EXHIBIT 10.28
GAS PURCHASE CONTRACT
SHELL OIL COMPANY, SELLER
AND
ALASKA PIPELINE COMPANY, BUYER
INDEX TO GAS PURCHASE CONTRACT
ARTICLE PAGE
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I DEFINITIONS 2
II POINT OF DELIVERY, CONSTRUCTION OF
FACILITIES, OWNERSHIP AND CONTROL OF GAS 6
III PRESSURE 8
IV RESERVATIONS OF SELLER 9
V QUANTITY 11
VI QUALITY 22
VII PRICE 26
(a) Annual price Adjustment 26
(b) Taxes 27
(c) Excess Royalty payments 30
VIII MEASUREMENT 31
IX AMOUNT OF SELLER'S GAS 33
X WARRANTY OF TITLE 36
XI BILLING AND PAYMENT 37
XII TAXES 38
XIII FORCE MAJEURE 39
XIV DEFAULT AND TERMINATION 41
XV TERM 42
XVI ASSIGNMENT 43
XVII NOTICE 44
XVIII GOVERNMENT REGULATIONS 44
XIX PACIFIC ALASKA LNG ASSOCIATES 45
XX MISCELLANEOUS 45
GAS PURCHASE CONTRACT
THIS CONTRACT is made and entered into as of this 20th day of December,
1982, by and between Shell oil Company, a Delaware corporation (hereinafter
referred to as "Seller"), and ALASKA PIPELINE COMPANY, an Alaska corporation
(hereinafter referred to as "Buyer");
WITNESSETH:
WHEREAS, Seller now owns and/or controls an interest in certain oil, gas
and mineral leases in the Beluga Gas Field area, Cook inlet, Alaska; and
WHEREAS, Buyer is engaged in the purchase, transmission and sale of
natural gas in the State of Alaska; and
WHEREAS, the Beluga Field is currently remote from pipeline facilities
necessary to market Buyer's natural gas reserves in the Cook Inlet area; and
WHEREAS, Buyer is willing to construct and operate a new pipeline system
to transport natural gas from the Beluga Gas Field; and
WHEREAS, Seller desires to deliver and sell to Buyer and Buyer desires to
receive and purchase from Seller certain natural gas upon the terms and
conditions herein set forth;
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration, paid by Buyer to Seller, the
receipt and sufficiency of which are hereby acknowledged, and of the mutual
covenants and agreements herein set forth, the parties hereto agree as follows:
ARTICLE I: DEFINITIONS
Except where the context otherwise indicates another or different meaning
or intent, the following terms are intended and used herein and in Exhibit
A and shall be construed to have the meanings as follows:
1.1 The term "day" shall mean a period of twenty-four (24) consecutive
hours beginning and ending at 8:00 A.M. Alaska Standard Time.
1.2 The term "month" shall mean a period beginning at 8:00 A.M. on the
first day of the calendar month and ending at 8:00 A.M. on the first
day of the next succeeding calendar month.
1.3 The term "contract year" shall mean any period of twelve (12)
consecutive calendar months during the life of this contract
beginning at 8:00 A.M. on the first day of January following the
date of initial delivery of gas hereunder and any anniversary of
such date during the term hereof.
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1.4 The "initial period" shall mean the period beginning on the first
day of delivery and ending at 8:00 A.M. on the start of the first
contract year.
1.5 The term "calendar year" shall mean a period of twelve (12)
consecutive months beginning on the first day of January of any
calendar year.
1.6 The term "gas" shall mean natural gas meeting the standards set
forth in Article VI hereof.
1.7 The term "cubic foot of gas" means the volume of gas contained in
one cubic foot of space at a standard pressure base of fourteen and
sixty-five one-hundredths (14.65) pounds per square inch absolute
and a standard temperature base of sixty degrees Fahrenheit
(60(degree) F.). For the purposes of measurement, calculations and
meter calibrations, the atmospheric pressure shall be assumed to be
fourteen point seven (14.7) pounds per square inch absolute.
Temperature shall be determined by a recording thermometer
continuously used and installed by Buyer so as to record properly
the temperature of the gas being metered, and specific gravity shall
be determined by Buyer by use of the Acme gravity balance, or, at
the option of Buyer, by such other tests and instruments as may be
standard for such purposes in the gas industry.
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1.8 The term "MCF" shall mean one thousand (1,000) cubic feet of gas.
1.9 The term "British thermal unit" (Btu) is defined as the amount of
heat required to raise the temperature of one pound of water from
fifty-nine degrees Fahrenheit to sixty degrees Fahrenheit at a
pressure of fourteen and 65/100 pounds per square inch absolute. For
the purpose of this contract, the Btu content per cubic foot
("gross") shall be determined for a cubic foot of gas at a
temperature of sixty degrees Fahrenheit (60(degree) F.) when
saturated with water vapor and at an absolute pressure equivalent to
thirty inches (30") of mercury at thirty-two degrees Fahrenheit
(32(degree) F.) when the products of combustion are cooled to the
initial temperature of gas and air and when the water formed by
combustion is condensed to the liquid state.
1.10 The term "contract area" means the area described in the schedule
attached hereto as Exhibit A and made a part hereof and as shown on
the plat attached hereto as Exhibit B and made a part hereof.
1.11 The term "daily deliverability" shall mean that quantity of gas
which Seller has available to Buyer during each day from the
contract area when
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Seller's wells and facilities are produced and operated at the
maximum efficient rate of flow determined by Seller, or the rate
permitted by applicable orders, rules, regulations or laws,
whichever is the lesser amount.
1.12 The term "price" shall mean the price to be paid by Buyer to Seller
for gas delivered to Buyer hereunder as provided for in Article VII
hereof.
1.13 The term "annual contract quantity" or "ACQ" shall mean the quantity
of gas which Seller agrees to sell and deliver to Buyer and Buyer
agrees to take and pay for, or pay for if available whether taken or
not, during each contract year during the term hereof.
1.14 The term "average daily contract quantity" shall mean one/365th or
the annual contract quantity committed by Buyer to Seller hereunder.
1.15 The "term of this contract" shall mean the period during which this
Gas Purchase Contract shall remain in full force and effect as
provided for in Article XV hereof.
1.16 The term "swing rate" means the maximum obligation of Seller to
deliver gas in millions of cubic feet per day.
1.17 The term "swing factor" means the relationship between the swing
rate and the average daily con-
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tract quantity.
For example, 20 billion cubic feet per year annual contract
quantity divided by 365 is 55 million cubic feet per day; and
110 million CFD swing rate (E.G.), divided by this million
CFD, is a swing factor of 2.0.
1.18 The term "Seller's gas" shall mean Seller's entire interest in
natural gas contained in sands underlying the contract area,
presently developed or developed during the term of this contract
less gas previously committed under sales contracts to others as
reserved pursuant to Article IV hereof.
