Exhibit 10.1
AGREEMENT FOR FIRM INTRASTATE TRANSPORTATION
OF NATURAL GAS IN THE
STATE OF LOUISIANA
BETWEEN
LOUISIANA INTRASTATE GAS COMPANY L.L.C.
AND
TRANS LOUISIANA GAS COMPANY
A DIVISION OF ATMOS ENERGY CORPORATION
TABLE OF CONTENTS
ARTICLE DESCRIPTION PAGE
I. Definitions 2
II. Transportation Service 4
III. Pressure 6
IV. Facilities 6
V. Scheduling and Transportation Limitations 7
VI. Rates 9
VII. Term 10
VIII. Notices and Addresses 11
IX. General Conditions 12
X. Miscellaneous 12
Signatures 15
Exhibit A
Exhibit B
AGREEMENT FOR FIRM INTRASTATE TRANSPORTATION
OF NATURAL GAS IN THE
STATE OF LOUISIANA
THIS AGREEMENT is made and entered into this 22nd day of
December, 1997, to be effective as of the Effective Date, by and
between LOUISIANA INTRASTATE GAS COMPANY L.L.C., a Louisiana
limited liability company, hereinafter referred to as
"Transporter" and TRANS LOUISIANA GAS COMPANY, a division of
Atmos Energy Corporation, a Texas and Virginia corporation,
hereinafter referred to as "Customer."
WITNESSETH :
WHEREAS, Customer has or will have gas available which is
produced in the state of Louisiana and is capable of being
delivered into Transporter's pipeline system; and
WHEREAS, Customer desires that Transporter transport such gas on
behalf of Customer; and
WHEREAS, Transporter has the ability in its system to move gas
from certain parts of Louisiana to certain other parts of
Louisiana to Customer or for further transportation to Customer;
and
WHEREAS, Transporter and Customer are of the opinion that the
transaction referred to above is an agreement for the
transportation of gas that is not committed or dedicated to
interstate commerce, that such gas is produced entirely within
the state of Louisiana, and that such transportation will not
cause either Transporter or Customer to become regulated as a
"Natural Gas Company" within the meaning of the Natural Gas Act
of 1938 (15 USC 717, et. seq.), or require Transporter or
Customer to invoke a Hinshaw exemption pursuant to Section 1(c)
of the Natural Gas Act to avoid such jurisdiction;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto covenant
and agree as follows:
ARTICLE I.
DEFINITIONS
Except as otherwise herein provided, the following words and/or
terms as used in this Agreement shall have the following scope
and meaning:
1.1 The term "day" shall mean a period of twenty-four (24)
consecutive hours beginning and ending at 9:00 a.m. Central Clock
Time.
1.2 The term "month" shall mean the period beginning at 9:00
A.M. Central Clock Time on the first day of the calendar month
and ending at 9:00 A.M. Central Clock Time on the first day of
the next succeeding calendar month.
1.3 The term "year" shall mean a period of three hundred
sixty-five (365) consecutive days provided, however, that any
such year which contains a date of February 29 shall consist of
three hundred sixty-six (366) consecutive days.
1.4 The term "contract year" shall mean one-year periods
beginning at 9:00 A.M. Central Clock Time on the Effective Date.
1.5 The terms "gas" and "natural gas" shall mean natural gas
as produced in its natural state whether or not stored or
processed prior to delivery, natural gas or any component thereof
that has been previously liquefied and restored to its gaseous
state prior to delivery to Customer, gas synthesized or
manufactured from oil, naphtha, coal or any other material that
meets the quality standards contained in this Agreement and which
Transporter elects to deliver in lieu of or commingled with one
or more of the types of gas described herein.
1.6 The term "MCF" shall mean one thousand (1,000) cubic feet
of gas as determined on the measurement basis set forth in
Article B-1 of Exhibit "B" hereto.
1.7 The terms "British thermal unit" or "Btu" shall mean the
amount of heat required to raise the temperature of one pound of
pure water from fifty-eight and five-tenths degrees (58.5)
Fahrenheit to fifty-nine and five-tenths degrees (59.5)
Fahrenheit.
1.8 The term "MMBtu" shall mean one million (1,000,000) Btu's.
1.9 The term "heating value" shall mean the gross number of
British thermal units, sometimes hereinafter referred to as
Btu's, produced by the combustion at constant pressure of the
amount of gas saturated with water vapor which would occupy a
volume of one (1) cubic foot at a temperature of sixty (60)
degrees Fahrenheit, under a pressure equivalent to that of thirty
(30) inches of mercury at thirty-two (32) degrees Fahrenheit and
under gravitational force (acceleration 980.665 cm. per sec. per
sec.) with air of the same temperature and pressure as the gas,
when the products of combustion are cooled to the initial
temperature of the gas and air, and when the water formed by
combustion is condensed to the liquid state, and expressed at a
pressure base of 15.025 pounds per square inch absolute and
adjusted as delivered, provided; however, gas containing a water
content not exceeding seven (7) pounds per MMcf shall be
considered dry. Where a chromatograph is used instead of a
calorimeter, the gross dry Btu shall be determined by analysis
but shall be on the equivalent basis as above.
1.10 The term "equivalent quantity" shall mean a quantity
of gas of equal heating value as determined by the product of the
volumes in cubic feet and the heating value per cubic foot, minus
Customer's pro rata share of the quantity of gas consumed by
Transporter as compressor fuel, company use and unaccounted for,
which shall not exceed 1%.
1.11 The term "Points of Delivery" shall mean those points
identified on Exhibit "A" as Points of Delivery and such other
points as the parties hereto may mutually agree.
1.12 The term "Points of Redelivery" shall mean those points
identified on Exhibit "A" as Points of Redelivery and such other
points as the parties hereto may mutually agree.
1.13 The term Effective Date shall mean July 1, 1997.
1.14 The term Sales Agreement shall mean that certain
Agreement For Natural Gas Service for Distribution and Resale
dated October 28, 1991, as amended by amendment of even date
herewith, between Customer, as buyer, and Transporter, as seller.
