Exhibit 10.17

 

SUNRISE EXPANSION PRECEDENT AGREEMENT

 

This Precedent Agreement (“Agreement”) is effective as of this 30th day of
May of 2013 and is between Equitrans, L.P. (“Equitrans” or “Transporter”) and
EQT Energy, LLC (“Shipper”).  Transporter and Shipper are also referred to
herein individually as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, Transporter is a provider of interstate natural gas transmission
services; and

 

WHEREAS, Transporter is responsible for the operation of the Sunrise Pipeline
under a lease agreement with Sunrise Pipeline, LLC, which is the owner of the
Sunrise Pipeline.

 

WHEREAS, Transporter has determined it can modify and expand the Sunrise
Pipeline, or cause the same to be modified and expanded in order to provide
additional firm transmission (hereinafter referred to as “the Project”); and

 

WHEREAS, the Project will be subject to the jurisdiction of the Federal Energy
Regulatory Commission (“FERC”) and Transporter will be seeking authority for the
construction and operation of the Project and to provide services on the Project
facilities; and

 

WHEREAS, Shipper has indicated an interest in entering into a binding agreement
for the transportation of natural gas by Transporter on capacity made available
by the Project pursuant to the terms and conditions described in this Precedent
Agreement;

 

NOW, THEREFORE, in consideration of the following mutual covenants and
agreements, and intending to be legally bound, Transporter and Shipper agree as
follows:

 

1.                                    Facilities.  Transporter agrees, subject
to the satisfaction of the conditions precedent set forth below, to create
additional capacity on the Sunrise Pipeline through the modification and
expansion of the Sunrise Pipeline’s facilities located within the Marcellus
fairway in West Virginia and Pennsylvania (such additional capacity to be
referred to as the “Project Capacity”).

 

(a)                               The Project is expected to provide in
aggregate approximately 640,000 Dth per day of new firm transportation capacity
and is expected to involve the installation of approximately 12,913 horsepower
of compression at Equitrans’ Jefferson Compressor Station.

 

(b)                              The primary firm receipt and delivery points
and the associated maximum daily quantities expected to be available to Shipper
for the Project are set forth on Exhibit 1 to this Agreement.

 

(c)                               Transporter will be responsible for the
acquisition, design, construction, installation, rights of way, and permitting
of the facilities that may be necessary for Transporter to provide the services
specified in this Agreement and in accordance with the terms and conditions of
this Agreement.

 

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(d)                             Shipper shall be responsible for making all
construction arrangements with, and/or acquiring any services from, upstream and
downstream pipelines that may be necessary for Shipper to utilize the Project
Capacity. Shipper’s failure to have in place adequate upstream or downstream
facilities or arrangements shall not relieve Shipper of its obligations under
this Agreement.

 

2.                                    Level of Service, Term, and Rates for
Service.

 

(a)                               Shipper commits to receive from and to pay to
Transporter for firm transportation service capacity as set forth below:

 

Capacity Subscription Table

Rate Schedule FTS Agreement
“MDQ Effective Date”

Maximum Daily Quantity
(Dth / Day)

MDQ Term

September 1, 2014

295,000 Dth / Day

10 years

 

 

The “Anticipated Service Date” shall be the date by which Transporter
anticipates the Project will be placed into service.  The “Service Commencement
Date” shall be the date the Project commences service, whether before or after
the Anticipated Service Date. The Anticipated In-Service Date for the Project is
September 1, 2014.  The Service Commencement Date for the Project shall be the
first day of the month immediately following the date on which Transporter is
authorized by FERC to commence service and Transporter is first able, in its
judgment, to render service to Shipper utilizing the Project capacity.  To the
extent the Service Commencement Date is not September 1, 2014, the MDQ Effective
Dates shown in the Capacity Subscription Table above shall be adjusted
accordingly; provided, the MDQ Terms and total contract length of ten years will
remain the same.

