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Exhibit 10.15
"Pages where confidential treatment has been requested are marked 'Confidential
Treatment Requested.' The redacted material has been separately filed with the
Commission, and the appropriate section has been marked at the appropriate place
and in the margin with a star (*)."
AMENDED AND RESTATED
PRODUCTS SALE AND DELIVERY AGREEMENT
THIS AMENDED AND RESTATED PRODUCTS SALE AND DELIVERY AGREEMENT (the
"Agreement"), is made and entered into this 18th day of June, 2001, but
effective as of May 1, 2001 (the "Amendment Effective Date"), by and between
DYNEGY LIQUIDS MARKETING AND TRADE, hereinafter referred to as "Dynegy," and
EQUISTAR CHEMICALS, LP, hereinafter referred to as "Equistar."
WITNESSETH:
WHEREAS, Equistar's predecessor in interest (Oxy Petrochemicals, Inc.) and
Dynegy's predecessors in interest (Trident NGL, Inc. and Oxy NGL Pipeline
Company) entered into that certain Product Sale and Delivery Agreement,
effective as of August 31, 1991, as previously amended (the "Original
Agreement"), pursuant to which Dynegy agreed to sell certain Products to
Equistar and Equistar agreed to purchase such Products from Dynegy; and
WHEREAS, Equistar and Dynegy, the sole and remaining parties to the
Original Agreement, have agreed to amend and supplement certain portions of the
Original Agreement and now desire to enter into this Amended and Restated
Products Sale and Delivery Agreement to evidence such agreement which will
supercede and replace in its entirety, effective as of May 1, 2001, the Original
Agreement.
WHEREAS, Equistar desires to purchase from Dynegy quantities of Ethane,
Propane and, potentially, Normal Butane (as such terms are defined in Article I
below); and WHEREAS, Dynegy has quantities of Ethane, Propane and, potentially,
Normal Butane available for sale and desires to sell such Ethane, Propane and
Normal Butane to Equistar; and
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, Equistar and Dynegy agree as
follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
listed below:
"Accounting Period" shall mean a period of one (1) Month commencing at 7:00
a.m. local time on the first Day of a calendar Month and ending at 7:00 a.m.
local time on the first Day of the succeeding Month.
"Additional Storage Volumes" shall have the meaning ascribed to such term
in Section 4.06 hereinafter.
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"Additional Volumes" shall have the meaning ascribed to such term in
Section 4.02 hereinafter.
"Affiliate" shall mean any person, firm, corporation or other entity which
is an affiliate within the regulations promulgated under the Securities Act of
1933, as such regulations and act are amended and in effect on the date of this
Agreement.
"Barrel" shall mean 42 U.S. Gallons.
"Business Day" shall mean any Day in which Federal Reserve membership
banks situated in Houston, Texas are open for business.
"Contract Startup Date" shall have the meaning ascribed to such term in
Section 4.11 hereinafter.
"Contract Startup Notice" shall have the meaning ascribed to such term in
Section 4.11 hereinafter.
"Day" or "Daily" shall mean a twenty-four (24) hour period commencing at
7:00 a.m. local time and extending until 7:00 a.m. local time on the following
day. The date of the day shall be that of its beginning.
"Delivery Month" shall have the meaning ascribed to such term in Section
4.02 hereinafter.
"Deemed Nominations" shall have the meaning ascribed to such term in
Section 4.02 hereinafter.
"DMSLP Fractionator" shall have the meaning ascribed to such term in
Section 12.03 hereinafter.
"E-Mail" shall have the meaning ascribed to such term in Section 12.04
hereinafter.
"Estimated Volumes" shall have the meaning ascribed to such term in Section
4.02 hereinafter.
"Ethane" shall mean the stream containing ethane, incidental hydrocarbons
and other associated compounds which shall meet the specifications listed on
Exhibit "A" attached hereto and made a part hereof.
"Equistar's Facility" or "Equistar's Plant" shall mean Equistar's olefins
plant located near the town of Lake Charles in Calcasieu Parish, Louisiana.
"Equistar Storage Volumes" shall have the meaning ascribed to such term in
Section 4.06 hereinafter.
"Extension Period" shall have the meaning ascribed to such term in
Section 4.11 hereinafter.
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"Final Nominations" shall have the meaning ascribed to such term in Section
4.02 hereinafter.
"Force Majeure" shall have the meaning ascribed to such term in Section
9.02 hereinafter.
"Gallon" shall mean one (1) U.S. standard liquid gallon containing 21
cubic inches at sixty degrees Fahrenheit (60DEG. F) and at the equilibrium
vapor pressure of the liquid measured.
"Hackberry Storage" shall mean the underground storage facilities located
in Cameron Parish near Hackberry, Louisiana, to which Dynegy has access and/or
control for the purpose of storing natural gas liquid products, including Ethane
and Propane, and the pipelines and related facilities used to receive and
deliver Ethane and Propane to and from the Hackberry Storage facility.
"Initial Nominations" shall have the meaning ascribed to such term in
Section 4.02 hereinafter.
"Lake Charles Area" shall mean an area within a twenty (20) mile radius of
the Equistar Facility.
"Location Differential" shall have the meaning ascribed to such term in
Section 7.01 hereinafter.
"MBAO" means the Monthly average of the Daily high and low prices of the
particular Product as quoted by the Oil Price Information Service ("OPIS") for
Mont Belvieu, Texas (Non-TET for Propane) during the Delivery Month.
"Month" or "Monthly" shall mean a period commencing at 7:00 a.m. local time
on the first Day of a calendar month and extending until 7:00 a.m. local time on
the first Day of the next succeeding calendar month.
"Non-Take Period" shall have the meaning ascribed to such term in Section
4.11 hereinafter.
"Normal Butane" shall mean normal butane meeting the specifications listed
on Exhibit "C" attached hereto and made a part hereof.
"Original Agreement" shall have the meaning ascribed to such term in the
first "Whereas" clause on page 1 of this Agreement.
"Pound" shall mean a unit of weight equivalent to sixteen (16) ounces
avoirdupois.
"Product" or "Products" shall mean Ethane, Propane and/or Normal Butane but
not mixtures of Ethane and Propane ("E/P") (For example 80/20, 70/30.)
"Propane" shall mean the stream containing propane, incidental hydrocarbons
and other associated compounds which shall meet the specifications of HD-5
propane as set forth in Gas
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'Confidential Treatment Requested'
Processors Association (hereinafter referred to as "GPA") Publication 2140-80,
as amended from time to time, except that the water content shall only be
limited to no free water. If the specifications for Propane are amended,
Dynegy shall notify Equistar prior to shipping any Propane to Equistar that
is subject to the amended specification.
"Sale Agreement" shall have the meaning ascribed to such term in Section 4.
10 hereinafter.
"Spot Resale Volumes" shall have the meaning ascribed to such term in
Section 4.04 hereinafter.
"Spot Sales Volumes" shall have the meaning ascribed to such term in
Section 4.05 hereinafter.
"Stored Volumes" shall have the meaning ascribed to such term in Section
4.06 hereinafter.
"Third Party Notice" shall have the meaning ascribed to such term in
Section 4.10 hereinafter.
"Turnaround Period" shall have the meaning ascribed to such term in Section
4.09 hereinafter.
"12" Pipeline" shall have the meaning ascribed to such term in Section 7.01
hereinafter.
"Week" or "Weekly" shall mean a period of seven (7) Days commencing at 7:00
a.m. local time on Monday and ending at 7:00 a.m. the following Monday.
ARTICLE 11
TERM
* 2.01 This Agreement shall extend for a term of [REDACTED] (the "Term")
commencing August 30, 1991.
ARTICLE III
QUALITY
3.01 The Products to be sold and delivered hereunder shall have a
composition conforming to the specifications herein provided. In accordance
with the provisions of Exhibit "B" attached hereto, Dynegy shall
continuously test through the use of an online analyzer(s) to ensure that
Products sold and delivered to Equistar shall meet the specifications set
forth or referred to in the definitions of Ethane, Propane and Normal Butane
as set forth in Article I above. Should Dynegy's tests determine Products
are off-specification, Dynegy shall immediately notify Equistar's Plant
Manager, or his or her designee, by telephone of said non-specification
Products. Dynegy shall determine the source of such non-specification
Products and, at Equistar's direction, Dynegy shall cease delivery of same
until otherwise advised. Dynegy shall immediately seek to determine, and
shall notify Equistar of, the estimated duration of such condition. Equistar
shall have no obligation
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'Confidential Treatment Requested'
but may elect to continue acceptance of the non-specification Products;
however, Dynegy shall endeavor to bring the Products back within the
specifications herein provided as soon as possible. Should Equistar elect to
accept non-specification Product, Equistar's election shall act as a waiver
of all of Equistar's rights against Dynegy under this Article III for breach
of this Article III, with respect to such non-specification Product accepted
by Equistar.