1.15 The term Intrastate Storage Agreement shall mean
that certain Firm Intrastate Gas Storage Agreement of even date
herewith by and between Equitable Storage Company L.L.C. and
Customer.
1.16 The term 311 Storage Agreement shall mean that
certain Firm 311(a)(2) Gas Storage Agreement of even date
herewith by and between Equitable Storage Company L.L.C. and
Customer.
1.17 The term 311 Transportation Agreement shall mean
that certain Agreement for Firm 311(a)(2) Transportation of
Natural Gas in the State of Louisiana of even date herewith by
and between Transporter and Customer.
ARTICLE II.
TRANSPORTATION SERVICE
2.1 Commencing on the Effective Date, Customer agrees to
tender and Transporter agrees to accept at the Points of Delivery
for transportation hereunder a quantity of gas each day during
the term of this Agreement, scheduled pursuant to the provisions
of Article V below, up to 80,000 MMBtu ( Maximum Daily
Quantity ). In the event Customer exceeds 80,000 MMBtu on any
given day, under the combination of this Agreement and the 311
Transportation Agreement, then the Maximum Daily Quantity under
this Agreement, in combination with the Demand Quantity under the
311 Transportation Agreement, shall be increased to such higher
amount for the remaining term of this Agreement. Transporter
shall redeliver, or cause to be redelivered, an equivalent
quantity of gas to Customer, or for Customer's account, at the
Points of Redelivery. Transporter's obligation to accept gas at
any single Point of Delivery and to redeliver gas at any single
Point of Redelivery, to the extent specified in Exhibit "A,"
shall be limited to that quantity so specified in Exhibit "A"
hereto attached as to each such point, or such greater quantity
as Transporter in its sole discretion may accept or redeliver
from time to time at such points depending on Transporter's
operating requirements.
2.2 The transportation service provided hereunder shall be for
intrastate natural gas only and on a firm basis; provided
however, such service shall be subject to the force majeure
conditions of Article B-IV of Exhibit B attached hereto and
incorporated herein. Customer hereby commits to tender to
Transporter for transportation hereunder volumes of natural gas
approximately equal to the volumes currently physically served
(both sales and transportation) by Transporter to Customer, up to
the Maximum Daily Quantity. However, if Customer desires to
utilize the transportation service under the 311 Transportation
Agreement, it may do so and Customer and Transporter hereby agree
that the volumes and payment received by Transporter thereunder
shall be credited against Customer s rights and obligations
hereunder. In the event amount received by Transporter under the
311 Transportation Agreement is less than the amount provided
under Article VI hereof, then Customer shall pay to Transporter
each month, as a transportation surcharge under this Agreement,
the difference between the rates under this Agreement and the 311
Transportation Agreement times the volume transported under the
311 Transportation Agreement during such month.
ARTICLE III.
PRESSURE
3.1 Customer shall cause delivery of the gas at the Points of
Delivery at a pressure sufficient to allow the gas to enter
Transporter's system at the varying pressures that may exist on
such system from time to time; provided, however, that if
specified for the Points of Delivery on Exhibit "A" such pressure
shall not exceed the maximum allowed delivery pressure specified
for each such Point.
3.2 Transporter shall deliver, or cause to be delivered, the
gas transported hereunder for the account of Customer at the
Points of Redelivery at pressures that may exist in Transporter's
pipeline from time to time; provided, however, that if specified
for the Points of Redelivery on Exhibit "A" hereto attached, the
pressure of the gas delivered by Transporter shall not exceed the
maximum allowed redelivery pressure specified for each such
Point.
ARTICLE IV.
FACILITIES
4.1 Transporter and Customer recognize that measurement and
other facilities exist at the Delivery or Redelivery Points
initially identified or those which may be added by amendment.
Ownership of such facilities shall remain with the original
owner, and operation of meters, instruments and other measurement
equipment at such locations shall be in accordance with Article
B-I of the General Conditions of Exhibit "B".
4.2 At Delivery and Redelivery points at which facilities do
not yet exist, Transporter shall install, own, operate and
maintain, or cause the same to be done, the meter, instruments,
equipment, and surface leases necessary to deliver the gas under
this Agreement. Installation and operation of meters,
instruments and other measurement equipment shall be in
accordance with Article B-I of the General Conditions of Exhibit
"B" as determined by Transporter in Transporter's reasonable
judgment. Transporter shall not be obligated to pay for new
facilities required under this Agreement.
ARTICLE V.
SCHEDULING AND TRANSPORTATION LIMITATIONS
5.1 Customer shall be obligated to notify Transporter by 10:00
a.m. two (2) business days prior to each month as to the daily
quantity of gas it desires to be transported during that month.
Such notification may be either written or electronic and will
indicate the quantity of gas Customer estimates it will deliver
to Transporter at each of the Points of Delivery (except Point of
Delivery Number 5, the Equitable Storage point, unless Customer
knows in advance the quantity it desires to deliver at such
point) as well as the quantity to be redelivered by Transporter
at each of the Points of Redelivery hereunder (except Points of
Redelivery Number 1, the distribution points, and Number 3, the
Equitable Storage point, unless Customer knows in advance the
quantity it desires to receive at such points).
5.2 Customer shall give Transporter at least twenty-four (24)
hours notice prior to the commencement of any day in which
Customer desires to change the quantity of gas it has scheduled
to be delivered to Transporter at the Points of Delivery (except
Point of Delivery Number 5, the Equitable Storage point).
Transporter may waive these notice requirements upon request if
in Transporter's judgment operating conditions permit such
waiver.
5.3 It is the intent of the parties that gas delivered, or
caused to be delivered, by Customer to Transporter and
redelivered by Transporter for the account of Customer shall be
as nearly as possible at uniform hourly rates and that the volume
tendered at the Points of Delivery shall be equal to that taken
by Customer at the Points of Redelivery. Departures from the
scheduled deliveries shall be kept to the minimums permitted by
the operating conditions.
