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CAPACITY LEASE AGREEMENT BETWEEN ENOGEX INC. AND MIDCONTINENT EXPRESS PIPELINE LLC

Lease Agreement

CAPACITY LEASE AGREEMENT

BETWEEN

ENOGEX INC.

AND

MIDCONTINENT EXPRESS PIPELINE LLC
 | Document Parties: OGE ENERGY CORP | MIDCONTINENT EXPRESS PIPELINE LLC | Enogex Inc. You are currently viewing:
This Lease Agreement involves

OGE ENERGY CORP | MIDCONTINENT EXPRESS PIPELINE LLC | Enogex Inc.

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Title: CAPACITY LEASE AGREEMENT BETWEEN ENOGEX INC. AND MIDCONTINENT EXPRESS PIPELINE LLC
Governing Law: Oklahoma     Date: 2/16/2007
Industry: Electric Utilities     Sector: Utilities

CAPACITY LEASE AGREEMENT

BETWEEN

ENOGEX INC.

AND

MIDCONTINENT EXPRESS PIPELINE LLC
, Parties: oge energy corp , midcontinent express pipeline llc , enogex inc.
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Exhibit 10.30

 

CAPACITY LEASE AGREEMENT

BETWEEN

ENOGEX INC.

AND

MIDCONTINENT EXPRESS PIPELINE LLC

 

THIS CAPACITY LEASE AGREEMENT (“Lease”) is made and entered into effective on the 11th day of December, 2006, by and between Enogex Inc. (“Enogex”), an Oklahoma corporation, and Midcontinent Express Pipeline LLC (“MEP”), a Delaware limited liability company. Enogex and MEP are sometimes referred to in this Lease individually as a “Party” or collectively as the “Parties.”

 

W I T N E S S E T H:

 

WHEREAS, MEP will be established as a new interstate natural gas pipeline company that will provide natural gas transmission services in interstate commerce, subject to regulation under the Natural Gas Act of 1938, as amended, 15 U.S.C. §§ 717 - 717w (2000) (the “NGA”); and

 

WHEREAS, Enogex owns and operates an intrastate natural gas transmission pipeline system in the state of Oklahoma (the “Enogex System”) that provides natural gas transmission services within the state of Oklahoma, and in interstate commerce under Section 311 of the Natural Gas Policy Act of 1978, as amended (the “NGPA”), 15 U.S.C. § 3371 (2000); and

 

WHEREAS, MEP intends that, subject to the receipt of all necessary regulatory authorizations, MEP will design, construct, own and operate certain interstate natural gas transmission facilities that will extend from a point of interconnection with the Enogex System in the vicinity of Bennington, Oklahoma to a point of interconnection with the Transcontinental Gas Pipe Line Corporation (“Transco”) system near Transco’s Station 85 in Choctaw County, Alabama (the “MEP System”); and

 

WHEREAS, MEP intends to request a certificate of public convenience and necessity from the Federal Energy Regulatory Commission (“the Commission” or “FERC”) pursuant to Section 7(c) of the NGA, 15 U.S.C. § 717f(c), authorizing the construction and operation of the MEP System, including its interconnection with the Enogex System in the vicinity of Bennington, Oklahoma; and

 

WHEREAS, MEP desires to obtain by lease from Enogex firm pipeline capacity in the Enogex System from (i) [Confidential information has been omitted and filed separately with the Securities and Exchange Commission.] (ii) Enogex’s West Pooling Point (“West Pool”); (iii) Enogex’s East Pooling Point (“East Pool”); and (iv) [Confidential information has been omitted and filed separately with the Securities and Exchange Commission.] all as more specifically described on Exhibit A hereto (collectively, the “Receipt Points”) to a proposed point of interconnection with the MEP System in the vicinity of Bennington, Oklahoma (the “Bennington Delivery Point”), and MEP intends to obtain from the Commission authorization under Section 7(c) of the NGA to include such leased pipeline capacity as a part of the MEP System; and

 

 

WHEREAS, Enogex is willing to lease to MEP such firm pipeline capacity in the Enogex System; and

 

WHEREAS, this Lease and the Parties’ performance of the obligations set forth herein are subject to FERC approval under the NGA.

