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Exhibit 10.17

Copano Energy, L.L.C.
Long-Term Incentive Plan

Grant of Options

Grantee:       

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Grant Date:
 
    

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, 2004
 

        1.    Grant of Options.    Copano Energy, L.L.C. (the "Company") hereby
grants to you the right and option ("Options") to purchase all or any part of an
aggregate of [            ] Common Units ("Units") of Copano Energy, L.L.C. on
the terms and conditions set forth herein and in the Copano Energy, L.L.C.
Long-Term Incentive Plan (the "Plan"), which is incorporated herein by reference
as a part of this Agreement. This grant of Options does not include a tandem
grant of DERs. In the event of any conflict between the terms of this Agreement
and the Plan, the Plan shall control. Capitalized terms used but not defined in
this Agreement shall have the meaning attributed to such terms under the Plan,
unless the context requires otherwise.

        2.    Purchase Price.    The purchase price per Unit purchased pursuant
to the exercise of the Options shall be $                        , subject to
adjustment as provided in the Plan.

        3.    Vesting and Exercise of Option.    Subject to the further
provisions of this Agreement, the Options shall become vested and may be
exercised in accordance with the following schedule, by written notice to the
Company at its principal executive office addressed to the attention of its
Secretary (or such other officer or employee of the Company as the Company may
designate from time to time):

Anniversary of
Grant Date

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  Cumulative
Vested Percentage

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  1st   20 % 2nd   40 % 3rd   60 % 4th   80 % 5th   100 %

        Notwithstanding the above schedule, but subject to the further
provisions hereof, upon the occurrence of the following events the Options shall
vest and become exercisable as provided below:

        (a)    Disability.    If your employment with the Company and its
Affiliates terminates by reason of a disability that entitles you to benefits
under the Company's or an Affiliate's long-term disability plan, the Options
shall become fully vested and, subject to the further provisions of this
Agreement, may be exercised at any time during the one-year period following
such termination by you or by your guardian or legal representative (or, if you
die during such one-year period, by your estate or the person who acquires the
Options by will or the laws of descent and distribution).

        (b)    Death.    If you die while in the employ of the Company or an
Affiliate, the Options shall become fully vested and, subject to the further
provisions of this Agreement, your estate (or the person who acquires the
Options by will or the laws of descent and distribution) may exercise the
Options at any time during the one-year period following the date of your death.

        (c)    Termination For Cause.    If your employment with the Company and
its Affiliates is terminated by the Company or an Affiliate for Cause (as
determined by the Company or an Affiliate in accordance with its employment
policies), the Options, whether or not then vested, shall immediately cease to
be exercisable upon such termination and shall be cancelled automatically
without payment.

        (d)    Other Terminations.    If your employment with the Company and
its Affiliates is terminated for any reason other than as provided in paragraphs
3(a), (b) and (c) above, the

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Options, to the extent vested on the date of your termination, may be exercised,
subject to the further provisions of this Agreement, at any time during the
three month period following such termination by you or by your guardian or
legal representative (or by your estate or the person who acquires the Options
by will or the laws of descent and distribution or otherwise by reason of your
death if you die during such period), but only as to the vested number of Units,
if any, that you were entitled to purchase hereunder as of the date your
employment so terminates.

        (e)    Copano Operations Ceases to be an Affiliate.    If (i) Copano
Operations ceases to be an Affiliate, (ii) you are an employee of Copano
Operations on that date, and (iii) your employment is not transferred to the
Company or an Affiliate, the Options, to the extent vested on the date Copano
Operations ceases to be an Affiliate, may be exercised, subject to the further
provisions of this Agreement, at any time during the three month period
following such date by you or by your guardian or legal representative (or by
your estate or the person who acquires the Options by will or the laws of
descent and distribution or otherwise by reason of your death if you die during
such period), but only as to the vested number of Units, if any, that you were
entitled to purchase hereunder as of the date Copano Operations ceases to be an
Affiliate.

        (f)    Change of Control.    The Options shall become fully vested upon
a Change of Control.

        For purposes of this Agreement, "employment with the Company" shall
include being an employee or a director of the Company or an Affiliate.

        There is no minimum or maximum number of Units that must be purchased
upon exercise of the Options. Instead, the Option may be exercised, at any time
and from time to time, to purchase any number of Units that are then vested and
exercisable according to the provisions of this Agreement.

        Notwithstanding any of the foregoing, the Options shall not be
exercisable in any event after the expiration of 10 years from the Grant Date.

        All Options that are not vested on your termination of employment as
provided above shall be automatically cancelled without payment upon your
termination.

