water System main as
necessary to maintain and inspect the system.
d. Clark R&M shall conduct performance tests of the fire
pumps at least annually.
e. Clark R&M shall develop and implement an emergency
response plan for the Coker Complex.
f. Clark R&M shall maintain and repair the following fixed
and portable Emergency Response Equipment to be located
at the Coker Complex.
i. hand portable extinguishes (dry chemical)
ii. hose cam - annual hydrostatic test for hoses
iii. fire mains, post indicator valves, hydrants and monitors
iv. SCBA equipment
g. Clark R&M shall maintain all Emergency Response Equipment
in accordance with the manufacturers' service schedule
and repair it in accordance with recommended practices.
Maintenance of such equipment shall include lubricating
and replacing parts to the fire trucks, ambulances,
hazmat vans, communications vans and other vehicles.
Schedule 5.12.2
Services and Supply Agreement
h. Clark R&M shall calibrate, maintain and repair all gas
detection equipment located in the Coker Complex in
accordance with the manufacturers' service schedule and
repair it in accordance with recommended practices.
1.2 Emergency Response Team
a. Clark R&M shall designate a "Fire Chief" who shall be
responsible for managing the Coker Company's emergency
response plan, and for general management of any
emergency. Each party shall cooperate in maintaining a
plant emergency response team who shall perform the duties
set forth in the emergency response plan including,
without limitation, the following:
i. response to alarms and other emergency calls
ii. response to medical emergencies, hazardous chemical
releases and rescue situations
iii. attending regularly scheduled emergency drills
iv. performance Fire Water System main flushing
v. attending quarterly group training sessions as
scheduled by the Fire Chief
b. The Fire Chief shall train and effectively implement the
emergency response plan with the team. In addition, Clark
R&M will review with Coker Company or provide additional
training to Coker Company employees to ensure proper
coordination of emergency response plan. All emergency
response team members must meet minimum standards
specified by Applicable Law.
c. The emergency response team shall consist of the following
minimum complement of personnel per shift unless otherwise
decided by Clark R&M or Applicable Law:
i. 2 Fire Mechanics from Clark R&M
ii. 8 Brigade Members from Clark R&M
iii. 2 Brigade Members from Coker Company
d. Emergency response team members shall be issued car passes
to allow entry into the Refinery or the Coker Complex
property.
1.3 Emergency Communications
Clark R&M shall maintain the Refinery radio emergency channel
equipment and the refinery-wide emergency alarm and
notification system (beeper) in good operating condition and
provide the Coker Company with access to all emergency
communications equipment at the Refinery.
-2-
Schedule 5.12.2
Services and Supply Agreement
2. Applicable Price.
----------------
2.1 Coker Complex
a. The Coker Company shall reimburse Clark R&M for the actual cost of
materials used by Clark R&M in maintaining and repairing Emergency
Response Equipment (including the Fire Water System) for the Coker
Complex during each month and for the actual cost for materials
actually used by Clark R&M in responding to and emergency
situations at the Coker Complex.
b. The Coker Company shall pay Clark R&M a monthly fee of $10,000 for
all other emergency response services provided to the Coker
Company by Clark R&M.
c. Each party shall bear its own Labor Costs incurred with respect to
its own employees, including emergency response team members, who
may be involved in performing emergency response services
hereunder.
2.2 Ancillary Equipment
Consideration for emergency response services provided by Clark
R&M to the Coker Company related to the Ancillary Equipment is
provided for in the Ancillary Equipment Operating Fee.
-3-
Schedule 5.13
Service and Supply Agreement
INSURANCE
1. Scope of Coverages.
------------------
1.1 Coker Company Insurance
Clark R&M shall cause the insurance coverages listed under the
headings "Construction Period -- Partnership" and "Operational
Period--Partnership" on Exhibit J to the Common Security Agreement
to be maintained in the name of the Coker Company in accordance with
the provisions of such Exhibit and Article 7 of the Common Security
Agreement.
1.2 Clark R&M shall provide and maintain the insurance coverages listed
under the headings "Construction Period -- Operator" and
"Operational Period -- Operator" on Exhibit J to the Common Security
Agreement to be maintained in its name in accordance with the
provisions of such Exhibit and Article 7 of the Common Security
Agreement.
2. Applicable Price.
----------------
2.1. Consideration for obtaining and maintaining insurance is included in
the fees payable under Schedule 5.8.5.
2.2 The Coker Company shall pay directly, or reimburse Clark R&M for
payment of, premiums, fees or deductibles payable in connection with
the insurance coverages described in 1.1 above.
2.3 Consideration for maintenance of the insurance coverages described
in 1.2 above is included in the Ancillary Equipment Operating Fee.
