-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LAkpwnY15XnAHANaCHENwzp/w6vzf4TDrqewcG/jU5MmTyOs/yIGvb3TGe3FnoQM Wrw3O0WoY3juc8IkKAuxww== 0001104659-08-030905.txt : 20080508 0001104659-08-030905.hdr.sgml : 20080508 20080507214911 ACCESSION NUMBER: 0001104659-08-030905 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20071231 FILED AS OF DATE: 20080508 DATE AS OF CHANGE: 20080507 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARKWEST ENERGY PARTNERS L P CENTRAL INDEX KEY: 0001166036 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 270005456 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-31239 FILM NUMBER: 08811838 BUSINESS ADDRESS: STREET 1: 1515 ARAPAHOE STREET STREET 2: TOWER 2, SUITE 700 CITY: DENVER STATE: CO ZIP: 80202-2126 BUSINESS PHONE: 303-925-9200 MAIL ADDRESS: STREET 1: 1515 ARAPAHOE STREET STREET 2: TOWER 2, SUITE 700 CITY: DENVER STATE: CO ZIP: 80202-2126 10-K/A 1 a08-13756_110ka.htm 10-K/A

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-K/A

(Amendment No. 1)

 

x

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007.

or

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

for the transition period from                  to                 .

 

Commission File Number 001-31239

 


 

MARKWEST ENERGY PARTNERS, L.P.

(Exact name of registrant as specified in its charter)

 

Delaware

 

27-0005456

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

1515 Arapahoe Street, Tower 2, Suite 700, Denver, CO 80202-2126

(Address of principal executive offices)

 

Registrant’s telephone number, including area code: 303-925-9200

 

Securities registered pursuant to Section 12(b) of the Act:  Common units representing limited partner interests, New York Stock Exchange

 

Securities registered pursuant to Section 12(g) of the Act:  None

 

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o

 

Indicate by check mark if the registrant is not required file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer x

 

Accelerated filer o

 

Non-accelerated filer o

 

Smaller reporting company o

 

 

 

 

(Do not check if a smaller reporting company)

 

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

 

The aggregate market value of common units held by non-affiliates of the registrant on June 29, 2007 was approximately $1.1 billion.

 

As of February 28, 2008, the number of the registrant’s common units were 50,876,295.

 

DOCUMENTS INCORPORATED BY REFERENCE:

 

The information required by Part III of this Report, to the extent not set forth herein, is incorporated herein by reference from the registrant’s definitive proxy statement relating to the Annual Meeting of Shareholders to be held in 2008, which definitive proxy statement shall be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Report relates.

 

 



 

Explanatory Note

 

This Amendment No. 1 on Form 10-K/A (the “Amendment”) to MarkWest Energy Partners, L.P.’s (the “Partnership,” “we” or “us”) Annual Report on Form 10-K for the year ended December 31, 2007, originally filed on February 29, 2008 (Commission File No. 001-31239 or the “Original Filing”), is being filed to address comments made by the SEC in connection with the commission’s review of the Original Filing.  The Amendment includes in Part IV, Item 15(b), revised Exhibits 10.29 and 10.33, both of which we filed in the Original Filing with a request for confidential treatment.  In response to the commission’s review, we are including certain portions of those agreements that were omitted from the Original Filing.

 

This Amendment does not update any other disclosure to reflect events occurring after the filing of the original Form 10-K.  Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, we have restated in its entirety each item of the original Form 10-K affected by this Amendment.

 

2



 

PART IV

 

ITEM 15.  Exhibits and Financial Statement Schedules

 

(b)                                 Exhibits

 

Exhibit Number

 

Description

 

 

 

2.1(2)

 

Purchase Agreement dated as of March 24, 2003, among PNG Corporation, Energy Spectrum Partners LP, MarkWest Texas GP, L.L.C., MW Texas Limited, L.L.C. and MarkWest Energy Partners, L.P.

 

 

 

2.2(2)

 

Plan of Merger entered into as of March 28, 2003, by and among MarkWest Blackhawk L.P., MarkWest Pinnacle L.P., MarkWest PNG Utility L.P., MarkWest Texas PNG Utility L.P., Pinnacle Natural Gas Company, Pinnacle Pipeline Company, PNG Transmission Company, PNG Utility Company and Bright Star Gathering, Inc.

 

 

 

2.3(3)

 

Asset Purchase-and-Sale Agreement dated as of November 18, 2003, by and between American Central Western Oklahoma Gas Company, L.L.C., MarkWest Western Oklahoma Gas Company, L.L.C. and American Central Gas Technologies, Inc.

 

 

 

2.4(4)

 

Purchase and Sale Agreement, dated as of November 7, 2003, by and between Shell Pipeline Company, LP and Equilon Enterprises L.L.C., dba Shell Oil Products US, and MarkWest Michigan Pipeline Company, L.L.C.

 

 

 

2.5(8)

 

Asset Purchase and Sale Agreement and addendum, thereto, dated as of July 1, 2004, by and between American Central Eastern Texas Gas Company Limited Partnership, ACGC Gathering Company, L.L.C. and MarkWest Energy East Texas Gas Company’s L.P.

 

 

 

2.6(15)

 

Purchase and Sale Agreement effective as of January 1, 2005 between MarkWest Energy Partners L.P. and Enterprise Products Operating L.P.

 

 

 

2.7(16)

 

Purchase and Sale Agreement, dated as of September 16, 2005, by and between El Paso Corporation, as seller, and MarkWest Energy Partners, L.P. as buyer.

 

 

 

2.8(16)

 

Purchase and Sale Agreement, dated as of September 16, 2005, by and between Kerr McGee Corp., KM Investment Corp., and Javelina Holdings Corp., as joint sellers, and MarkWest Energy Partners, L.P. as buyer.

 

 

 

2.9(16)

 

Purchase and Sale Agreement, dated as of September 16, 2005, by and between Valero Energy Corp., and Valero Javelina, L.P., as sellers, and MarkWest Energy Partners, L.P. as buyer.

 

 

 

2.10(31)

 

Agreement and Plan of Redemption and Merger dated September 5, 2007 by and among MarkWest Hydrocarbon, Inc. MarkWest Energy Partners, L.P. and MWEP, L.L.C.

 

 

 

3.1(1)

 

Certificate of Limited Partnership of MarkWest Energy Partners, L.P.

 

 

 

3.2(5)

 

Amended and Restated Agreement of Limited Partnership of MarkWest Energy Partners, L.P., dated as of May 24, 2002.

 

 

 

3.3(1)

 

Certificate of Formation of MarkWest Energy Operating Company, L.L.C.

 

 

 

3.4(5)

 

Amended and Restated Limited Liability Company Agreement of MarkWest Energy Operating Company, L.L.C., dated as of May 24, 2002.

 

 

 

3.5(1)

 

Certificate of Formation of MarkWest Energy GP, L.L.C.

 

 

 

3.6(5)

 

Amended and Restated Limited Liability Company Agreement of MarkWest Energy GP, L.L.C., dated as of May 24, 2002.

 

 

 

3.7(12)

 

Amendment No. 1 to Amended and Restated Limited Partnership Agreement MarkWest Energy Partners, L.P.

 

 

 

3.8(23)

 

Amendment No. 2 to Amended and Restated Limited Partnership Agreement MarkWest Energy Partners, L.P.

 

 

 

3.9(28)

 

Amendment No. 3 to Amended and Restated Limited Partnership Agreement MarkWest Energy Partners, L.P.

 

3



 

Exhibit Number

 

Description

4.1(6)

 

Purchase Agreement dated as of June 13, 2003, by and among MarkWest Energy Partners, L.P. and Tortoise Capital Advisors, LLC as attorney-in-fact for the Purchasers.

 

 

 

4.2(6)

 

Registration Rights Agreement dated as of June 13, 2003, by and among MarkWest Energy Partners, L.P. and Tortoise Capital Advisors, LLC as attorney-in-fact for the Purchasers.

 

 

 

4.3(8)

 

Unit Purchase Agreement dated as of July 29, 2004 among MarkWest Energy Partners, L.P., and MarkWest Energy GP, L.L.C. and each of Kayne Anderson Energy Fund II, L.P., and MarkWest Energy GP, L.L.C. and each of Kayne Anderson Energy Fund II, L.P., Kayne Anderson Capital Income Partners, L.P., Kayne Anderson MLP Fund, L.P., Kayne Anderson Capital Income Fund, LTD., Kayne Anderson Income Partners, L.P., HFR RV Performance Master Trust, Tortoise Energy Infrastructure Corporation and Energy Income and Growth Fund as Purchasers.

 

 

 

4.4(8)

 

Registration Rights Agreement dated as of July 29, 2004, among MarkWest Energy Partners, L.P., and each of Kayne Anderson Energy Fund II, L.P., Kayne Anderson Capital Income Fund, LTD., Kayne Anderson Income Partners, L.P., HFR RV Performance Master Trust, Tortoise Energy Infrastructure Corporation and Energy Income and Growth Fund.

 

 

 

4.5(10)

 

Purchase Agreement dated October 19, 2004, among MarkWest Energy Partners, L.P., MarkWest Energy Finance Corporation, the Guarantors named therein and the Initial Purchasers named therein.

 

 

 

4.6(10)

 

Registration Rights Agreement dated October 25, 2004, among MarkWest Energy Partners, L.P., MarkWest Energy Finance Corporation, the Guarantors named therein and the Initial Purchasers named therein.

 

 

 

4.7(10)

 

Indenture dated as of October 25, 2004, among MarkWest Energy Partners, L.P., MarkWest Energy Finance Corporation, the Guarantors named therein and Wells Fargo Bank, National Association, as Trustee.

 

 

 

4.8(10)

 

Form of 6.875% Series A Senior Notes due 2014 with attached notation of Guarantees (incorporated by Reference to Exhibits A and D of Exhibit 4.7 hereto)

 

 

 

4.9(17)

 

Registration Rights Agreement, dated as of November 9, 2005

 

 

 

4.10(17)

 

Unit Purchase Agreement, dated as of November 9, 2005

 

 

 

4.11(18)

 

Registration Rights Agreement, dated as of December 23, 2005

 

 

 

4.12(18)

 

Unit Purchase Agreement, dated as of December 23, 2005

 

 

 

4.13(24)

 

Registration Rights Agreement dated as of July 6, 2006 among MarkWest Energy Partners, L.P., with MarkWest Energy Finance Corporation as the Issuers, the Guarantors named therein, and each of RBC Capital Markets Corporation, J.P. Morgan Securities Inc., Wachovia Capital Markets, LLC, A.G. Edwards & Sons, Inc., Credit Suisse Securities (USA) LLC, Fortis Securities LLC, Mizuho International plc, Piper Jaffray & Co. and SG Americas Securities, LLC collectively as Initial Purchasers.

 

 

 

4.14(24)

 

Indenture dated as of July 6, 2006, among MarkWest Energy Partners, L.P., MarkWest Energy Finance Corporation, as Issuers, the Guarantors named therein, and Wells Fargo Bank, National Association, as Trustee.

 

 

 

4.15(24)

 

Form of 8.5% Series A and Series B Senior Notes due 2016 with attached notation of Guarantees (incorporated by Reference to Exhibits A and D of Exhibit 4.11 hereto.

 

 

 

4.16(25)

 

Registration Rights Agreement dated as of October 20, 2006 among MarkWest Energy Partners, L.P., with MarkWest Energy Finance Corporation as the Issuers, the Guarantors named therein, and RBC Capital Markets as the Initial Purchaser.

 

 

 

4.17(30)

 

Unit Purchase Agreement dated April 9, 2007 by and among MarkWest Energy Partners, L.P., MarkWest Energy G.P., L.L.C., and each of Kayne Anderson MLP Investment Company, GPS Income Fund, L.P., GPS High Yield Equities Fund, L.P., GPS New Equity Fund, L.P., Agile Performance Fund, L.L.C., Tortoise Energy Infrastructure Corporation, Tortoise Energy Capital Corporation, Royal Bank of Canada, Structured Finance Americas, L.L.C., The Cushing MLP Opportunity Fund I, L.P., and ZLP Fund, L.P. as purchasers.

 

 

 

4.18(30)

 

Registration Rights Agreement dated April 9, 2007 by and between MarkWest Energy Partners, L.P., and each of Kayne Anderson MLP Investment Company, GPS Income Fund, L.P., GPS High Yield Equities Fund, L.P., GPS New Equity Fund, L.P., Agile Performance Fund, L.L.C., Tortoise Energy Infrastructure Corporation, Tortoise Energy Capital Corporation, Royal Bank of Canada, Structured Finance Americas, L.L.C., The Cushing MLP Opportunity Fund I, L.P., and ZLP Fund, L.P. as purchasers.

 

4



 

Exhibit Number

 

Description

 4.19(36)

 

Unit Purchase Agreement, dated as of December 18, 2007

 

 

 

 4.20(36)

 

Registration Rights Agreement, dated as of December 18, 2007

 

 

 

10.1(5)

 

Credit Agreement dated as of May 20, 2002, among MarkWest Energy Operating Company, L.L.C (as the Borrower), MarkWest Energy Partners, L.P. (as a Guarantor), Bank of America (as Administrative Agent), and Lenders Party Hereto $60,000,000 Senior Credit Facility, and Banc of America Securities, L.L.C. as sole lead arranger and book manager.

 

 

 

10.2(3)

 

Amended and Restated Credit Agreement dated as of December 1, 2003, among MarkWest Energy Operating Company, L.L.C., as Borrower, MarkWest Energy Partners, L.P., as Guarantor, Royal Bank of Canada, as Administrative Agent, Bank One, NA, as Syndication Agent, Fortis Capital Corp., as Documentation Agent, to the $140,000,000 Senior Credit Facility.

 

 

 

10.3(5)

 

Contribution, Conveyance and Assumption Agreement dated as of May 24, 2002, by and among MarkWest Energy Partners, L.P.; MarkWest Energy Operating Company, L.L.C.; MarkWest Energy GP, L.L.C.; MarkWest Michigan, Inc.; MarkWest Energy Appalachia, L.L.C.; West Shore Processing Company, L.L.C.; Basin Pipeline, L.L.C.; and MarkWest Hydrocarbon, Inc.

 

 

 

10.4(5)

 

MarkWest Energy Partners, L.P. Long-Term Incentive Plan.

 

 

 

10.5(5)

 

First Amendment to MarkWest Energy Partners, L.P. Long-Term Incentive Plan.

 

 

 

10.6(5)

 

Omnibus Agreement dated of May 24, 2002, among MarkWest Hydrocarbon, Inc.; MarkWest Energy GP, L.L.C.; MarkWest Energy Partners, L.P.; and MarkWest Energy Operating Company, L.L.C.

 

 

 

10.7(5)+

 

Fractionation, Storage and Loading Agreement dated as of May 24, 2002, between MarkWest Energy Appalachia, L.L.C. and MarkWest Hydrocarbon, Inc.

 

 

 

10.8(5)+

 

Gas Processing Agreement dated as of May 24, 2002, by and between MarkWest Energy Appalachia, L.L.C. and MarkWest Hydrocarbon, Inc.

 

 

 

10.9(5)+

 

Pipeline Liquids Transportation Agreement dated as of May 24, 2002, by and between MarkWest Energy Appalachia, L.L.C. and MarkWest Hydrocarbon, Inc.

 

 

 

10.10(5)

 

Natural Gas Liquids Purchase Agreement dated as of May 24, 2002, by and between MarkWest Energy Appalachia, L.L.C. and MarkWest Hydrocarbon, Inc.

 

 

 

10.11+

 

Gas Processing Agreement (Maytown) dated as of May 28, 2002, between Equitable Production Company and MarkWest Hydrocarbon, Inc.

 

 

 

10.12+

 

Amendment to Gas Processing Agreement (Maytown) dated as of March 26, 2002, between Equitable Production Company and MarkWest Hydrocarbon, Inc.

 

 

 

10.13(7)

 

Services Agreement dated January 1, 2004 between MarkWest Energy GP, L.L.C. and MarkWest Hydrocarbon, Inc.

 

 

 

10.14(8)

 

Second Amended and Restated Credit Agreement dated as of July 30, 2004 among MarkWest Energy Operating Company, L.L.C., as Borrower, MarkWest Energy Partners, L.P., as Guarantor, Royal Bank of Canada, as Administrative Agent, Fortis Capital Corp., as Syndication Agent, Bank One, NA, as Documentation Agent and Societe Generale, as Documentation Agent to the $315,000,000 Senior Credit Facility.

 

 

 

10.15(8)

 

First Amendment to the Second Amended and Restated Credit Agreement dated as of August 20, 2004, among MarkWest Energy Operating Company, L.L.C., as Borrower, MarkWest Energy Partners, L.P., as Guarantor, Royal Bank of Canada, as Administrative Agent, Fortis Capital Corp., as Syndication Agent, Bank One, NA, as Documentation Agent and Societe Generale, as Documentation Agent.

 

 

 

10.16(11)

 

Third Amended and Restated Credit Agreement dated as of October 25, 2004 among MarkWest Energy Operating Company, L.L.C., as Borrower, MarkWest Energy Partners, L.P., as Guarantor, Royal Bank of Canada, as Administrative Agent, Bank One, N.A., as Syndication Agent, Fortis Capital Corp., as Documentation Agent, U.S. Bank National Association, as Documentation Agent, Societe Generale, as Documentation Agent, and Wachovia Bank, National Association, as Documentation Agent, RBC Capital Markets and J.P. Morgan Securities Inc., as Lead Arrangers and Joint Bookrunners, to the $200,000,000 Senior Credit Facility.

 

 

 

10.18(14)r

 

Executive Employment Agreement effective September 5, 2007 between MarkWest Hydrocarbon, Inc. and Frank Semple.

 

5



 

Exhibit Number

 

Description

10.19(19)

 

Fourth Amended and Restated Credit Agreement, dated as of November 1, 2005, among MarkWest Energy Operating Company, L.L.C., as borrower, MarkWest Energy Partners, L.P., as Guarantor, Royal Bank of Canada, as Administrative Agent, JP Morgan Chase Bank, N.A., as Co-Syndication Agent, Fortis Capital Corp., as Co-Syndication Agent, Societe Generale, as Co-Documentation Agent, Wachovia Bank, National Association, as Co-Documentation Agent and RBC Capital Markets, as Sole Lead Arranger and Bookrunner to the $100,000,000 Revolver Facility and $400,000 Term Loan.

 

 

 

10.20(20)

 

Fifth amended and restated credit agreement dated as of December 29, 2005, among MarkWest Energy Operating Company, L.L.C., as Borrower, MarkWest Energy Partners, L.P., as Guarantor, Royal Bank of Canada, as Administrative Agent, Bank One, N.A., as Syndication Agent, Forties Capital Corp., as Documentation Agent, U.S. Bank National Association, as Documentation Agent, Society General, as Documentation Agent, and Wachovia Bank, National Association, as Documentation Agent, RBC Capital Markets and J.P. Morgan Securities Inc., as Lead Arrangers and Joint Bookrunners, to the $615,000,000 Senior Credit Facility.

 

 

 

10.21(26)

 

Office Lease Agreement, dated April 19, 2006, by and between Park Central Property LLC, the landlord, and MarkWest Energy Partners, L.P., the tenant.

 

 

 

10.22(14)r

 

Form of Executive Employment Agreement effective September 5, 2007 between MarkWest Hydrocarbon, Inc. and Nancy K. Buese, C. Corwin Bromley, John C. Mollenkopf and Randy S. Nickerson.

 

 

 

10.23(29)

 

Form of Indemnification Agreement between MarkWest Energy Partners, LLP and each Non-employee Director and the following Officers of the Company: Frank Semple, President and Chief Executive Officer; Nancy Buese, Senior Vice President and Chief Financial Officer; Randy Nickerson, Senior Vice President and Chief Commercial Officer; John Mollenkopf, Senior Vice President and Chief Operations Officer; C. Corwin Bromley, Senior Vice President, General Counsel and Secretary; David Young, Senior Vice President of Corporate Services; Richard Ostberg, Vice President of Risk and Compliance, and Andrew Schroeder, Vice President and Treasurer dated as of January 26, 2007.

