Exhibit 10.4
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
THROUGHPUT AND DEFICIENCY AGREEMENT
This Throughput and Deficiency Agreement (the "AGREEMENT"), with an
effective date of April 25, 2005 (the "EFFECTIVE DATE"), by and between [*****],
a [*****] which is principally located at [*****] ("SHIPPER"), on the one hand,
and Sunoco Pipeline L.P., a Texas limited partnership which is located at 1801
Market Street, Philadelphia, PA 19103 ( referred to as either "SUNOCO" or
"CARRIER"), is made with reference to the following facts and circumstances:
INTRODUCTION
A. SUNOCO's affiliate owns and operates a marine storage and terminaling
facility which is located at or near Nederland, Texas (the "NEDERLAND TERMINAL")
for the storage and throughput of crude oil and other refinery feedstocks
(collectively, the "FEEDSTOCKS").
B. SUNOCO owns a 43.8% interest in and operates a twenty-six inch (26")
nominal diameter pipeline designed principally for the transportation of
Feedstocks that originates at a valve at the origin of West Texas Gulf Pipe Line
Company's ("WTG") pipeline at Nederland, Texas, and runs, in part, to a valve
which is situated within WTG's Wortham Station located at or near Wortham, Texas
(said pipeline being referred to herein as the "WTG 26" PIPELINE").
C. Furthermore, SUNOCO intends to acquire a storage and terminaling
facility that is situated at or near Corsicana, Texas for the storage and
throughput of Feedstocks and which is located approximately 20 miles from a
prospective pipeline connection/tie-in point on the WTG 26" Pipeline near
Wortham, Texas (the "CORSICANA TERMINAL"), and the rights, duties and
obligations of SUNOCO and Shipper hereunder are expressly conditioned upon
SUNOCO's acquisition of the Corsicana Terminal as particularly set forth in
paragraph 14 hereof.
D. SUNOCO also intends to acquire and operate a sixteen-inch (16") nominal
diameter pipeline which is designed principally for the transportation of
Feedstocks and that runs between (1) SUNOCO's valve which is situated within the
Corsicana Terminal, and (2) the
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
separate valves in or near the [*****] Terminal and the [*****] Terminal (as
both of those terms are defined in Recital E, below) (said pipeline system being
collectively referred to herein as the "SUNOCO PIPELINE") and the rights, duties
and obligations of SUNOCO and Shipper hereunder are expressly conditioned upon
SUNOCO's acquisition of the SUNOCO Pipeline as more particularly set forth in
paragraph 14 hereof.
E. [*****] ("[*****]") owns and operates breakout tanks in or near [*****]
(the "[*****] Terminal") and a storage terminal in or near [*****](the
"[*****]TERMINAL"). Both the [*****]Terminal and the [*****]Terminal are tied
into the SUNOCO Pipeline and a [*****]pipeline system which is owned and
operated by one or more third-party pipeline operators, including [*****].
F. [*****], [*****], owns and operates a [*****] in or near [*****] (the
"[*****]"). The [*****]is tied into the [*****]Terminal via a pipeline system
owned and operated by [*****].
G. [*****] owns and operates a [*****]in or near [*****], [*****] (the
"[*****]"). The [*****] is tied into the [*****] Terminal via a pipeline system
which is also owned and operated by [*****] (the "[*****] TO [*****] PIPELINE")
that runs between the [*****] Terminal and the [*****] Pump Station which is
located in [*****] County, [*****].
H. Shipper desires to transport Feedstocks to certain [*****] facilities
that are owned and/or operated by [*****], which includes both the [*****] and
the [*****], through the use of the Nederland Terminal, the WTG 26" Pipeline,
the New Pipeline (as that term is defined in Recital I, below), the Corsicana
Terminal, the SUNOCO Pipeline, the [*****] Terminal, and/or the [*****]
Terminal, as the case may be, with all such origin, intermediary, and
destination points and related facilities being generally depicted on Attachment
A hereto.
I. In order to transport Feedstocks from the Nederland Terminal to [*****],
SUNOCO will be required to make certain capital expenditures including, without
limitation, those associated with designing, engineering, installing, testing,
inspecting, protecting,
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
commissioning, operating, acquiring, and maintaining approximately 20 miles of
pipeline and related equipment between the WTG 26" Pipeline (near Wortham,
Texas) and the Corsicana Terminal (collectively, the "NEW PIPELINE"). For the
purposes of this Agreement, (1) the WTG 26" Pipeline, the New Pipeline, the
Corsicana Terminal, and the SUNOCO Pipeline up to the point where such pipeline
physically ties into both the [*****] Terminal and the [*****] Terminal shall be
hereinafter collectively referred to as the "N-[*****] PIPELINE ROUTE," and (2)
each segment of the SUNOCO Pipeline located between the Corsicana Terminal and
the [*****] Terminal, including the [*****] Terminal, which is tied into a
Third-Party Pipeline System (as that term is defined in paragraph 3, below)
pipeline connection shall hereinafter be collectively referred to as the
"C-[*****] PIPELINE ROUTE."
J. SUNOCO is willing to make such expenditures provided that it has
obtained a commitment from Shipper to ship a minimum throughput of Feedstocks
along, on an aggregate basis, the N-[*****] Pipeline Route and the C-[*****]
Pipeline Route.
K. Shipper is willing to make such a commitment to ship a minimum
throughput of Feedstocks along, on an aggregate basis, the N-[*****] Pipeline
Route and the C-[*****] Pipeline Route, in consideration of SUNOCO using
commercially reasonable efforts and taking the necessary steps (including
eminent domain/condemnation proceedings) to (1) design and install the New
Pipeline, (2) connect the Nederland Terminal to the WTG 26" Pipeline, (3)
connect the WTG 26" Pipeline to the New Pipeline, and (4) connect the Corsicana
Terminal to both the New Pipeline and the SUNOCO Pipeline, provided that SUNOCO
(or one of its affiliates) maintains in place and continuously operates (except
for emergency shutdowns and routine, scheduled maintenance) throughout the term
of this Agreement fully-operational pipeline connections between (i) the
Nederland Terminal and the WTG 26" Pipeline, (ii) the WTG 26" Pipeline and the
New Pipeline, (iii) the New Pipeline and the Corsicana Terminal, (iv) the
Corsicana Terminal and the SUNOCO Pipeline, and (v) the SUNOCO Pipeline and both
the [*****] Terminal and the [*****] Terminal. Notwithstanding the foregoing,
while SUNOCO
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
will use commercially reasonable efforts to cause the WTG 26" Pipeline
connections described herein to be maintained in place and continuously operated
(except for emergency shutdowns and routine, scheduled maintenance) throughout
the term of this Agreement, the parties hereto acknowledge that such operation
and maintenance is not entirely within the control of SUNOCO and hereby agree
that a failure to maintain and operate such connections would not constitute a
breach of the Agreement by SUNOCO; provided, however, under such circumstances,
Shipper may still pursue the rights and remedies that are set forth in
subparagraph 6.G., below, to which it may be entitled.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
SUNOCO, on the one hand, and Shipper, on the other hand, agree as follows:
1. Commencement Date.
-----------------
A. SUNOCO shall notify Shipper promptly upon SUNOCO's acquisition of the
SUNOCO Pipeline, and such notice shall include the effective date of
such acquisition. On or before October 1, 2005, SUNOCO will use
commercially reasonable efforts to have the N-[*****] Pipeline Route
ready to receive, transport and deliver Feedstocks as provided for
under the terms of this Agreement. Shipments of Feedstock shall
commence, and the first Contract Year shall begin, on the first day of
the calendar month following Carrier's written notice to Shipper that
the N-[*****] Pipeline Route is ready to receive and transport no less
than [*****] barrels of Feedstocks per hour (the "COMMENCEMENT DATE").
In addition, on or before March 1, 2006, SUNOCO will use commercially
reasonable efforts to have the C-[*****] Pipeline Route ready to
receive, transport, and deliver Feedstocks as provided for under the
terms of this Agreement.
B. If the N-[*****] Pipeline Route is not ready to receive and transport
at least [*****] barrels of Feedstock per hour by October 1, 2005,
then SUNOCO, at its
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
sole cost and expense, shall use commercially reasonable efforts to
provide a temporary pipeline route in order to move Feedstocks between
the Nederland Terminal and the [*****] Terminal or the [*****]
Terminal, by utilizing an existing [*****] [*****]-inch nominal
diameter pipeline (the "[*****] PIPELINE CONNECTION") which is
currently connected to the WTG 26" Pipeline and the Corsicana
Terminal, or by using an existing [*****][*****]-inch nominal diameter
pipeline (the "[*****] PIPELINE CONNECTION") between Nederland, Texas
and Corsicana, Texas, until such time as the N-[*****] Pipeline Route
is ready to receive and transport at least [*****] barrels of
Feedstock per hour. If, and for so long as, SUNOCO is required to use
any portion of a temporary route that is owned and/operated by any
unaffiliated entity, including the [*****] Pipeline Connection and the
[*****] Pipeline Connection, as provided for under the preceding
sentence, SUNOCO agrees to suspend Shipper's Minimum Monthly
Throughput Obligation (as that term is defined in subparagraph 6.A,
below).
C. Notwithstanding any of the other provisions set forth in this
Agreement, if SUNOCO is unable or unwilling to receive and transport
at least [*****] barrels of Feedstock per hour along the N-[*****]
Pipeline Route within fifteen (15) months after SUNOCO (or one of its
subsidiaries or affiliates) acquires the SUNOCO Pipeline, then Shipper
has the option (within 30 days after the above referenced 15 month
period), but not the obligation, to terminate this Agreement without
penalty to either party or either party being in breach thereof, upon
giving no less than ten (10) days written notice of termination.
2. Capacity of Pipeline System. The N-[*****] Pipeline Route will have a
design capacity of no less than [*****] barrels per hour of Feedstocks
(based on a viscosity of [*****] SUS @ 60(Degree)F and an API gravity of
[*****].0) to the [*****] Terminal and the [*****]
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
Terminal. The C-[*****] Pipeline Route will also have a design capacity of
no less than [*****] barrels per hour of Feedstocks (based on a viscosity
of [*****] SUS @ 60(Degree)F and an API gravity of [*****].0) to the
[*****] Terminal and the [*****] Terminal.
3. Common Carriage; Published Tariffs; Tariff Rates. SUNOCO is expected to be
a common carrier for hire with respect to the operation of the New Pipeline
and the SUNOCO Pipeline. With respect to the WTG 26" Pipeline, SUNOCO is a
shareholder of WTG, which is also a common carrier. The transportation of
any Feedstock which is performed by SUNOCO or WTG hereunder along either
the N-[*****]Pipeline Route or the C-[*****] Pipeline Route, as the case
may be, shall be subject to the rules and regulations, that are set forth
in such carrier's oil tariff publication (each a "RULES TARIFF"). Based on
the applicable rules and regulations set forth in each Rules Tariff, SUNOCO
will, with WTG, file or cause to be filed a joint proportional incentive
tariff (the "JOINT INCENTIVE TARIFF") with the Federal Energy Regulatory
Commission ("FERC") in order to cover the movement of Feedstocks from the
Nederland Terminal, the Corsicana Terminal, or a Third Party Pipeline
System (as defined below) and on to either the [*****] Terminal or the
[*****] Terminal.