5.4 Customer and Transporter agree that (i) confirmed
transportation volumes under this Agreement shall be the first
gas delivered to the Points of Redelivery, excluding the point
with Equitable Storage Company L.L.C., (ii) confirmed
transportation volumes under the 311 Transportation Agreement
shall be the second gas delivered to the Points of Redelivery
(Points of Delivery under the 311 Transportation Agreement),
excluding the point with Equitable Storage Company L.L.C., (iii)
volumes withdrawn from storage under the Intrastate Storage
Agreement shall be the third gas delivered to the Points of
Redelivery, and (iv) volumes withdrawn from storage under the 311
Storage Agreement shall be the fourth gas delivered to the
Points of Redelivery (Points of Delivery under the 311
Transportation Agreement).
5.5 Transporter agrees to determine with Customer a method to
calculate Customer s peak day and other requirements and to
provide a daily tabulation (furnished within 24 hours via fax or
other mutually agreeable method) of Customer s estimated natural
gas requirements, transportation receipts and deliveries and
storage balances. The current methodology utilized for farm taps
will be maintained. Customer s gas delivered to the storage
Point of Redelivery each month will be the difference between the
estimates mentioned above and the actual volumes received and
delivered. On any day that Customer s confirmed transportation
volumes for delivery to Transporter under this Agreement and the
311 Transportation Agreement exceed the volumes actually
physically received by Customer, those excess volumes will be
redelivered to the storage Point of Redelivery (Point of Delivery
under the 311 Transportation Agreement) on a no notice basis.
Conversely, if the volumes delivered to Transporter under this
Agreement and the 311 Transportation Agreement are less than the
requirements of Customer, then volumes of Customer s gas will be
transported from the storage Point of Delivery (Point of Receipt
under the 311 Transportation Agreement) to the Points of
Redelivery (Points of Delivery under the 311 Transportation
Agreement) on a no notice basis.
ARTICLE VI.
RATES
6.1 Customer agrees to pay Transporter a demand fee each month
equal to the product of $0.75 per MMBtu times the Maximum Daily
Quantity applicable for such month, and for all natural gas
transported hereunder as measured at the Points of Redelivery
(except Point of Redelivery No. 3, ESC), a transportation fee of
four cents (4) per MMBtu.
6.2 Transporter and Customer recognize that the fees per MMBtu
specified in this Agreement takes into account the Louisiana
Natural Gas Franchise Tax of 1% as applied to the business of
Transporter represented by this Agreement. Transporter and
Customer agree that if the Louisiana Natural Gas Franchise Tax is
increased, or if there is levied by law an additional tax other
than an income tax, after the effective date of this Agreement,
which tax is levied on or measured by sales, the movement of, the
value of, or the quantity of the gas delivered to Customer and
which tax is payable by Transporter for the right to sell or
transport gas and if Transporter lawfully pays such tax, then
Customer shall reimburse Transporter for that portion of the tax
paid by Transporter which is attributable under generally
accepted accounting principles to that part of Transporter's
business represented by this Agreement.
6.3 Customer agrees to reimburse Transporter for fifty percent
(50%) of all filing and other fees in connection with this
Agreement that Transporter is obligated to pay to any
governmental authority having jurisdiction. Filing and other
fees in connection with this Agreement shall be limited to those
fees required to implement, commence and continue transportation
under this Agreement.
ARTICLE VII.
TERM
7.1 Subject to the other provisions hereof, this Agreement
shall become effective as of the Effective Date, and shall remain
in force and effect for a primary term of five (5) years, and
shall continue from year-to-year thereafter. This Agreement may
be terminated by either party effective at the end of the fifth
contract year or at the end of any subsequent contract year by
giving written notice at least six (6) months prior to the end of
the applicable contract year.
7.2 In the event the Louisiana Public Service Commission
( LPSC ) does not allow Customer to recover in its resale rates
to its Customers the costs incurred by Customer under this
Agreement, the 311 Transportation Agreement, the Intrastate
Storage Agreement, the 311 Storage Agreement or the Sales
Agreement, then Customer may terminate this Agreement upon thirty
(30) days prior written notice to Transporter.
7.3 In the event (i) the LPSC issues an order during the term
hereof which requires Customer to unbundle its sales service, or
(ii) either the LPSC or market conditions demand or expect
Customer to unbundle its sales service, then Customer may elect
to reduce its obligation to transport hereunder pro rata to the
extent Customer s system is unbundled (up to and including
termination of this Agreement by Customer) upon sixty (60) days
prior written notice to Transporter. For purposes hereof,
unbundle shall mean the separation of sales service from
transportation service and the obligation to offer to provide
transportation service only to its end users.
ARTICLE VIII.
NOTICES AND ADDRESSES
8.1 Notices - All notices are required to be given in writing.
Any correspondence provided for in this Agreement shall be deemed
sufficiently given when deposited in the United States mail,
postage prepaid, and addressed to the respective parties at such
address or such other addresses as the parties respectively shall
designate by written notice; provided however, any notice to
cancel this Agreement shall be sent Certified Mail.
8.2 Addresses
A. Notices and Correspondence - Until Customer is
otherwise notified in writing by Transporter, notices and
payments to Transporter shall be addressed to Transporter at the
address set forth below or at such other address as Transporter
may hereafter designate by notifying Customer in writing:
Notices and Correspondence: Payments:
Louisiana Intrastate Gas Louisiana Intrastate Gas
Company L.L.C. Company L.L.C.
5555 San Felipe, Suite 2100 Texas Commerce Bank
Houston, Texas 77056 P. O. Box 200674
Attn: Transportation and ABA No. 113000609
Exchange Department Account No. 00101815455
Houston, Texas 77216-0674
B. Payments - Customer agrees to make payment hereunder
to Transporter for its account by (1) wire transfer, or (2) at
the address indicated on the monthly billing, or such other
address as Transporter may designate in writing to Customer from
time to time.