 

 

(b)                              The Parties shall execute and deliver the
Transportation Service Agreement applicable to Firm Transportation Service under
Rate Schedule FTS (“Service Agreement”) set forth in Transporter’s FERC Gas
Tariff, subject only to such modifications as are necessary to reflect the terms
set forth in this Agreement and any conditions imposed by FERC in its
authorization of the Project.

 

(i)        Once Transporter has obtained any requisite FERC authorizations to
construct and operate the Project or FERC requires Transporter to demonstrate
contractual support for the Project and prior to the Service Commencement Date,
Transporter shall have the right to require Shipper to execute and to deliver,
and Shipper agrees to execute and to deliver, the applicable Service Agreement
for the Project Capacity subscribed pursuant to this Agreement promptly, but no
later than, within ten (10) business days of receipt of such Service Agreement.

 

(ii)       The Service Agreement shall become effective upon the Service
Commencement Date of the Project.

 

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(iii)     The Contract Term for the Service Agreement shall be ten (10) years
from the Service Commencement Date.

 

(c)                               Transporter will only pursue the Project on a
negotiated rate basis. The negotiated rate, expressed as a monthly reservation
rate and a usage rate, shall be as follows:

 

Rate Table

 

Monthly Reservation Rate

$7.604 / MDQ

Usage Rate

$0.00 / Dth

Overrun Rate

$0.25 / Dth

 

 

(d)                             In addition to the rates listed in the Rate
Table above, Shipper shall pay:

 

(i)  For gas delivered to off system interstate markets, (A) a retention rate to
recover actual fuel usage and actual lost and unaccounted for gas;   and (B) all
surcharges generally applicable in accordance with Transporter’s FERC Gas
Tariff, as it may be in effect from time to time, with the exception of the
Pipeline Safety Cost Rate (PSC).

 

(ii) For gas delivered to on system markets, (A) the tariff Mainline fuel
retention rate; and (B) all surcharges generally applicable in accordance with
Transporter’s FERC Gas Tariff, as it may be in effect from time to time,
including the Pipeline Safety Cost Rate (PSC).

 

(iii)  Shipper shall also be subject to any FERC mandated surcharges, imposed by
FERC on an industry wide and generally applicable basis to shippers on
interstate pipelines. Transporter shall assess the impact of any such FERC
proposed surcharge on its Shippers and use commercially reasonable efforts to
minimize the application or impact of such surcharge on Transporter’s Shippers,
provided that such efforts by Transporter shall not include any obligation on or
risk to Transporter of cost responsibility for such surcharge

 

3.                                    Open Season.

 

(a)                               Transporter held an open season to obtain firm
commitments for the Project from April 18, 2013 through May 2, 2013.   This
Agreement shall be deemed a binding bid for Project Capacity in that Open
Season.

 

(b)                              Transporter shall have the right to reduce the
Capacity Subscriptions specified in Section 2 of this Agreement if a reduction
is necessary, in Transporter’s reasonable discretion, not to be exercised in an
unduly discriminatory manner, to comply with any FERC regulation, requirement,
directive, or order, or with Transporter’s FERC Gas Tariff.

 

4.                                    Transporter’s Conditions Precedent.

 

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(a)                               Transporter’s obligations under this Agreement
and the Service Agreement are subject  to the satisfaction of the following
conditions precedent:

 

(i)      Transporter’s receipt of binding contractual commitments from
creditworthy shippers sufficient, in Transporter’s judgment, to economically
justify construction and operation of the Project;

 

(ii)       Transporter’s determination, in its judgment, that the Project is
economically viable, including, without limitation, the ability of Transporter 
to acquire all materials, equipment, or contractor services necessary on terms
acceptable to Transporter;

 

(iii)     Transporter’s timely receipt on terms satisfactory to Transporter of 
rights of way, permits, licenses, authorizations and regulatory consents,
including but not limited to receipt of a FERC authorization, environmental
permits and land use or zoning permits, necessary for the construction and
operation of the Project (“Authorizations”); and

 

(iv)     Obtaining any necessary approvals by the appropriate Board of Directors
and / or executive officers of Transporter by July 31, 2013.

