PIPELINE LIQUIDS TRANSPORTATION AGREEMENT
This Pipeline Liquids Transportation Agreement ("Agreement") is made and
entered into this ____ day of ______, 2002, by and between MARKWEST ENERGY
APPALACHIA, L.L.C., a Delaware limited partnership ("MEA"), and MARKWEST
HYDROCARBON, INC., a Delaware corporation ("MarkWest"). MEA and MarkWest may be
referred to individually as "Party", or collectively as "Parties".
Section 1. SCOPE OF AGREEMENT AND GENERAL TERMS AND CONDITIONS. MarkWest
agrees to deliver, or cause to be delivered, Raw Make, as defined below, to MEA,
and MEA agrees to receive and transport that Raw Make to MEA's Siloam
Fractionation facility, all in accordance with this Agreement. This Agreement
incorporates and is subject to all of the General Terms and Conditions attached
hereto, together with any other Exhibits attached hereto.
Section 2. EFFECTIVE DATE. The date on which the obligations and duties of
the Parties shall commence, being the "Effective Date", shall be
_______________, 2002.
Section 3. TERM. This Agreement shall remain in full force and effect from
the Effective Date for a period of 10 years (the "Primary Term"), and shall
continue thereafter on a year-to-year basis until terminated by either Party by
providing at least 60 days written notice to the other Party in advance of the
termination of the Primary Term or of any one-year extension thereof.
Section 4. FEES AND CONSIDERATION.
A. As full consideration for the services provided by MEA, MarkWest shall
pay the following fees and MEA shall make the following deliveries:
i. For the transportation of Raw Make by MEA, MarkWest shall pay MEA
a Transportation Fee equal to the gallons of Raw Make delivered to MEA
at the Receipt Point(s) multiplied by $*.
ii. A portion of each of the Transportation Fee shall be subject to
annual adjustments. *% of the Transportation Fee, shall be adjusted on
an annual basis in proportion to the percentage change, from the
preceding year, in the Producer Price Index for oil and Gas field
services (SIC 138) as published by the Department of Labor ("PPI").
The adjustment of the Fees shall be made effective January 1 of each
year, and shall reflect the percentage change in the PPI as it existed
for the immediately preceding January from the PPI for the second
immediately preceding January.
iii. MEA shall deliver the Raw Make transported for MarkWest to the
Redelivery Point.
B. During the Primary Term of this Agreement or any extension thereof,
MarkWest (i) shall not seek to challenge the level of the Transportation
Fee before any regulatory authorities of the federal government or of any
state in which the facilities of the Pipeline are located; (ii) shall not
seek to invoke the jurisdiction of any such regulatory authorities with
regard to the Transportation Fee; and (iii) shall not encourage, assist, or
support any
*Denotes Confidential Portion Omitted and
Filed Separately with the Commission
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other person in invoking the jurisdiction of any such regulatory
authorities with regard to the Transportation Fee.
Section 5. NOTICES. All notices, statements, invoices or other
communications required or permitted between the Parties shall be in writing and
shall be considered as having been given if delivered by mail, courier, hand
delivery, or facsimile to the other Party at the designated address or facsimile
numbers. Normal operating instructions can be delivered by telephone or other
agreed means. Notice of events of Force Majeure may be made by telephone and
confirmed in writing within a reasonable time after the telephonic notice.
Monthly statements, invoices, payments and other communications shall be deemed
delivered when actually received. Either Party may change its address or
facsimile and telephone numbers upon written notice to the other Party:
MarkWest:
Address: 000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Contract Administration
Fax: (000) 000-0000
MEA:
Address: 000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Contract Administration
Fax: (000) 000-0000
Section 6. EXECUTION. This Agreement may be executed in any number of
counterparts, each of which shall be considered and original, and all of which
shall be considered one instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date first
set forth above.
MARKWEST HYDROCARBON, INC.
By:
-----------------------------
Name:
Title:
MARKWEST ENERGY APPALACHIA, L.L.C.
By:
-----------------------------
Name:
Title:
2
GENERAL TERMS AND CONDITIONS
ATTACHED TO AND MADE A PART OF THAT CERTAIN
PIPELINE LIQUIDS TRANSPORTATION AGREEMENT
BETWEEN
MARKWEST HYDROCARBON, INC., AS "MARKWEST"
AND
MARKWEST ENERGY APPALACHIA, L.L.C., AS "MEA"
DATED:
ARTICLE 1: DEFINITIONS
ACCOUNTING PERIOD. The period commencing at 10:00 a.m., Eastern Time, on the
first day of a calendar month and ending at 10:00 a.m., Eastern Time, on the
first day of the next succeeding month.
