Exhibit 10.76
GAS PURCHASE CONTRACT
BETWEEN
YANKEE GAS SERVICES COMPANY
AS "BUYER"
AND
CHEVRON U.S.A. PRODUCTION COMPANY,
a division of Chevron U.S.A. Inc.
AS "SELLER"
Effective November 1, 1993
GAS PURCHASE CONTRACT
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THIS CONTRACT, made and entered into as of the 1st day of
November, 1993, by and between YANKEE GAS SERVICES COMPANY,
herein referred to as "Buyer," and CHEVRON U.S.A. PRODUCTION
COMPANY, a division of Chevron U.S.A. Inc., herein referred to as
"Seller."
WITNESSETH
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WHEREAS, Seller has certain volumes of gas which are
available for sale; and
WHEREAS, Buyer desires to purchase such gas from Seller and
Seller desires to sell such gas to Buyer on a firm basis.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
For the purpose of this Contract, the following definitions
are applicable:
1.1 The term "Btu" means British thermal unit, and is the
quantity of heat required to raise the temperature of one pound
of water from fifty-eight and five-tenths degrees to fifty-nine
and five-tenths degrees Fahrenheit.
1.2 The term "Contract" means this agreement, including all
exhibits attached hereto and all amendments hereof that may be
made from time to time.
1.3 The term "day" means a period of twenty-four
consecutive hours, beginning and ending at 8:00 a.m. Eastern
Time.
1.4 The term "FERC" means the Federal Energy Regulatory
Commission or successor agency.
1.5 The term "MMBtu" means one million British thermal
units.
1.6 The term "month" means the period beginning at 8:00
a.m., Eastern Time, on the first day of a calendar month and
ending at 8:00 a.m., Eastern Time, on the first day of the next
succeeding calendar month.
1.7 The term "Party" or "Parties" means Seller and/or Buyer
under this Contract.
1.8 The term "Point(s) of Delivery" means the point or
points on Transporter(s)' pipeline system where gas is to be
delivered by Seller to Transporter(s) for Buyer's account, as set
forth in Exhibit "A" attached hereto and made a part hereof.
1.9 The term "Transporter(s)" primarily means Texas Eastern
Transmission Corporation, but in addition may include any
upstream or downstream Transporter(s), as dictated by context.
1.10 The term "Transportation Segment" shall mean Texas
Eastern Transmission Corporation's East Louisiana Pooling Zone or
West Louisiana Pooling Zone, within which Seller is to deliver
and Buyer is to take Gas hereunder.
1.11 The term "Locked Price" shall mean the price per MMBtu
to be paid by Buyer, in lieu of the otherwise applicable
Commodity Charge, for Locked Quantities purchased hereunder. A
Locked Price shall be determined in accordance with Section 8.3
hereof.
1.12 The terms "Locked Quantity" or "Locked Quantities"
shall mean quantities of gas to be sold by Seller and purchased
by Buyer during any month during the term hereof, as to which a
Locked Price has been established.
1.13 The term "Minimum Locking Quantity" shall mean a
quantity of gas to be delivered during any month during the term
hereof, equal to the product of 5,000 MMBtus and the number of
days in said month.
1.14 The term "Unlocked Quantities" shall mean quantities
of gas as to which no Locked Price has been established.
ARTICLE 2
QUANTITY
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2.1 Seller's Obligation. Subject to the other provisions
of this Contract, Seller will make available to Buyer each day at
the Point(s) of Delivery daily volumes of natural gas equal to
the lesser of the Maximum Daily Quantity (MDQ) or ******** under
Paragraph 2.3 of this Contract, or pay a Deficiency Charge as
provided in Paragraph 2.5.B.
2.2 Buyer's Obligation. Subject to the other provisions of
this Contract, Buyer shall take from Seller each day at the
Point(s) of Delivery ******** under Paragraph 2.3 of this
Contract and shall pay Seller the applicable Reservation Fee and
Commodity Charge (or Locked Price, whichever is applicable),
together with any Deficiency Charge due pursuant to Paragraph
2.5.A.
********CONDIFENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
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2.3 Nominations. Gas shall be purchased and sold hereunder
in accordance with the following nomination procedure:
A. At least three business days prior to the Transporter's
first-of-the-month nomination deadline each month, Buyer shall
provide Seller a purchase nomination by telecopy, using the form
attached hereto as Exhibit "B," and stating the quantity of gas,
expressed in MMBtu's per day, to be purchased by Buyer hereunder
during the subsequent month (********). Buyer shall state
separately any portion of ******** which is for a Locked Quantity
of gas. Said ******** shall be for an amount less than or equal
to the MDQ, as set forth in Paragraph 2.4. At a time
sufficiently in advance of the Transporter's nomination deadline
to permit compliance with the nomination procedure, Seller shall
notify Buyer of the quantity that Seller intends to deliver at
each Point of Delivery to fulfill ********. ******** shall not
be subject to change during a month, and Seller shall have no
obligation to deliver quantities of gas in excess of ********.
B. If Buyer fails to provide Seller with a ******** for any
month, the ******** for said month shall be deemed to be equal to
the MDQ.
2.4 MDQ. The MDQ under this Contract shall be 10,443 MMBtu
per day, plus sufficient additional gas as the Transporter's
tariff may require from time to time as fuel and lost or
unaccounted for gas to effect delivery of the gas delivered
hereunder to Transporter's Zone M-3.
