EXHIBIT 10.24
GAS TRANSPORTATION AGREEMENT
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THIS AGREEMENT, made and entered into as of this 14th day of June,
1994, by and between MESA Operating Co., a Delaware corporation, acting on
behalf of itself and as agent for Hugoton Capital Limited Partnership
(HCLP) hereinafter collectively referred to as "Shipper," and WESTERN
RESOURCES, INC., a Kansas corporation, hereinafter referred to as WR."
WITNESSETH
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WHEREAS, Shipper desires that certain volumes of gas be delivered to
WR, and
WHEREAS, WR is willing on behalf of Shipper to compress and transport
such gas through WR's facilities and deliver such gas for Shipper's account
at the interconnect point(s) specified herein or at such other interconnect
point(s) as may be mutually agreed to between the parties with such
compression and transportation to take place pursuant to this Agreement
between WR and Shipper and with WR to be paid for such compression and
transportation by Shipper as hereinafter set forth; and
WHEREAS, WR is agreeable to compressing and transporting such gas on a
firm basis, in accordance with the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants and premises
set forth herein, the parties hereto agree as follows:
ARTICLE I
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DEFINITION OF TERMS
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Except where the content expressly states another meaning, the
following terms, when used in this Agreement shall have the following
meanings:
1.1 The term "day" shall mean a period of twenty-four (24) consecutive
hours beginning and ending at 8:00 a.m. local time.
1.2 The term "month" shall mean the period of time beginning at 8:00
a.m. local time on the first day of the calendar month and ending at 8:00
a.m. local time on the first day of the next succeeding calendar month.
1.3 The term "quarter" shall mean a three-month period beginning
January 1st, April 1st, July 1st or October 1st.
1.4 The term "contract year" shall mean a period of twelve (12)
consecutive months beginning on the first day of the month during the
occurrence of initial deliveries of gas hereunder. The last contract year
of this Agreement shall end at the termination hereof as provided in Article
XI of this Agreement.
1.5 The term "cubic foot" shall mean the volume of gas which occupies
one cubic foot when such gas is at a temperature of sixty degrees Fahrenheit
(60 degrees sign F), and at a pressure of fourteen and sixty-five hundredths
pounds per square inch absolute (14.65 psia) dry and corrected for deviation
from ideal gas behavior.
1.6 The term "MCF" shall mean one thousand (1,000) cubic feet of gas;
the term "MMCF" shall mean one million (1,000,000) cubic feet of gas; and
the term "BCF" shall mean one billion (1,000,000,000) cubic feet of gas.
1.7 The term "British Thermal Unit (BTU)" shall mean the amount of
heat required to raise the temperature of one pound of water from fifty-nine
degrees Fahrenheit (59 degrees sign F) to sixty degrees Fahrenheit (60
degrees sign Fahrenheit) at a pressure of fourteen and sixty-five hundredths
pounds per square inch (14.65 psia). The term "MMBTU" shall mean one
million (1,000,000) BTU.
1.8 The term "gross heating value" means the total calorific value,
expressed as BTU per cubic foot, and obtained pursuant to Paragraph 7.11 of
ARTICLE VII of the amount of gas which would occupy the volume of one cubic
foot on a dry basis.
1.9 The term "gas" shall mean natural gas or a mixture of hydrocarbons
or of hydrocarbons and noncombustible gas, helium or other inerts, in a
gaseous state, consisting predominantly of methane.
ARTICLE II
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DELIVERY AND REDELIVERY
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2.1 Subject to the further provisions of this Agreement, Shipper
agrees to deliver to cause to be delivered to WR at the point(s) of
interconnect as set forth Exhibit "A," attached hereto and made a part
hereof, hereinafter called the "Delivery Point(s)," or at such other points
as the parties may mutually agree and place on Exhibit "A," and WR agrees to
accept, compress, transport and redeliver, (i) up to one hundred thirty
(130) MMCF per day of gas on a firm basis during the months of April through
October and up to an additional (thirty) (30) MMCF per day of gas on an
interruptible basis, and (ii) up to one hundred forty-five (145) MMCF per
day of gas on a firm basis during the months of November through March and
up to an additional fifteen (15) MMCF per day of gas on an interruptible
basis. Except for events of force majeure and scheduled maintenance, WR
cannot refuse to accept, compress, transport or redeliver gas delivered by
Shipper on a firm basis up to the maximum firm quantities specified above.
WR shall redeliver volumes of gas, containing the same number of BTU's,
equivalent gallons of ethane and heavier hydrocarbon products, and
equivalent cubic feet of helium as the gas contained when accepted by WR,
except for any reduction for any natural gas liquids which may occur as a
result of natural condensation in the compression or transportation process,
to the point(s) of interconnect as set forth on Exhibit "B," attached hereto
and made a part hereof, hereinafter called the "Redelivery Point(s)," or at
such other points as the parties may mutually agree and place on Exhibit
"B." The acceptance and inclusion of additional Delivery and Re-delivery
Points under this Agreement shall be at WR's sole discretion.