The Joint Incentive Tariff shall apply only to those shippers which
agree in writing to deliver the Aggregate Throughput Obligation (as that
term is defined in subparagraph 6.A, below). The initial tariff rates under
the Joint Incentive Tariff are set forth in Attachment B (entitled
"Pipeline Rate Schedule"), a copy of which is attached to and made a part
of this Agreement. The applicable rates, rules, and regulations set forth
in both the Rules Tariff and the Joint Incentive Tariff may be adjusted by
the Carrier to reflect the terms and conditions set forth in this Agreement
in accordance with the applicable rules and regulations of the FERC.
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
Shipper reserves the right to separately nominate and deliver barrels
of Feedstock along and as part of the C-[*****] Pipeline Route which are
received from one or more third party-owned and/or -operated pipeline
systems that are tied into either the Corsicana Terminal or the SUNOCO
Pipeline at any location between the Corsicana Terminal and the [*****]
Terminal (each hereinafter called a "THIRD-PARTY PIPELINE SYSTEM") and
which are then to be transported by SUNOCO (or its designated pipeline
operator) to either the [*****] Terminal or the [*****] Terminal. Each
barrel of Feedstock shipped each month by or on behalf of Shipper along the
C-[*****] Pipeline Route shall also be credited against the applicable
Minimum Monthly Throughput Obligation for that particular month, but shall
be measured and accounted for separately from any barrels of Feedstock
moved along the N-[*****] Pipeline Route. However, regardless of when and
whether Shipper has exceeded its Minimum Monthly Throughput Obligation for
any given calendar month, all of the barrels of any Feedstocks that are
received from any Third-Party Pipeline System and moved along the C-[*****]
Pipeline Route shall be subject to the then-current Joint Incentive Tariff.
To the extent permitted by any applicable federal and state law, rule,
and regulation, the tariff rates that are set forth in the Joint Incentive
Tariff may only be adjusted in accordance with the annual index which is
set forth in Title 18, Code of Federal Regulations, Section 342.3, as such
regulation may be amended, supplemented, or otherwise modified from time to
time. Shipper agrees not to challenge or protest any of the tariff rates
set forth in the Joint Incentive Tariff, provided that such tariff rates
are proposed to be adjusted only in accordance with the terms of this
Agreement.
4. Service and Storage Agreements.
------------------------------
A. [*****] intends to enter into a separate, contractual arrangement with
SUNOCO following the execution of this Agreement (the "SERVICES
AGREEMENT"). Under
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
the terms of the Services Agreement, based on the separate
consideration recited therein, SUNOCO will operate and supply (or
arrange to operate and supply) electrical power to the pumps at the
[*****] Terminal in order to facilitate the movement of Feedstocks
coming off of the SUNOCO Pipeline into and along the [*****] to
[*****] Pipeline.
B. In addition, Shipper intends to enter into a separate, contractual
arrangement with SUNOCO following the execution of this Agreement with
respect to leasing one or more storage tanks within the Corsicana
Terminal (the "CORSICANA STORAGE AGREEMENT"). Under the terms of the
Corsicana Storage Agreement, SUNOCO will lease to Shipper up to
[*****] barrels of shell storage capacity ("LEASED STORAGE CAPACITY")
at the Corsicana Terminal for the storage of Feedstocks based on the
mutually agreeable terms and conditions set forth in such agreement;
provided, however, there shall be no lease, storage, throughput or
in-tank exchange fee or like charge associated with the Leased Storage
Capacity under the Corsicana Storage Agreement, the compensation for
such being already included in the Joint Incentive Tariff that is
being assessed under paragraph 3, above.
C. Furthermore, Shipper intends to enter into another separate,
contractual arrangement with SUNOCO's affiliate following the
execution of this Agreement with respect to the receipt and delivery
of Feedstocks through the Nederland Terminal (the "MARINE DOCK &
TERMINALING Agreement"). Under the terms of the Marine Dock &
Terminaling Agreement, Shipper will deliver Feedstocks to the
Nederland Terminal for subsequent deliveries into the N-[*****]
Pipeline Route at a rate (see Attachment C, entitled "Terminal Rate
Schedule") based on mutually agreeable terms and conditions set forth
in such agreement.
D. Furthermore, Shipper intends to enter into another separate,
contractual arrangement with SUNOCO's affiliate following the
execution of this Agreement
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
with respect to leasing one or more storage tanks within the Nederland
Terminal (the "TANK NO. [*****] STORAGE AGREEMENT"). Under the terms
of the Tank No. [*****] Storage Agreement, SUNOCO's affiliate will
lease to Shipper up to [*****] barrels of maximum fill storage
capacity at the Nederland Terminal for the storage of one or more
Feedstocks starting at an initial lease rate of $[*****] per maximum
fill barrel and for a period of five (5) years, based on mutually
agreeable terms and conditions set forth in such agreement.
E. With respect to the Agreements described in subparagraphs 4.B, 4.C and
4.D, above, any additional services, such as receipts from other
carriers, blending, or tank to tank transfers will be based on fees
mutually agreed by both parties, all of which shall be set forth in
such agreement, as may be amended from time to time.
5. Contract Period. In recognition of the cost and expense being incurred by
SUNOCO to (a) design, engineer, install, test, inspect, protect,
commission, operate, and maintain the New Pipeline, (b) connect the
Nederland Terminal to the WTG 26" Pipeline, (c) connect the WTG 26"
Pipeline to the New Pipeline, and (d) connect the Corsicana Terminal to
both the New Pipeline and the SUNOCO Pipeline, Shipper agrees to ship the
Minimum Annual Throughput Obligation of Feedstocks, on a collective basis,
along the N-[*****] Pipeline Route and the C-[*****] Pipeline Route, to the
[*****] Terminal or the [*****] Terminal, under the Joint Incentive Tariff,
as provided in this paragraph 5 and in paragraph 6 below. Subject to the
remaining subparagraphs of this paragraph 5, Shipper's obligation to ship
any Feedstocks along any portion of the N-[*****] Pipeline Route or the
C-[*****] Pipeline Route pursuant to this Agreement shall cover a period of
ten (10) years (the "CONTRACT PERIOD") from the Commencement Date. A
"CONTRACT YEAR" as used in this Agreement shall mean a period of twelve
(12) full months commencing on the Commencement Date or any anniversary
thereof. Notwithstanding anything else to
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
the contrary, this Agreement shall run simultaneously with the Corsicana
Storage Agreement and the Marine Dock & Terminaling Agreement (collectively
with this Agreement, the COTERMINOUS AGREEMENTS"), and should any of the
Coterminous Agreements be terminated by either Shipper or SUNOCO in
accordance with the provisions of such agreement, then all other
Coterminous Agreements shall simultaneously terminate therewith, subject to
any terminaling or transportation credits to be given and any payments to
be made under each such agreement upon such early termination.
If this Agreement is terminated by Shipper for any reason other than
discontinuation of service as set out in subparagraph 6.G, below, prior to
the end of the Contract Period, Shipper agrees to pay SUNOCO a lump sum
equal to (i) the [*****] tariff rate set forth in the then current Joint
Incentive Tariff, multiplied by (ii) the difference between (A) the sum of
(1) the quantity actually shipped by or on behalf of Shipper, and (2) any
quantity credited for shipment for Shipper's account as a Prepaid
Transportation Credit (as that term is defined in subparagraph 6.D), during
the term of this Agreement, and (B) the Aggregate Throughput Obligation.
Shipper will make any such undisputed lump sum payment within 15 days after
receipt of an invoice for same from SUNOCO upon the early termination of
this Agreement by Shipper and, after having been given credit for all
available Prepaid Transportation Credits under the formula set forth in the
preceding sentence, Shipper shall forfeit all unused Prepaid Transportation
Credits.
Likewise, if this Agreement is terminated by SUNOCO for any reason
other than (i) the failure of SUNOCO to acquire either the SUNOCO Pipeline
or the Corsicana Terminal as more particularly set forth in paragraph 14
hereof; or (ii) discontinuation of service as set out in subparagraph 6.G,
below, prior to the end of the Contract Period, SUNOCO agrees to pay
Shipper a lump sum equal to (i) the difference between (A) the
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
[*****] tariff rate set forth in the then current Joint Incentive Tariff
and (B) Shipper's [*****] aggregate transportation cost, as determined by
Shipper, for substantially similar service to transport no less than
[*****] barrels of Feedstocks per day to the [*****] Terminal or the
[*****] Terminal (the "ALTERNATIVE PENALTY") multiplied by (ii) the
quantity difference between (A) the quantity actually shipped (including
any quantity credited for shipment to Shipper's account as a Prepaid
Transportation Credit) during the term of this Agreement, and (B) the
Aggregate Throughput Obligation (subject to reduction thereof pursuant to
subparagraph 6.G). The Alternative Penalty shall not exceed $[*****] per
barrel. SUNOCO will make any such undisputed lump sum payment within 15
days after receipt of an invoice for same from Shipper upon the early
termination of this Agreement by SUNOCO.
In addition, within 60 days after Shipper's receipt of SUNOCO's early
notice of termination under this paragraph 5, SUNOCO shall pay (or cause to
be paid) to Shipper in immediately available funds to an account to be
designated in writing by Shipper the entire amount of any outstanding
(i.e., from the preceding [*****] Contract Years) Prepaid Transportation
Credits that Shipper has accumulated with SUNOCO or any of SUNOCO's
affiliates, under the terms of this Agreement.
6. Shipments by Shipper.
--------------------
A. Throughput Obligation: Subject to the early termination provisions set
forth in paragraph 5, above, and subparagraph 6.G, below, during each
Contract Year, Shipper will ship, or cause to be shipped, in the
aggregate, along (1) the N-[*****] Pipeline Route, from the Nederland
Terminal to the [*****] Terminal or the [*****] Terminal, and (2) the
C-[*****] Pipeline Route, through the Corsicana Terminal to the
[*****] Terminal or the [*****] Terminal, each pursuant to the
applicable tariff for such origin and destination points, at least
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
[*****] ([*****]) barrels of Feedstocks (the "MINIMUM ANNUAL
THROUGHPUT OBLIGATION"), which equals a minimum throughput of [*****]
([*****]) barrels of Feedstock per calendar month (the "MINIMUM
MONTHLY THROUGHPUT OBLIGATION"), and [*****] barrels of Feedstock of
the entire term of this Agreement (the "AGGREGATE THROUGHPUT
OBLIGATION").
In the event that Shipper's shipments are prorated for any reason
whatsoever through the N-[*****] Pipeline Route or any portion thereof
affecting such movements, during any calendar month and, as a result,
is unable to transport any portion of the quantity of Feedstocks that
was nominated by Shipper (in accordance with subparagraph 6.B, below)
to be shipped under this Agreement during such month, then Shipper
shall still be given credit by Carrier against Shipper's Minimum
Monthly Throughput Obligation for that same calendar month, on a
barrel-for barrel basis, for the greater of either (1) the actual
quantity of Feedstocks that Shipper was able to transport along such
route (or any portion thereof) during the applicable time period, or
(2) the lesser of (i) Shipper's Minimum Monthly Throughput Obligation,
and (ii) Shipper's nominated volume of Feedstocks for such calendar
month.