FORCE MAJEURE. Any cause or condition not within the reasonable control of the
Party claiming suspension and which by the exercise of reasonable diligence,
such Party is unable to prevent or overcome.
FRACTIONATION AGREEMENT. That certain Fractionation, Storage and Loading
Agreement between MarkWest and MEA, of even date herewith.
INCIDENTAL LOSSES OR GAINS. The incidental losses of Raw Make incurred in MEA's
facilities, or the losses or gains of Raw Make incurred due to variations in
measurement equipment.
INDEMNIFYING PARTY and INDEMNIFIED PARTY. As defined in Article 8, below.
LOSSES. Any actual loss, cost, expense, liability, damage, demand, suit,
sanction, claim, judgment, lien, fine or penalty which are incurred by the
applicable Indemnified Party on account of injuries (including death) to any
person or damage to or destruction of any property, sustained or alleged to have
been sustained in connection with or arising out of the matters for which the
Indemnifying Party has indemnified the applicable Indemnified Party.
MEA PLANTS. Gas processing and extraction plants, owned and/or operated by MEA.
PIPELINE. The liquids transportation pipelines owned or leased by MEA for
transporting liquefied hydrocarbons from their respective extraction plants to
Siloam.
RAW MAKE. A combined stream of propane and heavier liquefied hydrocarbons,
including incidental ethane.
RECEIPT POINT. The inlet flanges of the Pipeline at or near the tailgate of the
applicable MEA Plants, where MarkWest delivers, or causes to be delivered, Raw
Make for transportation hereunder.
REDELIVERY POINT. The inlet flange of the Raw Make metering facilities of MEA at
or near Siloam.
SILOAM. MEA's Siloam fractionation facility located near South Shore, Kentucky,
including any treating equipment, Products separation and fractionation vessels,
all above ground Products storage vessels and all below ground Products storage
caverns and facilities, and associated condensing, heating, pumping, conveying,
and other equipment and instrumentation; including all structures associated
with those facilities; and, all Products loading facilities, including railcar
loading, truck loading and barge loading facilities and including all easements,
rights-of-way, and other property rights pertaining to the construction and
operation of those facilities; wherever those
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facilities, structures, easements, rights-of-way, and other property rights are
located.
ARTICLE 2: MARKWEST COMMITMENTS
2.1. MarkWest hereby commits and agrees to deliver at the applicable Receipt
Points all of MarkWest's Raw Make acquired from the MEA Kenova Gas Extraction
facility, and such of MarkWest's Raw Make as it desires to deliver from MEA's
Xxxxxxx Gas Extraction facility, or from other extraction plants or sources in
the Appalachian region as agreed upon by the Parties. MEA shall provide other
Receipt Points on the Pipeline at MarkWest's request; provided, that MarkWest
pays MEA, in advance, all reasonable and necessary costs incurred in installing
such Receipt Point facilities.
ARTICLE 3: OPERATION OF MEA'S FACILITIES
3.1. MEA shall, at its sole cost, risk, and expense, maintain and operate the
Pipeline to transport MarkWest's Raw Make from the Receipt Points to the
Redelivery Point.
3.2 All Incidental Losses and Gains incurred in the Pipeline shall be allocated
to MarkWest and other parties shipping on the Pipeline.
ARTICLE 4: QUALITY
4.1. RAW MAKE QUALITY.
A. The Raw Make transported under this Agreement shall be of a quality that,
when fractionated, will result in products meeting the specifications set forth
in Exhibit A, attached to the Fractionation Agreement.
B. Should any of the Raw Make fail to meet the above specifications, then:
i. MEA may take receipt of the non-conforming Raw Make, and that receipt
shall not be construed as a waiver or change of standards for future Raw
Make deliveries; or
ii. MEA may, at its sole discretion, cease receiving the non-conforming
Raw Make, and shall notify MarkWest that it has, or will, cease receiving
the non-conforming Raw Make.
ARTICLE 5: MEASUREMENT EQUIPMENT AND PROCEDURES AND ANALYSES
5.1. RAW MAKE. Raw Make shall be measured at the Receipt Point(s) as
follows:
A. MEA shall measure the weight of the Raw Make delivered hereunder using
either turbine or coriolis mass flow meters installed, operated and maintained
in accordance with GPA Standard 8182-latest edition and/or API Manual of
Petroleum Measurement Standards Draft Standard, Measurement of Single-Phase,
Intermediate and Finished Hydrocarbon Fluids by Coriolis Meters-latest edition.