ARTICLE II; POINT OF DELIVERY, CONSTRUCTION OF FACILITIES, OWNERSHIP AND CONTROL
OF GAS
2.1 The point of delivery for all gas to be purchased hereunder shall be
at the inlet flanges of Buyer's or its designee's central meter
station to be located at a mutually agreeable point in the contract
area. Seller will construct, at its sole expense, the gathering
pipeline and other facilities required to deliver the gas produced
to the point of delivery.
2.2 Seller shall, to the extent Seller has the right to do so, furnish
to Buyer, at no expense to Buy-
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er, a suitable site at the point of delivery, together with the
right of ingress and egress, to be used by Buyer for Buyer's or its
designee's measuring and other equipment. All property of Buyer
placed on or under the property of Seller shall, insofar as Seller
is concerned, be deemed the personal property of Buyer whether or
not affixed to the realty, and shall at all times be subject to the
absolute control and disposition of Buyer. Seller, to the extent
that Seller has the right to do so, hereby grants to Buyer a
right-of-way and easement on and over the various leases within the
contract area together with the right of ingress and egress, for the
construction, maintenance, operation, repair and removal of the
pipelines, measuring stations, and any other facilities which may be
installed by Buyer or its designee in order to receive and transport
the gas delivered hereunder.
2.3 Title to all gas purchased hereunder shall pass from Seller to Buyer
at the point of delivery. As between the parties hereto, Seller
shall be in control and possession of the gas deliverable hereunder
and responsible for any loss of such gas or for any damage or injury
caused thereby until the same shall have been delivered to Buyer at
the point of delivery, after which delivery Buyer
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shall be deemed to be in control and possession thereof and
responsible for any loss of such gas or for any injury or damage
caused thereby.
ARTICLE III: PRESSURE
3.1 The gas delivered hereunder at the point of delivery shall be
delivered into Buyer's facilities at the pressure existing therein
from time to time but not in excess of one thousand (1,000) pounds
per square inch gauge. Seller agrees to continue deliveries at such
pressure so long as such pressure is naturally available but when
the natural well pressures decline Seller shall not be required to
deliver such gas in excess of natural well pressures.
3.2 Should it become necessary to install compression facilities in
order to deliver gas hereunder, Seller agrees to install such
facilities and operate same if in the sole judgment of Seller it is
economical and desirable for Seller to do so. In the event Seller
elects not to install and operate such facilities, it shall so
advise Buyer; then Buyer shall for a period of ninety (90) days have
the right and option to elect to do so or cause same to be done. If
Buyer so elects to install
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and operate, or cause to be installed and operated such compression
facilities, then Seller agrees that Buyer shall have the right to
deduct each month as a compression fee, from the proceeds due and
payable to Seller hereunder, Buyer's out-of-pocket cost and expenses
incurred in the acquisition, installation and operation of such
facilities (including but not limited to the value of Buyer's
equipment utilized and labor costs, including fringe benefits). The
amount to be deducted each month and any terms and conditions
pertaining thereto shall be set forth in a letter agreement executed
by and between Buyer and Seller at the time Buyer elects to install
and operate, or cause to be installed and operated, such compression
facilities. In the event neither party elects to install compression
facilities, then Seller may terminate this contract by written
notice to Buyer.
ARTICLE IV; RESERVATIONS OF SELLER
4.1 Seller reserves from this contract such quantities of Seller's gas
as are required for the development, operation and maintenance of
Seller's leasehold interests within the contract area, such
quantities as are necessary to fulfill Seller's obligations to
deliver gas to the lessors and such
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quantities as are subject to contracts executed prior to this
contract.
4.2 Seller may process the gas delivered hereunder either prior to the
point of delivery or downstream from the point of delivery for the
extraction of liquefiable hydrocarbons at a mutually agreeable point
in the contract area. Such processing shall be for the recovery of
liquefiable hydrocarbons, other than methane (except such methane
unavoidably removed in such processing). Seller shall not subject
such gas to any process or operation which will cause such gas to
fail to meet the applicable specifications as to quality contained
in this contract. The fuel, shrinkage and all other losses
attributable to and resulting from such processing shall be borne by
Seller. When such gas is processed downstream from the point of
delivery, Seller's plant volume (as used herein meaning fuel,
shrinkage and all other losses attributable to such processing)
which is attributable to the gas delivered hereunder shall be
subtracted from the volumes delivered for sale hereunder at the
point of delivery, and the net volume thus obtained shall be used
for the purposes of computing Buyer's payments for gas purchased
hereunder.
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ARTICLE V: QUANTITY
5.1.1 During the term of this contract, Buyer shall have the right to take
and purchase, if available, and Seller shall make its best efforts
to sell and deliver or cause to be delivered to Buyer, the following
quantities of gas:
Annual Contract
Quantity (ACQ) Swing Rate
Year (MMMcf) Swing Factor (MMcf per day)
- ---- --------------- -------------- --------------
1985 0 Not Applicable 25
1986 5 2.0 25
1987 10 2.0 50
1988 10 2.0 50
1989 15 2.0 80
1990 15 2.0 80
1991 20 2.0 110
1992 20 2.0 110
1993 20 2.0 110
1994 20 2.0 110
1995 20 2.0 110
1996 15 2.0 80
1997 15 2.0 80
1998 15 2.0 80
1999 10 2.0 50
2000 10 2.0 50
5.1.2 Premium Deliverability
Buyer may request Seller to increase the swing rate (swing factor)
tabulated above, said increase to be known as "premium
deliverability". Seller shall thereafter have six (6) months to
respond
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to Buyer regarding Seller's ability and intent to meet Buyer's
request for said premium deliverability, said response by Seller to
be at Seller's sole option. If Seller's said response results in
swing rate(s) sufficient to produce a swing factor of 2.5 or more as
requested by Buyer, then from the first day of the month following
an effective swing rate of 2.5 or more, Buyer shall, so long as the
swing rate remains at 2.5 or more, pay Seller a premium
deliverability fee of 35 cents per MCF applicable to all gas
delivered. Said premium deliverability fee shall be adjusted by the
same factor as the base price given per paragraph 7.2(a) of Article
VII hereof.
5.2.1 Relief by Loss of Market
Seller recognizes that Buyer's ability to meet the annual contract
quantity is limited to demands for gas made on Buyer by Buyer's
customers and that if said customers discontinue or reduce their
demands for Buyer's gas as a result of obtaining increased
quantities of gas from any source other than Buyer, then to the
extent of said increased quantities Buyer shall be relieved of its
annual contract quantity obligation to Seller and the total contract
quantity will be reduced by an amount equal to the sum of said
reductions in contract quantities. In such event, Seller's
obligation
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of swing rate shall be proportionally reduced simultaneously.
