Exhibit 10.6
EXECUTION VERSION
TRANSPORTATION SERVICES AGREEMENT
(High Plains Pipeline System)
     This TRANSPORTATION SERVICES AGREEMENT (this “Agreement”) is dated as of
April 26, 2011, by and between Tesoro High Plains Pipeline Company LLC, a
Delaware limited liability company (“THPP”) and Tesoro Refining and Marketing
Company, a Delaware corporation (“TRMC”), collectively referred to as “Parties.”
RECITALS
     WHEREAS, THPP intends to provide transportation services with respect to
crude petroleum owned by TRMC on the intrastate portions of the Pipeline System
from various points in North Dakota to Mandan, North Dakota, subject to and upon
the terms and conditions of this Agreement; and
     WHEREAS, THPP will agree to operate and maintain the Pipeline System in
good working order and ship crude petroleum for TRMC in North Dakota intrastate
commerce on the Pipeline System, subject to the terms and conditions of this
Agreement.
     NOW, THEREFORE, in consideration of the covenants and obligations contained
herein, the Parties to this Agreement hereby agree as follows:
1. DEFINITIONS
     Capitalized terms used throughout this Agreement shall have the meanings
set forth below, unless otherwise specifically defined herein.
     “Agreement” has the meaning set forth in the Preamble.
     “Actual Costs” has the meaning set forth in Section 6(c).
     “Actual Shipments” means crude petroleum that is physically delivered on
the Pipeline System under NDPSC tariffs from North Dakota intrastate origin
points on the Pipeline System to the Mandan Refinery, or such other North Dakota
destinations as may be incorporated into the terms and conditions of this
Agreement pursuant to Section 2(b).
     “Agreement” has the meaning set forth in the Preamble.
     “Applicable Law” means any applicable statute, law, regulation, ordinance,
rule, determination, judgment, rule of law, order, decree, permit, approval,
concession, grant, franchise, license, requirement, or any similar form of
decision of, or any provision or condition of any permit, license or other
operating authorization issued by any Governmental Authority having or asserting
jurisdiction over the matter or matters in question, whether now or hereafter in
effect.
     “Available Capacity” means the capacity usable for transportation of crude
petroleum on each Segment of the Pipeline System, and subject to adjustment
pursuant to Section 2(b).
     “Barrel” means a volume equal to 42 U.S. gallons of 231 cubic inches each,
at 60 degrees Fahrenheit under one atmosphere of pressure.
     “bpd” means Barrels per day.

 

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     “Business Day” means a day, other than a Saturday or Sunday, on which banks
in New York, New York are open for the general transaction of business.
     “Capacity Expansion” has the meaning set forth in Section 2(b).
     “Capacity Expansion Completion Date” has the meaning set forth in
Section 2(b).
     “Capacity Resolution” has the meaning set forth in Section 13(c).
     “Commencement Date” has the meaning set forth in Section 3.
     “Committed Tariff Rate” means, for each separate Tariff Section of the
Pipeline, the Firm Committed Rate specified on Schedule A for shipping crude
petroleum from the origin set forth on Schedule A to the Mandan Refinery, as may
be supplemented and revised from time to time, as provided herein.
     “Confidential Information” means all confidential, proprietary or
non-public information of a Party, whether set forth in a writing, orally or in
any other manner, including all non-public information and material of such
Party (and of companies with which such Party has entered into confidentiality
agreements) that another Party obtains knowledge of or access to, including
non-public information regarding products, processes, business strategies and
plans, customer lists, research and development programs, computer programs,
hardware configuration information, technical drawings, algorithms, know-how,
formulas, processes, ideas, inventions (whether patentable or not), trade
secrets, schematics and other technical, business, marketing and product
development plans, revenues, expenses, earnings projections, forecasts,
strategies, and other non-public business, technological, and financial
information, and specifically including without limitation all shipper
information of TRMC that THPP is required by Applicable Law to protect as
confidential.
     “Control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract, or otherwise.
     “Credit” has the meaning set forth in Section 6(b).
     “Excess Barrels” has the meaning set forth in Section 5(b).
     “Extension Period” has the meaning set forth in Section 4.
     “First Offer Period” has the meaning set forth in Section 11(d).
     “Force Majeure” means circumstances not reasonably within the control of
THPP and which, by the exercise of due diligence, THPP is unable to prevent or
overcome that prevent performance of THPP’s obligations, including: acts of God,
strikes, lockouts or other industrial disturbances, wars, riots, fires, floods,
storms, orders of courts or Governmental Authorities, explosions, terrorist
acts, breakage, accident to machinery, storage tanks or lines of pipe and
inability to obtain or unavoidable delays in obtaining material or equipment and
similar events.
     “Force Majeure Notice” and “Force Majeure Period” each have the meaning set
forth in Section 12.
     “FERC” means the Federal Energy Regulatory Commission.

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     “Governmental Authority” means any federal, state, local or foreign
government or any provincial, departmental or other political subdivision
thereof, or any entity, body or authority exercising executive, legislative,
judicial, regulatory, administrative or other governmental functions or any
court, department, commission, board, bureau, agency, instrumentality or
administrative body of any of the foregoing.
     “Mandan Refinery” means the petroleum refinery owned by TRMC located in
Mandan, North Dakota.
     “Minimum Required Gathering Line Capacity” means the average daily capacity
of each portion of the gathering lines, tanks and associated lateral pipelines
of the Pipeline System in 2010; provided, however, that THPP shall not be
required to maintain a gathering pipeline in operation if the volume of crude
petroleum being shipped on such gathering pipeline declines to a level where
continued operation of the gathering line is uneconomic as determined by THPP.
     “Minimum Required Terminal Capacity” means, for each Terminal, the average
daily terminalling capacity in 2010.
     “Minimum Throughput Commitment” means an average of 49,000 bpd per Month
shipped on the Pipeline System in intrastate commerce in North Dakota, subject
to adjustment for Capacity Expansions pursuant to Section 2; provided however,
that the Minimum Throughput Commitment during the Month in which the
Commencement Date or a Capacity Expansion Completion Date occurs shall be
prorated in accordance with ratio of the number of days in such Month during
which the Commencement Date or Capacity Expansion Completion Date (as to the
additional bpd reserved by TRMC pursuant to Section 2) occurs bears to the total
number of days in such Month.
     “Month” means the period commencing on the Commencement Date and ending on
the last day of the calendar month in which service begins and each successive
calendar month thereafter.
     “NDPSC” means the North Dakota Public Service Commission.
     “Notice Period” has the meaning set forth in Section 14(a).
     “Offer Period” has the meaning set forth in Section 2(d).
     “Partnership Change of Control” means Tesoro Corporation ceases to Control
the general partner of Tesoro Logistics LP.
     “Person” means any individual, partnership, limited partnership, joint
venture, corporation, limited liability company, limited liability partnership,
trust, unincorporated organization or Governmental Authority or any department
or agency thereof.
     “Payment Month” has the meaning set forth in Section 6(a).
     “Pipeline System” means the combined THPP pipeline in North Dakota,
comprised of the Segments and associated lateral pipelines, gathering lines and
tanks.
     “Prepaid Fee” has the meaning set forth in Section 6(a).
     “Rate Tariff” means the tariff THPP currently has on file with the NDPSC,
or any amended, replacement or supplemental tariff that THPP files in the future
with the NDPSC, specifying rates for