 

 

 

10.24(31)

 

Exchange Agreement dated September 5, 2007 by and among MarkWest Energy Partners, L.P., MarkWest Hydrocarbon, Inc., and MarkWest Energy, GP L.L.C.

 

 

 

10.25(31)

 

Voting Agreement dated September 5, 2007 by and among MarkWest Energy Partners, L.P. and the Fox Family Holders.

 

 

 

10.26(34)+

 

Hydrogen Supply Agreement dated September 28, 2007, by and between MarkWest Blackhawk, L.P. and CITGO Refining and Chemicals Company L.P.

 

 

 

10.27(32)

 

Amended and Restated Class B Membership Interest Contribution Agreement dated October 26, 2007 by and among MarkWest Energy Partners, L.P. and John M. Fox, Donald C. Heppermann, Frank M. Semple, Nancy K. Buese, Randy S. Nickerson, John C. Mollenkopf, C. Corwin Bromley, Andrew L. Schroeder, Jan Kindrick, Cindy Kindrick, Kevin Kubat and Art Denney as the Sellers.

 

 

 

10.28(33)

 

Amended and Restated Form of Indemnification Agreement dated October 26, 2007 by and between MarkWest Energy Partners, L.P. and each non-employee director and executive officer of the General Partner, including the following named executive officers: Frank Semple, President and Chief Executive Officer; Nancy Buese, Senior Vice President and Chief Financial Officer; Randy Nickerson, Senior Vice President and Chief Commercial Officer; John Mollenkopf, Senior Vice President and Chief Operations Officer; C. Corwin Bromley, Senior Vice President, General Counsel and Secretary and Andrew Schroeder, Vice President and Treasurer.

 

 

 

10.29*+

 

Gas Processing Agreement dated as of November 1, 2007, by and between MarkWest Javelina Company and CITGO Refining and Chemicals Company, L.P.

 

 

 

10.30(37)+

 

Amendment to Gas Processing Agreement dated as of December 11, 2007, by and between MarkWest Javelina Company and CITGO Refining and Chemicals Company, L.P.

 

 

 

10.31(35)

 

Amended Class B Membership Interest Contribution Agreement dated as of October 26, 2007, to Agreement and Plan of Redemption and Merger by and among the Partnership, MarkWest Hydrocarbon, Inc. and MWEP, L.L.C.

 

 

 

10.32(37)

 

Omnibus Termination Agreement dated as of November 16, 2007, by and between MarkWest Energy Appalachia, L.L.C. and Equitable Production Company and Equitable Gathering LLC

 

6



 

Exhibit Number

 

Description

10.33*+

 

Natural Gas Liquids Transportation, Fractionation, and Marketing Agreement dated as of November 16, 2007, by and between MarkWest Energy Appalachia, L.L.C. and Equitable Gathering LLC

 

 

 

10.34(37)

 

Assignment and Bill of Sale and Assumption Agreement dated as of November 16, 2007, by and between MarkWest Energy Appalachia, L.L.C. and Equitable Production Company and Equitable Gathering LLC

 

 

 

10.35(37)+

 

Second Amendment to the Gas Processing Agreement dated as of December 26, 2007, by and between MarkWest Energy Appalachia, L.L.C. and MarkWest Hydrocarbon, Inc.

 

 

 

16.1(22)

 

Changes in registrants certifying accountants. MarkWest Energy Partners, L.P. dismissed KPMG LLP as the Partnership’s independent registered public accounting firm and engaged Deloitte & Touche LLP as its new independent registered public accounting firm.

 

 

 

21.1(37)

 

List of subsidiaries

 

 

 

23.1(37)

 

Consent of Deloitte & Touche LLP

 

 

 

23.2(37)

 

Consent of PricewaterhouseCoopers LLP

 

 

 

31.1*

 

Chief Executive Officer Certification Pursuant to Section 13a-14 of the Securities Exchange Act

 

 

 

31.2*

 

Chief Financial Officer Certification Pursuant to Section 13a-14 of the Securities Exchange Act

 

 

 

32.1*

 

Certification of Chief Executive Officer of the General Partner pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.2*

 

Certification of Chief Financial Officer of the General Partner pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 


(1)                                  Incorporated by reference to the Registration Statement (No. 33-81780) on Form S-1 filed January 31, 2002.

 

(2)                                  Incorporated by reference to the Current Report on Form 8-K filed April 14, 2003.

 

(3)                                  Incorporated by reference to the Current Report on Form 8-K filed December 16, 2003.

 

(4)                                  Incorporated by reference to the Current Report on Form 8-K filed December 31, 2003.

 

(5)                                  Incorporated by reference to the Current Report on Form 8-K filed June 7, 2002.

 

(6)                                  Incorporated by reference to the Current Report on Form 8-K filed June 19, 2003.

 

(7)                                  Incorporated by reference to the Annual Report on Form 10-K filed March 15, 2004.

 

(8)                                  Incorporated by reference to the Current Report on form 8-K/A filed September 13, 2004.

 

(9)                                  Incorporated by reference to the Current Report on Form 8-K filed September 20, 2004.

 

(10)                            Incorporated by reference to the Current Report on Form 8-K filed October 25, 2004.

 

(11)                            Incorporated by reference to the Current Report on Form 8-K filed October 29, 2004.

 

(12)                            Incorporated by reference to the Current Report on Form 8-K filed January 6, 2005.

 

(13)                            Incorporated by reference to the Quarterly Report of MarkWest Hydrocarbon, Inc. on Form 10-Q filed November 13, 1997.

 

(14)                            Incorporated by reference to the Current Report on Form 8-K filed September 11, 2007.

 

(15)                            Incorporated by reference to the Current Report on Form 8-K filed April 6, 2005.

 

(16)                            Incorporated by reference to the Current Report on Form 8-K filed September 21, 2005.

 

7



 

(17)                            Incorporated by reference to the Current Report on Form 8-K filed November 16, 2005.

 

(18)                            Incorporated by reference to the Current Report on Form 8-K/A filed December 29, 2005.

 

(19)                            Incorporated by reference to the Current Report on Form 8-K filed November 7, 2005.

 

(20)                            Incorporated by reference to the Current Report on Form 8-K filed January 5, 2006.

 

(21)                            Incorporated by reference to the Current Report on Form 8-K filed March 1, 2004.

 

(22)                            Incorporated by reference to the Current Report on Form 8-K filed September 23, 2005.

 

(23)                            Incorporated by reference to the Current Report on Form 8-K filed June 15, 2005.

 

(24)                            Incorporated by reference to the Current Report on Form 8-K filed July 7, 2006.

 

(25)                            Incorporated by reference to the Current Report on Form 8-K filed October 24, 2006.

 

(26)                            Incorporated by reference to the Current Report on Form 8-K filed April 25, 2006.

 

(27)                            Incorporated by reference to the Current Report on Form 8-K filed November 1, 2006.

 

(28)                            Incorporated by reference to the Current Report on Form 8-K filed January 31, 2007.

 

(29)                            Incorporated by reference to the Annual Report on Form 10-K filed March 7, 2007.

 

(30)                            Incorporated by reference to the Current Report on Form 8-K filed April 11, 2007.

 

(31)                            Incorporated by reference to the Current Report on Form 8-K filed September 6, 2007.

 

(32)                            Incorporated by reference to the Current Report on Form 8-K filed November 13, 2007.

 

(33)                            Incorporated by reference to the Current Report on Form 8-K filed November 1, 2007.

 

(34)                            Incorporated by reference to the Quarterly Report on Form 10-Q filed November 8, 2007.

 

(35)                            Incorporated by reference to the Current Report on Form 8-K filed November 13, 2007.

 

(36)                            Incorporated by reference to the Current Report on Form 8-K filed December 19, 2007.

 

(37)                            Incorporated by reference to the Annual Report on Form 10-K filed February 29, 2008.

 

+                                         Application has been made to the Securities and Exchange Commission for confidential treatment of certain provisions of these exhibits. Omitted material for which confidential treatment has been requested and has been filed separately with the Securities and Exchange Commission.

 

*                                         Filed herewith.

 

r                                   Identifies each management contract or compensatory plan or arrangement.

 

8



 

SIGNATURES

 

Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

MarkWest Energy Partners, L.P.

 

 

 

(Registrant)

 

 

By:

MarkWest Energy GP, L.L.C.,

 

 

Its

General Partner

 

 

 

Date: May 7, 2008

 

By:

/s/ FRANK M. SEMPLE

 

 

 

Frank M. Semple

 

 

 

President and Chief Executive Officer

 

 

 

(Principal Executive Officer)

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities with MarkWest Energy GP, L.L.C., the General Partner of MarkWest Energy Partners, L.P., the Registrant, and on the dates indicated.

 

Date: May 7, 2008

 

By:

/s/ FRANK M. SEMPLE

 

 

 

Frank M. Semple

 

 

 

President and Chief Executive Officer

 

 

 

(Principal Executive Officer)

 

Date: May 7, 2008

 

By:

/s/ NANCY K. BUESE

 

 

 

Nancy K. Buese

 

 

 

Senior Vice President & Chief Financial Officer

 

 

 

(Principal Financial Officer and

 

 

 

Principal Accounting Officer)

 

Date:

 

By:

 

 

 

 

John M. Fox

 

 

 

Chairman of the Board and Director

 

Date: May 7, 2008

 

By:

/s/ Keith E. Bailey

 

 

 

Keith E. Bailey

 

 

 

Director

 

Date: May 7, 2008

 

 

/s/ MICHAEL L. BEATTY

 

 

 

Michael L. Beatty

 

 

 

Director

 

Date: May 7, 2008

 

By:

/s/ CHARLES K. DEMPSTER

 

 

 

Charles K. Dempster

 

 

 

Director

 

Date: May 7, 2008

 

By:

/s/ DONALD C. HEPPERMANN

 

 

 

Donald C. Heppermann

 

 

 

Director

 

Date: May 7, 2008

 

By:

/s/ WILLIAM A. KELLSTROM

 

 

 

William A. Kellstrom

 

 

 

Director

 

9



 

Date:

 

 

 

 

 

 

Anne E. Mounsey

 

 

 

Director

 

Date: May 7, 2008

 

By:

/s/ WILLIAM P. NICOLETTI

 

 

 

William P. Nicoletti

 

 

 

Director

 

Date: May 7, 2008

 

 

/s/ DONALD D. WOLF

 

 

 

Donald D. Wolf

 

 

 

Director

 

10


EX-10.29 2 a08-13756_1ex10d29.htm EX-10.29

Exhibit 10.29

 

Contract No. 11009

 

SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPERATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

GAS PROCESSING AGREEMENT

 

BY AND BETWEEN

 

MARKWEST JAVELINA COMPANY

 

AND

 

CITGO REFINING AND CHEMICALS COMPANY, L.P.

 

EAST and WEST REFINERIES

 

DATED NOVEMBER 1, 2007

 



 

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

 

 

ARTICLE I

 

DEFINITIONS

 

3

 

 

 

 

 

ARTICLE II

 

EXHIBIT(S)

 

6

 

 

 

 

 

ARTICLE III

 

DEDICATION OF SUPPLY

 

6

 

 

 

 

 

ARTICLE IV

 

CURTAILMENTS

 

8

 

 

 

 

 

ARTICLE V

 

DELIVERY AND QUALITY OF SUPPLIER’S OFF-GAS

 

9

 

 

 

 

 

ARTICLE VI

 

OFF-GAS PROCESSING

 

11

 

 

 

 

 

ARTICLE VII

 

GAS MEASUREMENT AND TRANSMISSION

 

11

 

 

 

 

 

ARTICLE VIII

 

DETERMINATION OF PROCEEDS

 

13

 

 

 

 

 

ARTICLE IX

 

RESIDUE GAS PIPELINE

 

15

 

 

 

 

 

ARTICLE X

 

TERM

 

17

 

 

 

 

 

ARTICLE XI

 

WARRANTY

 

18

 

 

 

 

 

ARTICLE XII

 

FORCE MAJEURE

 

19

 

 

 

 

 

ARTICLE XIII

 

NOTICES

 

19

 

 

 

 

 

ARTICLE XIV

 

MISCELLANEOUS

 

21

 

 

 

 

 

EXHIBIT A

 

RESIDUE AND EXCESS GAS SPECIFICATIONS

 

 

 

 

 

 

 

EXHIBIT B

 

ALLOCATION STATEMENT EXAMPLE

 

 

 

 

 

 

 

EXHIBIT C

 

EXAMPLE CALCULATION OF WEIGHTED AVERAGE SALES PRICE

 

 

 

 

 

 

 

EXHIBIT D

 

METHODS OF GAS MEASUREMENT, SAMPLING, TESTING AND ANALYSIS

 

 

 

2



 

GAS PROCESSING AGREEMENT

 

THIS GAS PROCESSING AGREEMENT (“Agreement”) is made and entered into effective November 1, 2007 by and between MarkWest Javelina Company (“Processor”), a Texas general partnership with its corporate office in Denver, CO and local office at 5438 Union Street, Corpus Christi, TX 78407 and CITGO Refining and Chemicals Company, L.P. (“Supplier”), a Delaware limited partnership with offices at 1802 Nueces Bay Boulevard, Corpus Christi, TX 78469.

 

W I T N E S S E T H:

 

WHEREAS, Processor owns and operates the MarkWest Javelina Gas Processing and Fractionation Plant (the “Plant”), located at 5438 Union Street, Corpus Christi, Texas, 78407, for the purpose of extracting Liquefiable Hydrocarbons, hydrogen and impurities from Inlet Gas delivered to the Plant from certain refineries and other sources; and

 

WHEREAS, Supplier desires to deliver, subject to the provisions of this Agreement, Off-Gas from its Refineries to the Plant for the extraction of Liquefiable Hydrocarbons, hydrogen and impurities; and

 

WHEREAS, Processor desires to receive, subject to the provisions of this Agreement, Supplier’s Off-Gas at the Plant.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, the mutual benefits to be derived and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged Supplier and Processor agree as follows:

 

ARTICLE I

DEFINITIONS

 

The definitions in this Article shall apply for all purposes to this Agreement:

 

1.1

 

“Btu” means a British Thermal Unit, and “MMBtu” means one million (1,000,000) Btus.

 

 

 

1.2

 

“Component” means an identifiable constituent of Off-Gas which may be extracted by Processing at the Plant, including, without limitation, incidental methane, ethane, ethylene, propane, propylene, butanes, pentanes-plus, hydrogen, and incidental non-hydrocarbon materials.

 

3



 

1.3

 

“Delivery Point” means Processor’s meter at which Supplier’s Off-Gas is initially measured upon delivery into Processor’s, or Processor’s affiliates, delivery pipeline(s).

 

 

 

1.4

 

“East Refinery” means Supplier’s East Refinery located at 1802 Nueces Boulevard, Corpus Christi, Texas 78469.

 

 

 

1.5

 

“Energy Expenses” means all fuel, power and other utility and energy related expenses necessary to operate the Plant including, but not limited to, electricity and Plant Fuel.

 

 

 

1.6

 

“Energy Expense Charge” or “EEC” means the proportionate share of the Energy Expenses allocated each Month to Supplier as set forth in Section 8.5.

 

 

 

1.7

 

“Excess Gas” means the residue gas attributable to refiners and other sources other than Supplier delivering Inlet Gas to the Plant and Gas purchased by Processor for use at the Plant but not consumed at the Plant.

 

 

 

1.8

 

“Gas” means any fluid, either combustible or non-combustible, including Off-Gas, which maintains a gaseous or rarefied state at a temperature of 60 degrees Fahrenheit and at a pressure of 14.65 psia.

 

 

 

1.9

 

“Inlet Gas” means Off-Gas and other Gas that is Processed at the Plant for the extraction of Plant Products and certain incidental non-hydrocarbon materials.

 

 

 

1.10

 

“Liquefiable Hydrocarbons” means all Components except hydrogen, incidental methane and non-hydrocarbon materials.

 

 

 

1.11

 

“Mscf” means 1,000 standard cubic feet of Gas and “MMscf” means 1,000,000 standard cubic feet of Gas. A standard cubic foot of gas is one cubic foot of gas at a temperature of 60 degrees Fahrenheit and at a pressure of 14.65 psia.

 

 

 

1.12

 

“Month” means the period of time beginning at 7:00 a.m. Central Clock Time in Corpus Christi, Texas, on the first day of each calendar month and ending at such time on the first day of the next calendar month.

 

 

 

1.13

 

“Nonaffiliated Third Parties” means any corporation, limited liability company, partnership (including a limited partnership) or other entity other than an affiliate of Processor. For the purposes of this definition, “affiliate of Processor” shall mean any person, corporation, limited liability company, partnership (including a limited partnership) or other entity which (i) controls, (ii) is controlled by, or (iii) is under common control with Processor. “Control”, as used in this definition, means the ownership directly or indirectly of more than fifty (50) percent of the voting rights in a company or other legal entity, or the right, directly or indirectly through its ownership position or

 

4



 

 

 

through contract, to direct the management and policies of a company or other legal entity.

 

 

 

1.14

 

“Off-Gas” means Gas produced as a by-product of refining crude oil and other refinery feedstocks.

 

 

 

1.15

 

“Party” means either Processor or Supplier and “Parties” means both Processor and Supplier.

 

 

 

1.16

 

“Plant Fuel” means the quantity of Gas or other hydrocarbons purchased by Processor to operate the Plant.

 

 

 

1.17

 

“Plant Net Proceeds Attributable to Supplier’s Off-Gas” means for all Components of Plant Products, the sum of the total quantity of each Component of Plant Products attributable to Supplier’s Off-Gas multiplied by the Weighted Average Sales Price for each such Component of Plant Products. Exhibit B includes an example of the calculation of Plant Net Proceeds Attributable to Supplier’s Off-Gas.

 

 

 

1.18

 

“Plant Products” means each and all of the Components extracted from the Off-Gas by Processing at the Plant.

 

 

 

1.19

 

“Plant Thermal Reduction” or “PTR” means the decrease in the quantity of Supplier’s Off-Gas measured in Btus as a result of Processing Supplier’s Off-Gas as further defined in Section 6.2.

 

 

 

1.20

 

“Process”, “Processed” or “Processing” means the extraction of Plant Products and certain incidental non-hydrocarbon materials from Off-Gas at the Plant.

 

 

 

1.21

 

“Redelivery Point” means Processor’s meter at which Supplier’s Residue Gas will be measured following the construction by Processor of the Residue Gas Pipeline, and which location shall be immediately prior to Processor’s delivery thereof to Supplier.

 

 

 

1.22

 

“Refineries” means the East Refinery and the West Refinery collectively.

 

 

 

1.23

 

“Residue Gas” means the quantity of Gas, measured in Btus, remaining after the Processing of Supplier’s Off-Gas as further defined in Section 8.4.

 

 

 

1.24

 

“Supplier’s Percentage” shall be ** of Plant Net Proceeds Attributable to Supplier’s Off-Gas.

 

 

 

1.25

 

“Supplier’s Proceeds” means (a) the sum for all Components of (i) the Plant Net Proceeds Attributable to Supplier’s Off-Gas for each Component multiplied by (ii) Supplier’s Percentage for each such Component; less (b) the applicable Energy Expense Charge. Exhibit B includes an example of the calculation of Supplier’s Proceeds.

 

5



 

1.26

 

“Weighted Average Sales Price” for a Month means the average sales value for each Component of Plant Products and shall be equal to the sum of the proceeds the Plant receives for each Component of Plant Products during such Month less all transportation, storage, marketing and exchange fees paid to Nonaffiliated Third Parties for such Component of Plant Products divided by the volume of such Component of Plant Products that was sold during such Month. Exhibit C includes an example of the calculation of the Weighted Average Sales Price for each Component of Plant Products.

 

 

 

1.27

 

West Refinery” means the Supplier’s West Refinery located at 17350 Highway 37 West, Corpus Christi, Texas 78408.

 

ARTICLE II

EXHIBIT(S)

 

The following Exhibit(s) are attached to and made a part of this Agreement by reference:

 

2.1

 

Exhibit A sets forth the specifications for Residue Gas and Excess Gas.