2.5 Deficiency Charges.
A. If Buyer fails on any day to purchase ******** for that
day pursuant to Paragraph 2.3, and to the extent that such
failure was not caused by force majeure or Seller's failure to
make appropriate volumes of gas available, a Deficiency Charge
shall apply. The unit Deficiency Charge shall be equal to the
amount, if any, by which the Commodity Charge applicable under
this Contract during the month in which the deficiency occurred
(or the Locked Price, if the deficiency pertains to Locked
Quantities) exceeds the weekly NGW Spot Price, as hereinafter
defined, for the Texas Eastern Transmission Corp. Pooling Zone in
which the deficient quantity was to have been delivered by
Seller. The "weekly NGW Spot Price" shall be determined by
reference to the table "Spot Prices On Interstate Pipeline
Systems, Delivered-to-Pipeline" in the issue of Natural Gas Week
published during the week following the week in which the
deficiency occurred. The price used will be the price per MMBtu
quoted for gas delivered to Texas Eastern Transmission Corp. in
the appropriate Pooling Zone under the column labeled "This
Week." The unit Deficiency Charge will then be multiplied by the
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unexcused deficiency quantity. If an unexcused ******** occurs
in more than one week, the unit Deficiency Charge will be
separately computed for each week and applied to the unexcused
deficiency quantity for that week. If an unexcused ********
occurs in more than one Pooling Zone during a month, the unit
Deficiency Charge shall be calculated separately for each Pooling
Zone and shall be applied to the deficient quantities which were
to have been delivered in each such Pooling Zone. The unexcused
deficiency quantity shall be ******** for each day, less (a) the
volumes actually purchased by Buyer on such day and (b) any
volumes which Buyer was prevented from purchasing on such day by
force majeure or Seller's failure to make appropriate volumes of
gas available. Any Deficiency Charges incurred in a month may be
included in Seller's invoice for deliveries during that month or
in the next succeeding invoice issued by Seller after the
Deficiency Charge has been calculated. Payment for the
Deficiency Charge shall be due on the payable date of the invoice
in which it is included.
B. If Seller fails, in whole or in part, to make available
to Buyer on any day ******** for that day, and if such failure is
not excused by an event of force majeure or Buyer's failure to
take quantities of gas which Seller was ready, willing and able
to deliver, Seller shall pay Buyer a Deficiency Charge equal to
the unexcused shortfall in delivery from ********, multiplied by
the difference between (a) the Commodity Charge which was
applicable during the month in which the deficiency occurred (or
the Locked Price, if the deficiency pertains to Locked
Quantities) plus Buyer's cost of transportation that would have
been incurred from the Delivery Point(s) to Buyer's city gate,
and (b) the price Buyer paid to obtain and deliver to Buyer's
city gate alternate fuel supplies (including, without limitation,
natural gas, fuel oil, propane, penalty gas, and/or after-the-
fact corrections such as cash outs); provided, that if Buyer is
unable after reasonable efforts (with due consideration being
given to all relevant circumstances) to obtain such alternate
fuel supplies then Buyer's replacement cost shall be deemed to be
equal to the rate applicable under the Transporter's FERC tariff
for imbalance or unauthorized overrun gas. Buyer shall use its
best efforts, acting in a commercially reasonable manner (with
due consideration being given to all relevant circumstances), to
obtain alternate fuel supplies at the lowest available price.
Seller agrees to pay Buyer any Deficiency Charges to which Buyer
is entitled under this Section on or before the tenth day after
Seller receives a written calculation of the amount of such
charges from Buyer.
********CONDIFENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
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C. Neither Party shall be liable in any event for
consequential damages or losses which may be suffered by the
other as a result of the failure to deliver or take the required
quantities of gas, and both Parties agree that recovery of
Deficiency Charges as set forth in this Section 2.5 shall
constitute the sole and exclusive remedies for any such failure
to deliver or receive gas.
ARTICLE 3
TRANSPORTATION
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3.1 Transportation Guidelines. The Transporter(s)' rules,
guidelines, operational procedures and policies, as they may be
changed from time to time, shall define and control the manner in
which gas delivered and sold under this Contract is transported.
Seller and Buyer each agree to provide to the other, in as prompt
a manner as reasonable, all information necessary to permit
scheduling pursuant to such requirements.
3.2 Transportation Imbalances. If Seller delivers or
Buyer takes a quantity of gas not equal to the quantity ********,
a "Transportation Imbalance" may occur. Upon notification by the
other Party or the Transporter that a Transportation Imbalance
exists, each Party will exercise its best efforts to correct the
Transportation Imbalance, subject to any restrictions imposed by
the Transporter(s). Buyer and Seller agree to use their best
efforts to prevent or diminish any occurrences of imbalances by
adjusting their ******** and/or actual flow rates, as necessary,
and to minimize any imbalance penalties through the use of
imbalance trading procedures or other available methods.
******** made pursuant to this Article for the purpose of
******** shall ******** the parties' ******** under Article 2
hereof.
3.2.1 ********. The Transporter's tariff or applicable
contracts may contain provisions under which, in the ********
hereunder, a Party to this Contract may be required to ********
from the Transporter or ******** to the Transporter at prices
determined pursuant to the Transporter's tariff or the ********
(such purchases and/or sales being referred to herein as "cash
outs"). If one Party hereto is required by the Transporter to
******** caused by the other Party's ******** of gas ******** for
transportation, the Party whose act or omission caused the
******** shall ******** the other Party for the ********. For
purposes of this Contract, ******** shall be the ******** by
which the ******** at which a Party is required to ********, if
applicable) in effect under Article 8 hereof during the month in
which the ********, or the ******** if applicable) in effect
under Article 8 hereof during the month in which the ******** the
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******** at which a Party is required to ********, in each case
********. To the extent that a ******** due to a ******** in the
Transporter's tariff or applicable contract, the ******** of each
tolerance level shall be computed separately and applied to the
quantity of gas ******** at that level.
3.2.2 ******** shall hold ******** from all costs and
penalties, other than those described in Section 3.2.1, which may
be assessed by the Transporter(s) against ******** as a result of
******** of gas caused by ********. ******** shall hold ********
harmless from all costs and penalties other than those described
in Section 3.2.1 which may be assessed by the Transporter(s) as a
result of ******** of gas caused by ********.