B. MEA shall measure the composition of the Raw Make delivered hereunder
using a chromatograph installed, operated and maintained in accordance with GPA
Standard 2165-latest edition, GPA Standard 2145-latest edition, GPA Standard
2261-latest edition, GPA Standard 2177-latest edition and the manufacturer's
specifications and standards. Factors for hexanes and heavier shall be in
accordance with Table IV of GPA Standard 2261-latest edition or determined by
periodic samples taken by the MEA. Samples shall be taken at intervals not to
exceed 20 minutes. The arithmetic average of the samples during a day shall be
deemed to be the Raw Make Composition for such day.
C. The weight of each Raw Make component shall be converted to gallons at
60(degree)F in accordance with GPA
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Standard 8173-latest edition and GPA Standard 2145-latest edition.
5.2 If any measuring equipment used herein, is out of service or, upon test, is
found to be in error by an amount exceeding 0.5%, at a recording rate
corresponding to the average rate of flow for the period since the last
preceding test, then any preceding recordings of that equipment since the last
preceding test shall be corrected to zero error for any period which is known
definitely or agreed upon. If the period is not known definitely or agreed upon,
the correction shall be for a period extending back one-half of the time elapsed
since the last test. In the event a correction is required for previous
deliveries, the volumes delivered shall be calculated by the first of the
following methods which is feasible: (i) by using the registration of any check
meter or meters if installed and accurately registering; or (ii) by correcting
the error if the percentage of error is ascertainable by calibration, test, or
mathematical calculations; or (iii) by MarkWest estimating the quantity of
delivery by deliveries during periods of similar conditions when the meter was
registering accurately.
ARTICLE 6: PAYMENTS
6.1. MEA shall provide MarkWest with a statement explaining fully how all
consideration due under the terms of this Agreement was determined not later
than the 20th day of the Accounting Period following the Accounting Period for
which the consideration is due.
6.2. Any sums due MEA under this Agreement shall be paid no later than the last
day of the Accounting Period in which the statement under Section 6.1 was
received.
6.3. Either Party, on 10 days prior written notice, shall have the right at its
expense, at reasonable times during business hours, to audit the books and
records of the other Party to the extent necessary to verify the accuracy of any
statement, measurement, computation, charge, or payment made under or pursuant
to this Agreement. A Party electing to audit ("Auditing Party") shall complete
its audit within 3 months following the date on which the books and records of
the other Party ("Audited Party") are first made available for inspection
following the Auditing Party's notice of audit. Within that 3-month period, the
Auditing Party shall submit, in writing, all exceptions disclosed by the audit
to the Audited Party. The Audited Party shall have 30 days following receipt of
the exceptions in which to respond in writing to the exceptions. If the Audited
Party fails to respond within that 30-day period, the exceptions shall be deemed
accepted and appropriate adjustments and settlements shall be made and, as
applicable, paid. If the Parties are unable to reach agreement as to any
exceptions to which the Audited Party timely responded within 30 days of the
Audited Party's response, then either Party may submit the matter to arbitration
in accordance with the provisions in Article 9.
ARTICLE 7: FORCE MAJEURE
7.1. In the event a Party is rendered unable, wholly or in part, by Force
Majeure, to carry out its obligations under this Agreement, other than the
obligation to make any payments due hereunder, the obligations of that Party, so
far as they are affected by Force Majeure, shall be suspended from the inception
and during the continuance of the inability, and the cause of the Force Majeure,
as far as possible, shall be remedied with commercially reasonable diligence.
The Party affected by Force Majeure shall provide the other Party with written
notice of the Force Majeure event, with reasonably full detail of the Force
Majeure within a reasonable time after the affected Party learns of the
occurrence of the Force Majeure event. The settlement of strikes, lockouts, and
other labor difficulty
3 of General Terms and Conditions
shall be entirely within the discretion of the Party having the difficulty and
nothing herein shall require the settlement of strikes, lockouts, or other labor
difficulty.
ARTICLE 8: LIABILITY AND INDEMNIFICATION
8.1. As among the Parties hereto, MarkWest and any of its designees shall be in
custody, control and possession of the Raw Make hereunder, until the Raw Make is
delivered to MEA at the Receipt Point.
8.2. As among the Parties hereto, MEA and any of its designees shall be in
custody, control and possession of the Raw Make hereunder after Raw Make is
delivered at the Receipt Point.
8.3. Each Party ("Indemnifying Party") hereby covenants and agrees with the
other Party, and its affiliates (except for the Indemnifying Party itself), and
each of their directors, officers and employees ("Indemnified Parties"), that
except to the extent caused by the Indemnified Parties' gross negligence or
willful conduct, the Indemnifying Party shall protect, defend, indemnify and
hold harmless the Indemnified Parties from, against and in respect of any and
all Losses incurred by the Indemnified Parties to the extent those Losses arise
from or are related to: (a) the Indemnifying Party's facilities; or (b) the
Indemnifying Party's possession and control of the Raw Make or Products, as
applicable.