 

 

 

2.2

 

Exhibit B illustrates the allocation statements to be provided monthly to Supplier.

 

 

 

2.3

 

Exhibit C illustrates the method used to calculate Weighted Average Sales Price for each Plant Product.

 

 

 

2.4

 

Exhibit D sets forth the methods of measurement, sampling, testing and analysis of Supplier’s Off-Gas.

 

ARTICLE III

DEDICATION OF SUPPLY

 

3.1

 

Subject to the terms and conditions of this Agreement, (i) Supplier shall dedicate certain streams of Off-Gas from Supplier’s East Refinery and a specified volume of Off-Gas from Supplier’s West Refinery to Processor for Processing and extraction of Plant Products for the term of this Agreement; and shall deliver to the Delivery Point, one hundred percent (100%) of its dedicated Off-Gas and the Liquefiable Hydrocarbons and hydrogen contained therein that is produced from Supplier’s Refineries, under normal operations, up to the Processor’s ability to receive (ii) subject to Section 3.2 below, Supplier shall commit to **; (iii) Processor shall **; and (iv) Supplier shall ** Processor shall **. Supplier’s Off-Gas dedicated to this Agreement shall include but not be limited to the **. Processor understands Supplier’s West Refinery Off-Gas is **. Processor

 

6



 

 

 

understands and agrees that Supplier is not obligated under this Agreement to change or modify the operations of its Refineries to increase or change the quantity or quality of the Off-Gas produced at its Refineries.

 

 

 

3.2

 

Supplier may reduce volumes from its East or West Refinery due to ** (referred to herein as a “Temporary Reduction”). In this context, **

 

 

 

3.3

 

Supplier shall not strip Liquefiable Hydrocarbons or hydrogen from Supplier’s Off-Gas prior to delivery at the Delivery Point(s) other than by separation methods in operation at Supplier’s Refineries as of the effective date of this Agreement. Additional separation methods designed to recover Liquefiable Hydrocarbons or hydrogen from Supplier’s Off-Gas, including but not limited to, solid bed absorption, lean oil absorption, turbo-expansion, membranes, mechanical or refrigeration principles shall not be installed by Supplier at the Refineries after effective date hereof.

 

 

 

3.4

 

Subject to Sections 3.3 and 3.5, Supplier shall have the right to (i) reduce the volume of, or modify the slate of, crude oil and/or other feedstocks refined at Supplier’s Refineries; (ii) change the equipment and/or operation of Supplier’s Refineries for the purpose of expanding, reducing or improving the refining of oil and other hydrocarbon feedstocks; or (iii) fully or partially curtail operation of Supplier’s Refineries at any time for routine or non-routine maintenance or repairs. Supplier shall be required to provide prior written notice to Processor if such changes described above results in a reduction or interruption of the volume of Supplier’s Off-Gas, or significantly alters the composition of Supplier’s Off-Gas.

 

 

 

3.5

 

If any non-temporary changes made to the Supplier’s refineries materially affect the quantity or composition of Supplier’s Off-Gas, the Parties will negotiate in good faith a fair and equitable adjustment to Supplier’s Proceeds or other appropriate adjustments. For purposes of this Section 3.5, the quantity and composition of Supplier’s prior twelve months Off-Gas excluding Supplier’s planned outages and Processor’s outages and curtailments shall be used as the expected volume of Off-Gas when determining any reduction in the volume or change in the composition of Supplier’s Off-Gas.

 

 

 

3.6

 

If Supplier, during the term of this Agreement, installs additional equipment resulting in the production of additional Off-Gas from Supplier’s Refineries, such additional Off-Gas shall be subject to this Agreement, upon the mutual agreement of both Parties.

 

ARTICLE IV

CURTAILMENTS

 

4.1

 

Processor shall have the right at any time to curtail all or a portion of Supplier’s

 

7



 

 

 

Off-Gas Processed at the Plant, to the extent reasonably necessary for routine or non-routine maintenance or repair of the Plant. In any instance of curtailment, Processor agrees to curtail Off-Gas received at the Plant **. Further curtailment shall be **

 

 

 

 

 

If Supplier requests that Processor not curtail Off-Gas from Supplier’s West Refinery and that all of Supplier’s curtailment be applied to Supplier’s East Refinery, Supplier shall pay to Processor an amount equal to the difference between the Plant Net Proceeds Attributable to Supplier’s Off-Gas from its East Refinery and the Plant Net Proceeds Attributable to Supplier’s Off-Gas from its West Refinery for all Off-Gas not curtailed and processed from Supplier’s West Refinery in lieu of Off-Gas processed from Supplier’s East Refinery ** provided that such payment amount shall never be less than zero. An example of this calculation is included in Exhibit B.

 

 

 

 

 

Processor shall notify Supplier of the nature and extent of each instance of curtailment due to a non-routine event as soon as reasonably practicable. Such notice shall include the reasons for the curtailment and an estimate of the amount of time the curtailment is expected to last. Processor shall give Supplier no less than thirty (30) days prior written notice of scheduled maintenance or repairs that are expected to fully or significantly curtail operations at the Plant and shall include a general description of such activities and the amount of time the curtailment is expected to last. Processor agrees to use commercially reasonable efforts to minimize the time of any such curtailments and, to the extent practicable, coordinate with Supplier any scheduled curtailment with Supplier’s activities at its Refineries.

 

 

 

4.2

 

Subject to reasonable fees, terms and conditions, Processor will assist in transporting Gas between the Refineries or to Supplier’s designees, or provide other services in this context only during Processor’s total Plant outages.

 

 

 

4.3

 

Supplier is aware that material changes in the quality and quantity of Supplier’s Off-Gas delivered to the Plant could adversely affect Plant operations. If, in Processor’s sole but reasonable opinion, changes in the composition or volume of Supplier’s Off-Gas have an adverse affect on Plant operations, Processor may adjust Supplier’s Off-Gas deliveries until such time as the composition and/or volume of Supplier’s Off-Gas returns to the original composition, or becomes otherwise acceptable to Processor.

 

 

 

4.4

 

Supplier shall provide Processor with no less than thirty (30) days advance written notice of Supplier’s planned outages which are anticipated to impact the volume or composition of Supplier’s Off-Gas.

 

8



 

ARTICLE V

DELIVERY AND QUALITY OF SUPPLIER’S OFF-GAS

 

5. 1

 

Supplier shall deliver its Off-Gas to Processor at the Delivery Point, (a) at a pressure not to exceed the lesser of (i) one hundred (100) psig or (ii) the Javelina Pipeline MAOP; (b) at a pressure of not less than seventy (70) psig; and (c) meeting the following specifications:

 

Ammonia

 

50 ppmv maximum

H2S

 

80 ppmv maximum

Total Sulfur

 

100 ppmv maximum

CO2

 

2 mol% maximum

CO

 

1.5 mol% maximum

Oxygen

 

0.5 mol% maximum

H2O

 

No free water

Temperature

 

Less than 120 degrees Fahrenheit

 

 

 

Processor may refuse to accept all or any portion of Supplier’s Off-Gas that does not meet the above quality specifications or Supplier’s Off-Gas that contains other constituents which neither Supplier nor Processor knows or should have known may affect Plant Products quality, Plant operations or damage Plant equipment. In the event such otherwise unknown constituent will, does or may affect Processor’s Plant Product(s) quality, Plant operations or damage Plant equipment, then Processor will provide notice to Supplier that Supplier’s Off-Gas is rejected until Supplier has corrected the problem. If Supplier’s Off-Gas is rejected, Supplier shall correct the problem before resuming deliveries of Supplier’s Off-Gas to the Delivery Point(s). It is Supplier’s option whether or not to take any actions to correct said problem and therefore resume delivery of Off-Gas to Processor.

 

 

 

 

 

Processor shall have the right to curtail the delivery of Supplier’s Off-Gas if a particular constituent of total sulfur in the combined Inlet Gas streams from all suppliers is of sufficient concentration that Processor believes in its reasonable and sole opinion, may affect product quality, Plant operations, or damage Plant equipment, even though the total sulfur in the respective Refineries’ Off-Gas streams are within the above specifications.

 

 

 

 

 

Additionally, Processor may refuse to accept all or any portion of Supplier’s Off-Gas that contains H2S between 50 ppmv and 80 ppmv. If Supplier’s Off-Gas is rejected under this subparagraph, Supplier will obtain approval from Processor before resuming deliveries of Off-Gas that contains H2S between 50 ppmv and 80 ppmv.

 

 

 

5.2

 

Supplier shall deliver Off-Gas to the Plant on a daily, pro-rata and continuous basis.

 

 

 

5.3

 

Processor shall have the right at any time to secure supplies of Gas from any other source which it, in its sole discretion, chooses, regardless of whether such supplies cumulatively exceed the Processing capacity of the Plant. If at any time

 

9



 

 

 

during the term of this Agreement, the cumulative supply of Inlet Gas, including Supplier’s Off-Gas, delivered to the Plant exceeds its operating capacity, Processor may, with notice as soon as practicable thereafter to Supplier, reduce the volume of Supplier’s Off-Gas Processed based on its economic value to Processor, **, when the Plant is operating normally and when such quantities of Off-Gas are available from Supplier. Processor will use commercially reasonable efforts to ** when the Plant is operating normally and when such quantities of Off-Gas are available from Supplier.

 

ARTICLE VI

OFF-GAS PROCESSING

 

6.1

 

Subject to the other provisions of this Agreement, Processor shall accept possession of and title to Supplier’s Off-Gas at Delivery Point(s). Processor shall own and have all right, title and interest in and to all Plant Products and impurities extracted from such Off-Gas at the Plant in which Processor, in its sole discretion, desires to so retain.

 

 

 

 

 

After construction of the Residue Gas Pipeline as defined in Section 9.1, Processor shall deliver and Supplier shall accept possession of and title to Supplier’s Residue Gas at the Redelivery Point.

 

 

 

6.2

 

The Plant Thermal Reduction attributable to the Processing of Supplier’s Off-Gas to produce the Plant Products shall be determined by using the applicable conversion factors for (i) all Plant Products except ethylene, propylene and hydrogen as set forth in the Gas Processors Association Publication 2145-03 and any subsequent revisions thereof in effect at the time such calculation is performed, and (ii) for ethylene, propylene and hydrogen, as set forth in the API Technical Data Book – Petroleum Refining and any subsequent revisions thereof in effect at the time such calculation is performed. All calculations shall be done at a pressure base of 14.65 psia to conform to NAESB standards.

 

 

 

6.3

 

Processor shall provide Supplier with a “Plant Allocation Statement” no later than the last calendar day of the Month following the Month of production. An example Plant Allocation Statement is attached hereto as Exhibit B.

 

 

 

6.4

 

Other than as provided in Section 8.2, Processor shall sell all Plant Products on an “arms length” basis to Nonaffiliated Third Parties, unless the Parties mutually agree otherwise.

 

10



 

ARTICLE VII

GAS MEASUREMENT AND TRANSMISSION

 

7.1

 

Supplier shall provide, install, operate and maintain, or cause to be provided, installed, operated and maintained, at its sole cost, risk and expense, all pipelines and related facilities (i) upstream of the Delivery Point to enable Supplier to deliver its Off-Gas to Processor hereunder and, following the construction of the Residue Gas Pipeline, (ii) downstream of the Redelivery Point to enable Processor to deliver Supplier’s Residue Gas to Supplier, or Supplier’s designee.

 

 

 

7.2

 

Processor shall provide, install, operate and maintain, or cause to be provided, installed, operated, and maintained, at its sole cost, risk and expense all pipelines, instrumentation equipment, including meters, telemetry and telecommunications equipment, and related facilities (i) downstream of the Delivery Point to enable Processor to receive Supplier’s Off-Gas at the Delivery Point and, following the construction of the Residue Gas Pipeline, (ii) upstream of the Redelivery Point to enable Processor to deliver Supplier’s Residue Gas to Supplier, or its designee, at the Redelivery Point.

 

 

 

7.3

 

Processor shall operate, or cause to be operated, all facilities to transport and meter Supplier’s Off-Gas downstream of the Delivery Point.  Processor shall perform the measurement, testing and analysis of Supplier’s Off-Gas in accordance with appropriate sections of this Article VII and Exhibit D. Processor’s meters shall be the controlling meters regarding all Delivery Point measurements hereunder.

 

 

 

7.4

 

Following the construction of the Residue Gas Pipeline, Processor shall operate, or cause to be operated, all facilities to transport and meter Supplier’s Residue Gas, Excess Gas, and all other Gas upstream of the Redelivery Point.  Processor shall perform the measurement, testing and analysis of Supplier’s Residue and Excess Gas in accordance with appropriate sections of this Article VII and Exhibit D. Processor’s meter(s) shall be the controlling meter(s) regarding all Redelivery Point measurements hereunder.

 

 

 

7.5

 

Each Party shall have the right, upon prior written request, at its own expense and during normal business hours, to have a firm of independent certified public accountants audit the books, records and other pertinent documents and data (collectively, the “Records”) of the other Party relating to this Agreement, to the extent necessary to verify the accuracy of any statement, charge, computation or demand made under or pursuant to this Agreement, provided, however that such accountants shall not disclose to the Party requesting the audit any information obtained during the audit and shall only report to such Party the results of the audit and whether same shows compliance with the terms of this Agreement, or as the case may be, the respects in which the terms of this Agreement have not been complied with. If any such examination reveals, or if either Party otherwise discovers, any error in its own or the other Party’s statements, payments,

 

11



 

 

 

calculations or determinations, then proper adjustment thereof shall be made as promptly as practical thereafter. It is understood, however, that no adjustment of any statement or payment shall be made after the lapse of two (2) year from the end of the Month to which such statement or payment pertains.  Each Party shall retain all records for four (4) years from the end of the calendar year in which they were compiled, unless the statement or payment is subject to dispute, in which case the pertinent records shall be retained until the dispute is resolved.

 

 

 

7.6

 

Each Party shall preserve for a period of twenty-four (24) months all test data, charts, and other similar records for auditing.  Either Party shall have the right, during normal business hours, to examine such records of the other Party and the accuracy of any statement, charge or computation made pursuant to this Agreement, to the extent necessary, to verify the performance of the Agreement.  However, no such examination shall be made by a Party more frequently than once each twelve (12) months, and no examination may cover any time periods that were the subject of a prior examination by that Party.  If any such examination reveals any clerical or mathematical inaccuracy in any billing or payment, the appropriate adjustment in the billing and payment shall be promptly made.  All payments made shall be considered final twenty-four (24) Months after they are made, unless disputed by either Party prior to the expiration of such twenty-four (24) month period.   If the other Party fails to have a representative present, the results of the test shall nevertheless be considered accurate until the next test as long as such test results are within reasonable and customary readings for such meter(s).

 

ARTICLE VIII

DETERMINATION OF PROCEEDS

 

8.1

 

Processor shall pay to Supplier the Supplier’s Proceeds by wire transfer with the appropriate adjustments made pursuant to this Agreement, within seven (7) business days following Processor’s issuance of the “Plant Allocation Statement” as set forth in Section 6.3. Payment shall be made in accordance with Supplier’s wiring instructions. Processor shall retain the remaining portion of such Plant Net Proceeds Attributable to Supplier’s Off-Gas for its own account and such amount shall be referred to as “Processor’s Proceeds”.

 

 

 

8.2

 

Upon receipt of written notice from Processor that Processor has ** Supplier agrees to allow Processor or such affiliate or related entity, at Processor’s option, to purchase for its own account, **. This provision shall be effective for ** from the date of the above notice and is not intended to extend the term of this Agreement. If this Agreement is extended beyond the Primary Term on a Contract Year to Contract Year basis, then with respect to ** this section shall continue to be utilized in the determination of Plant Net Proceeds Attributable to Supplier’s Off-Gas for each such Contract Year until the ** of

 

12



 

 

 

this provision has expired. In addition, if for any period between the end of the Primary Term and prior to the expiration of the ** period of this provision, this Agreement expires or terminates and is not extended, but Processor nevertheless processes Supplier’s Off-Gas at the Plant under any other agreement or arrangement, the Parties hereby agree that the pricing mechanism set forth in this section for the ** shall be utilized to price ** under such other agreements or arrangements.

 

 

 

8.3

 

The quantity of each Component of Plant Products allocated to Supplier each Month shall be equal to the total quantity of such Component of Plant Products recovered by Processor at the Plant during such Month multiplied by a fraction, the numerator of which shall be the total quantity of each such Component of Plant Products that is contained in Supplier’s Off-Gas delivered to the Delivery Point during such Month and the denominator of which shall be the total quantity of such Component of Plant Products as are contained in all Inlet Gas delivered at all delivery points during such Month.

 

 

 

8.4

 

The theoretical Residue Gas attributable to Supplier during each month shall be determined by subtracting the calculated PTR from the quantity, in MMbtus, of Off-Gas delivered by Supplier as measured at the Delivery Point. The total quantity of Residue Gas due Supplier each Month shall be equal to the actual Residue Gas attributable to all Inlet Gas delivered to the Plant during such Month multiplied by a fraction, the numerator of which shall be the theoretical Residue Gas attributable to Supplier’s Off-Gas delivered to the Delivery Point during such Month and the denominator of which shall be the total quantity of theoretical Residue Gas as is contained in all Inlet Gas delivered at all delivery points during such Month. The PTR Calculation will be done monthly and reported in Statement 2 of the Plant Allocation Statement. An example of the Plant Allocation Statement and PTR Calculation is included in Exhibit B.

 

 

 

8.5

 

The Energy Expense Charge deducted from Supplier’s Proceeds and attributable to Supplier’s Off-Gas shall be determined based on the following formula:

 

EEC =

 EE times R/T

 

 

Where:

 

EEC =

The Energy Expense Charge allocated each Month to Supplier

EE =

The total amounts paid by Processor for all Plant Energy Expenses paid during such Month.

R =

The total quantity of Off-Gas, measured in Mscf, delivered by Supplier during the Month.

T =

The total quantity of all Inlet Gas, measured in Mscf, delivered at all delivery points during such Month.

 

13



 

ARTICLE IX

RESIDUE GAS PIPELINE

 

9.1

 

Processor shall construct ** to allow the delivery of Supplier’s Residue Gas to Supplier at ** upon commencement of a connection agreement for the Residue Gas Pipeline. The Parties shall commit to negotiating and executing a connection agreement for the Residue Gas Pipeline as soon as reasonably practical. Processor shall commence construction of such Residue Gas Pipeline ** and shall complete the construction of the Residue Gas Pipeline ** The Residue Gas Pipeline shall originate at Processor’s existing valve site at the intersection of Buddy Lawrence Drive and Interstate Highway 37 and shall terminate at and connect into Supplier’s existing twelve (12) inch fuel gas manifold at the inlet to vessel V4 located inside Supplier’s East Refinery. The estimated length of the Residue Gas Pipeline is 2,725 feet, which includes approximately 600 feet of pipeline to be located within Supplier’s East Refinery. Processor shall install, own and operate all required measurement equipment at the existing meter station on Buddy Lawrence Drive. Processor shall retain ownership of the entire Residue Gas Pipeline excluding the 600 feet of pipeline to be located within Supplier’s East Refinery. Following the construction, Supplier shall own and operate the approximately 600 feet of pipeline to be located within Supplier’s East Refinery. Supplier shall be responsible for all costs associated with the construction of the approximately 600 feet of pipeline to be located within the East Refinery.