3.2.3 Minimization of Penalties. If any costs or penalties
associated with the transportation of Gas are anticipated, the
Party becoming aware that such costs or penalties may be assessed
or incurred shall inform the other Party as soon as the Party
becomes aware, followed by notice in writing. Each Party shall
then immediately cooperate in good faith with the other Party to
minimize or eliminate, if possible, such costs or penalties. The
Parties shall cooperate with each other and with the Transporter
to verify delivery and receipt of monthly nominated quantities on
a timely basis.
3.3 Cooperation and Verification. The Parties shall
cooperate with each other and with the Transporter to verify
delivery and receipt of Gas under this Contract on a timely
basis.
3.4 Upstream Transportation. Seller shall be responsible
for transportation to the Point(s) of Delivery and payment of all
transportation charges relating thereto. Buyer shall be
responsible for transportation from the Point(s) of Delivery and
payment of all transportation charges relating thereto.
ARTICLE 4
QUALITY
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4.1 Transporter(s)' Specifications. All gas delivered
hereunder shall conform to the quality specifications set forth
in the transportation agreement and/or FERC-approved tariff of
the Transporter receiving the gas for Buyer's account at the
Point(s) of Delivery. If any of the gas delivered by Seller
hereunder fails to meet such specifications, then Buyer shall
have the right to refuse to accept deliveries of such
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nonconforming gas, and, should Seller fail to replace the
nonconforming gas as soon as possible (but in no event later than
the first day for which Transporter will accept gas from Seller
to replace the nonconforming gas), such failure shall be deemed
to be a failure by Seller to sell and deliver a quantity of gas
under Section 2.5.B hereof, and Buyer may purchase deficiency gas
and be reimbursed for the cost of such purchases as provided
therein. If the Transporter's quality specifications are
changed to be more stringent and the gas from the sources Seller
is then utilizing to supply this Contract fails to meet the new
specifications, Seller shall have the option of either (a)
installing any necessary equipment to conform the gas to the new
specifications or (b) terminating this Contract upon not less
than sixty days prior written notice to Buyer.
4.2 Testing. Buyer shall have the right to be represented
and to participate in all tests of gas delivered hereunder, and
to inspect any equipment used in determining the quality of gas
delivered hereunder.
ARTICLE 5
DELIVERY AND PRESSURE; TITLE AND CONTROL; LIABILITY
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5.1 Delivery and Pressure. All gas to be sold and
purchased hereunder shall be delivered to Buyer at the Point(s)
of Delivery, as listed in Exhibit "A," at pressures sufficient to
enter Transporter(s)' facilities from time to time.
5.2 Title and Control. Title to the gas delivered
hereunder shall pass to and vest in Buyer at the Point(s) of
Delivery. Seller shall be deemed to be in exclusive control and
possession of said gas prior to delivery to Buyer, and Buyer
shall be deemed to be in exclusive control and possession of said
gas thereafter.
5.3 Liability. The Party deemed to be in control and
possession of the gas sold hereunder shall be responsible for and
shall indemnify, defend and hold the other Party harmless with
respect to any losses, claims, liabilities or damages arising
therefrom when such gas is deemed to be in that Party's control
and possession.
ARTICLE 6
MEASUREMENT
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Units of Measurement. The unit of volume for measurement of
gas delivered hereunder shall be one cubic foot of gas at a base
temperature of sixty degrees Fahrenheit and at an absolute
pressure of fourteen and seventy-three hundredths pounds per
square inch. The sales unit of the gas shall be one MMBtu,
determined on a dry basis. All measurements of gas delivered and
sold hereunder shall be in accordance with the provisions of
Transporter(s)' tariff(s) as applicable at the Point(s) of
Delivery.
ARTICLE 7
RESERVATION FEE
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As consideration for the right to nominate and receive
quantities of gas each month up to the applicable MDQ, Buyer
shall pay Seller each month the monthly Reservation Fee,
regardless of the quantities of gas actually purchased by Buyer
in such month. The monthly Reservation Fee shall be calculated
each month by multiplying the MDQ as stated in Section 2.4,
including fuel and lost and unaccounted for gas as required by
the Transporter's tariff, by ******** and multiplying the result
by the number of days in that month.
ARTICLE 8
PRICE
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8.1 Commodity Charge. For each MMBtu of gas delivered to
Buyer by Seller at the Point(s) of Delivery, except any Locked
Quantities, Buyer shall pay Seller a Commodity Charge which shall
be equal to the Inside FERC Index Price (hereinafter defined) for
deliveries in the Texas Eastern Transmission Corp. Pooling Zone
in which the gas is delivered by Seller. The Inside FERC Index
Price shall be the price per MMBtu quoted in the first issue
published during the delivery month of Inside FERC's Gas Market
Report in the table entitled "Prices of Spot Gas Delivered to
Pipelines (per MMBtu dry)" under the column entitled "Index." If
Seller delivers gas hereunder in more than one Pooling Zone
during a month, the Inside FERC Index Price for each Pooling Zone
shall be applied to the quantities delivered in each such Pooling
Zone.
8.2 Temporary Interruption of Index Publication. If the
requisite price quotes utilized to establish the Commodity Charge
are unavailable for any reason, then, until the Parties agree on
a replacement method of determining the Commodity Charge, the
Commodity Charge shall equal the average of the closing prices
for the three last days of trading of gas futures contracts for
the applicable month on the New York Mercantile Exchange
("NYMEX"), plus or minus the average (rounded to the nearest
cent), over the twelve most recent months, of the differences
between the NYMEX closing price for gas futures contracts and the
Commodity Charge as determined by reference to the publication
described above.
********CONDIFENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
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8.3 Locked Price. Subject to the terms set forth herein,
in lieu of paying the applicable Commodity Charge hereunder,
Buyer may lock the price of all or a portion of the gas to be
purchased during the term hereof, by notifying one of Seller's
authorized representatives by telephone of Buyer's desire to lock
a price on such gas.