 

(b)                              Transporter has the right to determine whether
the foregoing conditions precedent have been satisfied or whether to waive any
conditions precedent.

 

(c)                               If any of the aforementioned conditions
precedent is not met, or if the condition stated in section 5(a)(i) or the
obligation stated in section 7(a) is not met by Shipper on or before the date
that is thirty (30) days after the date of Shipper’s execution of this
Agreement, Transporter shall have the right to provide written notice to Shipper
of its intention to terminate this Agreement.  Such notice shall designate all
conditions precedent or obligations of Shipper that have not been satisfied.  In
the event of termination by Transporter due to Shipper’s failure to satisfy or
waive a condition or meet an obligation, unless all such conditions or
obligations of Shipper are satisfied within thirty (30) days after the receipt
of such notice from Transporter or the Parties mutually agree otherwise in
writing, this Agreement shall terminate effective upon the expiration of said
thirty (30) day period, without any liability on the part of Transporter to
Shipper.

 

5.                                    Shipper’s Conditions Precedent.

 

(a)                               Shipper’s obligations under this Agreement and
the Service Agreement are subject  to the satisfaction of the following
conditions precedent:

 

(i)                        Obtaining any necessary approvals by the appropriate
Board of Managers and / or executive officers of Shipper within thirty (30) days
of the execution of this Agreement.  Shipper shall promptly confirm by written
notice any disapproval by Shipper’s Board of Managers or executive officers
within two (2) business days of the decision. If approval has not been obtained
within thirty (30) days of execution of this Agreement, Shipper shall promptly
give

 

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notice of termination, which shall be effective on the date of its notice to
terminate (“Termination Date”).

 

 

6.                                    Transporter’s Obligations.

 

(a)                               Transporter agrees to use commercially
reasonable efforts to timely seek the contractual and property rights, financing
arrangements and regulatory approvals, including the necessary authorizations
from FERC, as may be necessary to construct and operate the Project so as to
provide firm transportation service to Shipper consistent with the terms and
conditions in this Agreement.  Transporter shall have the right to terminate
this Agreement, in its judgment, if FERC attaches any material conditions to
Transporter’s authority to construct, modify, own or operate any aspect of the
Project.

 

Once construction of Project has commenced, Transporter shall provide Shipper
monthly written updates on the progress of the Project, including updates
regarding the Anticipated Service Date.  Shipper will use commercially
reasonable efforts to provide Shipper thirty (30) days advanced notice of the
Service Commencement Date.

 

7.                                    Shipper’s Obligations.

 

(a)                               Shipper shall execute and deliver the Credit
Agreement in the form attached as Exhibit 2 within thirty (30) days of the
execution of this Precedent Agreement.  If Shipper does not satisfy
Transporter’s creditworthiness requirements within such thirty (30) day period,
Transporter may terminate this Agreement in accordance with section 4(c). 
Shipper shall continue to meet Transporter’s creditworthiness requirements
during the term of this Agreement.

 

(b)                              Upon the Service Commencement Date, Shipper
agrees to pay the charges set forth in Section 2 above pursuant to the Service
Agreement.

 

(c)                               Shipper agrees to cooperate with Transporter
as may be reasonably requested by Transporter in the preparation and filing of
Transporter’s applications for authorizations and to support such applications
of Transporter provided that such Transporter applications are not inconsistent
with this Agreement.

 

(d)                             Shipper agrees to apply for, and will seek with
due diligence to obtain, any regulatory authorizations it deems necessary for it
to utilize the Project.

 

8.                                    Termination.

 

(a)                               If the Service Commencement Date has not
occurred by September 1, 2016, Shipper shall have the right to provide written
notice to Transporter of its intention to terminate this Agreement, the Credit
Agreement and the Service Agreement (if executed).  Unless all such Service
Commencement Date has occurred within ninety (90) days after the receipt of such
notice from Transporter or the Parties mutually agree otherwise in writing, this
Agreement shall terminate effective upon the expiration of said ninety (90) day
period, without any liability on the part of Shipper to Transporter.