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intrastate transportation from North Dakota origins on the Pipeline System to
the Mandan Refinery or other North Dakota intrastate destinations.
     “Receiving Party Personnel” has the meaning set forth in Section 17(g).
     “Reference Month” has the meaning set forth in Section 6(a).
     “Reserved Capacity” means 70% of the Available Capacity of each Segment of
the Pipeline System existing as of the Commencement Date, along with any portion
of any Capacity Expansion reserved by TRMC pursuant to Section 2.
     “Restoration” has the meaning set forth in Section 13(b)(ii).
     “Right of First Refusal” has the meaning set forth in Section 2(d).
     “Rules Tariff” means the tariff THPP currently has on file with the NDPSC
which specifies rules and regulations for transporting crude petroleum from
North Dakota origins on the Pipeline System to the Mandan Refinery, and any
amended, replacement or supplemental tariff that THPP files in the future with
the NDPSC for the transportation of crude petroleum from North Dakota origin
points to North Dakota destinations.
     “Segment” means a portion of the Pipeline System extending between any two
of the North Dakota hubs described in Schedule B.
     “Shipping Month” has the meaning set forth in Section 6(a).
     “Shortfall Payment” has the meaning set forth in Section 6(b).
     “Storage Contract” has the meaning set forth in Section 2(d).
     “Subject Tank” has the meaning set forth in Section 2(d).
     “Suspension Notice” has the meaning set forth in Section 14(a).
     “Tariff Section” means any contiguous portion of the Pipeline System
extending between a North Dakota intrastate origin and destination pair for
transportation that is specified in a Rate Tariff on file with the NDPSC. A
Tariff Section may consist of multiple Segments.
     “Term” and “Initial Term” each have the meaning set forth in Section 4.
     “Terminal” means the facilities at each origin of the Pipeline System for
the receipt of crude petroleum and breakout tanks in use on the Pipeline System
on the Commencement Date, including associated racks, pumps, piping tanks,
valves, control equipment, and related fixtures and equipment.
     “Termination Notice” has the meaning set forth in Section 12(a).
     “THPP” has the meaning set forth in the Preamble.
     “Transportation Right of First Refusal” has the meaning set forth in
Section 11(d).
     “TRMC” has the meaning set forth in the Preamble.

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     “TRMC Termination Notice” has the meaning set forth in Section 12(b).
     “Uncommitted Tariff Rate” means, for each respective Tariff Section, the
Uncommitted Rate specified on Schedule A for shipping crude petroleum from the
origin set forth on Schedule A to the Mandan Refinery, as may be supplemented
and revised from time to time, as provided herein.
     “Weighted Average Committed Tariff Rate” means, with respect to any period,
the result of (i) the aggregate amount incurred under Section 6(c)(i) by TRMC
for such period divided by (ii) the total volume shipped by TRMC on such Tariff
Sections for such period at such Committed Tariff Rates.
2. VOLUME COMMITMENT; RESERVED CAPACITY
     (a) Minimum Throughput and Reserved Capacity.
     (i) Ship or Pay Arrangement. TRMC commits that from the Commencement Date
through the end of the Term, TRMC shall ship, from North Dakota origin points on
the Pipeline System to the Mandan Refinery (or other North Dakota intrastate
destination points on terms negotiated pursuant to the terms of Section 2(b)
below), the Minimum Throughput Commitment each Month, or, in the event it fails
to do so, shall remit to THPP the Shortfall Payment pursuant to Section 6 below.
THPP, in turn, commits to TRMC that it shall make available to TRMC the Reserved
Capacity on each Segment of the Pipeline System. THPP shall inform TRMC in
writing prior to the Commencement Date of the Available Capacity of each Segment
of the intrastate portion of the Pipeline System. THPP shall also make available
to TRMC sufficient capacity on each gathering pipeline connected to the Pipeline
System that is being operated or is capable of being operated by THPP on the
Commencement Date to allow TRMC to ship the Minimum Throughput Commitment and to
utilize the Reserved Capacity; provided, however, that THPP shall not be
required to maintain a gathering pipeline in operation if the volume of crude
petroleum being shipped on such gathering pipeline declines to a level where
continued operation of the gathering line is uneconomic as determined by THPP.
     (ii) Minimum Throughput Capacity to Mandan Refinery. At all times, except
by reason of Force Majeure or temporary shutdown for pipeline testing and
maintenance, THPP shall maintain and operate the Pipeline System so that the
actual operating capacity of individual Segments shall not be materially reduced
and the total capacity of the Pipeline System that is actually available for
shipment of crude petroleum to the Mandan Refinery (including any capacity
reserved or dedicated to any other shipper) always equals or exceeds 70,000 bpd.
     (b) Pipeline System Modification or Expansion.
     (i) New North Dakota Destinations and Origins; Modifications. In the event
that THPP proposes the construction of any new North Dakota origin or
destination point on the Pipeline System, then the Parties shall negotiate in
good faith to determine an appropriate adjustment to the Reserved Capacity for
any particular affected Segments (and only such affected Segments) and an
appropriate credit to the Minimum Throughput Commitment for shipments by TRMC to
any new intrastate destination points. Notwithstanding the foregoing, consistent
with the terms of Section 2(a)(ii) above, unless otherwise expressly agreed in
writing by TRMC, no such new construction shall (A) reduce or restrict the right
and ability of TRMC to ship at least the Minimum Throughput Commitment in the
aggregate across all Segments from North Dakota origin points nominated by TRMC
to the Pipeline System hub at Dunn Center for further delivery to the Mandan
Refinery, (B) reduce the Available Capacity on the Dunn Center-to-Mandan Segment
below 70,000 bpd or TRMC’s Reserved Capacity on such Segment or (C) reverse the
flow of any Segment on the Pipeline System.