B. Pipeline Nominations; Scheduling; Waterborne Deliveries. After the
Commencement Date and continuing throughout the entire term of this
Agreement, on or before the 25th day of each calendar month, Shipper
agrees (1) to separately nominate the volume of Feedstocks that
Shipper wants to ship and have delivered by Carrier along (i) the
N-[*****] Pipeline Route, and (ii) the C-[*****] Pipeline Route,
during the following calendar month, and (2) to make a good faith
effort to tender, or arrange to tender, the nominated volumes to
Carrier at Carrier's Nederland Receipt Point or Carrier's Corsicana
Receipt Point (as both
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
terms are defined in paragraph 8, below), as the case may be. In turn,
Carrier will use its commercially reasonable efforts (taking into
account applicable law) to provide Shipper with the necessary line
space or capacity to move all volumes tendered by or on behalf of
Shipper to (x) Carrier's Nederland Receipt Point along the N-[*****]
Pipeline Route to the [*****] Terminal or the [*****] Terminal, and
(y) Carrier's Corsicana Receipt Point along the C-[*****] Pipeline
Route to the [*****] Terminal or the [*****] Terminal during each
calendar month and each Contract Year, as the case may be.
Any scheduling procedures for waterborne deliveries into the
Nederland Terminal shall be set forth either in the Rules Tariff or in
SUNOCO's affiliate's Nederland Terminal Port Manual.
C. Billing and Payment
Billing. Carrier shall invoice Shipper on or before the tenth (10th)
day of each month for amounts owing for the preceding month under the
terms of this Agreement. Subject to the subitem, below, of this
subparagraph 6.C. entitled "Disputed Payment," Shipper shall pay
Carrier within twenty (20) days from invoice date, regardless of
whether billed before, on, or after the tenth (10th) day of the month,
the amount specified on the invoice. Such payment shall be by
electronic transfer of federal funds to the bank and bank account set
forth on each invoice. For any invoice submitted hereunder, Carrier
shall provide any supporting documentation reasonably requested by
Shipper.
Monthly Payment. Beginning on the Commencement Date and continuing
throughout the term hereof, Shipper shall pay Carrier each month the
undisputed
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
sum of each of the following: (1) the product of (i) the applicable
tariff rate in the then-current Joint Incentive Tariff (depending on
the viscosity of the Feedstock(s) having been shipped) provided for
under the terms of this Agreement, multiplied by (ii) the quantity of
Feedstock (in barrels) measured at either the [*****] Meter or the
[*****] Meter (as both such terms are defined in paragraph 9, below)
for movements along the N-[*****] Pipeline Route during such month and
allocated to Shipper from such quantity, and (2) the product of (i)
the applicable tariff rate in the then-current Joint Incentive Tariff
(depending on the viscosity of the Feedstock(s) having been shipped)
provided for under the terms of this Agreement, multiplied by (ii) the
quantity of Feedstock (in barrels) measured at either the [*****]
Meter or the [*****] Meter for movements along the C-[*****] Pipeline
Route during such month and allocated to Shipper.
Loss Allowance. For the purposes of this Agreement, the term "LOSS
ALLOWANCE" means [*****] percent ([*****]%) of the volumes of
Feedstocks received either (a) into Carrier's Nederland Receipt Point
and which are then shipped along the N-[*****] Pipeline Route, through
the Corsicana Terminal, and on to either the [*****] Terminal or the
[*****] Terminal, or (b) into Carrier's Corsicana Receipt Point from a
Third Party Pipeline System or via truck and which are then shipped
through the Corsicana Terminal, along the C-[*****] Pipeline Route,
and on to either the [*****] Terminal or the [*****] Terminal, as the
case may be, which shall be deducted and retained by Carrier to cover
any loss(es) due to shrinkage and evaporation incident to
transportation on Carrier's facilities. All volumes
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
delivered to Shipper from Carrier's facilities under the terms of this
Agreement shall be net of such deduction. No loss allowance will be
assessed under the Corsicana Storage Agreement. However, Shipper and
SUNOCO hereby agree that for all volumes of Feedstocks delivered from
Tank No. [*****] at the Nederland Terminal into crude storage tankage
at the Nederland Terminal for the purpose of blending, there shall be
an additional loss allowance of [*****]percent ([*****]%), which shall
be reflected in the Marine Dock & Terminaling Agreement.
Disputed Payment. Shipper may dispute, in good faith, the amount of
any such invoice for a period of ninety (90) days after such invoice
is received by Shipper. Shipper shall timely pay to Carrier all
amounts which Shipper concedes are correct. Shipper and Carrier agree
to begin discussions to settle any amount in dispute within thirty
(30) days of notification by one party to the other of such dispute.
If Shipper fails to pay any disputed amount within ten (10) days after
the date on which the Parties have finally resolved or settled such
amount or payment of such disputed amount has been finally adjudicated
or otherwise resolved, whichever occurs first, Carrier, in addition to
any other remedies it may have, may suspend service under this
Agreement. No payment by Shipper of the amount of a disputed invoice
shall prejudice the right of Shipper to claim an adjustment of the
disputed invoice so long as such invoice is disputed in accordance
with this paragraph.
-15-
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
Default. Should Shipper fail to pay part or all of the amount of any
undisputed invoice or any disputed invoice which has been resolved,
Carrier may charge interest at the rate equal to [*****]% of the prime
rate of Citibank, N.A., New York, New York (or any successor thereof)
on the unpaid portion of the bill computed from the date payment is
due until the date payment is received. If such failure to pay
continues for sixty (60) days after such payment is due, Carrier, in
addition to any other remedy it may have hereunder or otherwise, may
suspend further service for Shipper under this Agreement until such
undisputed amount is paid.
D. Deficiency Volume/Payment. Within 60 days after the end of each
Contract Year (including the last Contract Year of the Contract
Period), Shipper and Carrier shall meet and make a good faith and
diligent effort to separately reconcile and verify the aggregate
volume of Feedstock that Shipper (i) nominated to be transported, and
(ii) actually shipped, in either case, during the previous Contract
Year under the terms of this Agreement. If, at the end of any such
Contract Year (including the last Contract Year of the Contract
Period), Shipper's shipments as provided in subparagraph 6.A hereof,
since the start of such Contract Year, are insufficient due to any
cause whatsoever other than that provided in the first subpart of
subparagraph 6.G (i.e., cessation of operations), hereof, to meet the
Minimum Annual Throughput Obligation (a "DEFICIENCY VOLUME"), then
subject to the credits provided pursuant to the provisions of
subparagraph 6.A, above, and also subject to subparagraph 6.E., below,
Shipper shall be obligated within twenty (20) days after receipt of
invoice from Carrier to promptly pay to the Carrier under the
then-current Joint Incentive Tariff, the undisputed amount equal to
the Deficiency Volume for the Contract Year in question, multiplied by
the [*****]
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
tariff rate set forth in the then-current Joint Incentive Tariff
provided for under the terms of this Agreement (the "DEFICIENCY
PAYMENT"). Any such Deficiency Payment shall constitute prepayment for
transportation (each a "PREPAID TRANSPORTATION CREDIT") by Shipper in
the N-[*****] Pipeline Route or C-[*****] Pipeline Route applicable to
the [*****] succeeding Contract Years.
E. Pre-Paid Transportation Credits. Shipper must first exceed the Minimum
Annual Throughput Obligation for the applicable, succeeding Contract
Year before any Prepaid Transportation Credits shall be applied
against the transportation charges at the applicable tariff rate(s)
set forth in the then-current Joint Incentive Tariff (depending on the
viscosity of the Feedstock(s) having been shipped) for quantities in
excess of the Minimum Annual Throughput Obligation.
For example, Prepaid Transportation Credits from Contract Year No. 1
can be used only during the [*****] subsequent Contract Years (i.e.,
Contract Year Nos. [*****]), but only to the extent that the
deliveries of Feedstocks to Carrier for movement by or on behalf of
Shipper along the N-[*****] Pipeline Route and/or the C-[*****]
Pipeline Route, in the aggregate, exceed the Minimum Annual Throughput
Obligation for the particular, subsequent Contract Year in question.
Upon expiration of this Agreement and subject to the force majeure
provisions referred to in paragraph 10, below, Shipper shall have the
[*****] full calendar months following expiration of this Agreement in
which to use any Prepaid Transportation Credits that are available to
Shipper from the [*****] preceding Contract Years, after which time
any unused amount thereof shall be forfeited.
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
F. Early Compliance with the Aggregate Throughput Obligation. If, at any
time prior to the expiration or early termination of this Agreement,
Shipper has transported in excess of the Aggregate Throughput
Obligation, then Shipper's obligations to Carrier under this Agreement
shall immediately cease and be deemed satisfied; PROVIDED, HOWEVER,
Shipper may continue to transport any Feedstock pursuant to this
Agreement. If Shipper continues to transport Feedstocks along the
N-[*****] Pipeline Route, then Carrier agrees to maintain (subject to
permitted escalations in the applicable tariff rates pursuant to
paragraph 3 hereof) each of the tariff rates set forth in the then
current Joint Incentive Tariff as provided for under paragraph 3 and
subparagraph 6.D, above, throughout the term of this Agreement for any
additional barrels of Feedstocks delivered by Shipper from Carrier's
Nederland Receipt Point. If Shipper continues to transport Feedstocks
along the C-[*****]Pipeline Route, then Carrier agrees to maintain
(subject to permitted escalations in the applicable tariff rates
pursuant to paragraph 3 hereof) each of the tariff rates set forth in
the then-current Joint Incentive Tariff as provided under paragraph 3
and subparagraph 6.D, above, throughout the term of this Agreement for
any additional barrels of Feedstocks delivered by Shipper to Carrier's
Corsicana Receipt Point.
G. Cessation of Operations.
If (1) SUNOCO (or any of its successors or assigns) either
permanently (i) discontinues operation of the Nederland Terminal or
ceases to provide transportation service along any portion of the
N-[*****] Pipeline Route between the Nederland Terminal and the
[*****] Terminal or the [*****] Terminal, or (ii) disconnects any
portion of the N-[*****] Pipeline Route from the Nederland Terminal,
the Corsicana Terminal, or the SUNOCO Pipeline but not at the request
of Shipper, and not as a direct result of Shipper's own affirmative
act or actions, or
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
(2) WTG either ceases operation of the WTG 26" Pipeline or disconnects
any portion of the WTG 26" Pipeline from the N-[*****] Pipeline Route
and, as a result of any one of the multiple situations set forth in
subparts 6.G.(1) and (2), above, Carrier is no longer able, in the
aggregate, to deliver either the Minimum Monthly Throughput Obligation
or the Shipper's nominated volume of Feedstocks in or for a given
month, whichever is less, for at least six (6) consecutive months to
both the [*****] Terminal and the [*****] Terminal by means of either
the N-[*****] Pipeline Route or the C-[*****] Pipeline Route, then (x)
any obligations of Shipper pursuant to this Agreement which have not
accrued prior to discontinuation of such applicable operation(s) shall
be extinguished and Shipper shall be forever released by Carrier from
shipping any additional volumes of any Feedstock or other substance
through any portion of the Nederland Terminal, the N-[*****] Pipeline
Route, or the C-[*****] Pipeline Route, or otherwise making any
payments for any such associated, unaccrued monetary obligation(s)
that may have been due and owing under this Agreement, and (y) Carrier
shall be released from any obligation to ship any additional
Feedstocks thereafter pursuant to this Agreement.
If, at any time after the completion of Contract Year No. 5 of
this Agreement, either the [*****] or the [*****] closes or announces
publicly its intent in writing to close for more than 180 consecutive
days, then SUNOCO and Shipper shall promptly negotiate, in good faith,
a reduction (including a total cessation) in the minimum quantities of
Feedstocks to be delivered by Shipper pursuant to this Agreement,
taking into account the quantities of Feedstocks delivered to either
the [*****] (via the [*****] Terminal) or the [*****] (via the [*****]
Terminal) over the twelve-month period immediately preceding the
effective date of the closing of such [*****]; provided, however, that
if such
-19-
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
closure does not take place, then the provisions of this particular
subparagraph 6.G shall not apply.