5.2.2 Seller recognizes that Buyer's ability to meet the annual contract
quantity is limited to demands for gas made on Buyer by increased
demand(s) by Buyer's customers and that if such customers projected
demand(s) fail to materialize, then undue hardship will result as to
Buyer. Therefore, notwithstanding any other provisions of this
Agreement, if, in its sole discretion, Buyer determines at any time
and from time to time that Buyer cannot market some or all of the
gas to be delivered hereunder at the annual contract quantity or
quantities provided for herein, Buyer shall so notify Seller in
writing, no later than April 1 of any contract year, identifying the
lower annual contract quantity(s) (but such reduction not to be in
excess of thirty percent (30%) of the annual contract quantity(s))
which Buyer projects it will be able to market during the following
contract year(s). As of January 1 of the following contract year the
annual contract quantity(s)shall be the lower annual contract
quantity(s) as set forth in the hereinabove mentioned notice from
Buyer; provided, however, in consideration of the relief provided by
Seller to Buyer, Buyer agrees to pay to Seller a premium on
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the then applicable gas price, including any premium deliverability
fee in effect, as determined by Article VII applicable to all gas
delivered, as follows:
If the Annual Contract The Applicable price
Quantity is Reduced per MCF Shall
From TO be increased by
- ---- -- --------------------
0% 10% 5.6%
11% 20% 12.5%
21% 30% 21.4%
Thereafter, the total contract quantity will be reduced by an amount
equal to such lower contract quantity or quantities, and Seller may
commit and deliver such quantity(s) to any other purchaser,
provided, however, as to the quantity(s) of gas sales made to
another party or parties by Seller, Buyer shall be proportionally
relieved of paying the premium hereinabove stated for each MCF sold.
If Seller has not committed such quantity(s) to another purchaser,
Seller shall have the right and option to extend the term of this
Agreement by recommitting such quantity(s), including a swing factor
of 1.33, to Buyer, otherwise upon the same terms and conditions set
forth herein, provided
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Seller gives Buyer written notice three (3) years prior to end of
the term of this Agreement.
If Buyer elects to reduce the annual contract quantity under this
option, and if during the period of such reduced contract quantity
Buyer purchases gas from any other producer(s) at the Beluga Unit at
a price higher than the price then payable to Seller hereunder, then
Buyer shall pay Seller such higher price during said period.
In the event Buyer elects to reduce the annual contract quantity as
set forth hereinabove, Buyer agrees to take gas from Seller ratably
insofar as possible, based on deliverability, with all others
supplying gas to Buyer during such period(s).
5.3 Pre-construction Deliveries of Gas
The parties to this agreement recognize that an imminent demand for
gas may exist or develop for which neither Seller nor Buyer is
prepared to make delivery immediately on demand through facilities
owned outright by either Seller or Buyer. It is agreed that Buyer
will proceed diligently to negotiate to supply said demand by
deliveries of
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gas owned and through facilities owned by Seller in part and in part
by others. To the extent of Seller's ability to do so, Seller will
make available to Buyer its share of spare delivery capacity
(production) at these existing facilities so that Buyer can offer
said spare delivery capacity to supply said demand pending
completion by Seller of its own facilities and the commencing of
deliveries therethrough to Buyer. Buyer will simultaneously
negotiate with the other owners of said gas and facilities to
utilize their spare delivery capacity similarly to supply said
imminent demand, it being intended by both Buyer and Seller that
immediately upon Seller's completion of its own delivery capacity,
Buyer would terminate its purchases from said other owners of gas
and facilities and commence taking Seller's gas only to supply said
imminent demand for gas.
During the period until January 1, 1986 no annual contract quantity
shall apply to Buyer's taking of gas under this Article 5.3, and no
swing rate and no swing factor shall be in effect, but Seller will
develop a swing rate of 25 MMCF per day with all due diligence, by
January 1, 1984 if practicable with prudent practice.
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Buyer's takes of gas from Seller as contemplated above in this
Article 5.3, and as may be further accomplished into Buyer's own
facilities prior to January 1, 1986, shall together count toward
Buyer's annual contract quantity obligation to which commences at
January 1, 1986, and Buyer shall be relieved of its annual contract
quantity obligation to Seller until such time as a deficiency of
annual contract quantity takes of gas may exist in excess of the
amounts so taken by Buyer from Seller prior to January 1, 1986.
5.4 Relief by Taking of Royalty Gas in Kind
The annual contract quantities and the swing rates set forth in
Paragraph 1 of Article V hereof shall be reduced whenever and to the
extent that any lessor or lessors within the contract area shall
exercise partially or wholly any right to take their shares of
royalty gas (attributable to Seller's leaseholds in the contract
area) in kind. Should any such lessor deliver such royalty gas to
Buyer or to any of Buyer's affiliated companies, then for the
purpose of annual contract quantities and the swing rate hereunder
such royalty gas shall be deemed delivered hereunder.
5.5 Seller shall, with due diligence, operate the lands and leaseholds
subject to this contract in a skillful and prudent manner to the end
that
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Seller's delivery capacity to Buyer shall be maintained during the
term hereof at a rate equal to the swing rate set forth in Paragraph
5.1 of Article V hereof; provided, however, in the event Seller
should at any time during a period of peak demand (normally winter
time) in a contract year fail or be unable to develop, or having
developed fail to maintain during a period in excess of 120 days,
the delivery capacity necessary to deliver to Buyer the swing rate
then in effect, the annual contract quantity shall be reduced by
1.25 times the percentage by which Seller's demonstrated delivery
capacity as established by Article V, Paragraph 5.5 is below the
swing rate then in effect. In the event there is an increase in
Seller's demonstrated delivery capacity as defined in Paragraph 5.5
of Article V subsequent to the reduction of the annual contract
quantity as provided above, then from the first day of the month
following such increase (pro rated for any partial year), and for
subsequent calendar years, the annual contract quantity shall be
increased by the percentage by which Seller's demonstrated delivery
capacity shall have increased above the previously determined
delivery capacity which caused the reduction of annual contract
quantity, but in no event to more than the annual contract quantity
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set forth in paragraph 5.1 of Article V hereof for such year,
subject to Buyer's prior written acceptance of such increase at
Buyer's sole option, provided Buyer has contracted with a third
party to replace gas lost due to the lack of Seller's delivery
capacity. In determining the annual quantities of gas Buyer is
required to take or pay Seller for, whether taken or not, during any
year by reason of change in Seller's delivery capacity, the annual
contract quantity for any year shall be computed by prorating the
several values of the annual contract quantity on the basis of the
portion of the year each such value was in effect.
5.6 As soon as practicable after deliveries of gas have commenced and
stabilized, the delivery capacity of Seller's gas wells shall be
determined during a mutually agreeable consecutive three (3) day
deliverability test. Seller's delivery capacity shall be the average
daily quantities of gas delivered to Buyer attributable to Seller's
interest in the lease(s) during said three (3) day test.
5.7 At any time but no more often than once in any twelve (12) month
period, except at Seller's option, Seller's delivery capacity
(demonstrated capacity) may be redetermined upon request by either
party by actual measurements and calcula-
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tions and shall be estimated or calculated for each month in the
months in which no actual tests are made using the result of the
last actual test, if any, as the basis of the estimation. Each test
will be for a period of three (3) consecutive days, during which
time the wells will be produced at the maximum efficient rate of
flow as determined by Seller against the pressures provided for in
Article III hereof or under such other conditions as determined by
mutual agreement of the parties and the delivery capacity shall be
the average daily quantities of gas delivered to Buyer during said
three (3) day test.
