EXHIBIT 10.32
BPAmoco AMOCO ENERGY TRADING CORPORATION
A subsidiary of We BP Amoco Group
000 XxxxXxxx Xxxx Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
November 17, 1999
Cascade Natural Gas Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxxxx
STORAGE MANAGEMENT AGREEMENT
Dear Xx. Xxxxxx:
This letter documents the storage management agreement between Cascade
Natural Gas Corporation (Cascade) and Amoco Energy Trading Corporation
(AETC), Part of BP Amoco Group, relating to a portion of Cascade's storage
capacity in the Xxxxxxx Prairie storage field operated by NWPL.
Contract Term: November 1, 1999 through October 31, 2000,
extendible by mutual agreement.
Storage Capacity: 604,351 MMbtu's
Contracted Withdrawal Capacity: 16,789 MMbtu/D
Bonus Payment: US $ < * > payable by AETC to Cascade on
or before November 24, 1999. The Bonus
Payment is the consideration for Cascade
allowing AETC to manage and use its storage
rights as provided in this agreement.
Optimization Profit Sharing: In the event AETC recovers 100% of the
Bonus Payment, as optimization profits
generated by its storage and cycling
activities during the Contract Term, any
additional such optimization profits shall
be shared between AETC (< * > %) and Cascade
(< * > %), payable within thirty (30) days
after the end of the Contract term.
< * > = Redacted
CASCADE'S STORAGE MANAGEMENT AGREEMENT
NOVEMBER 17, 1999
PAGE 2 OF 4
Winter Priority: Cascade shall retain the right to call on
up to 604,351 MMbtu's of storage gas
between November 1, 1999 through March 31,
2000. As such, AETCs right to cycle storage
during this winter period shall be
subordinated to Cascade's right to withdraw
up to 604,351 MMbtu's during this period.
Any AETC winter cycling activity shall be
designed not to infringe upon Cascade's
contract withdrawal rights as stated above.
Summer Refill: It is the intent of the parties that AETC
during the contract term will manage the
refill of Cascade's storage capacity, in
compliance with tariff inventory capacity
targets, redelivering to Cascade 604,351
MMbtu's in the storage account at the end
of the Contract Term. AETC will cause
refill gas to be injected more or less
ratably during the summer injection season.
Cascade's ratable daily refill will be
determined by dividing the cumulative
volume withdrawn by Cascade through 3/31/00
by 183 days (i.e., up to 604,351 MMbtu's
divided by 183 days equals 3,302 Mmbtud).
In addition, with notice to AETC at least 5
business days prior to the beginning of the
month, Cascade may request that AETC refill
at a daily quantity of up to 125% of the
ratable daily refill quantity for such
month. For the 604,351 MMbtu's of supply,
Cascade shall pay AETC the pertinent
I.F.E.R.C. NWPL first of month index price
plus applicable transportation and storage
costs incurred by AETC. Cascade may elect,
from time to time, to convert such first of
month index price to either a) a fixed
price for one or more future months, or b)
a daily price tied to Gas Daily index
prices. If Cascade wants a quote for either
such price, it shall notify AETC at least 5
business days prior to the beginning of the
applicable month. AETC shall provide
Cascade a quote as soon as possible for the
requested pricing alterative(s) (a fixed
price or the Gas Daily average price for
the upcoming month) adjusted to reflect
market conditions. At that time, Cascade
shall be available to verbally respond
immediately to the quote provided by AETC
and to elect whether to accept the
alternative pricing. A verbal acceptance by
Cascade shall be binding upon the parties,
and AETC shall promptly confirm by
facsimile Cascade's acceptance of the
alternative pricing quote. If Cascade does
not accept the
CASCADE'S STORAGE MANAGEMENT AGREEMENT
NOVEMBER 17, 1999
PAGE 3 OF 4
alternative pricing, then the aforesaid
I.F.E.R.C. based price shall be the price
for that month. Upon request, AETC will
apprise Cascade of inventory volumes and
WACOG.
Operations: Cascade shall make its nominations to and
from the Xxxxxxx Prairie storage account
directly to AETC. Cascade shall designate
AETC as its Agent for nominations to
Xxxxxxxx Pipeline - West regarding Cascade's
storage account applicable to this
agreement. Cascade and AETC shall
coordinate actual activities associated
with the Xxxxxxx Prairie storage facility,
including operating practices ensuring
Cascade's nominations to AETC in a timely
manner for AETC to be compliant with all
Gas Industry Standards Board requirements.
However, Cascade will not have the right or
ability to dictate the manner in which AETC
uses or cycles the Xxxxxxx Prairie storage
account unless the activities of AETC can
be demonstrated to adversely impact
Cascade's right to call on winter gas as
stated in Winter Priority, above. Cascade
and AETC will cooperate to minimize the
number and severity of renominations.
Storage and Transport Costs: Cascade shall continue to bear all fixed
transportation and storage charges related
to the storage capacity, and all variable
transportation and storage charges
(including commodity and fuel charges)
relating to the withdrawal and refill of up
to 604,351 MMbtu's. AETC shall pay all
other variable costs (including commodity
and fuel charges) it incurs in the conduct
of its storage cycling activities.
Value of Storage Cycling: The value of storage management to AETC
(and to Cascade once AETC recovers the
Bonus Payment through optimization) arises
from taking advantage of cycling
opportunities whenever market conditions
permit.
CASCADE'S STORAGE MANAGEMENT AGREEMENT
NOVEMBER 17, 1999
PAGE 4 OF 4
Availability of TF-2 Transport: November 1, 1999 through September 30, 2000
(and possibly during October 2000 but only
with Cascade's prior consent). During the
period November 1, 1999 through March 31,
2000, AETC's right to use TF-2 transport as
agent for Cascade pursuant to this
agreement will be subordinated to Cascade's
right to transport up to 16,739 MMbtud.
Cascade and AETC can mutually agree to
allow AETC such use of TF-2 capacity. Use
of such capacity by AETC will preclude any
responsibility on AETC's part to reimburse
Cascade for TF-2 transport costs other than
applicable volumetric charges.
This letter constitutes the agreement between the parties for storage management
services as specified above.
Sincerely,
AMOCO ENERGY TRADING CORPORATION
By V
Xxxxx X. Xxxxxx
Regional Vice President - West
Agreed to and accepted this 25th day of November, 1999
CASCADE NATURAL GAS COMPANY
By
Name: KING XXXXX
Title: VICE PRESIDENT, GAS SUPPLY
