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AMENDATORY AGREEMENT NO. 5
TO
AGREEMENT FOR THE SALE AND PURCHASE OF NATURAL GAS
between
CHUGACH ELECTRIC ASSOCIATION, INC.
AND
MARATHON OIL COMPANY
dated September 26, 1988
WHEREAS, Chugach Electric Association, Inc. (Chugach) and Marathon
Oil Company (Marathon) entered into an Agreement for the Sale and Purchase of
Natural Gas (Agreement) dated September 26, 1988;
WHEREAS, the Agreement has heretofore been amended four times; and
WHEREAS, Chugach and Marathon desire to modify further the Agreement
for the benefit of both parties;
NOW, THEREFORE, in consideration of the promises and mutual
agreements herein contained, the parties do covenant and agree as follows:
Section A. The definition of Xxxxxxx Xxxx Power Plant in Section
14(h) of the Agreement shall include but not be limited to Chugachs portion of
the capability and output of the Nikiski cogeneration facility, which
facility consists in part of a forty megawatt (40 MW) gas-fired generating
unit owned by Alaska Electric Generation & Transmission, Inc. (AEG&T)
and located on the east side of Xxxx Inlet, Alaska near Nikiski on the
Kenai Peninsula.
Section B. If and to the extent that Marathon supplies gas to Chugach
from the Xxxxxxx River Field for use by Chugach as fuel for Chugachs portion
of the capability and output of the Nikiski cogeneration facility owned by
AEG&T, then the Agreement shall be modified in the following respects for
any such Xxxxxxx River Field gas:
(1) For purposes of Section 7(b) of the Agreement and
Section 2(b)(5) of Exhibit F of the Agreement, the upper limit of
the acceptable range for the heating value of Xxxxxxx River Field
gas shall be 1090 (rather than 1050) Btu per cubic foot, expressed at
14.65 pounds per square inch absolute, 60 degrees Fahrenheit
(dry basis).
(2) Section 3 (Gas Quality) of Exhibit F of the
Agreement shall be modified as follows for
Xxxxxxx River Field gas: As a non-operator of the Xxxxxxx River
Field and gas storage reservoir, Marathon can not guarantee the
quality of the gas delivered to Chugach from this location.
However, Marathon will endeavor to provide Chugach on a monthly
basis with an analysis provided by the Operator of the Xxxxxxx River
gas field and storage reservoir.
(3) Section 3 (Gas Pressure) of Exhibit F of the Agreement
shall be modified as follows for Xxxxxxx River Field gas: Gas shall
be delivered to Chugach at a pressure of not less than four hundred
(400) pounds per square inch gauge and not more than one thousand
(1000) pounds per square inch gauge. Gas shall be delivered to
UNOCALs facility at a pressure within this stated range or at the
pressure required at the inlet of the UNOCAL facility.
Section C. Chugach and Marathon recognize the possibility that
the steam output of the Nikiski cogeneration facility may, in some
circumstances, cease being used as process steam in the production of ammonia
and may instead be harnessed for the production of electric power. Chugach
and Marathon also recognize that if this occurs, and if Chugach (rather than
some other entity) obtains such steam-generated electric power, then
such steam-generated electric power will in effect displace electric power
that Chugach would otherwise produce by operating Chugachs gas-fired
generators at Beluga. As a result of its existing contractual obligations to
the Beluga River Field Producers, Chugach has offered to the Beluga River Field
Producers gas contract amendments under which, in such circumstances, each
individual Beluga River Field Producer could elect to increase its sales
of gas to Chugach at Beluga in order to offset the reduction in such sales
that would otherwise result from Chugach obtaining such steam-generated
electric power. If and to the extent that any or all of the Beluga River
Field Producers accept(s) such contract amendments and, in the circumstances
contemplated by such amendments, such Producer(s) does/do in fact elect to
so increase its/their sales of gas to Chugach at Beluga, then (1)
Chugachs purchases of gas from Marathon at Beluga will be reduced by the
total amount of such increased sales, and (2) Chugach will continue to
purchase from Marathon all the gas used as fuel for Chugachs portion of the
capability and output of the Nikiski cogeneration facility.
Section D. Chugach will not, without Marathons advance written
consent, exercise its option granted by AEG&T to obtain from steam-powered
generation at the Nikiski cogeneration facility more energy than that which
can reasonably be produced by a 12 megawatt steam-powered generator; provided,
that if Chugach demonstrates that, in the circumstances then existing and
expected, Chugach can obtain more than 12 megawatts from such
steam-powered generation without reducing Marathons net sales of gas to
Chugach, then Marathon shall not unreasonably withhold such consent.
Section E. For purposes of Section D, above, Chugach shall
determine the effect of steam-powered generation at the Nikiski cogeneration
facility upon Marathons net sales of gas to Chugach, as follows: Chugach
shall notify Marathon if Chugach desires to obtain more energy from
such generation than that which can reasonably be produced by a 12 megawatt
steam-powered generator. The notice shall further state (1) the total
volume of gas delivered to Chugach by Marathon under the Agreement during the
twelve (12) full calendar months ended April 30, 1999, as reflected in
Marathons invoices for those months (Base Gas); (2) Chugachs estimate
for Marathons Share of Chugachs Total Gas Requirements under the Agreement
during the twelve (12) full calendar months beginning the first day of the
month after Chugachs notice, assuming that Chugach were to obtain more
energy during such period from steam-powered generation at the Nikiski
cogeneration facility than that which can reasonably be produced by a 12
megawatt steam-powered generator (Estimated Gas); and (3) Chugachs basis
for the calculations and estimates in the notice. If the Estimated Gas
minus the Base Gas is zero or a positive number, then Marathon shall not
unreasonably withhold its consent as provided in Section D, above.
Section F. This Amendment will become effective upon approval by the
Alaska Public Utilities Commission.
Section G. Except for the foregoing amendments, all other terms and
conditions of the Agreement remain in full force and effect.
IN WITNESS WHEREOF, Chugach and Marathon have caused this
Amendatory Agreement No. 5 to be executed by their authorized representatives.
Chugach Electric Association, Inc. Marathon Oil Company
By: /s/Xxxxxx X. Xxxxxxxxx By: /s/ X.X. Xxxxxx
Its: General Manager Its: Vice President
Date: May 19, 1999 Date:May 24, 1999