2.2 Shipper shall separately deliver to WR at the outlet of the
Satanta Plant a daily volume of residue gas equivalent to the volume fuel
actually incurred in providing the services hereunder at WR's Ulysses
compressor station and in WR's pipeline facilities between the Delivery and
Redelivery Point(s), up to a maximum of two and thirty-eight hundredths
percent (2.38%) of the volumes accepted from Shipper by WR for compression
and transportation at the Intermediate Delivery Point hereunder. On July 1,
1996, and each succeeding July 1st during the remaining term of this
Agreement, at WR's option, said maximum percentage may be redetermined by
WR. WR shall use its best judgement in redetermining said percentage based
on actual fuel consumption incurred in providing the service hereunder at
WR's Ulysses compressor station and in WR's pipeline facilities between the
Delivery and Redelivery Point(s).
2.3 Commencing on the date of first acceptance by WR of gas at the
Delivery Point(s), and continuing thereafter during the term hereof, WR
shall redeliver at the Redelivery Point(s), volumes of gas containing the
same number of BTU's equivalent gallons of ethane and heavier hydrocarbon
products, and equivalent cubic feet of helium as the gas contained when
accepted by WR, except for any reduction for any natural gas liquids which
may occur as a result of natural condensation in the compression or
transportation process, from Shipper under said Paragraph 2.1 at the
Intermediate Delivery Point. Measurement of gas at the Redelivery Point(s)
shall be through facilities installed, operated and maintained by the party
owning such facility or as new delivery points may be added, by WR or others
as may be designated.
2.4 Delivery and redelivery may be at points through which other
volumes of gas are being measured; therefore, the measurement of the
volumes of gas delivered and redelivered under this Agreement shall be
considered as part of the total volumes measured through the meter. Each
party hereto will furnish or cause to be furnished to the other party hereto
all data required to accurately account for all gas delivered and
redelivered hereunder.
2.5 Nothing in this contract shall require WR to increase the capacity
of the existing compressor station or pipeline system. WR shall sustain the
capacity of the existing compressor station and pipeline system at current
levels and shall maintain such facilities in good working order.
ARTICLE III
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SCHEDULING, REPORTING AND BALANCING DELIVERIES
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3.1 At least ten (10) days prior to the first day of each quarter of
each calendar year, or at such other times as may be mutually agreeable to
the parties hereto, Shipper shall furnish to WR a written schedule showing
the estimated daily quantity of gas it desires to WR to transport hereunder
during each month of the following four quarterly periods. This schedule is
prepared only to allow the parties hereto to schedule maintenance on
compressors and other facilities. Both parties understand and agree that
this schedule reflects estimates only and such estimates may change from
time to time. WR agrees to use its best efforts to schedule and reasonable
commercial efforts to perform maintenance on its compressors and other
facilities in a manner which would allow Shipper to produce the estimated
quantities of gas provided pursuant to this Section 3.1, as such estimates
may change from time to time.
3.2 Shipper shall on a daily basis by nine o'clock (9:00) a.m. or on
some other mutually agreeable basis, verbally advise WR's Gas Control
Department as to the volumes and estimated BTU content of the gas by
delivery point which Shipper desires transported hereunder.
3.3 Either party of its designee owning the measurement facilities
will report or cause to be reported to the other party on a daily basis, the
volumetric activity regarding that delivery or redelivery point. Such
reported volumes will be a field approximation and not of accounting
accuracy.
3.4 Notwithstanding the quarterly estimate discussed in Paragraph 3.1
above, Shipper may nominate, in writing, a transport volume by the 20th of
each month specifying the daily volumes to be transported, and WR shall
notify Shipper, in writing by the 25th of its acceptance of such original
nomination (the Original Nomination). When such Original Nomination is
subsequently modified by both parties, in writing, then such nomination, as
changed, shall nevertheless be deemed the Original Nomination for the
applicable transport month.
3.5 Whenever during any month, Shipper desires to change its
transportation nomination for the remaining day(s) in that month or desires
to change its transportation nomination on a daily basis or for any hour(s)
on any particular day(s), it may do so provided (i) Shipper requires such a
change(s), in writing, at least four hours prior to such change being
effective and (ii) WR accepts such change(s), in writing, within two hours
of Shipper's required change(s) in its nomination(s). WR shall charge the
rate provided for herein on the actual monthly transport volume. If the
actual monthly transport volume is less than ninety percent (90%) of the
Original Nomination, Shipper shall nevertheless pay WR as though ninety
(90%) of the Original Nomination had been transported if (1) such shortfall
was not the result of force majeure, (2) such shortfall was not caused by WR
and (3) WR demonstrates to Shipper that WR was unable to transport such
volumes for other parties for the month as a result of Shipper's Original
Nomination.
3.6 While it is the intent of the parties hereto that gas delivered to
WR hereunder be redelivered concurrently, it is recognized that due to
operating conditions, the volumes of gas delivered may not be equal to the
volume of gas redelivered on any one particular day. The parties shall use
their best efforts to keep such variances to a minimum, and therefore agree
to undertake to balance deliveries and redeliveries monthly on a BTU basis.