5.8 Buyer shall use its best efforts to keep Seller informed as to any
peak demand that may occur during a period other than a normal peak
demand period to the end that Seller can more expeditiously schedule
any well workover(s) that Seller believes necessary.
5.9 It is understood and agreed that nothing in this Agreement shall be
construed to require Seller to produce and deliver or Buyer to
purchase and receive from Seller or pay Seller for any quantities of
gas in excess of that which may be produced under the applicable
rules, regulations and orders of regulatory bodies having
jurisdiction. It is expressly understood that Buyer shall have the
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right and option to purchase at any time and from time to time such
daily quantity of gas as it desires up to the swing rate then in
effect and, in addition, such daily quantities of gas, if any, in
excess of the swing rate then in effect which in Seller's sole
judgment can be produced and delivered from Seller's lands and
leaseholds efficiently and in accordance with good operating
practices and without impairment of Seller's obligations under prior
contracts. It is recognized that Seller is not obligated to provide
facilities to meet the quality specifications set forth in Article
VI for quantities of gas in excess of the swing rate in effect from
time to time, and therefore any additional gas which Buyer may elect
to receive under this Paragraph, which is in excess of the capacity
of Seller's facilities as then installed, may be bypassed around
such facilities and the quality specifications of Article X shall
not apply to such excess quantity. The taking by Buyer of such
bypassed gas shall be at Buyer's sole risk.
5.10 In the event Buyer is required by the provisions of this agreement
to pay Seller for a quantity of gas which Buyer shall not have
actually taken during any year of the term hereof, then during the 5
years next succeeding the year in which Buyer
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has failed to take the gas so paid for, all gas taken by Buyer from
Seller which is in excess of the annual contract quantity for the
current year shall be known as make-up gas and shall be delivered
without charge to Buyer until such excess equals the amount of gas
previously paid for but not taken; provided, however, Buyer will pay
Seller any price differential between that price previously paid and
that price in effect when such make-up gas is actually taken. In the
event Buyer has not by the end of the term of this agreement made up
all gas paid for but not taken, then Seller shall refund, without
interest, monies to Buyer for that portion of the gas volumes paid
for but not taken which Seller is unable to deliver as a result of
Seller's wells not being capable of producing all of such volumes as
Make-up Gas when produced at their delivery capacity throughout the
remaining term following the year in which Buyer has failed to take
the gas so paid for; provided, however, in lieu of paying such
refund, Seller shall have the right and option to extend the term of
this Agreement for a period of time which is sufficient to enable
Buyer to receive the volumes paid for but not received.
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ARTICLE VI: QUALITY
6.1 Seller agrees that:
(a) The gas delivered hereunder shall have a total heating value of
not less than nine hundred fifty (950) Btus per cubic foot or more
than one thousand fifty (1,050) Btus per cubic foot. If at any time
Seller shall become unable to produce gas possessing at least such
total heating value, Buyer shall have the option from time to time
to refuse to accept that part of Seller's gas which is deficient so
long as said heating value remains below nine hundred fifty (950)
Btus per cubic foot In the event Buyer accepts delivery of said gas
when the heating value thereof is below nine hundred fifty (950)
Btus per cubic foot, Buyer may reduce the total amount payable as
the purchase price for gas delivered under this contract for each
month during which such deficiency exists by an amount determined by
multiplying such total amount by a fraction having as its numerator
the average deficiency of British thermal units per cubic foot of
gas below nine hundred fifty (950) and its denominator nine hundred
fifty (950). If Buyer shall refuse, pursuant to the foregoing, to
accept any percentage of Seller's gas, then Seller's obligations to
deliver Seller's gas hereunder shall be reduced by a similar
percentage.
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If Buyer shall refuse, pursuant to the foregoing, to accept any of
Seller's gas for a period of thirty (30) days, then Seller, as to
such volume of refused gas, may terminate this contract by written
notice to Buyer.
(b) Buyer shall have the right to determine, at such time or times
as it may desire, the total heating value of the gas in Btus per
cubic foot by means of some approved method of general use in the
industry and on the standard set forth in Paragraph 1.8 hereof.
Buyer shall give to Seller notice of the time of all tests for
determining the BTU content of the gas to be conducted by such party
reasonably in advance of making the test in order that the other
party may conveniently have its representative present. Should there
be any material variance between tests by Buyer and Seller, a joint
test will be run and will be controlling, effective from the first
day of the calendar month preceding such joint test.
6.2 Seller agrees that Buyer may refuse to accept any gas hereunder
which:
(a) Shall contain more than one (1) grain of hydrogen sulphide per
one hundred (100) cubic feet of gas as determined by the Tutwiler
test or some other quantitative test, mutually agreeable to the
parties hereto, after the presence of hydrogen
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sulphide has been indicated by qualitative test;
(b) Shall contain more than twenty (20) grains of total sulphur per
one hundred (100) cubic feet of gas;
(c) Shall contain in excess of:
(i) Three percent (3%) by volume of carbon dioxide;
(ii) One percent (1%) by volume of oxygen;
(d) Shall have a temperature of more than one hundred twenty
degrees Fahrenheit (120 degrees F.); or
(e) Shall contain more than four (4) pounds of water per one
million (1,000,000) cubic feet of gas.
6.3 In addition to meeting the above specifications, the gas delivered
hereunder shall be commercially free from dust, gums, gum forming
constituents, or other liquid or solid matter which might become
separated from the gas in the course of transportation through
pipelines.
6.4 In the event Buyer shall exercise its option to refuse to accept any
part of Seller's gas not meeting any of the above quality
specifications, Seller shall be free to sell such rejected gas to
others. Should Buyer exercise its option to refuse to accept any of
Seller's gas by reason of
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the above quality specifications, then Seller, as to such volume of
refused gas, may by written notice terminate this contract.
ARTICLE VII: PRICE
7.1 Subject to the provisions of paragraphs 7.2 and 7.3 below, the base
price to be paid by Buyer to Seller for gas delivered to Buyer
hereunder shall be $2.32 per MCF.
7.2 Subject to the provisions of Paragraph 7.3 below, it is expressly
understood and agreed between the parties that there shall be an
adjustment to the price provided for in Paragraph 7.1 above, as
follows:
(a) Annual Price Adjustment:
Effective January 1 of each year during the term of this
agreement, the base price provided for in Paragraph 7.1 shall
be increased or decreased by multiplying it by the following
ratio:
Posted Price No. 2 Fuel Oil on November 1 preceding
date of adjustment
---------------------------------------------------
Posted Price No. 2 Fuel Oil on November 1, 1982
The term "Posted Price" shall mean the average posted price of
No. 2 fuel oil f.o.b., Tesoro Refinery, Nikiski, Alaska. In
the event that there ceases to be a posted price for No. 2
fuel oil at Tesoro's Refinery at Nikiski, the
-26-
average of the postings for No. 2 fuel oil as published in
Platt's Oilgram Price report (or another mutually agreed upon
publication in the event Platt's Oilgram discontinues
publishing such quotes) f.o.b. Seattle, Washington, shall be
substituted in the ratio described above.