Until Transporter is otherwise notified in writing by
Customer, notices and invoices to Customer shall be addressed to
Customer at the address set forth below or at such other address
as Customer may hereafter designate by notifying Transporter in
writing:
Notices, Correspondence and Invoices:
Trans Louisiana Gas Company
P. O. Box 650205
Dallas, Texas 75265-0205
Attn: Gas Supply Department
ARTICLE IX.
GENERAL CONDITIONS
9.1 This Agreement is subject to the General Conditions
Applicable to Agreements for Transportation of Natural Gas in the
State of Louisiana, a copy of which is attached hereto and made
part hereof as Exhibit "B."
ARTICLE X.
MISCELLANEOUS
10.1 Successors and Assigns: This Agreement shall not be
assignable by either party hereto without the prior written
consent of the other, which such consent shall not be
unreasonably withheld. Nothing herein shall be construed to
prevent either party or any assignee from pledging all or any
part of this Agreement or any benefit accruing hereunder. In the
event either Transporter or Customer shall assign its interest in
this Agreement it shall in the instrument of assignment cause the
assignee to assume its rights and obligations under this
Agreement. Except as provided above, no assignment shall relieve
a party of its obligations hereunder unless the other party
hereto shall consent to the same.
10.2 Louisiana Law: It is hereby agreed by and between the
parties that all aspects of the Agreement, including
interpretation of its provisions and any disputes arising
hereunder, are to be governed solely and exclusively by Louisiana
law.
10.3 Modifications: No modifications of the terms and
provisions of this Agreement shall be or become effective except
by the execution of a supplementary written agreement.
10.4 Intrastate Commerce: Customer and Transporter agree
that as a consequence of their voluntary acts none of the gas
transported hereunder will be sold or resold, transported,
commingled, used or consumed so as to subject the gas or this
Agreement to the jurisdiction of the Federal Energy Regulatory
Commission, or successor authority, under the Natural Gas Act of
1938 (15 USC Sec. 717, et. seq.). Breach of this promise by
either party shall entitle the other party to declare this
Agreement terminated ipso facto by written notice to that effect
to the offending party. Customer and Transporter agree that any
change in applicable law which gives rise to such jurisdiction
under circumstances existing at the time of the change shall not
be such a cause for termination of this Agreement.
10.5 Odorization: It is specifically understood and agreed
that Customer is responsible for any and all odorization that is
or may be required by any statute, ordinance, rule or regulation,
and that Customer shall construct, maintain and operate any
facilities required for the performance of this obligation.
Customer agrees that Transporter shall not be obliged to odorize
the gas transported and redelivered hereunder.
10.6 Governmental Authorization: This Agreement shall be
subject to all valid and applicable laws, rules and regulations
either Federal, State or local. Transporter and Customer agree
that they will comply with and abide by the requirements of any
valid and applicable laws, rules and regulations in compliance
with their respective obligations to the other hereunder.
Without admitting to or acquiescing in the jurisdiction of the
Commissioner of Conservation of the State of Louisiana over this
Agreement pursuant to the provisions of LSA R.S. 30:555(b) or of
any body either State or Federal and reserving rights with
respect thereto, Transporter and Customer contract and agree that
each party will, in support of any application of the other, seek
pregranted approval for the abandonment of service under this
Agreement at the termination of this Agreement by the Assistant
Secretary of the Department of Natural Resources for the State of
Louisiana, or any other body or otherwise successor, either
Federal or State, that may have or assert jurisdiction over the
service provided under this Agreement. Customer and Transporter
confirm to each other that the cessation of service at the
termination of this Agreement is an important consideration to
each, and to this end, both contract and agree with the other
that neither will take any action that may be construed by any
regulatory official or body that has jurisdiction as a basis for
requiring deliveries of gas by Transporter to Customer after the
termination of this Agreement. Both agree that at all times they
will take appropriate action, and cooperate with the other, to
the end that delivery of gas hereunder may be abandoned at the
termination of this Agreement and both agree that the termination
of this Agreement, for whatever reason shall constitute authority
to abandon service hereunder.
10.7 THIS AGREEMENT shall as of the Effective Date supersede
and replace all previous agreements with respect to the
transportation of gas between Transporter and Customer.
IN WITNESS WHEREOF, this Agreement is executed effective as of
the date and year first above written.
WITNESS:
TRANS LOUISIANA GAS COMPANY
a Division of Atmos Energy
Corporation
By:
Title:
WITNESS:
LOUISIANA INTRASTATE GAS
COMPANY L.L.C.
By:
Title:
EXHIBIT "A"
POINTS OF DELIVERY
Location Quantity
MMBtu/d
1.Interconnection between Amoco Production Company
and Transporter at the tailgate of the LIG
Liquids Plaquemine Plant. 25,000
2.Existing interconnection between Transporter's
facilities and Mobil E&P North America located in
Section 24, Township 12 South, Range 1 East,
Vermilion Parish, Louisiana. (1522/Kaplan Outlet) 25,000
3.Existing central point downstream of
transporter's gathering facilities in the Reddell
field located in Section 21, Township 4 South,
Range 1 East, Evangeline Parish, La.(1118/LL&E) 10,000
4.Existing interconnection between Transporter's
facilities and Amerada Hess Corporation located
in Section 26, Township 11 South, Range 1 East,
Vermilion Parish, Louisiana.(1871/Leleux) 25,000
5.Existing interconnection between Transporter's
under facilities and Equitable Storage Company
L.L.C. this Agreement in Section 43, Township 12
South, Range 5 East, and the 311 Iberia Parish,
Louisiana. Agreement Combined 80,000
6.Existing interconnection between Transporter's
facilities and Louisiana Resources Pipeline
Company L.P. located in Section 14, Township 11
South,Range 5 East, St. Martin Parish, Louisiana. 10,000
7.Existing interconnection between Transporter's
facilities and PELICO located in Section 14,
Township 11 North, Range 6 West, Natchitoches
Parish, Louisiana (1377-01-9/Black Lake) 10,000*
Points of Delivery shall include all other points as the
parties hereto may mutually agree.