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained in this Lease, the receipt and sufficiency of which are hereby acknowledged, the Parties do covenant and agree as follows:

 

 


ARTICLE I

SCOPE OF LEASE

1.1           (a)          Leased Capacity and Lease Quantity . Subject to the receipt of the regulatory authorizations described in Article VI and the satisfaction or waiver of the conditions precedent set forth in Article VII, for the term of this Lease (as defined in Article III), Enogex hereby leases to MEP on a firm basis, and MEP hereby leases from Enogex on a firm basis, pipeline capacity in the Enogex System from the Receipt Points to the Bennington Delivery Point (the “Leased Capacity”) equal to (i) a minimum of 250,000 Dth of natural gas per day, up to a maximum of 500,000 Dth of natural gas per day, in each case with the constituent quantities to be sourced from specific Receipt Points in the quantities specified in Exhibit A; plus (ii) the capacity necessary for the receipt of applicable Enogex System Fuel Gas quantities as set forth in Section 4.2; plus (iii) the capacity necessary for the receipt and transportation of the quantities of fuel and lost and unaccounted for gas required to support transportation service on the MEP system downstream of the Bennington Delivery Point as nominated by MEP (“MEP Fuel”) (the quantities identified in items (i)-(iii) shall be collectively referred to as the “Lease Quantity”). Quantities of MEP Fuel shall in no event exceed 1.5% of the Lease Quantity, unless the Parties otherwise agree. The Leased Capacity shall include the firm Receipt Point capacity set forth on Exhibit A (as well as such additional capacity at the Receipt Points as is required to enable Enogex to receive applicable Enogex System Fuel Gas quantities), and up to a maximum of 500,000 Dth per day of capacity (plus MEP Fuel) at the Bennington Delivery Point. The Parties may agree at any time to change the Receipt Points, or (subject to Enogex’s determination that the requested incremental capacity is available as set forth herein) the quantity of capacity at any of the Receipt Points, by an appropriate amendment to Exhibit A. MEP shall notify Enogex of the results of its open season and, by no later than January 31, 2007, shall designate the total number of Dth per day of Receipt Point capacity (by Receipt Point, subject to the parameters specified in Exhibit A) plus Enogex System Fuel Gas plus MEP Fuel that MEP wishes to deliver into the Enogex System at the various Receipt Points for redelivery at the Bennington Delivery Point. During the period from January 31, 2007 to March 30, 2007, MEP may request that Enogex increase the Lease Quantity or the capacity to be delivered to Enogex at any of the Receipt Points specified on Exhibit A to quantities not greater than those specified on Exhibit A. To the extent that, in Enogex’s sole judgment, the requested incremental capacity remains available, Enogex will increase the Lease Quantity in accordance with MEP’s request, the Parties will amend Exhibit A accordingly and Enogex will make the Leased Capacity as so increased available to MEP under the terms of this Lease. Notwithstanding the foregoing, the Leased Capacity at the Bennington Delivery Point shall not be less than 250,000 Dth per day and shall not be greater than 500,000 Dth per day, plus Enogex System Fuel Gas and MEP Fuel. The quantity of Leased Capacity at the Bennington Delivery Point (less Enogex System Fuel Gas) shall constitute the Lease Quantity for purposes of determining the Monthly Lease Charges defined in Section 4.1 below until otherwise determined in accordance with this Lease or as may be agreed to by the Parties. Shippers making use of the Leased Capacity at the West Zone Receipt Points pursuant to MEP’s FERC Gas Tariff shall have access on any day to Enogex’s West Pool, in addition to the other Receipt Points identified on Exhibit A in the West Zone, provided, however, that the quantities received at the Receipt Points on any day may not exceed the maximum quantity of Leased Capacity at the Receipt Points and maximum aggregate zone quantities specified in Exhibit A.

 

(b)          Changes in Lease Quantity . At any time following MEP’s delivery of the notice described in Section 1.1(a) above, MEP may request that the Lease Quantity be increased by a specified amount of capacity, including related firm receipt and delivery point capacity, for a specified term. If the Parties mutually agree to the amount of increased capacity, the charge for such increased capacity and the term of such increase, the Lease Quantity may be increased up to a maximum of 800,000 Dth/d.