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     (ii) Capacity Expansion. In the event that THPP proposes the construction
or acquisition of any new pipeline with an intrastate North Dakota origin point
which connects to the Pipeline System, the return to service of any pipeline
with an intrastate North Dakota origin which connects to the Pipeline System
inactive on the Commencement Date or the expansion or enhancement of the
Available Capacity on any currently existing Segment (any of the foregoing, a
“Capacity Expansion”), then: (A) THPP shall provide written notice to TRMC at
least 180 days prior to the projected date of completion and first usable
service for such Capacity Expansion (“Capacity Expansion Completion Date”),
describing in reasonable detail the proposed Capacity Expansion and the
projected timetable for such Capacity Expansion, including the projected
Capacity Expansion Completion Date; (B) TRMC shall have the option, exercisable
by written notice to THPP within 60 days after TRMC’s receipt of a Capacity
Expansion Notice, to reserve up to 70% of such Capacity Expansion; and (C) in
the event that TRMC so elects to reserve a portion of such Capacity Expansion,
then (1) THPP shall provide TRMC with such periodic updates and information with
respect to the Capacity Expansion as TRMC shall reasonably request and (2) on
the actual Capacity Expansion Completion Date, the Minimum Throughput Commitment
and Reserved Capacity for the affected Segments shall be increased by the number
of bpd of the Capacity Expansion TRMC has elected to reserve. For any Capacity
Expansion requiring the filing of any new tariff with the NDPSC, the provisions
of Section 5(e)(ii) shall apply to the determination of the Committed Tariff
Rate applicable to TRMC’s reserved portion of such Capacity Expansion. The
proration provisions of the Rules Tariff shall apply so as to provide TRMC with
priority for the adjusted Reserved Capacity as a shipper under a Committed
Tariff, and TRMC shall be subject to proration as a shipper under an Uncommitted
Tariff with respect to any portion of a Capacity Expansion not reserved by TRMC
pursuant to this Section 2(b)(ii). Notwithstanding the foregoing, consistent
with the terms of Section 2(a)(ii) above, unless otherwise expressly agreed in
writing by TRMC, no Capacity Expansion shall (Y) reduce or restrict the right
and ability of TRMC to ship at least the Minimum Throughput Commitment in the
aggregate across all Segments from North Dakota origin points nominated by TRMC
to the Pipeline System hub at Dunn Center for further delivery to the Mandan
Refinery or (Z) reduce the Available Capacity on the Dunn Center-to-Mandan
Segment below 70,000 bpd, or TRMC’s Reserved Capacity on such Segment. Nothing
contained herein shall require THPP to divulge any information concerning any
other shipper that is confidential shipper information or otherwise Confidential
Information of THPP or any third party. The provisions of Section 17 shall apply
to all such Confidential Information.
     (iii) Determination of Minimum Throughput Commitment. TRMC shall be deemed
to have shipped its Minimum Throughput Commitment if the average quantity of
crude petroleum that TRMC ships to the Mandan Refinery on the Pipeline System in
any Month under NDPSC tariffs equals at least the Minimum Throughput Commitment,
regardless of the particular Segments on which those shipments are made.
Shipments to or from new destinations or origins added pursuant to
Section 2(b)(i) above or included as part of a Capacity Expansion pursuant to
Section 2(b)(ii) shall only be included in the calculation of Minimum Throughput
Commitment upon adjustment to the Reserved Capacity and Minimum Throughput
Commitment as required by each such respective subsection.
     (c) Testing and Repair; Capacity Expansion Requested by TRMC.
     (i) Segment Testing. As further consideration for THPP’s obligation to make
available to TRMC the Reserved Capacity on each Segment, TRMC shall reimburse
THPP for any costs or expenses associated with or related to the pipeline test
and/or inspection scheduled to commence during the 2011 calendar year on the
Tariff Section of the Pipeline System between Ramberg and Mandan and the cost of
any capital expenditures necessary, as a result of such tests, to maintain the
capacity of the Ramberg-to-Mandan Tariff Section at 70,000 bpd. If THPP
determines based on such pipeline tests or inspections that the Available
Capacity of such Tariff Section exceeds 70,000 bpd, then notwithstanding the
provisions of Section 2(b)(ii), the amount of such excess shall be included in
the calculation of Reserved Capacity for