*Limited to months of December, January and February
POINTS OF REDELIVERY
Location Quantity
MMBtu/d
1. Those points of connection between Transporter
and Customer where gas is physically taken to
serve Customer s actual gas demand for its
distribution systems in the state of
Louisiana. As Required
2. Interconnection between Transporter and
Acadian Gas Pipeline Company located Section
3, Township 10 South, Range 2 East, Ascension
Parish, Louisiana. (1660/Geismar) 10,000
3. Existing interconnection between Transporter s
facilities and Equitable Storage Company
L.L.C. in Section 43, Township 12 South, Range
5 East, Iberia Parish, Louisiana. 30,000 under this
Agreement and the
311 Agreement Combined
4. Existing interconnection between Transporter s
facilities and Louisiana Gas Pipeline Company,
L.P., located in Section 15, Township 12
South, Range 15 East, St. James Parish,
Louisiana. 10,000
5. Existing interconnection between Transporter s
facilities and Louisiana Resources Pipeline
Company L.P. located in Section 14, Township
11 South, Range 5 East, St. Martin Parish,
Louisiana. Up to available
displacement volume
Points of Redelivery shall include all other points as the
parties hereto may mutually agree.
EXHIBIT "B"
LOUISIANA INTRASTATE GAS COMPANY L.L.C.
GENERAL CONDITIONS
APPLICABLE TO
AGREEMENTS FOR TRANSPORTATION
OF NATURAL GAS
IN THE STATE OF LOUISIANA
LOUISIANA INTRASTATE GAS COMPANY L.L.C.
GENERAL CONDITIONS
APPLICABLE TO
AGREEMENTS FOR TRANSPORTATION
OF NATURAL GAS
IN THE STATE OF LOUISIANA
TABLE OF CONTENTS
ARTICLE TITLE PAGE
B-I Measurements and Tests B-1
B-II Quality B-7
B-III Billings and Payments B-8
B-IV Force Majeure B-10
B-V Default B-11
B-VI Possession and Warranty of Title B-13
B-VII Governmental Regulations B-14
GENERAL CONDITIONS
ARTICLE B-I
MEASUREMENTS AND TESTS
1. The measurement of gas at each Point of Delivery and
Redelivery shall be accomplished in accordance with the following:
(a) The unit of volumes for all purposes of measurement
hereunder shall be one (1) cubic foot of gas at a temperature of
sixty (60) degrees Fahrenheit and at an absolute pressure of
fifteen and twenty-five thousandths (15.025) pounds per square
inch absolute. The average atmospheric pressure shall be assumed
to be fourteen and seven tenths (14.7) pounds per square inch at
the Points of Delivery and at the Points of Redelivery. Whenever
conditions of temperature and pressure differ from such standard,
conversion of the volume from such conditions to the standard
conditions shall be made in accordance with the Ideal Gas Laws
corrected for deviation of the gas from Boyle's Law in accordance
with the methods and formulas prescribed in the American Gas
Association's manual for the determination of super-
compressibility factors for natural gas as last amended and
superseded.
(b) The volume of gas transported hereunder shall be
measured by an orifice meter with flange type connections
installed at the Points of Delivery and at the Points of
Redelivery; provided, however, that if measurement exists at a
Point of Redelivery and is by a positive displacement meter, then
such positive meter will be used for measurement of gas at such
Point of Redelivery. Orifice meters shall be installed, operated
and volumes computed in accordance with the American National
Standard publication, Orifice Metering of Natural Gas, ANSI/API
2530, and in such amendments and revisions thereto and
superseding publications thereof. Differential and static
pressure chart cycles shall not exceed eight (8) days.
(c) The temperature of the gas transported hereunder
shall be determined by a recording thermometer continuously used
and installed so as to record properly the temperature of the gas
flowing through each meter. Temperature chart cycles shall not
exceed eight (8) days.
(d) The specific gravity of the gas shall be determined
at the point(s) of measurement by one of the following methods,
mutually acceptable to both parties: (1) by means of a properly
installed recording gravitometer of standard manufacture
utilizing the arithmetical average of the hourly specific gravity
recorded each day for computing the quantity of gas for that day,
(2) by an on line chromatograph, (3) by continuous sampling, or
(4) if (1), (2) or (3) is not considered feasible, then by use of
a portable specific gravity balance of standard manufacture
acceptable to both parties. Such determination to be made at
least once every thirty (30) days. If the recording gravitometer
fails, then the gravity from the chromatograph or the continuous
sampler shall be used if installed and working properly.
(e) The arithmetical average of the hourly temperature
when gas is flowing, the factor for specific gravity according to
the latest test therefor and the corrections for deviation from
Boyle's Law applicable during each metering period shall be used
to make proper computations of gas volumes measured hereunder.