ARTICLE IV
QUANTITY
4.01 Subject to the terms of this Agreement and except as otherwise
provided herein, Equistar agrees to purchase from Dynegy and Dynegy agrees
to sell to Equistar one hundred percent (100%) of its Product requirements
for Equistar's Plant unless Dynegy is excused from supplying Product
pursuant to this Agreement, in which event Equistar shall be free to
purchase Product from third parties.
4.02 During the term of this Agreement, Dynegy agrees to sell and deliver,
or cause to be delivered, and Equistar agrees to purchase, a Daily volume of
Products as determined and nominated by Equistar which is estimated to be
* [REDACTED] Barrels per Day, and anticipated to be [REDACTED] Barrels per Day
* of Ethane, [REDACTED] Barrels per Day of Propane, and [REDACTED] Barrels per
Day of Normal Butane, subject to the provisions of this Section 4.02. In no
event shall Dynegy be obligated to sell, or Equistar be obligated to buy
* more than [REDACTED] Barrels per Day of Product. Notwithstanding the
foregoing, Equistar and Dynegy may mutually agree to sell and purchase, as
applicable, volumes of Product above the estimates set forth above
(hereinafter referred to as "Additional Volumes"). Equistar shall give
Dynegy one (1) year written notice prior to Dynegy's obligation to deliver a
* total volume of Product in excess of [REDACTED] Barrels per Day or [REDACTED]
above the average Daily total volume of Product delivered by Dynegy during
* the previous calendar year, whichever is greater, up to [REDACTED] Barrels
per Day. On the fifteenth (15th) workday of each calendar Month during the
term of this Agreement, Equistar shall provide Dynegy with a sliding
estimate of Product volume needs by Product for the next three (3) Months
(the "Estimated Volumes"). Additionally, Equistar shall nominate in writing
to Dynegy all volumes of each Product to be purchased by Equistar from
Dynegy during the next succeeding Months by the 15th Day of the Month prior
to the Month deliveries of Product are to commence (the "Delivery Month")
unless (i) the 15th Day of the Month falls on a Saturday, in which event,
such nominations shall be made on the immediately preceding Business Day,
(ii) the 15th Day of the Month falls on a Sunday or a Monday holiday
(non-Business Day), in which event, such nominations shall be made the
Business Day immediately following such Sunday or Monday holiday, or (iii)
the 15th Day of the Month falls on a non-Business Day during the work week,
in which event such nominations shall be made on the immediately preceding
Business Day (hereinafter referred to as the "Initial Nominations"). If, for
any reason, Equistar fails to timely make its Initial Nomination of Products
to be purchased during a particular Delivery Month, it shall be deemed that
Equistar has nominated to purchase from Dynegy a volume of Products equal to
the estimated volume of Products for such Delivery Month included in the
most recent Estimated Volumes furnished by Equistar to Dynegy as set forth
above (the "Deemed Nominations"). No later than five (5) Days prior to the
first Day of a Delivery Month, unless a weekend or holiday falls
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'Confidential Treatment Requested'
within such five (5) Day period, in which event such time period will be no
less than three (3) Business Days prior to the first Day of a Delivery
Month, Equistar shall have the right to change the Initial Nominations or
the Deemed Nominations, as applicable, for each Product to be purchased
during the Delivery Month, and such new nominated volumes shall be utilized
in determining the volume and prices for the Products sold and purchased
during said Delivery Month (hereinafter referred to as the "Final
Nominations"). It is understood and agreed that any changes in the nominated
volumes made within the required time period as a Final Nomination shall be
* limited to a total of no more than [REDACTED] Barrels per Day of Ethane or
* [REDACTED] Barrels per Day of Propane (increase and/or decrease) such that
the changes made in the volumes nominated in the Initial Nominations or the
Deemed Nominations will be no greater than (increase or decrease) a total of
* [REDACTED] Barrels per Day of Product, it being further understood and
* agreed that Ethane volumes may not change by more than [REDACTED] Barrels
per Day (increase or decrease).
It is further understood and agreed that any changes in the nominated
volumes made within the required time period as a Final Nomination shall
include the final total Monthly nominations of each Product to be purchased
by Equistar from Dynegy during such Delivery Month.
Should Equistar desire to convert one or more furnaces to Normal Butane,
Equistar shall provide Dynegy with at least twelve (12) Months advance
written notice of such desire, such notice to include notice of furnace
configuration, capacity and the daily quantity of Normal Butane equivalent
to and required by conversion of one furnace to Normal Butane cracking.
Commencing twelve (12) Months following Dynegy's receipt of such notice, and
provided that Dynegy has the capability to do so, Dynegy shall sell and
deliver to Equistar the quantities of Normal Butane required by Equistar, as
nominated pursuant to the terms hereof.
4.03 Deliveries of Product sold and purchased pursuant to this Agreement
shall be made on a ratable daily basis. Notwithstanding the foregoing,
subject to applicable governmental laws, regulations and rules or prior
contractual commitments and subject to the capabilities of the storage
and/or pipeline facilities (including, without limitation, existing pumping
capacity and any brine usage limitations related to the operation of the
Hackberry Storage) utilized by Dynegy to deliver Products to Equistar,
Equistar shall have the right to adjust its consumption patterns during each
Delivery Month, as long as Equistar purchases the full amount of nominated
volumes during such Delivery Month. Except as otherwise provided elsewhere
in this Agreement, including without limitation, Article IX hereinafter
(Force Majeure), any volumes of Product nominated by Equistar for purchase
during a Delivery Month not taken by Equistar during such Delivery Month
shall be purchased by Equistar and delivered into Equistar's Storage Account
(as defined hereinafter). For such purpose, the volume of Product nominated
to be purchased by Equistar from Dynegy shall be (i) the Initial Nomination
or Deemed Nomination, as applicable, if no Final Nomination is made, or (ii)
the Final Nomination if such a Final Nomination is made.
4.04 During each Delivery Month on one (1) Business Day notice to Dynegy,
Equistar shall have the right to sell to Dynegy volumes of Product it does
not utilize in Equistar's Facility during such Delivery Month (hereinafter
referred to as "Spot Resale Volumes"), equal to the lesser of (i) the
volumes of each Product nominated by Equistar to purchase during such
Delivery Month or (ii) the maximum volumes listed below:
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<Table>
<Caption>
MAXIMUM VOLUMES THAT CAN BE SOLD BACK TO DYNEGY
----------------------------------------------------------------------------------------------------
DAYS REMAINING IN MONTH MAXIMUM VOLUME
----------------------------------------------------------------------------------------------------
* 20-30 [REDACTED]
----------------------------------------------------------------------------------------------------
* 15-19 [REDACTED]
----------------------------------------------------------------------------------------------------
* 10-14 [REDACTED]
----------------------------------------------------------------------------------------------------
* 5-9 [REDACTED]
----------------------------------------------------------------------------------------------------
</Table>
Any volumes that Equistar desires to sell to Dynegy in excess of the
limitations set forth above must be mutually agreed to by Dynegy and
Equistar; provided that Dynegy agrees to use commercially reasonable efforts
to (i) either purchase such excess Products from Equistar or (ii) assist
Equistar in disposing of such excess Products to third parties. If Dynegy
assists Equistar in disposing of such excess Products to third parties,
Equistar agrees to pay to Dynegy reasonable costs and expenses, including a
reasonable profit, associated with such sales and/or deliveries, the amount
of which will be mutually agreed to between Dynegy and Equistar prior to the
disposition of such Products.
4.05 Subject to applicable governmental laws, regulations and rules or prior
contractual commitments and subject to the capabilities of the storage
and/or pipeline facilities (including, without limitation, existing pumping
capacity and any brine usage limitations related to the operation of the
Hackberry Storage) utilized by Dynegy to deliver Products to Equistar,
during each Delivery Month, upon five (5) Business Days notice to Dynegy,
Equistar shall have the right to purchase volumes of Product from Dynegy
above the volumes nominated for delivery during such Delivery Month
(hereinafter referred to as "Spot Sales Volumes"), as long as the Spot Sales
Volumes do not exceed the maximum volumes listed below:
<Table>
<Caption>
MAXIMUM ADDITIONAL VOLUMES OF ETHANE
THAT CAN BE PURCHASED BY EQUISTAR
-----------------------------------------------------------------------------------------------------
Days Remaining in Month Maximum Volume
-----------------------------------------------------------------------------------------------------
* 20-30 [REDACTED]
-----------------------------------------------------------------------------------------------------
* 15-19 [REDACTED]
-----------------------------------------------------------------------------------------------------
* 10-14 [REDACTED]
-----------------------------------------------------------------------------------------------------
</Table>
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<Table>
<Caption>
MAXIMUM ADDITIONAL VOLUMES OF PROPANE
THAT CAN BE PURCHASED BY EQUISTAR
----------------------------------------------------------------------------------------------------
DAYS REMAINING IN MONTH MAXIMUM VOLUME
----------------------------------------------------------------------------------------------------
* 20-30 [REDACTED]
----------------------------------------------------------------------------------------------------
* 15-19 [REDACTED]
----------------------------------------------------------------------------------------------------
* 10-14 [REDACTED]
----------------------------------------------------------------------------------------------------
* 5-9 [REDACTED]
----------------------------------------------------------------------------------------------------
</Table>
It is understood and agreed that if the additional volumes of Product to be
purchased by Equistar from Dynegy as set forth above would constitute
Additional Volumes, such Additional Volumes would only be sold and purchased
hereunder pursuant to the mutual agreement of Equistar and Dynegy.