 

1.2            Use of Leased Capacity . MEP shall have the right to use the Leased Capacity on a firm basis, in accordance with the terms of the FERC authorizations referenced in Section 6.1 and subject to the terms and conditions of MEP’s FERC Gas Tariff, as if it were MEP’s own capacity; provided, however, that Enogex shall at all times have and maintain operational control of the facilities used to provide the Leased Capacity as specified in Sections 2.1 and 2.2 below. Subject to the terms and conditions of MEP’s FERC Gas Tariff and notwithstanding any provisions to the contrary pertaining to the availability of firm service in Enogex’s then-effective Statement of Operating Conditions applicable to NGPA Section 311 transportation service on file with the FERC, as it may be modified from time to time (the “SOC”), once the Leased Capacity has been determined, MEP will have the right to use the full amount of the Leased Quantity on a firm basis.

 

1.3            New Facilities . Enogex shall timely construct, own, operate, and maintain, at its sole cost and expense, such facilities as are necessary to provide the Leased Capacity to MEP, including without limitation all facilities which are necessary to connect the Enogex System to the insulating flange of the measurement facilities at the Bennington Delivery Point. Enogex shall use commercially reasonable efforts to complete the construction of such facilities so that they may be available for service on or before the commencement date of the Interim Lease Term as defined in Section 3.1 below. Notwithstanding the foregoing, MEP shall reimburse Enogex for all costs and expenses approved in advance by MEP, acting reasonably, which are directly related to the construction and installation by Enogex, but not the operation or maintenance, of

 

2

 


those certain booster compressor facilities to be located on Enogex’s System at or near the [Confidential information has been omitted and filed separately with the Securities and Exchange Commission.] and to be owned by Enogex (the “Booster”). MEP agrees to acquire the compressor unit for the Booster, and in this connection, Enogex agrees to provide MEP with the necessary specifications for the Booster in writing on or before January 31, 2007. Enogex shall size and design the Booster to accommodate a suction pressure of 525 psig and to produce a discharge pressure of as much as 1100 psig. MEP shall timely construct, own, operate, and maintain, at its sole cost and expense, such facilities as are necessary to interconnect with and receive gas through the Leased Capacity from Enogex, including without limitation the measurement and interconnection facilities at and downstream of the insulating flange at the Bennington Delivery Point which are necessary to interconnect the MEP System with the Enogex System, and shall timely acquire the compressor unit for the Booster. MEP shall use commercially reasonable efforts to complete the construction of such facilities so that they may be available for service on or before the commencement date of the Interim Lease Term. MEP shall have no right, title, or interest in or to any portion of the Enogex System, except to the extent otherwise expressly set forth in this Lease. Except as expressly set forth in this Lease, MEP shall have no right to construct or cause to be constructed any modifications or additions to, or any expansion of, the Leased Capacity or the Enogex System. MEP expressly agrees that its rights to utilize the Leased Capacity are solely as set forth in this Lease and in accordance with any and all necessary regulatory authorizations regarding utilization of the Leased Capacity. Upon termination of this Lease or any reduction in the Lease Quantity, all of the Leased Capacity or any reduced quantity thereof, as applicable, shall revert to Enogex, subject to receipt by the Parties of any and all necessary regulatory authorizations.

 

1.4           Classification of Lease . The Parties agree that this Lease is intended to be classified as an operating lease agreement. To the extent that by law or regulation this Lease cannot be classified as an operating lease agreement, the Parties agree to negotiate in good faith to effect any such changes to this Lease as may be necessary to classify this Lease as an operating lease agreement. In the event that any provision of this Lease is found to be unlawful by a court or regulatory body having jurisdiction over one or more of the Parties or the Lease itself, the Parties agree to negotiate in good faith to effect the changes necessary for the Lease to be lawful while continuing to honor the original goals and objectives of the Parties to the maximum extent possible.