(f) The heating value of gas, as defined in Paragraph
1.9 of Article I of this Agreement shall, at Transporter's
option, be determined at each point(s) of measurement hereunder:
(1) by the use of a spot sample taken during such month to be
analyzed on a gas chromatograph, (2) by analysis samples from a
continuous gas sampler taken by Transporter and/or its nominee by
using an analytical chromatograph, (3) by a recording calorimeter
installed by Transporter and/or its designee, (4) by an on line
chromatograph installed by Transporter and/or its designee or (5)
by application of the methods contained in the American Gas
Association publication, Fuel Gas Energy Metering, Gas
Measurement Committee Report No. 5, and in such amendments and
revisions thereto and superseding reports thereof as recommended
by such committee. The heating value however determined shall be
converted to the same condition stipulated for the unit of volume
in "Article B-I, Paragraph 1.(a)." If an analytical
chromatograph is used, such analytical chromatograph shall be of
a design and manufacture mutually agreeable to both the Customer
and the Transporter. The method of Btu computation for a perfect
gas shall be derived from the "Table of Physical Constants of
Paraffin Hydrocarbons and Other Compounds" as published in the
Gas Processors Association Bulletin 2145-84 and superseding
revisions thereof. The analysis shall be complete and individual
values in mol percent or fraction of each hydrocarbon compound
shall be listed through CH6. The CH7 value shall include the sum
of the remaining hydrocarbons in the sample and the designated
value for CH7's+ shall be 50% CH7 and 50% CH8 or as determined
from an extended chromatograph breakdown. If an on line
chromatograph is used the appropriate CH + configuration shall be
set from the program choices by an independent spot analysis, the
value of which shall be used to select the program choice closest
to the actual CH7 + value. The analysis shall further include
the mol fraction or percent individually of additional compounds
contained in chromatographically measurable quantities contained
in the sample. The method to be used for chromatographic
analysis shall be that contained in Gas Processors Association
publication number 2261-72, GPA Method of Analysis for Natural
and Similar Gaseous Mixtures by Gas Chromatography.
(g) Upon mutual agreement of the parties, other types of
Btu per cubic foot measuring devices may be installed, operated
and Btu computed in accordance with the manufacturer instructions
for same and consistent with industry-accepted practices for
transmission Btu per cubic foot measurement.
(h) Gas samples taken from the pipeline system for
purposes of determining or deriving quantitative values that will
be used in the computation of gas volume and Btu per cubic foot
shall be obtained through use of a probe to be inserted
sufficiently beyond the periphery of the internal pipe walls to
assure that the gas being drawn for the sample is free of any
liquid accumulation from the internal pipe wall.
(i) If the method for determining chromatographic
analysis, as set forth in the GPA publication 2261-72, is
revised, both parties agree that this Agreement will be amended
accordingly.
(j) Transporter's and Customer's measuring and testing
equipment shall be of standard type, installed, operated and
maintained as necessary to measure and test gas transported
hereunder. Transporter shall keep same accurate, and in good
repair, and shall test once each month. Changing of meter
charts, readings, calibrations, tests, repairs and adjustments of
Transporter's measuring and testing equipment shall be done only
by employees of Transporter, or its designated representatives.
Customer, or its designated representative shall, in the presence
of an employee of Transporter or Transporter's designated
representative, have access to Transporter's measuring and
testing equipment at any reasonable time, and shall have the
right to witness tests, calibrations and adjustments thereof.
All tests scheduled hereunder shall be preceded by reasonable
notice to Customer. Upon request of either party hereto for a
special test of any meter or auxiliary equipment, but not more
often than once every three (3) months, Transporter shall
promptly verify the accuracy of same; provided that the cost of
such special test shall be borne by the requesting party, unless
the percentage of inaccuracy found is more than two percent (2%).
If, upon any test, any measuring equipment is found to
be in error, such errors shall be taken into account in a
practical manner in computing the deliveries. If the resultant
aggregate error in the computed receipts is not more than two
percent (2%), then previous receipts shall be considered
accurate. All equipment shall, in any case, be adjusted at the
time of test to record correctly. If, however, the resultant
aggregate error in computed receipts exceeds two percent (2%) of
a recording corresponding to the average hourly rate of gas flow
for the period since the last preceding test, the previous
recordings of such equipment shall be corrected to zero error for
any period which is known definitely or agreed upon, but in case
the period is not known definitely or agreed upon, such
correction shall be for a period extending back one-half of the
time elapsed since the date of the last test, not exceeding a
correction period of sixteen (16) days.
(k) If any meter or auxiliary equipment is out of
service or out of repair for a period of time so that the amount
of gas delivered cannot be ascertained or computed from the
reading thereof, then the gas delivered during such period shall
be estimated upon the basis of the best data available, using the
first of the following methods which is feasible: (1) by using
the registration of any check meter or meters, if installed and
accurately registering; or (2) by correcting the error if the
percentage of error is ascertainable by calibration tests or
mathematical calculations; or (3) by estimating gas volumes on
the basis of deliveries during the preceding periods under
similar conditions when the equipment was registering accurately,
or by other method(s) mutually acceptable to both parties.
(l) Upon request of Customer, Transporter shall submit
its measurement charts and records to Customer for examination,
the same to be returned within thirty (30) days. Transporter's
measurement charts and records for a given accounting month will
be presumed correct if no written objection thereto is served on
either party hereto by the other within the twelve (12) month
period following any accounting month, but the same shall be
retained for a twenty-four (24) month period.
(m) Customer may install, operate and maintain, at its
sole cost, risk and expense, but in the same manner as is
required for Transporter's equipment hereunder, check measuring
and testing equipment of standard type, provided that the same
does not interfere with the operation of Transporter's equipment,
but the measurement and testing of gas for purposes of this
Agreement shall only be by Transporter's equipment. Transporter
shall have the same rights with respect to said check metering
and testing equipment of Customer as are granted to Customer with
respect to Transporter's metering and testing equipment.
(n) If it is determined prior to, or as a result of, in-
service tests, experience and observation by either Customer or
Transporter that pulsations exist that affect the measurement
accuracy, then the operator of the facilities agrees to install
and operate mechanical dampening equipment necessary to eliminate
such pulsations.
(o) If at any time during the term hereof a new method
or technique is developed with respect to gas measurement, or the
determination of the factors used in such gas measurement, such
new method or technique may be substituted for the method set
forth in this Section when, in Transporter's sole discretion,
employing such new method or technique is advisable. Transporter
shall notify Customer in writing of any such election prior to
actually implementing such substitution.
ARTICLE B-II
QUALITY
1. The gas delivered and redelivered at each Point(s) of Delivery
and Point(s) of Redelivery shall meet the following quality
specification:
(a) Oxygen - The oxygen content shall not exceed one
percent (1%) by volume of uncombined oxygen, and the parties
shall make reasonable efforts to maintain the gas free from
oxygen.