Any monthly BTU imbalance shall be eliminated within the next thirty (30)
days or some other mutually agreeable time period. Upon termination of this
Agreement, any party owning gas hereunder shall tender for delivery or
redelivery at the point herein designated the amount of such deficiency
within sixty (60) days from the date of such termination. It is understood
and agreed that there will be complete balancing upon or following
termination of this Agreement and that the provisions of this Paragraph
shall survive the termination of the other portions of this Agreement until
such time as such balancing is attained. Should, after a period of sixty
(60) days, Shipper be unable to eliminate a balance of gas residing in WR's
system due to Shipper's failure to provide for the redelivery of said gas,
then WR shall purchase said gas from Shipper at the spot market price
discussed below, expressed in dollars per MMBTU dry, in effect for the month
said gas is purchased. Should, after a period of sixty (60) days, Shipper
not delver gas to make-up a shortage in its account on WR's system, Shipper
shall pay WR for each MMBTU required to eliminate said shortage at one
hundred five percent (105%) of the spot market price discussed below,
expressed in dollars per MMBTU dry, in effect for the month in which the
shortage is eliminated. Said spot market price shall be equal to the
arithmetic average of the five (5) "Index" MMBTU price postings representing
deliveries to the pipeline systems of ANR Pipeline Co. (Oklahoma region),
Natural Gas Pipeline Co. of America (Oklahoma and Kansas region), Northern
Natural Gas Co. (Texas, Oklahoma and Kansas region), Panhandle Eastern
Pipeline Co. (Texas and Oklahoma region) and the Williams Natural Gas Co.
(Texas, Oklahoma and Kansas region) as reported in the first issue of Inside
FERC Gas Marketing Report for the month in which said gas is purchased by WR
or said shortage is eliminated by Shipper, respectively.
ARTICLE IV
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QUANTITY
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4.1 Shipper shall deliver to WR each contract year a minimum quantity
of twenty (20) BCF at the Delivery Point(s), with daily quantities delivered
to and accepted by WR at the Delivery Point(s) up to the maximum quantities
as specified in Section 2.1.
4.2 It is understood that WR is currently obligated to transport up to
thirteen (13) MMCF per day on a firm basis for other customers from the
Initial Delivery Point to the Final Redelivery Point. In the event
insufficient firm capacity is available to transport both the quantities
specified in Section 2.1 and the firm quantity stated above which WR is
currently obligated to serve, the total available firm capacity will be
allocated among WR's firm customers based on the ratio between each
customer's firm (MDQ's) WR is obligated to serve. Notwithstanding the
above, the total available firm capacity allocated to Shipper will not be
less than ninety-one and eight tenths percent (91.8%) of the total available
firm capacity in the months of November through March and will not be less
than ninety and nine tenths percent (90.9%) of the total available firm
capacity in the months of April through October.
ARTICLE V
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QUALITY
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5.1 All natural gas delivered and redelivered under the terms of this
Agreement shall be of merchantable quality and conform to the following
specifications:
(a) Oxygen - the gas shall be free of oxygen
(b) Hydrogen Sulfide - the hydrogen sulfide content shall not exceed
one quarter (1/4) grain per one hundred (100) cubic feet).
(c) Carbon Dioxide - the carbon dioxide content shall not exceed five
hundred (500) parts per million.
(d) Liquids - the gas shall be free of water and hydrocarbons in
liquid form at the temperature and pressure at which the gas is
delivered. the gas delivered at the Intermediate Delivery Point
and the Final Redelivery Point shall in no event contain water
vapor in excess of seven pounds (7#) per million cubic feet.
(e) Dust, Gums and Solid Matter - the gas shall be commercially free
of dust, gum and other solid matter.
(f) Heating Value - the gas shall have a heating content of not less
than nine hundred and fifty (950) BTU per cubic foot at fourteen
and seventy-three hundredths pounds per square inch absolute
(14.73 psia) saturated.
(g) Total Sulphur - the gas shall not contain more than twenty (20)
grains of total sulphur per one hundred (100) cubic feet of gas as
determined by a method generally acceptable for use in the gas
industry.
5.2 If, at any time, gas tendered for delivery and/or redelivery
hereunder shall fail to conform to any of the quality specifications set
forth above, the receiving party may, at its option, refuse to accept
delivery and/or redelivery and be absolved of any further obligation to
perform, pending correction of the deficiency by the delivering party. The
receiving party shall notify the delivery party of the deficiency as soon as
possible after its occurrence. However, if Shipper delivers to WR gas which
conforms to all of the quality specifications set forth above, the WR must
redeliver to Shipper gas which conforms to all of the quality specifications
set forth above and WR will perform whatever work is required to cause the
gas to meet such quality specifications.
ARTICLE VI
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PRESSURES
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6.1 Shipper shall deliver gas to WR at the Initial Delivery Point at a
pressure of not less than one hundred (100) psig. After compression by WR,
the gas shall be delivered to Shipper at the Intermediate Redelivery Point
at a pressure not more than six hundred (600) psig nor less than five
hundred (500) psig. After dehydration or processing by Shipper, the
pressure of the gas or residue gas redelivered to WR at the Intermediate
Delivery Point shall not decline by more than ten (10) psi if dehydrated
only, or more than twenty-five (25) psi if dehydrated and processed from the
pressure such gas was delivered at the Intermediate Redelivery Point. WR
shall deliver gas dehydrated by Shipper, back to Shipper at the inlet to the
Satanta Processing Plant at a pressure of not less than four hundred ninety
(490) psig.