Such Spot Sales Volumes purchased by Equistar pursuant to this Section 4.05
and the volumes originally nominated to be purchased by Equistar as set
forth in Section 4.02 above, shall be made in accordance with the provisions
of Section 4.03 above based on the Days remaining in the Delivery Month.
4.06 To ensure the delivery of Equistar's requirements of Products, as
determined in accordance with Section 4.02 above, Dynegy shall maintain at
all times in Hackberry Storage an inventory of no less than five (5) Days of
such requirements. The volume of Products Dynegy is required to store in
inventory shall reasonably be determined by Dynegy after considering all
relevant factors including, but not limited to, Equistar's then current
operating rates, pipeline availability and expected production of Products
from the DMSLP Fractionator. In addition, Dynegy shall provide to Equistar
* up to a total of [REDACTED] Barrels of storage capacity at the Hackberry
Storage for Ethane and/or Propane ("Equistar Storage Volumes"). No storage
charges shall be assessed for the Equistar Storage Volumes. Upon mutual
agreement of Equistar and Dynegy, Equistar shall have the right to store
additional volumes of Ethane and/or Propane above the Equistar Storage
Volumes (the "Additional Storage Volumes") for their own use and without any
right to sublet or allow any other third party the right to utilize same, it
being the intent that the Stored Volumes (as such term is defined
hereinafter) shall be utilized solely in connection with the operation of
the Equistar Facility. The fee for storing the Additional Storage Volumes
* shall be [REDACTED] per Barrel per Month which shall be calculated based on
the Monthly average of the total Daily volumes of Products stored by
Equistar during the applicable Month as Additional Storage Volumes and which
shall be based on the highest volumes of Products stored by Equistar during
each Day of such Month. The volumes of Ethane and/or Propane stored as
Equistar Storage Volumes or Additional Storage Volumes (collectively
referred to as "Stored Volumes") shall be delivered on a ratable Daily basis
to Equistar when requested for redelivery by Dynegy to Equistar. Such
requests for redelivery of Stored Volumes shall be made at the time Equistar
makes its nominations as provided for in Section 4.02 above, if known at the
time such nominations are made, or on one (1) Business Days notice if not
known at that time, the redelivery of which shall be subject to applicable
governmental laws, regulations and rules or prior contractual commitments
and subject to the capabilities of the storage and/or pipeline facilities
(including, without limitation, existing pumping capacity and any brine
usage limitations related to the operation of the Hackberry Storage)
utilized by Dynegy to deliver Products to Equistar. The redelivery point for
Product stored by
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Dynegy on behalf of Equistar at the Hackberry Storage shall be at the outlet of
Dynegy's meters located at points in Equistar's Facility.
4.07 Title, custody, control and risk of loss of all Products sold and
delivered by Dynegy to Equistar hereunder shall pass to Equistar at the Point of
Delivery set forth in Article V hereof, unless such Products are delivered to
Equistar at the Hackberry Storage, in which event, title and risk of loss shall
pass (i) once the Product passes the meter utilized to measure Product stored in
the Hackberry Storage, if delivered into storage on Equistar's behalf, or (ii)
when such Products are transferred to Equistar by in-well transfer at the
Hackberry Storage. Title, custody, control and risk of loss of all Spot Resale
Volumes sold by Equistar to Dynegy hereunder shall pass to Dynegy when such
Products are transferred to Dynegy by in-well transfer at the Hackberry Storage.
4.08 Equistar will advise Dynegy in January of each year of any planned
and/or scheduled turnarounds at Equistar's Plant which would cause Equistar to
cease or significantly change receiving Product from Dynegy for any period
within the next twenty-four (24) Months. Equistar shall provide Dynegy with
written notice of a scheduled Turnaround Period at least ninety (90) Days prior
to such scheduled Turnaround Period and shall also advise Dynegy of any
significant changes to such scheduled Turnaround Period as they arise.
4.09 "Turnaround Period" shall mean a scheduled period of normally thirty
(30) Days in length during which operation of Equistar's Plant is halted for the
purpose of making repairs, inspections and modifications to the said Plant
facilities and replacing or maintaining certain assets of the said Plant, all
consistent with prudent industry practices.
4.10 Except as otherwise provided in Section 4.11 hereinafter, in the event
that Equistar fails to take product for a single period in excess of one hundred
twenty (120) Days in any calendar year and such failure is not due to or caused
by an event of Force Majeure as defined herein or by a Turnaround Period, Dynegy
shall have no further obligation to deliver Product hereunder, provided,
however, that (a) Equistar shall have the option of again receiving Product
hereunder three hundred sixty (360) Days after Equistar provides Dynegy with a
written notice of intent to again take Product hereunder and (b) Equistar shall
be free to purchase Products from third parties during such three hundred sixty
(360) Day period.
Notwithstanding the foregoing, prior to entering into an agreement with a
third party to purchase any Products during such three hundred sixty (360) Day
period, Equistar shall notify Dynegy in writing of its intent to enter into such
an agreement and the price and other terms and conditions pursuant to which such
third party is willing to sell Products to Equistar (the "Third Party Notice").
Dynegy shall have a period of five (5) Business-Days after its receipt of the
Third Party Notice to elect whether it desires to match the offer made by such
third party. If Dynegy agrees to match such third party offer, which shall be
evidenced by written notice by Dynegy to Equistar and delivered to Equistar
prior to the expiration of the aforementioned five (5) Business Days, Dynegy and
Equistar shall enter into an agreement to evidence such sale(s) (the "Sale
Agreement"), which could take the form of an amendment to this Agreement or a
new agreement containing General Terms and Conditions previously agreed to
between Dynegy and Equistar for sales of natural gas liquids. Such Sale
Agreement shall contain substantially the same terms as offered by such third
party. If Dynegy fails to notify Equistar of its agreement to match the third
party offer, Equistar
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shall be free to enter into the agreement with such third party containing, the
same price and other terms and conditions included in the Third Party Notice. In
such event, assuming Dynegy has available space in its pipelines situated in the
Lake Charles Area to handle same, Dynegy agrees to use commercially reasonable
efforts to assist Equistar in the transportation of such third party Product to
the Equistar Facility through the use of such Lake Charles Area pipelines. If
Dynegy assists Equistar in transporting such third party Product, Equistar
agrees to pay to Dynegy reasonable costs and expenses, including a reasonable
profit, associated with same, the amount of which will be mutually agreed to
between Dynegy and Equistar prior to the commencement of such transportation
services.
Except as otherwise provided above, nothing contained in this Section 4.10
shall require Dynegy to utilize any of its facilities to deliver Products
purchased by Equistar from third parties. The term of this Agreement shall not
be extended due to Equistar's failure to take Products hereunder.
4.11 Notwithstanding the provisions of Section 4.10 above, for a three (3)
year period commencing May 1, 2001 (the "Non-Take Period"), Equistar shall have
the right to suspend purchasing and taking delivery of Products under this
Agreement and shall have the right to recommence such purchase and receipts
during the Non-Take Period by giving Dynegy at least two Months prior written
notice of its intent to do so. For example, if Equistar desires to recommence
the purchase and receipt of Products on the last Day of the Non-Take Period
(April 30, 2004), it will be necessary for Equistar to notify Dynegy in writing
no later than two Months prior to the last Day of the Non-Take Period (i.e. on
or prior to the last Day of February, 2004) of its intent to recommence the
purchase and receipt of Product.
If (i) Equistar fails and/or refuses to recommence purchasing and taking
delivery of Products under this Agreement within the Non-Take Period and (ii)
Equistar fails to notify Dynegy in writing (the "Contract Startup Notice") on or
prior to the expiration of the Non-Take Period of its intent to recommence
purchasing and taking delivery of Products within a three hundred sixty (360)
Day period following expiration of such Non-Take Period (the "Extension
Period"), including the date such purchases are to recommence (the "Contract
Startup Date"), or (iii) after giving the Contract Startup Notice, Equistar
fails to recommence purchasing and taking delivery of Products on the Contract
Startup Date, Dynegy shall have the right, but not the obligation, to terminate
this Agreement. It is understood and agreed that any Contract Startup Notice
must be given to Dynegy at least six (6) Months prior to any Contract Startup
Date during the Extension Period (i.e. if Equistar waits until the last Day of
the Non-Take Period to give its Contract Startup Notice (April 30, 2004), the
earliest Contract Startup Date would be November 1, 2004). Once a Contract
Startup Notice has been given, Equistar agrees to use its best efforts to have
Equistar's Facility operational on the Contract Startup Date such that it can
utilize the Products purchased from Dynegy in Equistar's Facility instead of
selling such Products back to Dynegy as Spot Resale Volumes.