 

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(b)                              In the event Shipper terminates this Agreement
for any reason other than as provided by this Agreement or because of a material
breach by Transporter, or Transporter terminates this Agreement because of a
material breach by Shipper,  Shipper shall reimburse Transporter for Shipper’s
proportionate share of direct costs incurred by Transporter in connection with
the Project, including all costs incurred for  permits, licenses, regulatory
authorizations, rights of way, surveys, engineering designs, construction,
pipeline, materials, equipment, and cancellation charges.

 

(c)                               Unless terminated sooner pursuant to the terms
in this Agreement, the Agreement shall terminate upon the Service Commencement
Date.

 

 

9.                                    Assignment.  Any entity which shall
succeed either Shipper or Transporter by purchase or by merger or consolidation,
substantially or entirely, shall be entitled to the rights and subject to the
obligations of its predecessor under this Agreement.  Other than as set forth in
the preceding sentence, neither Party may assign its rights or obligations
without the prior written consent of the non-assigning Party, which consent
shall not be unreasonably withheld as long as, in the event of assignment by
Shipper, (i) the assignee meet’s Transporter’s creditworthiness standards set
forth in the Credit Agreement on Exhibit 2, (ii) Shipper remains liable for any
and all financial obligations arising under this Precedent Agreement; and,
(iii) such assignment is permitted pursuant to FERC rules, regulations or
applicable precedent.

 

10.                            Representations and Warranties.  Each Party
represents and warrants:

 

(a)                               It is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, and is in good
standing in each other jurisdiction where the failure to so qualify would have a
material adverse effect upon the business or financial condition of such Party.

 

(b)                              The execution, delivery and performance of this
Agreement by such Party does not and will not require the consent of any trustee
or holder of any indebtedness, or be subject to or be inconsistent with its
other obligations under any other Agreement.

 

(c)                               No governmental authorization, approval,
order, license, permit, franchise or consent, and no registration, declaration
or filing with any governmental authority is required on its part in connection
with the execution and delivery of this Agreement, except for the governmental
approvals described in the Agreement. To the best of its knowledge, there is no
pending or threatened action or proceeding affecting it before any court,
government authority, or arbitrator that could reasonably be expected to
materially and adversely affect its financial condition or operations or its
ability to perform its obligations hereunder, or that would affect the legality,
validity or enforceability of this Agreement or would otherwise hinder or
prevent performance hereunder.

 

11.                            Force Majeure.

 

(a)                               In the event that 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 payment

 

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of amounts accrued and due hereunder, the obligations of the Party so far as
they are affected by such Force Majeure shall be suspended during the
continuance of such inability to perform, provided that the affected Party gives
proper notice, but for no period longer than the continuation of the inability
to perform caused by such Force Majeure; such cause to be remedied with all
reasonable dispatch.  Proper notice shall be written notice delivered
electronically or otherwise that describes the full particulars of the Force
Majeure event.  The settlement of strikes or other labor disturbances shall be
in a Party’s sole discretion.

 

(b)                              The term “Force Majeure” shall include any act,
event or circumstance, or any combination thereof that is beyond the reasonable
control of the Party whose performance is affected.  The term “Force Majeure”
shall include, but shall not be limited to, the following, provided that the
act, event or circumstance is beyond the reasonable control of the affected
Party: acts of God, flood, fire, lightning, earthquake,  strikes, or other labor
disturbances, unavoidable accidents or disruptions (including major equipment
breakdown), and failure or delay beyond a Party’s reasonable control in securing
necessary materials, equipment, services, facilities, or authorizations or
approvals from any governmental authority, or restraint by court order or public
authority.