ARTICLE VII
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MEASUREMENT AND HEATING VALUE DETERMINATION
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7.1 Gas delivered to WR under this Agreement shall be measured at
prevailing meter pressures and the volumes thereof shall be calculated and
accounted for as between the parties hereto on the basis of a standard cubic
foot of gas at a pressure of fourteen and sixty-five hundredths pounds per
square inch (14.65 psia) and a temperature of sixty degrees Fahrenheit (60
degrees sign F), computed in accordance with Boyle's Law governing pressure
and volume of gases (with correction for deviation as hereinafter provided).
7.2 Gas redelivered under this Agreement by WR shall be measured and
calculated by the party owning said measurement facilities or his designee
at the point(s) of redelivery as described in Exhibit "B." The basis of
measurement shall be as described in Paragraph 7.1 above. All delivery and
re-delivery measurement shall be expressed or re-expressed on the same
pressure base for balancing and billing purposes as provided for herein.
7.3 Gas volumes and BTU/CF measurements shall be corrected to reflect
the actual water vapor content of the gas as delivered or redelivered. Any
gas which contains water vapor of seven pounds (7#) per MMCF or less shall
be deemed "dry".
7.4 The specific gravity of the gas delivered or redelivered hereunder
shall be determined by the party currently operating the measurement
facilities as often as is found necessary in practice and in accordance with
an approved method, provided that such test shall be preceded by reasonable
notice to the other parties in order that they may have a representative
present.
7.5 The temperature of the gas delivered and redelivered hereunder
shall be determined by means of recording thermometers of standard
manufacture so installed that they may properly record the temperature of
the gas delivered and redelivered through meters. The arithmetical average
of the hourly temperature recorded for each period shall be used in
correcting the volume of gas measured during said period to the standard
provided in Paragraph 7.1 and 7.2 above.
7.6 The deviation of the gas from Boyle's Law at the pressure and
temperatures at which the gas is measured shall be by tests and analyses
performed as often as the parties hereto deem necessary. The method of
making such tests or analyses shall be determined by mutual agreement.
7.7 It is assumed and agreed that the values of the Reynolds number
factor and the expansion factor are ONE (1).
7.8 The pressure and uncorrected volumes of gas delivered and
redelivered hereunder shall be measured by standard type metering equipment
constructed as required by WR, at the Point(s) of Delivery and Redelivery
hereunder. Orifice metering facilities shall be constructed in accordance
with Gas Measurement Committee Report No. 3, dated April 1955, of the
Natural Gas Department of the American Gas Association and any subsequent
amendments thereof which are mutually agreeable to the parties hereto, and
volumes shall be calculated in accordance with said Gas Measurement
Committee Report No. 3, or as hereafter amended.
7.9 Either party shall have access to the metering equipment at all
reasonable times, but calibrations and adjustments thereof and changing of
charts shall be done by the employees or agents of the owning party and such
party shall change the charts in accordance with good practice and shall
keep said meters accurate and in good repair. The meters shall be tested
and calibrated by the owning party monthly, or as often as is found
necessary in practice, provided that such tests shall be preceded by
reasonable notice to the parties in order that the parties may have
representatives present. Either party may challenge the accuracy of any
meter and if, after testing, such meter is found by the owning party to be
inaccurate by an amount exceeding one percent (1%), high or low, then said
party shall repair the meter and make the necessary volume corrections,
based on the extent of the inaccuracy and adjusting back to zero percent
(0%), for the time the meter has been inaccurate, provided that in no event
shall corrections extend back beyond the date of the preceding tests. If
the meter, when challenged, is found to be accurate within one percent (1%),
high or low, then the cost of the test shall be borne by the requesting
party and the meter shall be repaired to measure accurately. If for any
reason any meter shall be out of service or repair so that the amount of gas
delivered cannot be ascertained or computed from the reading thereof, the
gas delivered during the period the meter is out of service or repair shall
be estimated and agreed upon by the parties upon the basis of the best data
available suing the first of the following methods which is feasible: (1)
By using the registration of any check meter(s) installed and accurately
measuring; (2) By correcting the error if the percentage of error is
ascertainable by calibration, test or mathematical calculation; (3) By
estimating the quantity of delivery by deliveries during preceding periods
under similar conditions when the meter was registering accurately. If the
period that the meter is out of service or repair not known or agreed upon,
the correction shall be made for a period equal to one half (1/2) the time
since the date of the last test, but not exceeding thirty (30) days.
7.10 The charts and records from the metering equipment shall remain
the property of the owning party but, upon request of the other party, the
owning party shall submit same to the other party together with calculations
therefrom, for such party's inspection and verification, subject to return
within twenty (20) days from receipt thereof, after which the charts and
records shall be kept on file by the owning party for a period of time not
less than specified by Kansas law and may then, at the owning party's
option, be destroyed.
7.11 The gross heating value of the gas delivered and redelivered
hereunder shall be determined monthly by gas chromatography from a
continuous sample of the gas taken at the Intermediate Delivery Point. From
this analysis, a determination of the gross heating value will be made in
accordance with the latest published procedures by the Gas Processors
Association. The continuous sample will be taken such that the monthly
measured volume and monthly BTU/CF content are for the same period and will
be used together in payment calculations for the gas delivered to WR and
redelivered by WR.