        4.    Payment of Exercise Price.    The purchase price of the Units as
to which the Options are exercised shall be paid in full at the time of exercise
(a) in cash (including by check acceptable to the Company), (b) if the Units are
readily tradable on a national securities market or exchange, through a
"cashless broker exercise" procedure (a "cashless broker exercise" is not
available for executive officers of the Company except to the extent the
exercise in such manner is approved in advance by the Company) in accordance
with a program established by the Company, (c) any other method approved by the
Company, including, with the consent of the Committee, by withholding a number
of Units that would otherwise be delivered on exercise of the Option that have
an aggregate Fair Market Value that does not exceed the aggregate exercise price
for the Options being then exercised, or (d) any combination of the foregoing.
No fraction of a Unit shall be transferred upon exercise of the Options. Unless
and until a certificate or certificates representing such Units shall have been
transferred by the Company to you, you (or the person permitted to exercise the
Options in the event of your death) shall not be or have any of the rights or
privileges of a unitholder of the Company with respect to Units acquirable upon
an exercise of the Options.

        5.    Withholding of Tax.    To the extent that the exercise of an
Option results in the receipt of compensation by you with respect to which the
Company or an Affiliate has a tax withholding obligation pursuant to applicable
law, unless other arrangements have been made by you that are acceptable to the
Company or such Affiliate, which, with the consent of the Committee, may include
withholding a number of Units that would otherwise be delivered on exercise or
vesting that have an aggregate Fair Market Value that does not exceed the amount
of taxes to be withheld, you shall deliver to the Company or the Affiliate such
amount of money as the Company or the Affiliate may require to meet its
withholding obligations under such applicable law. No delivery of Units shall be
made

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pursuant to the exercise of an Option under this Agreement until you have paid
or made arrangements approved by the Company or the Affiliate to satisfy in full
the applicable tax withholding requirements of the Company or Affiliate.

        6.    Restrictions.    By accepting this grant, you agree that the Units
which you may acquire by exercising the Options will not be sold or otherwise
disposed of in any manner which would constitute a violation of any applicable
federal or state securities laws. You also agree that (i) the certificates
representing the Units purchased under the Options may bear such legend or
legends as the Committee deems appropriate in order to assure compliance with
applicable securities laws, (ii) the Company may refuse to register the transfer
of the Units purchased under the Options on the transfer records of the Company
if such proposed transfer would in the opinion of counsel satisfactory to the
Company constitute a violation of any applicable securities law, and (iii) the
Company may give related instructions to its transfer agent, if any, to stop
registration of the transfer of the Units purchased under the Options.

        7.    Limitations Upon Transfer.    All rights under this Agreement
shall belong to you alone and may not be transferred, assigned, pledged, or
hypothecated by you in any way (whether by operation of law or otherwise), other
than by will or the laws of descent and distribution and shall not be subject to
execution, attachment, or similar process. Upon any attempt by you to transfer,
assign, pledge, hypothecate, or otherwise dispose of such rights contrary to the
provisions in this Agreement or the Plan, or upon the levy of any attachment or
similar process upon such rights, such rights shall immediately become null and
void.

        8.    Insider Trading.    The terms of the Company's Insider Trading
Policy are incorporated herein by reference. The timing of the delivery of any
Units pursuant to an Option exercise shall be subject to and comply with such
policy.

        9.    Binding Effect.    This Agreement shall be binding upon and inure
to the benefit of any successors to the Company and all persons lawfully
claiming under you.

        10.    Entire Agreement.    This Agreement constitutes the entire
agreement of the parties with regard to the subject matter hereof, and contains
all the covenants, promises, representations, warranties and agreements between
the parties with respect to the Option granted hereby. Without limiting the
scope of the preceding sentence, all prior understandings and agreements, if
any, among the parties hereto relating to the subject matter hereof are hereby
null and void and of no further force and effect.

        11.    Modifications.    Except as provided below, any modification of
this Agreement shall be effective only if it is in writing and signed by both
you and an authorized officer of the Company. Notwithstanding anything in the
Plan or this Agreement to the contrary, if the Committee determines that the
terms of this grant do not, in whole or in part, satisfy the requirements of new
Section 409A of the Internal Revenue Code, the Committee, in its sole
discretion, may unilaterally modify this Agreement in such manner as it deems
appropriate to comply with such section and any regulations or guidance issued
thereunder.

        12.    Governing Law.    This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas, without regard to
conflicts of laws principles thereof.

        IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer all effective as of the day and year first above
written.

  Copano Energy, L.L.C.
 
By:
 
    

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      Name:       

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      Title:       

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Exhibit 10.17