8.3.1 Timing for Requesting Locked Price. Buyer may
request quote of a Locked Price for gas to be delivered hereunder
by telephone on any regular Chevron business day, between the
hours of 8:30 a.m. and 2:00 p.m., local Houston, Texas time, up
to and including the seventh Chevron business day prior to the
beginning of the month to which the Locked Price shall apply.
8.3.2 Procedures. As soon as possible after Buyer's
telephonic request, but in any event within 24 hours (excluding
weekends and Chevron holidays), Seller shall determine the price
per MMBtu at which it is willing and able to lock a price and
shall notify Buyer's authorized representative of such price. If
Buyer accepts such Locked Price, then Seller shall forward to
Buyer a "Price Lock Confirmation", similar to the form attached
hereto as Exhibit "C", which specifies the terms to which the
Parties have agreed. Said Price Lock Confirmation shall be
forwarded to Buyer prior to the beginning of the month in which
deliveries are to be made. The terms set forth in the Price Lock
Confirmation shall be binding upon the Parties unless Buyer
notifies Seller in writing that Buyer disputes one or more of the
terms set forth in said Price Lock Confirmation within forty-
eight hours, exclusive of weekends and Chevron holidays, after
Buyer receives the same. Any terms which remain undisputed after
expiration of said period shall be binding on the Parties, and
the Parties shall work together in good faith to resolve any
disputes as expeditiously as possible.
8.3.3 Minimum Quantities; Multiple Price Locks. Buyer may
request a Locked Price only on quantities for the applicable
month which are greater than or equal to the Minimum Locking
Quantity. Buyer may request and establish a Locked Price for a
particular month more than once, so long as Buyer meets the
requirements of this Section 8.3 with regard to timing and
quantities. Seller at its option may include all Locked Prices
and Locked Quantities in one Price Lock Confirmation for any
applicable month.
8.3.4. Irrevocability; Nominations; Allocation. Once a
Locked Price has been established for a month hereunder, the
Locked Price shall be irrevocable as to the affected Locked
Quantities, and shall not thereafter be subject to change.
Additionally, for any month as to which a Locked Price has been
established, Buyer shall be obligated to nominate and take a
quantity of gas equal to the Locked Quantities then in effect.
If Buyer elects to establish a Locked Price for less than all of
the gas nominated to be delivered in any month, and/or if Buyer
and Seller have established more than one Locked Price for
different Locked Quantities, the first gas delivered during said
month shall be the first Locked Quantities established, followed
by any additional Locked Quantities in the order they were
established, followed by any Unlocked Quantities.
8.3.5. Cessation of Futures Trading. If natural gas
futures contracts cease to be traded on the New York Mercantile
Exchange or on any other mercantile exchange acceptable to Seller
in its sole discretion, then after such cessation Seller shall be
relieved of any and all obligation to establish Locked Prices
hereunder.
ARTICLE 9
BILLING AND PAYMENT; AUDIT RIGHTS; CREDIT TERMS
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9.1 Billing and Payment. Not later than the fifteenth day
of each month, Seller shall provide Buyer an invoice (which may
be transmitted by electronic facsimile) setting forth (a) the
Reservation Fee due for the current month, (b) the quantities of
gas delivered at the Point(s) of Delivery during the preceding
month and the amount due therefor, and (c) any deficiency
payments due pursuant to Paragraph 2.5. For example, Seller's
invoice rendered during the month of April would cover gas
delivered during the preceding month of March, any deficiency
payment due for failure to receive or deliver quantities of gas
in March, and the Reservation Fee for April. If actual volumes
are not available at the time Seller issues its invoice, Seller
may invoice based on the volumes ********, subject to appropriate
adjustments to actual volumes when available. Buyer shall make
payment by wire transfer within ten business days following
receipt of Seller's invoice.
9.2 Bona Fide Disputes. If a bona fide dispute arises as
to the amount payable in any invoice rendered hereunder, Buyer
shall nevertheless pay when due the amount not in dispute under
such invoice. Such payment shall not be deemed to be a waiver of
the right by Buyer to recoup any overpayment, nor shall
acceptance of any payment be deemed to be a waiver by Seller of
any underpayment. In the event Buyer fails to forward the entire
undisputed amount due to Seller when same is due, interest on the
unpaid portion shall accrue at a rate equal to two percent above
the prime rate charged by Wells Fargo Bank, San Francisco, from
time to time, or the maximum legal rate, whichever is the lesser,
compounded monthly from the date such payment is due until the
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same is paid. If Buyer's failure to pay the undisputed portion
of any invoice rendered hereunder continues beyond thirty days
after the due date of the payment, then Seller, in addition to
all other legal remedies available to it, shall have the right
and option to suspend further deliveries of gas until such
default shall have been cured.
9.3 Resolution of Billing Disputes. If Buyer withholds
payment of any disputed amount as authorized herein, Buyer shall
within fifteen days after the due date of the disputed invoice
submit to Seller a written explanation of the dispute and any
available supporting documentation. The parties shall then
cooperate in good faith to resolve such dispute as expeditiously
as possible, and the portion, if any, of such disputed amount
eventually determined to be due shall bear interest at the rate
stated in Paragraph 9.2 of this Article 9 from the original due
date until the date actually paid.
9.4 Audit. Each Party shall have the right, during the
term of this Contract and for twenty-four months thereafter, to
examine and audit, at its own expense and at any reasonable time,
the books, records and charts of the other to the extent
necessary to verify the accuracy of any statements or charges
made under or pursuant to any of the provisions of this Contract;
provided, however, that neither Party shall be required to
maintain books, records or charts for a period of more than two
calendar years following the end of the calendar year to which
they pertain. Upon request, Buyer shall also make available to
Seller for audit purposes any relevant records of Buyer's
Transporter(s) to which Buyer has access. A formal audit of
accounts shall not be made more often than once each calendar
year. Any inaccuracy will be promptly corrected when discovered;
provided, however, that neither Party shall have any right to
question or contest any charge or credit if the matter is not
called to the attention of the other Party in writing within two
years after the end of the calendar year to which such charge or
credit pertained.
