TABLE OF CONTENTS
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FIRM STANDBY GAS STORAGE CONTRACT
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I. ACQUISITION AND CONSTRUCTION . . . . . . . . . . . 2
II. GAS TO BE STORED AND DELIVERED . . . . . . . . . . 4
III. SCHEDULING . . . . . . . . . . . . . . . . . . . . 6
IV. POINT(S) OF DELIVERY AND REDELIVERY . . . . . . . . 8
V. TERM . . . . . . . . . . . . . . . . . . . . . . . 8
VI. RATES . . . . . . . . . . . . . . . . . . . . . . . 9
VII. NOTICES . . . . . . . . . . . . . . . . . . . . . . 13
VIII. GENERAL TERMS AND CONDITIONS . . . . . . . . . . . 14
IX. ADDITIONAL STORAGE OPTION . . . . . . . . . . . . . 15
X. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . 16
Exhibit "A"
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General Terms and Conditions
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I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . 1
II. QUALITY . . . . . . . . . . . . . . . . . . . . . . 3
III. PRESSURE . . . . . . . . . . . . . . . . . . . . . 4
IV. TITLE AND RISK OF LOSS . . . . . . . . . . . . . . 4
V. MEASUREMENT . . . . . . . . . . . . . . . . . . . . 6
VI. BILLINGS AND PAYMENTS . . . . . . . . . . . . . . . 9
VII. TAXES . . . . . . . . . . . . . . . . . . . . . . 10
VIII. REGULATORY BODIES . . . . . . . . . . . . . . . . . 12
IX. FORCE MAJEURE . . . . . . . . . . . . . . . . . . . 13
X. DEFAULT AND TERMINATION . . . . . . . . . . . . . . 15
Exhibit "B"
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Point(s) of Delivery and Redelivery
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GAS STORAGE CONTRACT
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THIS GAS STORAGE CONTRACT (hereinafter referred to as the
"Contract") is made and entered into as of the 16th day of
February , 1990, by and between ENDEVCO INDUSTRIAL GAS SALES
COMPANY, a Delaware corporation, (herein referred to as
"Company"), operator of the Storage Facilities (as defined below)
and managing general partner of the Hattiesburg Gas Storage
Company, the owner of the said Storage Facilities, and
CONNECTICUT NATURAL GAS CORPORATION, a Connecticut corporation
(herein referred to as "Customer").
W I T N E S S E T H:
-------------------
WHEREAS, Company and Customer are parties to a "Precedent
Agreement" dated December 29, 1989, wherein Company and Customer
agreed, upon the satisfaction of certain conditions, to enter
into this Contract; and
WHEREAS, the conditions in the Precedent Agreement have been
satisfied or waived; and
WHEREAS, subject to the terms hereof, Company will acquire
certain caverns located near Petal, Mississippi and develop such
caverns into underground natural gas storage facilities
(hereinafter referred to as the "Storage Facilities") initially
having a usable storage capacity of approximately two billion
cubic feet ("Phase I"), and which may, at Company's discretion,
subsequently be expanded to a capacity of approximately five
billion cubic feet of usable storage capacity ("Phase II"); and
WHEREAS, Company will install and construct all facilities
necessary to connect the Storage Facilities with the Point(s) of
Delivery and Point(s) of Redelivery herein specified; and
WHEREAS, Customer desires that Company receive, on a firm basis,
at the Points of Delivery herein specified, certain quantities of
gas from the pipeline facilities of Transcontinental Gas Pipe
Line Corporation ("Transco") and/or Tennessee Gas Pipeline
Company ("Tennessee") for the purpose of injecting and storing
such gas for Customer or for its account in such Storage
Facilities, and that Company redeliver such gas, on a firm basis,
into the facilities of said pipeline companies, at the Points of
Redelivery herein specified; and
WHEREAS, Company desires to perform such services for
Customer, all to be provided pursuant and subject to the terms
and conditions hereof;
NOW, THEREFORE, for and in consideration of the mutual
covenants herein contained, together with other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed by both parties hereto, Company and
Customer hereby agree as follows:
ARTICLE I
ACQUISITION AND CONSTRUCTION
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Within thirty (30) days after the execution hereof, Company
shall endeavor to close its purchase of the Storage Facilities,
on terms and conditions satisfactory to Company. Thereafter,
Company shall commence the construction and development of the
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Storage Facilities and shall provide Customer written notice of
the commencement of construction and the date upon which Company
anticipates that such facilities will be operational. Upon
completion of construction, including testing, as required by all
applicable federal, state and/or applicable codes, and all other
matters required for operation, Company shall provide Customer
written notice that said facilities are fully operational and
shall state in such notice a date upon which Company will be
ready to receive gas for storage, which date shall be not less
than thirty (30) days following such notice (such date to be
hereinafter referred to as the "Commencement Date"). If the
Commencement Date does not occur on or before December 1, 1990,
or such later date as may be agreed upon, (subject to a day for
day extension for delays caused by an event(s) of "force majeure"
as herein defined and for each day after March 8, 1990 which
expires prior to the date that Company receives executed Firm
Storage Contracts covering at least 165,000 MMBtu of MDWQ, as
herein defined), for any reason, including, without limitation,
Company's inability to close its purchase of the Storage
Facilities on terms acceptable to Company, then either party
shall have the right to terminate this Contract, without further
liability or obligation to the other party hereunder, by
providing the other party thirty (30) days prior written notice.
Notwithstanding the foregoing, in the event that Customer gives
notice of termination in accordance with the above and,
thereafter, Company provides written notice to Customer stating a
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Commencement Date which will occur prior to the expiration of
such thirty (30) day period, then, Customer's notice of
termination shall be void and of no further force or effect and
this Contract shall continue in accordance with its terms, unless
Company is unable to commence service on the Commencement Date
stated in its notice.