 

 

 

9.2

 

Until such time as the Residue Gas Pipeline has been constructed and operational, Processor shall **

 

 

 

 

 

 

 

 

·

From the date of this Agreement through **

 

 

 

 

 

 

 

 

·

Beginning on ** and continuing through **

 

 

 

 

 

 

 

 

·

Notwithstanding anything to the contrary above, if the Residue Pipeline is not completed and in service within **

 

 

 

 

 

 

 

 

·

Once the Residue Gas Pipeline is operational, **

 

 

 

 

 

9.3

 

After the Residue Gas Pipeline, as set forth in Section 9.1, has been completed and is operational, then, from time to time and if available, Supplier may have the opportunity to **. If Supplier and Processor agree in writing that Supplier shall **

 

 

 

9.4

 

Following the completion of the Residue Gas Pipeline, Processor shall return to Supplier, or its designee, and Supplier shall accept and take title to 100% of

 

14



 

 

 

Supplier’s Residue Gas and Excess Gas at the Redelivery Point. The Residue Gas and the Excess Gas shall meet the specifications set forth in Exhibit A attached hereto, failing which Supplier shall not be obligated to receive such Residue Gas or Excess Gas. If, following the completion of the Residue Gas Pipeline, Processor (i) delivers Residue Gas or Excess Gas to Supplier, or for the account of Supplier, at the Redelivery Point in excess of the quantity of Residue Gas or Excess Gas to which Supplier is entitled hereunder, or (ii) fails to tender to Supplier all or a portion of the Residue Gas or Excess Gas Supplier was entitled to and capable of receiving during a Month (in either case “Imbalance Gas”), such over or under deliveries of Imbalance Gas, shall be settled by Processor buying from, or selling to, as applicable, Supplier such Imbalance Gas at ** Both Parties agree this Section is designed to address minor imbalances.

 

 

 

9.5

 

In the event Processor tenders to Supplier and Supplier is unable or refuses to receive all or any portion of its Residue Gas and Excess Gas during a Month, unless otherwise agreed in writing, Processor shall have the right, but not the obligation to otherwise dispose of such quantity of Supplier’s Residue Gas and Excess Gas not taken by Supplier during such Month in any reasonable manner, with the proceeds thereof less all associated losses, costs and expenses suffered or incurred by Processor to be for Supplier’s account in a temporary situation not expected to last more than (12) twelve hours after Supplier’s notification of their inability to accept Residue Gas. Prior to the expiration of the twelve hour period, Supplier shall notify Processor of Supplier’s option to (i) curtail deliveries of Supplier’s Inlet Gas to Processor, or (ii) have Processor’s Residue Gas delivered to a third party, up to available pipeline capacity, or (iii) offer to sell its Residue Gas to Processor at Processor’s disposal price.

 

 

 

9.6

 

Following the completion and operation of the Residue Gas Pipeline, Supplier shall have the option to ** during the remainder of the Primary Term and any subsequent annual extension thereof of this Agreement when the following conditions are met: ** Within six (6) months of the execution of this Agreement, at Supplier’s option, the Parties will negotiate in good faith the terms of an agreement to **

 

 

 

9.7

 

Except as set forth in Exhibit A and Section 11.1 below, PROCESSOR MAKES NO WARRANTY, AND HEREBY DISCLAIMS ALL EXPRESS OR IMPLIED WARRANTIES AS TO THE QUALITY OR QUANTITY, OR AS TO THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OF SUPPLIER’S RESIDUE GAS AND EXCESS GAS DELIVERED TO SUPPLIER AT THE REDELIVERY POINT.

 

15



 

ARTICLE X

TERM

 

10.1

 

The primary term of this Agreement shall be seven (7) years and shall commence on July 1, 2007 (the “Primary Term”). The Agreement shall continue thereafter for consecutive one (1) year terms until terminated by either Party upon at least two (2) years prior written notice to the other Party prior to end of the Primary Term or any subsequent annual extension thereof.

 

 

 

10.2

 

Notwithstanding anything to the contrary in Section 10.1, in the sole event that Supplier decides, in its sole discretion, that it will permanently cease operation of either one or both of Supplier’s Refineries, Supplier shall have the right to suspend this Agreement in part for one of Supplier’s Refineries or in whole for both of Supplier’s Refineries at any time by giving written notice to Processor at least one (1) year in advance of such shutdown and suspension (“Shutdown Notice”). A shutdown of one (1) year or greater will constitute a permanent cessation hereunder, and a shutdown of the FCC Unit shall constitute a shutdown of the entire East Refinery, and a shutdown of the Coker Unit shall constitute a shutdown of the entire West Refinery.

 

 

 

 

 

If Supplier provides such Shutdown Notice to Processor indicating that Supplier will shutdown either one or both Refineries, Supplier shall **. If Supplier shuts down the West Refinery only, Supplier **. If Supplier shuts down the East Refinery, within thirty (30) days from the shutdown, Supplier **

 

 

 

 

 

If Processor completes the construction of the Residue Gas Pipeline at any time prior to Processor’s receipt of Shutdown Notice from Supplier, **

 

 

 

 

 

If Processor completes the construction of the ** at any time prior to Processor’s receipt of Shutdown Notice from Supplier, **

 

ARTICLE XI

WARRANTY

 

11.1

 

Supplier warrants that upon delivery of its Off-Gas to Processor at the Delivery Point that (i) Supplier owns the Off-Gas and the Liquefiable Hydrocarbons, hydrogen and incidental non-hydrocarbon materials contained therein free and clear of all liens, and encumbrances, and (ii) the Off-Gas shall meet the specifications set forth in Section 5.1. EXCEPT AS SET FORTH IN THIS SECTION 11.1, SUPPLIER MAKES NO WARRANTY, AND HEREBY DISCLAIMS ALL EXPRESS OR IMPLIED WARRANTIES AS TO THE QUALITY OR QUANTITY, OR AS TO THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OF SUPPLIER’S OFF-GAS

 

16



 

 

 

DELIVERED TO PROCESSOR AT THE DELIVERY POINT.

 

 

 

11.2

 

Subject to Supplier’s warranty above, Processor warrants that (i) all Supplier’s Residue Gas and Excess Gas delivered to Supplier, or its designee at the Redelivery Point, shall be free and clear of all liens and encumbrances, and (ii) the Residue Gas and Excess Gas shall meet the specifications set forth in Exhibit A. EXCEPT AS SET FORTH IN THIS SECTION 11.2, SUPPLIER MAKES NO WARRANTY, AND HEREBY DISCLAIMS ALL EXPRESS OR IMPLIED WARRANTIES AS TO THE QUALITY OR QUANTITY, OR AS TO THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OF THE RESIDUE GAS AND EXCESS GAS.

 

ARTICLE XII

FORCE MAJEURE

 

 

 

In the event either Party is rendered unable, wholly or in part, by force majeure, to carry out its obligations under this Agreement, other than the obligation to make any payments or accounting hereunder, then the obligations of such Party, insofar as they are affected by such force majeure, shall be suspended during the continuance of any inability so caused, but for no longer period, and the Party giving such notice shall use good faith efforts to eliminate such force majeure and /or minimize its effects or impacts to the other Party, insofar as reasonably possible, with a minimum of delay. The term “force majeure” as employed herein shall mean any and all cause(s) beyond the reasonable control of the Party claiming force majeure, including but not limited to acts of God, that render such Party unable to wholly or partially carry out its obligations under this Agreement, other than obligations to make payment or accounting.  It is understood and agreed that the settlement of strikes or lockouts shall be entirely within the discretion of the Party having the difficulty, and that 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 any opposing party, when such course is inadvisable in the discretion of the Party having the difficulty.

 

ARTICLE XIII

NOTICES

 

 

 

All notices or demands required or provided for herein, except for routine communications, as hereinafter provided, shall be in writing and shall be considered as duly delivered when hand delivered or, if mailed by United States certified mail, postage prepaid, three (3) days after mailing or, if sent by facsimile transmission, when receipt is confirmed by the equipment of the transmitting Party; provided, if receipt of a facsimile transmission is confirmed

 

17



 

 

 

after normal business hours, receipt shall be deemed to be the next business day.  Such notice shall be given to the other Party at the following address, or to such other address as either Party shall designate by like written notice to the other Party:

 

 

SUPPLIER:

 

CITGO Refining and Chemicals Company, L.P.

 

 

Attn: Plant Manager

 

 

 

 

 

Physical and Mailing Address:

 

 

1802 Nueces Boulevard

 

 

Corpus Christi, TX 78469

 

 

Fax number: 361-844-4853

 

 

 

 

 

With a copy to

 

 

CITGO Petroleum Corporation

 

 

P.O. Box 4689

 

 

Houston, TX 77210

 

 

Attention: Product Manager - Petrochemicals

 

 

 

 

PROCESSOR: MarkWest Javelina Company

 

 

Attn: Plant Manager

 

 

 

 

 

Physical and Mailing Address:

 

 

5438 Union Street

 

 

Corpus Christi, TX 78407

 

 

 

 

No legal notice required or permitted hereunder concerning a claim or breach arising hereunder or notice of termination shall be valid unless provided in the manner described above to:

 

 

 

 

 

MarkWest Energy Partners, L.P.

 

 

1515 Arapahoe Street

 

 

Tower 2, Suite 700

 

 

Denver, CO 80202

 

 

Fax: (303) 925-9308

 

 

Attn: General Counsel

 

 

 

 

Routine communications, including statements, computations and allocations may be transmitted by ordinary mail, facsimile, email or other generally acceptable electronic means.

 

18



 

ARTICLE XIV

MISCELLANEOUS

 

14.1

 

PROCESSOR AND SUPPLIER SHALL EACH INDEMNIFY AND HOLD THE OTHER HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS FOR PERSONAL INJURY OR PROPERTY DAMAGE EXCEPT THOSE CAUSED BY GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE OTHER PARTY IN THE PERFORMANCE OF THIS AGREEMENT (A PARTY RESPONSIBLE FOR “REGULAR” NEGLIGENCE SHALL BE AS PROVIDED FOR BY APPLICABLE LAW, SUBJECT TO THE TERMS OF THIS AGREEMENT AS APPLICABLE); PROVIDED HOWEVER, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR LOSS OF INCOME/REVENUE/PROFITS, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES, NO MATTER HOW ARISING, WHETHER IN CONTRACT, TORT OR OTHERWISE.

 

 

 

14.2

 

Upon execution by both Parties, this Agreement shall extend to and be binding upon the Parties and their respective successors and assigns. This Agreement and the rights and obligations of either Party may not be assigned or otherwise conveyed in whole or in part, except with the prior written consent of the non-assigning Party, which consent shall not be unreasonably conditioned, withheld or delayed. Notwithstanding the forgoing, either Party may assign or convey this Agreement without consent to an entity or person who purchases 100% of the assets of said Party so long as all obligations under this Agreement are assumed by said entity or person. No assignment or other transfer of interest hereunder shall be effective or bind the other Party until such Party shall have been furnished with a copy of the recorded instrument under which the permitted assignment or other transfer occurs.

 

 

 

14.3

 

Any and all taxes, fees, or other charges imposed or assessed by governmental or regulatory bodies, the taxable incident of which is the transfer of title or the delivery of the product hereunder, or the receipt of payment therefore, regardless of the character, method of calculation, or measure of the levy or assessment, shall be paid by the Party upon whom the tax, fee, or charge is imposed by law. The importer of record shall be responsible for and shall pay all custom duties, import fees, environmental fund fees, and other assessments pertaining to the importation of the products.

 

 

 

 

 

If Processor claims exemption from any of the aforesaid taxes, then Processor must furnish Supplier with a properly completed and executed exemption certificate in the form prescribed by the appropriate taxing authority in lieu of payment of such taxes or reimbursement of such taxes to Supplier. Notwithstanding anything to the contrary contained herein, each Party shall be responsible for its own income and franchise taxes.

 

 

 

14.4

 

No director, officer, employee, or agent of either Party or its direct or indirect parents, subsidiaries, or affiliates shall give or receive any commission, fee, rebate, gift, or entertainment of significant value or cost in connection with this Agreement. Further, neither Party or its direct or indirect parents, subsidiaries, or affiliates shall make any commission, fee, rebate, gift, or entertainment of significant value or cost

 

19



 

 

 

to any governmental official or employee in connection with this Agreement.

 

 

 

14.5

 

Each Party hereto agrees to comply with all laws, rules, regulations, ordinances and requirements of federal, state and local governmental or regulatory bodies which are applicable to this Agreement, including but not limited to environmental laws and regulations and the provisions contained in Section 18, to the extent that such laws or regulations are applicable to this Agreement.

 

 

 

14.6

 

Any matters not specifically covered in this Agreement shall be dealt with in accordance with the custom and practice in the industry.

 

 

 

14.7

 

This Agreement and the respective rights and obligations of the Parties shall be construed, interpreted and enforced in accordance with the laws of Texas notwithstanding any principles of conflicts of laws which may require the application of the laws of another jurisdiction. Any dispute between the Parties arising out of or pertaining to this Agreement, not otherwise resolved to the mutual satisfaction of both Parties, shall be submitted for resolution by either Party to the exclusive jurisdiction of the appropriate state or federal court with venue exclusively located in Harris County, Texas. This Agreement, and the respective rights and obligations of the Parties, is subject to all valid and applicable current and future laws, rules and regulations of duly constituted authorities now or hereafter having jurisdiction over the Parties, the services contemplated herein and the facilities used to provide those services.

 

 

 

14.8

 

Any failure by either Party, whether intentional or unintentional, to enforce any rights hereunder shall not act as a waiver of its right to enforce such rights thereafter.

 

 

 

14.9

 

Supplier shall have title to, be in full control and possession of and be responsible for damage or injury caused by (i) its Off-Gas prior to delivery thereof to Processor at the Delivery Point and (ii) its Residue Gas after delivery to Supplier, or its designee, at the Redelivery Point, except for injury or damage caused by the gross negligence or willful misconduct of Processor. Processor shall be in control and possession of the Off-Gas, Liquefiable Hydrocarbons, hydrogen and incidental non-hydrocarbon materials to which Processor takes title under this Agreement after delivery of Supplier’s Off-Gas to Processor, or for its account, at the Delivery Point and until delivery of Supplier’s Residue Gas to Supplier, or its designee, at the Redelivery Point and shall be responsible for any damage or injury caused thereby, except for injury or damage caused by the gross negligence or willful misconduct of Supplier.

 

 

 

14.10

 

Each Party shall have the right at its sole cost, risk and expense at reasonable times during normal business hours and with reasonable prior written notice to the other Party, of access to the Plant, the Refineries, the Delivery Point and

 

20



 

 

 

the Redelivery Point for the purposes of performing its obligations under this Agreement.

 

 

 

14.11

 

In the event that any of the provisions, or portions, or applications of this Agreement are held to be unenforceable or invalid by any court of competent jurisdiction, the Parties shall negotiate an equitable adjustment in the provisions of this Agreement with a view toward affecting the purpose of this Agreement. If the provision cannot be modified so as to be enforceable under existing laws, this Agreement shall be construed and enforced as if such provision had not been included herein and the validity and enforceability of the remaining provisions, or portions or applications thereof, shall not be affected.

 

 

 

14.12

 

The parties agree that the rule of construction that a contract be construed against the drafter, if any, shall not be applied in the interpretation and construction of this Agreement. The titles and section headings contained in this Assignment are for reference purposes only and shall not affect the interpretation of this Assignment.

 

 

 

14.13

 

This Agreement may be executed in counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument.

 

 

 

14.14

 

During the term of this Contract, Processor and Supplier shall maintain the confidentiality of this Contract and not disclose same to any third party except independent auditors who are under written obligations of confidentiality with respect to this Contract, and as may be required in the opinion of such parties’ counsel to comply with orders of any court or governmental agency, or comply with any laws, rules and regulations of applicable governmental agencies, including, without limitation, federal, state, and local agencies.

 

 

 

14.15

 

This Agreement is intended to give no rights or benefits to anyone other than the Parties and, accordingly, has no third-party beneficiaries.

 

 

 

14.16

 

This Agreement contains the complete, final and exclusive agreement of the Parties with respect to the matters set forth and supersedes all prior understandings, negotiations, representations, discussions, statements, inducements and agreements, written or oral, pertaining thereto. This Agreement may not be amended, modified or rescinded in any way except by written instrument duly executed by both Parties.

 

[The remainder of the page is intentionally left blank]

 

21



 

IN WITNESS WHEREOF, this Agreement is executed effective by the Parties as of the effective date.

 

 

SUPPLIER”

 

“PROCESSOR”

 

 

 

CITGO REFINING AND

 

MARKWEST JAVELINA

CHEMICALS COMPANY

 

COMPANY, L.P.

 

 

 

 

 

 

By:

/s/ DOYLE DOMMERT

 

By:

/s/ FRANK SEMPLE

 

 

 

Name: Doyle Dommert

 

Name: Frank Semple

 

 

 

Title: GM, Petrochemicals

 

Title: Pres. & CEO

 

22



 

EXHIBIT “A” TO THE

GAS PROCESSING AGREEMENT

BETWEEN MARKWEST  JAVELINA COMPANY

 AND CITGO REFINING AND CHEMICAL LP

 

Residue Gas and Excess Gas Specifications

 

Residue Gas and Excess Gas delivered to the Redelivery Point will meet the following specifications:

 

Ammonia

 

50 ppmv maximum

H2S

 

50 ppmv maximum

Total Sulfur

 

100 ppmv maximum

CO2

 

2 mol % maximum

CO

 

1.5 mol % maximum

Oxygen

 

0.5 mol % maximum

H2O

 

No free water

Temperature

 

Less than 120 degrees Fahrenheit

Pressure

 

100 psig minimum

Btu content

 

700 – 900 Btus per standard cubic foot (see note below)

 

NOTE:  Processor expects, when the Plant is in normal operation, that the Residue Gas and the Excess Gas shall have a Btu content between 700 and 900 Btus per standard cubic foot.  In the event the combined Btu value of the Residue Gas and Excess Gas delivered to the Redelivery Point is (i) less than 700 Btus per standard cubic foot or greater than 1000 Btus per standard cubic foot, then upon actual knowledge of such event (in any case as soon as commercially reasonable under the then existing circumstances) the discovering Party shall notify the other Party of such event.  Within six (6) hours of Processor’s discovery of such event, or Processor’s receipt of notice from Supplier of such event, Processor shall take corrective action, as the case may be, to (i) (a) increase the combined Btu content of the Residue Gas and the Excess Gas delivered to the Redelivery Point to equal or exceed 700 Btus per standard cubic foot or (b) reduce the combined Btu content of the Residue Gas and the Excess Gas delivered to the Redelivery Point to equal or be less than 1000 Btus per standard cubic foot, or (ii) suspend deliveries of the Residue Gas and the Excess Gas to the Redelivery Point until such condition (either low Btu content or high Btu content) is corrected.

 



 

EXHIBIT B

 

Plant Allocation Statement

Statement 2 of Exhibit B

 

Statement 2

 

Javelina Plant Allocation

Plant Thermal Reduction “PTR”

Month, Year

 

 

 

Mmbtus

 

Residue Gas:

 

 

 

Theoretical Residue Gas Attributable to Supplier’s Off-Gas

 

**

 

Total Quantity of Theoretical Residue Gas for all Inlet Gas

 

**

 

 

 

 

 

Ratio of Supplier’s Theoretical Residue Gas

 

**

 

 

 

 

 

Actual Residue Gas attributable to All Inlet Gas

 

**

 

 

 

 

 

Residue Gas Attributable to Supplier’s Off-Gas

 

**

 

 

 

 

 

Plant Thermal Reduction “PTR”

 

 

 

Inlet 441-207 and Inlet 441-200

 

**

 

 

 

 

 

Residue Gas Attributable to Supplier’s Off-Gas

 

**

 

 

 

 

 

Refiner’s Plant Thermal Reduction PTR

 

**

 

 


* All volumes and amounts are fictional and intended for this example only.

 



 

EXHIBIT “C” TO THE

GAS PROCESSING AGREEMENT

BETWEEN MARKWEST  JAVELINA COMPANY

 AND CITGO REFINING AND CHEMICALS, LP

 

Calculation of Weighted Average Sales Price for a sample Plant Product

 

Following is an example of the calculation of the Weighted Average Sales Price for ethane during the example Month:

 

As set forth below, the Weighted Average Sales Price for ethane in the following example would be $665.55 divided by 1,035 gallons or $0.6430 per gallon.