Schedule 5.14
Service and Supply Agreement
LICENSING, PERMITS AND APPROVALS
1. Scope.
-----
1.1. Licenses, Permits and Approvals held by Clark R&M
a. Federal Communications Commission 800 megahertz license for the
Trunked Radio System (as such term is defined on Schedule
5.7.3)
b. AIR EMISSION PERMITS FROM TEXAS NATURAL RESOURCE CONSERVATION
COMMISSION ("TNRCC")
i. TNRCC No.6825A/PSD 49 -- Flexible Permit
Covering the Marine docks for feed receipts, product &
coke shipping, Refinery Units, Tanks, boilers, flares.
ii. TNRCC No. 7600 -- Crude Tanks
iii. TNRCC No. 802 -- Gas Turbine Generator
iv. TNRCC No. 5491 -- Crude Tanks
v. TNRCC No. 8369 -- Amine Treating
vi. TNRCC No. 4478
TNRCC No. 1535
TNRCC No. 7585
Crude Tanks at Lucas
Product Tanks at Lucas
c. WATER PERMITS - (Federal & State)
i. Wastewater Discharge NPDES No. TX 0005991
ii. Wastewater Discharge TNRCC No. 00309
iii. Wastewater Permit Expansion Wavier
iv. TNRCC Stormwater Discharge- LUCAS
v. TNRCC Water Rights Adudification Certificate-FANNETT
d. WASTE MANAGEMENT PERMITS
i. TNRCC Solid Waste Notice of Registration No. 30004
ii. EPA Hazardous Waste Generator Permit
iii. EPA PCB Waste Generator Permit
iv. TNRCC Solid Waste Notice of Registration - LUCAS
v. EPA Hazardous Waste Generator I.D. No.- LUCAS
vi. Railroad Commission of Texas Brine Disposal Permit-
Fannett
e. OPERATING PERMITS
Schedule 5.14
Service and Supply Agreement
i. Corps of Engineers Pipeline Operating Permit 217
ii. Corps of Engineers Pipeline Operating Permits 218
iii. Corps of Engineers Pipeline Operating Permits 219
iv. Railroad Commission of Texas Salt Dome Permit
v. Railroad Commission of Texas Brine Pit Permit
1.2 Licenses, Permits and Approvals held by Coker Company
a. Air Emissions Permit TNRCC No. 2303A
Authorization to construct the Coker Complex covering the
following:
DCU 843
HCU 942
SRU 545
SWS 8747
Flare 23
Crude Oil Tanks 106 - 109 (Four Total)
b. Standby Air Emissions Permit No. 6825Z/PSD - TX - 492
2. Applicable Price.
----------------
Consideration for obtaining and maintaining Permits is included in the fees
payable under Schedule 5.12.1.
-2-
Schedule 6.1
Services and Supply Agreement
ANNUAL BUDGET AND OPERATING PLAN
--------------------------------------------------------------------------
INCOME STATEMENT
-------------------------------------
2001
-------------------------------------
Q1 Q2 Q3 Q4
-- -- -- --
Total Product Revenue $263.5 $298.5 $289.5 $298.7
Total Chargestock Cost 203.6 234.2 233.6 231.9
------ ------ ------ ------
Refinery Gross Margin 59.9 64.4 55.9 66.8
- - - -
Margin Stabilization 12.1 6.1 15.2 10.4
------ ------ ------ ------
Total Gross Margin 72.1 70.4 71.1 77.2
Variable Operating Expenses 6.3 6.5 6.9 6.8
Fixed Operating Expenses 8.6 8.6 8.6 8.6
Lease Fees 8.5 8.6 8.7 8.7
Operating Fees 13.2 13.0 13.0 14.0
Processing Fees (17.1) (17.3) (17.4) (17.7)
G&A Expense 0.2 0.2 0.2 0.2
------ ------ ------ ------
Total Expenses 19.6 19.6 20.0 20.5
EBITDA 52.4 50.8 51.0 56.6
Amortization - - - -
Depreciation 2.9 2.9 2.9 2.9
------ ------ ------ ------
EBIT 49.5 47.9 48.1 53.7
Interest Expense, Net 16.4 18.3 14.7 16.4
------ ------ ------ ------
Net Income 33.1 29.6 33.5 37.3
Schedule 6.1
Services and Supply Agreement
GROSS MARGIN ASSUMPTIONS
-------------------------------------------------
2001
-------------------------------------------------
Q1 Q2 Q3 Q4
-- -- -- --