(b) Taxes:
The full amount of any tax or taxes paid by Seller
irrespective of the mode or basis of imposition. The term "tax
or taxes" as used herein shall mean (i) any tax (other than ad
valorem, capital stock, general property or income and excess
profit taxes) or (ii) similar charge now or hereafter levied,
assessed or made by any governmental or native authority,
including any Federal windfall profits taxes, on the gas
itself, or on the act, right or privilege or occupation of
production, severance, gathering, transportation, sale or
delivery of gas which tax is measured by the volume, value,
removal price, prevailing value or sales price to Buyer of the
gas in question but shall not include any value attributable
to the liquid hydrocarbons in said gas that are removed by
Seller by processing; provided,
-27-
however, that the term "tax" shall not be deemed to include
(i) any processing tax imposed on Seller because of the fact
that gas may be processed or handled through or in any plant,
or (ii) any general franchise tax imposed on corporations on
account of their corporate existence or on their right to do
business within the state as a foreign corporation; or (iii)
any delinquent interest and penalty that may be attributable
to any tax. Taxes or assessments applicable to any royalty,
overriding royalty, production payment or similar interest
shall be considered to be covered by the provisions hereof to
the extent reimbursement made by Buyer to Seller with respect
thereto is passed on by Seller to the owner of such royalty,
overriding royalty, production payment or similar interest or
to the extent Seller has paid such taxes without reimbursement
from the owner of such royalty, overriding royalty, production
payment or similar interest.
The above provisions of this paragraph 7.2(b) notwithstanding,
should Seller at any time pay ad valorem mineral rights
property taxes
-28-
attributable to gas which Buyer has the right to receive
hereunder, Seller will notify Buyer in writing, stating the
amount thereof, along with adequate supporting information,
and Buyer will, within thirty (30) days after the receipt of
such notice from Seller, reimburse Seller in the amount of
such taxes. The reimbursement shall be based upon the ratio
which the volume of gas Buyer has the right to receive
hereunder as of the date of assessment bears to the total
volume of gas reserves underlying the properties subject to
this agreement as of the assessment date or in the event the
lands subject to this agreement are not assessed separately
but rather as part of other lands, the reimbursement shall be
based upon the ratio which the volume of gas Buyer has the
right to receive hereunder as of the date of assessment bears
to the total volume of gas reserves underlying all the lands
so assessed. Unless the total gas underlying the properties is
valued separately for assessment purposes, the amount of the
ad valorem mineral rights property taxes assigned to the gas
each year shall be that portion of the total tax that the
value of the gas bears to the total value of all liquids and
gas combined as determined
-29-
by the assessor before applying any depreciation charges,
operating costs or present worth factors. The intent of this
paragraph is that the Buyer shall pay all ad valorem mineral
rights property taxes reasonably attributable to gas which
Buyer has the right to receive hereunder, and the amount of
such taxes shall be determined in an equitable manner to
produce that result. Nothing contained herein shall imply that
Buyer has any title to any volume of gas it has the right to
receive hereunder. Failure of Seller to notify Buyer, within
one (1) year after the due date, of the payment by Seller of
any ad valorem mineral rights property taxes on gas which
Buyer has the right to receive hereunder shall constitute a
waiver by Seller of the reimbursement by Buyer for that
particular item, but shall not constitute a waiver of any
rights to reimbursement for the payment of such tax for
subsequent periods.
(c) Excess Royalty Payments - Seller agrees to pay or cause to
be paid to the parties entitled thereto all royalties,
overriding royalties or like charges against said gas or the
value thereof. Buyer agrees to reimburse Seller for all
"excess royalty payments" which Seller
-30-
shall be required to pay to the State of Alaska, United States of
America or other royalty owners with respect to gas sold and
delivered to Buyer hereunder. Such payments shall be made by Buyer
to Seller within ten (10) days following receipt of statements from
Seller therefor. The term "excess royalty payments" as used herein
is defined as the amount by which actual royalty payments by Seller
to the State of Alaska, United States of America, or other royalty
owners under the Agreement exceed the amount such payment would have
been if the royalty value thereunder had been calculated upon the
sums received by Seller pursuant to this agreement.
7.3 Notwithstanding the provisions of paragraphs 7.1 above, the price to
be paid by Buyer to Seller for gas delivered to Buyer hereunder
shall not exceed the applicable maximum lawful price, and
adjustments thereto, permitted by FERC, the Congress, the President
or any other Governmental authority having jurisdiction to establish
such maximum lawful prices.
ARTICLE VIII. MEASUREMENT
8.1 Buyer shall measure the gas purchased hereunder by means of
standard-type equipment known as turbine meters, conforming to the
requirements of AGA Gas
-31-
Measurement Committee Report No. 7, installed in series of two
identical units at the point of delivery, and the average of the two
measurements shall be used as the basis for purchases unless either
Buyer or Seller may show cause to the other that good reason exists
to choose one or the other of the series measurements to be
preferable and more accurate pending any necessary repairs or
adjustments to the questioned measurement. Installation and
operation and maintenance of said turbine meters shall be done by
Buyer. Seller may at its option install suitable orifice meter(s)
also in series with Buyer's turbine meters for purposes of auditing
the measurement obtained from said turbine meters. Said orifice
meter(s), if installed, shall be operated and maintained by Seller
as prescribed by AGA Gas Measurement Committee Report No. 5 or
subsequent revisions thereof. Buyer and Seller each shall have
access to the other's measuring equipment at reasonable hours, but
the reading, calibrating, and adjusting thereof and the changing of
charts shall be done by the respective owner.
8.2 At appropriate intervals, the meters and instruments shall be
calibrated and if in the aggregate they are found to be inaccurate
by more than one percent (1%), the quantities of gas based on such
-32-
registration shall be corrected at the rate of inaccuracy for any
period which is known or agreed upon. In the event the period of
inaccuracy is not known or cannot be agreed upon, then such period
shall be deemed to be thirty (30) days.
ARTICLE IX: AMOUNT OF SELLER'S GAS
9.1 As soon as is practicable after the date of this agreement, Seller
shall make available to Buyer all information, material and data
which Seller has available and does not consider confidential
concerning Seller's gas.
9.2 At any time during this contract, but not more often than once each
year, Seller will, at Buyer's request, furnish to Buyer such
geological, engineering and production data (except interpretive
data) available to Seller, without cost to Buyer, as may be needed
for an independent determination of gas reserves and deliverability
thereof. Such data shall include any and all information pertaining
to Seller's wells,including but not limited to pressure data.
9.3 Determinations of the amount of Seller's gas not yet produced shall
be made by Seller and Buyer upon the written request by Buyer, but
in no event sooner than one (1) year after the date of the last
determination. The effective date for any
-33-
redetermination of the amount of Seller's gas not yet produced shall
be the last day of the month following the date of notice by Buyer
for such redetermination. Buyer's reliance upon any such
determination or redetermination shall be at its sole risk.