H. New Law or Regulation:
In the event that during the term of this Agreement, any existing
codes and applicable law, codes, or regulations are amended or new
laws, codes and regulations are enacted or promulgated which, in
either case, (1) generally apply to, affect, or impact all domestic,
common carrier crude oil pipelines which are located [*****] and which
are of comparable size, age, throughput capacity, and operational
capability as those pipelines which are part of the N-[*****] Pipeline
Route, and (2) will require SUNOCO and/or WTG (either individually or
the aggregate) to incur (i) a capital expense improvement to the
N-[*****] Pipeline Route in excess of $[*****] prior to the end of the
Contract Period, or (ii) an increase in the cost of operating the
N-[*****] Pipeline Route in excess of $[*****] per Contract Year,
SUNOCO shall, upon written notice to Shipper, have the right to
initiate negotiations for an adjustment in any of the applicable
tariff rates which are set forth in the Joint Incentive Tariff in
order to compensate Sunoco for the required improvements.
In connection with SUNOCO's request to initiate negotiations to
adjust any of the tariff rates set forth in the Joint Incentive Tariff
for the N-[*****] Pipeline Route, SUNOCO shall provide Shipper with a
proper showing of the governmental requirement for such improvements
and that such improvements are the most cost effective to conform to
such governmental requirements.
If the Parties hereto are unable to mutually agree on an
adjustment in the applicable tariff rates set forth in the Joint
Incentive Tariff before it becomes necessary for SUNOCO to take such
action so as to be in compliance with the
-20-
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
new or amended law, code or regulation, this Agreement shall terminate
without further liability hereunder at the option of SUNOCO, except
for payments due and owing as of the date of such early termination.
7. Sampling, Testing, and Metering. All rules, regulations, procedures,
policies, guidelines, or recommendations which pertain to or govern the
sampling, testing, measurement, or metering of any Feedstock to be
received, transported, or delivered under the terms of this Agreement shall
be set forth under the Rules Tariff or the Joint Incentive Tariff.
8. Carrier's Receipt Points; Point of Custody, Transfer, Title, and Risk of
Loss; Use of [*****] Terminal. Except as specifically noted in the
following paragraph, the discharge flange on the vessel designated by
Shipper where Feedstock enters the hose or receiving arm that is currently
owned and operated by SUNOCO (or any of its affiliates) and located at or
in close proximity to Nederland Terminal shall be the point of custody
transfer of all Feedstocks tendered by or on behalf of Shipper to SUNOCO at
the Nederland Terminal for movement along the N-[*****] Pipeline Route (the
"CARRIER'S NEDERLAND RECEIPT POINT") under the terms of this Agreement. The
inlet side of the meter that is currently owned and operated by SUNOCO (or
any of its affiliates) and located at or in close proximity to Corsicana
Terminal shall be the point of custody transfer of all Feedstock tendered
by or on behalf of Shipper to SUNOCO at the Corsicana Terminal for movement
along the C-[*****] Pipeline Route (the "CARRIER'S CORSICANA RECEIPT
POINT") under the terms of this Agreement. Subject to the provisions set
forth in the last sentence of this paragraph 8, below, receipts of
Feedstocks at the Corsicana Terminal from Third Party Pipeline Systems or
via truck shall be separately metered at the Carrier's Corsicana Receipt
Point from those volumes of Feedstocks being moved through the Corsicana
Terminal (including the Carrier's Corsicana Receipt Point) off of either
the WTG 26" Pipeline or the New Pipeline. Shipper shall retain title to and
-21-
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
risk of loss for all Feedstock transported under the terms of this
Agreement, excluding volumes of Feedstocks retained by Carrier as per the
Loss Allowance as defined in subparagraph 6.C.
From time to time, SUNOCO may be unable to offload and accept
deliveries of one of more Feedstocks at the Nederland Terminal from vessels
nominated by Shipper. Carrier acknowledges that Shipper has made
arrangements to offload, deliver, and store one or more Feedstocks at
[*****] Terminal (the "[*****] TERMINAL"). Carrier shall permit Shipper to
deliver (or cause to be delivered) barrels of Feedstocks from the
[*****]Terminal into the pipeline system which serves as the N-[*****]
Pipeline Route, provided that Shipper (1) arranges (makes the necessary
arrangement(s)) to move such Feedstock through and out of the [*****]
Terminal to a mutually agreeable origin/connection point (the "[*****]
TERMINAL CONNECTION") which is tied into such N-[*****] Pipeline Route, and
(2) retains all liability for paying any and all transportation charges
associated with transporting such Feedstocks through the [*****] Terminal
to the [*****] Terminal Connection. Shipper shall retain title to and risk
of loss of all Feedstocks shipped hereunder. Any batch or tender of
Feedstock that is delivered into the [*****] Terminal and subsequently
delivered by or on behalf of Shipper into the WTG 26" Pipeline at or near
the Nederland Terminal for shipment under the terms of this Agreement shall
be subject to the same Loss Allowance hereunder as though such batch or
tender was originally delivered into Carrier's Nederland Receipt Point,
regardless of any loss allowance that may be charged by Unocal.
9. INDEMNITY PROVISIONS. AS BETWEEN THE PARTIES, SHIPPER SHALL BE LIABLE FOR,
AND RELEASE, INDEMNIFY, AND HOLD HARMLESS, SUNOCO, SUNOCO'S SUBSIDIARIES
AND AFFILIATES, AS WELL AS THE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
CONTRACTORS,
-22-
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
SUBCONTRACTORS, AND OTHER REPRESENTATIVES OF EACH SUCH ENTITY (THE "SUNOCO
GROUP"), FROM AND AGAINST ANY LOSS OR CONTAMINATION OF ANY FEEDSTOCK, AS
WELL AS FOR THIRD PARTY DAMAGES, CAUSED BY THE RELEASE, LEAK, SPILL, OR
DISCHARGE, AND RELATED OFF-SITE MIGRATION, OF ANY FEEDSTOCK AT ALL POINTS
(A) PRIOR TO SUCH PRODUCT OR SUBSTANCE BEING TRANSPORTED AND DELIVERED TO
THE CARRIER'S NEDERLAND RECEIPT POINT OR CARRIER'S CORSICANA RECEIPT POINT,
AND (B) AFTER THE FEEDSTOCK IS RETURNED TO SHIPPER OR SHIPPER'S DESIGNEE AT
EITHER THE METER OWNED/OPERATED BY OR ON BEHALF OF [*****]THAT IS LOCATED
AT THE [*****]TERMINAL (THE "[*****]METER") OR THE METER OWNED/OPERATED BY
OR ON BEHALF OF [*****]THAT IS LOCATED AT THE [*****] TERMINAL (THE
"[*****] METER"), AS THE CASE MAY BE.
LIKEWISE, AS BETWEEN THE PARTIES, SUNOCO SHALL BE LIABLE FOR, AND
RELEASE, INDEMNIFY, AND HOLD HARMLESS, SHIPPER, SHIPPER'S SUBSIDIARIES AND
AFFILIATES, AS WELL AS THE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
CONTRACTORS, SUBCONTRACTORS, AND OTHER REPRESENTATIVES OF EACH SUCH ENTITY,
FROM AND AGAINST ANY LOSS OR CONTAMINATION OF ANY RELEASE, LEAK, SPILL, OR
DISCHARGE, AND RELATED OFF-SITE MIGRATION, OF ANY FEEDSTOCK, AS WELL AS FOR
THIRD-PARTY DAMAGES, CAUSED BY ANY SUCH FEEDSTOCK AFTER SUCH PRODUCT OR
SUBSTANCE IS TENDERED TO SUNOCO AT CARRIER'S NEDERLAND RECEIPT POINT OR
CARRIER'S CORSICANA RECEIPT POINT UNTIL IT IS
-23-
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
DELIVERED TO SHIPPER OR SHIPPER'S DESIGNEE AT EITHER THE [*****]METER OR
THE [*****]METER, AS THE CASE MAY BE.
10. Force Majeure. If Carrier is unable to accept bona fide tenders of any
Feedstock by Shipper due to the inability of Carrier to receive or
transport any such product or substance as a result of fire, explosion,
storm, flood, power loss or shortage, extreme heat or cold, war, rebellion,
acts of terrorism or sabotage, insurrection, riot, strike, acts of third
persons or natural causes, breakage of or accident to equipment or
facilities, governmental regulations, court judgments or other causes
reasonably beyond the control of Carrier, but which under any such
circumstances or conditions are not caused by or the result of any
negligent act or omission or willful misconduct of Carrier, its
subsidiaries or affiliates, or the employees, agents, contractors, or
subcontractors of any such entity, then this Agreement shall be extended
for a period of time co-extensive with the time during which Carrier is
unable to accept such tenders of any Feedstock or otherwise perform its
duties and obligations under the terms of this Agreement, plus an
additional three (3) months, provided, however, that the addition of the
three (3) months described herein shall occur only once during the term of
this Agreement. If a force majeure event causes an interruption in the
service provided by Carrier hereunder, Carrier shall use all commercially
reasonable efforts to remedy the service interruption within a reasonable
time after the cessation of the force majeure event.
If Shipper is unable to deliver bona fide tenders of any Feedstock to
the Nederland Terminal or any portion of either the N-[*****] Pipeline
Route or the C-[*****] Pipeline Route due to Shipper's inability to secure
Feedstock supplies for tender into such facility or accept bona fide
tenders of any Feedstock by Carrier into either the [*****] Terminal or the
[*****] Terminal, or otherwise due to the shutdown of the marine dock/berth
at Nederland, Texas which serves the Nederland Terminal, or the [*****] or
the [*****], in
-24-
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
any such case, as a result of fire, explosion, storm, flood, power loss or
shortage, extreme heat or cold, war, rebellion, acts of terrorism or
sabotage, insurrection, riot, strike, acts of third persons or natural
causes, breakage of or accident to equipment or facilities, governmental
regulations, court judgments or other causes reasonably beyond the control
of Shipper, but which are not caused by or the result of any negligent act
or omission or willful misconduct of Shipper, its subsidiaries or
affiliates, or the employees, agents, contractors, or subcontractors of any
such entity, then this Agreement shall be extended for a period of time
co-extensive with the time during which Shipper is unable to deliver such
tenders of any Feedstock or otherwise perform under the terms of this
Agreement. If a force majeure event causes an interruption in Shipper's
deliveries provided to Carrier hereunder, Shipper shall use all
commercially reasonable efforts to remedy the interruption of deliveries
within a reasonable time after the cessation of the force majeure event.
Any party whose performance under this Agreement is suspended or
restricted by any force majeure event shall notify the other party, first
immediately by either telephone or facsimile, then promptly thereafter in
writing, providing reasonable details as to the extent and/or cause of the
force majeure event (to the extent known) and its known or estimated
duration.
11. Commingling. Shipper understands that some of its Feedstocks may be
commingled with products and commodities that are substantially similar to
the Feedstocks and being shipped by other parties. SUNOCO shall exercise
commercially reasonable efforts to minimize commingling of Feedstocks with
other products and to minimize or eliminate contamination.