9.5 Credit Terms. Prior to the commencement of deliveries
of gas hereunder, and at any time and from time to time
thereafter upon request from Seller, Buyer shall provide Seller
such credit information as may reasonably be required by Seller
to determine Buyer's creditworthiness. If, based on the
information provided and Seller's review thereof using generally
accepted financial evaluation standards applied on a non-
discriminatory basis, Seller concludes that Buyer does not
currently meet Seller's reasonable requirements for extension of
unsecured credit in an amount commensurate with the estimated
outstanding receivables under this Contract, Seller may request
and Buyer shall promptly provide an irrevocable standby letter of
credit, guaranty, or other good and sufficient security of a
continuing nature, satisfactory in form, issuer and amount to
Seller, as determined by Seller in its reasonable discretion.
Seller will periodically review its evaluation of Buyer's
creditworthiness and will release any such security instruments
when and if Seller concludes, applying the standards set forth
above, that Buyer meets Seller's requirements for extension of
unsecured credit. Seller shall have the right to delay
commencement of deliveries, or suspend deliveries after they are
commenced, pending Buyer's full compliance with this Paragraph
9.5.
ARTICLE 10
PROCESSING RIGHTS AND INJECTION OF LIQUIDS
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10.1 Seller hereby reserves the right to process all or any
portion of the gas deliverable to Buyer hereunder for the removal
of all or any constituents thereof other than methane, and to
remove such methane as is necessary in the operation of the
processing facilities; provided, however, that Seller's exercise
of such rights shall not have the effect of reducing the
quantities of gas (determined on a thermal basis) sold and
delivered hereunder below Buyer's Nominated Purchase Quantity
pursuant to Article II hereof. Such processing rights may be
exercised either upstream of or, if the Transporter allows,
downstream of the Delivery Point(s) and may be accomplished by
Seller or by any assignee or designee of Seller; provided,
however, that if Seller elects to process gas downstream of the
Delivery Point(s), Seller shall deliver to Transporter for
Buyer's account any additional quantities of gas necessary to
account for any reduction in quantity and/or heating value that
may result from such processing. When Seller is exercising its
right to process the gas (and such right may be exercised at any
time and from time to time during the term of this Contract),
title to the liquefiable hydrocarbons and other constituents
removed or consumed during processing shall not pass to Buyer,
but shall remain at all times in Seller. Buyer and Seller agree
that they will cooperate in good faith to facilitate the exercise
of Seller's processing rights, including, without limitation,
taking the actions described in the remainder of this Article 10.
10.2 Regardless of whether or not Seller initially elects
to process the gas, Buyer shall make reasonable efforts to ensure
that all transportation agreements entered into by Buyer for
transportation of the gas downstream of the Point(s) of Delivery
shall contain a provision acknowledging and providing for the
exercise of Seller's processing rights upon reasonable terms and
conditions at a mutually agreeable point on the system of
Transporter.
10.3 When and if Seller elects to exercise its processing
rights, Buyer and Seller will establish reasonable accounting and
billing procedures so that (a)Buyer will pay only for the
quantities of residue gas remaining after processing (b) all
charges of the Transporter will be equitably allocated between
Buyer and Seller, with Seller paying all costs attributable to
the exercise of its processing rights (including any cash-outs
imposed by Transporter) and Buyer paying all costs attributable
to the gas purchased by it hereunder.
10.4 It is understood that Seller's gas wells may produce
liquid hydrocarbons (condensate) along with the gas well gas to
be delivered hereunder. To the extent that any Point of Delivery
provided for in this Contract is located on an offshore platform,
Buyer agrees that Seller may inject condensate into the gas
stream delivered hereunder for transportation and redelivery to
Seller at a separation facility to be located onshore. Buyer
shall make reasonable efforts to ensure that all transportation
agreements entered into by Buyer for transportation of the gas
downstream of any offshore Point(s) of Delivery shall contain a
reservation in favor of Seller of the right to inject and have
such condensate transported in Transporter's pipeline for
redelivery to Seller at the onshore separation facility. Seller
agrees to bear, or reimburse Buyer for, all charges of
Transporter attributable to the injection, transportation, and
redelivery of Seller's condensate.
10.5 Buyer shall furnish Seller with documentation
establishing the actual charges incurred by Buyer and borne by
Seller under Paragraphs 10.3 and 10.4. Such documentation shall
reflect the method of allocation of such charges between Buyer
and Seller.
10.6 Seller shall indemnify and save Buyer harmless from
all losses, damages, expenses, and liabilities (including
reasonable attorneys' fees) that may occur or be asserted by
reason of accidents or occurrences resulting from Seller's or any
third party's operations as authorized by this Article 10.
ARTICLE 11
TAXES
----------
The price for gas delivered hereunder is inclusive of all
production, severance, ad valorem, or similar taxes levied on the
production or transportation of the gas prior to its delivery to
or for the account of Buyer at the Point(s) of Delivery, and all
such taxes shall be borne and paid exclusively by Seller;
provided, however, that if Buyer is required by law to remit such
taxes to the collecting authority, Buyer shall do so and deduct
the taxes so paid on Seller's behalf from payments otherwise due
to Seller hereunder. The price does not include any Federal,
Indian, State or local sale, use, consumption or similar taxes
which may now or hereafter be imposed on the transfer of title or
possession of the gas to or for the account of Buyer, or on
Buyer's subsequent use or disposition thereof. Any such taxes
shall be paid by Buyer directly to the taxing authority unless
Seller is required by law to collect and remit such taxes, in
which case Buyer shall reimburse Seller for all amounts so paid.
If Buyer claims exemption from any such taxes, Buyer shall
provide Seller a tax exemption certificate or other appropriate
documentation thereof.