It is understood and agreed that the rights granted in this Section 4.11 is
a one time right and, accordingly, if Equistar elects to recommence the
purchasing and taking delivery of Products under this Agreement within the
aforementioned Non-Take Period or the Extension Period, thereafter the
provisions of Section 4.10 above shall apply.
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ARTICLE V
DELIVERIES
5.01 Except as otherwise provided herein (deliveries into storage), the
Point of Delivery for Products sold and purchased hereunder shall be at the
outlet of Dynegy's meters located at points in Equistar's Facility.
5.02 Dynegy agrees that the Ethane delivered to Equistar shall be delivered
at a pressure sufficient to enter Equistar's pipeline (minimum pressure 200
psig), but Dynegy shall not be obligated to deliver such Ethane at a pressure in
excess of 475 psig at the Point of Delivery. Dynegy agrees that Propane
delivered to Equistar shall be delivered at a sufficient pressure to enter
Equistar's pipeline (minimum pressure 230 psig) but Dynegy shall not be
obligated to deliver such Propane at a pressure in excess of 275 psig at the
Point of Delivery.
5.03 As long as Equistar does not permanently cease operating the Equistar
Facility, Equistar agrees to provide to Dynegy at Dynegy's meter area located in
or near Equistar's Facilities free of any charges or fees whatsoever (i)
instrument air which is dry and free of contaminants and which shall be supplied
to Dynegy at a pressure consistent with prior practices, and (ii) an alternate
electricity source that can be switched by Dynegy or Equistar in the event of a
problem with Dynegy's existing source of electricity which is currently supplied
by Entergy which will be supplied consistent with prior practices.
ARTICLE VI
MEASUREMENT, TESTING, SAMPLING AND ANALYSIS
6.01 Dynegy or its designated representative shall install, operate,
maintain and perform the necessary testing of the measurement facilities for
Ethane, Propane and, if installed, Normal Butane delivered to Equistar from
Dynegy. Such responsibilities shall be performed in accordance with the American
Petroleum Institute's MANUAL OF PETROLEUM MEASUREMENT STANDARDS (hereinafter
referred to as the "API Manual"), as it may be amended from time to time, and in
accordance with Exhibit "B" attached hereto and made a part hereof
6.02 Dynegy or its designated representative shall perform necessary
calculations for the custody transfer of Ethane, Propane and Normal Butane
delivered hereunder in accordance with the API Manual and Exhibit "B."
6.03 The Propane and Normal Butane shall be measured by turbine meter or
other mutually agreeable method, and shall be calculated by mass measurement
procedures in accordance with the API Manual and Exhibit "B." The Ethane shall
be measured by orifice meter and shall be calculated by mass measurement
procedures in accordance with the API Manual and Exhibit "B."
6.04 The meters and densitometers shall be proved and calibrated Monthly
according to the API Manual and Exhibit "B."
11
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'Confidential Treatment Requested'
6.05 The Daily meter readings and Daily chart recordings of flow,
temperature, pressure and density shall be obtained by Dynegy for
calculation and determination of volumes to be used for accounting purposes
and custody transfer.
6.06 Samples of Ethane, Propane and Normal Butane shall be obtained and
analyzed by Dynegy or its designated representative in accordance with
methods described in Exhibit "B."
6.07 Equistar and Dynegy shall have the right to witness the testing,
calibration, inspection and proving of the metering facilities and equipment
and the obtaining of samples used for accounting purposes. Equistar and
Dynegy each agree to give to the other no less than forty-eight (48) hours
notice of any such testing, calibration, inspection and proving of the
metering facilities and equipment and the obtaining of samples.
ARTICLE VII
PRICE
7.01 Except as otherwise provided herein, all Products sold to Equistar
shall be F.O.B., Lake Charles, Louisiana, at the Point of Delivery as set
forth in Section 5.01, and the following pricing bases shall be used to
calculate the Monthly sales price for Products, excluding any Spot Sales
Volumes:
A. ETHANE
1) The sales price for Ethane nominated for delivery in any Month
shall be the lesser of (i) a price based on the following
table:
<Table>
<Caption>
--------------------------------------------------------------------------------------------
VOLUMES OF ETHANE NOMINATED WOULD BE PRICED AS FOLLOWS:
--------------------------------------------------------------------------------------------
* The First 0-350,000 Barrels [REDACTED]
--------------------------------------------------------------------------------------------
* The Next 350,001- 600,000 Barrels [REDACTED]
--------------------------------------------------------------------------------------------
* The Next 600,001 - 750,000 Barrels [REDACTED]
--------------------------------------------------------------------------------------------
</Table>
* or (ii) [REDACTED] which provide for deliveries of volumes
* for [REDACTED] or more Barrels per Day over periods of six
(6) Months or more at locations in Louisiana or Texas. With
respect to any third party sales in the State of Texas, solely
for the purposes of this subsection (ii), there shall be added
* to the actual third party sale price [REDACTED] per Gallon.
12
<Page>
'Confidential Treatment Requested'
B. PROPANE
1) The sales price for Propane nominated for delivery in any
Month shall be the lesser of (i) a price based on the
following, table:
<Table>
<Caption>
-------------------------------------------------------------------------------------------
VOLUMES OF PROPANE NOMINATED WOULD BE PRICED AS FOLLOWS:
-------------------------------------------------------------------------------------------
* The First 0-450,000 Barrels [REDACTED]
-------------------------------------------------------------------------------------------
* The Next 450,001-900,000 Barrels [REDACTED]
-------------------------------------------------------------------------------------------
</Table>
* or (ii) [REDACTED] which provide for deliveries of volumes for
* [REDACTED] or more Barrels per Day over periods of six (6)
Months or more at locations in Louisiana or Texas. With respect
to any third party sales in the State of Texas, solely for the
purposes of this subsection (ii), there shall be added to the
* actual third party sale price [REDACTED] per Gallon.
C. NORMAL BUTANE
1) The sale price for Normal Butane delivered in any Month shall
* be the lesser of (i) [REDACTED], or (ii) [REDACTED] for Normal
Butane for the Month the Normal Butane is delivered hereunder
* [REDACTED] which provide for deliveries of volumes for
* [REDACTED] or more Barrels per Day over periods of six (6)
Months or more at locations in Louisiana or Texas. With respect
to any third party sales in the State of Texas, solely for the
purposes of this subsection (ii), there shall be added to the
* actual third party sale price [REDACTED] per Gallon.
2) In addition to the price calculated in Section 7.01 C.1
above, Equistar will pay Dynegy a differential equal to the
tariff applicable to Dynegy's Affiliate's 12" Pipeline which
runs from Mont Belvieu, Texas to Lake Charles, Louisiana, for
Propane (currently 1.14 cents per gallon), provided that such
* differential shall not exceed [REDACTED] of the Dixie Pipeline
Tariff, then in effect, from Mont Belvieu, Texas to Sulphur,
Louisiana.