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the Segments included in such Tariff Section without any adjustment to the
Minimum Throughput Commitment.
     (ii) Capacity Expansion Requested by TRMC. TRMC may at any time make a
written request to THPP for a Capacity Expansion on any Segment existing as of
the Commencement Date, and shall include in such written request the parameters
and specifications of the requested Capacity Expansion. Upon the receiving such
a request, THPP shall promptly evaluate the relevant factors related to such
request, including, without limitation: engineering and design criteria,
limitations affecting the expansion of such Segment and any related tankage,
cost and financing factors and the effect of such Capacity Expansion on the
overall operation of the Pipeline System. If THPP determines that such a
Capacity Expansion is operationally and commercially feasible, THPP shall
present a proposal to TRMC concerning the design of such Capacity Expansion, its
projected costs and how such costs might be funded by or recovered from TRMC. If
THPP determines that such a Capacity Expansion is not commercially or
operationally feasible, it shall provide TRMC with an explanation of and
justification for why it made such determination. If THPP notifies TRMC that the
Capacity Expansion may be commercially and operationally feasible, the Parties
shall negotiate reasonably and in good faith to determine appropriate terms and
conditions for the Capacity Expansion, which shall include, without limitation,
the scope of the Capacity Expansion, the appropriate timing for constructing the
Capacity Expansion, the increase in Reserved Capacity and a mechanism for THPP
to recover its costs, plus a reasonable return on capital associated with such
Capacity Expansion, which may include, without limitation, direct funding of all
or part of the costs by TRMC, an increase in tariff rates and/or an increase in
the Minimum Throughput Commitment.
     (d) Excess Tank Capacity. In the event that THPP reasonably determines that
any storage tanks which are part of the Pipeline System are not then required,
and will not during the term of any Storage Contract be required, for THPP’s
delivery of the Reserved Capacity to TRMC (any such storage tank, a “Subject
Tank”), then THPP may take such Subject Tank out of service and offer such
Subject Tank to third parties for use on a dedicated storage basis (a “Storage
Contract”); provided, however, that prior to entering into any such Storage
Contract, THPP shall provide TRMC with (i) written notice of its intent to enter
into a Storage Contract and the general terms of such transaction and (ii) a
thirty (30)-day period (beginning upon TRMC’s receipt of such written notice)
(the “Offer Period”) during which TRMC may make a good faith offer to enter into
a Storage Contract with THPP with respect to such Subject Tank (the “Right of
First Refusal”). If TRMC makes an offer on terms no less favorable to THPP than
the third-party offer for a Storage Contract with respect to such Subject Tank
during the Offer Period, then THPP shall be obligated to enter into a Storage
Contract with TRMC. If TRMC does not exercise its Right of First Refusal in the
manner set forth above, THPP may, for the next ninety (90) days, proceed with
the negotiation of the third-party Storage Contract. If no third-party Storage
Contract is consummated during such ninety (90)-day period, then the terms and
conditions of this Section 2(d) shall again become effective with respect to
such Storage Tank.
     (e) Nomination Procedures. TRMC shall nominate volumes that it intends to
ship in accordance with the provisions of the THPP Rules Tariff on file with the
NDPSC. Pursuant to that tariff, TRMC shall not be subject to proration of its
nominations of intrastate shipments on any Segment of the Pipeline System for
volumes up to the Reserved Capacity, and TRMC shall be entitled to ship excess
intrastate volumes above the Reserved Capacity on a pro rata basis with other
shippers, as well as interstate volumes pursuant to the terms of THPP’s tariffs
on file with the FERC. TRMC agrees that in the event that its nomination for
intrastate transportation of crude petroleum during any nomination period is
less than the Minimum Throughput Commitment, THPP shall be entitled to use
TRMC’s unutilized capacity for volumes nominated by other shippers without any
reduction in the Shortfall Payment payable by TRMC.

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3. COMMENCEMENT DATE
The Parties anticipate that the “Commencement Date” will be April 26, 2011. The
actual Commencement Date shall be the date specified by THPP in a written notice
to TRMC. The Parties agree that there are a number of factors that may affect
the actual Commencement Date. Consequently, neither Party shall have any right
or remedy against the other Party if the actual Commencement Date is earlier or
later than the anticipated Commencement Date.
4. TERM
The initial term of this Agreement shall commence on the Commencement Date and
shall continue through April 30, 2021 (the “Initial Term”); provided, however,
that TRMC may, at its option, extend the Initial Term for up to two (2) renewal
terms of five (5) years each (each, an “Extension Period”) by providing written
notice of its intent to THPP no less than ninety (90) days prior to the end of
the Initial Term or the then-current Extension Period. The Initial Term, and any
extensions of this Agreement as provided above, shall be referred to herein as
the “Term”.
5. TARIFFS AND REIMBURSEMENT FOR CAPITAL EXPENDITURES
THPP has filed with the North Dakota Public Service Commission a Rate Tariff
that sets forth the Committed Tariff Rates and Uncommitted Tariff Rates
specified in Schedule A.
     (a) Intrastate Committed Tariff Rates. TRMC agrees to pay the Committed
Tariff Rates to THPP for all Barrels of crude petroleum shipped by TRMC on the
Pipeline System from North Dakota origin points to the Mandan Refinery up to the
Minimum Throughput Commitment.
     (b) Intrastate Uncommitted Tariff Rates. TRMC agrees to pay the Uncommitted
Tariff Rate to THPP for all Barrels of crude petroleum shipped by TRMC on the
Pipeline System from North Dakota origin points to the Mandan Refinery in excess
of the Minimum Throughput Commitment (“Excess Barrels”). For purposes of
calculating the amount owed by TRMC for shipments of Excess Barrels in any
Month, the number of Excess Barrels shipped on each Tariff Section of the
Pipeline System shall be deemed to be equal to (i) the total number of Excess
Barrels shipped during such Month times (ii) the result of (A) the total number
of Barrels shipped on such Tariff Section during such Month divided by (B) the
total number of Barrels shipped on all Tariff Sections the Pipeline System
during such Month.
     (c) FERC Tariff Rates. To the extent any shipments by TRMC on the Pipeline
System constitute interstate shipments under Applicable Law, TRMC agrees to pay
to THPP the common carrier tariff rate on file with the FERC. Any such shipments
shall be subject to this Agreement only to the extent expressly provided herein.
     (d) Other Fees. All pipeline gathering or pumpover fees applicable to
intrastate volumes shipped on the Pipeline System will be determined according
to the Rate Tariff.
     (e) Changes in Tariffs.
     (i) During the Term hereof, except as expressly provided herein, THPP shall
not revoke, replace or change (A) the Rates Tariffs, (B) the Rules Tariff or
(C) any FERC tariff currently on file for the Pipeline System, without TRMC’s
consent, which shall not be unreasonably withheld. TRMC’s withholding its
consent to a change in any tariff shall not be considered unreasonable if the
proposed tariff change would increase TRMC’s shipment costs above the cost
levels specified in the tariffs that THPP has filed with the NDPSC or FERC,
whichever is applicable on the effective date of this