 

 

 

Volume Sold
(gallons)

 

Sales Price
($ per gallon)

 

Sum of all
Transportation,
Storage,
Marketing and
Exchange Fees
($ per gallon)

 

Sales
Proceeds
($)

 

 

 

 

 

 

 

 

 

 

 

Ethane in Ethane Stream

 

1,000

 

$

0.62

 

$

0

 

$

620.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ethane in Ethylene Stream

 

10

 

$

2.27

 

$

0.065

 

$

22.05

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ethane in Propane Stream

 

25

 

$

0.94

 

$

0

 

$

23.50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Sales Price

 

1,035

 

.064304

 

 

 

 

$

665.55

 

 


*  All volumes and amounts are fictional and intended for this example exhibit only.

 



 

EXHIBIT “D” TO THE

GAS PROCESSING AGREEMENT

BETWEEN MARKWEST JAVELINA COMPANY

AND CITGO REFINING AND CHEMICALS COMPANY, L.P.

 

METHODS OF GAS MEASUREMENT AND SAMPLING

TEST AND ANALYSES

 

Definitions

 

“Report No. 3” shall mean the most current version of AGA Report No. 3, “Orifice Metering of Natural Gas”, Measurement Committee of the American Gas Association, as such publication may be revised from time to time.

 

A.           Gas Measurement

 

Processor shall, at its cost install, operate, and maintain, or shall cause to be installed, operated and maintained, at the Delivery Point suitable measurement equipment to accurately measure the Off-Gas delivered for processing.  Processor shall determine the quantity of all Components and the Btus per cubic foot contained in representative samples of Off-Gas at the Delivery Point pursuant to Section B of this Exhibit.

 

The measurement equipment shall consist of electronic flow measurement transmitters measuring differential and static pressure as well as temperature recorders that shall be installed, tested and maintained in accordance with the provisions of this Exhibit. Electronic Flow Measurement (EFM) equipment shall conform to all provisions of API MPMS, Chapter 21. The measuring equipment should include a Daniels Senior Fitting or equivalent using concentric, square-edged orifice meters per API Chapter 14.3, Natural Gas Fluids Measurement.  Volumes shall be measured using a flow computer with real time flow-weighted average temperatures and pressures applied to the volumes in the flow computer to generate a batch end report.    A Coriolis type flow meter may be used instead of an orifice type meter if agreed to by both Supplier and Processor.

 

Installation of all electrical and instrumentation facilities shall conform to all provisions of the National Electric Code (NFPA Subpart 70), the American Gas Association “Classification of Gas Utility Areas for Electrical Installation” XF0277, and ANSI/ISA RPI 12.6 “Installation of Intrinsically Safe Instrument System in Class I Hazardous Locations”. All electrical equipment installed in a building containing all or a portion of the Facilities shall be classified and

 



 

designed for Class I, Division 1 or 2, Group D locations. Any equipment that vents or bleeds natural gas shall be piped in such a way so as to vent or bleed outside any enclosed structure in which it may be installed.

 

The unit of volume for the purpose of measurement of Liquefiable Hydrocarbons, excluding ethylene and propylene, shall be one (1) U.S. liquid gallon of 231 cubic inches, when said liquid has a temperature of sixty degrees Fahrenheit (60oF) and is at the equilibrium vapor pressure of the liquid being measured.

 

Unit of measurement for ethylene and propylene shall be pounds. Unit of measurement for hydrogen shall be Mcf.

 

B.             Measurements and Tests

 

1.               Standard of measurements and tests:

 

a.               Except as provided in Section B.1(b) relating to deviation, the volume of Gas delivered hereunder shall be computed in accordance with the latest methods prescribed in the Report #3, AGA Report No. 8 “Super Compressibility” and API Chapter 21.1 “Electronic Gas Measurement Standard”.

 

b.              The deviation of the Gas from the Ideal Gas Laws due to the pressures and temperatures under which Gas is delivered hereunder, shall be determined by the methods prescribed by Report #3. Such determination shall be made at the beginning of and at such times as either Party hereto may reasonably desire each Month. Results of each determination shall be used in computing the volumes of Gas measured hereunder until the next determination is made.

 

c.               The specific gravity of the Off-Gas at the Delivery Point shall be determined by Processor using chromatographic analysis of a composite sample not less than once each Month.

 

d.              The flowing temperature of the Gas at the point of measurement shall be determined by means of a recording thermometer of standard make and the arithmetical average of readings during the time Gas is flowing each day shall be deemed the Gas temperature and used in computing the volumes of Gas delivered during such day.

 

e.               The Btus per cubic foot of the Gas delivered hereunder shall be determined at each measurement point hereunder at least once each Month by means of chromatographic analysis of composite samples and the factors for pure Components stated in Article V.

 

f.                 In addition to the Monthly determination of Btus per cubic foot, Processor shall install a continuous recording chromatograph or other

 

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industry accepted equipment to monitor the Delivery Point. The volume weighted average of daily recorded Btus per cubic foot shall be used in computing the total estimated quantity of Btus received from each delivery point during that day.

 

2.               Measurements

 

a.               For the purpose of calculating the volume of Gas and in the computation of such volumes, the atmospheric pressure shall be assumed to be fourteen and sixty-five hundredths (14.65) pounds per square inch absolute regardless of the actual atmospheric pressure at which the Gas is delivered and measured unless otherwise established by governmental authority.

 

b.              Processor shall install, maintain and operate at its own expense the necessary equipment of a character and design acceptable to Supplier to measure separately the volume of Off-Gas delivered for Processing and perform all tests required to accomplish the measurement of volumes, temperatures, specific gravities and Btus per cubic foot of the Gas measured hereunder. Such volume measuring equipment shall conform to the specifications contained in Report #3 and API Chapter 21.1, “Electronic Gas Measurement Standards”. Supplier shall have access to such measuring equipment at all reasonable hours, but the calibration, adjustment and maintenance thereof shall be done only by Processor and witnessed by the Supplier. Upon reasonable request of Supplier all volume, specific gravity, and temperature charts used in measurement of Gas hereunder shall be mailed or delivered to Supplier for checking and calculating within twenty (20) days after the last chart for each accounting period is removed from the recorders. Such chart shall be mailed or returned to Processor within thirty (30) days after receipt thereof by Supplier.

 

c.               Supplier may install, maintain, operate, calibrate and adjust at its own expense check measurement equipment, and/or telemetry equipment provided such equipment does not interfere with the accuracy or operations of the Processor’s measurement equipment and facilities required by this agreement. Electronic Flow Measurement (EFM) equipment shall conform to all provisions of API MRMS, Chapter 21. Installations of all electrical and instrumentation equipment shall conform to all provisions set forth by this agreement.

 

d.              Supplier and Processor shall each have the right to be present at the time of installing, testing, cleaning, changing, repairing, inspecting, calibrating or adjusting done in connection with the measuring equipment of the other which is used in measurement here under. The Party planning to conduct such operations shall give the other Party at least ten (10) days prior notice thereof in order that all necessary parties may be present.

 

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e.               If both EFM and the backup orifice meters are out of service or out of repair so that the quantity of Gas is not correctly indicated by reading thereof, the Gas measured during the period shall be estimated and agreed upon on the basis of the best data available, using the first of the following methods which is feasible:

 

(1)              By using the registration of any check measuring equipment if  installed and accurately registering; or

 

(2)              By estimating the volume by comparison with volumes during preceding periods under similar conditions when the recorder was registering accurately; or

 

(3)              .By correcting the error if the percentage of error is ascertainable by calibration, tests or mathematical calculation.

 

f.                 The accuracy of the measuring equipment shall be tested at reasonable intervals and, if requested, in the presence of representatives of the other party, but such verification shall not be required more frequently than once in a thirty (30) day period. In the event either party shall notify the other that it desires a special test of any measuring equipment, the parties shall cooperate to secure a prompt verification of the accuracy of such equipment. The expense of such a special test as may be requested by either party shall be borne by the party requesting such test if the measurement equipment, by such test, is found to be correct.

 

g.              If upon test, any meter or any related instrument or device the readings of which are used in the registration, integration, or computation of quantities which affect the measured  quantity hereunder is found to be in error to the extent that it introduces not more than a two percent (2%) measurement error in the individual  meter or meters affected, previous records of such equipment shall be considered accurate in computing deliveries hereunder; but such equipment shall be adjusted at once to function correctly. If, upon testing, any such measuring equipment shall be found inaccurate to the extent that is causes the end result measurement of the individual meter or meters so affected to be in error by an amount exceeding two percent (2%), at a recording corresponding to the average hourly rate of flow through the individual meter or meters affected, for the period since the last preceding test, then any previous registration, integration or recordings of such meter or meters affected shall be corrected  to zero error for any part of the period since the last test that such error is known to have existed or which may be agreed upon in actual practice by the operating representatives of the parties. In case the period of such error is not known definitely or is not agreed upon, such correction shall be for a period of one-half (1/2) of the time elapsed since the date of the last such test, but not exceeding a correction period of fifteen (15) days.

 

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The records for measuring equipment shall remain the property of the operator of such equipment, but upon request the operator will submit to the other party its records, together with calculations therefrom, for inspection, subject to return within thirty (30) days after receipt thereof.

 

h.              Gas Sampling and Analysis

 

Processor shall obtain representative samples of Off-Gas in accordance with GPA Publication 2166, latest revision, by utilizing continuous sampling techniques designed to obtain a representative sample over a thirty (30) day period proportional to Gas flow rates. For Monthly accounting, Processor shall analyze this representative sample by chromatographic techniques in accordance with GPA Publication 2261 and 2145, latest revision. Suppliers shall have the right to witness the sampling and analyzing of Off-Gas at Delivery Point.  Should said representative sample be inadvertently lost or contaminated, then a mutually agreeable replacement sample or previous analysis will be used.

 

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EX-10.33 3 a08-13756_1ex10d33.htm EX-10.33

Exhibit 10.33

 

Execution Version

 

SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPERATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

NATURAL GAS LIQUIDS TRANSPORTATION, FRACTIONATION AND
MARKETING AGREEMENT

 

THIS NATURAL GAS LIQUIDS TRANSPORTATION, FRACTIONATION AND MARKETING AGREEMENT (this “Agreement”) is made and entered into this 16th day of November, 2007, by and between EQUITABLE GATHERING, LLC (herein referred to as “Equitable”), and MARKWEST ENERGY APPALACHIA, L.L.C. (herein referred to as “MEA”).

 

RECITALS:

 

A.                                   Equitable operates and is acquiring that certain existing gas processing plant and related facilities together with gas compression facilities located in the vicinity of Langley, Kentucky, known as the “Maytown Plant”; and

 

B.                                     Equitable is constructing and installing additional gas processing and gas compression facilities located in the vicinity of Langley, Kentucky, to operate in conjunction with the Maytown Plant, said additional facilities referred to herein as the “Langley Plant”;

 

C.                                     Equitable desires to deliver to MEA and MEA desires to receive from Equitable, natural gas liquids recovered at the Plant (as defined herein), and recovered from other sources, as provided herein, and the parties desire to have such natural gas liquids transported to the Siloam Facility (as defined herein), fractionated into commercial components at the Siloam Facility, and to have such fractionated components marketed and Sold.

 

NOW THEREFORE, in consideration of the mutual covenants contained herein, the parties hereby agree as follows:

 

ARTICLE 1
DEFINITIONS

 

The following definitions shall apply for all purposes of this Agreement unless otherwise indicated:

 

Accounting Period.  The period commencing at 10:00 a.m., Eastern Time, on the first day of a calendar month and ending at 10:00 a.m., Eastern Time, on the first day of the next succeeding month.

 

Affiliate.  When used with respect to a Person, means any other Person that directly or indirectly controls, is controlled by or is under common control with such first Person, where control, and its derivatives, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person (whether through majority

 



 

ownership of securities or partnership or other ownership interests, by contract or otherwise, including, without limitation, through the ownership of the general partner of any partnership).

 

Delivery Point** provided, however, until the full or partial Replacement Equitable Pipeline is constructed, installed, made operational, and capable of delivering natural gas liquids to the **, and for any natural gas liquids delivered hereunder other than through such full or partial Replacement Equitable Pipeline, the Delivery Point shall be at **

 

Effective Date.  The date upon which MEA has transferred and conveyed the Maytown Plant to Equitable.

 

Equitable Group.  Equitable Production Company, Equitable Gathering, LLC, and each current and subsequently created Affiliate of each of them.

 

Equitable Pipeline.  The existing pipeline running from the Plant to the interconnection, near Ranger, West Virginia, with the MEA Pipeline, including any replacement of such pipeline.

 

Fractionated Products.  The component products derived from the fractionation operations at the Siloam Facility.

 

Gathering Area.  The area of gas production and gathering as described in Exhibit B.

 

MEA Pipeline.  The pipeline to transport natural gas liquids running from the point commonly referred to as “Ranger, West Virginia” to the Siloam Facility.

 

Net Sales Price.  **

 

Person or person. Any individual, corporation, limited liability company, limited or general partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity, or any group comprised of two or more of the foregoing.

 

Plant Products.  Liquid hydrocarbon components (ethane, propane, iso-butane, normal butane, iso-pentane, normal pentane, hexanes plus, any other liquid hydrocarbon product, or any mixtures thereof, and any incidental methane included in any of the foregoing), which are separated, extracted or condensed from natural gas at the Plant.

 

Plant.  The Maytown Plant and the Langley Plant, including (i) any and all gas processing and compression facilities to be installed to replace any of the foregoing or to expand or alter any of the foregoing, all located in the vicinity of Langley, Kentucky; (ii) gas refrigeration and chilling equipment, gas compression and cooling equipment, product separation and fractionation vessels, product storage vessels, and associated condensing, heating, compressing, pumping, conveying, and other equipment and instrumentation; (iii) all existing piping, valves and fittings; including any refrigeration compression required by plant operations; (iv) all control systems and equipment; (v) all measurement and communications equipment; (vi) all utility system; and including all structures associated with those facilities; and (vii) all easements, rights-of-way, and other property rights pertaining to the construction and operation

 

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of those facilities wherever those facilities, structures, easements, rights-of-way, and other property rights are located.

 

Siloam Facility.  MEA’s Siloam fractionation facility located near South Shore, Kentucky, including (i) any treating equipment, products separation and fractionation vessels; (ii) all above ground products storage vessels and all below ground products storage caverns and facilities; (iii) all associated condensing, heating, pumping, conveying, and other equipment and instrumentation; (iv) all structures associated with those facilities; (v) all products loading facilities, including railcar loading, truck loading and barge loading facilities; (vi) all control systems and equipment; (vii) all measurement and communication equipment; (viii) all utility systems, and including all structures associated with those facilities; and (ix) all easements, rights-of-way, and other property rights pertaining to the construction and operation of those facilities wherever those facilities, structures, easements, rights-of-way, and other property rights are located.

 

Sold.   Any physical sale or similar transaction.

 

ARTICLE 2
EQUITABLE COMMITMENTS

 

2.1                                 (a) As of the Effective Date and subject to the restrictions set forth in this Article 2 and elsewhere in this Agreement, Equitable commits to deliver ** calculated on an average daily basis during an Accounting Period.  If the Plant Products are ** MEA shall have the right to receive, fractionate and market other natural gas liquids of the Equitable Group **, if any, if there is available capacity at the Siloam Facility, and subject to the following terms:

 

(i)                                    if the production of Plant Products on an average daily basis during an Accounting Period is **, Equitable shall deliver and MEA shall have the right to receive, fractionate and market under the terms of this Agreement, ** of natural gas liquids of the Equitable Group ** (inclusive of Plant Products) during such Accounting Period, and Equitable, ** shall deliver or cause to be delivered, such natural gas liquids to the applicable Delivery Point.  Such rights to natural gas liquids of the Equitable Group shall be binding upon any successors or transferees of the Equitable Group; and

 

(ii)                                 if the production of Plant Products on an average daily basis during an Accounting Period is **, MEA shall have the right ** of natural gas liquids produced by Equitable ** (inclusive of Plant Products) during such Accounting Period.  In that event, Equitable shall give MEA at least 30 days advance written notice of the quantity of such natural gas liquids that will be available.  MEA shall have 15 days following receipt of that notice in which **

 

(b)                                 In addition, and subject to the last sentence of this Section 2.1, if MEA’s Share of Plant Products and natural gas liquids in an Accounting Period falls below the

 

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level set forth in the “Maximum Daily Plant Products and Natural Gas Liquids” column of the chart in Section 7.1(b) of this Agreement, Equitable shall either **  The obligations in this Section 2.1 are subject to Equitable’s right to reduce or prorate the delivered amount of Plant Products and natural gas liquids as a result of **

 

2.2                               Nothing herein shall constitute any guarantee or warranty by Equitable of minimum volumes of natural gas delivered to the Plant, or the content of hydrocarbon liquids thereof, or the amount of Plant Products recovered therefrom or that there exists sufficient trucking capacity and/or pipeline capacity to effectuate delivery of the Plant Products and natural gas liquids, as set forth in Section 2.1, to the applicable Delivery Point.

 

2.3                               Equitable will operate the Plant in accordance with the standard a prudent operator under similar conditions would operate, and in compliance with applicable laws, rules and regulations.

 

2.4                               Equitable will provide MEA with reasonable opportunity to utilize ** on terms that are mutually agreeable to Equitable and MEA, provided that MEA will be responsible for **

 

2.5                               Equitable commits to use commercially reasonable efforts to construct the Langley Plant and to put it in service for use under the terms of this Agreement by **.

 

2.6                               In addition, and as a material inducement for MEA to expand its Siloam Facility, Equitable commits to cause itself or an affiliate of Equitable to construct and place into service, within a commercially reasonable time, the replacement for the current Equitable Pipeline, ** (the “Replacement Equitable Pipeline”).

 

ARTICLE 3
MEA COMMITMENTS

 

3.1                               Subject to the other provisions of this Agreement, as of the Effective Date, MEA shall

 

(a)                                Receive the natural gas liquids (inclusive of Plant Products) delivered by Equitable at the applicable Delivery Point, fractionate such Plant Products and natural gas liquids at the Siloam Facility, market (in the manner set forth in Section 7.3 of this Agreement) the fractionated components derived from the Plant Products and natural gas liquids and remit payment to Equitable for such Plant Products and natural gas liquids pursuant to the provisions of Article 7 below.

 

(b)                               As of the Effective Date:

 

(i)                                    MEA shall arrange for fractionation at the Siloam Facility and pipeline transportation from the point where the Replacement Equitable Pipeline interconnects with MEA’s liquid line (collectively, the “Capacity”) of up to a maximum of ** gallons, on any day, of Plant Products and natural gas liquids delivered by Equitable hereunder; provided, however, MEA shall

 

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not be responsible to provide such pipeline transportation until such time as the Replacement Equitable Pipeline is placed into service, or at such time that Equitable has the ability to deliver natural gas liquids (inclusive of Plant Products) to the ** through a partially completed Replacement Equitable Pipeline, it being understood that any such commitment on the part of MEA is subject to the terms herein (including but not limited to Article 4 and Article 5) and MEA’s ability to meet any regulatory or safety requirements with regards to operating the MEA Pipeline.  Equitable will give MEA at least 30 days advance written notice prior to commencing deliveries to **; provided, however, such deliveries to ** may not commence prior to **.

 

(ii)                                MEA shall arrange for trucking and provide capacity for truck unloading at the Siloam Facility of up to a maximum of ** gallons, on any day, of Plant Products and natural gas liquids delivered by Equitable hereunder.

 

(c)                                  Prior to the commencement of operations of the Replacement Equitable Pipeline, MEA will arrange truck transportation, and Equitable will cooperate and coordinate deliveries with MEA, as to delivery of Plant Products and natural gas liquids to the Siloam Facility by truck transportation in quantities above the applicable volumes set forth in Section 3.1(b)(ii) above and Section 3.1(d) below, as MEA, in its sole and reasonable discretion, determines it can accommodate at the Siloam Facility.  **  On a weekly or more frequent basis, each party shall keep the other reasonably informed as to any expected ** and as to any expected need to utilize any available ** and shall cooperate and coordinate with each other regarding the availability and utilization thereof.  Equitable’s first right to use **  Equitable shall have the right to make alternate delivery, transportation, and/or fractionation and related marketing arrangements with third parties for any portion of Plant Products or natural gas liquids that MEA is unwilling or unable to accept under this Agreement; provided, such alternate arrangements shall be for as short a time period as is practicable, and shall not extend beyond the date that the Replacement Equitable Pipeline is placed into service.