7.02 The following pricing bases shall be used to calculate the Monthly
sales price for Spot Sales Volumes sold by Dynegy to Equistar during each
Delivery Month:
13
<Page>
'Confidential Treatment Requested'
* A. ETHANE: [REDACTED] as quoted by the OPIS for Mont Belvieu,
Texas for the remainder of the Month commencing on the date
* deliveries of such Spot Sales Volumes commence plus [REDACTED]
per Gallon plus the following additional amounts depending on
the volumes nominated and the volumes purchased as Spot Sales
Volumes:
<Table>
<Caption>
-----------------------------------------------------------------------------------------------------
IF THE SUM OF THE VOLUMES OF ETHANE
NOMINATED FOR DELIVERY DURING THE
DELIVERY MONTH AND THE VOLUMES TO BE THE ADDITIONAL PER GALLON
PURCHASED AS SPOT SALES VOLUME ARE AMOUNT PAYABLE BY EQUISTAR TO
WITHIN THE FOLLOWING RANGES: DYNEGY WOULD BE AS FOLLOWS:
-----------------------------------------------------------------------------------------------------
* 0 - 350,000 Barrels [REDACTED]
-----------------------------------------------------------------------------------------------------
* 350,001 - 600,000 Barrels [REDACTED]
-----------------------------------------------------------------------------------------------------
* 600,001 - 750,000 Barrels [REDACTED]
-----------------------------------------------------------------------------------------------------
</Table>
* B. PROPANE: [REDACTED] as quoted by the OPIS for Mont Belvieu,
Texas (Non TET) for the remainder of the Month commencing on
the date deliveries of such Spot Sales Volumes commence plus
* [REDACTED] per Gallon plus the following additional amounts
depending on the volumes nominated and the volumes purchased
as Spot Sales Volumes:
<Table>
<Caption>
-----------------------------------------------------------------------------------------------------
IF THE SUM OF THE VOLUMES OF PROPANE
NOMINATED FOR DELIVERY DURING THE
DELIVERY MONTH AND THE VOLUMES TO BE THE ADDITIONAL PER GALLON
PURCHASED AS SPOT SALES VOLUME ARE AMOUNT PAYABLE BY EQUISTAR TO
WITHIN THE FOLLOWING RANGES: DYNEGY WOULD BE AS FOLLOWS:
-----------------------------------------------------------------------------------------------------
* 0-450,000 Barrels [REDACTED]
-----------------------------------------------------------------------------------------------------
* 450,001- 900,000 Barrels [REDACTED]
-----------------------------------------------------------------------------------------------------
</Table>
7.03 The following pricing bases shall be used to calculate the Monthly
sales price for Spot Resale Volumes sold by Equistar to Dynegy during each
Delivery Month:
* A. ETHANE: [REDACTED] as quoted by the OPIS for Mont Belvieu,
Texas for the remainder of the Month commencing on the date
deliveries of such Spot Resale Volumes commence minus
* [REDACTED] per Gallon.
* B. PROPANE: [REDACTED] as quoted by the OPIS for Mont Belvieu,
Texas (Non TET) for the remainder of the Month commencing on
the date deliveries of such Spot Resale Volumes commence minus
* [REDACTED] per Gallon.
14
<Page>
7.04 In the event the Oil Price Information Service should cease to be
published or should cease to be representative of actual day-to-day markets,
Equistar and Dynegy shall promptly agree on a substitute publicly available
source of spot prices representative of actual day-to-day markets.
7.05 Dynegy shall be responsible for payment of any tax (excluding income
or franchise taxes of Equistar), duty, fee or other governmental charge imposed
on the Products before the Products pass to Equistar at the Point of Delivery
set forth in Article V hereof. Equistar shall be responsible for payment of any
tax (excluding income or franchise taxes of Dynegy), duty, fee or other
governmental charge imposed on the Products after the Products pass to Equistar
at the Point of Delivery set forth in Article V hereof.
ARTICLE VIII
BILLING AND PAYMENT
8.01 Dynegy shall render to Equistar as soon as practical after the close
of each Month an invoice for (i) all Products sold by Dynegy to Equistar during
the preceding Month, including any Spot Sale Volumes and (ii) any other fees or
charges payable by Equistar to Dynegy as provided in this Agreement. All
invoices shall be sent to the following address:
Equistar Chemicals, LP
One Houston Center, Suite 1600
1221 McKinney Street
Houston, Texas 77010
Attention: Accounts Payable
Fax Number: 713-652-4173
or to such other address as Equistar may hereafter designate in writing.
8.02 Equistar shall render to Dynegy as soon as practical after the close
of each Month an invoice for all Spot Resale Volumes sold by Equistar to Dynegy
during the preceding Month. All invoices shall be sent to the following address:
Dynegy Liquids Marketing and Trade
1000 Louisiana Street, Suite 5800
Houston, Texas 77002
Attention: Accounts Payable
Fax Number: 713-767-5988
8.03 Payment of invoices shall be based on net terms and shall be made by
wire transfer within ten (10) Days from the receipt by Equistar or Dynegy, as
the case may be, of the invoice with the supporting documents and wiring
instructions, in accordance with said instructions. Such supporting documents to
be furnished by Dynegy to Equistar shall be the same or similar to the documents
previously supplied by Dynegy to Equistar prior to the Amendment Effective Date.
Equistar and Dynegy will accept as a basis for payment, a facsimile (Fax)
invoice, to be followed by original documents at the earliest opportunity.
15
<Page>
8.04 In the event that Equistar or Dynegy, as the case may be, fails to
comply with the terms of payment set forth in this Article VIII, the party that
is owed such payment shall have the option to assess late payment charges, to be
calculated at the annual prime rate in effect the first date of delinquency as
published in the Wall Street Journal plus two percent (2.0%), or at the maximum
legal rate, whichever is lower, beginning with the first Day the payment is past
due.
8.05 If a good faith dispute arises as to the amount payable in any
statement, the amount not in dispute shall be paid. If either party elects to
withhold any payment otherwise due as a consequence of the good faith dispute,
the withholding party shall provide the other party with written notice of its
reasons for withholding payment, and shall simultaneously place the disputed
amount into an escrow account at a mutually acceptable commercial bank, pending
resolution of the dispute. The performance of both parties under this Agreement
shall continue pending the resolution of such good faith dispute. If it is
subsequently determined, whether by mutual agreement of the parties or
otherwise, that the withholding party is required to pay all or any portion of
the disputed amounts to the other party, the withholding party, in addition to
paying over such amounts, shall also pay interest accrued on such amounts from
the original due date until paid, at the rate as set forth in Section 8.04
above.
8.06 Each party hereto, shall have the right at reasonable hours to audit
the other party's accounts and records relating to the accounting or billing
under the provisions of any article hereof for any calendar year within the
twenty-four (24) Month period following the end of such calendar year; provided,
however, the party conducting the audit must take written exception to and make
claim upon the other for all discrepancies disclosed by said audit within said
twenty-four (24) Months. Such audit shall be conducted by the auditing party or
its representative or auditor at the auditing party's expense. In addition, any
claim by Dynegy against Equistar due to errors by Dynegy may be made by Dynegy
within the twenty-four (24) Month period following the end of the calendar year
in which the errors occurred.
ARTICLE IX
FORCE MAJEURE
9.01 In the event either party hereto is rendered unable, by reason of
Force Majeure, to carry out in whole or in part its obligations under this
Agreement, other than the obligation to make payments of monies due hereunder,
such party shall give notice and reasonably full particulars of such Force
Majeure by telephone and in writing or by telegraph to the other party as soon
as possible after the occurrence of said Force Majeure and the determination of
the cause relied upon, and upon the giving of such notice, the obligations of
such party shall, insofar as they are affected by such Force Majeure, be
suspended during the continuance of any inability so caused, but for no longer
period; and such cause shall, as far as possible, be remedied with all
reasonable dispatch. If by reason of any such cause, supplies of Product are
curtailed or cut off, then Dynegy or Equistar shall not be obligated to make up
deliveries or receipts omitted by reason of any of the above causes.
9.02 The term "Force Majeure," as employed herein, shall include strikes,
lockouts, or other industrial disturbances; wars, blockades, insurrections, or
acts of the public enemy; epidemics, landslides, lightning, earthquakes, fires,
storms, floods, washouts, or other acts of God; arrests and restraints of
governments and people; federal, state or local laws, rules or regulations;
acts, orders,
16
<Page>
directives, requisitions, or requests of any official or agency of the federal,
state or local government; rationing of, shortage of, or inability to obtain or
to use any material or equipment; riots or civil disturbances, fires,
explosions, failures, disruptions, breakdowns, or accidents to machinery,
facilities or line of pipe (whether owned, leased or rented); freezing of lines;
embargoes, priorities, or expropriations by government or governmental
authorities, interference by civil or military authorities, legal or DE FACTO,
whether purporting to act under some constitution, decree, law or otherwise,
lack of capacity on third party pipelines (pipelines not owned by Dynegy and/or
its Affiliates) then being utilized to (i) deliver Product to Equistar hereunder
or (ii) transport Product from Mont Belvieu, Texas to Lake Charles, Louisiana,
it being understood and agreed that if such pipelines are on allocation, Dynegy
will utilize a portion of any such allocation given to Dynegy to move Product
based on the percentage of Equistar's Product to the total of all products
scheduled to be transported by Dynegy on such pipeline during the Month(s) such
pipeline is on allocation; or any other cause, whether of the kind herein
enumerated or otherwise, which is not reasonably within the control of the party
claiming suspension and which such party is unable to prevent or overcome by the
exercise of reasonable diligence. Such term shall likewise include: (a) delays
in acquiring or inability to acquire, at reasonable cost and after exercising
reasonable diligence, any servitudes, rights-of-way, permits, licenses or
regulatory approvals necessary to enable a party to fulfill its obligations
hereunder; and (b) the inability of a party to acquire or delays on the part of
such party in acquiring, at reasonable cost and after the exercise of such party
in acquiring, at reasonable cost and after the exercise of such party acquiring,
at reasonable cost and after the exercise of reasonable diligence, such
materials or supplies or governmental permits or permissions as are necessary to
enable such party to fulfill its obligations hereunder. It is understood and
agreed that reasonable diligence as used herein shall not require either party
to resort to litigation. It is further understood and agreed that the settlement
of strikes or lockouts by acceding to the demands of the opposing party when
such course is inadvisable in the sole discretion of the party having the
difficulty shall not be required of a party.