-25-
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
12. Inventory Requirements. Shipper shall provide its proportionate share of
minimum inventory in the N-[*****] Pipeline Route (the "MINIMUM LINEFILL
INVENTORY") for Feedstocks moving from the Nederland Terminal to the
[*****] Terminal or the [*****] Terminal, based on the portion of the
N-[*****] Pipeline Route that is used by Shipper in order to facilitate
such movement. Shipper shall maintain a Minimum Linefill Inventory for each
pipeline segment of the N-[*****] Pipeline Route that is equal to its
percentage of total movements for each such pipeline segment, multiplied by
the total pipeline fill required for each such pipeline segment of the
N-[*****] Pipeline Route. Additionally, Shipper shall maintain a pro rata
share of Feedstocks necessary for efficient operation including tank heels
and minimum working tank stock. Upon termination of this Agreement, SUNOCO
shall return to Shipper all of Shipper's proportionate share of pipeline
fill inventory provided under the terms of this Agreement within 180 days
after the effective date of such termination.
13. Regulatory Approval. This Agreement, and the parties respective rights,
duties, and obligations set forth herein, are predicated upon acceptance of
the Rules Tariff and the Joint Incentive Tariff by the FERC in
substantially the same form as those which are set forth in Attachments D-1
and D-2 to this Agreement. Shipper will reasonably cooperate with Carrier
and take such actions as may be deemed reasonably necessary in order to
assist Carrier in obtaining such approval by FERC, including the agreement
by Shipper to the tariffs referenced in this Agreement as required by 18
CFR Section 342.2 (b).
14. Conditions Precedent to Obligations. The rights, duties and obligations of
Shipper and SUNOCO under the terms of this Agreement are expressly
conditioned upon all of the following:
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
(a) SUNOCO's acquisition of the Corsicana Terminal on or before December
31, 2005;
(b) SUNOCO's acquisition of the SUNOCO Pipeline on or before December 31,
2005;
(c) the execution and delivery by each party of each of the Coterminous
Agreements on or before June 15, 2005; provided, however, that both SUNOCO
and Shipper shall make good faith efforts to fulfill the conditions
precedent to their obligations as set forth above.
15. Guaranty. Shipper agrees to provide a guaranty executed by its ultimate
parent company (the "[*****] GUARANTY"), in a form and content that is
acceptable to SUNOCO, to be effective for the duration of this Agreement.
The [*****] Guaranty will guarantee all of Shipper's obligations under this
Agreement. Failure to provide the [*****] Guaranty prior to or simultaneous
with the execution and delivery of the Coterminous Agreements (as provided
for under paragraph 14, above) shall constitute a material breach of the
Agreement, entitling SUNOCO to cancel or suspend its delivery obligation
and to offset any payments or deliveries due to the other party under this
Agreement. Similarly, if and when, SUNOCO is maintaining, holding, or
otherwise retaining any Prepaid Transportation Credits for [*****] under
the terms of the Agreement SUNOCO shall provide a guaranty executed by
Sunoco Logistics Partners L.P. (the "SUNOCO GUARANTY"), in form and content
that is acceptable to Shipper and in amount which is no less than the value
of the Prepaid Transportation Credit being so maintained, held, or retained
to be effective for as long as SUNOCO or any of its subsidiaries, partners
(whether general or limited), or affiliates maintains, holds, or retains
any Prepaid Transportation Credits for or on behalf of [*****] or any of
its subsidiaries, partners (whether general or limited) or affiliates.
-27-
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
16. Volume Records. Carrier shall maintain, update, and promptly deliver to
Shipper, and as soon as such information is final and available for
distribution, as of the end of each calendar month during the term of this
Agreement, records of current throughput activity by Shipper from the
Nederland Terminal along any portion of the N-[*****] Pipeline Route or the
C-[*****] Pipeline Route during the preceding calendar month. Carrier shall
maintain all such records for a period of three (3) years after the
expiration of each Contract Year under this Agreement.
17. Additional Terms and Conditions; No Third-Party Rights. Except as
specifically noted in paragraph 1, in the event of any conflict between the
terms and conditions set forth in this Agreement and those set forth in the
Rules Tariff or the Joint Incentive Tariff, as the case may be, the terms
and conditions of the applicable published tariff shall prevail. Any
additional applicable rules or regulations which are set forth in the Rules
Tariff or the Joint Incentive Tariff and not otherwise addressed or set
forth in this Agreement including, without limitation, those involving
pro-ration, shall also apply to the parties. Carrier shall promptly notify
Shipper if Carrier is required to prorate any of the available line space
or capacity through the Nederland Terminal or along any portion of the
N-[*****] Pipeline Route or the C-[*****] Pipeline Route for any reason
whatsoever. Nothing expressed or referred to in this Agreement will be
construed to give any person or entity other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement.
18. Audit Rights. Shipper shall have the right during regular business hours
and upon reasonable notice to review for compliance with this Agreement (a)
Shipper's movement of its Feedstocks from the Nederland Terminal along any
portion of the N-[*****] Pipeline Route or the C-[*****] Pipeline Route,
(b) the relevant portions of all books,
-28-
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
records, and information kept by or on behalf of Carrier that reasonably
relate to Shipper's rights and obligations under this Agreement (including,
with respect to periods during which Shipper suffers or claims to have
suffered from delays in the delivery of its Feedstocks as a result of the
use by Carrier (or any of its affiliates) of any portion of either the
N-[*****] Pipeline Route or the C-[*****] Pipeline Route in violation or
alleged violation of this Agreement for the movement of any product or
commodity for any shipper or customer other than Shipper, all such books,
records, and information relating to (i) the total number of barrels moved
through Nederland Terminal and along any portion of the N-[*****] Pipeline
Route and the C-[*****] Pipeline Route on a monthly basis, (ii) the total
number of barrels delivered to the [*****] Terminal along the N-[*****]
Pipeline Route and the C-[*****] Pipeline Route on a monthly basis, (iii)
the total number of barrels delivered to the [*****] Terminal along the
N-[*****] Pipeline Route and the C-[*****] Pipeline Route, and (iv) each
pipeline nomination requested by and granted to Shipper by SUNOCO along
either the N-[*****] Pipeline Route and the C-[*****] Pipeline Route during
the same monthly period), and (c) any other fees and/or costs charged by
SUNOCO pursuant to this Agreement including, but not limited to, matters
that require the direct reimbursement by Shipper, and to conduct audits
relating thereto (each, an "AUDIT"), which Audits may be conducted by
Shipper's own internal audit group; provided, however, that no more than
one Audit may be performed in any six (6) month period, and the scope of
any Audit must be limited to fees, costs, and charges invoiced by SUNOCO to
Shipper (or its designee) within the three (3) year period prior to the
notice by Shipper of its intent to conduct any Audit. The costs associated
with any such Audit shall be borne by Shipper; provided, however, if any
Audit reveals and verifies that Shipper has been overcharged by either (i)
more than [*****] percent ([*****]%) of the total amount invoiced for the
period in question, or (ii) [*****] Dollars ($[*****]), whichever is
greater, then for any such excess charge, SUNOCO shall
-29-
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
promptly pay or reimburse Shipper for all such costs and expenses
associated with conducting the Audit, in addition to promptly reimbursing
or crediting Shipper the amount of such excess charges. In no event shall
Shipper or its auditors have access to the name or identity of the other
customers using the Nederland Terminal or any portion of either the
N-[*****] Pipeline Route or the C-[*****] Pipeline Route, the volumes of
any product or commodity being stored in, moved through, or otherwise
handled at the Nederland Terminal or any portion of either the N-[*****]
Pipeline Route and the C-[*****] Pipeline Route for any particular customer
(other than Shipper), the ultimate destination for any product or commodity
being transported by those other shippers or customers, or any other
information concerning such other shippers and customers, the disclosure of
which is restricted pursuant to any applicable law, rule, or regulation or
any agreement entered into by SUNOCO.
19. Assignment and Succession; Binding Obligation. Neither this Agreement, nor
any right, duty, obligation, or interest therein, shall be assigned by
either party without the prior written consent of the other, which such
consent will not be unreasonably withheld, delayed, or conditioned;
provided, however, this Agreement may be freely assigned by either SUNOCO
or Shipper to one of their respective affiliates or subsidiaries without
the prior written consent of the other party so long as in the event of
such assignment, the [*****] guaranty and the SUNOCO Guaranty (as
applicable) are renewed in the name of the assignee. However, any such
assignment shall not relieve either party of or from any of its obligations
or liabilities that accrued or were otherwise incurred under this Agreement
prior to the effective date of such assignment. The terms, conditions, and
provisions set forth in this Agreement shall apply to, be binding upon in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties.
-30-
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
20. Notices. Any notice, demand, or other communication that is required or
permitted to be given hereunder shall be made in writing and shall be
properly given when (a) received by hand to the intended recipient, (b)
sent by facsimile transmission, or (c) served by certified, registered or
express mail or by reputable, overnight courier service upon the party for
whom it is intended at the address set forth below or other such address as
may be specified from time to time in writing by one party to the other:
CARRIER: Sunoco Pipeline L.P.
Attention: Vice-President Business Development
1801 Market Street
Philadelphia, PA 19103
Fax No.: 215-246-8287
SHIPPER: [*****]
[*****]
[*****]
[*****]
Attn: Vice President, [*****]
Fax No.: [*****]
21. Governing Law. This Agreement is subject to all applicable laws, rules, and
regulations of any federal, state or local judicial, regulatory,
administrative, or governmental body or agency having proper jurisdiction
over the subject matter thereof. This Agreement shall be deemed to be made
under, and shall be governed and construed in accordance with the laws of
State of [*****], excluding any choice of law that may direct the
application of the laws of another jurisdiction. Unless otherwise agreed by
SUNOCO and Shipper, the
-31-
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
federal or state courts sitting in [*****] shall be the exclusive venue or
situs for the resolution of any legal dispute arising under this Agreement
which cannot first be resolved by mediation within 30 days after such
matter is referred to mediation by either party.
22. Strict Performance; Waiver. The rights of either party to require strict
performance by the other party of any and/or all obligations imposed on
such party by this Agreement shall not in any way be affected by previous
waiver, forbearance or course of dealing.
23. Entire Agreement. This Agreement (including all attachments thereto)
contains the entire agreement between SUNOCO and Shipper concerning the
subject matter hereof and supersedes any prior expression of interest or
understanding, oral or written, with respect to the subject matter herein.
This Agreement may not be amended except by written execution by duly
authorized representatives of both parties hereto, which writing states
specifically that it is an amendment to this Agreement.
24. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be fully effective as an original and which together
shall constitute one agreement.