Products - Volume ('000 bpd)
DISTILLATES
LS Diesel 36.7 38.8 38.8 38.8
Jet Fuel 24.2 25.5 25.5 25.5
-------- -------- -------- --------
SUBTOTAL - Distillates 60.9 64.3 64.3 64.3
LPG
Propane 1.0 1.1 1.1 1.1
Isobutane 0.3 0.4 0.4 0.4
Normal Butane 2.0 2.1 2.1 2.1
-------- -------- -------- --------
SUBTOTAL - LPG 3.4 3.6 3.6 3.6
UNFINISHED
Coker Propane Propylene Mix 2.0 2.1 2.1 2.1
Coker Butane Butylene Mix 1.4 1.5 1.5 1.5
Penhex 8.7 9.2 9.2 9.2
Virgin Diesel 7.1 7.4 7.4 7.4
Naphtha - Sour 33.1 35.0 35.0 35.0
Heavy Naphtha 3.6 3.8 3.8 3.8
ULS VGO 9.7 10.3 10.3 10.3
VGO 41.9 44.2 44.2 44.2
-------- -------- -------- --------
SUBTOTAL - Unfinished 107.5 113.4 113.4 113.4
OTHER PRODUCTS
Sulfur 1.2 1.2 1.2 1.2
Coke 17.2 18.2 18.2 18.2
Produced Fuel 4.0 4.4 4.5 4.4
-------- -------- -------- --------
SUBTOTAL - Other Products 22.4 23.8 23.9 23.8
-------- -------- -------- --------
TOTAL PRODUCTS 194.1 205.1 205.1 205.1
======== ======== ======== ========
-2-
Schedule 6.1
Services and Supply Agreement
GROSS MARGIN ASSUMPTIONS
------------------------
2001
------------------------------------------------
Q1 Q2 Q3 Q4
-- -- -- --
Chargestock - Volume ('000 bpd)
-------------------------------
CRUDE
-----
Arab Lt. 36.2 38.2 38.2 38.2
-------- ------- -------- ------- -------
Maya - Market 144.8 152.9 152.9 152.9
------------- ------- -------- ------- -------
SUBTOTAL - Crude 181.0 191.1 191.1 191.1
---------------- ======= ======== ======= =======
OTHER CHARGESTOCKS
------------------
GFU Feed 1.5 1.5 1.5 1.5
--------- ------- ------- ------- -------
Hydrogen 3.2 3.4 3.4 3.4
-------- ------- ------- ------- -------
SUBTOTAL - Other Chargestocks 4.7 4.9 4.9 4.9
----------------------------- ------- ------- ------- -------
TOTAL CHARGESTOCK 185.7 196.0 196.0 196.0
----------------- ======= ======= ======= =======
-3-
Schedule 6.1
Services and Supply Agreement
GROSS MARGIN ASSUMPTIONS
------------------------
2001
-----------------------------------------------
Q1 Q2 Q3 Q4
-- -- -- --
Products - Price ($/bbl)
-----------------------
DISTILLATES
-----------
LS Diesel 18.65 18.64 18.52 19.95
--------- ------- ------- ------- -------
Jet Fuel 18.92 18.90 19.18 20.80
-------- ------- ------- ------- -------
LPG
---
Propane 11.48 11.63 11.42 12.13
------- ------- ------- ------- -------
Isobutane 14.82 15.67 14.94 15.09
--------- ------- ------- ------- -------
Normal Butane 13.24 11.27 11.11 14.17
------------- ------- ------- ------- -------
UNFINISHED
----------
Coker Propane Propylene Mix 13.30 13.99 14.03 14.45
--------------------------- ------- ------- ------- -------
Coker Butane Butylene Mix 14.30 17.48 15.47 14.40
--------------------------- ------- ------- ------- -------
Penhex 13.24 16.44 14.56 13.20
------ ------- ------- ------- -------
Virgin Diesel 16.69 16.79 16.74 18.32
------------- ------- ------- ------- -------
Naphtha - Sour 16.26 18.42 16.93 16.61
-------------- ------- ------- ------- -------
Heavy Naphtha 19.03 21.18 19.70 19.37
------------- ------- ------- ------- -------
ULS VGO 17.21 18.64 17.49 17.59
------- ------- ------- ------- -------
VGO 15.06 16.44 15.37 15.42
--- ------- ------- ------- -------
OTHER PRODUCTS
--------------
Sulfur 9.38 9.40 9.43 9.46
------ ------- ------- ------- -------
Coke (0.26) (0.19) (0.11) (0.11)
---- ------- ------- ------- -------
Produced Fuel 13.15 11.87 11.71 13.34
------------- ------- ------- ------- -------