(b) Hydrogen Sulphide - The hydrogen sulphide content shall not
exc eed one (1) grain per one hundred (100) cubic feet of gas.
(c) Total Sulphur - The total sulphur content, including
mercaptans and hydrogen sulphide, shall not exceed ten (10) grains
per one hundred (100) cubic feet of gas.
(d) Carbon Dioxide - The carbon dioxide content shall not
exceed two percent (2%) by volume.
(e) Liquids - The gas shall be free of water and other
objectionable liquids at the temperature and pressure at which
the gas is delivered and the gas shall not contain any
hydrocarbons which might condense to free liquids in the
distribution system under normal distribution operating
conditions (20 psig and 40oF) and shall in no event contain water
vapor in excess of seven (7) pounds per one million (1,000,000)
cubic feet.
(f) Dust, Gums and Solid Matter - The gas shall be
commercially free of dust, gums, gum forming constituents and
other solid matter.
(g) Heating Value - The gas delivered shall contain a
heating content of not less than nine hundred fifty (950) Btu s
per cubic foot.
(h) Temperature - The gas shall not be delivered at a
temperature of less than forty degrees (40o) Fahrenheit, and not
more than one hundred twenty degrees (120o) Fahrenheit.
(i) Nitrogen - The nitrogen content shall not exceed three
percent (3%) by volume.
(j) Hydrogen - The gas shall contain no carbon monoxide,
halogens or unsaturated hydrocarbons, and no more than four
hundred parts per million (400ppm) of hydrogen.
2. In the event any gas delivered by Customer to
Transporter at any Point of Delivery fails to meet the quality
specifications set forth above, Transporter may refuse to accept
receipt of such gas until Customer or Customer s supplier shall
have corrected the quality deficiency.
3. In the event any gas delivered by Transporter to
Customer at any Point of Redelivery fails to meet the quality
specifications set forth above, Customer may refuse to accept
receipt of such gas until Transporter shall have corrected the
quality deficiency.
ARTICLE B-III
BILLINGS AND PAYMENTS
1. Billing Date - Each calendar month during the term
hereof, Transporter shall render to Customer at such office as
Customer has herein designated, statements showing the
calculations of the monthly bill for gas transported by
Transporter for Customer during the preceding month.
2. Payment Date - Not later than ten (10) days following
Customer's receipt of such statement, Customer shall make payment
to Transporter of amounts due Transporter at such office as
Transporter has herein designated as shown by statements
furnished Customer in accordance with the foregoing Paragraph.
3. Error in Bills - In the event any error is discovered in
the amount billed in any statements rendered by Transporter, such
error shall be adjusted promptly, but shall not be an excuse for
non-payment of that part of the bill which was not in error. All
statements, meter and billing, shall be considered final if not
challenged within twenty-four (24) months after the date of same.
If any statement shall have been paid in full and it shall be
determined that a disputed part of the statement was paid in
error, Transporter shall refund such amount to Customer, together
with interest at the rate set forth in Paragraph 5 of this
Article B-III over the period that Transporter had possession of
the money, within fifteen (15) days after resolution of the
dispute.
4. Access to Billing Data - Customer and Transporter shall
have the right to examine the books, records and charts of the
other party at all reasonable times to the extent necessary to
verify the accuracy of any statement, charge or computation made
pursuant to the provision of any Article of this Agreement.
5. Past Due Payments - In the event Customer fails to pay
any of the amount due Transporter when the same is due, interest
thereon shall accrue at a rate equal to the sum of the prime rate
in effect at such time at the Citibank of New York, plus one
percent (1%), not to exceed any applicable maximum lawful rate,
payable for the period from the date when such amount is due
until the same is paid. Continued default in payment after
receipt of written notice for amounts due which are not then
subject to a bona fide dispute between the parties shall entitle
Transporter to suspend all further performance under this
Agreement in addition to all other legal remedies.
ARTICLE B-IV
FORCE MAJEURE
1. If by reason of force majeure, either party hereto is
rendered unable, wholly or in part, to carry out its obligations
under this Agreement, other than the obligation to pay for
transportation services rendered, and if such party gives notice
and reasonably full particulars of such force majeure by
telephone and then followed up with a written notice to the other
party within a reasonable time after the occurrence of the cause
relied on, the obligations of the parties, such notice having
been given, so far as and to the extent that they are affected by
such force majeure, shall be suspended during the continuance of
any inability so caused, but for no longer period; and such cause
shall so far as possible be remedied with all reasonable
dispatch, except as provided for in this Section B-IV 4. hereof.
2. The term "force majeure", as used herein, shall mean any
and all circumstances beyond the direct or reasonable control of
either party which would make performance of this Agreement
impossible or unsafe, and shall include, without limiting the
foregoing, acts of God such as landslides, earthquakes,
lightning, storms (including but not limited to hurricanes and
hurricane warnings), crevasses, floods, washouts, epidemics; acts
of public enemies including wars, riots, blockades; civil and
military disturbances; insurrections, fires, explosions,
freezing; arrests and restraints of government, either federal or
state, civil or military; shutdowns for purposes of necessary or
required repairs, relocations, or construction of facilities; any
operational or mechanical failure such as breakage or accident to
machinery or lines of pipe, temporary losses of supply, or
failure of surface equipment or pipelines; the necessity for
testing pipeline or other equipment as may be required by
governmental authority or as deemed necessary by the testing
party for the safe operation thereof; any failure to perform or
to comply with any obligation or condition of this Agreement due
to the inability to obtain necessary materials, supplies,
permits, or labor; any industrial disturbance, including strikes
or lockouts; or any inability to obtain necessary rights-of-way.
3. Force majeure affecting the performance hereunder by
either party, however, shall not relieve such party of liability
in the event of negligence or in the event of failure to use due
diligence to remedy the situation and to remove the cause in an
adequate manner and with all reasonable dispatch; and such causes
or contingencies affecting such performance shall not relieve
either party from its obligations to make payment as determined
hereunder.