 

(d)                                 Notwithstanding anything to the contrary herein, MEA will have the following available capacities at the Siloam Facility for truck unloading and for fractionation of Plant Products and natural gas liquids by the following dates:

 

(i)                                     ** gallons per day by **; and

 

(ii)                                  ** gallons per day by ** (“First Expansion Date”).

 

(e)                                  By ** (“Second Expansion Date”), MEA shall provide Capacity for a total of ** gallons per day of Plant Products and natural gas liquids delivered by Equitable hereunder through the Replacement Equitable Pipeline.

 

(f)                                    MEA may accelerate the First Expansion Date to no earlier than ** (and such earlier date shall be referred to as the “Early First Expansion Date”); and may

 

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accelerate the Second Expansion Date to no earlier than ** (“Early Second Expansion Date”).  If either of the foregoing Early Expansion Dates will become effective, due to MEA providing the capacities required before the applicable Expansion Date, MEA will give written notice to Equitable of the completion of the expansion to provide the applicable capacity and the applicable Early Expansion Date will be effective two days following such notice.

 

(g)                                 MEA commits to expand the MEA Pipeline and Siloam Facility as necessary to provide an additional ** gallons per day of Capacity over that provided pursuant to 3.1(e) above, for Plant Products and natural gas liquids delivered by Equitable hereunder, on the following terms and conditions:

 

(i)                                    Equitable shall have the right to request incremental additional Capacity above the ** gallons per day Capacity by providing MEA with written notice ** in advance of the date on which Equitable anticipates the need for any portion of such requested incremental additional Capacity (“Incremental Capacity Start-Up Date”). The request shall cover Equitable’s anticipated requirements for additional Capacity for the ** period following the Incremental Capacity Start-Up Date (“Ramp-Up Period”), and the request shall include reasonable projections of the need for incremental additional Capacity on a monthly basis during the Ramp-Up Period, up to the total of the requested additional Capacity (the “Ramp-Up Schedule”).

 

(ii)                                 MEA shall have no obligation to provide total Capacity to Equitable for Plant Products and natural gas liquids delivered by Equitable hereunder in excess of ** gallons per day.

 

(iii)                              Each request for additional Capacity shall be in increments of ** gallons per day or greater; provided, if a request for additional Capacity occurs when the difference between ** gallons per day and the then current Capacity is less than ** gallons per day, such request may be made for the remaining increment to bring total capacity to ** gallons per day.

 

(iv)                             MEA shall acknowledge and confirm, in writing, Equitable’s request(s) for capacity within twenty (20) days of receipt.

 

(v)                                MEA shall construct, install and make operational the requested additional Capacity in increments and with timing that meets the Ramp-Up Schedule submitted by Equitable for the applicable Ramp-Up Period.

 

(vi)                             **, with respect to the incremental Capacity increases requested by Equitable under this Section 3.1(g).

 

3.2                                 Notwithstanding anything to the contrary herein, within ninety (90) days from the date hereof, MEA and Equitable shall cooperate to identify other options, and the associated costs for implementing such options, that may be available to increase the available capacity at the Siloam Facility for truck unloading and for fractionation of Plant Products and natural gas

 

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liquids to ** gallons per day, or to identify other options, and costs, to market unfractionated natural gas liquids to other markets.  The undertaking and implementation of any of the foregoing options shall be subject to the mutual agreement of the parties which shall include agreement upon the allocation of any incremental costs which would be incurred in implementing such option.

 

3.3                                 MEA will operate the MEA Pipeline and the Siloam Facility in accordance with the standard a prudent operator under similar conditions would operate, and in compliance with applicable laws, rules and regulations.

 

3.4                                 Equitable and MEA acknowledge and agree that, contemporaneous with the execution of this Agreement, the parties have amended that certain Netting, Financial Responsibility and Security Agreement by and between Equitable Production Company and MarkWest Hydrocarbon, Inc., dated September 23, 2004, that certain Netting, Financial Responsibility and Security Agreement by and between Equitable Production Company and MEA, dated September 23, 2004 and/or entered into other agreements to provide for performance assurances by MarkWest Hydrocarbon, Inc. in the event of a decline in MEA’s financial condition and for certain changes in the value and volume of fractionated products under this Agreement.

 

ARTICLE 4
QUALITY SPECIFICATIONS

 

4.1                                 The Plant Products, and other natural gas liquids, delivered by Equitable to MEA from the Plant shall be of a quality which, when fractionated, meets the applicable specifications set forth on Exhibit A, attached hereto.  In particular, but without limiting the other specifications on Exhibit A, the Plant Products and other natural gas liquids delivered hereunder shall only contain such amount of ethane such that the propane products fractionated by MEA will not exceed the ethane content set forth on Exhibit A.

 

4.2                                 Should any of the Plant Products or natural gas liquids fail to meet the above specifications, then:

 

(a)                                  MEA may take receipt of the non-conforming Plant Products or natural gas liquids, and that receipt shall not be construed as a waiver or change of standards for future Plant Product or natural gas liquid deliveries; or

 

(b)                                 MEA may, at its sole but reasonable discretion, cease receiving the non-conforming Plant Products or natural gas liquids, and shall notify Equitable that it has, or will, cease receiving the non-conforming Plant Products or natural gas liquids; provided that such rejection shall not otherwise excuse Equitable from its delivery obligations pursuant to Section 2.1 of this Agreement for the time period during which MEA ceases receiving deliveries.

 

4.3                                 All Plant Products and natural gas liquids delivered to ** shall be delivered at a pressure sufficient to effect delivery into ** at the pressures at the **.  Plant Products and natural gas liquids delivered to ** will be delivered at as uniform of flow rate as is practical.

 

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4.4                                 All MEA deliveries at Equitable facilities shall comply with Equitable’s safety policies and procedures.

 

ARTICLE 5
MEASUREMENT

 

5.1                                 Truck Measurement.  Until the Replacement Equitable Pipeline has been constructed, installed and made operational, quantities of Plant Products and natural gas liquids delivered into trucks at the ** will be determined by weighing each truck, using State certified scales, both full and after the Plant Products and natural gas liquids have been unloaded and calculating the weight of the Plant Products and natural gas liquids delivered.  A sample of the Plant Products and natural gas liquids will be taken and analyzed, using means and methods generally acceptable in the gas industry, to determine the component composition and specific gravity of the delivered Plant Products and natural gas liquids.  The measured weight and compositional analysis will be applied in accordance with the ASTM-IP Petroleum Measurement Tables, American Edition, ASTM designation D 1250, Table No. 24, to determine the volume of Plant Products and natural gas liquids delivered by component, corrected to 60°F.

 

5.2                                 Pipeline Interconnect Measurement.  Equitable shall design and construct a liquid hydrocarbon metering facility containing meters for both custody transfer measurement and for check measurement meeting the specifications set forth in this Agreement and reasonably acceptable to MEA.  The liquid hydrocarbons shall be measured in pounds (lbm) by coriolis meters mutually acceptable to Equitable and MEA.  Two meters shall be installed in series (Meter A and Meter B).  Meter A shall be the first meter in the line of flow and shall be designated as the “Check Meter”.  Meter B shall be the second meter in the line of flow and shall be the “Accounting Meter”.  If additional meter runs are required, they shall be configured in the same manner.  The facility will be constructed with prover loops and sufficient access for either truck mounted or trailer mounted provers so that the custody and check meters can be proved on site with ball provers (if agreed upon by the parties herein).

 

The liquid stream shall be analyzed with a gas chromatograph mutually acceptable to Equitable and MEA.  The gas chromatograph shall be housed in a temperature controlled building.  The natural gas liquid will be vaporized to a gas state prior to analysis by the chromatograph.  The analysis results shall be used to calculate the hydrocarbon liquids physical properties.  The calibration gas shall be certified by the supplier, and shall be stored and used in a temperature-controlled environment so that condensation of any component does not occur.

 

5.3                                 Btu Calculation.  The quantity of Btus in the liquid hydrocarbon stream shall be calculated by using the accumulated mass of the hydrocarbon liquid stream from the Accounting Meter and the weight percent of each liquid hydrocarbon component determined by chromatographic analysis.  More specifically, the calculation steps are:

 

(a)                                  Calculate the weight fraction of each component by multiplying the mole fraction of each component (from chromatographic analysis) by its molecular weight (from latest approved edition of GPA standard 2145) to obtain the weight (lbs).  The component weight is then divided by the total composite weight to obtain the weight fraction of each component.

 

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(b)                                 Calculate the composite total Btu of each pound (Btu/lbm) of liquid hydrocarbon mixture.  This is obtained by multiplying the weight fraction of each component from (a) by its standard Gross Heating Value.  For purposes of this section, Gross Heating Value is obtained from Gas Processor Association (GPA), Standard 2145, latest edition.  The value used is “Btu/lbm, fuel as ideal gas”.  Hexanes+ shall initially be 20,899 subject to subsequent determination by a mutually agreeable third-party laboratory.  Analysis shall be conducted at intervals not to exceed one year.

 

(c)                                  Calculate each liquid hydrocarbon component’s portion of the total Btu of each pound of liquid hydrocarbon by taking the total Btu of each pound (Btu/lbm) value from (b) and multiplying by the weight fraction of each component.

 

(d)                                 Calculate the total Btus in the liquid hydrocarbon stream by multiplying the total mass (lbm) from the Accounting Meter by the total Btus per pound (Btu/lbm) from (c).

 

5.4                                 Meter Operation.  MEA shall own and be responsible for the operation and maintenance and all associated operation and maintenance costs of the Accounting Meter(s).  Equitable shall own and be responsible for the operation and maintenance and all associated operation and maintenance costs of the Check Meter(s).  An online comparison of the difference in measurements by the two (2) meters shall be maintained.  If the difference between the daily accumulated total mass flow readings (lbm) at Meter A and Meter B exceeds 1% of the reading of Meter B, for longer than (10) consecutive days, the meter with the smaller mass flow reading shall be returned to the factory for repair and calibration.  The calibration may also be performed by mutually agreed upon means between Equitable and MEA. The remaining meter will serve as the Accounting Meter during this period.  After calibration of the meter with the smaller mass flow reading, if the difference between the meter readings still exceeds 1% of the meter of Meter B, for longer than ten (10) consecutive days, then the other meter will be returned to the factory for repair and calibration or calibrated by means mutually agreed upon between Equitable and MEA.  Readings during the period where the difference exceeds 1% shall be adjusted to reflect readings based upon the meter determined to be more accurate during that period.  If both Meter A and Meter B should fail, recordings and quantities shall be determined as followed in descending order:

 

(a)                                  Using measurement from other check meters, if any, which were in operation during the period to be corrected; or if this cannot be done,

 

(b)                                 By correcting the error if the percentage of error is ascertainable by calibration or calculation; or if this cannot be done,

 

(c)                                  By comparison with quantities flowing under similar conditions when the meter was registering accurately and by the use of pertinent plant records, including, but not limited to, storage tank readings.

 

(d)                                 If the preceding methods cannot be done, an alternate method agreed to by the parties herein shall control.

 

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Any correction shall be retroactive for any period definitely known or, if not known, it shall be retroactive for one-half of the volume displaced since the last test of the measuring equipment affected, not to exceed 50% of the volume displaced.  However, no correction shall be made if the magnitude of the error is determined to be .0050 (0.50%) or less.  Any corrections shall be debited or credited on the next subsequent statements for the Accounting Period.

 

5.5                                 Measurement Accuracy and Testing.  The liquid hydrocarbon measurement equipment shall be calibrated at least once every 12 month period.  The calibration procedure will be either the manufacturer’s recommended methods or by other means mutually agreed upon by Equitable and MEA.  The calibration frequency may be altered in the future if agreed upon by both parties in writing.  The Check Meter will serve as the Accounting Meter during all periods the Accounting Meter is out of service. When the Accounting Meter is returned, the Check Meter shall be calibrated by the same method as the Accounting Meter.  If a meter is calibrated due to differences exceeding 1% of Meter B before the 12 month period is reached, the period between calibrations will start at the last completed calibration.  MEA and Equitable shall share all costs of recalibration.  Each party shall promptly provide the other the results of all meter calibrations in writing following their receipt of the results.

 

If field meter proving equipment is used for calibration, it shall be designed, manufactured, and tested in accordance with Chapter 4 of the “API Manual of Petroleum Measurement Standards” as current at the time of such design, manufacture, and testing.  Proving equipment shall be recertified to NIST (National Institute of Standards and Technology) at least annually.  Meter proving shall be done at least annually by a mutually agreed upon third party meter proving service, in accordance with Chapters 4 and 5 of the “API Manual Of Petroleum Measurement Standards”, as amended from time to time.  The calibration frequency may be altered in the future if agreed upon by both parties in writing.  Recalibration of gravitometers, densitometers or such other similar devices, or the determination of a gravitometer adjustment factor shall be done once per quarter, by use of a pyonometer to an accuracy of fifty one-hundredths percent (0.50%).

 

The chromatographic equipment shall be tested and recalibrated on a monthly basis.  MEA shall own and be responsible for the operation and maintenance and all associated operation and maintenance costs of the chromatograph.  At any time that inaccuracies in the chromatograph is suspected, MEA shall obtain samples of the natural gas liquid and calibration gas and shall have a mutually agreeable third party laboratory analyze the samples.  If inaccuracies are found, the calibration gas shall be changed to be representative of the natural gas liquid.

 

Both parties shall have access to the metering equipment at all reasonable times.  Each party must notify the other party a minimum of twenty four (24) hours in advance of any planned testing, calibrations, or meter provings.  Each party may have a representative present during any of the foregoing activities.   Representatives of both parties shall have the right to be present during any repairing, inspecting, testing, calibrating, or adjusting done in connection with the measuring equipment. Each party reserves the right at a future date to install additional check meters; such meters shall be of a type mutually agreeable to both parties and shall not be installed in such a manner as to interfere with the proper operation of other existing measurement equipment.

 

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If either party to this Agreement notifies the other party that it desires a special test of any measuring equipment, the parties shall cooperate to secure a prompt verification of such equipment, at the expense of the party requesting such special test.  However, if a meter or other equipment is found to be in error by more than 1%, MEA shall bear the expense of such special test.

 

5.6                                 Standards.  The measurement equipment shall maintained and operated in accordance with the latest amended and revised edition of (a) “API Manual of Petroleum Measurement Standards”, Chapters 1, Vocabulary; Chapter 4, Proving Systems; Chapter 5, Metering; Chapter 12, Calculation of Petroleum Quantities; and Chapter 14, Section 6, Installing and Proving Density Meters; (b) GPA Publication 2145-95, “Table of Physical Constants of Paraffin Hydrocarbons and Other Components of Natural Gas”; (c) GPA Publication 2174, “Methods for Obtaining Hydrocarbon Fluid Samples Using a Floating Piston Cylinder”; (d) GPA Publication 2177, “Methods for Analysis of Demethanized Natural Gas Liquid Mixtures by Gas Chromatography”; (e) GPA Publication 8173, “Standard for Converting Natural Gas Liquids and Vapors to Equivalent Liquid Volumes”; and (f) GPA Publication 8182, “Standard for the Mass Measurement of Natural Gas Liquids”, and any other API and GPA standards and publications that are considered industry standards that are applicable.

 

5.7                                 Record Retention.  All records shall be retained for audit purposes for a period of two (2) years or a longer period if required by any applicable law and/or regulatory body.  Each party reserves the right to contract outside services to participate in any audits or review of data.

 

5.8                                 Flow Computer / RTU.  The custody transfer flow computer / RTU shall be mutually agreed upon by both parties.  MEA shall operate and maintain the custody transfer flow computer / RTU.  Equitable shall have the right to install an audit flow computer / RTU and share any electronic signals that are necessary to audit the station.

 

5.9                                 Gallons Calculation.  For purposes of fees and compensation, gallons of individual Plant Products and natural gas liquids shall be calculated in the following manner:

 

Divide the individual Plant Product or natural gas liquid mass (lbm) by the individual liquid absolute density (lbm/gal).  The individual liquid absolute density values shall be taken from the latest edition of GPA Standard 2145, except for the component “Hexanes plus”, for which “pounds per gallon” shall be analytically determined.

 

ARTICLE 6
TITLE TO PLANT PRODUCTS AND NATURAL GAS LIQUIDS

 

6.1                                 Title to, and risk of loss for, and full responsibility for, all Plant Products and natural gas liquids delivered under this Agreement shall transfer and pass from Equitable to MEA at the ** Delivery Point or the ** Delivery Point, as applicable.

 

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ARTICLE 7
FEES AND COMPENSATION

 

7.1                                 From and after the Effective Date, for each Accounting Period during the term of this Agreement, MEA shall pay to Equitable ** delivered to MEA by Equitable at the applicable Delivery Point during that Accounting Period, less the proceeds allocable to “MEA’s Share”, as defined below; minus the fees payable to MEA under Sections 7.4 and 7.5, below (the “Products Proceeds”).  For purposes of this Article 7, “MEA’s Share” of the proceeds attributable to Fractionated Products derived from Equitable’s Plant Products and natural gas liquids shall be as follows:

 

(a)                                  Prior to **, MEA will be entitled to retain proceeds attributable to ** of the Plant Products and natural gas liquids delivered by Equitable hereunder.

 

(b)                                 Beginning on **, and, subject to Section 7.1(c) below, and continuing through the end of the Term, MEA’s retention of proceeds derived from all Plant Products and natural gas liquids delivered by Equitable to MEA under this Agreement shall be determined from the following table:

 

**

 

(c)                                  However, if **, MEA’s Share will be set at ** and will not be ** set forth above, until **.

 

(d)                                 Accounting hereunder shall be on an Accounting Period basis, and the reference in the foregoing table to daily volumes means the average daily volume during the month.

 

(e)                                  As used herein, “Third Party Gas” means gas (i) produced from any Non-Operated Well within the area described on Exhibit C and (ii) delivered to the Plant.  As used herein, “Non-Operated Well” means a well not (i) currently operated by Equitable, Equitable Production Company or an Affiliate of either, or a successor or assign thereto and/or (ii) operated at any time after the date hereof by Equitable, Equitable Production Company or an Affiliate of either, or a successor or assign thereto.  “Qualifying Third Party Gas” means “Third Party Gas” **

 

(f)                                    **  The foregoing will not be subject to the Maximum Daily Plant Products and Natural Gas Liquids set forth in the table above.   Examples of calculations to determine the additional retained natural gas liquids under certain scenarios in accordance with this Section 7.1(f) are set forth in Exhibit D.

 

7.2                                 If the MEA Pipeline is unable to receive and/or transport Plant Products and natural gas liquids or the Siloam Facility is unable to fractionate the Plant Products or natural gas liquids, for any reason, MEA shall use commercially reasonable efforts to utilize substitute means of receiving and/or transporting and/or fractionating Plant Products and natural gas liquids

 

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for the ultimate sale of components hereunder so long as such substitute means are pre-approved by Equitable and Equitable has not elected to exercise its right to make alternate arrangements under Section 3.1(c).  Any temporary increase in cost of transporting or fractionating Plant Products and natural gas liquids incurred as a result of such substitute means approved by Equitable during such inability shall be ** MEA shall use all reasonable efforts to remedy the disability and provided further that **

 

7.3                                 All Fractionated Products shall be marketed by MEA in a commercially reasonable manner.

 

7.4                                 From the applicable proceeds due Equitable under Section 7.1, above, MEA will deduct the following fees:

 

(a)                                  A ** per gallon of Plant Products and natural gas liquids as measured at the applicable Delivery Point; plus

 

(b)                                 A ** of Plant Products and natural gas liquids **, averaged over an Accounting Period.

 

(c)                                  The foregoing fees shall be applicable to the portion of Plant Products and natural gas liquids allocable to the Fractionated Products for which Equitable receives the proceeds under Section 7.1, i.e., not applicable to MEA’s Share.