7.12 In the event daily BTU calculations are required, the monthly
BTU/CF determination derived from the analysis of the monthly continuous or
periodic sample would be applicable to each and every daily volume in the
given month. As an alternative to gas chromatography, WR may determine the
gross heating value of the monthly continuous or periodic sample by a
calorimeter employing the Thomas Principle of Calorimetry described in
Research Paper #519 published by the U.S. Department of Commerce. In the
event a continuous sample is lost or inadvertently destroyed, the previous
month's gross heating value will be applied unless a mutually agreeable
alternate source of accurate data is available for that month. All tests
and analyses of samples shall be preceded by reasonable notice to the other
party in order that such party may have a representative present.
7.13 If during the term hereof, any new and improved method or
technique is developed for gas measurement or for determination of factors
used in gas measurement, such new and improved method or technique may be
substituted for the gas measurement described herein by mutual agreement of
the parties.
ARTICLE VIII
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RATES
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8.1 For gas transported on behalf of Shipper hereunder, Shipper shall
pay WR a transportation rate equal to six cents ($.06) for each MCF of gas
transported from the Initial Delivery Point to the Final Redelivery Point
based on the volumes of gas actually delivered by WR for Shipper's account
at the Final Redelivery Point. The transportation rate shall escalate at
four percent (4%) on each annual anniversary date beginning June 1, 1996.
8.2 The parties hereto agree that transportation of gas hereunder
shall not include storage service.
8.3 Should it appear to WR that it will be required to incur
additional costs of any kind, excluding property, ad valorem, franchise and
income taxes and costs of administering this agreement or operating,
maintaining, or replacing existing capacity, equipment, pipelines, or
facilities used and useful in the performance of this Agreement and not
otherwise identified in this Agreement, WR shall advise Shipper of its
estimate of such costs with supporting workpapers, the reasons such costs
are expected to be incurred to provide service, and the changes required in
Shipper's nominations and scheduling of gas transportation needed to avoid
incurrence of such costs in writing before WR incurs such costs. Shipper
shall have the right to alter its nominations and schedules to avoid the
necessity for WR to incur such additional costs. The notice provided for in
this Section 8.3 will allow Shipper a reasonable time, not less than thirty
(30) business days, in which to take action to avoid the incurrence of such
costs by WR. If Shipper does not take appropriate action in the period
specified in the notice, WR will be authorized to increase the rates and
charges to Shipper hereunder in an amount sufficient to allow it to recover
such additional costs over the then-remaining term of this agreement.
8.4 In each contract year during the term of this Agreement, Shipper
shall purchase or pay for an annual quantity of natural gas transportation
service equal to the minimum annual quantity specified in Article IV (20 BCF
per contract year) at the then effective transportation rate. If Shipper
transports less than the annual minimum amount and such deficiency was not
caused by WR, WR shall, in its first invoice after the end of the applicable
contract year, invoice Shipper for the difference between Shipper's actual
annual transportation quantity and such minimum annual quantity in the
applicable contract year at the transportation rate in effect in the last
month of the applicable contract year and Shipper shall be obligated to pay
such charges. In any contract year after Shipper has, by virtue of this
Paragraph 8.4, been required to pay transportation charges for volumes not
transported, Shipper may transport such deficient volumes on an
interruptible basis by providing WR written notice of the volume to be
transported hereunder and subject to the availability of capacity to
transport such volumes. Shipper may not transport such deficient volumes
hereunder in any contract year until it shall have first transported under
this Agreement the minimum annual quantity Specified in Article IV for that
contract year. In connection with the transportation of such deficient
volumes, Shipper shall, in addition to the charges previously paid to WR,
pay WR the difference between the transportation rate in effect hereunder
when such volumes are actually transported and the rate which was in effect
and applied to such deficient volumes at the time such deficiency was
incurred. Shipper shall have six (6) months after termination of the
Agreement to make up any deficient volumes that may have previously
occurred.
ARTICLE IX
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BILLING AND PAYMENT
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9.1 Following the commencement of deliveries and redeliveries pursuant
to Paragraph 2.1 and 2.3 herein, WR shall on or before the tenth (10th) day
of each month submit to Shipper a statement of the total MCF and MMBTU of
gas delivered and redelivered pursuant to this Agreement during the
preceding months as well as a billing for the transportation fee as
determined in accordance with Article VII herein.
9.2 Shipper shall pay WR the amount shown as due by such billing
within fifteen (15) days from the date of receipt of said statement, or by
the twenty-fifth (25th) day of the month, whichever is later.
9.3 Each party shall have the right at all reasonable times to examine
the books, records, and charts of the other party to the extent necessary to
verify the accuracy of any statement, charge, computation or demand made
under or pursuant to any of the provisions of this contract.
9.4 If an error should be discovered in any billing, such error shall
be adjusted within thirty (30) days of the determination thereof, provided
that claim therefor shall have been made in writing within twenty-four (24)
months from the date of such billing.