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Agreement. TRMC’s withholding its consent shall further not be considered
unreasonable if the proposed tariff change would materially restrict or limit
TRMC’s ability to use the full Reserved Capacity to ship the Reserved Capacity
to the Mandan Refinery on terms consistent with those set forth in this
Agreement or would otherwise alter or abridge TRMC’s rights as stated in this
Agreement.
     (ii) Notwithstanding the requirement stated in the previous provision of
this subparagraph, THPP may change the Rates Tariff and the FERC tariff to add
new origin or destination points and may change the Rules Tariff and its FERC
Rules and Regulations tariff pursuant to the provisions of Section 2 or
otherwise as may be reasonably required in response to changes in Applicable
Laws. However, before filing any such tariff changes with a Governmental
Authority, THPP shall transmit a copy of the proposed change to TRMC and afford
TRMC a reasonable period of time to submit comments to THPP as to whether the
tariff changes are appropriate and in accordance with the provisions of this
Agreement. THPP shall take into account TRMC’s comments in any tariff that it
subsequently files with a Governmental Authority. Tariff rates for any new
origin points shall be based upon the same average rate per barrel mile that
applies to tariffs for existing North Dakota origin points at the time a tariff
is filed adding the new origin point. Tariffs for new intrastate destinations
shall be subject to the provisions set forth in Section 2 above. Any new
gathering rate shall be sufficient to allow THPP to recover its cost of service
for establishing any new gathering service, consistent with established FERC
ratemaking principles.
     (f) Index Based Tariff Changes. All fees set forth in this Agreement shall
be increased or decreased, as applicable, on July 1 of each year of the Term
(i) by the change in any inflationary index promulgated by FERC in accordance
with the FERC’s indexing methodology currently set forth at 18 CFR § 342.3,
including future amendments or modifications thereof or (ii) in the event that
the FERC terminates its indexing methodology during the Term of this Agreement,
by a percentage equal to the change in the CPI-U (All Urban Consumers), as
reported by the U.S. Bureau of Labor Statistics.
     (g) Other Reimbursements or Tariff Increases. TRMC shall reimburse THPP
for, or THPP shall be permitted to file tariff rate increases for, the
following:

  (i)   The costs that THPP incurs in complying with any new Applicable Laws
that affect the services provided by THPP to TRMC under this Agreement;
provided, that (A) compliance by THPP with any such new law or regulation
requires substantial unanticipated capital expenditures by THPP, (B) THPP has
made good faith efforts to mitigate the effect of such Applicable Laws, (C) THPP
has negotiated in good faith with TRMC in order to reach a reasonable agreement
on the level of the increased tariff rate, which will be sufficient to allow
THPP to recover its cost of service consistent with established FERC ratemaking
principles and (D) TRMC will only be charged its proportionate share of any such
costs based upon of its shipments on affected Tariff Sections of the Pipeline
System;     (ii)   All taxes (other than income taxes, gross receipt taxes and
similar taxes) that THPP specifically incurs on TRMC’s behalf for the services
THPP provides to TRMC under this Agreement, if such reimbursement is not
prohibited by law; and     (iii)   Actual costs of any capital expenditures THPP
agrees to make at TRMC’s request which THPP proposes to recover through rate
increases that are consistent with FERC ratemaking principles.

6. PAYMENTS

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     (a) Payments in Advance for Minimum Throughput Commitment. TRMC shall pay
THPP for its reserved Minimum Throughput Commitment in advance by making an
estimated payment to THPP (the “Prepaid Fee”) no later than the last Business
Day of the Month (the “Payment Month”) prior to the Month in which shipments are
actually made (the “Shipping Month”). THPP will invoice TRMC for such Prepaid
Fee no later than ten (10) days prior to the end of the Payment Month. The
Prepaid Fee shall be calculated by multiplying the Minimum Throughput Commitment
for such Shipping Month by the Weighted Average Committed Tariff Rate for the
Month immediately preceding the Payment Month (the “Reference Month”). The
Prepaid Fee for the first Month of the Term of this Agreement shall be paid by
TRMC on the Commencement Date, and shall be based on the volumes of crude
petroleum shipped by TRMC during the last full Month immediately preceding the
Commencement Date.
     (b) Monthly Shortfall Payment. If, during any Shipping Month, Actual
Shipments by TRMC are less than the Minimum Throughput Commitment for such
Shipping Month, TRMC shall pay to THPP an amount equal to (i) the amount of such
shortfall (in Barrels) multiplied by (ii) the Weighted Average Committed Tariff
Rate for such Shipping Month (the “Shortfall Payment”). The dollar amount of any
Shortfall Payment included in the monthly invoice described in Section 6(c)
below and paid by TRMC shall be posted as a credit to TRMC’s account (the
“Credit”), and such Credit shall be applied in subsequent monthly invoices
against amounts owed by TRMC for Excess Barrels shipped on the intrastate
portion of the Pipeline System during any of the succeeding three (3) Months.
Credits will be applied in the order in which such Credits accrue and any
portion of the Credit that is not used by TRMC during the succeeding three
(3) Months will expire (e.g., a Credit which accrues in January will be
available in February, March and April, will expire at the end of April, and
must be applied prior to applying any Credit which accrues in February).
     (c) Monthly Reconciliation. At the end of each Shipping Month, THPP will
calculate the total fees that TRMC owes THPP for Actual Shipments on the
intrastate portion of the Pipeline System during such Shipping Month as follows
(“Actual Costs”):

  (i)   the amount TRMC owes THPP for shipments during such Shipping Month,
based on Actual Shipments during such Shipping Month at the Committed Tariff
Rate; plus     (ii)   the result of (A) the amount TRMC owes THPP for shipments
during such Shipping Month based on Actual Shipments of Excess Barrels at the
Uncommitted Tariff Rate (determined in accordance with Section 5(b)) less
(B) any applicable Credits; plus     (iii)   any applicable Shortfall Payment
for such Shipping Month (subject to adjustment pursuant to Section 14(b) during
a Notice Period); plus     (iv)   any FERC tariffs for such Shipping Month
(subject to adjustment pursuant to Section 14(b) during a Notice Period); plus  
  (iii)   other tariff fees for such Shipping Month payable pursuant to Section
5(d) and payments for volume losses set forth in Section 7(b).