ARTICLE II
GAS TO BE STORED AND DELIVERED
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2.1 Subject to the terms and provisions of this Contract,
Company agrees to reserve for service to Customer a portion of
the Storage Facilities. The capacities so reserved for Customer
shall be sufficient to enable Customer to inject gas into,
withdraw gas from, and store gas in the Storage Facilities, in
quantities up to the maximum quantities set forth below:
(i) a maximum daily withdrawal quantity ("MDWQ") of
10,000 MMBtu per day;
(ii) a maximum daily injection quantity ("MDIQ") of
5,000 MMBtu per day;
(iii) a maximum capacity in the Storage Facilities ("MQS")
equal to 100,000 MMBtu.
2.2 Customer shall tender or cause to be tendered to
Company at the Point(s) of Delivery any gas which Customer
desires to have injected into storage hereunder. Customer shall
also receive or cause to be received gas requested to be
withdrawn from storage at the Point(s) of Redelivery upon tender
for redelivery by Company.
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2.3 Subject to the operating conditions of the pipelines
delivering or receiving gas for Customer's account, Company shall
receive gas for injection from Customer at the Point(s) of
Delivery and redeliver gas to Customer at the Point(s) of
Redelivery as scheduled by Customer from time to time; provided
that Company shall not be obligated to receive for injection any
quantity of gas if the injection of the same would cause the
quantity of gas stored in the Storage Facilities for Customer's
account ("Customer's Gas Storage Inventory") to exceed Customer's
MQS as stated above; nor shall Company be obligated at any time
to deliver more gas to Customer than Customer has in its then-
current Customer's Gas Storage Inventory.
2.4 Company shall not be obligated to receive, at any Point
of Delivery for injection, or to redeliver, at any Point of
Redelivery, any quantity of gas when the quantity of gas tendered
for delivery to Company or requested by Customer to be
redelivered, together with all other volumes of gas tendered for
delivery to Company at any such Point of Delivery, or requested
for redelivery at such Point of Redelivery, is less than
5,000 MMBtu per day in the aggregate.
2.5 In addition to the maximum daily rates of injection and
withdrawal as specified above in Section 2.1, Company shall use
its best efforts to accommodate requests of Customer to inject or
withdraw gas at greater rates of flow and, at such Point(s) of
Delivery or Point(s) or Redelivery in addition to those specified
on Exhibit "B" annexed hereto, at such times as such additional
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capacities are not required for service to other firm, standby
storage customers. Any such additional services shall be
provided at the rates stated in Section 6.1(c) and 6.1(d), as may
be amended by Section 6.1(e), only as capacities are available
and on a pro-rata basis to other firm, standby storage customers,
without obligation or liability for interruption by Company as to
any withdrawals or injections in excess of the maximums reserved
for Customer. Additional withdrawals and/or injections will be
made only to the extent that Customer has gas in storage to be
withdrawn, or unfilled capacity in the Storage Facilities
reserved as part of Customer's MQS as stated herein.
ARTICLE III
SCHEDULING
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3.1 At any time during any day when Customer desires
Company to receive and inject gas into, or to withdraw and
deliver gas from, the Storage Facilities, Customer shall give
verbal notice in accordance with Section 3.2 of this Article to
Company's dispatcher, specifying the quantity of gas to be
injected or withdrawn and the appropriate Points of Delivery or
Points of Redelivery, as applicable. Customer shall make
available and tender any gas to be injected hereunder and receive
and accept delivery, upon tender by Company, any gas requested to
be withdrawn from storage. The quantity of gas stored in the
Storage Facilities for the account of Customer shall be increased
or decreased upon injection or withdrawal of gas from storage, as
applicable. Customer shall not (unless otherwise agreed by
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Company), on an hourly basis, tender for injection nor shall
Company be obligated to receive gas for injection or to withdraw
and deliver gas from storage, at rates of flow in excess of 1/24
of Customer's MDIQ or MDWQ, respectively.
3.2 Customer shall notify Company at least eight (8) hours
in advance of any requested change in the daily or hourly rate of
flow for injections or withdrawals of gas hereunder. Company may
waive any part of the eight (8) hour notice upon request if, in
Company's reasonable judgement, operating conditions permit such
waiver. Customer shall notify Company immediately of any
circumstance which causes or will cause the deliveries to or
receipts from Company to be different from those requested.
Notices provided in this Article may be verbal, followed by a
written confirmation delivered via telecopy, overnight mail,
first class U.S. mail, or hand-delivery when such written
confirmation is requested by either party. Customer shall
provide notice of any changes in deliveries to or receipts from
Company to all applicable transporting pipelines and shall be
responsible for, and shall indemnify and hold Company harmless
from, any and all liabilities and expenses resulting from
Customer's failure to notify all applicable transporting
pipelines of any such changes.
3.3 In the event that an imbalance occurs on the pipeline
to or from which such gas is delivered or received, which
imbalance results from Company's failure to tender the quantities
of gas scheduled for delivery from storage, or accept delivery of
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the quantities of gas scheduled for injection into storage and
tendered for delivery by Customer, all in accordance with and
subject to this Contract, Company shall reimburse Customer for
any imbalance penalty due and rightfully owing to the pipeline
receiving or delivering the gas at such Point(s) of Delivery or
Point(s) of Redelivery, which was caused by Company's failure to
accept or deliver gas. In the event that Company is unable to
receive or deliver gas as required by this Contract and in
accordance with the request of Customer as provided above,
Company shall notify Customer as soon as practicable following
any failure to receive or tender such gas and, Customer shall, as
soon as practicable following receipt of such notice, notify and
change nominations and scheduling with all pipelines and other
parties delivering or receiving gas to be delivered to or
withdrawn from storage for Customer and be reasonably diligent in
taking such further actions to prevent or minimize any imbalances
from occurring. Customer and Company will diligently work to
correct any imbalance so caused prior to the end of the
applicable balancing period.