25. Arbitration. Any controversy or claim ("DISPUTE") arising out of or related
to this Agreement shall be settled by consultation between the parties and
initiated by written notice of a dispute by one party (the "CLAIMANT") to
the other (the "RESPONDENT"). In the event that the Dispute is not settled
within thirty (30) days following such written notice, the Dispute shall be
resolved through the use of binding arbitration using three arbitrators, in
accordance with the then current Commercial Arbitration Rules of the
American
-32-
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
Arbitration Association, as supplemented to the extent necessary to
determine any procedural appeal questions by the Federal Arbitration Act
(Title 9 of the United States Code). If there is any inconsistency between
this Section and the Commercial Arbitration Rules or the Federal
Arbitration Act, the terms of this Section will control the rights and
obligations of the parties. The Claimant shall serve written notice on the
other party identifying the arbitrator Claimant has appointed. The
Respondent shall respond to Claimant within 30 days after receipt of
Claimant's notice, identifying the arbitrator Respondent has appointed. If
the Respondent fails for any reason to name an arbitrator within the 30-day
period, Claimant shall petition to the American Arbitration Association for
appointment of an arbitrator for Respondent's account. The two arbitrators
so chosen shall select a third arbitrator within 30 days after the second
arbitrator has been appointed. The Claimant will pay the compensation and
expenses of the arbitrator named by or for it, and the Respondent will pay
the compensation and expenses of the arbitrator named by or for it. The
costs of petitioning for the appointment of an arbitrator, if any, shall be
paid by Respondent. The Claimant and Respondent will each pay one-half of
the compensation and expenses of the third arbitrator. All arbitrators must
(a) be neutral Parties who have never been officers, directors or employees
of the parties or any of their affiliates and (b) have not less than seven
years experience in the energy industry. The hearing will be conducted in
[*****] and commence within 30 days after the selection of the third
arbitrator. Within five days after the selection of the third arbitrator,
the parties shall exchange in writing their respective determinations of
the Dispute, which determinations either Party may amend no later than ten
days after receipt of the other Party's determination by giving written
notice the other Party specifying the revised determination. At the
conclusion of the hearing, the arbitrators shall choose either the
determination of Claimant or the determination of Respondent as to the
Dispute and shall have no power or authority whatsoever to reach any other
result. In making their choice,
-33-
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
the arbitrator shall choose the determination that in their judgment is the
closest to being in conformity with the provisions of this Agreement. The
parties and the arbitrators shall proceed diligently and in good faith in
order that the decision may be implemented as promptly as possible. Except
as provided in the Federal Arbitration Act, the decision of the arbitrators
will be binding on and non-appealable by the Parties. The arbitrators shall
have no right to grant or award indirect, consequential, punitive or
exemplary damages of any kind.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
-34-
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
This Agreement has been executed by the parties as of the date and
year first above written.
SUNOCO PIPELINE L.P.
By: Sunoco Logistics Partners Operations GP LLC,
its general partner
By: ______________________________
Printed Name:_____________________
Title: ___________________________
[*****]
By: ____________________________
[*****],
[*****]
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
ATTACHMENT A
[*****]
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
ATTACHMENT B
PIPELINE RATE SCHEDULE
FROM TO
Nederland Terminal [*****]
Corsicana Terminal [*****]
Third Party Pipeline System
Viscosity Rate
SUS @ 60 (Degree) F $/Barrel
[*****] [*****]
[*****] [*****]
[*****] [*****]
[*****] [*****]
[*****] [*****]
[*****] [*****]
[*****] [*****]
[*****] [*****]
The above rates are Volume Incentive Rates which will apply to shipments of any
shipper agreeing in writing to deliver a minimum of [*****] barrels in aggregate
to [*****] from Nederland Terminal, Corsicana Terminal, or [*****] during the
Contract Period. Contract Period is defined as ten (10) years beginning with the
effective date specified in the written agreement and ending the last day of the
ten (10) year period.
Crude Petroleum with viscosities above [*****] will be accepted for delivery
only if there will not be unreasonable degradation of other crude types taking
into account the operation of Carrier's pipeline system and if adequate capacity
exist.
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
ATTACHMENT C
TERMINAL RATE SCHEDULE
TERMINALING
Nederland Terminal
Viscosity Rate
SUS @ 60 (Degree) F $/Barrel
[*****] [*****]
[*****] [*****]
[*****] [*****]
[*****] [*****]
[*****] [*****]
[*****] [*****]
[*****] [*****]
[*****] [*****]
ATTACHMENT D-1 F.E.R.C. NO. 3
CANCELS F.E.R.C. NO. 764*
(*SUN PIPE LINE COMPANY SERIES)
SUNOCO PIPELINE L.P.
In Connection With
Participating Carriers Shown Herein
Local & Joint Pipeline Tariff
CONTAINING
RULES AND REGULATIONS
GOVERNING THE TRANSPORTATION AND HANDLING
OF
CRUDE PETROLEUM
All charges, rules and regulations have been brought forward unchanged from Sun
Pipe Line Company's F.E.R.C. No. 764 in accordance with Sunoco Pipeline L.P.'s
Adoption Notice F.E.R.C. No. 1, effective February 8, 2002.
Filed in compliance with 18 CFR 341.6 (c).
Issued on 18 days' notice under authority of 18 CFR 341.14. This tariff
publication is conditionally accepted subject to refund pending a 30 day review
period.
The provisions published herein will, if effective, not result in an effect on
the quality of the human environment.
================================================================================
ISSUED: APRIL 12, 2002 EFFECTIVE: MAY 1, 2002
================================================================================
Issued by: Compiled by:
Deborah M. Fretz, President Richard G. Taylor, Tariff Manager
Sunoco Logistics Partners Sunoco Logistics Partners
Operations GP LLC, the General Partner of Operations GP LLC, the General Partner of
Sunoco Pipeline L.P. Sunoco Pipeline L.P.
Ten Penn Center Ten Penn Center
1801 Market Street 1801 Market Street
Philadelphia, PA 19103-1699 Philadelphia, PA 19103-1699
(215) 246-8393
</Table>
SUNOCO PIPELINE L.P. F.E.R.C. NO. 3
Cancels F.E.R.C. No. 764*
(*Sun Pipe Line Company Series)
TABLE OF CONTENTS
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------
ITEM PAGE
SUBJECT NO. NO.
- -----------------------------------------------------------------------------------------------------
Acceptance Free from Liens and Charges 35 5
Application of Rates and Charges 55 7
Application of Rates From and To Intermediate Points 100 9
Claims and Times for Filing 90 9
Commodity 120 10
Connection Requirements 115 10
Corrosion Inhibitors 110 9
Definitions 5 3
Duty of Carrier 95 9
Establishment of Grades 10 3
Exemption of Liability 80 8
Facilities Required at Origin and Destination 45 6
Intra-system Transfers 105 9
Measurement, Testing, Volume Corrections and Deductions 40 5
Mixing of Products in Transit 30 5
Mixtures 20 4
Notice of Arrival, Delivery at Destination 60 7
Origin Facilities Required for Automatic Custody Transfer 50 7
Payment of Transportation and other Charges; Finance Charges, Lien; Set-Off 70 7
Pipeage Contracts Required 85 9
Proration of Pipeline Capacity 65 7
Specification Required as to Quality 25 4
Tenders 15 4
Warranties 75 8
- -----------------------------------------------------------------------------------------------------
</Table>
EXPLANATION OF REFERENCE MARK:
[U] UNCHANGED
PARTICIPATING CARRIER
Marathon Ashland Pipe Line, LLC
Page 2
SUNOCO PIPELINE L.P. F.E.R.C. NO. 3
Cancels F.E.R.C. No. 764*
(*Sun Pipe Line Company Series)
GENERAL APPLICATION
Carrier will receive, transport, and deliver Petroleum through its
facilities only as provided in this rules and regulations tariff, except that
specific rules and regulations published in individual tariffs will take
precedence over rules and regulations published herein.
5. DEFINITIONS
"Barrel" as herein used will consist of forty-two (42) U.S. gallons at
sixty degrees Fahrenheit (60F).
"Carrier" as herein used means and refers to Sunoco Pipeline L.P. and other
common carrier pipelines participating herein.
"FERC" as used herein means the Federal Energy Regulatory Commission or its
successor agencies.
"Indirect Products" as herein used means indirect liquid products of oil
and gas wells, including gasoline and liquified petroleum.
"Nomination" as herein used means a written designation by a Shipper to
Carrier of an approximate quantity of Petroleum for transportation from a
specified origin point or points of Carrier to a specified destination point or
points of Carrier over a period of one Operating Month in accordance with these
Rules and Regulations.
"Operating Month" for Shipper or Transferor as herein used means any month
in which Carrier either transports Petroleum or recognizes and records a change
in the ownership of Petroleum for the account of such party. For purpose hereof,
the month shall be deemed to begin on the first day of such month at 0700 hours
until the first day of the succeeding month at 0659 hours [Central Standard or
Central Daylight Savings Time, whichever is in effect on the date specified].
"Petroleum" as herein used refers to crude petroleum which means the grade
or grades of the direct virgin liquid products of oil wells or a mixture of the
direct virgin liquid products of oil wells with the Indirect Products, as
provided in Item No. 20.
"Shipment Transfer" as herein used means the physical transfer of a stated
quantity of Petroleum in custody of Carrier from a Shipper to another shipper.
"Shipper" as herein used means the consignor of a Tender.
"Tender" or "Tendering" as herein used means an offer of delivery by a
Shipper to Carrier of a stated quantity of Petroleum for transportation from a
specified origin point or points of Carrier to a specified destination point or
points of Carrier in accordance with these Rules and Regulations.
"Title Transfer" as herein used means transfer of ownership reported in the
records of Carrier of a stated quantity of Petroleum in the custody of Carrier
from one entity to another.
10. ESTABLISHMENT OF GRADES
Carrier will from time to time give notice to Shippers specifying the
grades of Petroleum which it will regularly be transporting by Petroleum grades
between particular origin points and destination points of Carrier.
Carrier may from time to time, after giving reasonable notice to persons
who may be affected, cease to transport particular grades of Petroleum.
Page 3
SUNOCO PIPELINE L.P. F.E.R.C. NO. 3
Cancels F.E.R.C. No. 764*
(*Sun Pipe Line Company Series)
15. TENDERS
All Shippers tendering Petroleum to Carrier will promptly provide Carrier
with all Nomination information required by Carrier to schedule the shipment of
Petroleum which Shipper desires to be made to satisfy Carrier that Tenders are
in good faith and can be transported in conformance with Carrier's tariffs.
Carrier may refuse to accept Petroleum for transportation until Shipper has
provided Carrier with such information.
Carrier can require Tenders for the same kind and quality of Petroleum in
minimum of ten thousand (10,000 bbl.) shipments consigned to the same
destination point. Tenders shall become operative in the order in which they are
received and accepted by Carrier. Carrier at its option and for its convenience
may transport such Petroleum by intermittent pumpings.
Carrier will not be obligated to accept a Tender for any Operating Month
unless the Shipper submits its Nomination, in writing, specifying the kind and
quantity of Petroleum, to the Carrier on or before the fifteenth (15th) day of
the preceding calendar month.
20. MIXTURES
The Indirect Products will be accepted and transported as a mixture with
the direct virgin liquid products, providing the vapor pressure of the resulting
mixture does not exceed that permitted in Item No. 25.
The Indirect Products portion of the mixture will be accepted for
transportation at reception points other than the one at which the direct virgin
liquid products portion of the same mixture is received, provided that the
Shipper, consignee, and destination are the same, and that operating conditions
and the Carrier's facilities permit the Indirect Products portion to be mixed
with the direct virgin liquid products of the same Shipper or consignee. The
rate to be assessed on each portion of the mixture shall be the rate applicable
from the reception point at which each is received.
The direct virgin liquid products and Indirect Products will be measured
and tested separately for determining volumes received. Each such measurement
will be made in accordance with Item No. 40.
Mixtures will be transported and delivered as Petroleum only. Nothing in
this rule is to be construed to waive provisions of Item No. 30 of this tariff
or to require the Carrier to receive, transport, and deliver unmixed Indirect
Products. However, unmixed Indirect Products may be transported for subsequent
mixing with direct virgin liquid products in accordance with this rule where
facilities exist and operations permit transporting such Indirect Products.