 

ARTICLE II

USE, OPERATION, AND MAINTENANCE OF LEASED CAPACITY

2.1            Operation of Leased Capacity . Subject to the terms and conditions of this Lease, Enogex at all times during the term of this Lease shall operate the Leased Capacity as necessary to enable MEP and its shippers to utilize the Leased Capacity as if it were MEP’s own capacity. Enogex shall be solely responsible for, and will have sole and exclusive control over, all aspects of the operation and maintenance of the facilities used to provide the Leased Capacity, and shall operate and maintain such facilities in accordance with this Lease, the SOC, sound and prudent natural gas pipeline industry practice, Enogex’s standard operating and maintenance policies, and the applicable requirements of federal, state, or other governmental agencies having jurisdiction. MEP shall have no right or duty to operate or maintain the Enogex facilities used to provide the Leased Capacity, or to supervise, direct or otherwise control in any manner the operation and maintenance of the Enogex System or the facilities providing the Leased Capacity. Prior to the commencement of the Interim Lease Term (as defined in Section 3.1), the Parties shall meet to establish operational guidelines, procedures and timeframes for scheduling gas receipts and deliveries and to the extent such mutually agreed upon guidelines, procedures and timeframes are not consistent with either the SOC or MEP’s FERC Gas Tariff, such mutually agreed upon guidelines, procedures and timeframes shall control. The Parties agree that each of them may install check measurement facilities at any Receipt Point or the Bennington Delivery Point. Matters respecting this Lease, including without limitation the day-to-day operation of the Enogex Facilities used to provide the Leased Capacity, shall be governed by the following documents in the following order: (1) this Lease and the mutually agreed upon guidelines, procedures and timeframes, (2) the SOC, and (3) MEP’s FERC Gas Tariff. Enogex shall give MEP thirty (30) days’ advance Notice of any changes to the SOC it intends to file with the FERC.

 

2.2           Coordination of Operations . The Parties agree to coordinate operation of the facilities providing the Leased Capacity and the MEP System facilities receiving gas from the Leased Capacity. Enogex shall not be obligated to receive quantities of gas in excess of the quantities scheduled by MEP or third parties designated by MEP at the Receipt Points or to deliver quantities in excess of the quantities scheduled by MEP at the Bennington Delivery Point, unless otherwise agreed by the Parties; provided, however, that in no event shall Enogex be obligated (i) to receive for the account of MEP quantities of gas in excess of the Lease Quantity, (ii) to receive at the Receipt Points natural gas that does not comply with the gas quality specifications set forth in the SOC, or (iii) to deliver to MEP at the Bennington Delivery Point quantities of gas in excess of the Lease Quantity. Nothing in this Lease shall be construed as requiring MEP to receive from Enogex at any time natural gas that does not meet the gas quality specifications set forth in the SOC. The Parties agree that all actions affecting this Lease shall be taken in good faith.

 

3

 


2.3            Imbalances . As of and at all times following the Commencement Date (as defined below), MEP and Enogex shall maintain in effect a mutually acceptable operational balancing agreement for the Bennington Delivery Point (the “OBA”), which such OBA shall govern the allocation and resolution of imbalances as between the Parties at the Bennington Delivery Point notwithstanding any contrary provision of the SOC; provided, however, that, in the event that the Parties fail for any reason to maintain such operational balancing agreement in effect, any operational imbalance occurring on any day will be corrected by allocating such gas quantities in accordance with MEP’s FERC Gas Tariff. Upon the termination of this Lease, any remaining operational imbalance attributable to this Lease shall be resolved pursuant to such effective OBA between the Parties; provided, however, that if no such OBA is in effect, then this provision of the Lease shall survive termination for the sole purpose of enabling the Parties to correct such operational imbalances. The Parties agree that, for so long as (i) the Receipt Points are restricted to pooling points, interconnections with gathering systems and interstate pipelines where operational balancing agreements are in effect and (ii) the Lease Quantity is being delivered at the Bennington Delivery Point, there will be no imbalance penalties applicable to the Lease Quantity. Provided that Enogex confirms nominations from MEP, Enogex agrees that no penalties, imbalance charges or other similar charges will be assessed against MEP or against MEP shippers on whose behalf gas is transported through the Leased Capacity.

 