ARTICLE IV
POINT(S) OF DELIVERY AND REDELIVERY
-----------------------------------
4.1 The Point(s) of Delivery for all gas to be tendered by
Customer to Company for injection into the Storage Facilities
shall be as specified on Exhibit "B" attached hereto, and the
maximum daily quantity of gas which Company is obligated to
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receive from Customer at each individual Point of Delivery shall
not exceed the maximum stated thereon.
4.2 The Point(s) of Redelivery for all gas to be tendered
by Company to Customer for redelivery pursuant to the terms
hereof shall be as specified on Exhibit "B", attached hereto, and
the maximum quantities of gas which Company is obligated to
redeliver to Customer at each such Point of Redelivery shall not
exceed the maximum stated thereon.
ARTICLE V
TERM
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5.1 This Contract shall be effective as of the date set
forth at the outset hereof and shall continue in full force and
effect for a primary term of fifteen (15) years following the
Commencement Date, as defined in Article I hereof, and year to
year thereafter unless and until terminated effective at the end
of such fifteenth (15th) year or any year thereafter by either
party upon not less than thirty-six (36) months prior written
notice.
5.2 Upon expiration hereof, Company agrees that in the
event that gas storage services are still being provided in the
Storage Facilities by Company, or any assignee of Company as
provided for herein, to other customers, then, Customer shall
have the right and option to continue to receive storage services
from Company, or such assignee of Company, pursuant to terms and
conditions, and for rates and charges substantially similar to
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those being offered to said other customers by Company, or such
assignee of Company, at the time of such expiration.
ARTICLE VI
RATES
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6.1 During the first ten (10) years following the
Commencement Date, Customer shall pay to Company each month the
following charges:
6.1(a) A storage charge ("D1") of twenty and one-
half cents ($0.205) multiplied by Customer's MQS amount
specified in this Agreement; plus
6.1(b) A deliverability charge ("D2") of fifty-eight
cents ($0.58) multiplied by Customer's MDWQ amount; plus
6.1(c) One cent ($0.01) for each MMBtu of gas
received by Company for injection into storage hereunder and
one cent ($0.01) for each MMBtu of gas redelivered by
Company to Customer hereunder; plus
6.1(d) Customer's pro-rata share of the cost of gas
consumed in the operation of the Storage Facilities, such to
be pro rated among all Customers based upon the quantities
of gas injected and withdrawn by each Customer during each
month. It is presently estimated that the total cost of gas
to be consumed in the injection and withdrawal of gas into
and from the Storage Facilities will initially total
approximately three cents ($0.03) per MMBtu, in the
aggregate; however, the parties agree that this cost may
change from time to time and Customer shall continue to bear
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its pro rata share of such cost. Company shall endeavor to
operate the Storage Facilities in an efficient manner so as
to limit the gas consumed to that quantity reasonably
required. Each month, Company shall provide Customer a
statement showing its prorata share of such quantity and the
cost of the gas consumed in the operation of Storage
Facilities, along with the necessary supporting workpapers
showing the total quantity and cost of gas so consumed and
the proration calculations. Customer shall have the option,
exercisable upon thirty (30) days prior written notice at
any time during the term hereof, to thereafter (during the
term hereof) supply its pro-rata share of gas consumed, as
opposed to reimbursing Company in accordance herewith. In
the event that Customer elects to provide its pro-rata share
of the fuel used hereunder, then, following such election,
Company shall establish and maintain an account (the "Fuel
Account") with Customer. Initially, one and one-half
percent (1 1/2%) of all gas delivered to Company at the
Points of Delivery hereunder shall be retained by Company
and credited to the Fuel Account. Customer shall not pay
any injection, withdrawal or storage fee as to any volumes
retained by Company. At the close of each month, Company
shall debit the Fuel Account with Customer's pro-rata share
of the fuel gas. From time to time during the term hereof,
Company shall have the right, upon providing Customer ten
(10) days' prior written notice, to adjust the quantity of
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gas to be retained by Company and credited to the Fuel
Account in order to reflect actual quantities of gas
consumed in the operation of the Storage Facilities and, to
cause the Fuel Account to be as near to zero as is
practicable on a monthly basis. Within thirty (30) days
following the termination hereof, Company shall deliver gas
to Customer, or Customer shall deliver gas to Company, as is
necessary to cause the Fuel Account to equal zero. Company
shall report the status of the Fuel Account as of the end of
the previous month with each monthly statement. Customer
shall have the right to deliver to Company the maximum
capacities set forth in Section 2.1(iii) in addition to the
gas delivered by Customer for credit to the Fuel Account.
6.1(e) The fees payable for each MMBtu of gas
delivered to Company for injection and for each MMBtu of gas
redelivered to Customer hereunder, as provided for in
section 6.1(c), shall be subject to adjustment, upon
application to and approval by the appropriate regulatory
commission, to reflect increases or decreases in the cost of
maintenance, supplies and other variable expenses incurred
by Company in performing the services hereunder. Customer
shall have the right to contest any increase sought
hereunder before the appropriate regulatory commission. No
such adjusted fee shall exceed, however: (i) the fee herein
provided; multiplied by (ii) the sum of one (1) plus the
percentage change in the Gross National Product Implicit
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Price Deflator (the "Index") for the December of the then-
current calendar year as compared to such Index for
December, 1990.
6.2 Notwithstanding the above, in the event that Company
elects to expand the Storage Facilities as referenced in
section 9.1, the rates and charges payable hereunder during the
remaining portion of the initial ten (10) years hereof shall be
redetermined such that the sum of: (a) the D1 storage charge,
as provided in section 6.1(a); and (b) the D2 deliverability
charge, as provided in section 6.1(b); will be reduced such that
the total reservation charges payable hereunder during each month
shall not exceed eighty percent (80%) of the total reservation
charges payable hereunder prior to such expansion and rate
redetermination.
6.3 The charges payable hereunder for the remainder of the
term hereof following the tenth (10th) year (after the
Commencement Date) may be redetermined by the appropriate
regulatory body in accordance with this section 6.3. Company
shall have the right, upon its election, or shall be obligated,
upon request of Customer, to submit cost-of-service information
to the appropriate regulatory authority for a review of the rates
charged hereunder and to request a determination by such
regulatory authority of a rate for the remaining term hereof.
