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