ARTICLE 9: MISCELLANEOUS
9.1. The failure of any Party hereto to exercise any right granted hereunder
shall not impair nor be deemed a waiver of that Party's privilege of exercising
that right at any subsequent time or times.
9.2. This Agreement shall be governed by, construed, and enforced in accordance
with the laws of the State of Colorado without regard to choice of law
principles.
9.3. This Agreement shall extend to and inure to the benefit of and be binding
upon the Parties, and their respective successors and assigns, including any
assigns of MarkWest's Interests covered by this Agreement. No assignment of this
Agreement shall be binding on either of the Parties until the first day of the
Accounting Period following the date a certified copy of the instrument
evidencing that sale, transfer, assignment or conveyance has been delivered to
the other Party. Further, each assigning Party shall notify its assignee of the
existence of this Agreement and obtain a ratification of this Agreement prior to
such assignment. No assignment by either Party shall relieve that Party of its
continuing obligations and duties hereunder without the express consent of the
other Party.
9.4. Any change, modification or alteration of this Agreement shall be in
writing, signed by the Parties; and, no course of dealing between the Parties
shall be construed to alter the terms of this Agreement.
9.5 This Agreement, including all exhibits and appendices, contains the entire
agreement between the Parties with respect to the subject matter hereof, and
there are no oral or other promises, agreements, warranties, obligations,
assurances, or conditions precedent, affecting it.
9.6 NO BREACH OF THIS AGREEMENT OR CLAIM FOR LOSSES UNDER ANY INDEMNITY
OBLIGATION CONTAINED IN THIS AGREEMENT SHALL CAUSE ANY PARTY TO BE LIABLE FOR,
NOR SHALL LOSSES INCLUDE, ANY DAMAGES OTHER THAN ACTUAL AND DIRECT DAMAGES, AND
EACH PARTY EXPRESSLY WAIVES ANY RIGHT TO CLAIM ANY OTHER DAMAGES, INCLUDING,
WITHOUT LIMITATION, CONSEQUENTIAL, SPECIAL, INDIRECT, PUNITIVE OR EXEMPLARY
DAMAGES.
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9.7 DISPUTE RESOLUTION. Any dispute arising under this Agreement ("Arbitrable
Dispute") shall be referred to and resolved by binding arbitration in Denver,
Colorado, by three (3) arbitrators, in accordance with the rules and procedures
of the Judicial Arbiter Group ("JAG"); and, to the maximum extent applicable,
the Federal Arbitration Act (Title 9 of the United States Code). If there is any
inconsistency between this Section and any statute or rules, this Section shall
control. Arbitration shall be initiated within the applicable time limits set
forth in this Agreement and not thereafter or if no time limit is given, within
the time period allowed by the applicable statute of limitations, by one party
("Claimant") giving written notice to the other party ("Respondent") and to JAG,
that the Claimant elects to refer the Arbitrable Dispute to arbitration, and
that the Claimant has appointed an arbitrator, who shall be identified in such
notice. The Respondent shall notify the Claimant and JAG within thirty (30) Days
after receipt of Claimant's notice, identifying the arbitrator the Respondent
has appointed. The two (2) arbitrators so chosen shall select a third arbitrator
within thirty (30) Days after the second arbitrator has been appointed (upon
failure of a party to act within the time specified for naming an arbitrator,
such arbitrator shall be appointed by the administrator's designee). MarkWest
shall pay the compensation and expenses of the arbitrator named by or for it,
MEA shall pay the compensation and expenses of the arbitrator named by or for
it, and MarkWest and MEA shall each pay one-half of the compensation and
expenses of the third arbitrator. All arbitrators must be neutral parties who
have never been officers, directors, employees, contractors or agents of the
parties or any of their Affiliates, must have not less than ten (10) years
experience in the oil and gas industry, and must have a formal
financial/accounting, engineering or legal education. The parties shall have all
rights of discovery in accordance with the Federal Rules of Civil Procedure. The
hearing shall be commenced within thirty (30) Days after the selection of the
third arbitrator. The parties and the arbitrators shall proceed diligently and
in good faith in order that the arbitral award shall be made as promptly as
possible. The interpretation, construction and effect of this Agreement shall be
governed by the laws of Colorado, and to the maximum extent allowed by law, in
all arbitration proceedings the laws of Colorado shall be applied, without
regard to any conflicts of laws principles. All statutes of limitation and of
repose that would otherwise be applicable shall apply to any arbitration
proceeding. The tribunal shall not have the authority to grant or award indirect
or consequential damages, punitive damages or exemplary damages.
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