Customer shall have the right to take part in such proceedings
and to contest the proposed rates to the full extent allowed.
Company shall provide Customer not less than thirty (30) days
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prior written notice of Company's intent to file for a new rate
as herein provided. In the event that the rates resulting from
such redetermination are in excess of one hundred and ten percent
(110%) of the rates specified in Section 6.1, then Customer shall
have the right to terminate this Contract upon sixty (60) days'
prior written notice; provided, however, that during such sixty
(60) day period following the receipt of Customer's notice,
Company shall have the option, without obligation, to agree to
charge Customer rates which do not exceed one hundred and ten
percent (110%) of the rates set forth in Section 6.1 and, in such
event, this Contract shall continue for the remaining term.
Company shall provide Customer written notice of any such
election before the expiration of said sixty (60) day period and,
shall therein specify the rate to be charged hereunder.
ARTICLE VII
NOTICES
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7.1 Whenever any notice, request, demand, statement or
payment is required or permitted to be given under any provision
of this Contract, unless expressly provided otherwise, such shall
be in writing, signed by or on behalf of the person giving the
same, and shall be deemed to have been given and received upon
the actual receipt (including the receipt of a telecopy or
facsimile of such notice) at the address of the parties as
follows:
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Company:
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For Notices: Endevco Industrial Gas Sales Company
8080 N. Central Expressway
Twelfth Floor, Lock Box 47
Dallas, Texas 75206
For Payments: Endevco Industrial Gas Sales Company
P. O. Box 97611
Dallas, Texas 75397
Customer: Connecticut Natural Gas Corporation
-------- P. O. Box 1500
100 Columbus Avenue
Hartford, Connecticut 06144-1500
7.2 Operating communications made by telephone or other
mutually agreeable means shall be confirmed in writing or by
telecopy within two (2) days following same if requested by
either party. To facilitate such operating communications on a
daily basis, lists of names, telephone and telecopy numbers of
appropriate operating personnel shall be exchanged by and between
Company and Customer before commencement of service under this
Contract. Such lists shall be updated from time to time if
changed.
7.3 The addresses of the parties may be revised upon
written notice given in accordance herewith, designating in such
writing the new address of the party so affected.
ARTICLE VIII
GENERAL TERMS AND CONDITIONS
----------------------------
The General Terms and Conditions attached hereto as Exhibit "A"
are hereby incorporated herein and made a part of this Contract
as if fully set forth herein. Any conflict or inconsistency,
15
either in construction or interpretation, between the terms
hereof and the General Terms and Conditions attached hereto shall
be resolved in favor of the terms hereof.
ARTICLE IX
ADDITIONAL STORAGE OPTION
-------------------------
9.1 Company anticipates that it may elect to expand the
Storage Facilities at some time following initial storage
operations. In the event that Company so elects to expand the
Storage Facilities, Company hereby grants Customer an option on a
pro rata portion of any increased capacities (for storage,
withdrawal or injection) developed by Company in the Storage
Facilities. Such proportionate share shall equal (i) the total
additional capacity (for storage, withdrawal or injection)
developed by Company in such Storage Facilities multiplied by
(ii) a fraction, the numerator of which shall equal Customer's
rights to such capacity hereunder (MQS, MDWQ or MDIQ) and the
denominator of which shall equal the total storage capacity (for
storage, withdrawal or injection) of the Storage Facilities
immediately preceding such increase in capacity. Customer shall
exercise its option, if at all, in accordance with section 9.2
below.
9.2 In the event that Company makes the determination to
increase any capacity (for storage, withdrawal or injection) at
the Storage Facilities, Company shall so notify Customer in
writing. Such notice shall contain the terms and conditions upon
which Company will contract with other parties for such
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capacity(ies), which terms shall be similar to those provided in
this Contract. For ninety (90) days following receipt of such
notice, Customer shall have the right, without obligation, to
contract for additional storage rights in the Storage Facilities
upon the terms and conditions offered by Company and reflected in
the notice or such other terms as may be agreed to by Customer
and Company. Should Customer elect to contract for such
additional rights, and provide Company with written notice of
such election within such ninety (90) day period, Company shall
provide Customer with formal contracts for execution. The
failure of Customer to provide written notice to Company of its
election to contract for such additional capacity rights within
such ninety (90) day period, or the failure of Customer,
following such election, to execute and return to Company the
contract provided to Customer within thirty (30) days following
Customer's receipt of same, shall be deemed a waiver of
Customer's option on such capacity(ies).
ARTICLE X
MISCELLANEOUS
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10.1 HEADINGS. The subject headings of the articles and
sections of this Contract are intended for the sole purpose of
convenient reference and are not intended, nor shall the same be
construed, to be a part of this Contract or considered in any
interpretation hereof.
10.2 AMENDMENT. Neither this Contract nor any provisions
hereof may ever be amended, changed, modified or supplemented
17
except by an agreement in writing, duly executed by the party to
be charged with the same.
10.3 WAIVER. No failure by either party to enforce the
performance of any obligation of the other party under this
Contract shall operate as a waiver of such obligation or default,
or as a waiver of any other right or default, whether of a like
or different character.
10.4 CHOICE OF LAW. As to all matters of construction and
interpretation, this Contract shall be interpreted, construed and
governed by the laws of the State of Texas.
10.5 SUCCESSION. Either party may assign its rights, titles
or interests hereunder to any individual, bank, trustee, company
or corporation as security for any note, notes, bonds or other
obligations or securities of such assignor, but not otherwise,
without the written consent of the other party hereto, which
consent shall not be unreasonably withheld. No assignment
provided for hereunder shall in any way operate to enlarge, alter
or change any obligation of the other party hereto nor shall the
assignee be relieved of its obligations hereunder without the
express written consent of the non-assigning party.