 

(d)                                 ** will be subject to adjustment, beginning on February 1, 2008, in proportion to the annual percentage change, from the preceding year, in the Producer Price Index for Support Activities for Oil and Gas Operations (NAICS 213112), as published by the U.S. Department of Labor.  The adjustment of those fees shall be made effective upon each February 1, and shall reflect the annual average percentage change in the foregoing index during the immediately preceding calendar year.  In the event the Producer Price Index ceases to be published, the parties shall mutually agree to an alternative published price index to carry out the provisions of this section, and any dispute regarding a replacement index shall be resolved under the dispute resolution procedures set forth in Section 13.7 below.

 

**

 

a.                                       Equitable shall pay MEA the ** on the ** as determined below, if any, effective as of the following dates.  The following shall be determined on an Accounting Period basis:

 

i.                                          Commencing **, the ** will be calculated by subtracting the **; provided, however, that if the ** exceed ** shall be applied to only the **

 

ii.                                       Commencing **, the ** will be calculated by subtracting the **; provided, however, that if the ** exceed ** shall be applied to only the **; and

 

iii.                                    Commencing **, the ** will be calculated by subtracting the **; provided, however, that if the ** exceed ** shall be applied to only the **.

 

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iv.                                   If the calculation of ** is a negative amount, no ** under this Section 7.5(a) shall apply and the negative amount shall not be carried over to any subsequent Accounting Periods.

 

v.                                      For any Accounting Period in which ** under this Section 7.5(a) for ** are incurred, Equitable shall pay, or MEA shall deduct from amounts otherwise due hereunder, such amount.

 

(b)                                 If Equitable requests additional Capacity increases ** under Section 3.1(g), above, then Equitable shall ** applicable to the incremental capacity in the following manner:

 

(i)                                    For the then applicable incremental Capacity requested by Equitable, including incremental Capacity set forth in the Ramp-Up Schedule, each Accounting Period MEA shall determine **  If the difference is a negative amount, no ** under this Section 7.5(b) shall apply and the negative amount shall not be carried over to any subsequent Accounting Periods.

 

(ii)                                 For any Accounting Period in which a ** is incurred, Equitable shall pay, or MEA shall deduct from amounts otherwise due hereunder, an amount equal to **

 

(iii)                              The ** under this Section 7.5(b) shall be applicable to the incremental Capacity ** requested by Equitable, commencing with the ** and continuing for a period of the longer of **.  Should the Term expire before the period during which the ** under this Section 7.5(b) apply, as set forth above, then the **

 

7.6                                 Commencing with deliveries through the Replacement Equitable Pipeline, MEA agrees to **.  The Maximum Pipeline Fee will be subject to adjustment, beginning on February 1, 2009, in proportion to the annual percentage change, from the preceding year, in the Producer Price Index for Support Activities for Oil and Gas Operations (NAICS 213112), as published by the U.S. Department of Labor.  The adjustment of that fee shall be made effective upon each February 1, and shall reflect the annual average percentage change in the foregoing index during the immediately preceding calendar year.  In the event the Producer Price Index ceases to be published, the parties shall mutually agree to an alternative published price index to carry out the provisions of this Article, and in the event that the parties cannot agree, the matter shall be submitted to the dispute resolution procedures under Section 13.7, below.

 

7.7.                              Examples of calculations to determine amounts under this Article 7, including Fees under 7.4 and ** under 7.5, under various scenarios are set forth in Exhibit D.

 

7.8                                 In addition, in consideration of the expanded truck unloading capacity to be installed at the Siloam Facility by MEA, Equitable shall pay MEA an amount of **.  Such amount shall be prorated for partial months.  As used herein, “placed into service”, means the Replacement Equitable Pipeline has been completed and has commenced deliveries of Plant Products or natural gas liquids to MEA at the ** Delivery Point.  If the Replacement Equitable

 

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Pipeline is not placed into service by **, as described in Section 7.9, until such time as the Replacement Equitable Pipeline is placed into service.

 

7.9                                 Until deliveries are made to the ** Delivery Point through the Replacement Equitable Pipeline, Equitable and MEA shall ** to cause the Plant Products and natural gas liquids to be delivered from the Plant to the Siloam Facility.  **  Upon the execution of this Agreement, such **.  Within 30 days following the execution of this Agreement, MEA shall prepare a statement and invoice to Equitable indicating the amounts due to ** in accordance with the foregoing provisions.  Equitable shall pay such invoice within 15 days of receipt.

 

7.10                           To increase marketing efficiencies and opportunities, MEA may, but is not obligated to, install, acquire or participate in a finished product pipeline running from the Siloam Facility to other destinations such as, but not limited to, the Todhunter Terminal point (near Middletown, Ohio) on the TEPPCO pipeline, approximately 100 miles from the Siloam Facility.  Such pipeline would eliminate third party trucking expenses. In the event that MEA undertakes such a project, upon deliveries through such pipeline, MEA may **  Any dispute regarding the ** will be resolved pursuant to the dispute resolution procedure in Section 13.7 below.  Before MEA proceeds with such a project it will notify Equitable of the project and of the expected costs and savings of such a pipeline.

 

7.11                           As a result of this Agreement, MEA shall not be responsible for or required to pay any royalties, production taxes, severance taxes, ad valorem taxes, or similar taxes or other taxes based upon or with respect to, or measured by the production of hydrocarbons attributable to gas delivered to the Plant or attributable to gas from which other natural gas liquids are delivered to MEA.

 

ARTICLE 8
STATEMENTS AND PAYMENTS

 

8.1                                 Based on the measurements set forth in this Agreement, MEA shall provide Equitable with payment on each Payment Date and a detailed statement explaining fully how all payments due under the terms of this Agreement were determined not later than the applicable “Payment Date”.  As used herein, the Payment Dates shall be (i) the last day of each month, covering all deliveries hereunder during the period of the 1st day through the 15th day of that same month (“First Payment Date”), and (ii) the 15th day of each month, covering all deliveries hereunder during the period of the 16th day through the last day of the immediately preceding month (“Second Payment Date).

 

8.2                                 It is understood and agreed that the payments made on the First Payment Date and on the Second Payment Date shall be based upon (x) the applicable actual Net Sales Price (or MEA’s reasonable estimate of the applicable actual Net Sales Price to the extent that the actual Net Sales Price is not known) and (y) the actual volume of Plant Products and natural gas liquids (or MEA’s reasonable estimate of such volume to the extent actual volumes are not known) for the Accounting Period in which the Plant Products and natural gas liquids were delivered to MEA under this Agreement, and (ii) shall be net of the fees payable to MEA under Article 7, hereof.  Those payments made on the First Payment Date will also include adjustments, if any, to payments made during any of the months prior to the month in which the First Payment Date

 

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occurs, as necessary to adjust for differences between the estimated Net Sales Price used in making payments and the actual applicable Net Sales Price, and between estimated volumes and actual applicable volumes.  Additionally, the payment on the First Payment Date will reflect ** per Accounting Period.

 

8.3                                 All payments shall be paid by MEA to Equitable by wire transfer not later than the applicable Payment Date for which the payments are due.  If a Payment Date falls on a Saturday or a Friday bank holiday, payment shall be made on the preceding banking day.  If the Payment date falls on a Sunday or a Monday bank holiday, payment shall be made on the succeeding banking day.  Should MEA fail to make any payments to Equitable when due, interest shall accrue on the unpaid balance at the lower of (i) the then effective prime interest rate published in the “Money Rates” section of The Wall Street Journal, plus two percent (2%), or (ii) the applicable maximum published rate allowed by law, from the date due until paid.  If a party, in good faith, disputes an amount due or any part thereof, it shall provide supporting documentation fully explaining its basis for the disputed amount.  The assertion of a disputed amount shall not be a basis for MEA to withhold payment of amounts it concedes to be correct.

 

8.4                                 Subject to the audit provisions in Section 7.1, either party, on 30 days prior written notice, shall have the right at its expense, at reasonable times during business hours, to audit the books and records of the other party to the extent necessary to verify the accuracy of any statement, allocation, measurement, computation, charge, or payment made under or pursuant to this Agreement, or to determine if all Plant Products and natural gas liquids contemplated under this Agreement are being delivered under the terms of this Agreement.  The scope of any audit shall be limited to the 24 month period immediately prior to the month in which the audit is requested; provided, no audit may include any time period for which a prior audit hereunder was conducted, and no audit may occur more frequently than once each 12 months.  The party conducting the audit shall have 60 days after requesting the audit in which to submit a written claim for adjustments, with supporting detail.  The audited party shall respond to the written claim in writing within 30 days after receiving the written claim.  All statements, allocations, measurements, computations, charges, or payments made in any period prior to the 24 month period immediately prior to the month in which the audit is requested, or made in any 24 month period for which the audit is requested but for which a written claim for adjustments is not made within 30 days after the audit is requested, plus any additional time caused by the unreasonable delays of the party being audited, shall be conclusively deemed true and correct.

 

ARTICLE 9
TERM

 

9.1                                 This Agreement shall remain in full force and effect until March 31, 2015, unless terminated earlier pursuant to the provisions of this Agreement (“Term”).

 

ARTICLE 10
FORCE MAJEURE

 

10.1                           In the event a party is rendered unable, wholly or in part, by Force Majeure, to carry out its obligations under this Agreement, other than the obligation to make any payments due hereunder, the obligations of that party, so far as they are affected by Force Majeure, shall be

 

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suspended during the continuance of the inability, and the cause of the Force Majeure, as far as possible, shall be mitigated and remedied with all reasonable dispatch.  The party affected by Force Majeure shall provide the other party with written notice of the Force Majeure event, with reasonably full detail of the Force Majeure within a reasonable time after the occurrence of the Force Majeure event.

 

10.2                           Force Majeure” shall mean any act, event or circumstance that is not reasonably within the control of, does not result from the negligence of, and would not have been avoided or overcome by the exercise of commercially reasonable diligence by, the party claiming Force Majeure and that prevents or delays in whole or in part such party’s performance of any one or more of its obligations under this Agreement.

 

10.3                           The settlement of strikes, lockouts, and other labor difficulty shall be entirely within the discretion of the party having the difficulty and nothing herein shall require the settlement of strikes, lockouts, or other labor difficulty.

 

ARTICLE 11
DEFAULT, REMEDIES AND LIABILITY

 

11.1                           The following occurrences each shall constitute an “Event of Default”.

 

(a)                                  Failure by a party to make any payment required hereunder when due if such failure is not remedied within five (5) business days after receiving written notice of such failure, provided that the payment in question is not the subject of a good faith dispute.

 

(b)                                 Failure by a party to perform any other material obligation hereunder, and such failure is not remedied within 30 days after receipt by the defaulting party of written notice of such failure, provided that so long as a party has initiated and is diligently attempting to effect a cure, the party’s cure period shall extend for a period reasonably required to effectuate such cure, but not to exceed 120 days;

 

(c)                                  Any representation or warranty made by a party in this Agreement shall have been false in any material respect when made, and is not remedied within 30 days after receipt by the defaulting party of written notice of such failure, provided that so long as a party has initiated and is diligently attempting to effect a cure, the party’s cure period shall extend for a period reasonably required to effectuate such cure, but not to exceed 120 days.

 

(d)                                 A party (i) makes an assignment for the benefit of its creditors, (ii) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy or similar law for the protection of creditors, (iii) has such petition filed against it and such petition is not withdrawn or dismissed for sixty (60) days after such filing, (iv) becomes insolvent or, (v) is unable to pay its debts when due.

 

11.2                           Termination Upon an Event of Default.

 

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(a)                                  Upon the occurrence of, and during the continuation of, an Event of Default, the non-defaulting party may terminate this Agreement by written notice to the other party designating the date of termination and delivered to the defaulting party no less than ten days before such termination date.

 

(b)                                 In the event of a termination of this Agreement, the parties’ respective obligations under this Agreement shall terminate (other than those obligations which expressly are to be performed after termination).  Upon an event of default or termination, and subject to the provisions of Section 13.7, each party shall be free to pursue any remedies available to it at law or in equity.

 

11.3                           As between the parties hereto, Equitable and any of its designees shall be in custody, control and possession of the Plant Products and natural gas liquids hereunder until the Plant Products and natural gas liquids are delivered to the applicable Delivery Point.  As between the parties hereto, MEA and any of its designees shall be in custody, control and possession of the Plant Products and natural gas liquids, and the Fractionated Products derived therefrom, from and after their delivery at the applicable Delivery Point.

 

11.4                           MEA hereby covenants and agrees with Equitable that except to the extent caused by Equitable’s or Equitable’s Indemnified Parties (as defined below) gross negligence or willful misconduct or breach hereof, MEA shall protect, defend, indemnify and hold harmless Equitable, its parents, subsidiaries and affiliates, and each of their respective officers, employees, shareholders, equity holders, agents, and their successors and assigns (hereinafter referred to as the “Equitable’s Indemnified Parties”) from, against and in respect of any and all Losses (as hereinafter defined) incurred by Equitable or any of Equitable’s Indemnified Parties to the extent those Losses arise from or are related to:  (a) MEA’s operations or facilities from and after the applicable Delivery Point, including without limitation, MEA’s operations or facilities within the Siloam Facility, or (b) MEA’s possession and control of the Plant Products, natural gas liquids and Fractionated Products.  Notwithstanding anything to the contrary herein, MEA assumes all risk of loss to the Plant Products and natural gas liquids delivered under this Agreement to the extent any loss occurs as a result of MEA’s or its agent’s faulty equipment or their negligent acts or omissions or intentional misconduct.

 

11.5                           Equitable hereby covenants and agrees with MEA that except to the extent caused by MEA’s or MEA’s Indemnified Parties (as defined below) gross negligence or willful misconduct or breach hereof, Equitable shall protect, defend, indemnify and hold harmless MEA, its parents, subsidiaries and affiliates (including, but not limited to MarkWest Hydrocarbon, Inc.), and each of their respective officers, employees, shareholders, members, equity holders, agents, and their successors and assigns (hereinafter referred to as the “MEA’s Indemnified Parties”) from, against and in respect of any and all Losses (as hereinafter defined) incurred by MEA or any of MEA’s Indemnified Parties to the extent those Losses arise from or are related to:  (a) Equitable’s operations or facilities before the applicable Delivery Point or (b) Equitable’s possession and control of the Plant Products and natural gas liquids.  Notwithstanding anything to the contrary herein, Equitable assumes all risk of loss to the Plant Products and natural gas liquids delivered under this Agreement to the extent any loss occurs as a result of

 

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Equitable’s or its agent’s faulty equipment or their negligent acts or omissions or intentional misconduct.

 

11.6                           For the purposes of this Article, “Loss(es)” shall mean any actual loss, cost, expense, liability, damage, demand, suit, sanction, claim, settlement, judgment, lien, fine, penalty, interest of every kind and character (including reasonable fees and expenses of attorneys, technical experts and expert witnesses reasonably incident to same) which are alleged, asserted or suffered by the applicable indemnified party, and any expenses incurred in enforcing this indemnity provision, incurred by, imposed upon or rendered against one or more of the applicable indemnified party, on account of injuries (including death) to any person or damage to or destruction of any property, sustained or alleged to have been sustained in connection with or arising out of or incidental to the matters for which the indemnifying party has indemnified the applicable indemnified party, and whether based on contract, tort or pursuant to any then existing laws, rules or regulations of any governmental body having jurisdiction with respect thereto.

 

11.7                           Insurance.  Each party shall maintain, either from an insurance provider or through self insurance, insurance coverage sufficient to cover its liabilities under this Agreement, but in no case less than the amount set forth on Exhibit E.

 

11.8                           Indemnification Procedure.  The indemnifications contained in this Article shall be implemented as follows:

 

(a)                                  Notice of Claim.  The party seeking indemnification under the terms of this Agreement (“indemnified party”) shall submit a written “Claim Notice” to the other party (“indemnifying party”) which, to be effective, must state:  (i) the amount, if any, of each payment claimed by an indemnified party to be owing, (ii) the basis for the claim, with reasonable supporting documentation, and (iii) to the extent reasonably possible, each separate item of Loss for which payment, or other performance under the Article, is so claimed.  If the Claim Notice demands payment of money, the amount claimed shall be paid by the indemnifying party to, and only to, the extent required herein within 30 days after receipt of the Claim Notice or after the amount of that payment has been finally established, either judicially or by mutual agreement, whichever last occurs.

 

(b)                                 Claims Involving Litigation.  Within 30 days after notification to any indemnified party with respect to any claim or legal action or other matters that may result in a Loss for which indemnification may be sought under this Article, but in any event in time sufficient for the indemnifying party to contest any action, claim, proceeding or other matter that has become the subject of proceedings before any court or tribunal, the indemnified party shall give written notice of the claim, legal action or other matter to the indemnifying party and, at the request of the indemnifying party, shall furnish the indemnifying party or its counsel with copies of all pleadings and other information with respect to the claim, legal action or other matter.  If the information includes any matter which is privileged or otherwise exempt from discovery by an adverse party, disclosure of that matter may be made contingent upon entering into a joint defense agreement or taking other reasonable protective measures.  The failure to provide that notice within

 

19



 

the time specified shall not relieve an indemnifying party of its indemnity obligations hereunder except to the extent of any Losses which are attributable to that failure.  Upon the election of the indemnifying party made within 60 days after receipt of that notice by the indemnifying party, indemnifying party shall have the right to assume control of that claim, legal action or other matter (to the extent only that the claim, legal action or other matter relates to a Loss for which the indemnifying party is liable), including the determination of all appropriate actions, the negotiation of settlements on behalf of the indemnified party, and the conduct of litigation through attorneys of the indemnifying party’s choice, provided, however, that no settlement can result in any liability or cost to the indemnified party for which it is entitled to be indemnified hereunder without its consent, which consent shall not be unreasonably withheld.  If the indemnifying party elects to assume control, (i) any expense incurred by the indemnified party thereafter for investigation or defense of the matter shall be borne by the indemnified party and (ii) the indemnified party shall give all reasonable information and assistance, other than pecuniary, that the indemnifying party shall deem necessary to the proper defense of the claim, legal action, or other matter, subject to the requirements, if applicable, of a joint defense agreement or reasonable protective measures as referred to above.  In the absence of an election, the indemnified party will use good faith efforts to defend, at the indemnifying party’s expense any claim, legal action or other matter to which the other party’s indemnification under this Article applies until the indemnifying party assumes the defense, and, if the indemnifying party fails to assume that defense within the time period provided above, at the indemnified party’s election either continue the defense thereof, at the indemnifying party’s expense, or settle the same in the indemnified party’s reasonable discretion, and with the consent of the indemnifying party, which consent shall not be unreasonably withheld, at the indemnifying party’s expense.

 

11.9                           NO BREACH OF THIS AGREEMENT SHALL CAUSE ANY PARTY HERETO TO BE LIABLE TO THE OTHER PARTIES HERETO FOR, INDIRECT, PUNITIVE, CONSEQUENTIAL, OR EXEMPLARY DAMAGES.  However, the foregoing does not in any way limit an indemnifying party’s liability under its indemnification obligation under this Agreement for indemnification against indirect, punitive, consequential, or exemplary damages arising out of a claim or award of such damages to a third party for which indemnification may be sought under this Agreement.

 

ARTICLE 12
WARRANTIES

 

12.1                           Each party represents and warrants that it is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, and is qualified to conduct its business in all jurisdictions necessary to perform its obligations hereunder.

 

12.2                           Each party represents and warrants that the execution, delivery and performance of this Agreement are within its powers, have been duly authorized by all necessary action and do not violate any of the terms or conditions in its governing documents or any agreement to

 

20



 

which it is a party, or any law, rule, regulation, order, writ, judgment, decree or other legal or regulatory determination applicable to such party

 

12.3                           Each party represents and warrants that this Agreement constitutes a legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms.

 

12.4                           Each party represents and warrants that to such party’s knowledge, there are no liens, adverse claims or other encumbrances; and no actions, proceedings, judgments, rulings or orders, issued by or pending before any court or other governmental body that would materially adversely affect its ability to perform this Agreement.