2.4            Pressures . MEP shall deliver or shall have delivered on its behalf and Enogex shall receive on behalf of MEP at the Receipt Points all natural gas quantities tendered for transportation through the Leased Capacity in accordance with the provisions of Section 2.2 and Exhibit A at the line pressures existing in the Enogex System at the Receipt Points other than the [Confidential information has been omitted and filed separately with the Securities and Exchange Commission.]. Notwithstanding the line pressure prevailing in the Enogex System in the vicinity from time to time, Enogex shall be obligated to receive at [Confidential information has been omitted and filed separately with the Securities and Exchange Commission.] on a firm basis a quantity of gas up to the Receipt Quantity specified in Exhibit A for [Confidential information has been omitted and filed separately with the Securities and Exchange Commission.], plus a proportionate quantity of MEP Fuel and Enogex System Fuel Gas, provided that such gas is tendered at a pressure no lower than 525 psig, provided, however, that Enogex shall endeavor in the event gas is delivered at a pressure of not substantially less than 525 psig to receive as much gas [Confidential information has been omitted and filed separately with the Securities and Exchange Commission.] as can be delivered against the pressure then prevailing in the Enogex System at the point. In no event shall natural gas be delivered to Enogex at any Receipt Point at a pressure exceeding the Maximum Allowable Operating Pressure (“MAOP”) of the Enogex System. Enogex shall deliver to MEP at the Bennington Delivery Point quantities of natural gas which are thermally equivalent to those delivered to Enogex at the Receipt Points for transportation through the Leased Capacity, less Enogex System Fuel Gas, at pressures sufficient to enter MEP’s system against MEP’s prevailing line pressure, such pressure not to exceed 1250 psig, but in no event shall Enogex deliver gas to MEP at a pressure exceeding MEP’s MAOP at such point.

 

2.5           (a)          Restrictions in Availability of Leased Capacity . In the event of force majeure as defined in Article V below or the occurrence of any other event which requires Enogex to restrict the availability of capacity on the Enogex System between or at any of the Receipt Points and the Bennington Delivery Point, including without limitation scheduled maintenance or repair of any facilities used to provide the Leased Capacity, the quantity of capacity available for MEP’s use under this Agreement shall be reduced below the Lease Quantity (or below the amount of the relevant Receipt Point capacity) in the same proportion as Enogex reduces the quantity of capacity available for service to all firm shippers on the Enogex System entitled to firm service between or at such points, as applicable. Enogex shall give MEP reasonable prior Notice of any scheduled maintenance or repair, but in no event less than three (3) days’ prior Notice, or of any other activity within the reasonable control of Enogex, which requires or reasonably could be expected to require Enogex to so restrict the availability of capacity on the Enogex System, including without limitation, if reasonably practicable, such Notice as MEP may be required to provide to its shippers under any provisions of MEP’s FERC Gas Tariff.

 

(b)          Sustained Unavailability of Leased Capacity . To the extent that, for any reason other than an event of force majeure that is catastrophic in nature and not likely to recur, Enogex fails to make the entire amount of Leased Capacity available for use by MEP on any day in accordance with this Lease for more than sixty (60) days, whether consecutive or nonconsecutive, during any contract year of the Lease Term, then MEP shall have the right to terminate this Lease (without prejudice to its right to receive any damages to which it may be entitled at law or in equity) by the provision of thirty (30) days’ prior written Notice to Enogex. On a one-time basis, such termination Notice shall be void and of no effect if Enogex makes the Leased Capacity available for use by MEP within ten (10) days of receipt of such Notice. If, however, during the remainder of the contract year in which the sixty-day failure occurred Enogex fails again to make the entire amount of the Leased Capacity available for use by MEP on any day, then MEP shall have the right to terminate this Lease by the provision of thirty (30) days’ prior written notice.

 

2.6            Books and Records Pertaining to Leased Capacity . Enogex shall keep and maintain, in accordance with generally accepted practices, consistently applied, books, records, accounts and other documents sufficient to reflect accurately charges

4

 


assessed, operations and maintenances activities, services performed on behalf of MEP, and all other matters related to the performance of Enogex’s obligations under this Lease (collectively, the “Books and Records”). The Books and Records shall include without limitation receipts, memoranda, vouchers, inventories, agreements, and accounts pertaining to or affecting the Leased Capacity and Enogex’s obligations under this Lease. MEP and its independent auditors shall have access during regular daytime business hours, upon reasonable advance Notice in writing, to the Books and Records, for purposes of auditing and verifying the related services rendered, charges assessed, operations and maintenance activities performed, and all other matters related to the performance of Enogex’s obligations under this Lease. MEP shall have the right to reproduce any of the Books and Records, at MEP’s expense and provided that MEP agrees to be bound by a confidentiality agreement to be entered into by the Parties, and Enogex shall keep and preserve all of the Books and Records for a period of three (3) years from and after the close of the year in which the service was performed, or for any longer period as may be required by the FERC or any other governmental authority. Upon completion of any such audit, the Parties will prepare a written summary of audit findings, including a description of the resolution of any disputed item.