10.6 RIGHT OF EXAMINATION. Both Company and Customer shall
have the right to examine, at any reasonable time, the books,
records, charts and any operating data of the other to the extent
reasonably necessary to verify the accuracy of any statement,
chart or computation made under or pursuant to the provisions of
this Contract. All books, records and charts related to any
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statement, charge or computation made hereunder shall be retained
and available for review or inspection for a period of two years.
10.7 ENTIRE AGREEMENT. This Contract contains the entire
agreement and understanding of the parties hereto and there are
no agreements, understandings or representations, either oral or
in writing, except as set forth herein. That certain Precedent
Agreement, between Customer and Company, is hereby expressly
superseded and terminated by the execution hereof.
10.8 AUTHORITY. Company and Customer each hereby represents
and warrants that it has the full right, power and authority to
enter into this Contract, and that this Contract will not violate
the provisions of any other contract or agreement to which it is
a party.
IN WITNESS WHEREOF, the parties have executed this Contract
in one or more copies or counterparts, each of which shall
constitute and be an original of this Contract effective between
the parties as of the date first-above written.
COMPANY:
ATTEST: ENDEVCO INDUSTRIAL GAS SALES
COMPANY
________________________________ By: _______________________
Its: _______________________
CUSTOMER:
ATTEST: CONNECTICUT NATURAL GAS
CORPORATION
______________________________ By: ________________________
Its: ________________________
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EXHIBIT "A"
TO GAS STORAGE CONTRACT BETWEEN
ENDEVCO INDUSTRIAL GAS SALES COMPANY
AND CONNECTICUT NATURAL GAS CORPORATION
DATED ________________________
GENERAL TERMS AND CONDITIONS
----------------------------
These General Terms and Conditions ("General Terms") are
attached to and incorporated into the above-referenced GAS
STORAGE CONTRACT between ENDEVCO INDUSTRIAL GAS SALES
COMPANY (herein referred to as "Company") and CONNECTICUT
NATURAL GAS CORPORATION, a Connecticut corporation (herein
referred to as "Customer").
ARTICLE I
DEFINITIONS
-----------
For the purposes of this Contract, unless expressly stated
otherwise, the following definitions shall be applicable.
1.1 The term "Btu" shall mean British Thermal Units.
1.2 A "day" shall mean the twenty-four (24) hour period
beginning at 7:00 a.m. Jackson, Mississippi time on each calendar
day and ending at 7:00 a.m. Jackson, Mississippi time on the
following calendar day.
1.3 "Contract" shall mean the above-referenced Gas Storage
Contract together with these General Terms and all other
attachments hereto or thereto.
1.4 The term "gas" shall mean natural gas in its natural
state, produced from wells, including casinghead gas produced
with crude oil, natural gas from gas wells and residue gas
resulting from processing both casinghead gas and gas well gas.
1
1.5 The term "Mcf" shall mean one thousand (1,000) cubic
feet at a pressure of fifteen and twenty-five thousandths
(15.025) psia and at a temperature of sixty degrees (60 degrees)
Fahrenheit.
1.6 The term "MMBtu" shall mean 1,000,000 Btu.
1.7 A "month" shall mean that period of time beginning at
7:00 a.m. Jackson, Mississippi time on the first day of a
calendar month and ending at 7:00 a.m. Jackson, Mississippi time
on the first day of the following calendar month; provided, that,
the first month hereunder shall commence on the first day of the
calendar month in which the Commencement Date occurs, and the
last month hereunder shall end on the date that this Contract
terminates.
1.8 "Point(s) of Delivery" shall mean the point or points,
as identified on Exhibit "B" of the Contract, at which gas is
received by Company for injection into storage.
1.9 "Point(s) of Redelivery" shall mean the point or
points, as identified on Exhibit "B" of the Contract, at which
gas is tendered by Company to Customer for delivery from storage.
1.10 The term "psia" shall mean pounds per square inch
absolute.
1.11 The term "psig" shall mean pounds per square inch
gauge.
1.12 "Storage Facilities" shall be as defined in the
"WHEREAS" clauses of the Contract.
General Terms - Page 2
1.13 The term "year" shall mean a period of twelve (12)
consecutive months.
ARTICLE II
QUALITY
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The gas delivered by either party to the other hereunder
shall meet the quality specifications of the transporting
pipeline which receives or delivers such gas at the Point(s) of
Delivery or Redelivery and shall, in addition, be of such quality
that it shall meet the following specifications, if such
standards are more stringent:
a. Be commercially free of dust, gum, gum-forming
constituents, gasoline, and other solid and/or liquid
matter, including but not limited to water, gas
treating chemicals and well completion fluids and
debris, which may become separated from the gas during
transportation thereof.
b. Contain not more than one quarter (1/4) grain of
hydrogen sulphide per one hundred (100) cubic feet, as
determined by the cadmium sulfate quantitative test,
nor more than nine (9) grains of total sulfur per one
hundred (100) cubic feet.
c. The gas delivered hereunder shall not contain more than
two-tenths of one percent (0.2%) by volume of oxygen,
and shall not contain more than two percent (2%) by
General Terms - Page 3
volume of carbon dioxide; and shall not contain more
than two percent (2%) by volume of nitrogen.
d. Have a heating value of not less than nine hundred
eighty (980) Btu's per cubic feet.
e. Have a temperature of not more than one hundred twenty
degrees Fahrenheit (120 degrees F), nor less than forty
degrees Fahrenheit (40 degrees F).
f. Have been dehydrated by any method other than the use
of a calcium chloride as desiccant, for removal of
entrained water in excess of seven (7) pounds of water
per million (1,000,000) cubic feet of gas.
ARTICLE III
PRESSURE
--------
Company shall deliver gas to Customer from storage hereunder
at pressures sufficient to enter the transporting pipeline's
facilities at the Point(s) of Redelivery against the operating
pressures maintained in such pipeline from time to time, provided
that Company shall not be required to deliver gas at pressures in
excess of 960 psig. Customer shall deliver gas to Company for
injection at the Point(s) of Delivery at the pressures as may be
available from time to time in the transporting pipeline's
facilities at such points, but in no event shall such pressures
be less than 550 psig or greater than Company's maximum allowable
operating pressure.