ARTICLE X
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INDEMNIFICATION
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10.1 As between the parties hereto, Shipper shall be deemed to be in
control and possession of the gas deliverable hereunder and responsible for
any loss, claim, demands, expenses, damages or injuries caused thereby,
except those occasioned solely by the negligence of WR, until the same shall
have been delivered to WR at the points of delivery provided for herein, and
Shipper fully indemnifies and holds WR harmless with respect thereto. As
between the parties hereto, after delivery of such gas, WR shall be deemed
to be in exclusive control and possession of the gas and responsible for any
loss, claims, demands, expenses, injuries or damages caused thereby, except
for those occasioned solely by the negligence of Shipper, and WR fully
indemnifies and holds Shipper harmless with respect thereto.
10.2 Shipper warrants the gas delivered to WR for redelivery shall be
free from all adverse claims, liens and encumbrances. The party having
control and possession of the gas shall do all things necessary to prevent
and void any adverse claims, liens or encumbrances on the gas and shall
indemnify and save harmless the other party from and against all suits,
action, causes of action, claims and demands arising from or out of any
adverse claims by third parties claiming ownership of or an interest in the
gas which is delivered or of the account of the other party under this
Agreement, and which are caused by the failure to so protect clear title of
the gas.
ARTICLE XI
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TERM
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11.1 The term of this agreement shall be for a primary period of five
(5) contract years from June 1, 1995, and shall continue in effect from
year-to-year thereafter; provided, however, after the primary period, either
party, by giving twelve (12) months' written notice to the other party prior
to an anniversary date may cancel and terminate this agreement without
further liability hereunder, except as to any then existing imbalance,
outstanding bill and the warranties expressed in Section 10.2.
ARTICLE XII
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PROCESSING RIGHTS
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12.1 Shipper shall retain all processing rights associated with the
gas to be transported hereunder. WR will not process any gas delivered to
it by Shipper. WR will redeliver to Shipper a volume of gas containing the
same number of BTU's, equivalent gallons of ethane and heavier hydrocarbon
components and equivalent cubic feet of helium as the gas contained when
accepted by WR, except for any reduction for any natural gas liquids which
may occur as a result of natural condensation in the compression or
transportation process. Such natural gas liquids recovered shall be
delivered for Shipper's account to MESA's Satanta Plant facilities.
ARTICLE XIII
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DISPUTE RESOLUTION
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13.1 DISPUTE RESOLUTION. No party to this Agreement shall be entitled
to take legal action with respect to any dispute relating hereto until it
has complied in good faith with the following alternative dispute resolution
procedures. This Section 13.1 shall not apply if it is deemed necessary to
take legal action immediately to preserve a party's adequate remedy.
13.2 Negotiation. The parties shall attempt promptly and in good
faith to resolve any dispute arising out of or relating to this Agreement,
through negotiations between representatives who have authority to settle
the controversy. Any party may give the other party(ies) written notice of
any such dispute not resolved in the normal course of business. Within
twenty (20) days after delivery of such notice, representatives of both
parties shall meet at a mutually acceptable time and place, and thereafter
as often as they reasonable deem necessary, to exchange information and to
attempt to resolve the dispute, until the parties conclude that the dispute
cannot be resolved through unassisted negotiation. Negotiations extending
sixty (60) days after notice shall be deemed at an impasse, unless otherwise
agreed by the parties.
13.3 If a negotiator intends to be accompanied at a meeting by an
attorney, the other negotiator(s) shall be given at least three (3) working
days' notice of such intention and may also be accompanied by an attorney.
All negotiations pursuant to this clause are confidential and shall be
treated as compromise and settlement negotiations for purposes of the
Federal and State Rules of Evidence.
13.4 ADR Procedure. If a dispute with more than twenty thousand
dollars ($20,000.00) at issue has not been resolved within sixty (60) days
of the disputing party's notice, a party wishing resolution of the dispute
("Claimant") shall initiate assisted Alternative Dispute Resolution (ADR)
proceedings as described in this Section 13.4. Once the Claimant has
notified the other ("Respondent") of a desire to initiate ADR proceedings,
the proceedings shall be governed as follows: By mutual agreement, the
parties shall select the ADR method they wish to use. The ADR method may
include arbitration, mediation, mini-trial, or any other method which best
suits the circumstances of the dispute. The parties shall agree in writing
to the chosen ADR method and the procedural rules to be followed within
thirty (30) days after receipt of notice of intent to initiate ADR
proceedings. To the extent the parties are unable to agree on procedural
rules in whole or in part, the current Center for Public Resources (CPR)
Model Procedure for Mediation of Business Disputes, CPR Model Mini-trial
Procedure, or CPR Commercial Arbitration Rules--whichever applies to the
chosen ADR method--shall control, to the extent such rules are consistent
with the provisions of this Section 13.4. If the parties are unable to
agree on an ADR method, the method shall be arbitration.