-4-
Schedule 6.1
Services and Supply Agreement
GROSS MARGIN ASSUMPTIONS
------------------------
2001
------------------------------------
Q1 Q2 Q3 Q4
-- -- -- --
Chargestocks - Price ($/bbl)
----------------------------
CRUDE
-----
Arab Lt. 14.27 15.15 14.81 15.06
-------- ----- ----- ----- -----
Maya - Market 11.22 12.26 12.13 11.86
------------- ----- ----- ----- -----
OTHER CHARGESTOCKS
------------------
GFU Feed 16.68 16.78 16.73 18.31
-------- ----- ----- ----- -----
Hydrogen 30.04 27.61 27.30 30.40
-------- ----- ----- ----- -----
Q1 Q2 Q3 Q4
-- -- -- --
DISTILLATES
-----------
LS Diesel $ 61.6 $ 65.8 $ 66.1 $ 71.2
--------- ------ ------ ------ ------
Jet Fuel 41.1 43.8 45.0 48.8
-------- ----- ----- ----- -----
SUBTOTAL - Distillates 102.8 109.6 111.0 119.9
---------------------- ----- ----- ----- -----
LPG
---
Propane 1.1 1.2 1.2 1.2
------- ----- ----- ----- -----
Isobutane 0.4 0.5 0.5 0.5
--------- ----- ----- ----- -----
Normal Butane 2.4 2.2 2.2 2.8
------------- ----- ----- ----- -----
SUBTOTAL - LPG 3.9 3.9 3.8 4.5
-------------- ----- ----- ----- -----
UNFINISHED
----------
Coker Propane Propylene Mix 2.4 2.7 2.7 2.8
--------------------------- ----- ----- ----- -----
Coker Butane Butylene Mix 1.8 2.4 2.1 2.0
------------------------- ----- ----- ----- -----
Penhex 10.4 13.8 12.3 11.2
------ ----- ----- ----- -----
Virgin Diesel 10.6 11.4 11.5 12.6
------------- ----- ----- ----- -----
Naphtha - Sour 48.5 58.6 54.4 53.4
-------------- ----- ----- ----- -----
Heavy Naphtha 6.1 7.2 6.8 6.7
------------- ----- ----- ----- -----
ULS VGO 15.1 17.4 16.5 16.6
------- ----- ----- ----- -----
VGO 56.7 66.1 62.5 62.7
--- ----- ----- ----- -----
SUBTOTAL - Unfinished 151.6 179.6 168.9 167.9
--------------------- ----- ----- ----- -----
OTHER PRODUCTS
--------------
Sulfur 1.0 1.1 1.1 1.1
------ ------ ------ ------ ------
Coke (0.4) (0.3) (0.2) (0.2)
---- ------ ------ ------ ------
Produced Fuel 4.7 4.8 4.8 5.4
------------- ------ ------ ------ ------
SUBTOTAL - Other Products 5.3 5.5 5.7 6.3
------------------------- ------ ------ ------ ------
TOTAL PRODUCT REVENUE $263.5 $298.5 $289.5 $298.7
--------------------- ------ ------ ------ ------
2001
---------------------------------
Q1 Q2 Q3 Q4
-- -- -- --
GROSS MARGIN ASSUMPTIONS
------------------------
-5-
Schedule 6.1
Services and Supply Agreement
Chargestock Cost ($ in millions)
---------------------------------
CRUDE
-----
Arab Lt. $ 46.5 $ 52.7 $ 52.1 $ 52.9
-------- ------ ------ ------ ------
Maya - Market 146.2 170.6 170.6 166.8
------------- ------ ------ ------ ------
SUBTOTAL - Crude 192.7 223.3 222.6 219.8
---------------- ------ ------ ------ ------
OTHER CHARGESTOCKS
------------------
GFU Feed 2.2 2.3 2.4 2.6
-------- ------ ------ ------ ------
Hydrogen 8.7 8.6 8.6 9.5
-------- ------ ------ ------ ------
SUBTOTAL - Other Chargestocks 10.9 10.9 10.9 12.1
-------------------------------------------------- ------ ------
TOTAL CHARGESTOCK COST $203.6 $234.2 $233.6 $231.9
---------------------- ====== ====== ====== ======
TOTAL PRODUCT GROSS MARGIN $ 59.9 $ 64.4 $ 55.9 $ 66.8
---------------------------------------------------- ------ ------
-6-
Schedule 6.1
Services and Supply Agreement
--------------------------------------------------------------------------------
VARIABLE & FIXED OPERATING EXPENSE
----------------------------------
2001