General Terms - Page 4
ARTICLE IV
TITLE AND RISK OF LOSS
----------------------
4.1 Title to the natural gas stored by Company and to
Customer hereunder shall, at all times, be in Customer and,
except as provided in Section 4.2 Company makes no warranty of
title whatsoever. Customer warrants for itself, its and assigns,
that it will have at the time of delivery of gas storage
hereunder good title or valid right to deliver such stored
hereunder. Customer warrants for itself, its successors assigns,
that the gas it delivers hereunder shall be free and of all
liens, encumbrances, or claims whatsoever; and that it indemnify
Company and save it harmless from all claims, actions, damages,
costs and expenses arising directly or from or with respect to
the title to gas tendered to hereunder.
4.2 Company warrants that it shall neither cause nor allow
any cloud or encumbrance of any nature to arise by, through or
under Company with respect to Customer's title to any gas
tendered to Company for storage, and agrees to redeliver such gas
pursuant to this Contract free from all liens and adverse claims
arising by, through or under Company, and that it will indemnify,
defend, protect, and save Customer harmless from all claims,
suits, actions, damages, costs and expenses arising directly or
indirectly from the same.
4.3 As between Customer and Company: Customer shall be in
control and possession of the gas prior to delivery to Company
General Terms - Page 5
for injection at the Point(s) of Delivery and after redelivery by
Company to Customer at the Point(s) of Redelivery, and, shall
indemnify, defend and hold Company harmless from any damage or
injury caused thereby except for damages and injuries caused by
the negligence of Company; and, Company shall be in control and
possession of the gas after the receipt of the same for injection
at the Point(s) of Delivery and until redelivery by Company to
Customer at the Point(s) of Redelivery , and, shall indemnify,
defend and hold Customer harmless from any damage or injury
caused thereby, except for damages and injuries caused by the
negligence of Customer. The risk of loss for all gas injected
into, stored in and withdrawn from the Storage Facilities shall
be and remain with the party having control and possession of the
gas as herein provided.
ARTICLE V
MEASUREMENT
-----------
5.1 The unit of volume for measurement of gas delivered
hereunder shall be one (1) cubic foot of gas at a base
temperature of sixty degrees Fahrenheit (60 degrees F) and at an
absolute pressure of fifteen and twenty-five thousandths (15.025)
pounds per square inch. All fundamental constants, observations,
records, and procedures involved in determining and/or verifying
the quantity and other characteristics of gas delivered hereunder
shall, unless otherwise specified herein, be in accordance with
the standards prescribed in American Gas Association ("A.G.A.")
General Terms - Page 6
Gas Measurement Committee Report No. 3, as now and from time to
time amended or supplemented. All measurements of gas shall be
determined by calculation into terms of such unit. All
quantities given herein, unless expressly stated otherwise, are
in terms of such unit. Notwithstanding the foregoing, it is
agreed that, for all purposes, the Btu content of the gas
received and delivered by Company hereunder shall be measured on
an "as delivered" basis rather than a fully saturated or "wet"
basis.
5.2 Company, at its sole expense, shall install, and
operate, or cause to be installed, maintained and operated, the
measurement facilities required hereunder. Said measurement
facilities shall be so equipped with orifice meters, recording
gauges, or other types of meters of standard make and design
commonly acceptable in the industry, as to accomplish the
accurate measurement of gas delivered hereunder. The changing of
charts, calibrating and adjustment of meters shall be done by
Company or its agent.
5.3 The accuracy of Company's measuring equipment shall be
verified by Company at least once in each thirty (30) day
period. If either party desires a special test of any measuring
equipment, it will promptly notify the other party and the
parties shall then cooperate to secure a prompt verification of
the accuracy of such equipment. The expenses of any such special
test, if requested by Customer, shall be borne by Customer if the
measuring equipment tested is found to be accurate within the
General Terms - Page 7
limit of plus or minus two percent (2%) of error. For the
purposes of measurement and meter calibration, the atmospheric
pressure shall be assumed to be fourteen and seventy-three
hundredths (14.73) pounds per square inch, irrespective of
variations in natural atmospheric pressure from time to time.
Company and Customer, upon request, shall have the right to be
present at any test of any measuring equipment, including any
check measuring equipment installed by Customer at its sole
expense.
5.4 If upon testing, the metering equipment is found to be
inaccurate, in the aggregate, by two percent (2%) or more, either
plus or minus, registration thereof and any payment based upon
such registration shall be corrected at the rate of such
inaccuracy for any period of inaccuracy which is definitely known
or agreed upon, or if not known or agreed upon, then for a period
extending back one-half (1/2) of the time elapsed since the day
of the last calibration, not exceeding, however, forty-five (45)
days. Following any test, any metering equipment found to be
inaccurate to any degree shall be adjusted immediately to measure
accurately; however, if any inaccuracy is less than two percent
(2%), all prior readings and measurements shall be deemed to be
accurate and no adjustments to any prior reading shall be made.
If, for any reason, any meter is registering inaccurately or is
out of service or out of repair so that the quantity of gas
delivered through such meter cannot be ascertained or computed
from the readings thereof, the quantity of gas so delivered
General Terms - Page 8
during such period shall be estimated and agreed upon by the
parties hereto upon the basis of the best available data
determined,
a. by using the registration of any check measuring
equipment, if installed and registering accurately or
in the absence of (a);
b. by correcting the error if the percentage of error is
ascertainable by calibration, test, or mathematical
calculation, or in the absence of both (a) and (b);
c. by estimating the quantity of gas deliveries by
deliveries during preceding periods under similar
conditions when the meter was registering accurately.