25. SPECIFICATION REQUIRED AS TO QUALITY
Carrier reserves the right to reject all Tenders when, in Carrier's sole
determination:
(1) the vapor pressure of the Petroleum or any mixture thereof with
Indirect Products exceeds twelve pounds (12) lbs.) absolute at one hundred
degrees Fahrenheit (100(Degree)F);
(2) the true vapor pressure of the Petroleum or any mixture thereof with
Indirect Products might result in Carrier's non-compliance with federal,
state, or local requirements regarding hydrocarbon emissions;
(3) the gravity of the Petroleum or any mixture thereof with Indirect
Products is less than twenty (20(Degree)) degrees API [American Petroleum
Institute] or greater than one hundred twenty (120(Degree)) API;
Page 4
SUNOCO PIPELINE L.P. F.E.R.C. NO. 3
Cancels F.E.R.C. No. 764*
(*Sun Pipe Line Company Series)
(4) the Petroleum contains impurities exceeding one percent (1%) including
not more than three-tenths percent (0.3% water;
(5) the settled sediment and water (S&W) bottoms in tanks where the surface
of Petroleum accepted from the tank is no lower than four inches (4") below
the bottom of the pipeline connection with tank from which it enters
Carrier's facilities;
(6) the incrustation thickness of the internal surface of a tank where
Petroleum accepted from a tank is above a maximum as determined by Carrier;
or
(7) the Petroleum has been contaminated by the presence of any excessive
metals or chemicals including but not limited to chlorinated and/or
oxygenated hydrocarbon and salt as determined by Carrier. No Petroleum will
be accepted unless its gravity, viscosity, and other characteristics are
such that it will be readily susceptible to transportation through
Carrier's existing facilities, and it will not materially and adversely
affect the quality of Petroleum from other Shippers or cause disadvantage
to other Shippers and/or Carrier.
30. MIXING OF PRODUCTS IN TRANSIT
Direct virgin liquid products and Indirect Products will be accepted for
transportation only on the condition that the mixture shall be subject to such
changes in gravity or quality while in transit as may result from the mixture of
said direct virgin liquid products and Indirect Products with other direct
virgin liquid products or Indirect Products and/or with other Petroleum in the
pipelines or tanks of Carrier, or the connecting company or companies.
Carrier has no obligation to deliver the identical Petroleum received from
Shipper but may make delivery from common stock or from Carrier's pipeline
stream of substantially like Petroleum.
35. ACCEPTANCE FREE FROM LIENS AND CHARGES
Carrier may decline to accept for transportation Petroleum which is
involved in litigation or which is not free from liens or charges.
40. MEASUREMENT, TESTING, VOLUME CORRECTIONS AND DEDUCTIONS
All Petroleum tendered to the Carrier for transportation will be measured
and tested in tanks by a representative of Carrier or by automatic equipment
approved by Carrier. All measurements will be made in Barrels. Carrier only
routinely will test for gravity and sediment and water as described herein. When
tanks are gauged, all Petroleum will be measured, sampled or tested prior to
receipt or delivery. When automatic metering and sampling equipment is used, all
Petroleum will be measured and sampled during receipt or delivery and the
quantity determined and tested after such receipt or delivery. Shipper or its
consignee may be present to witness any or all parts of the measuring and
testing process.
Where measurement is made in tanks, quantities will be determined from
correctly compiled tank tables where the tanks are strapped and tables computed
in accordance with Chapter 2. Tank Calibration. American Petroleum Institute
Manual of Petroleum Measurement Standards, latest edition, indicating
one-hundred percent (100%) of the full capacity of the tanks. Where measurement
is made by temperature compensated meters, quantities indicated will be
Page 5
SUNOCO PIPELINE L.P. F.E.R.C. NO. 3
Cancels F.E.R.C. No. 764*
(*Sun Pipe Line Company Series)
further corrected for meter factor and for pressure in accordance with the
American Petroleum Institute Manual of Petroleum Liquid Hydrocarbons by Pipeline
Displacement Meters. After meter factor is applied for non-temperature
compensated meters, the correction for temperature will be made as described
herein.
Where Carrier uses a tank or meter of the Shipper or its consignee, Carrier
reserves the right to request restrapping or check-strapping of the tank and
proving or check proving of the meter.
Except for arithmetic errors, all measurement and testing by a
representative of Carrier will be conclusive evidence of the quantity as
adjusted herewith if a representative of Shipper or its consignee was not
present during such measuring and testing.
Adjustments from the observed gravity and volume will be made on Petroleum
received or delivered for temperature on the basis of sixty degrees Fahrenheit
(60(Degree)F) in accordance with Chapter 11.1, Volume I, 5a, Generalized Crude
Oils, Correction of Observed Gravity to API Gravity at 60 degrees Fahrenheit,
American Petroleum Institute Manual of Petroleum Measurement Standards, latest
edition and Table 6a, Generalized Crude Oils, Correction of Volume to 60 degrees
Fahrenheit against API Gravity at 60 degrees Fahrenheit, American Society of
Testing Materials D1250. Observed gravity correction will be made to the nearest
one-tenth degree (0.1(Degree)) API, and observed gravity temperature to be made
to the nearest one degree Fahrenheit (1.0(Degree)F). Volume adjustments will be
made for the observed volume temperature at least to the nearest one degree
Fahrenheit (1.0(Degree)F), and corrected gravity will be made at least to the
nearest five-tenths (0.5(Degree)) of one degree API, to the basis of sixty
degrees Fahrenheit (60(Degree)F).
Deductions will be made for the actual amount of sediment and water (S&W)
as determined by the Field Centrifuge Method "B" or "C" in accordance with
Chapter 10.4, Standard Methods of Test for Water and Sediment in Crude Oils,
American Petroleum Institute Manual of Petroleum Measurement Standards, latest
edition. Observed API gravity and temperature will be determined by the Open
Hydrometer Test Method in accordance with Chapter 9.1, Hydrometer Test Method
for Density, Relative Density (Specific Gravity), American Petroleum Institute
Manual of Petroleum Measurement Standards, latest edition or API Gravity of
Crude Petroleum and Liquid Petroleum Products, American Society of Testing
Materials D 1298-80. The sediment and water and gravity tests will be performed
by the Carrier.
If two or more Carriers are involved with tendered volumes, tests are to be
performed by the particular carrier as agreed between carriers.
The net balance at sixty degree Fahrenheit (60(Degree)F.) less the sediment
and water (S&W) volume percentage will be the quantity received or delivered by
Carrier.
An assessment of l/20 of 1%) one twentieth of one percent, on net
quantities so determined for acceptance by Carrier, will be charged to cover
transportation allowance.
45. FACILITIES REQUIRED AT ORIGIN AND DESTINATION
Petroleum will be received for transportation only when Shipper has
provided facilities satisfactory to originating and delivering carriers for
delivering Petroleum to the pipeline at terminal of receipt and for receiving
said Petroleum as it arrives at destination.
In the event Shipper fails to provide adequate facilities for receipt at
destination or has
Page 6
SUNOCO PIPELINE L.P. F.E.R.C. NO. 3
Cancels F.E.R.C. No. 764*
(*Sun Pipe Line Company Series)
not ascertained from Carrier that it has facilities available for receipt at
destination, or in the event the Shipper or its consignee refuses to accept the
Petroleum at the destination point, Carrier shall have the right to divert or
reconsign, subject to the rates, rules and regulations applicable from point of
origin to actual final destination, or make whatever arrangements for
disposition as are deemed appropriate to deliver the Petroleum from Carrier's
facilities, including the right of public or private sale in a commercially
reasonable manner. The Carrier may be a purchaser at such sale. Out of the
proceeds of said sale, the Carrier shall pay itself all transportation and all
other applicable lawful charges and necessary expenses of the sale and the
expense of caring for and maintaining the Petroleum until disposed of and the
balance shall be held for whosoever may be lawfully entitled thereto.
50. ORIGIN FACILITIES REQUIRED FOR AUTOMATIC CUSTODY TRANSFER
When Shipper or its consignee elects to deliver Petroleum to Carrier at
point of origin through automatic custody transfer facilities (in lieu of
tankage), Shipper or its consignee will furnish the required automatic measuring
and sampling facilities. The design, construction, and calibration of such
facilities must be approved by Carrier and any appropriate regulatory body.
In the event automatic custody transfer is made by a metering facility,
Shipper or its consignee will also furnish whatever pumping service is required
to ensure that the Petroleum being delivered through the meter is at a pressure
in excess of the true vapor pressure of the liquid.
55. APPLICATION OF RATES AND CHARGES
Petroleum accepted for transportation shall be subject to the rates and
charges in effect on the date of receipt of such Petroleum by Carrier.
Transportation and all other lawful charges will be collected on the basis of
net quantities of Petroleum delivered. All net quantities will be determined in
the manner provided in Item No. 40.
60. NOTICE OF ARRIVAL, DELIVERY AT DESTINATION
The obligation of Carrier is to deliver at the nominated destination the
Tendered net quantity of Petroleum and such delivery may be made upon
twenty-four (24) hours notice to the Shipper or consignee with all possible
dispatch into the tanks or facilities to be provided by the Shipper or its
consignee.
65. PRORATION OF PIPELINE CAPACITY
If, during any period, the total volume of Petroleum nominated over any
segment of Carrier's pipelines is in excess of the normal operational capacity
of said segment, such Petroleum will be apportioned for acceptance and
transportation on an equitable
70. PAYMENT OF TRANSPORTATION AND OTHER CHARGES; FINANCE CHARGES; LIEN;
SET-OFF
The transportation and all other charges accruing on all Petroleum accepted
for shipment, based on the rate applicable to the destination at which delivery
is made, shall be paid in accordance with invoice terms and these Rules and
Regulations. Carrier, at its option, may require Shipper to pay all such charges
and fees in advance or to provide an irrevocable letter of credit satisfactory
to Carrier. For Petroleum not released due to failure to pay or left in
Carrier's custody after the scheduled delivery has expired, Carrier may assess
reasonable storage charges
Page 7
SUNOCO PIPELINE L.P. F.E.R.C. NO. 3
Cancels F.E.R.C. No. 764*
(*Sun Pipe Line Company Series)
and other reasonable charges (including reasonable attorney fees and court
costs) incurred with the preservation or sale of the Petroleum.
If such charges are not paid by the due date stated on the invoice, Carrier
shall have the right to assess finance charges on the entire past due balance
(including principal and accumulated but unpaid finance charges) until paid in
full at the rate equal to one-hundred twenty-five percent (125%) of the prime
rate of interest charged by Citibank N.A., New York, New York as of the due date
or the maximum finance charge rate allowed by law, whichever is less.
Petroleum accepted for such transportation shall be subject to a lien for
all such charges or antecedent unpaid charges.
If the Petroleum remains in Carrier's custody more than thirty (30) days
after the tender of delivery by Carrier, Carrier shall have the right to sell
the Petroleum at a public or private sale in a commercially reasonable manner to
collect such charges.
Carrier reserves the right to set-off any such charges against any monies
owed to Shipper by Carrier or any Petroleum of Shipper in Carrier's custody.
75. WARRANTIES
Shipper warrants that the Petroleum tendered to Carrier will conform with
the specifications stated in Item No. 25, will be merchantable, and will not be
contaminated. Shipper will be liable to Carrier, other Shippers and/or
consignees for any damage, including special, incidental, and consequential,
arising from a breach of this warranty. The transportation of the Petroleum may
be refused or canceled if Carrier determines or is advised that the Petroleum
does not meet the requirements of these Rules and Regulations. In addition, if
Carrier samples the Petroleum prior to or after tendered by Shipper and if
contracted laboratory test results determine that the Petroleum is
non-merchantable, Shipper will be liable to Carrier for the cost of such tests
for non-merchantable or contaminated Petroleum.