---------------------------------
Q1 Q2 Q3 Q4
-- -- -- --
Variable ($ in millions)
============================
Fuel Consumed $ 3.7 $ 3.5 $ 3.5 $ 4.0
------------- ------- ------ ------ -------
Electricity $ 2.4 $ 2.7 $ 3.2 $ 2.5
----------- ------- ------ ------ -------
Other 0.2 0.2 0.2 0.2
----- ------- ------ ------ -------
Total Variable expenses 6.3 6.5 6.9 6.8
----------------------- ------- ------ ------ -------
Fixed ($ in millions)
============================
Operating labor 2.8 2.8 2.8 2.8
--------------- ------- ------ ------ -------
Cat / Chemicals 1.1 1.1 1.1 1.1
--------------- ------- ------ ------ -------
Repairs & Maintenance 1.8 1.8 1.8 1.8
--------------------- ------- ------ ------ -------
Environmental 0.2 0.2 0.2 0.2
------------- ------- ------ ------ -------
Insurance 0.5 0.5 0.5 0.5
--------- ------- ------ ------ -------
Taxes 1.0 1.0 1.0 1.0
----- ------- ------ ------ -------
Other 1.2 1.2 1.2 1.2 Contingency
----- ------- ------ ------ ------- -----------
Total Fixed Operating expenses $ 8.6 $ 8.6 $ 8.6 $ 8.6
------------------------------ ------- ------ ------ -------
Total Operating expenses 14.9 15.1 15.5 15.3
------------------------ ------- ------ ------ -------
Processing Fees Paid to Clark 4.6 4.4 4.4 5.0
----------------------------- ------- ------ ------ -------
Contract Services 0.4 0.4 0.4 0.4
----------------- ------- ------ ------ -------
G&A Allocation 0.2 0.2 0.2 0.2
-------------- ------- ------ ------ -------
Summary used to calculate accounts
----------------------------------
payable for operating expenses 30.0 30.3 30.9 31.2
------------------------------------------- ------ ------ -------
Variable ($/bbl crude charge)
===================================
-7-
Schedule 6.1
Services and Supply Agreement
Fuel 0.00 0.00
---- ------- -------
Electricity 0.00 0.00
----------- ------- -------
Steam - -
----- ------- -------
Other - -
----- ------- -------
Total Variable expenses ($/bbl crude) 0.00 0.00
-------------------------------------------- -------
Total Variable expenses ($) $ 0.00 $ 0.00
--------------------------- ======= =======
Fixed ($/bbl crude charge)
============================================
Operating labor 0.00 0.00
--------------- ------- -------
Cat / Chemicals 0.00 0.00
--------------- ------- -------
Maintenance/Environmental 0.00 0.00
------------------------- ------- -------
0.00 0.00
------- -------
Taxes & insurance 0.00 0.00
----------------- ------- -------
Total fixed expenses ($/bbl crude)
----------------------------------
Total Fixed expenses ($) $ 0.00 $ 0.00
------------------------ ======= =======
$ 0.00 $ 0.00
------- -------
-8-
Schedule 6.1
Services and Supply Agreement
2001
------------------------------
Q1 Q2 Q3 Q4
-- -- -- --
License Fees (Cash) 0.9
------------------- ----
License Fees (Expense)
----------------------
Catalyst Chemicals (Cash)
-------------------------
Catalyst Chemicals (Expense) 0.7 0.7 0.7 0.7
---------------------------- ----- ---- ---- ----
Total Cat & Chem Expense 1.1 1.1 1.1 1.1
------------------------ ----- ---- ---- ----
Amortized Financing Charges - 2.4 - 2.2
--------------------------- ----- ---- ---- ----
HDS Catalyst
------------
Diolifin Catalyst
-----------------
SCOTT Catalyst
--------------
HKG Catalyst
------------
SRU Catalyst
------------
-9-
EXHIBIT A
Services and Supply Agreement
TABLE V-9
PORT ARTHUR COKER COMPANY L.P.