 

ARTICLE III

TERM OF LEASE

3.1           (a)           Term . This Lease shall be effective as of the date first set forth above (the “Effective Date”). Enogex shall make the Leased Capacity available for use by MEP under this Lease on the in-service date of the last portion of the MEP System extending from Bennington to the terminus of the MEP System to be completed (the “Commencement Date”), which date shall be no earlier than February 1, 2009 and no later than June 1, 2009; provided , however , that MEP shall be required to give Enogex at least thirty (30) days’ prior written Notice of the anticipated Commencement Date, and provided further, that Enogex will make the Leased Capacity or a portion thereof available to MEP during an Interim Lease Term (as defined below) subject to the provisions of Section 3.1(b). The primary term of this Lease shall commence on the Commencement Date and shall continue in full force and effect for ten (10) years thereafter. This Lease shall thereafter, upon MEP’s provision of written Notice to Enogex no less than three hundred fifty (350) days prior to expiration of the primary term or any extended term, as applicable, continue in effect at MEP’s election for an additional term of either one (1) year or five (5) years, and for additional, successive one (1) year or five (5) year terms thereafter, provided, however, that such extended term(s) shall not extend beyond the twentieth (20th) anniversary of the Commencement Date. This Lease may be further extended beyond the expiration of the primary term and any applicable one-year or five-year term extensions, subject to the provision of written Notice by MEP to Enogex no less than three hundred fifty (350) days prior to expiration of the extended term, for up to two (2) additional terms of five (5) years, subject to escalation of the Lease Rate applicable during each such five (5) year extended term in accordance with Exhibit B. The aggregate term of this Lease, including the primary term and any extended terms, shall not exceed thirty (30) years.

 

(b)          Interim Term . Subject to the regulatory approvals described in Article VI having been received and the conditions precedent set forth in Article VII having been satisfied or waived by such date, and unless otherwise mutually agreed, Enogex, upon completion of the facilities necessary to provide all or a portion of the Leased Capacity to MEP, shall make the Leased Capacity available for use by MEP under this Lease on an interim basis to the extent that MEP determines that it will provide interim service to its shippers with receipts at the Bennington Delivery Point during a period commencing prior to the in-service date of the last portion of the MEP System extending from Bennington to the terminus of the MEP System to be completed and concluding as of the Commencement Date (the “Interim Lease Term”). MEP shall provide Enogex with thirty (30) days’ prior written Notice of the proposed date of commencement and duration of any desired Interim Lease Term, which date of commencement shall be no earlier than October 1, 2008. As to any month during the Interim Lease Term (each such month, an “Interim Service Month”), no less than twelve (12) business days prior to the beginning of each Interim Service Month, Enogex will notify MEP of the Receipt and Delivery Point capacity available on the Enogex System during the succeeding Interim Service Month. Not less than five (5) business days prior to the beginning of each Interim Service Month and no later than 8:00 p.m. Central Time on the date of notification, MEP will notify Enogex of the portion of the Leased Quantity that MEP requires for such month at each of the Receipt Points and at the Bennington Delivery Point. As promptly as possible thereafter Enogex shall confirm the quantities nominated as to each Receipt Point and the Bennington Delivery Point. Thereafter, MEP shall be obligated to pay for the quantity of Leased Capacity nominated and confirmed for the Interim Service Month an amount equal to the sum of the products of the quantities of Leased Capacity nominated and confirmed by each Receipt Point and the Lease Rate for the corresponding Receipt Point/Zone specified in Exhibit B, plus MEP Fuel. Such payments shall be made in accordance with the provisions of Article IV. For purposes of this Lease, the term “business days” shall mean any day other than a Saturday, Sunday or legal holiday observed in Houston, Texas.