9.03 In the event that Dynegy elects to supply Equistar from sources other
than the DMSLP Fractionator and Dynegy has notified Equistar of the identity of
Dynegy's source of supply, then any Force Majeure condition affecting such
source of supply after Dynegy's notice to Equistar shall be considered to be a
Force Majeure condition affecting Dynegy.
ARTICLE X
WARRANTY
10.01 Dynegy warrants title to all Products sold and delivered to Equistar
hereunder and covenants the same to be free and clear of all encumbrances.
ARTICLE XI
INDEMNITY
11.01 Dynegy releases and agrees to defend, protect, indemnify, and hold
harmless Equistar and its Affiliates and the directors, officers, agents, and
employees of Equistar and its Affiliates from and against all claims, liability,
loss, damage and expense, including attorneys' fees in connection therewith,
arising out of Dynegy's performance or nonperformance of this Agreement,
including, but not limited to, Dynegy's ownership, possession or use of the
Products, except for and to the
17
<Page>
proportionate extent of such as may be caused by the negligence of Equistar, its
agents or employees. Likewise, Equistar releases and agrees to defend, protect,
indemnify and hold Dynegy and its Affiliates and the directors, officers, agents
and employees of Dynegy or its Affiliates harmless from and against all claims,
liability, loss, damage and expense, including attorneys' fees in connection
therewith, arising out of Equistar's performance or nonperformance of this
Agreement, including, but not limited to, Equistar's ownership, possession or
use of the Product, except for and to the proportionate extent of such as may be
caused by the negligence of Dynegy, its agents or employees.
ARTICLE XIII
MISCELLANEOUS
12.01 This Agreement shall be construed in accordance with the laws of the
State of Texas and shall be subject to all applicable federal, state and local
laws, and to all rules, regulations, orders and directives of any governmental
authority, agency, commission, or regulatory body in connection with any and all
matters and things incident to this Agreement.
12.02 Failure of either Dynegy or Equistar to require performance of any
provision of this Agreement shall not waive its right to require full
performance thereof at any time thereafter.
12.03 This Agreement shall be binding on the successors and assigns of the
parties hereto; provided, however, that neither party shall assign this
Agreement in whole or in part, or any benefits, payments or obligations
hereunder, without the prior written consent of the other party, which consent
shall not be unreasonably withheld or delayed, except that (a) either party may,
upon written notice to the other, assign this Agreement to any of such assigning
party's Affiliates, but any such assignment shall not relieve the assigning
party from any obligations hereunder, and (b) Dynegy may, upon written notice to
Equistar, assign this Agreement to a purchaser of the fractionator owned by
Dynegy's Affiliate, Dynegy Midstream Services, Limited Partnership, situated in
or near Lake Charles, Louisiana (the "DMSLP Fractionator") and the Hackberry
Storage. If this Agreement is assigned as provided in (b) above, the purchaser
of such facilities shall provide Equistar a written assumption of the
obligations of this Agreement.
12.04 Any notice or other communication provided for in this Agreement or
any notice which either party may desire to give to the other shall be in
writing and shall be sent by facsimile, transmission, electronic mail
transmission ("E-Mail"), delivered by hand, U.S. Mail or by courier, and if
sent by mail, shall be sent by U.S. Express Mail, registered mail or certified
mail, with all postage fully prepaid, or if sent by courier, shall be sent
through a bonded courier with charges paid in accordance with the customary
arrangements established by such courier, in each case addressed to the parties
at the following addresses:
Dynegy: Dynegy Liquids Marketing and Trade
1000 Louisiana, Suite 5800
Houston, Texas 77002
Attention: Senior Vice President,
Liquids Marketing and Trading
Facsimile: 713-507-3715
18
<Page>
Equistar: Equistar Chemicals, LP
One Houston Center, Suite 1600
1221 McKinney Street
Houston, Texas 77010
Attention: NGL Manager, Feedstock Supply
Facsimile: 713-652-4173
or at such other address or E-Mail address as either party shall designate by
written notice to the other. A notice sent by facsimile or E-Mail transmission
shall be deemed to have been received by the close of the Business Day following
the Business Day on which it was transmitted and confirmed by transmission
report or such earlier time as confirmed orally or in writing by the receiving
party. Notice by U.S. Mail, whether by U.S. Express Mail, registered mail or
certified mail, or by overnight courier shall be deemed to have been received by
the close of the second Business Day after the Day upon which it was sent, or
such earlier time as is confirmed orally or in writing by the receiving party.
Any party may change its address or facsimile number by giving notice of such
change in accordance with herewith.
12.05 This Agreement, including the Exhibits attached hereto, contains the
entire agreement between the parties regarding the sale, purchase and delivery
of Products by Dynegy to Equistar and Equistar to Dynegy, and supersedes and
replaces all prior or contemporaneous discussions, negotiations, representations
or agreements relating to the subject matter contained herein, but this
Agreement shall not be binding on either party until it is executed by both
parties. Amendment or modification of this Agreement shall not be binding on
either party until it is reduced to writing and executed by both parties.
12.06 Equistar hereby grants Dynegy the right of ingress and egress in, to
and over property owned or leased by Equistar where Dynegy's pipelines and
associated equipment are located, for any purpose incidental to the operation of
Dynegy's pipelines hereunder. Likewise, Dynegy hereby grants Equistar the right
of ingress and egress in, to and over property owned or leased by Dynegy where
Equistar's pipelines and associated equipment are located, for any purpose
incidental to the operation of Equistar's pipelines and associated equipment
hereunder.
12.07 This Agreement is intended for the exclusive benefit of the parties
to this Agreement and their respective successors and permitted assigns, and
nothing contained in this Agreement shall be construed as creating any rights or
benefits in or to any third party.
19
<Page>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
EQUISTAR:
EQUISTAR CHEMICALS, LP
By: /s/ EUGENE R. ALLSPACH
-----------------------------------------
Title: President & CEO
--------------------------------------
DYNEGY:
DYNEGY LIQUIDS MARKETING AND TRADE
By: /s/ VINCENT A. MCCONNELL
-----------------------------------------
Title: Senior V.P. Liquid Trading
--------------------------------------
20
<Page>
EXHIBIT "A"
SPECIFICATIONS FOR ETHANE
<Table>
<Caption>
COMPONENT OPERATING RANGE SPECIFICATIONS
- --------- ------------------------------
Carbon dioxide and other non-hydrocarbons 1000 ppm by weight maximum
other than specifically listed
Methane and inerts 3.0 Liquid Volume percent maximum of
contained ethane
Propane and heavier hydrocarbons 8.0 mol percent maximum
Total sulfur (1) 5 ppm, by weight maximum
Water 7 pounds per million standard cubic feet of
vapor maximum
Ethane Remainder (90 mol percent minimum)
</Table>
(1) Tested in accordance with the GPA Volatile Sulfur Test Method for
Liquefied Petroleum Gas, gas chromatography, or other mutually
acceptable methods.
21
<Page>
EXHIBIT "B"
CUSTODY TRANSFER MEASUREMENT
Dynegy and Equistar agree to comply with the following techniques and procedures
with respect to custody transfer measurement involving delivery, sampling,
testing, analysis and reporting of Product at the Point of Delivery.
1. GENERAL
(A) Installation, operation, testing and maintenance of primary
measurement elements, recording devices, sampling equipment, data
transmission equipment and analysis of samples shall be in
accordance with the latest edition of the API Manual of Petroleum
Measurement Standards (API MPMS), Gas Processors Association (GPA)
and American Gas Association Transmission Measurement Committee
(AGA) standards. Industry standards and publications referenced in
this Exhibit shall mean the latest revision. Revision of an
industry standard will apply on the effective date of the revised
standard. A partial list of standards and publications is provided
at the end of this Exhibit.
(B) MEASUREMENT BASIS. The quantity of Product measured at each Point
of Delivery shall be calculated by mass measurement techniques.
(C) LIMITATION TO REVISIONS. Revisions to such API MPMS, GPA and AGA
standards and publications shall apply to computations and
operation of measurement stations but shall not be construed to
require major modifications to, or replacement of, said equipment.
(D) FLOW METERING. The custody measurement station will, in Dynegy's
sole discretion, be comprised of:
1. A coriolis meter, composite sampler and microprocessor; or
2. A turbine meter, densitometer, composite sampler and
microprocessor, or
3. An orifice meter, densitometer, composite sampler and
microprocessor, or
4. An orifice meter, on-line gas chromatograph and microprocessor
with an in-situ master turbine meter station for proving and
calibration of the orifice meter.