ARTICLE 12
LAWS AND REGULATION
-------------------
This Contract is subject to all valid laws, orders, rules
and/or regulations of any and all duly constituted governmental
authorities, Federal, State or local, to the extent such laws,
regulations, and orders are applicable and effective from time to
time; provided, however, that if any such governmental authority
shall take any action or assert any jurisdiction whereby the
sale, delivery, receipt, or use of gas as contemplated hereunder
will be subjected to terms, conditions, or restraints that in the
sole judgment of the Party affected are unduly burdensome or
unacceptable, then such Party, within 30 days after learning of
such action or assertion of jurisdiction, may cancel and
terminate this Contract effective one day prior to the effective
date of such governmental action. In the event of such
termination, the parties agree that all gas received by Buyer
hereunder prior to cessation of deliveries shall be paid for by
Buyer at the rate in effect immediately prior to the termination
of this Contract.
ARTICLE 13
FORCE MAJEURE
-------------
13.1 Suspension of Obligations During Force Majeure. If
either Party hereto is rendered unable, wholly or in part, by
force majeure to carry out its obligations under this Contract,
other than to make payment for gas delivered hereunder, then upon
such Party's giving notice and full particulars of such force
majeure in writing to the other Party as soon as practicable
after the occurrence of the cause relied on, the obligations of
both parties, except unpaid financial obligations arising prior
to the force majeure event, shall be suspended to the extent
and insofar as they are affected by the force majeure event, for
the duration of the force majeure event, but for no longer
period, and to the extent that the force majeure situation can be
mitigated or eliminated by the exercise of due diligence by the
Party claiming force majeure, such Party shall act to remedy the
situation with all reasonable dispatch.
13.2 Relationship of Force Majeure to Seller's Supply
Obligations Under This and Other Contracts. The Parties
acknowledge and agree that Seller may make sales of gas to other
buyers under other firm contracts and that those other contracts
may provide for deliveries of gas on the same Transportation
Segment(s) as this Contract. The Parties further recognize that
a force majeure occurrence affecting Seller's ability to deliver
gas on a Transportation Segment could result in Seller's having
less gas available on that Transportation Segment than Seller is
contractually obligated to deliver under all of those contracts.
If a force majeure occurrence results in Seller's total supply of
available gas on a Transportation Segment being less than the sum
of Seller's total firm sales obligations on that Transportation
Segment, even if such available supply is sufficient to fulfill
Seller's obligations under one or more of such contracts, then
such force majeure occurrence shall be deemed to have rendered
Seller unable to fulfill its obligations under each one of such
contracts, including this Contract, and Seller shall be entitled
to the protection afforded by Section 13.1 so long as Seller
endeavors in good faith to allocate its available supply in
accordance with Section 13.4, giving due regard to the nature of
the force majeure occurrence, any restrictions imposed by
transporters, and the time required for Seller to make alternate
arrangements.
13.3 Definition of Force Majeure. The term "force majeure"
as employed herein means acts of God, strikes, lockouts, or other
industrial disturbances, acts of the public enemy, wars,
blockades, insurrections, riots, epidemics, landslides,
lightning, hurricanes or storms, hurricane or storm warnings
which in Seller's judgment require the precautionary shut-down or
evacuation of production facilities, earthquakes, fires, floods,
washouts, arrest and restraints of governments and people, civil
disturbances, explosions, breakage or accidents to machinery,
equipment, or lines of pipe, freezing of wells or lines of pipe,
partial or entire failure of wells, and any other cause beyond
the reasonable control of the Party affected which renders that
Party unable to carry out its obligations under this Contract.
The settlement of strikes or lockouts shall be entirely within
the discretion of the Party having the difficulty, and 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 opposing party when
such course is inadvisable in the discretion of the Party having
the difficulty.
13.4 Allocation of Supplies During Force Majeure
Occurrences. The Parties recognize and agree that there are no
specific reserves or wells dedicated to this Contract, and that
designation of a Point or Points of Delivery hereunder does not
mean that any gas flowing to any such Point or Points of Delivery
is dedicated specifically to this Contract or to any other
contract before actually being delivered to a buyer. In the
event of a force majeure occurrence affecting Seller's ability to
deliver gas on one or more Transportation Segments associated
with this Contract, unless prevented by the force majeure from
doing so, Seller shall take the following actions, in the order
listed, to the extent reasonably necessary to maintain or restore
its deliveries to Buyer and Seller's other firm sales customers,
which, for all purposes of this Article 13 shall be deemed to
include any of Seller's own corporate facilities receiving gas on
the affected Transportation Segment(s) under a written memorandum
of understanding:
1. Curtailing or interrupting some or all of Seller's
interruptible sales on the affected Transportation Segment(s).
2. Delivering all or part of the gas to be delivered
hereunder at any mutually agreeable alternate Point(s) of
Delivery on the affected Transportation Segment(s) (excluding any
storage facilities owned or held by Seller) where Seller has gas
which can be delivered to Buyer without violating other
contractual obligations of Seller.
If, in response to a force majeure occurrence, Seller takes the
above actions and still is unable to meet all of its firm sales
obligations on the affected Transportation Segment(s), then
Seller shall curtail ratably its firm sales customers (including
Buyer) receiving gas on the affected Transportation Segment(s)
based on each customer's nominated quantities on the affected
Transportation Segment(s). If, at the inception of any force
majeure occurrence, Seller is delivering gas from a single source
to more than one Transportation Segment (i.e., from a split-
connected source) Seller shall curtail deliveries from that
source to each such Transportation Segment on a pro rata basis,
based on the relative quantities nominated by Seller's firm
customers on each of the affected Transportation Segments.
13.5 Special Arrangements. During any period when Buyer's
Nominated Purchase Quantity is being prorated as provided above,
Seller shall also use reasonable efforts to locate and offer to
Buyer substitute gas supplies on other Transportation Segments or
other pipeline systems in the vicinity of the affected
Transportation Segment, but only to the extent that (a) Buyer has
so requested, (b) Seller can do so without violating Seller's
contractual obligations to other customers, and (c) Buyer and
Seller first agree on the allocation between them of any
additional costs incurred in utilizing such alternate sources.