If Actual Costs exceed the Prepaid Fee, then TRMC will pay THPP the difference.
If the Prepaid Fee exceeds Actual Costs, then THPP will refund to TRMC the
difference. THPP will invoice TRMC monthly (which invoice shall, if applicable,
set forth any refund due to TRMC), and all amounts owed by either Party
(including any refund owed by THPP) shall be due and payable no later than ten
(10) days after TRMC’s receipt of THPP’s invoice. Any past due payments owed by
TRMC hereunder shall accrue

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interest, payable on demand, at the rate of eight percent (8%) per annum from
the due date of the payment through the actual date of payment.
7. TRANSPORTATION SERVICES; VOLUME LOSSES
     (a) The services provided by THPP pursuant to this Agreement shall consist
only of transportation pursuant to the Rate Tariff and Rules Tariff that THPP
files with the North Dakota Public Service Commission. THPP will not be
obligated to provide terminalling or tankage facilities at any location or any
intermediate interconnection point or truck unloading as part of the services it
provides. Shipments of crude petroleum on the Pipeline System under a FERC
tariff shall be subject to this Agreement only to extent expressly provided for
herein.
     (b) Liability and measurement of volume losses shall be governed by the
Rules Tariff. To the extent that actual losses are less than 0.2% during any
particular Shipping Month, TRMC shall repurchase from THPP the difference
between the actual loss and the 0.2% allowance, at a price per barrel for such
volume equal to eighty-five (85) percent of the mean average, trading days only,
of the NYMEX daily closing near-month settlement prices for light sweet crude
oil, deemed 40.0 degrees API gravity, posted each trading day during the month
of measurement of such volume loss. Such repurchase shall be deemed to occur at
the Mandan Refinery. All such sales shall be “AS IS”, “WHERE IS”, without any
warranty, express or implied, including warranties of merchantability, fitness
or title, all of which are expressly excluded.
8. PRIORITY SERVICE
In order to effectuate the underlying objectives of this Agreement, THPP agrees
as follows:
     (a) Throughout the Term of this Agreement, THPP shall take such action as
may be necessary, including filing and continuing to maintain tariffs (including
the Rules Tariff) with the NDPSC, to permit TRMC to ship the full Reserved
Capacity without subjecting TRMC to prorationing or any similar reduction in
TRMC’s allocation.
     (b) Prior to filing any new tariff with a Governmental Authority, THPP
shall consult with TRMC as set forth in Section 5(e)(ii). THPP shall ensure that
any new tariff does not in any way impinge upon or prejudice any of TRMC’s
rights under the terms of this Agreement, including TRMC’s rights under Section
8(a) above.
     (c) THPP shall provide TRMC with reasonable advance notice before taking
any actions to shut down or reduce throughput rates on any Segment of the
Pipeline System or any gathering line, and any such action shall be subject to
the provisions of Section 2(a)(ii). Upon request by TRMC, THPP shall provide a
reasonable explanation for the actions it is taking, and if an action is
temporary, inform TRMC of the expected duration. The Parties shall negotiate in
good faith arrangements to ensure that such actions do not impair the rights and
obligations hereunder.
9. REGULATORY MATTERS
     (a) As of the date of this Agreement, the shipment of crude petroleum on
the Pipeline System from North Dakota origin points to the Mandan Refinery is
subject to regulation by the State of North Dakota, and this Agreement is
subject to the rules and regulations of the NDPSC. Accordingly, THPP has filed a
Rate Tariff and a Rules tariff with the NDPSC that governs its intrastate
shipments of crude petroleum. In the event that the NDPSC takes any adverse
action with respect to the Rate Tariff or Rules Tariff currently on file or a
Rate Tariff or Rules Tariff that THPP may file with it in the future, THPP

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shall diligently defend the Rate Tariff or Rules Tariff, including appealing any
such adverse action. If any such adverse action is not stayed pending appeal,
each Party’s obligations under this Agreement shall be suspended until a stay is
implemented or a final, non-appealable decision is rendered with respect to such
adverse action. If a final, non-appealable decision is ultimately issued by the
NDPSC and confirmed by the North Dakota courts having final authority in the
matter which requires THPP to amend the Rates Tariff or the Rules Tariff in a
manner that is fundamentally contradictory to the provisions of this Agreement,
then the Parties shall negotiate in good faith to amend this Agreement to comply
with any such judgment but still retain the protections and structures reflected
by its current terms to the maximum extent permissible under such judgment. In
the event the Parties are unable to reach agreement with respect to such an
amendment within a reasonable period of time after the issuance of such final
judgment, which shall not be less than thirty (30) days, then either Party may
terminate this Agreement.
     (b) TRMC hereby agrees: (i) to take all such actions and do all such things
as THPP shall reasonably request in connection with its applications for, and
the processing of, any necessary certificates, approvals and authorizations of
Governmental Authorities; (ii) at all times to support the Committed Tariff Rate
specified in this Agreement as a rate that it has agreed to pay; (iii) not
directly or indirectly take any action that indicates a lack of support for the
Committed Tariff Rate at terms agreed to in this Agreement; (iv) not to file any
action, protest or complaint with the NDPSC with respect to the Rules Tariff on
file as of the date of this Agreement; and (v) not to file any complaint or
other action at the FERC with respect to the THPP tariff currently on file with
the FERC, including any increased rates based on the inflationary index referred
to in Section 5(f) of this Agreement.
     (c) THPP operates the Pipeline System as a common carrier, and TRMC’s
rights as a shipper on the Pipeline System shall be subject to all Applicable
Laws related to common carrier pipelines. The terms and provisions of the
Rules Tariff and the Rate Tariff shall apply to the intrastate transportation
services provided pursuant to this Agreement.
     (d) Each Party, in carrying out the terms and provisions of this Agreement,
shall comply with all present and future Applicable Laws of any Governmental
Authority having jurisdiction.
10. LIMITATION ON LIABILITY
Notwithstanding anything to the contrary contained herein, except to the extent
incorporated in the rates set forth in the Rate Tariff or as otherwise set forth
in the Rules Tariff, neither Party shall be liable or responsible to the other
Party or such other Party’s affiliated Persons for any consequential,
incidental, or punitive damages, or for loss of profits or revenues
(collectively referred to as “special damages”) incurred by such Party or its
affiliated Persons that arise out of or relate to this Agreement, regardless of
whether any such claim arises under or results from contract, tort, or strict
liability; provided that the foregoing limitation is not intended and shall not
affect special damages imposed in favor of unaffiliated Persons that are not
Parties to this Agreement.
11. TERMINATION; RIGHT TO ENTER INTO NEW AGREEMENT
     (a) A Party shall be in default under this Agreement if:
     (i) the Party materially breaches any provision of this Agreement and such
breach is not cured within fifteen (15) Business Days after notice thereof
(which notice shall describe such breach in reasonable detail) is received by
such Party; or
     (ii) the Party (A) files a petition or otherwise commences, authorizes or
acquiesces in the commencement of a proceeding or cause of action under any
bankruptcy, insolvency,