5.5 The measurement hereunder shall be corrected for
deviation from Boyle's Law at the pressure and temperature under
which gas is delivered hereunder.
ARTICLE VI
BILLINGS AND PAYMENTS
---------------------
6.1 On the tenth (10th) day of each month, Company shall
render to Customer a statement for the preceding month properly
identifying the applicable Point(s) of Delivery and Point(s) of
Redelivery and showing the total quantity of gas received from
and delivered to Customer hereunder, the amount due therefor, the
amount of Customer's gas in storage as of the close of such month
and information sufficient to explain and support any adjustments
General Terms - Page 9
made by Company (in accordance with section 6.3 below) in
determining the amount billed.
6.2 Customer shall pay Company the full amount reflected on
the statements rendered within fifteen (15) days of its receipt
of same. If the fifteenth (15th) day shall fall upon a weekend
or legal holiday, then such payment shall be made on the first
regular business day following such fifteenth (15th) day. In the
event that Customer fails to pay such amounts when due, interest
shall accrue on all unpaid amounts from the date due until paid
at a rate of interest equal to the lesser of: (i) the rate of
interest quoted as the "prime rate" of NCNB Texas National Bank -
- Dallas, Texas to its largest and most credit-worthy commercial
customers; or (ii) the highest legal rate of interest allowed by
law.
6.3 In the event an error is discovered in the amount
billed in any statement rendered by Company, such error shall be
adjusted within thirty (30) days of the discovery of the error.
In the event a dispute arises as to the amount payable in any
statement rendered, Customer shall pay the amount shown payable
to Company in the statement which is not in dispute. Any
overcharges collected by Company pursuant to this section 6.3
shall be remitted to Customer, with interest, calculated as
provided in section 6.2, from the date such overcharges are
received by Company until repaid. Such payment shall not be
deemed to be a waiver of the right by Customer to recoup any
overpayment. All statements shall be considered final, and any
General Terms - Page 10
and all objections thereto be deemed waived, unless made in
writing within twenty-four (24) months of Customer's receipt
thereof.
ARTICLE VII
TAXES
-----
7.1 Subject to the provisions of Section 7.3, Customer
agrees to pay to Company, by way of reimbursement, within fifteen
(15) days of receipt of an invoice for same (pro-rated among all
customers), all new taxes enacted and levied or imposed upon
Company after the Commencement Date and, any increases in
existing taxes which may be made effective after the Commencement
Date, which arise out of the gas storage services provided
hereunder. In the event that any additional taxes or increases
in taxes are imposed with respect to the storage of gas hereunder
and, should Company elect not to challenge the same, then
Customer shall be subrogated to Company's rights to challenge
same.
7.2 The term "taxes" as used herein, shall mean all taxes
which are now in existence or which may in the future be levied
upon Company, or its facilities or the storage of gas hereunder
and and arising out of the gas storage services to be provided
hereunder including, but not limited to, street and alley rental
tax, licenses, fees and any other taxes, charges or fees of any
kind levied, assessed or made by any governmental authority on
the act, right or privilege of transporting, handling or
General Terms - Page 11
delivering gas or using Company's Storage Facilities, which is
measured by the volume, heating value, value of the gas, or any
fee in respect to the gas or the storage,transportation or other
handling thereof (excluding, however, real property, ad valorem,
capital stock, income or excess profit taxes, or general
franchise taxes imposed on corporations on account of their
corporate existence or on their right to do business within the
state as a foreign corporation and similar taxes).
7.3 Customer shall not be obligated to reimburse Company
pursuant to Section 7.1 in any year in an amount in excess of
five percent (5%) of the cumulative total of the monthly demand
charges paid by Customer to Company in such year. In the event
that the total of the increases in taxes and additional taxes
exceed such five percent (5%) amount, then Company shall have the
option of paying the same or of seeking a determination from the
appropriate regulatory agency that such additional taxes or
increases in taxes are prudent and appropriate for inclusion in
Company's rates. Subject to the following provisions, in the
event that such regulatory agency determines that such additional
and increased taxes including, without limitation, those in
excess of said five percent (5%) amount, are appropriate for
inclusion, Customer shall have the option of either paying such
approved rate increases or terminating this Contract, upon
providing Company sixty days' prior written notice; provided,
however, that upon receipt of Customer's notice of termination,
Company shall have the option, without obligation, to charge
General Terms - Page 12
Customer an increased amount which does not exceed such five
percent (5%) amount and, in such event, Customer's notice of
termination shall be of no force or effect and this Contract
shall continue in accordance with its terms. Company shall
provide Customer written notice of any such election within such
sixty (60) day period. Customer shall be given notice and shall
have the right to participate in such rate determination and
oppose the appropriateness of including the additional or
increased taxes in Company's rates.
ARTICLE VIII
REGULATORY BODIES
-----------------
This Contract is subject to all present and future valid
laws and lawful orders of all regulatory bodies now or hereafter
having jurisdiction of either or both the parties; and should
either of the parties, by force of any such law or regulation
imposed at any time during the term of this Contract, be rendered
unable, wholly or in part, to carry out its obligations under
this Contract, other than Customer's obligation to make payments
due hereunder then, this Contract shall continue nevertheless and
shall then be deemed modified to conform with the requirements of
such law or regulation. Notwithstanding the above, this Contract
shall not be deemed to be so modified if such law or regulation
substantially and materially prohibits Company from providing
services to Customer hereunder substantially in accordance with
the terms set forth in this Contract and, in such event, Company
General Terms - Page 13
and Customer shall negotiate in good faith to amend the terms of
this Contract such that such law or regulation may be complied
with and both Company and Customer will continue to receive the
rights and benefits herein provided. This Contract is expressly
made subject to any and all tariff and other filings made by
Company and approved by any federal or state regulatory body
provided, that Company will not, without Customer's consent, seek
to alter the firm character of the storage services herein
provided or to reduce the term of this Contract. In the event
that any regulatory body having jurisdiction over this Contract
prohibits Company from collecting rates for the services provided
hereunder which are at least equal to the rates and charges
provided for in this Contract, then Company shall have the right
to terminate this Contract. In the event that any regulatory
body having jurisdiction requires Company to collect rates for
services provided hereunder which are in excess of the rates
herein provided, then Customer shall have the right to terminate
this Contract.