 

12.                            Modifications or Waivers.  No modification or
waiver of the terms and provisions of this Agreement shall be or become
effective except by the execution by both Parties of a written amendment.

 

13.                            Notices.  Notices under this Agreement shall be
sent to:

 

Transporter:

Shipper:

 

 

Equitrans, L.P.

EQT Energy, LLC

Attention: Andy Murphy

Attention: Paul Kress

625 Liberty Avenue

625 Liberty Avenue

Pittsburgh, PA 15222

Pittsburgh, PA 15222

Phone: 412 395-3358

Phone: 412 395-3232

e-mail: amurphy@eqt.com

e-mail: pkress@eqt.com

 

 

Any notice to be given under this Agreement shall be in writing and delivered
personally or mailed by certified mail by courier, or by facsimile.  Notice
given by personal delivery, certified mail, or courier shall be effective upon
actual receipt.  In the absence of proof of the actual receipt date, notice by
personal delivery or courier shall be deemed to have been received on the next
business day after it was sent or such earlier time as is confirmed by the
receiving Party, and notice given by certified mail shall be deemed to have been
received five (5) business days after it was sent or such earlier time as is
confirmed by the receiving Party.  Notice given by facsimile shall be effective
upon actual receipt if received during the recipient’s normal business hours or
at the beginning of recipient’s next business day if received after recipient’s
normal business hours.  All notices by facsimile shall promptly be confirmed in
writing by certified mail or courier.  Any Party may change any address to which
notice is to be given to it by providing written notice.

 

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14.                            Confidentiality.  Due to the competitive nature
of the information contained in this Agreement, each Party shall keep the terms
of this Agreement confidential, except where disclosure is expressly
contemplated or required by law, regulation, or order of any governmental
authority, including but not limited to the FERC.

 

15.                            Miscellaneous.

 

(a)                               Neither Party shall be liable to the other for
any special, indirect, consequential or punitive damages.

 

(b)                              The exhibits shall be deemed part of this
Agreement as though they were embodied in the Agreement.

 

(c)                               No provision of this Agreement shall be
construed as creating any obligations for the benefit of, or rights in favor of,
any person or entity other than Transporter or Shipper.

 

(d)                             No waiver of either Party of any default by the
other Party in the performance of any provision, condition or requirement in
this Agreement shall be deemed a waiver of, or in any manner release the other
Party from, future performance of any other provision, condition or requirement
herein, nor shall such waiver be deemed to be a waiver of, or in any manner
release the other Party from, future performance of the same provision,
condition or requirement.   Any delay or omission of either Party to exercise
any right in this Agreement shall not impair the exercise of any such right, or
any like right, accruing to it thereafter.

 

(e)                               This Agreement requires execution by both
Parties to create a binding contractual commitment.

 

(f)                                This terms and provisions in this Agreement
are subject to all laws, orders, rules and regulations of any governmental
authority having jurisdiction.

 

 

SIGNIFYING THE RESPECTIVE PARTIES’ ACCEPTANCE TO THIS AGREEMENT:

 

 

 

Equitrans, L.P.

EQT Energy, LLC

 

 

 

 

Signature:_/s/ M. Elise Hyland_______

Signature: _/s/ Paul C. Kress__________

 

 

 

 

Name:_ M. Elise Hyland ____________

Name: _ Paul C. Kress ______________

 

 

 

 

Title:_Executive Vice President,

Title: _SVP, Capacity Planning Analysis__

 

Midstream Asset Mgmt & Eng________

 

 

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EXHIBIT 1

PRIMARY FIRM RECEIPT AND DELIVERY POINTS

 

 

Receipt Point *

MDQ Sep 1, 2014

Mark West Mobley

195,000 Dth

Jupiter

100,000 Dth

 

 

Delivery Point

MDQ Sep 1, 2014

TETCO Jefferson

295,000 Dth

 

 

*Receipt Point MDQs do not include quantities required for retainage.

 

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EXHIBIT 2

CREDIT AGREEMENT

 

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