 

12.5                           Equitable represents and warrants that it owns, or has the right to commit, all Plant Products and natural gas liquids committed hereby and has the right to deliver and sell the Plant Products and natural gas liquids to MEA for the purposes of this Agreement, free and clear of all liens, encumbrances and adverse claims.  Equitable hereby indemnifies MEA against and holds MEA harmless from any and all damages, claims, actions, losses, and costs, including its court costs and attorneys fees, arising out of or related to any breach of the foregoing representation and warranty.

 

12.6                           MEA represents and warrants that it has the right and ability to turn over proceeds from the sale of Fractionated Products, as required in Article 7 of this Agreement, free and clear of all liens, encumbrances and adverse claims.  MEA hereby indemnifies Equitable against and holds Equitable harmless from any and all damages, claims, actions, losses, and costs, including its court costs and attorneys fees, arising out of or related to any breach of the foregoing representation and warranty.

 

12.7                           OTHER THAN THOSE WARRANTIES EXPRESSLY SET FORTH IN THE TERMS OF THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS, IMPLIED, ORAL, WRITTEN OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH REPRESENTATIONS AND WARRANTIES ARE EXPRESSLY DISCLAIMED AND WAIVED BY THE PARTIES.

 

ARTICLE 13
MISCELLANEOUS

 

13.1                           The failure of any party hereto to exercise any right granted hereunder shall not impair nor be deemed a waiver of that party’s privilege of exercising that right at any subsequent time or times.

 

13.2                           This Agreement shall be subject to all applicable state, federal and local laws, rules and regulations, and the parties hereto shall be entitled to regard all those laws, rules and regulations as valid, and may act in accordance therewith until they may be invalidated by final judgment in a court of competent jurisdiction.

 

13.3                           This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Kentucky without regard to choice of law principles. It is agreed that

 

21



 

venue regarding any action or proceedings with respect to any claim or dispute arising out of or related to the matters described herein shall lie exclusively in the Federal Court for the Eastern District of Kentucky, or, if the Federal Court does not exercise jurisdiction, in the State Court located in Fayette County, Kentucky.

 

13.4                           This Agreement shall extend to and inure to the benefit of and be binding upon the parties hereto, and their respective successors and assigns.  Neither party may assign this agreement, in whole or in part, without the prior written consent of the other party which consent shall not be unreasonably withheld or delayed; provided, however, that without the need for consent: (a) Equitable shall have the right to assign its rights and obligations under this Agreement to any wholly-owned Affiliate that owns and operates the Plant; provided, the foregoing permitted assignment shall not relieve Equitable of its obligations under this Agreement unless otherwise expressly agreed  to in writing by MEA; and (b) MEA shall have the right to assign its rights and obligations under this Agreement to any wholly-owned Affiliate that owns and operates the Siloam Facility; provided, the foregoing permitted assignment shall not relieve MEA of its obligations under this Agreement unless otherwise expressly agreed  to in writing by Equitable.  The failure of either party to provide written consent to a written notice and request for a proposed assignment within twenty (20) days of receipt of the notice and request, shall be deemed as approval by such party of the proposed assignment, provided, again the assignment shall not relieve a party of its obligations under this Agreement unless otherwise expressly agreed to in writing by the other party.  No assignment of this Agreement or of a Party’s rights and obligations under this Agreement, shall be binding on either of the parties hereto, other than the party selling, transferring, assigning or conveying its interests in this Agreement, until the first day of the Accounting Period following the date a certified copy of the instrument evidencing that sale, transfer, assignment or conveyance has been delivered to the other party.

 

13.5                           Nothing herein contained shall be deemed to create a partnership, mining partnership, joint venture or an association between or among the parties hereto and each party shall be deemed to act in connection with its performance of this Agreement for itself, and not for the other, and no party hereto shall be liable, or responsible for any acts of the other by virtue of the relationship created under this Agreement.

 

13.6                           The parties agree to keep the terms of this Agreement, and any information disclosed during any audits permitted hereunder, confidential and not disclose the same to any other persons, firms or entities without the prior written consent of the other party; provided, the foregoing shall not apply to disclosures compelled by law, rule or regulation, including without limitation the rules and regulations of a stock exchange or the Securities Exchange Commission, or court order; or to disclosures to a party’s financial advisors, consultants, attorneys, banks, and institutional investors; or to disclosures to prospective purchasers of the Plant, Siloam Facility, Equitable Pipeline or MEA Pipeline, provided those prospective purchasers likewise agree to keep this Agreement confidential. No announcement or press release relating to this Agreement shall be made by either party without the prior written consent of the other party, which consent shall not be unreasonably withheld, provided however, either party, with notice to the other, may make any announcement required by law, rule or regulation including without limitation the rules and regulations of a stock exchange or the Securities Exchange Commission.  Notwithstanding anything herein to the contrary, to the extent a party to this Agreement is

 

22



 

required to file this Agreement with a stock exchange or the Securities Exchange Commission, such party shall (i) notify the other party (the “Notified Party”) in advance of such filing, (ii) seek confidentiality treatment with regards to any information contained therein that the Notified Party requests be kept confidential and (iii) provide the Notified Party adequate opportunity to review any proposed filing of this Agreement to enable it to seek a protective order if sensitive or confidential information is to be disclosed.

 

13.7                           Dispute Resolution.  Any dispute, controversy or claim arising out of or in relation to or in connection with this Agreement, including any dispute as to the construction, validity, interpretation, enforceability, or breach of this Agreement, may be resolved by any means available to the parties at law or equity.  Upon a party’s written request, the senior executives of the parties shall agree to meet and negotiate in good faith to attempt to resolve such dispute.  If such executives are unable to resolve the dispute within thirty (30) days, either party may submit such a dispute to mediation by a single mediator by providing notice of such election to the other party.  The mediator shall be knowledgeable in the field of the dispute, shall have no economic interest in or economic relationship with the parties, shall not have been employed by any party or any of their affiliates for at least five (5) years prior to its appointment as mediator hereunder, and shall be selected unanimously by the parties.  If the parties are unable to agree upon a mediator within fifteen (15) days after deciding to refer the matter to mediation, then, upon request of either party, the American Arbitration Association shall appoint such mediator.  The mediator, within thirty (30) days after the mediator’s acceptance of its appointment, the mediator shall schedule a mediation hearing and each party shall provide the mediator with a report containing their proposal for the resolution of the matter and the reasons therefore, accompanied by all relevant supporting information and data.  Each party shall pay one-half the costs for such mediation.

 

13.8                           All notices, payments, consents or other communications between the parties given under or in relation to this Agreement shall be as directed below.  Written notices shall be delivered by letter, facsimile or other mutually acceptable electronic means.  Notice by facsimile, overnight mail, courier or hand delivery shall be deemed to have been received on the business day on which it was transmitted or hand delivered, unless transmitted or hand delivered after 5 p.m. local time at the receiving party’s address, in which case it shall be deemed to have been received on the next business day.  Notice by U.S. Mail shall be deemed to have been received upon arrival at the receiving parties address.

 

Payments:
Wire Transfers:
Equitable Gathering, LLC

 

**

 

Statements:
Equitable Gathering, LLC

 

Attn: Accounting Department

Telephone:

(423) 224-3800

 

Facsimile:

(423) 224-3894

 

 

23



 

 

To Equitable:

 

Equitable Gathering, LLC
Attention: Gas Control
225 North Shore Drive
Pittsburgh, Pennsylvania 15212-5861
Phone: 412-395-2587

With a copy to:

Equitable Production Company
Attention: Vice President & General Counsel
1710 Pennsylvania Avenue
Charleston, West Virginia 25302
Phone: 304-348-3890
Facsimile: 304-343-2829

 

To MEA:

 

MarkWest Energy Appalachia, LLC
1515 Arapahoe Street
Tower 2, Suite 700
Denver, Colorado 80202
Attn: Contract Administration

Telephone:

(303) 290-8700

 

Facsimile:

(303)290-8669

 

 

With a copy to:

 

MarkWest Energy Appalachia, LLC
1515 Arapahoe Street
Tower 2, Suite 700
Denver, Colorado 80202
Attn: General Counsel 

Telephone:

(303) 925-9220

 

Facsimile:

(303) 925-9308

 

 

Either party may change its address for notice purposes by written notice to that effect delivered to the other party in accordance with this Article.

 

13.9                           Upon a determination by a court of competent jurisdiction that any term or other provision of this Agreement is invalid, illegal or incapable of being enforced, then (i) all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect, (ii) the parties shall negotiate in good faith to modify this Agreement to give effect to the original economic and legal intent of the parties as closely as possible in an acceptable manner to the end

 

24



 

that the transactions contemplated by this Agreement are fulfilled to the extent possible and (iii) if the Parties are unable to agree on such modifications to this Agreement and the economic or legal substance of the transactions contemplated by this Agreement is affected in any manner materially adverse to any Party, then this Agreement shall be interpreted to give effect to the original economic and legal intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated by this Agreement are fulfilled to the extent possible.

 

13.10                     This Agreement is made solely for the benefit of the parties, and no other person, including any officer or employee of the parties, shall have any right, claim or cause of action under or by virtue of this Agreement.

 

13.11                     MEA and Equitable agree to take all such further actions and to execute, acknowledge and deliver all such further documents that are reasonably necessary or useful in carrying out the purpose of this Agreement.

 

(signatures on next page)

 

25



 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above.

 

EQUITABLE GATHERING, LLC

MARKWEST ENERGY APPALACHIA,
L.L.C.

 

 

 

 

By:

/s/ JOSEPH O’BRIEN

 

By:

/s/ FRANK M. SEMPLE

Name:  Joseph O’Brien

Name:  Frank M. Semple

Title:    President

Title:    CEO and President

 

[Signature Page to Natural Gas Liquids Transportation, Fractionation and Marketing Agreement]

 



 

EXHIBIT A

 

PRODUCTS QUALITY SPECIFICATIONS

 

PROPANE

 

Product Characteristics

 

Minimum

 

Maximum

 

Test Methods 
Latest Revision

 

 

 

 

 

 

 

 

 

1. Composition

 

 

 

 

 

ASTM E-260

 

Percent by Liquid Volume:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ethane

 

 

 

As limited by other components and vapor pressure; however in no event more than 5% by volume of the volume of propane

 

 

 

 

 

 

 

 

 

 

 

HD-5 Propane

 

90

 

100

 

 

 

 

 

 

 

 

 

 

 

Propylene

 

 

 

5

 

 

 

 

 

 

 

 

 

 

 

Butanes & Heavier

 

 

 

2.5

 

ASTM D-2163

 

 

 

 

 

 

 

 

 

2. Vapor Pressure (psig @ 100 degrees F.)

 

 

 

208

 

ASTM D-1267

 

 

 

 

 

 

 

 

 

3. Corrosion

 

 

 

 

 

 

 

Copper Strip @ 100 deg. F.

 

 

 

1-b

 

ASTM D-1838

 

 

 

 

 

 

 

 

 

4. Total Sulfur (PPM by weight in liquid)

 

 

 

123

 

ASTM D-2784

 

 

 

 

 

 

 

 

 

5. Non-Volatile Residue

 

 

 

 

 

 

 

a) Milliliters @ 100 deg. F.

 

 

 

0.05

 

ASTM D-2158

 

b) Oil Stain

 

 

 

Pass

 

 

 

 



 

NORMAL BUTANE

 

Product Characteristics

 

Minimum

 

Maximum

 

Test Methods 
Latest Revision

 

 

 

 

 

 

 

 

 

1. Composition

 

 

 

 

 

ASTM E-260

 

Percent by Liquid Volume:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Isobutane and Lighter

 

 

 

5

 

ASTM D-2163

 

 

 

 

 

 

 

 

 

Butylene (Percent of N. Butane)

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

Normal Butane & Butylene

 

95

 

100

 

GPA 2165

 

 

 

 

 

 

 

 

 

Pentanes & Heavier

 

 

 

2

 

 

 

 

 

 

 

 

 

 

 

2. Vapor Pressure (psig @ 100 degrees F.)

 

 

 

50

 

ASTM D-1267

 

 

 

 

 

 

 

 

 

3. Corrosion

 

 

 

 

 

 

 

Copper Strip @ 100 deg. F.

 

 

 

1-b

 

ASTM D-1838

 

 

 

 

 

 

 

 

 

4. Total Sulfur (PPM by weight in liquid)

 

 

 

140

 

ASTM D-3246

 

 

 

 

 

 

 

 

 

5. Volatile Residue

 

 

 

 

 

 

 

95% Evaporated-Temperature, degrees F.

 

 

 

plus 36

 

ASTM D-1837

 

 



 

ISOBUTANE

 

Product Characteristics

 

Minimum

 

Maximum

 

Test Methods 
Latest Revision

 

 

 

 

 

 

 

 

 

1. Composition

 

 

 

 

 

ASTM E-260

 

Percent by Liquid Volume:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Propane, Propylene and Lighter

 

 

 

3

 

ASTM D-2163

 

 

 

 

 

 

 

 

 

Isobutane

 

96

 

100

 

 

 

 

 

 

 

 

 

 

 

Butylene, Normal Butane & Heavier

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

2. Vapor Pressure (psig @ 100 degrees F.)

 

 

 

62

 

ASTM D-1267

 

 

 

 

 

 

 

 

 

3. Corrosion

 

 

 

 

 

 

 

Copper Strip @ 100 deg. F.

 

 

 

1-b

 

ASTM D-1838

 

 

 

 

 

 

 

 

 

4. Total Sulfur (PPM by weight in liquid)

 

 

 

140

 

ASTM D-3246

 

 

 

 

 

 

 

 

 

5. Volatile Residue

 

 

 

 

 

 

 

95% Evaporated-Temperature, degrees F.

 

 

 

plus 16

 

ASTM D-1837

 

 

 

 

 

 

 

 

 

6. Dryness

 

 

 

No free water

 

Visual

 

 



 

NATURAL GASOLINE

 

Product Characteristics

 

Minimum

 

Maximum

 

Test Methods 
Latest Revision

 

 

 

 

 

 

 

1. Composition

 

 

 

 

 

ASTM E-260

Percent by Liquid Volume:

 

 

 

 

 

 

 

 

 

 

 

 

 

Butanes and Lighter

 

 

 

3

 

GPA 2165

 

 

 

 

 

 

 

Pentanes & Heavier

 

97

 

100

 

 

 

 

 

 

 

 

 

2. Vapor Pressure (psig @ 100 degrees F.)

 

 

 

14

 

ASTM D-323

 

 

 

 

 

 

 

3. Corrosion

 

 

 

 

 

 

Copper Strip @ 104 deg. F.

 

 

 

1-b

 

ASTM D-130

 

 

 

 

 

 

 

4. Doctor Test

 

 

 

Negative

 

GPA 1138

 

 

 

 

 

 

 

5. Dryness

 

 

 

No free water

 

Visual

 

 

 

 

 

 

 

6. Color

 

 

 

No Color

 

Field White Cup Method

Saybolt No.

 

plus 25

 

 

 

Lab-ASTM D-156

 

 

 

 

 

 

 

7. Distillation

 

 

 

 

 

 

End Point, deg. F.

 

 

 

375

 

ASTM D-216

 



 

EXHIBIT B

 

GATHERING AREA

**

 



 

EXHIBIT C

 

**

 



 

EXHIBIT D

 

EXAMPLES OF CALCULATIONS

 

**

 



 

EXHIBIT E

 

INSURANCE

 

Coverage Required.  At all times during the Term of this Agreement, MEA and Equitable each shall carry with insurers reasonably acceptable to the other, at each such party’s sole expense, insurance of the types and in the minimum coverages set forth below, subject to standard policy terms, conditions and exclusions.  Any and all deductibles and self-insured retentions in the insurance policies described below shall be assumed by the party carrying such insurance.

 

(i)    Workers Compensation Insurance, including, without limitation, statutory and occupational disease coverage required under applicable law;

 

(ii)   Employer’s Liability Insurance with limits of liability of not less than ** dollars ($**) per occurrence covering employee accident, injury and death;

 

(iii)  Commercial General Liability Insurance, including, without limitation, premises and operations, products and completed operations, cross liability and contractual liability coverages, and no endorsements limiting coverage due to a party’s negligence, with a combined single limit of not less than ** dollars ($**) per occurrence;

 

(iv)  Automobile Liability Insurance, covering owned, hired, and non-owned automobiles with a combined single limit of not less than ** dollars ($**) per occurrence; and

 

(v)   Commercial Property and All-Risk Casualty Insurance, including Boiler and Machinery, in amounts not less than the replacement amount for the covered property, and covering breakdown of equipment, pressure vessels, systems, and machinery.

 

(vi)  Excess Liability Umbrella Insurance over that required in (ii), (iii) and (iv) above, with minimum limits of ** dollars ($**) per occurrence.

 

Additional Insured Endorsements/ Primary Coverage/Other.  The policies required by Subsections 1(ii) through 1(vi) above shall be endorsed to name the other party, its parent compan(ies), subsidiaries and affiliates as additional insureds.  Each of the policies set forth above shall be endorsed to waive subrogation against the other party.  To the extent of the liabilities retained or assumed by each party under this Agreement, each party agrees that all such insurance policies carried by such party shall be primary and non-contributory to the other party’s insurance.  All policies (applying to coverage listed above), unless prohibited under applicable law, shall contain no exclusion for punitive damages.  The insurance to be obtained hereunder shall not be construed as limiting a party’s indemnity liability or other liability and obligations under the Agreement to the amount of the minimum required insurance coverage.

 


EX-31.1 4 a08-13756_1ex31d1.htm EX-31.1

Exhibit 31.1

 

CERTIFICATION

 

I, Frank M. Semple, certify that:

 

1. I have reviewed this annual report on Form 10-K/A of MarkWest Energy Partners, L.P.

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

 

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

 

a)              Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)             Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)              Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)             Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

 

a)              All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)             Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 7, 2008

By:

/S/ FRANK M. SEMPLE

 

 

 

 

Frank M. Semple

 

 

 

 

President and Chief Executive Officer
(Principal Executive Officer)

 


 

EX-31.2 5 a08-13756_1ex31d2.htm EX-31.2

Exhibit 31.2

 

CERTIFICATION

 

I, Nancy K. Buese, certify that:

 

1. I have reviewed this annual report on Form 10-K/A of MarkWest Energy Partners, L.P.

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

 

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

 

a)              Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)             Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)              Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)             Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

 

a)              All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)             Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 7, 2008

 

 

By:

/S/ NANCY K. BUESE

 

 

 

 

Nancy K. Buese

 

 

 

 

Senior Vice President & Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)

 


EX-32.1 6 a08-13756_1ex32d1.htm EX-32.1

Exhibit 32.1

 

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Annual Report of MarkWest Energy Partners, L.P. (the “Partnership”), on Form 10-K/A for the period ending December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frank M. Semple, Chief Executive Officer of the General Partner of the Partnership, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Partnership.

 

/S/ FRANK M. SEMPLE

 

 

 

 

 

Frank M. Semple

 

 

President and Chief Executive Officer

 

 

(Principal Executive Officer)

 

 

 

 

 

May 7, 2008

 

 

 

This certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document. This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act except to the extent this Exhibit 32.1 is expressly and specifically incorporated by reference in any such filing.

 

A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained by the Partnership and furnished to the Securities and Exchange Commission or its staff upon request.

 


 

 

EX-32.2 7 a08-13756_1ex32d2.htm EX-32.2

Exhibit 32.2

 

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Annual Report of MarkWest Energy Partners, L.P. (the “Partnership”) on Form 10-K/A for the period ending December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Nancy K. Buese, Chief Financial Officer of the General Partner of the Partnership, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Partnership.

 

/S/ NANCY K. BUESE

 

 

 

 

 

Nancy K. Buese

 

 

 Senior Vice President & Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)

 

 

 

 

 

May 7, 2008

 

 

 

This certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.  This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section.  This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act except to the extent this Exhibit 32.2 is expressly and specifically incorporated by reference in any such filing.

 

A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained by the Partnership and furnished to the Securities and Exchange Commission or its staff upon request.

 


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