BASE CASE
CHARGES AND YIELDS
--------------------------------------------------------------------------------
2001 2002 2003 2004 2005 2006 2007 2008
----- ----- ----- ----- ----- ----- ----- -----
Products - Volume (bpd in thousands)
DISTILLATES
LS Diesel 38.3 40.6 40.8 38.5 40.8 40.6 40.8 38.5
Jet Fuel 25.2 26.3 26.8 25.3 26.8 26.3 26.8 25.3
----- ----- ----- ----- ----- ----- ----- -----
SUBTOTAL - Distillates 63.4 66.9 67.6 63.8 67.6 66.9 67.6 63.8
LPG
Propane 1.1 1.1 1.2 1.1 1.2 1.1 1.2 1.1
Isobutane 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.4
Normal Butane 2.1 2.2 2.2 2.1 2.2 2.2 2.2 2.1
----- ----- ----- ----- ----- ----- ----- -----
SUBTOTAL - LPG 3.5 3.7 3.8 3.6 3.8 3.7 3.8 3.6
UNFINISHED
Coker Propane Propylene Mix 2.1 2.2 2.2 2.1 2.2 2.2 2.2 2.1
Coker Butane Butylene Mix 1.5 1.6 1.6 1.5 1.6 1.6 1.6 1.5
Penhex 9.1 9.5 9.7 9.1 9.7 9.5 9.7 9.1
Virgin Diesel 7.3 7.0 7.8 7.4 7.8 7.0 7.8 7.4
Naphtha - Sour 34.5 36.1 36.8 34.7 36.8 36.1 36.8 34.7
Heavy Naphtha 3.7 3.8 4.0 3.7 4.0 3.8 4.0 3.7
ULS VGO 10.1 10.6 10.8 10.2 10.8 10.6 10.8 10.2
VGO 43.6 45.8 46.5 43.9 46.5 45.8 46.5 43.9
----- ----- ----- ----- ----- ----- ----- -----
SUBTOTAL - Unfinished 112.0 116.5 119.4 112.5 119.4 116.5 119.4 112.5
OTHER PRODUCTS
Sulfur 1.2 1.3 1.3 1.2 1.3 1.3 1.3 1.2
Coke 17.9 18.8 19.1 18.0 19.1 18.8 19.1 18.0
Produced Fuel 4.3 4.3 4.4 4.2 4.4 4.3 4.4 4.2
----- ----- ----- ----- ----- ----- ----- -----
SUBTOTAL - Other Products 23.5 24.4 24.9 23.4 24.9 24.4 24.9 23.5
TOTAL PRODUCTS 202.4 211.5 215.7 203.3 215.7 211.5 215.7 203.3
Chargestocks - Volume (bpd in thousands)
CRUDE
Arab Lt. 37.7 39.5 40.2 37.9 40.2 39.5 40.2 37.9
Maya 150.9 157.8 160.9 151.7 160.9 157.8 160.9 151.7
----- ----- ----- ----- ----- ----- ----- -----
SUBTOTAL - Crude 188.6 197.3 201.1 189.6 201.1 197.3 201.1 189.6
OTHER CHARGESTOCKS
GFU Feed 1.5 1.6 1.6 1.5 1.6 1.6 1.6 1.5
Hydrogen 3.4 3.5 3.6 3.4 3.6 3.5 3.6 3.4
----- ----- ----- ----- ----- ----- ----- -----
SUBTOTAL - Other Chargestocks 4.9 5.1 5.2 4.9 5.2 5.1 5.2 4.9
TOTAL CHARGESTOCKS 193.5 202.4 206.3 194.5 206.3 202.4 206.3 194.5
TABLE V-10
PORT ARTHUR COKER COMPANY L.P.
BASE CASE
PRICE FORECAST
--------------------------------------------------------------------------------
2001 2002 2003 2004 2005 2006 2007 2008
---- ---- ---- ---- ---- ---- ---- ----
Products - ($/bbl)
DISTILLIATES
LS Diesel 18.94 20.69 21.66 22.39 22.85 23.09 23.35 23.60
Jet Fuel 19.45 21.16 22.12 22.84 23.30 23.55 23.80 24.07
LPG
Propane 11.67 12.65 13.22 13.63 13.91 14.16 14.36 14.55
Isobutane 15.13 16.35 17.10 17.61 17.93 18.04 18.23 18.41
Normal Butane 12.45 13.57 14.27 14.73 15.02 15.12 15.28 15.44
UNFINISHED
Coker Propane Propylene Mix 13.94 15.28 16.39 16.88 17.22 17.48 17.71 17.91
Coker Butane Butylene Mix 15.41 16.87 17.72 18.36 18.78 19.01 19.23 19.46
Penhex 14.36 15.60 16.31 16.84 17.18 17.34 17.53 17.73
Virgin Diesel 17.14 18.84 19.79 20.50 20.95 21.18 21.43 21.68
Naphtha - Sour 17.05 18.73 19.61 20.27 20.70 20.93 21.17 21.42
Heavy Naphtha 19.82 21.50 22.38 23.05 23.47 23.70 23.95 24.19
ULS VGO 17.73 19.43 19.93 20.53 20.97 21.20 21.43 21.67
VGO 15.57 17.22 17.69 18.24 18.66 18.88 19.10 19.33
OTHER PRODUCTS
Sulfur 9.42 9.48 9.66 9.77 9.88 9.99 10.10 10.22
Coke (0.17) 0.00 0.06 0.07 0.13 0.16 0.19 0.21
Produced Fuel 12.51 12.85 13.08 13.26 13.38 13.46 13.62 13.77
Chargestocks - ($/bbl)
CRUDE
Arab Lt. 14.82 16.25 16.98 17.50 17.89 18.09 18.29 18.49
Maya 11.87 12.98 13.46 13.73 14.08 14.24 14.41 14.58
OTHER CHARGESTOCKS
GFU Feed 17.13 18.82 19.76 20.46 20.91 21.14 21.38 21.62
Hydrogen 28.84 29.20 29.49 30.33 30.26 30.50 30.79 31.51
2
TABLE V-11
PORT ARTHUR COKER COMPANY L.P.