ARTICLE IX
FORCE MAJEURE
-------------
9.1 In the event of either party hereto being rendered
unable, wholly or in part, by force majeure to carry out its
obligations under this Contract, other than to make payments
hereunder (except as provided in section 9.3 below), the
obligations of the party, as far as they are affected by such
General Terms - Page 14
force majeure, shall be suspended during the continuance of any
inability so caused, but for no longer period, and such cause
shall as far as possible be remedied with all reasonable
dispatch. The party so affected by such event of force majeure
shall give written notice, including reasonably full particulars
of such force majeure, in writing or by telegraph to the other
party as soon as possible but in no event more than ten (10) days
after the occurrence of the cause so relied upon.
9.2 The term "force majeure" as employed herein shall mean,
without limitation, acts of God, strikes, lockouts, or other
industrial disturbances, acts of the public enemy, wars,
blockades, insurrection, riots, epidemics, landslides, lightning,
earthquakes, fires, storms, floods, washouts, arrest and
restraints of governments and people, civil disturbances,
explosions, breakage and/or accidents to machinery, lines or
pipe, freezing of lines or pipe, freezing of lines of pipe,
inability to obtain or delay in obtaining rights-of-way,
material, supplies, labor or permits, or refusal by pipelines,
which are transporting on Customer's behalf, to receive or
deliver gas hereunder. It is understood and agreed that the
settlement of strikes or lockouts shall be entirely within the
discretion of the party having the difficulty, and that the above
requirements that any force majeure shall be remedied with all
reasonable dispatch shall not require the settlement of strikes
or lockouts by acceding to the demands of any opposing party when
such course is inadvisable in the discretion of the party having
General Terms - Page 15
the difficulty. Company shall utilize all reasonable efforts to
design, operate and maintain its facilities in a manner which
minimizes the potential for freezing of wells or lines of pipe.
9.3 In the event that Company is, due to an event of force
majeure, as herein defined, unable to provide storage services,
in whole or in part, under this Contract, then the obligation of
Customer to make payment of demand charges hereunder shall
thereafter be waived or reduced proportionately until service is
again made available hereunder.
ARTICLE X
DEFAULT AND TERMINATION
-----------------------
10.1 If either party hereto shall fail to perform any of the
covenants or obligations imposed upon it by virtue of this
Contract (except where such failure shall be excused under any of
the provisions hereof), then in such event the other party may,
at its option, terminate this Contract by proceeding as follows:
the party not in default shall cause a written notice to be
served upon the party in default, stating specifically the cause
for terminating this Contract and declaring it to be the
intention of the party giving the notice to terminate the same;
whereupon, the party in default shall have thirty (30) days after
receipt of the aforesaid notice in which to remedy or remove the
cause or causes of default stated in the notice of termination
and if, within said period of thirty (30) days, the party in
default does so remedy and remove said cause or causes, and fully
General Terms - Page 16
indemnifies the party not in breach, then such notice shall be
nullified and this Contract shall continue in full force and
effect. In the event the party in default does not so remedy and
remove the cause or causes of default, or does not fully
indemnify the party giving the notice for such party's actual
damages as a result of such breach within said period of thirty
(30) days, then this Contract shall become null and void from and
after the expiration of said period; provided, however, that if
such default be remedied but no indemnification therefor has been
made due to a bona fide dispute between the parties as to the
amount thereof, then this Contract shall not terminate, but the
party not in default shall have the right to seek recovery of its
actual damages as provided by law. Any termination for breach of
this Contract shall be carried out strictly in accordance with
this section. Nothing in this Section 10.1 shall be construed to
limit in any way the remedies available to either party for
breach of this Contract except for the right to terminate.
10.2 Any cancellation of this Contract pursuant to the
provisions of this Article X shall be without prejudice to the
right of the party not in default to collect any amounts then due
it and without waiver of any other remedy to which the party not
in default may be entitled.
10.3 In the event of termination, cancellation or expiration
of this Contract and, upon such occurrence, there is gas in
storage for Customer's account, this Contract shall continue in
force and effect for the sole purpose of withdrawal and delivery
General Terms - Page 17
of and payment for storage services of said gas for an additional
ninety (90) days.
General Terms - Page 18
EXHIBIT "B"
TO GAS STORAGE CONTRACT BETWEEN
ENDEVCO INDUSTRIAL GAS SALES COMPANY
AND CONNECTICUT NATURAL GAS CORPORATION
DATED ___________________________
Maximum Quantity
POINT(S) OF DELIVERY (In MMBtu's)
-------------------- ----------------
Interconnection between the Storage 5,000
Facilities and the pipeline facilities
of Transco in Covington County,
Mississippi
Interconnection between the Storage 5,000
Facilities and the pipeline facilities
of Tennessee in Forrest County,
Mississippi
Gas may be scheduled for delivery at either or both of the Points
of Delivery, in quantities up to the maximum quantities indicated
for each such point, but the cumulative total of deliveries at
both Points of Delivery shall not exceed the MDIQ stated in the
Contract, unless otherwise agreed by Company.
Maximum Quantity
POINT(S) of REDELIVERY (In MMBtu's)
---------------------- ----------------
Interconnection between the Storage 10,000
Facilities and the pipeline facilities
of Transco in Covington County,
Mississippi
Interconnection between the Storage 10,000
Facilities and the pipeline faciliites
of Tennessee in Forrest County,
Mississippi
Gas may be scheduled for delivery at either or both of the Points
of Redelivery, in quantities up to the maximum quantities
indicated for each such point, but the cumulative total of
deliveries at both Points of Redelivery shall not exceed the MDWQ
stated in the Contract, unless otherwise agreed by Company.