13.5 The parties shall select a single Neutral third party to preside
over the ADR proceedings, by the following procedure: within fifteen (15)
days after an ADR method is established, the Claimant shall submit a list of
five (5) acceptable Neutrals to the Respondent. Each Neutral listed shall
be sufficiently qualified, including demonstrated neutrality, experience and
competence regarding the subject matter of the dispute. A Neutral shall be
deemed to have adequate experience if an attorney or former judge. None of
the Neutrals may be present or former employees, attorneys or agents of
either party. The list shall supply information about each Neutral,
including address, and relevant background and experience (including
education, employment history and prior ADR assignments). Within fifteen
(15) days after receiving the Claimant's list of Neutrals, the Respondent
shall select one Neutral from the list, if at least one individual on the
list is acceptable to the Respondent. If none on the list are acceptable to
the Respondent, the Respondent shall submit a list of five (5) Neutrals,
together with the above background information, to the Claimant. Each of
the Neutrals shall meet the conditions stated above regarding Claimant's
Neutrals. Within fifteen (15) days after receiving the Respondent's list of
Neutrals, the Claimant shall select one Neutral, if at least one individual
on the list is acceptable to the Respondent. If none on the list are
acceptable to the Claimant, then the parties shall request assistance from
the Center for Public Resources, Inc., to select a Neutral.
13.6 The ADR proceeding shall take place within thirty (30) days after
the Neutral has been selected. The Neutral shall issue a written decision
within thirty (30) days after the ADR proceeding is complete. Each party
shall be responsible for an equal share of the costs of the ADR proceeding.
The parties agree that any applicable statute of limitations shall be tolled
during the pendency of the ADR proceedings, and no legal action may be
brought in connection with this agreement during the pendency of an ADR
proceeding.
13.7 The Neutral's written decision shall become final and binding on
the parties, unless a party objects in writing within thirty (30) days of
receipt of the decision. The objecting party may then file a lawsuit in any
court allowed by this Agreement. The Neutral's written decision shall be
admissible in the objecting party's lawsuit.
ARTICLE XIV
-----------
REGULATORY AUTHORIZATIONS
-------------------------
14.1 The transportation of gas hereunder is made pursuant to the
authority under WR's certificate of convenience and necessity granted by the
Kansas Corporation Commission. If at any time during the term of this
Agreement, any governmental authority shall take action as to WR, excluding
however, any action relating to the rates prescribed under Article VIII or
the costs of providing the services hereunder, and/or Shipper whereby the
sale/purchase or transportation of gas hereunder is prescribed or subject to
conditions or restraint that, in the sole judgment of the party affected is
unacceptable, such party, upon written notice to the other, may cancel and
terminate this Agreement without further liability hereunder, except as to
any then existing imbalance, outstanding bill and the warranties expressed
in Section 10.2 herein. Any obligations of Shipper under Section 8.4 herein
shall automatically cease for that contract year and any subsequent contract
year.
14.2 The parties hereto shall respectively proceed with diligence in
the preparation, filing and prosecution of any applications, filings and
notices with federal and/or other governmental agencies as may be required.
Each party shall promptly provide the other with a copy of all applications,
filings, notices, and approvals. Shipper agrees to reimburse WR for any
filing fees imposed by regulatory agencies upon such filing.
14.3 If required, WR shall, pursuant to the rules and regulations
promulgated by the regulatory agency having authority, promptly file for
approval of the rates prescribed under Article VIII. In the event any such
filling is not approved within sixty (60) days of the execution of this
Agreement, WR or Shipper shall have the right to terminate this Agreement
effective upon written notice given to one by the other.
14.4 If at any time during the term of this Agreement, WR and Shipper
mutually agree upon changes in the rates prescribed under Article VIII, WR
shall promptly file for the approval of such revised rates. In the event
any such filing shall be disapproved, WR and Shipper shall attempt to agree
upon new rates. Should WR and Shipper be unable to agree upon new rates
within a period of sixty (60) days after the disapproval of such rates by
the regulatory agency having jurisdiction, then either party, by giving
twelve (12) months written notice to the other party, may cancel and
terminate this Agreement. Absent approval of revised rates, the existing
(old) rates shall remain in effect while this Agreement remains effective.
ARTICLE XV
----------
NOTICES
-------
15.1 Any formal notice, request or demand which either party may
desire to give to the other respecting this Agreement, shall be in writing
and shall be considered as duly delivered when mailed by registered or
certified mail by said party to the other party hereto, as follows:
NOTICE AND PAYMENTS:
MESA Operating Co.
5205 N. O'Connor Blvd, Suite 1400
Irving, Texas 75039-3746
Attn: Marketing Department
Facsimile: (214) 444-4394
NOTICES:
WESTERN RESOURCES, INC.
P. O. Box 889
Topeka, Kansas 66601
Attn.: Gas Supply
Gas Control Facsimile: 913-575-8137
PAYMENTS:
WESTERN RESOURCES, INC.
P.O. Box 758500
Topeka, KS 66675-8500
or to such other address as either party shall designate by formal written
notice. Routine communications shall be considered as duly delivered as of
the postmarked date when mailed by ordinary mail. Nominations and
confirmations thereof may be made by facsimile. Operating communications by
telephone or other mutually agreeable means shall be considered as duly
delivered without subsequent written confirmation, unless written
confirmation is requested by either party.
ARTICLE XI
----------
FORCE MAJEURE
-------------
16.1 Neither party shall be liable for failure of performance (other
than to make payments due hereunder) due to labor controversies, fires,
strikes, floods, lack of water, winds, lightning, accidents, required
maintenance and repair of equipment and lines of pipe, the inability of any
party hereto to obtain right-of-way grants necessary to enable such party to
fulfill any obligation hereunder, or the delay or failure on the party of
such party in acquiring such right-of-way grants due to cost, which in the
opinion of such party is unreasonable or excessive, or any other
circumstances beyond the control of the party failing to perform, whether of
similar or dissimilar nature. Settlement of strikes and lockouts shall be
wholly within the discretion of the party involved in any such strike or
lockout.