BASE CASE
REVENUE AND FEEDSTOCK COST FORECAST
--------------------------------------------------------------------------------
2001 2002 2003 2004 2005 2006 2007 2008
------ ------ ------ ------ ------ ------ ------ ------
Product Revenue (Dollars in Millions)
DISTILLATES
LS Diesel 264.6 306.5 322.6 315.2 340.4 342.1 347.7 332.3
Jet Fuel 178.7 203.3 216.6 211.4 228.2 226.3 233.2 222.8
------ ------ ------ ------ ------ ------ ------ ------
SUBTOTAL - Distillates 443.4 509.8 539.3 526.6 568.6 568.4 580.9 555.1
LPG
Propane 4.6 5.2 5.6 5.4 5.9 5.8 6.1 5.8
Isobutane 1.9 2.2 2.3 2.3 2.4 2.4 2.5 2.4
Normal Butane 9.5 10.8 11.7 11.4 12.3 12.1 12.5 11.9
------ ------ ------ ------ ------ ------ ------ ------
SUBTOTAL - LPG 16.1 18.2 19.6 19.1 20.6 20.3 21.0 20.1
UNFINISHED
Coker Propane Propylene Mix 10.6 12.1 13.2 12.9 13.9 13.8 14.3 13.7
Coker Butane Butylene Mix 8.4 9.6 10.3 10.1 10.9 10.8 11.2 10.7
Penhex 47.6 53.9 57.6 56.2 60.7 59.9 61.9 59.2
Virgin Diesel 46.0 48.4 56.6 55.4 59.9 54.4 61.3 58.6
Naphtha-Sour 214.9 246.8 263.4 257.3 278.0 275.8 284.3 271.8
Heavy Naphtha 26.8 29.8 32.3 31.4 33.9 32.9 34.6 33.0
ULS VGO 65.6 75.4 78.6 76.5 82.7 82.3 84.6 80.8
VGO 248.1 287.7 300.3 292.7 316.9 315.4 324.4 310.2
------ ------ ------ ------ ------ ------ ------ ------
SUBTOTAL - Unfinished 668.0 763.7 812.4 792.7 856.9 845.4 876.4 838.0
OTHER PRODUCTS
Sulfur 4.2 4.4 4.6 4.4 4.7 4.7 4.8 4.6
Coke (1.1) 0.0 0.4 0.5 0.9 1.1 1.3 1.4
Produced Fuel 19.6 20.3 21.1 20.1 21.6 21.3 21.9 21.1
------ ------ ------ ------ ------ ------ ------ ------
SUBTOTAL - Other Products 22.8 24.8 26.1 25.0 27.2 27.0 28.1 27.2
TOTAL PRODUCT REVENUE 1150.2 1316.5 1397.4 1363.4 1473.3 1461.2 1506.4 1440.4
CRUDE
Arab Lt. 204.2 234.0 249.3 242.8 262.7 260.5 268.5 256.7
Maya - Market 654.2 747.6 790.3 762.3 827.1 820.5 846.3 809.3
------ ------ ------ ------ ------ ------ ------ ------
SUBTOTAL - Crude 858.4 981.6 1039.6 1005.2 1089.8 1081.0 1114.8 1066.0
Chargestock Cost (Dollars in Millions)
OTHER CHARGESTOCK
GFU Feed 9.5 11.1 11.7 11.4 12.3 12.5 12.6 12.1
Hudrogen 35.3 37.4 38.6 37.5 39.6 39.1 40.3 39.0
------ ------ ------ ------ ------ ------ ------ ------
SUBTOTAL - Other Chargestocks 44.8 48.5 50.2 48.9 51.9 51.6 52.9 51.0
TOTAL CHARGESTOCK COST 903.2 1030.1 1089.8 1054.1 1141.7 1132.6 1167.7 1117.0
3
TABLE V-12
PORT ARTHUR COKER COMPANY L.P.