If such substitute supplies are available, Seller shall use
reasonable efforts to equitably allocate them among Buyer and
other adversely affected firm customers which are capable of
receiving gas at the alternate sources.
ARTICLE 14
WARRANTY OF TITLE AND ROYALTIES
-------------------------------
14.1 Title. Seller hereby warrants title to the gas sold
by it hereunder and its right to sell the same and warrants that
all such gas shall be delivered by Seller free from all liens,
encumbrances and adverse claims, including, but not limited to
liens to secure payment of production taxes, severance taxes and
other taxes.
14.2 Royalties and Other Charges. Seller shall pay or
cause to be paid all royalties and other sums due on the
gathering and handling of the gas prior to its delivery to Buyer.
14.3 Indemnity. Seller shall indemnify and save Buyer
harmless from and against all suits, actions, damages, costs and
expenses arising from or out of any breach of Seller's
obligations, representations, or warranties as expressed in this
Article 14.
ARTICLE 15
TERM
----------
This Contract shall become effective as of the date first
above written and shall continue in force and effect, unless
terminated earlier under the provisions hereof, for a primary
term of five months. After the primary term, this Contract shall
continue in effect on a month to month basis, unless and until
terminated by either Party giving written notice to the other at
least thirty days prior to the end of the primary term or any
successive one month extension.
ARTICLE 16
RESOLUTION OF DISPUTES
----------------------
16.1 Any dispute arising under any paragraph of this
Contract shall be resolved as provided in this Article. During
the process of dispute resolution, the parties shall continue
performance of their respective obligations under this Contract.
16.2 Prior to resorting to mediation or litigation, the
parties agree to consult about any differences they may have
under this Contract.
16.3 Prior to initiating litigation hereunder, the parties
agree to attempt to mediate their dispute through the selection
of a mutually acceptable neutral mediator upon such terms and
conditions as they might agree to.
16.4 If, after a period of two months after selection of
the neutral mediator, the parties are unable to reach agreement
through mediation, either Party may then resort to litigation or
any other legal remedy which may be available to resolve the
dispute.
16.5 Neither Party shall be required to delay the
commencement of litigation in order to comply with this Section
16 unless the other Party first agrees to toll any applicable
statute of limitations that might otherwise require commencement
of litigation to preserve either Party's rights in the disputed
matter.
ARTICLE 17
CONFIDENTIALITY
---------------
17.1 Except as specifically provided herein, each Party
agrees that it will maintain this Contract and all terms and
conditions of this Contract in strictest confidence and that it
will not cause or permit disclosure of this Contract or of the
contents thereof to any third party without the express written
consent of the other Party hereto; provided, however, that such
third party restriction does not apply to affiliated companies.
Disclosures otherwise prohibited by this Article 17 may be made
by either Party (a) to the extent necessary for such Party to
enforce its rights hereunder against the other Party, (b) to the
extent a Party is contractually or legally bound to disclose
financial information to a third party such as a royalty owner or
partner, or (c) to the extent to which a Party hereto is required
to disclose all or part of this specific Contract by a statute or
by a court, agency, or other governmental body exercising
jurisdiction over the subject matter hereof or the parties
hereto, by order, regulation or by other compulsory process
(including, but not limited to, deposition, subpoena,
interrogatory, or request for production of documents).
17.2 If either Party is or becomes aware of a fact,
obligation or circumstance that has resulted or may result in a
disclosure authorized in Section 17.1, it shall so notify the
other Party immediately and shall provide documentation or an
explanation of the disclosure as soon as it is available. Each
Party further agrees to cooperate to the fullest extent in
seeking confidential status to protect any material so disclosed.
17.3 The Parties hereto acknowledge that independent legal
counsel or consultants may, from time to time, be provided with a
copy of this Contract and agree that such disclosure does not
require consent by the other Party, provided that such counsel or
consultant affirms in writing to the client that they agree to
abide by the terms and conditions of this Article 17.
ARTICLE 18
MISCELLANEOUS
-------------
18.1 Waivers. No waiver by either Seller or Buyer of any
default of the other under this Contract shall operate as a
waiver of future default, whether of like or different character
or nature.
18.2 Binding Nature; Assignment As Security. This Contract
shall be binding upon and inure to the benefit of the successors
and assigns, or the heirs, administrators, or executors of the
Parties hereto. Either Party hereto may assign its right, title
and interest in, to and under this Contract, including without
limitation, any and all renewals, extensions, amendments, and/or
supplements herein to any individual, bank, trustee, company or
corporation as security for any notes, bonds or other obligations
or securities of such assignor; provided, however, that no such
assignment shall in any way operate to enlarge, alter or change
any obligation of the other Party hereto.
18.3 Assignment. Seller and Buyer reserve the right to
assign this Contract partially or in its entirety to any of their
affiliates; however, ultimate responsibility for performance
hereunder shall remain with the respective Party hereto. Except
as otherwise provided in this Contract, this Contract may not be
assigned by either Party without the written agreement of the
other Party.
18.4 Notices. Any notice, request, demand, or statement,
provided for in this Contract, except as otherwise herein
provided, may be given in writing, delivered in person or by
United States Mail or by any other recognized delivery service,
to the parties hereto at the addresses shown below or at such
other addresses as may hereafter be furnished to the other Party
in writing:
BUYER: INVOICES, NOTICES, AND CORRESPONDENCE
Yankee Gas Services Company
P.O. Box 1030
599 Research Parkway
Meriden, Connecticut 06450-4050
Attention: Mr. Dave Egelson
Telecopy No.: (203) 639-4050
SELLER: Correspondence and Notices
Chevron U.S.A. Production Company
1301 McKinney
P.O. Box 2100
Houston, TX 77252
Attention: Natural Gas Supply and Marketing
Payments Shall Be Made By Wire Transfer To:
Chevron U.S.A. Production Company
Account No. 59-51704
First National Bank of Chicago, Illinois
ABA Ref. No. 071000013
Statements
Chevron U.S.A. Production Company
P.O. Box J - Section 726 G - East Team
Concord, California 94524
Any notice initially delivered by telecopy shall be confirmed by
regular mail within one week after transmission of the telecopy.