Failure by Shipper or WR to meet the quality, reliability and
measurement standards provided herein shall not constitute force majeure.
Immediately upon becoming aware of the occurrence or termination of an
event of force majeure, the party claiming force majeure shall give notice
thereof to the other party describing such event.
ARTICLE XVII
------------
LAWS AND REGULATIONS
--------------------
17.1 This Agreement shall be subject to all valid statutes and valid
rules and regulations of any duly constituted Federal or State regulatory
body having jurisdiction herein.
ARTICLE XVIII
-------------
NONWAIVER OF FUTURE DEFAULT
---------------------------
18.1 No waiver by any party of any one or more defaults by the other
in performance of any of the provisions of this Agreement shall operate or
be construed as a waiver of any other existing or future default or
defaults, whether of a like or of a different character.
ARTICLE XIX
-----------
SUCCESSORS AND ASSIGNS
----------------------
19.1 Any company which shall succeed by purchase, merger of
consolidation to the properties or which shall take tile, at the wellhead,
of the gas transported hereunder, substantially as an entirety, shall be
subject to the obligations of its predecessor in title under this Agreement.
No other assignment of this Agreement or any of the rights or obligations
hereunder shall be made unless there first shall have been obtained the
consent thereto of the other party, which such consent shall not be
unreasonably withheld. Furthermore, either party may assign the interest in
and to and under this Agreement to a trustee or trustees, individual or
corporate, as security for bonds or other obligations or securities without
the necessity of any such assignee becoming in any respect obligated to
perform the obligation of the assignor under this Agreement and, if any such
trustee be a corporation, without its being required to qualify to do
business in any state in which performance of this Agreement may occur.
ARTICLE XX
----------
DEHYDRATION FUEL AGREEMENT
--------------------------
20.1 This Agreement does not modify the obligations of WR or HCLP
under the terms of the Dehydration Fuel Agreement dated April 16, 1993.
ARTICLE XXI
-----------
COMPRESSION OF GAS BY SHIPPER
-----------------------------
21.1 In the event WR's compression capacity is being fully utilized,
Shipper may provide compression services on an interruptible basis for gas
being transported by WR. Shipper may stop providing compression services in
whole or in party at any time for any reason. WR shall pay Shipper five
cents ($0.05) plus fuel for each MCF of gas compressed by Shipper and
delivered to the Intermediate Redelivery Point. Such gas compressed by
Shipper shall be measured at the inlet to Shipper's compression facilities
in accordance with the measurement procedures set forth in Article VII
herein.
ARTICLE XXII
------------
MISCELLANEOUS
-------------
22.1 Any modification of terms or amendments of provisions of this
agreement shall become effective only by supplemental written agreement
between the parties hereto.
22.2 As to all matters of construction and interpretation, this
Agreement shall be interpreted, construed and governed by the laws of the
State of Kansas.
22.3 Transportation hereunder shall be effected pursuant to any and
all applicable regulations, of the regulatory agency having authority, and
the parties hereto agree to comply with all said regulations in their
performance of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused two (2) originals of
this Agreement to be executed, by their officers duly authorized, as of the
day and year first hereinabove written.
WESTERN RESOURCES, INC.
WITNESS:
/s/ Larry G. Willer(?) By: /s/ R. H. Tangeman
----------------------- ------------------------------------
R. H. Tangeman,
Assistant Vice President, Gas Supply
WITNESS:
MESA OPERATING CO. acting on behalf of
/s/ D'Nard Hemphill itself and as agent for Hugoton Capital
----------------------- Limited Partnership
By: /s/ Paul W. Cain
------------------------------------
Title: Paul W. Cain
-----------------------------------
President
Exhibit "A"
to
Gas Transport Agreement
Dated June 14, 1994
between
Western Resources, Inc.
and
MESA Operating Co. acting on behalf of itself and
as agent for Hugoton Capital Limited Partnership
Delivery Points
---------------
Initial Delivery Point -
Interconnect between Shipper and WR at the inlet of WR's Ulysses
compressor station located in Grant County, Kansas (Sec. 10-T30S-R37W).
Intermediate Delivery Point -
Interconnect between Shipper and WR at the outlet of Shipper's Ulysses
Processing Plant located in Grant County, Kansas (Sec. 10-T30S-R37W).
Exhibit "B"
to
Gas Transport Agreement
Dated June 14, 1994
between
Western Resources, Inc.
and
MESA Operating Co. acting on behalf of itself and
as agent for Hugoton Capital Limited Partnership
Redelivery Points
-----------------
Intermediate Redelivery Point -
Interconnect between WR and the inlet of Shipper's Ulysses Processing Plant
located in Grant County, Kansas (Sec. 10-T30S-R37W).
Final Redelivery Point -
Interconnect between WR and the inlet to Shipper's Satanta Processing Plant
in Grant County, Kansas (Sec. 5-T30S-R35W).