BASE CASE
CASH FLOW AND DEBT AMORTIZATION
---------------------------------------------------------------------------------------------------------------------------------
(Dollars in Millions)
2001 2002 2003 2004 2005 2006 2007 2008
---- ---- ---- ---- ---- ---- ---- ----
Total Product Revenue 1,150.2 1,316.5 1,397.4 1,363.4 1,473.3 1,462.2 1,506.4 1,440.4
Total Chargestock Cost 903.2 1,030.1 1,089.8 1,054.1 1,141.7 1,132.6 1,167.7 1,117.0
------- ------- ------- ------- ------- ------- ------- -------
Refinery Gross Margin 247.0 286.4 307.5 309.3 331.6 328.6 338.7 323.4
PMI Contract Coker Gross Margin Guarantee 43.8 19.0 (2.7) (22.6) (28.0) (23.9)
------- ------- ------- ------- ------- ------- ------- -------
Total Gross Margin 290.8 305.4 304.8 286.7 303.6 304.6 338.7 323.4
Variable Operating Expenses 26.5 27.9 28.5 28.0 29.1 28.9 29.6 29.0
Fixed Operating Expenses 34.3 34.4 35.0 35.8 37.5 39.3 41.5 42.8
Lease Fees 31.6 32.2 32.8 33.6 34.2 34.8 35.5 36.4
Operating Fees 58.5 61.4 63.2 59.4 62.3 62.6 64.0 62.9
Processing Fees (69.7) (72.0) (73.4) (74.1) (76.1) (77.4) (78.9) (79.7)
G&A Expense 0.7 0.8 0.8 0.8 0.8 0.8 0.8 0.9
------- ------- ------- ------- ------- ------- ------- -------
Total Expenses 81.9 84.7 86.8 83.5 87.7 89.1 92.6 92.2
Operating Cash Flow 208.8 220.7 218.0 203.2 215.9 215.5 246.1 231.2
Other Cash Items
Interest Income 1.9 2.7 3.1 3.1 2.1 2.3 3.6 5.3
Cash Taxes (18.3) (32.1) (27.1) (48.5) (53.6) (68.1) (50.6)
Mandatory Capex (3.0) (2.3) (2.4) (2.4) (3.8) (3.9) (4.0) (4.1)
Turnaround Expense (7.5) (7.5) (7.5) (7.5) (9.9) (9.9) (9.9) (9.9)
Catalyst Adjustment 2.7 (2.1) 2.2 (2.9) 2.9 (2.9) 3.0 (3.1)
Other 1.6 5.7 5.4 5.0 1.4 (6.4) (0.7) (0.7)
------- ------- ------- ------- ------- ------- ------- ------
Total Other Cash Items (4.4) (21.9) (31.3) (31.9) (55.8) (74.4) (76.0) (63.0)
Cash Flow Available For Debt Service 204.4 198.9 186.7 171.3 160.0 141.2 170.1 168.2
Debt Service (1)
----------------
Interest / Financing Fees 70.4 57.1 44.4 33.3 28.2 22.4 16.8 11.1
Principal 12.4 44.5 29.0 30.6 46.4 46.4 40.3 61.7
------- ------- ------- ------- ------- ------- ------- -------
Total Debt Service 82.8 101.6 73.4 63.9 74.6 68.8 57.1 72.8
DSCR 2.5 2.0 2.5 2.7 2.1 2.1 3.0 2.3
Average 2.4
Minimum 2.0
Debt Amortization Schedule
--------------------------
Capital Markets
Interest Payment 31.9 31.6 30.1 27.2 22.9 17.1 11.5 5.8
Principal Payment 8.7 20.9 30.6 46.4 46.4 40.3 61.7
Bank Debt
Interest Payment 31.6 20.1 9.0 0.8
Principal Payment - Scheduled 12.4 35.8 8.1
Principal Payment - Sweep 95.8 73.0 85.0 15.0
(1) Annual debt service for a given year includes July 15 debt service for
subject year and January 15 debt service for following year.
4
TABLE V-13
PORT ARTHUR COKER COMPANY L.P.
BASE CASE
SOURCES AND USES
--------------------------------------------------------------------------------
(Dollars in Millions) Project Cost
Total PACC Total Clark Total Project
-----------------------------------------------------
Uses of Funds
------------------------------------------------
EPC costs 543.9 92.0 635.9
Project Contingency 28.0 28.0
Taxes and Import Duties 5.0 5.0
Project Team Cost 26.0 26.0
Startup Cost (includes initial Cat & Chem) 14.6 14.6
------ ------ -------
Total Cash Construction Cost 591.5 118.0 709.5
Transfer of Value 2.2 (2.2)
Interesting during construction 89.7 89.7
Interest Income (0.9) (0.9)
Legal / Consulting / Other Fees 11.4 2.0 13.4
Financing expenses 21.1 21.1
------ ------ -------
Total Uses 715.0 117.8 832.8
Sources of Funds
------------------------------------------------
Bank Debt 325.0 325.0
Capital Markets 255.0 255.0
Cash Equity 135.0 117.8 252.8
------ ------ -------
Total Sources 715.0 117.8 832.8
5