9.4 If, as a result of a determination made subsequent to January 1,
1993 of the amount of Seller's gas not then produced, it is
determined that the amount of Seller's gas on the date of this
agreement was less than two hundred twenty million (220,000,000)
Mcf, plus the undelivered portion of the delivery obligations
contained in any such other contracts as Seller may enter into
pursuant to Paragraphs 9.5 of this Article IX, then the annual
contract quantities, swing factors and swing rates set forth in
Paragraph 5.1 of Article V hereof remaining on the effective date
for such determination shall be adjusted as of such date by
multiplying said quantities, factors and rates by a fraction the
numerator of which is the amount of Seller's gas not yet produced as
so determined, expressed in MCF, and the denominator of which is two
hundred twenty million (220,000,000) MCF plus the undelivered
portion of any delivery obligations contained in any such other
contracts.
-34-
9.5 Seller shall have the right and option during the term hereof, at
any time or times, to sell and deliver Seller's gas to any new gas
purchaser or purchasers, or to increase sales to existing gas
purchasers, provided, however, said Seller's gas that is to be sold
is not needed to meet its obligations to Buyer hereunder. In
reaching its decision for such additional sales, Seller agrees that
it will not on or after the date hereof enter into a contract or
contracts for the sale of Seller's gas which obligates Seller to
deliver any Seller's gas which would reduce the quantity of Seller's
gas to an extent that the total gas available to Buyer under this
agreement would be less than two hundred twenty million
(220,000,000) Mcf. In addition, Seller will provide in the sales
contract with said gas purchasers that if any future determination
of the amount of Seller's gas not yet produced, together with the
amount of prior deliveries under this contract, is found to be less
than 220,000,000 Mcf plus the amount of gas sold in such new
contract or contracts, the purchaser(s) of said gas shall deduct
from the quantities to be purchased such amounts as are required to
enable Buyer to purchase a total of 220,000,000 Mcf hereunder.
9.6 Buyer will, subject to all the terms, conditions, reservations and
limitations set forth in this
-35-
agreement, accept from Seller during the term hereof a total
quantity of gas up to but not in excess of two hundred twenty
million (220,000,000) MCF, which can be produced and delivered from
the lands and leaseholds described in Exhibit "A". Seller, however,
reserves the right, in its sole discretion, to deliver gas from
lands and leaseholds other than those described in said Exhibit "A"
without in any way enlarging its delivery obligations hereunder.
ARTICLE X: WARRANTY OF TITLE
10.1 This contract embraces one hundred percent (100%) of the gas
delivered and purchased hereunder and Seller warrants that it has
full and unqualified title and authority to sell such gas to Buyer
upon the terms and conditions herein specified. Buyer shall pay
Seller for one hundred percent (100%) of all gas sold and delivered
to Buyer hereunder, and Seller shall pay the royalty owners, the
other owners of the working interest and all other persons, if any,
owning an interest in such gas the proportionate part due each of
them for and with respect to the sale of such gas. Seller agrees to
indemnify and hold Buyer harmless from and against any and all
claims arising out of the wrongful payment of or failure to pay any
owner of an interest in such gas, and against all suits,
-36-
actions, debts, accounts, damages, costs, losses and expenses
arising from or out of any adverse claims to or against such gas or
any interest therein or in the value thereof. Seller further agrees
to warrant and forever defend unto Buyer the title to all gas
delivered to Buyer hereunder, and warrants that such gas is free
from any and all liens, charges, adverse claims and encumbrances at
the point and time of delivery of such gas to Buyer hereunder.
ARTICLE XI: BILLING AND PAYMENT
11.1 On or before the last day of each calendar month after the month of
initial delivery of gas hereunder, Buyer agrees to account and make
payment to Seller for all gas received by Buyer during the preceding
calendar month or billing period. Payments are to be based on gas
purchased by Buyer at its measuring station at the point of delivery
during the applicable billing period.
11.2 If Buyer shall fail in any year during the term hereof to take the
Annual Contract Quantity, then Seller shall, within sixty (60) days
after the end of such year, render a bill to Buyer for the amount of
the deficiency based on the average price paid for gas delivered
hereunder during the last month of the year in which such deficiency
-37-
occurred. In computing the amount due Seller for any deficiency in
takings by Buyer occurring during any year, the following quantities
shall be deducted from such deficiency:
(a) The total of the daily quantities of gas which Buyer requests
(up to and including the Swing Rate) and which Seller fails to
deliver on any day or days during such year.
(b) The total of the quantities of gas not included in (a) above
which Buyer is unable to take on any day or days during such
year by reason of force majeure or for failure to meet the
quality requirements of Article X.
Buyer agrees to make full payment for the full amount for such
deficiency within fifteen (15) days after receipt of such bill.
ARTICLE XII: TAXES
12.1 Subject to reimbursement as provided in this agreement, Seller shall
pay all gross production, severance and other taxes now or hereafter
required by law to be paid to governmental authorities with respect
to the production or other handling of gas at any point upstream
from the point of delivery.
-38-
ARTICLE XIII: FORCE MAJEURE
13.1 If any party is rendered unable, wholly or in part, by force majeure
or other causes herein specified, to carry out its obligations under
this contract, then upon such party's giving notice and reasonably
full particulars of such force majeure in writing or by telegraph to
the other party within a reasonable time after the occurrence of the
cause relied on, the obligations of the party giving such notice, so
far as they are affected by such force majeure or other causes
herein specified, shall be suspended during the continuance of such
cause, but for no longer period, and such cause shall be remedied so
far as possible with all reasonable dispatch.
13.2 The term "force majeure" as employed herein means acts of God;
strikes, lockouts or other industrial disturbances (including an
event of force majeure which causes a major customer of Buyer to
interrupt its gas purchases); acts of the public enemy; wars;
blockades; insurrections; riots; epidemics; landslides; lightning;
earthquakes; fires; storms; floods; washouts; arrests and restraints
of the government, either federal or state, civil or military; civil
disturbances; explosions; breakage; breakdown or accident to
machinery, equipment or lines of pipe; the necessity or desirability
of
-39-
repairing, altering, maintaining, inspecting, replacing, changing
the size of, substituting or removing machinery, equipment,
pipelines or appurtenant facilities; and any other causes, whether
of the kind herein enumerated or otherwise, not reasonably within
the control of the party claiming suspension, and which by the
exercise of due diligence such party is unable, wholly or in part,
to prevent or overcome. Such term likewise includes (i) in those
instances where either party hereto is required to obtain
servitudes, right-of-way grants, permits, exceptions or licenses to
enable such party to fulfill its obligation hereunder, the inability
of such party to acquire, or the delays on the part of such party in
acquiring, at reasonable cost and after the exercise of reasonable
diligence, such servitudes, right-of-way grants, permits, exceptions
or licenses, and (ii) in those instances where either party hereto
is required to furnish materials and supplies for the purpose of
constructing or maintaining facilities or is required to secure
permits or permission from any governmental agency (federal, state
or municipal, civil or military) to enable such party to fulfill its
obligations hereunder, the inability of such party to acquire, or
the delays on the part of such
-40-
party in acquiring, at reasonable cost and after the exercise of
reasonable diligence, such material and supplies, permits and
permissions. Settlement of strikes or lockouts shall be entirely
within the discretion of the party having the difficulty and the
above requirement that any force majeure shall be remedied with all
reasonable dispatch shall not require the settlement of strikes or
lockouts by acceding to the demands of the opposing party when such
cause is inadvisable in the discretion of the party having the
difficulty.