2. RESPONSIBILITY
(A) CUSTODY TRANSFER POINT. The point of custody transfer for Product
shall be the meter station at the Point of Delivery.
22
<Page>
(B) CUSTODY TRANSFER PARTY. Dynegy will measure and account for the
mass, volume and quality of the Product delivered at the Point of
Delivery.
(C) CHECK MEASUREMENT. Either party to this Agreement may install check
measurement facilities at its own cost and expense as long as the
check measurement facilities do not interfere with the custody
transfer meter and equipment.
(D) DIVISION OF RESPONSIBILITY. Equistar, or its representative, shall
have access at all reasonable times to the equipment of Dynegy's
custody measurement station, or that of Dynegy's designees, but the
reading, calibrating and adjusting thereof shall be done by the
employees, agents, representatives or designees of Dynegy.
Similarly, Dynegy shall have access at all reasonable times to the
equipment of Equistar's check measurement stations, but the
reading, calibrating, and adjusting thereof shall be done by the
employees, agents or representatives of Equistar.
3. EQUIPMENT
(A) MICROPROCESSOR. The measurement station shall include a
microprocessor meeting the requirements of API MPMS Chapter 21.1
or Chapter 21.2, as appropriate, and capable of continuously
integrating gross metered volumes from the volumetric meter with
flowing density from the densitometer or on-line gas chromatograph
and reporting in gross Pounds and gross Barrels (or Gallons).
(B) SAMPLE. The metering facility for Product at the Point of Delivery
shall include an automatic sampling device to obtain a
representative sample of the Product in accordance with GPA
Standard 2174. The sampling device will extract a sample in
proportion to the metered quantity. The sample of the liquids shall
be secured throughout the entire metering period.
(C) ON-LINE GAS CHROMATOGRAPH. The metering facility for Product at the
Point of Delivery may alternatively include an on-line gas
chromatograph to continuously determine the composition of the
Product. The Ethane meter station shall use the on-line gas
chromatograph to measure the stream composition throughout the
entire metering period.
(D) QUANTITY. The equipment used in the meter station (as applicable)
shall conform to the following standards and publications.
1. LIQUID TURBINE METER(S) shall be installed and operated in
accordance with API MPMS Chapter 5 and manufacturer's
recommendations.
2. DENSITOMETER(S) shall be installed and operated in accordance
with API MPMS Chapter 14, Section 6 and manufacturer's
recommendations.
3. CORIOLIS METER(S) shall be installed and operated in
accordance with the API Draft Standard Measurement of Single
Phase, Intermediate, and Finished
23
<Page>
Hydrocarbon Fluids by Coriolis Meters and manufacturer's
recommendations.
4. ORIFICE METER(S) shall be installed and operated in accordance
with API MPMS Chapter 14, Section 3 and manufacturer's
recommendations.
5. Gas Turbine Meter(s) shall be installed and operated in
accordance with AGA Report Number 7 and manufacturer's
recommendations.
4. OPERATION
(A) FLOW METER BACKPRESSURE. The metering backpressure will be a
minimum of the sum of 1.25 times the stream bubble point pressure
at flowing temperature plus two times the differential pressure
across the meter at flowing conditions.
(B) CHECK MEASUREMENT. Either party to this Agreement may install check
measurement facilities at its own cost and expense as long as the
check measurement facilities do not interfere with the custody
transfer meter and equipment.
(C) DIVISION OF RESPONSIBILITY. Equistar, or its representative, shall
have access at all reasonable times to the equipment of Dynegy's
custody measurement station, or that of Dynegy's designees, but the
reading, calibrating and adjusting thereof shall be done by the
employees, agents, representatives or designees of Dynegy.
Similarly, Dynegy shall have access at all reasonable times to the
equipment of Equistar's check measurement stations, but the
reading, calibrating, and adjusting thereof shall be done by the
employees, agents or representatives of Equistar.
5. PROVING & CALIBRATION
(A) PRESSURE AND TEMPERATURE DEVICES - LIQUID SERVICE. Instrumentation,
including static pressure, temperature and any chart recorders,
shall be tested and accuracy verified at least quarterly with a
full calibration performed at least annually. Instrument
calibration and repairs shall be made when the test results exceed
the tolerances specified in API MPMS 21.2.
(B) PRESSURE AND TEMPERATURE DEVICES - VAPOR / GAS SERVICE.
Instrumentation, including static pressure, temperature and any
chart recorders, shall be calibrated at least monthly and in
accordance with API MPMS 21.1.
(C) QUANTITY DEVICES. The flow and density meter(s) (where applicable)
will be proven no less frequently than once each Month during the
delivery period. Dynegy will prove the meter(s) at the metering
station and will give Equistar forty-eight (48) hours notice of the
intent and time to prove so that representatives of Equistar can be
present.
1. CORIOLIS. Five (5) calibration tests shall be performed to
establish the meter correction factor applicable for turbine
meters. Each calibration test shall consist of the total
pulses obtained from a proof run. The determined meter
24
<Page>
correction factor thus obtained shall be applied to the Daily
registered meter reading. The average of the five (5)
calibration tests shall be taken as the meter correction
factor for the meter if the five (5) calibration tests are
within 0.05% of each other. The meter correction factor shall
be established at flowing conditions in accordance with API
MPMS, Chapter 4 and the API Draft Standard Measurement of
Single Phase, Intermediate, and Finished Hydrocarbon Fluids by
Coriolis Meters. A coriolis meter shall not be removed from
service for maintenance without first proving such meter. The
meter proving data shall be delivered to Equistar on a meter
proving report.
2. LIQUID TURBINE. Five (5) calibration tests shall be performed
to establish the meter correction factor applicable for
turbine meters. Each calibration test shall consist of the
total pulses obtained from a proof run. The determined meter
correction factor thus obtained shall be applied to the Daily
registered meter reading. The average of the five (5)
calibration tests shall be taken as the meter correction
factor for the meter if the five (5) calibration tests are
within 0.05% of each other. The meter correction factor shall
be established at flowing conditions in accordance with API
MPMS, Chapter 4. The meter proving data shall be delivered to
Equistar on a meter proving report. A turbine meter element
shall not be removed from service for maintenance without
first proving such meter. The meter correction factor so
determined shall be used in accordance with Paragraph 7(A) of
this Exhibit, FACTOR DEVIATION.
3. ORIFICE METER INSTRUMENTATION. All orifice meter
instrumentation, including differential pressure, static
pressure, temperature and any chart recorders shall be tested
and the orifice plate inspected at the beginning of the
delivery and at least Monthly during the delivery period.
Instrument calibration, necessary repairs to the metering
equipment and replacement of the orifice plate shall be made
when the test results exceed the tolerances specified in the
appropriate API MPMS standard.
4. ORIFICE METER PROVING. The orifice meters used in Ethane
service will be calibrated and proved against the master
turbine meter at operating conditions and using the installed
piping configuration, orifice plates, transmitters and flow
computer system. The Ethane delivery system will be
constructed to allow normal delivery of Ethane during periods
when calibration and proving are taking place. Calibration and
proving will consist of a testing period to establish a meter
correction factor (the ratio of the mass flow reading of the
turbine meter divided by the mass flow reading of the orifice
meter) which will then be multiplied times the orifice meter
measurement to establish the mass delivered through the meter.
In addition to the Monthly proving schedule, the Ethane
orifice meters and on-line gas chromatograph will be
calibrated (i) when the orifice plate is changed, and (ii)
after any internal work is performed on the meter tube or
orifice fitting.
25
<Page>
5. GAS TURBINE MASTER METER. The gas turbine master meter, with
its associated upstream and downstream piping, will be
calibrated prior to its initial installation and annually
thereafter, unless there is no significant deviation in the
calibration curve after at least three calibrations and,
thereafter, the frequency of such calibration will be extended
for a period as mutually agreed to by Equistar and Dynegy. The
gas turbine meter calibration will be performed at a certified
testing facility traceable to the National Institute of
Standards and Technology at the anticipated flowing density
and covering the expected flow rate range.
6. DENSITOMETER. The accuracy of the densitometer shall be
verified Monthly by calibrating and proving the instrument in
accordance with the API MPMS Chapter 14, Section 6 and the
manufacturer's recommendations. Two (2) provings shall be
performed to establish the densitometer correction factor. The
determined densitometer correction factor thus obtained shall
be applied to the Daily registered meter reading. The average
of the two provings shall be taken as the densitometer
correction factor if the two provings are within 0.05% of each
other. A densitometer shall not be removed from service for
maintenance without first proving such densitometer. The
densitometer correction factor so determined shall be used in
accordance with Paragraph 7(A) of this Exhibit, FACTOR
DEVIATION.
(D) UNSCHEDULED CALIBRATIONS. Either party may ask for an unscheduled
flow meter or densitometer calibration at any time. The party
requesting the unscheduled proving shall bear the expense of the
special proving if the correction factor deviates less than 0.25%
from the previous factor.