CARRIER DOES NOT MAKE ANY WARRANTIES, EXPRESSED OR IMPLIED INCLUDING, BUT
NOT LIMITED TO, FITNESS FOR A PARTICULAR PURPOSE AND MERCHANTABILITY, CONCERNING
THE QUALITY OF THE PETROLEUM.
80. EXEMPTION OF LIABILITY
Carrier will not be liable for any loss of Petroleum or damage thereto or
delay caused by an act of God, fire, explosion, storm, flood, electrical
malfunction, war, rebellion, insurrection, strike, breakage or accident to
machinery or equipment, difference with workman, the public enemy, quarantine,
the authority of law, riots, the act of default of Shipper or owner, or any
cause not due to the fault or negligence or any cause reasonably beyond the
control of Carrier. In such cases, the loss allocated to Shipper shall be the
quantity equal to the amount of its Tenders for the month in which such loss
occurs bears to the whole amount of the line fill and tankage in the system of
Carrier during the month of such loss, and Shipper shall be entitled to receive
only such portion of its Tenders as remains after deducting its due proportion
of the loss. Carrier's custody of the Tenders shall end when Petroleum has been
delivered into Shipper's or its consignee's facilities.
Page 8
SUNOCO PIPELINE L.P. F.E.R.C. NO. 3
Cancels F.E.R.C. No. 764*
(*Sun Pipe Line Company Series)
Except in force majuere situations, correction of a nonconformity shall be the
payment of the difference between the posted price for similar Petroleum in the
area of origin and the value of the degraded Petroleum, or the replacement of
the Petroleum, at Carrier's option, will constitute fulfillment of all
liabilities of Carrier whether the liabilities are based on contract, negligence
or otherwise. Carrier will not be liable for special, consequential or
incidental damages.
85. PIPEAGE CONTRACTS REQUIRED
Separate pipeage contracts in accordance with this tariff and these Rules
and Regulations covering further details may be required of a Shipper before any
duty to transport will arise.
90. CLAIMS AND TIMES FOR FILING
As a condition precedent to recovery for loss, damage, or delay to
shipments, claims must be filed in writing with Carrier within nine (9) months
after delivery of the Petroleum or, in case of failure to make delivery, then
within nine (9) months after a reasonable time for delivery has elapsed. Suits
arising out of such claims must be instituted against Carrier only within two
(2) years from the time when the Carrier delivers, or tenders delivery of the
Petroleum or, in case of failure to make or tender delivery, then within two (2)
years after a reasonable time for delivery has elapsed. Where claims are not
filed or suits are not instituted thereon in accordance with the foregoing
provisions, Carrier will not be liable and such claims will not be paid.
95. DUTY OF CARRIER
Carrier shall not be required to transport Petroleum except with reasonable
diligence, considering the quantity of Petroleum, the distance of
transportation, the safety of operation, and other material factors.
100. APPLICATION OF RATES FROM AND TO INTERMEDIATE POINTS
Carrier will receive Petroleum for pipeline transportation only from and to
established origin and delivery stations or terminals.
Petroleum received at an established origin station, on Carrier's system,
which is not named in tariffs making reference hereto, but which is intermediate
to a point from which rates are published in said tariffs, through such unnamed
point, will be assessed the rate in effect from the next more distant point
published in the tariff.
Petroleum delivered to an established delivery station or terminal, on
Carrier's system, which is not named in tariffs making reference hereto, but
which is intermediate to a destination to which rates are published in said
tariffs, through such unnamed point, will be assessed the rate in effect to the
next more distant point published in the tariff.
105. INTRASYSTEM TRANSFERS
Carrier will allow a Shipper Transfer of one shipper to another, and Title
Transfers from one ownership to another for Petroleum in custody of Carrier. A
charge of one-half cent (0.5 cents) per barrel with a fifty dollars ($50.00)
minimum will be made to each party directing such transfers, except for the
first Title Transfer.
Page 9
SUNOCO PIPELINE L.P. F.E.R.C. NO. 3
Cancels F.E.R.C. No. 764*
(*Sun Pipe Line Company Series)
Only one Shippers Transfer will be allowed per movement and party accepting
volumes on a Shipper Transfer shall become the shipper of record. Shipper
Transfer must be made at point of origin.
Title Transfers may not be accepted after 25th day of the preceding
calendar month.
A transfer request, if accepted, must be confirmed in writing or Telex by
both the transferor and the transferee within forty-eight (48) hours after the
transfer request. Such transfer request will indicate the party to which the
transfer is to be made, the amount of Petroleum to be transferred and its
location and grade.
Carrier will incur no liability for any losses or damage incurred by an
Shipper or owner involved in any intra-system transfer.
110. CORROSION INHIBITORS
Carrier reserves the right to inject or approve the injection of corrosion
inhibitors in the Petroleum to be transported.
115. CONNECTION REQUIREMENTS
All proposed receiving or delivery connections must meet tender, tankage,
hourly flow rate conditions, and metering requirements as they exist at the time
of requested connection and must also have provisions which will allow for
increases to maximum line flow rate and pressure conditions. All proposed
connection designs must be approved by Carrier, and all costs of connections
shall be paid by the connecting party.
120. COMMODITY
Carrier is engaged exclusively in the transportation of Petroleum specified
and described in Item No. 25 and, therefore, will not accept any other
commodities for transportation. No Petroleum will be received for shipment
except good merchantable Petroleum of substantially the same kind and quality as
that being currently transported through the same facilities for other shippers.
Petroleum of substantially different grade or quality will be received for
transportation only in such quantities and upon such terms and conditions as
Carrier and Shipper may agree.
Page 10
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
ATTACHMENT D-2
F.E.R.C. NO.
SUNOCO PIPELINE L.P.
JOINT PROPORTIONAL TARIFF
IN CONNECTION WITH
WEST TEXAS GULF PIPE LINE COMPANY
APPLYING ON
CRUDE PETROLEUM
FROM
NEDERLAND, TEXAS
TO
[*****]
Governed, except as otherwise provided herein, by the rules and regulations
published in Sunoco Pipeline L.P.'s F.E.R.C. tariff No. 3, supplements thereto
and successive issues thereof.
The provisions published herein will, if effective, not result in an effect on
the quality of the human environment.
================================================================================
ISSUED: EFFECTIVE:
================================================================================
ISSUED BY: COMPILED BY:
Deborah M. Fretz, President Yiping Ren
Sunoco Logistics Partners Operations Sunoco Logistics Partners Operations
GP LLC, the General Partner of GP LLC, the General Partner of
Sunoco Pipeline L.P. Sunoco Pipeline L.P.
1801 Market Street 1801 Market Street
Philadelphia, PA 19103-1699 Philadelphia, PA 19103-1699
Telephone: (215) 977-6861
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
TABLE OF VOLUME INCENTIVE RATES
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------
RATES IN CENTS PER BARREL OF 42 U.S. GALLONS
- -----------------------------------------------------------------------------------------------
FROM TO
- -----------------------------------------------------------------------------------------------
VISCOSITY RANGE [*****] [*****]
(SUS @ 60 (Degree) F) [*****] [*****]
- ------------------------------------------------------------------------------------------------
[*****] [*****] [*****]
[*****] [*****] [*****]
NEDERLAND, [*****] [*****] [*****]
TEXAS
(Jefferson [*****] [*****] [*****]
County)
[*****] [*****] [*****]
[*****](a) [*****] [*****]
[*****](a) [*****] [*****]
[*****](a) [*****] [*****]
- -----------------------------------------------------------------------------------------------
[*****] [*****] [*****]
[*****] [*****] [*****]
CORSICANA,
TEXAS [*****] [*****] [*****]
(Navarro
County) [*****] [*****] [*****]
[*****] [*****] [*****]
[*****](a) [*****] [*****]
[*****](a) [*****] [*****]
[*****](a) [*****] [*****]
- ----------------------------------------------------------------------------------------------
</Table>
NOTES:
(a) Crude Petroleum with viscosities above [*****] will be accepted for
delivery only if there will not be unreasonable degradation of other crude
types taking into account the operation of Carrier's pipeline system and if
adequate capacity exists.
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH "[*****]" AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
APPLICATION OF VOLUME INCENTIVE RATES
1. Volume Incentive Rates set forth in this tariff will apply to shipments of
any shipper agreeing in writing to deliver a minimum of [*****] barrels in
aggregate to [*****] from Nederland, Texas (the "Aggregate Throughput
Obligation") during the Contract Period. "Contract Period" is defined as ten
(10) years beginning with the effective date specified in the written agreement
and ending the last day of the ten (10) year period. Carrier shall invoice
shipper monthly at each of the applicable, then-current Volume Incentive Rate(s)
reflected on this tariff, including any current supplements thereto and
successive issues thereof.
2. The "Minimum Annual Throughput Obligation" shall be [*****] of the Aggregate
Throughput Obligation. However, if shipper's shipments hereunder during any
Contract Year (as that term is defined in Item No. 3 of this tariff) are greater
than the Minimum Annual Throughput Obligation, then the volumes in excess will
be credited to the succeeding Contract Years. If shipper's shipments hereunder
in any Contract Year are less than the Minimum Annual Throughput Obligation,
then shipper shall pay to Carrier the undisputed amount which is equal to the
[*****], then-current volume incentive rate [*****] set forth in this tariff,
multiplied by the number of barrels that shipper is deficient for such Contract
Year, which payments shall be made within twenty (20) days after both (a) the
completion of any Crude Petroleum throughput reconciliation process for such
Contract Year that has been agreed upon in writing by and between Carrier and
such shipper, and (b) the receipt of an invoice from Carrier for same. Such
amount will be considered by Carrier as prepaid transportation at the current
Volume Incentive Rate to be applied to volumes in excess of the Minimum Annual
Throughput Obligation in succeeding Contract Years in which shipper's volumes
exceed the Minimum Annual Throughput Obligation and for one year after the
Contract Period ends; provided, however, that any such prepaid transportation
credits shall expire if not used in the [*****] Contract Years subsequent to
the Contract Year in which it is earned.
3. For purposes of this tariff, the term "Contract Year" is defined to mean the
twelve-month period beginning on the effective date of the Contract Period and
each successive twelve-month period thereafter as agreed upon in writing by
Carrier and such affected shipper.
4. Carrier during the Contract Period may adjust the Volume Incentive Rates
contained in this tariff, including any current supplements thereto and
successive issues thereof, in accordance with the procedure for annual indexing
of tariff rates which is set forth in Title 18, Code of Federal Regulations,
Section 342.3, as such regulation may be amended, supplemented, or otherwise
modified from time to time. Said adjustment will be effective each July 1 (or as
otherwise provided by applicable law).
APPLICATION OF TARIFF
Rates set forth in this tariff are applicable only to Crude Petroleum delivered
to Carrier by pipeline at point of origin and are for trunk line transportation
only.
Shipments to [*****] shall include pump out from tankage located at [*****] and
back to the Carrier for movement to [*****].
No gathering service or Nederland terminalling service will be performed under
this tariff. Viscosities are determined by Carrier, absent fraud or manifest
error.
ADDITION TO SUNOCO PIPELINE'S F.E.R.C. TARIFF NO. 3, ITEM NO. 40, ENTITLED
MEASUREMENT, TESTING, VOLUME CORRECTIONS AND DEDUCTIONS: For purposes of this
tariff, the last sentence of Sunoco Pipeline L.P.'s F.E.R.C. Tariff No. 3, Item
No. 40, shall not apply. Instead, an assessment of [*****] [*****], on net
quantities so determined for acceptance by Carrier, absent fraud or manifest
error, will be charged to cover transportation allowance.