13.3 In the event Buyer invokes force majeure hereunder, Buyer agrees to
take gas from Seller ratably insofar as possible, based on
deliverability, with all others supplying gas to Buyer during such
periods of force majeure.
ARTICLE XIV: DEFAULT AND TERMINATION
14.1 If either party hereto shall fail to perform any of the covenants or
obligations imposed upon it under and by virtue of this agreement,
the other party hereto, in addition to any and all other remedies
which it may have, may at its option terminate this agreement by
proceeding as follows: The party not in default shall cause a
written notice to be served on the party in default, stating
specifically the cause for termi-
-41-
nating this agreement and declaring it to be the intention of the
party giving notice to terminate the same; whereupon the party in
default shall have sixty (60) days after the service of the
aforesaid notice in which to remedy, remove or take all appropriate
action to remedy or remove the cause or causes stated in the notice
for terminating this agreement, and if, within said period of sixty
(60) days, the party in default does so remedy or take all
appropriate action to undertake to remedy or remove said cause or
causes and fully protect, defend and indemnify the party not in
default for any and all consequences of such breach, then such
notice shall be withdrawn and this agreement shall continue in full
force and effect. In case the party in default does not so remedy,
remove or take all appropriate action to undertake to remedy or
remove the cause or causes and does not indemnify the party giving
the notice from any and all consequences of such breach within said
period of sixty (60) days, this agreement, at the option of the
party giving the notice, shall terminate upon the expiration of said
period.
ARTICLE XV: TERM
15.1 The term of this contract shall commence on the date of initial
delivery of gas hereunder and
-42-
shall continue thereafter in force and effect for a period of
fifteen (15) years or longer as may be required under Article V
hereof to enable Buyer to receive gas which has not theretofore been
available to Buyer from Seller, as provided in Article V hereof.
ARTICLE XVI: ASSIGNMENT
16.1 The terms and provisions of this contract shall extend to and be
binding upon the parties hereto, their respective successors and
assigns, provided, however, that no change in ownership or change
in any right to receive payment hereunder with respect to Seller's
leases, wells or the gas produced therefrom shall be binding upon
Buyer until the first (1st) day of the calendar month next following
the date upon which Buyer shall have been furnished with certified
copies of recorded instruments and other proper and sufficient
evidence supporting and defining such change, without regard to
whether Buyer has had previous notice or knowledge thereof.
16.2 Seller agrees to indemnify, defend and hold harmless Buyer against
any claim, action, suit or demand by any transferee or mortgagee of
Seller which contends or alleges that the lands described on
Exhibit A are not subject to this contract.
-43-
ARTICLE XVII: NOTICE
17.1 Any notice, request, demand or statement provided for in this
contract shall be in writing and shall be deemed delivered seven (7)
days after the postmarked date when mailed by registered or
certified mail to the post office address of each of the parties
hereto as follows:
BUYER: Alaska Pipeline Company
P. O. Box 6288
3000 Spenard Road
Anchorage, Alaska 99502
Attention: President
SELLER: Shell Oil Company
Attention: Natural Gas
P. O. Box 576
Houston, Texas 77001
or at such address as Seller or Buyer shall from time to time
designate by letter properly addressed.
ARTICLE XVIII: GOVERNMENT REGULATIONS
18.1 This contract and each provision hereof shall be subject to all
valid applicable federal and state laws and to all present and
future valid orders, rules and regulations of any duly constituted
regulatory body of the Federal Government, the State of Alaska or
any other authority having jurisdiction hereof.
18.2 Buyer shall promptly undertake to obtain an initial determination
by the Alaska Public Utilities
-44-
Commission that the costs incurred by Buyer hereunder constitute
reasonable and recoverable costs of Buyer's public utility business.
In the event that within ninety (90) days from the date of this
contract such determination is refused, then Buyer or Seller may by
written notice terminate this contract.
ARTICLE XIX: PACIFIC ALASKA LNG ASSOCIATES
19.1 Seller herein shall cancel that certain Agreement entitled "Gas Sale
and Purchase Agreement" dated July 11, 1977 between itself and
Pacific Alaska LNG Associates concurrently with the execution of
this Contract. Notice shall be by Certified Mail, return receipt
requested.
ARTICLE XX: MISCELLANEOUS
20.1 Each party shall promptly furnish to the other party copies of any
and all notices, determinations, orders, documents, applications and
forms filed or received with or from the Federal Energy Regulatory
Commission and with or from the Public Utilities Commission of
Alaska relative to the gas, wells and leases in the contract area.
20.2 This contract was prepared jointly by the parties hereto and not by
either to the exclusion of the other.
-45-
20.3 The failure of either party to insist upon strict performance of any
provision hereof shall not constitute a waiver of, or estoppel
against asserting, the right to require such performance in the
future, nor shall a waiver or estoppel in any one instance
constitute a waiver or estoppel with respect to a later breach of a
similar nature or otherwise.
20.4 Time is of the essence with regard to all obligations to be
performed on or by a specified date, if any, herein contained.
20.5 This contract shall be governed by and construed in accordance with
the laws of the State of Alaska, excluding any conflicts-of-law rule
or principle which might refer such construction to the laws of
another state.
20.6 In the event Buyer has not obtained financing acceptable to Buyer
for pipeline construction and installation on or before one hundred
eighty (180) days after the execution of this agreement and so
notifies Seller, then either party may terminate this agreement by
written notice. In the event Buyer obtains financing prior to said
one hundred eighty (180) days, Buyer shall notify Seller within a
reasonable time thereafter.
-46-
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed, in multiple originals, on the day and year first hereinabove written.
BUYER
ALASKA PIPELINE COMPANY
By /s/ Dale Teel
-----------------------------------
President
SELLER
SHELL OIL COMPANY
By /s/ Thomas F. Hart
-----------------------------------
-47-
THE STATE OF ALASKA )
BEFORE ME, the undersigned authority, on this day personally appeared DALE
TEEL, President of ALASKA PIPELINE COMPANY, a corporation, known to me to be the
person whose name is subscribed to the foregoing instrument, and acknowledged to
me that he executed the same for the purposes and consideration therein
expressed, in the capacity therein set forth and as the act and deed of said
corporation.
GIVEN under my hand and seal of office, this the 20th day of December,
1982.
/s/ Margaret L. Moses
-----------------------------------
NOTARY PUBLIC in and for
ALASKA
my commission expires
September 14, 1985
THE STATE OF TEXAS)
COUNTY OF HARRIS )
BEFORE ME, the undersigned authority, on this day personally appeared
Thomas F. Hart, Vice President of SHELL OIL COMPANY, a corporation, known to me
to be the person whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and consideration
therein expressed, in the capacity therein set forth and as the act and deed of
said corporation.