6. CALCULATION
(A) MASS MEASUREMENT.
1. QUANTITY. The quantity of Product measured at the Point of
Delivery shall be calculated by mass measurement procedures in
accordance with API MPMS and GPA standards. The determined
mass in Pounds shall be converted to Barrels (or Gallons) at
standard conditions by applying the analysis of the composite
sample to the flow period in accordance with GPA Standard 8173
using weight-in-vacuum factors from GPA Standard 2145.
2. ETHANE DENSITY. Ethane flowing density will be derived from an
equation of state using stream composition measured by the
on-line gas chromatograph and flowing pressure and temperature.
3. ANALYSIS. Samples of Product will be analyzed by a laboratory
mutually agreeable to the parties or by an on-line gas
chromatograph using gas chromatography methods in accordance
with GPA Standard 2177 or GPA Standard 2261 as appropriate.
The composition of the representative sample
26
<Page>
of Product for each metering period shall be applied to the
quantity measured during the period covered by the sample. The
molecular (mole) percentage values of nitrogen, carbon dioxide
and natural gas hydrocarbons C(1) through C(6)+ or C(7)+
shall be determined.
a) GPA 2145 CONSTANTS. The conversion constants for
nitrogen, carbon dioxide, propylene and C(1) through C(5)
shall be in accordance with GPA Standard 2145.
b) HEXANE AND HEAVIER CHARACTERIZATION. Where hexane and
heavier components are present, the individual components
of C(6)+ or C(7)+ shall be analyzed and used to determine
the weighted average molecular weight and density of the
hydrocarbons from a representative sample. GPA Standard
2186 shall be used for extended analysis to quantify C(6)+
or C(7)+ composition. Physical constants contained in GPA
Technical Publication TP-17 shall be used in the
calculation of the averages. The average determination
shall be made at least once during each calendar quarter.
7. ERROR CORRECTION
(A) FACTOR DEVIATION.
1. LESS THAN +/- 0.25%. If the meter or densitometer correction
factor deviates less than +/-0.25% from one scheduled proving
to the next, the effective date of the correction factor shall
be the date of the proving and shall remain in effect until
the next proving.
2. MORE THAN +/- 0.25%. If the meter or densitometer correction
factor deviates more than +/-0.25% corrective action may need
to be performed on the meter. It shall be the decision of the
Dynegy and Equistar as to the scope of any corrective action
to be taken, if any. The effective date of the new correction
factor shall be the date on which an event occurred which is
known to have changed the correction factor, or if such date
is not known, then the affected metering period is determined
in accordance with Paragraph (B) of this section of this
Exhibit.
3. MORE THAN +/- 0.50%. Should the new meter correction factor
deviate more than +/-0.50%, and in addition to Paragraph 2 of
this section of this Exhibit, Dynegy shall proceed with
diligence to effect maintenance, repair or replacement of the
meter. A new turbine element will not be proved before a
24-hour break-in period. The proving after the break-in period
will provide the meter correction factor which will be
effective the date of the new element installation. This
factor will be used until the next scheduled proving.
27
<Page>
(B) MASS & VOLUME. If, upon calibration or proving, the meter does not
meet requirements given, then any previous recording of such
equipment shall be corrected for any period which is known or
agreed upon, but in case the period is not known or agreed upon,
such correction shall apply to one-half (1/2) the total volume
measured since the date of the last calibration (proving). However,
this correction shall not exceed one Month.
(C) ANALYSIS. If the sampler or on-line gas chromatograph should fail
or is out of service, or the analysis is not representative of the
liquid metered at the custody transfer station, Dynegy and Equistar
shall agree on a composition determined from one of the following
methods in the order stated:
1. By using the sample from properly operating check measuring
equipment; or
2. By using the composition of the most recent accurate and
representative sample; or
3. By using the composition from on-line gas chromatograph
equipment typically used for plant control after determining
the amount of bias between it and a laboratory chromatograph;
or
4. Alternatively, by agreement of Dynegy and Equistar.
(D) ERROR RESOLUTION. If the meter should fail or is out of service,
the quantity for the measurement period while the meter is out of
service will be determined by the following methods in the order
stated:
1. By using data recorded by any properly operating check
measuring equipment; or
2. By correcting the error if the percentage of error can be
ascertained by calibration test or calculation; or
3. By comparison with deliveries during earlier periods under
similar conditions when the meter was registering accurately;
or
4. Alternatively, by agreement of Dynegy and Equistar.
8. TECHNICAL PUBLICATIONS
(A) API Manual of Petroleum Measurement Standards (MPMS), American
Petroleum Institute:
1. Chapter 1, Vocabulary, Second Edition, July 1994
2. Chapter 4, Proving Systems, Section 2, Conventional Pipe
Provers, First
28
<Page>
Edition, October 1988, Reaffirmed October 1993
3. Chapter 4, Proving Systems, Section 3, Small Volume Provers,
First Edition. July 1988, Reaffirmed October 1993
4. Chapter 5, Metering, Section 3, Measurement of Hydrocarbon
Liquids by Turbine Meters, Second Edition, November 1987,
Reaffirmed October 1992
5. Chapter 5, Metering, Section 4, Accessory Equipment for Liquid
Meters, Second Edition, November 1987, Reaffirmed October 1992
6. Chapter 14, Natural Gas Fluids Measurement, Section 3,
Concentric Square-Edged Orifice Meters. Parts 1, 2, 3 and 4
7. Chapter 14, Natural Gas Fluids Measurement, Section 6,
Continuous Density Measurement, Second Edition, April 1991
8. API Draft Standard, Measurement of Single Phase, Intermediate,
and Finished Hydrocarbon Fluids by Coriolis Meters, pending
issue.
(B) Standards of the Gas Processors Association (GPA):
1. GPA Standard 2145-2000 Revision 2, Physical Constants for
Paraffin Hydrocarbons and Other Components of Natural Gas
2. GPA Standard 2174-93, Obtaining Liquid Hydrocarbon Samples for
Analysis by Gas Chromatography
3. GPA Standard 2177-95, Analysis of Demethanized Hydrocarbon
Liquid Mixtures Containing Nitrogen and Carbon Dioxide by Gas
Chromatography
4. GPA Standard 2186-95, Tentative Method for the Extended
Analysis of Hydrocarbon Liquid Mixtures Containing Nitrogen
and Carbon Dioxide by Temperature Programmed Gas Chromatography
5. GPA Standard 2261, Analysis for Natural Gas and Similar
Gaseous Mixtures by Gas Chromatography.
6. GPA Standard 8173-94, Method for Converting Mass Natural Gas
Liquids and Vapors to English Liquid Volumes
7. GPA Standard 8182-95, Standard for Mass Measurement of Natural
Gas Liquids
8. GPA Technical Publication TP-16, Composite Pressure and
Temperature Volume Correction Factor Table for Liquefied
Petroleum Gas (LPG) and
29
<Page>
Natural Gasoline
9. GPA Technical Publication TP-17, Table of Physical Properties
of Hydrocarbons for Extended Analysis of Natural Gases
10. GPA Technical Publication TP-25, Temperature Correction for
the Volume of Light Hydrocarbons, Tables 24E and 23E.
(C) Standards of the American Gas Association (AGA):
1. Transmission Measurement Committee Report Number 7,
Measurement of Gas Flow by Turbine Meters.
30
<Page>
EXHIBIT "C"
SPECIFICATION FOR NORMAL BUTANE
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------------------------------
TEST METHODS LATEST
PRODUCT CHARACTERISTIC MINIMUM MAXIMUM REVISION
- ------------------------------------------------------------------------------------------------------------------------
Vapor Pressure, psig @ 50 ASTM D 1267
100 DEG. F
- ------------------------------------------------------------------------------------------------------------------------
Volatile Residue, Temp (DEG. F)
@ 95% Evaporation +36 ASTM D 1837
- ------------------------------------------------------------------------------------------------------------------------
Composition (liq. vol. %):
n-Butane 94 100.0 ASTM D 2163
i-Butane 5.0 ASTM D 2163
propane 2.5 ASTM D 2163
pentane & heavier 2.0 ASTM D 2163
- ------------------------------------------------------------------------------------------------------------------------
Corrosion, copper strip
@ 100 DEG. F 1 ASTM D 1838
- ------------------------------------------------------------------------------------------------------------------------
Total Sulfur, ppm by
weight in liquid 140 ASTM D 2784
- ------------------------------------------------------------------------------------------------------------------------
Free Water None -
- ------------------------------------------------------------------------------------------------------------------------
</Table>
The product shall not contain any other contaminants that may make it or its
components commercially unacceptable as ethylene feedstock.
Any potential contaminant not listed above or any special specification must be
identified and maximum allowable concentration agreed to in writing by both
parties prior to delivery of product.