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reorganization or similar Applicable Law, or has any such petition filed or
commenced against it; (B) makes an assignment or any general arrangement for the
benefit of creditors; (C) otherwise becomes bankrupt or insolvent (however
evidenced); or (D) has a liquidator, administrator, receiver, trustee,
conservator or similar official appointed with respect to it or any substantial
portion of its property or assets.
     (b) If any of the Parties is in default as described above, then (A) if
TRMC is in default, THPP may or (B) if THPP is in default, TRMC may:
(1) terminate this Agreement upon notice to the defaulting Parties; (2) withhold
any payments due to the defaulting Parties under this Agreement; and/or
(3) pursue any other remedy at law or in equity, including the remedies of TRMC
set forth below.
     (c) Upon termination of this Agreement for reasons other than (x) a default
by TRMC and (y) any other termination of this Agreement initiated by TRMC
pursuant to Section 12 or Section 14, TRMC shall have the right to require THPP
to enter into a new transportation services agreement with TRMC that (i) is
consistent with the terms and objectives set forth in this Agreement and (ii)
has commercial terms that are, in the aggregate, equal to or more favorable to
THPP than fair market value terms as would be agreed by similarly-situated
parties negotiating at arm’s length provided, however; that the term of any such
new transportation services agreement shall not extend beyond April 30, 2031.
     (d) In the event that THPP proposes to enter into a transportation services
agreement with a third party upon the termination of this Agreement for reasons
other than (x) a default by TRMC and (y) any other termination of this Agreement
initiated by TRMC pursuant to Section 12 or Section 14, THPP shall give TRMC
ninety (90) days’ prior written notice of any proposed new transportation
services agreement with a third party, including (i) details of all of the
material terms and conditions thereof and (ii) a thirty (30)-day period
(beginning upon TRMC’s receipt of such written notice) (the “First Offer
Period”) in which TRMC may make a good faith offer to enter into a new
transportation services agreement with THPP (the “Transportation Right of First
Refusal”). If TRMC makes an offer on terms no less favorable to THPP than the
third-party offer with respect to such transportation services agreement during
the First Offer Period, then THPP shall be obligated to enter into a
transportation services agreement with TRMC on the terms set forth in subsection
(c) above. If TRMC does not exercise its Transportation Right of First Refusal
in the manner set forth above, THPP may, for the next ninety (90) days, proceed
with the negotiation of the third-party transportation services agreement. If no
third party agreement is consummated during such ninety-day period, the terms
and conditions of this Section 11(d) shall again become effective.
12. FORCE MAJEURE
     (a) As soon as possible upon the occurrence of a Force Majeure, THPP shall
provide TRMC with written notice of the occurrence of such Force Majeure (a
“Force Majeure Notice”). THPP shall identify in such Force Majeure Notice the
particular Segment or Segments of the Pipeline System that are affected by the
Force Majeure and the approximate length of time that THPP reasonably believes
in good faith such Force Majeure shall continue (the “Force Majeure Period”). If
THPP advises in any Force Majeure Notice that it reasonably believes in good
faith that the Force Majeure Period shall continue for more than twelve
(12) consecutive Months, then, subject to Section 13 below, at any time after
THPP delivers such Force Majeure Notice, either Party may terminate this
Agreement, but only upon delivery to the other Party of a notice (a “Termination
Notice”) at least twelve (12) Months prior to the expiration of the Force
Majeure Period; provided, however; that such Termination Notice shall be deemed
cancelled and of no effect if the Force Majeure Period ends prior to the
expiration of such twelve (12)-Month period. For the avoidance of doubt, neither
Party may exercise its right under this Section 12(a) to terminate this
Agreement as a result of a Force Majeure with respect to any machinery, storage,
tanks, lines of pipe or other equipment that has been unaffected by, or has been
restored to working order since,