 

3.2            Reduction in Lease Quantity in Extension Term . MEP shall have the unilateral right to decrease the Lease Quantity in connection with any one or more term extensions in the event it has not secured sufficient shipper commitments to support

 

5

 


the Leased Capacity during such extended term. Notwithstanding the foregoing, the Lease Quantity at any time may not be less than a total of 100,000 Dth of natural gas per day, provided, however, that if service is to be furnished from either [Confidential information has been omitted and filed separately with the Securities and Exchange Commission.], the minimum quantity of natural gas to be received by Enogex from each of such Receipt Points may not be less than 50,000 Dth of natural gas per day. There shall be no minimum quantity requirements applicable to the West Pool or the East Pool Receipt Points. The unilateral reduction right granted by this Section 3.2 may be exercised by MEP by the provision of three hundred fifty (350) days’ prior written Notice to Enogex. Any decrease in the Lease Quantity shall result in an adjustment to the calculation of the Monthly Lease Charges in accordance with the provisions of Section 4.1 below for the term over which such decreased Lease Quantity shall be applicable, provided, however, that there shall be no change in the rate per dekatherm set forth in Exhibit B.

 

3.3            Termination . Upon termination of this Lease, each Party shall continue to be obligated to make any and all payments due to the other which have accrued prior to and including the effective date of such termination, and to resolve any operational imbalance in accordance with Section 2.3.

 

ARTICLE IV

CHARGES AND PAYMENT

4.1            Monthly Lease Charges . Commencing as of the Commencement Date, and continuing for each month thereafter during the primary term and any extended term of this Lease, MEP shall be obligated to pay to Enogex for the Leased Capacity (excluding the Enogex System Fuel Gas) the charges set forth on Exhibit B, such charges collectively referred to as the “Monthly Lease Charges.”

 

4.2            System Fuel Gas . In addition to payment of the Monthly Lease Charges, MEP shall furnish to Enogex the quantity of Enogex System Fuel Gas required to transport natural gas through the Leased Capacity for the account of MEP and its shippers. The term “Enogex System Fuel Gas” shall mean that quantity of natural gas consumed by Enogex as compressor fuel in the provision of the Leased Capacity plus an allocated portion of lost and unaccounted-for gas on the Enogex System between the Receipt Points and the Bennington Delivery Point. The quantity of natural gas required for Enogex System Fuel Gas shall be the amount determined in accordance with the provisions of Enogex’s then-effective SOC governing the determination of fuel and lost and unaccounted-for gas quantities applicable to receipts and deliveries of natural gas in the Enogex System’s Zones traversed by the Leased Capacity.

4.3            Statements; Payments . Enogex shall render to MEP on or before the tenth (10 th ) day of each month a statement setting forth all Monthly Lease Charges and any other charges applicable to the Leased Capacity for the prior month, as well as such other information as may be required to explain and support the amounts to be paid to Enogex (each, a “Statement”). MEP shall pay Enogex the amount set forth in each Statement by electronic transfer of federal funds no later than twenty (20) days following receipt of such Statement, except when such day is a Saturday, Sunday or federal bank holiday, in which case payment shall be due the following business day (the “Due Date”). Payment shall be considered to have been made on the date on which MEP transfers such payment to a bank account designated by Enogex. Enogex shall have the right, upon thirty (30) days’ prior written Notice, to change the designated account for receipt of electronic transfer of funds from MEP.

 

4.4            Adjustments to Statements . In the event MEP in good faith disputes any portion of a Statement rendered pursuant to Section 4.3, MEP shall timely remit payment of that portion of such Statement not in dispute, along with a written Notice to Enogex setting forth the reasons MEP disputes the unpaid amount. Enogex and MEP shall in good faith attempt promptly to resolve any such dispute. Any billing dispute that has not been resolved by the Parties within ninety (90) days of the date of the disputed Statement shall be resolved pursuant to the Dispute Resolution provisions of Article XIV. In the event an error is discovered in the amount billed in any invoice issued by Enogex, such error shall be adjusted within thirty (30) days of the determination thereof; provided that a claim for such adjustment shall have been made within sixty (60) days of the date of determination of such error; and provided further that no adjustments shall be made for errors discovered more than twelve (12) months from the date of any Statement. If it is determined that an adjustment is not necessary or that a necessary adjustment results in additional monies owed by MEP to Enogex, MEP shall include payment of the formerly disputed amount and of any additional amount in its payment of the next Statement. If an adjustment is determined to be necessary requiring a credit to MEP resulting from an overpayment by MEP to Enogex, such credit shall be applied to the next Statement following such determination. In the event the adjustment is greater than the amount to be paid by MEP in such Statement, Enogex shall make the appropriate adjustment in the next Statement following determination by Enogex of such overpayment and promptly r


 
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