GIVEN under my hand and seal of office, this the 17th day of December,
1982.
[STAMP] /s/ Elsie Gilmore
-----------------------------------
NOTARY PUBLIC in and for
Harris County, Texas
-48-
EXHIBIT A
ATTACHED TO AND MADE A PART OF
GAS PURCHASE CONTRACT BETWEEN
SHELL OIL COMPANY
AND
ALASKA PIPELINE COMPANY
COOK INLET AREA, ALASKA
Application
Tract Serial No.,
No. Description Acres or Name Lessor
- ----- --------------------------------- ------- ----------- ------
1 T.13N., R.10W., S.M. 831.66 A-029656 U.S.A.
Sec. 33: S1/2 SE1/4
Sec. 34: S1/2 SW1/4,
Fractional S1/2 SE1/4
T.12N., R.10W., S.M.
Sec. 3: Fractional W1/2 NW1/4
except that portion
lying within U.S.
Survey #3072
Sec. 4: Fractional all,
except that portion
lying within U.S.
Survey #3072
Sec. 9: Fractional NW1/4
Lots 1 and 2, U.S. Survey
#4540, U.S. Survey #4541
2 T.13N.,R.10W.,S.M. 1394.00 A-029657 U.S.A.
Sec. 26: SW1/4, S1/2 NW1/4
Fractional S1/2 SE1/4
Sec. 27: SE1/4, S1/2 NE1/4,
S1/2 SW1/4
Sec. 33: NE1/4, N1/2 SE1/4
Sec. 34: N1/2,
Fractional N1/2 S1/2
Sec. 35: Fractional N1/2,
Fractional N1/2 S1/2
Lots 1 and 2, U.S. Survey
#3962, U.S. Survey #3963
A-1
Exhibit A (Continued)
Application
Tract Serial No.,
No. Description Acres or Name Lessor
- ----- ------------------------------------ ------- ----------- ------
3 T.13N., R.10W., S.M. 1090.43 ADL-17658 State
Sec. 13: SE1/4 (Excl. lands of
North of PLO 2162) Alaska
Sec. 23: S1/2 SE1/4
Sec. 24: S1/2 SW1/4, E1/2
(Excl. lands North
of PLO 2162)
Sec. 25: N1/2 NW1/4,
NW1/2 NE1/4,
Fractional S1/2 NW1/4,
Fractional NW1/4 SW1/4
Sec. 26: NE1/4,
Fractional N1/2 SE1/4
T.13N., R.9W, S.M.
Sec. 18: S1/2 SW1/4 (Excl. lands
North of PLO 2162)
Sec. 19: W1/2 NW1/4
4 T.12N., R.10W., S.M. 858.10 ADL-17592 State
Sec. 3: All tide and sub- of
merged land within: Alaska
W1/2 NE1/4,
NE1/4 NE1/4,
SW1/4, NW1/4 SE1/4,
NW1/4
Sec. 4: All tide and sub-
merged land
Sec. 9: All tide and sub-
merged land in N1/2
Sec. 10: All tide and sub-
merged land in
NW1/4 NW1/4
A-2
Exhibit A Continued
Application
Tract Serial NO.,
No. Description Acres or Name Lessor
- ----- ------------------------------------ ------- ---------- ------
5 T. 13N., R. 10W., S.M. 488.54 ADL-17599 State
Sec. 25: Tide and submerged of
lands within: Alaska
SE1/4 NW1/4,
NW1/4 SW1/4
Sec. 26: Tide and submerged
lands within:
S1/2 SE1/4,
NE1/4 SE1/4
SEC. 34: Tide and submerged
lands within:
E1/2 SE1/4
SEC. 35: Tide and submerged
lands within:
W1/2,
W1/2 NE1/4,
NW1/4 SE1/4, NE1/2, NE1/4
6 T. 13N., R. 10W., S.M. 240.00 ADL-21126 State
Sec. 22: SE1/4, SE1/4 NE1/4, of
SE1/4 SW1/4 Alaska
7 T. 13N., R. 10W., S.M. 489.01 ADL-21128 State
Sec. 23: NE1/4, of
N1/2 SE1/4 Alaska
Sec. 24: NW1/4, N1/2 SW1/4,
NW1/4 NE1/4,
except that portion
lying within
ADL-17658, Tract
No. 3
8 T. 13N., R. 10W., S.M. 480.00 ADL-21127 State
Sec. 23: W1/2 of
Alaska
Sec. 26: N1/2 NW1/4
Sec. 27: N1/2 NE1/4
A-3
Exhibit A Continued
Application
Tract Serial No.,
No. Description Acres or Name Lessor
- ----- --------------------------------------- ------- ---------- ----------
9 T. 13N., R. 10W., S.M. 160.00 ADL-21129 State
Sec. 27: N1/2 SW1/4, of
E1/2 NW1/4 Alaska
10 T. 13N., R. 10W., S.M. 1108.57 ADL-58831 State
Sec. 13: All, excl. any land of
within the SE1/4 Alaska
lying South of
former PLO 2162
Sec. 14: E1/2,SW1/4
11 T. 13N., R. 9W., S.M. 120.00 ADL-58815 State
Sec. 7: S1/2 SW1/4, SW1/4 SE1/4 of
Alaska
12 T. 13N., R. 9W., S.M. 329.69 ADL-58820 State
Sec. 18: W1/2 NE1/4, W1/2, of
excl. any lands Alaska
in the S1/2 SW1/4
lying South of
former PLO 2162
13 T. 12N., R. 10W., S.M. 5.00 E. F. Earl F.
U.S. Survey #3072 Roberts Roberts &
Glennie L.
Roberts,
his wife
14 T. 13N., R. 10W., S.M. 5.00 J. W. Jerome W.
U.S. Survey #3596 Hensley Hensley &
Nellie G.
Hensley,
his
wife
RECAPITULATION:
- --------------
2 U. S. Oil and Gas Leases 2225.66 Acres
10 State of Alaska Oil and Gas Leases 5364.34 Acres
2 Fee Oil and Gas Leases 10.00 Acres
Totals: 14 Tracts 7600.00 Acres
=============
A-4
Exhibit A (Continued)
Reservoirs covered by this Depths in Type Log
Agreement BRU 212-35
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Upper Sterling 2520'-3125'
Lower Sterling 3125'-3608'
Upper Beluga 3608'-5175'
Lower Beluga 5175'-8115'
At such time as lands and leases contiguous to lands hereinabove described
are proved to be a part of the Beluga River Field as defined by the appropriate
State of Alaska governmental authority, then such lands and leases, whether held
or owned by Seller or subsequently acquired by Seller, shall be included within
this Exhibit A.
A-5
[BELUGA RIVER GAS FIELD MAP]
EXHIBIT B
ATTACHED TO AND MADE A PART OF
GAS PURCHASE CONTRACT BETWEEN
SHELL OIL COMPANY
AND
ALASKA PIPELINE COMPANY
COOK INLET AREA, ALASKA