18.5 Choice of Law. The parties agree that Connecticut law
exclusively shall govern all terms of this Contract, including
this paragraph, disregarding, however, any applicable conflict-
of-laws provisions that would require the application of the law
of some other state. If either Party initiates litigation
relating to this Contract, then, in addition to complying with
any applicable statutory notice requirements, such Party shall
give the other Party notice thereof by certified mail, return
receipt requested, at the most recent address provided by such
Party in accordance with Section 18.4.
18.6 Modifications. No modification of the terms and
provisions of this Contract shall be or become effective except
pursuant to and upon the due and mutual execution of an
appropriate supplemental written contract by the Parties hereto.
18.7 No Third Party Beneficiaries. It is specifically
agreed that there are no third party beneficiaries to this Contr-
act, and that this Contract shall not impart any rights
enforceable by any person, firm, organization, or corporation not
a Party hereto.
18.8 Conflicts of Interest. No director, employee, or agent
of either Party shall give or receive any commission, fee,
rebate, gift, or entertainment of significant cost or value in
connection with this Contract. Any mutually agreeable
representative(s) authorized by either Party may audit the
applicable records of the other Party solely for the purpose of
determining whether there has been compliance with this
paragraph.
IN WITNESS WHEREOF, the parties have executed this Contract
in duplicate originals, each of which shall constitute and be an
original contract.
BUYER: YANKEE GAS SERVICES COMPANY
By: /s/ Thomas J. Houde
--------------------------------
Title: Vice President - Rates and
Resource Planning
SELLER: CHEVRON U.S.A PRODUCTION
COMPANY, a division of
Chevron U.S.A. Inc.
By: /s/ D. H. MacLean
---------------------------------
Title: Assistant Secretary
EXHIBIT A
To Gas Purchase Contract effective November 1, 1993,
between CHEVRON U.S.A. PRODUCTION COMPANY, as Seller
and
YANKEE GAS SERVICES COMPANY, as Buyer.
POINTS OF DELIVERY
Texas Eastern
Pooling Zone Delivery Point Maximum Quantity
- ----------------- -------------- ----------------
West Louisiana Pool Cameron System ******** MMBtu/day*
Service Point
No. 79503**
East Louisiana Pool Venice System ******** MMBtu/day*
Service Point
No. 79504**
* Plus fuel and lost and unaccounted for gas as required by the
Transporter's tariff.
** Chevron will deliver to the listed Service Points using its
TABS-I Agreement, which is currently designated as No. 600243.
********CONDIFENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
EXHIBIT B
To Gas Purchase Contract effective November 1, 1993,
between CHEVRON U.S.A. PRODUCTION COMPANY, as Seller
and
YANKEE GAS SERVICES COMPANY, as Buyer.
BUYER'S MONTHLY PURCHASE NOMINATION
To: Chevron U.S.A. Production Company
1301 McKinney Street
P.O. Box 2100
Houston, TX 77252
Attention: Natural Gas Business Unit--Gas Control
Telecopy No. (713) 754-3840
Buyer's Nominated Purchase Quantity under the captioned contract
for the month of , 199 , inclusive of any Price
Locked quantities, shall be a total of MMBtu per day,
plus fuel and lost and unaccounted for gas as required by the
Transporter's tariff.
If any daily quantities included in the above total have been
Price Locked pursuant to Paragraph 8.3 of the Contract they are
listed separately below:
Locked Locked Date of
Quantity Price Price Lock Confirmation
MMBtu/d $
- --------- ---------- ------------------------------
MMBtu/d $
- --------- ---------- ------------------------------
MMBtu/d $
- --------- ---------- ------------------------------
YANKEE GAS SERVICES COMPANY
By:
---------------------------
Title:
-------------------------
Date:
--------------------
EXHIBIT "C"
To Gas Purchase Contract effective November 1, 1993,
between CHEVRON U.S.A. PRODUCTION COMPANY, as Seller
and
YANKEE GAS SERVICES COMPANY, as Buyer.
[Date]
Price Lock Confirmation
Under Gas Purchase Contract
Our Contract No.
--------------
Yankee Gas Services Company
P.O. Box 1030
599 Research Parkway
Meriden, Connecticut 06450-4050
Attention: Mr. Dave Egelson
Gentlemen:
In accordance with that certain Gas Purchase Contract effective
November 1, 1993, by and between Chevron U.S.A. Production
Company, a division of Chevron U.S.A. Inc., as Seller, and,
Yankee Gas Services Company, as Buyer, which contract is
incorporated herein and made a part hereof, Seller hereby
confirms establishment of the following "Locked Price" and
"Locked Quantities" as previously discussed and agreed orally:
Date of Parties' Oral Agreement:
----------------------------
Month of Delivery Affected:
---------------------------------
Locked Quantities (MMBtus/day):
------------------------------
Locked Price ($/MMBtu):
--------------------------------------
Previously Locked Quantities for this month:
----------------
Remaining Unlocked Quantities (MMBtus/day):
-----------------
THIS PRICE LOCK CONFIRMATION IS BINDING UPON THE PARTIES UNLESS
BUYER NOTIFIES SELLER OF A DISPUTE WITH ALL OR A PORTION HEREOF
FORTY-EIGHT (48) HOURS (EXCLUSIVE OF WEEKENDS AND CHEVRON
HOLIDAYS) AFTER BUYER'S RECEIPT THEREOF.
Very truly yours,
CHEVRON U.S.A. PRODUCTION COMPANY,
a division of Chevron U.S.A. Inc.
By:
---------------------------
Trading Representative
Date
---------------------
Approval and Execution
Review: CA T/M/ETR
--------