4. It is understood and agreed that the settlement of
strikes, lockouts, or controversies with landowners involving
rights-of-way shall be entirely within the discretion of the
party having the difficulty and that the above requirement that
any force majeure shall be remedied with all reasonable dispatch
shall not require the settlement of strikes, lockouts, or
controversies with landowners involving rights-of-way, by
acceding to the demands of the opposing party when such course is
inadvisable in the discretion of the party having the difficulty.
ARTICLE B-V
DEFAULT
It is covenanted and agreed that if either party hereto shall
fail to perform any of the covenants or obligations imposed upon it
under and by virtue of this Agreement, then, in such event, the
other party hereto may at its option terminate this Agreement by
proceeding as follows: The party claiming the default shall cause
a written notice to be served by registered mail or hand delivery
on the party allegedly in default, stating specifically the cause
for terminating this Agreement and declaring it to be the intention
of the party giving the notice to terminate the same; thereupon,
the party in default shall have thirty (30) days after the service
of the aforesaid notice in which to commence remedying such default
or remove the cause or causes stated in the notice for terminating
this Agreement, and if within said period of thirty (30) days the
party in default does so remedy or remove said cause or causes, or
if same cannot be remedied within a thirty (30) day period, shall
commence remedial action within such thirty (30) day period and
thereafter shall pursue such remedial action with due diligence to
completion, then such notice shall be withdrawn and this Agreement
shall continue in full force and effect. In case the party in
default does not so remedy the default to remove the cause or
causes within said period, then the party giving such notice shall
have the option of canceling this Agreement at will, on serving
written notice of such cancellation to the party in default by
registered mail or hand delivery while such default is still
unsatisfied. In the event Transporter and Customer cannot agree on
whether or not a default has occurred or, if so, on whether or not
it has been remedied or removed and suit is filed within such
thirty (30) day period, then the party adjudged to be in default by
final judgment shall have thirty (30) days from the date of such
final judgment within which to comply therewith and thereby prevent
such termination. This article shall not limit or control any
specific provisin for termination or cancellation of this Agreement
contained elsewhere herein. Any cancellation of this Agreement
pursuant to the provisions of this article shall be without
prejudice to the right of Transporter to collect any amounts then
due for gas delivered prior to the time of cancellation. No waiver
by either party of any one or more defaults by the other in the
performance of this Agreement shall operate or be construed as a
waiver of any future default or defaults, whether of a like or
different character.
ARTICLE B-VI
POSSESSION AND WARRANTY OF TITLE
1. As between the parties to this Agreement, each party
shall be in control and possession of all gas in that party's
facilities. The receiving party shall have no responsibility
with respect to any gas deliverable under this Agreement until
such gas is received into its facilities on or account of
anything which may be done, happen or arise with respect to such
gas before such delivery, and the delivering party shall have no
responsibility with respect to such gas after its delivery into
the facilities of the other party on or account of anything which
may be done, happen or arise with respect to such gas after such
delivery and receipt. Nothing herein shall be deemed to relieve
either the receiving party or the delivering party from
responsibility for any damages or losses which may arise or occur
as a result of the negligence of that party. Each of the parties
hereto agrees to indemnify, defend, and hold the other party
harmless from and against any and all claims, liabilities,
damages, losses, costs, and expenses (including attorney s fees)
incurred by the indemnified party arising from or relating to any
damages, losses or injuries for which the indemnifying party is
responsible pursuant to the provisions of this Section.
2. Customer hereby warrants that it has good rights to
deliver, or cause to be delivered, the gas delivered hereunder
and the right of Transporter to transport the same and Customer
warrants that all such gas is free from all liens and adverse
claims. Transporter hereby warrants that it has the right to
redeliver gas to Customer and all such gas is free from all liens
and adverse claims from all third parties.
3. Customer agrees to indemnify Transporter and save it
harmless from all suits, actions, debts, accounts, damages,
costs, losses and expenses arising from or out of adverse claims
of any and all persons to the gas delivered by Customer to
Transporter hereunder or to all taxes, license fees or charges
thereon which may be levied and assessed against Customer upon
the delivery thereof to Transporter. Transporter agrees to
indemnify Customer and save it harmless from all suits, actions,
debts, accounts, damages, costs, losses and expenses arising from
or out of adverse claims of any and all persons to the gas
redelivered by Transporter to Customer hereunder or, except as
provided in this Agreement with respect to reimbursement of the
same, to all taxes, license fees or charges imposed upon the
redelivery to Customer. If any such adverse claim is asserted
with respect to the gas delivered hereunder, with respect to the
right to deliver or redeliver such gas, or with respect to the
right to receive payment for transporting such gas, the party
against whom the adverse claim is asserted shall have the right
to retain any amount of money up to the amount of such claim out
of the money then or thereafter payable to the other party
hereunder. Such money shall be retained without interest as
security for the performance of the indemnity obligations
described above with respect to such adverse claim until such
adverse claim has been finally determined or until the party
against whom the adverse claim is asserted shall have received a
bond from the other party in an amount and with a surety
satisfactory to the party against whom the claim is asserted,
conditioned to hold such party harmless or otherwise protect such
party with respect to such claim.
ARTICLE B-VII
GOVERNMENTAL REGULATIONS
1. This Agreement shall be subject to all relevant,
present, future, local, state and federal laws, and all rules,
regulations and orders of any regulatory authority having
jurisdiction. Neither party shall be held in default for failure
to perform hereunder if such failure is due to good faith
compliance with such party's best understanding of the
requirements of any such laws, orders, rules or regulations.
Customer warrants that gas and concomitant production transported
hereunder has been and will be produced and handled in compliance
with the requirements of the Fair Labor Standards Act of 1938,
and amendments thereto, and any other applicable laws, orders,
rules and regulations.
END OF EXHIBIT "B"