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the applicable Force Majeure, including pursuant to a Restoration under
Section 13.
     (b) Notwithstanding the foregoing, if TRMC delivers a Termination Notice to
THPP (the “TRMC Termination Notice”) and, within thirty (30) days after
receiving such TRMC Termination Notice, THPP notifies TRMC that THPP reasonably
believes in good faith that it shall be capable of fully performing its
obligations under this Agreement within a reasonable period of time, then the
TRMC Termination Notice shall be deemed revoked and the applicable portion of
this Agreement shall continue in full force and effect as if such TRMC
Termination Notice had never been given.
     (c) Subject to Section 13 below, THPP’s obligations may be temporarily
suspended during the occurrence of, and for the entire duration of, a Force
Majeure that prevents THPP from shipping the Minimum Throughput Commitment. If,
for reasons of Force Majeure, THPP is prevented from shipping volumes equal to
the full Minimum Throughput Commitment, then TRMC’s obligation to ship the
Minimum Throughput Commitment and pay the Shortfall Payment shall be reduced to
the extent that THPP is prevented from shipping the full Minimum Throughput
Commitment. At such time as THPP is capable of shipping volumes equal to the
Minimum Throughput Commitment, TRMC’s obligation to ship the full Minimum
Throughput Commitment shall be restored.
13. CAPABILITIES OF PIPELINE SYSTEM
     (a) Interruptions of Service. THPP shall use reasonable commercial efforts
to minimize the interruption of service on the Pipeline System and any Segment
thereof. THPP shall promptly inform TRMC of any anticipated partial or complete
interruption of service on any Segment of the Pipeline System affecting THPP’s
ability to receive crude petroleum at any origin on the Pipeline System or
gathering pipeline connected to the Pipeline System or to deliver crude
petroleum to the Mandan Refinery (or any other North Dakota destination added
pursuant to this Agreement) which is projected to extend more than twenty-four
(24) hours, including relevant information about the nature, extent, cause and
expected duration of the interruption and the actions THPP is taking to resume
full operations, provided that THPP shall not have any liability for any failure
to notify, or delay in notifying, TRMC of any such matters except to the extent
TRMC has been materially prejudiced or damaged by such failure or delay.
     (b) Maintenance and Repair Standards.
     (i) Subject to Force Majeure, interruptions for routine repair and
maintenance consistent with customary crude petroleum pipeline standards,
scheduling requirements as set forth in the Rules Tariff and any requirements of
Applicable Law, THPP shall accept for shipment on the Pipeline System in
accordance with pipeline industry standards all crude petroleum that meets the
quality specifications of the Rules Tariff. Further, THPP shall maintain and
repair all portions of the Pipeline System in accordance with pipeline industry
standards and in a manner which allows the Pipeline System to be capable,
subject to Force Majeure, of shipping, storing and delivering volumes of crude
petroleum which are no less than (A) the Reserved Capacity of each Segment of
the Pipeline System, (B) the Minimum Required Terminal Capacity for each
Terminal and (C) the Minimum Required Gathering Line Capacity of each portion of
the gathering lines, tanks and associated lateral pipelines of the Pipeline
System.
     (ii) If for any reason, including without limitation a Force Majeure event,
(A) the throughput capacity of any Segment should fall below the specified
minimum Reserved Capacity, (B) the throughput or storage capacity of any
Terminal should fall below the Minimum Required Terminal Capacity or (C) the
throughput or storage capacity of any gathering line, tank and associated
lateral pipelines of the Pipeline System should fall below the Minimum Required
Gathering Line Capacity, then (Y) during such period of reduced throughput or
storage TRMC’s

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obligation to ship the Minimum Throughput Commitment shall be reduced as
described in Section 12(c) above and (Z) within a reasonable period of time
after the commencement of such reduction, THPP shall make repairs to and/or
replace the affected portion of the Pipeline System to restore the capacity of
each Segment, Terminal and Gathering System to the Reserved Capacity, Minimum
Required Terminal Capacity or Minimum Required Gathering Line Capacity, as
applicable (collectively “Restoration”). Except as provided below in Sections
13(c) and 13(d), all such Restoration shall be at THPP’s cost and expense unless
the damage creating the need for such repairs was caused by the negligence or
willful misconduct of TRMC, its employees, agents or customers.
     (c) Capacity Resolution. In the event of (i) the failure of THPP to
maintain any Segment at its full specified minimum required Reserve Capacity;
(ii) the failure of THPP to maintain any Terminal at its full specified Minimum
Required Terminal Capacity; or (iii) the failure of THPP to maintain each
gathering line, tank and associated lateral pipelines of the Pipeline System at
the Minimum Required Gathering System Capacity, then either Party shall have the
right to call a meeting between executives of both Parties by providing at least
two (2) Business Days’ advance written notice. Any such meeting shall be held at
a mutually agreeable location and will be attended by executives of both Parties
each having sufficient authority to commit his or her respective Party to a
Capacity Resolution (hereinafter defined). At the meeting, the Parties will
negotiate in good faith with the objective of reaching a joint resolution for
the Restoration of capacity on the affected portion of the Pipeline System which
will, among other things, specify steps to be taken by THPP to fully accomplish
Restoration and the deadlines by which the Restoration must be completed (the
“Capacity Resolution”). Without limiting the generality of the foregoing, the
Capacity Resolution shall set forth an agreed upon time schedule for the
Restoration activities. Such time schedule shall be reasonable under the
circumstances, consistent with customary pipeline transportation industry
standards and shall take into consideration THPP’s economic considerations
relating to costs of the repairs and TRMC’s requirements concerning the
operation of the Mandan Refinery. In the event that TRMC’s economic
considerations justify incurring additional costs to restore the Pipeline System
in a more expedited manner than the time schedule determined in accordance with
the preceding sentence, TRMC may require THPP to expedite the Restoration to the
extent reasonably possible, subject to TRMC’s payment, in advance, of the
estimated incremental costs to be incurred as a result of the expedited time
schedule. In the event the Parties agree to an expedited Restoration plan
wherein TRMC agrees to fund a portion of the Restoration cost, then neither
Party shall have the right to terminate this Agreement pursuant to Section 12(a)
above so long as such Restoration is completed with due diligence, and TRMC
shall pay such portion to THPP in advance based on an estimate conforming to
reasonable engineering standards applicable to petroleum pipelines. Upon
completion, TRMC shall pay the difference between the actual portion of
Restoration costs to be paid by TRMC pursuant to this Section 13(c) and the
estimated amount paid under the preceding sentence within thirty (30) days after
receipt of THPP’s invoice therefor, or, if appropriate, THPP shall pay TRMC the
excess of the estimate paid by TRMC over THPP’s actual costs as previously
described within thirty (30) days after completion of the Restoration.
     (d) TRMC’s Right To Cure. If at any time after the occurrence of a
(x) Partnership Change of Control or (y) a sale of the Mandan Refinery, THPP
either (i) refuses or fails to meet with TRMC within the period set forth in
Section 13(c), (ii) fails to agree to perform a Capacity Resolution in
accordance with the standards set forth in Section 13(c) or (iii) fails to
perform its obligations in compliance with the terms of a Capacity Resolution,
TRMC may, as its sole remedy for any breach by THPP of any of its obligations
under Section 13(c), require THPP to complete a Restoration of the affected
portion of the Pipeline System. Any such Restoration required under this Section
13(d) shall be completed by THPP at TRMC’s cost. THPP shall use commercially
reasonable efforts to continue to provide transportation of crude petroleum
tendered by TRMC under the applicable tariffs while such Restoration is being
completed. Any work performed by THPP pursuant to this Section 13(d) shall be

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performed and completed in a good and workmanlike manner consistent with
applicable pipeline industry standards and in accordance with all applicable
laws, rules and/or regulations. Additionally, during such period after the
occurrence of (x) a Partnership Change of Control or (y) a sale of the Mandan
Refinery, TRMC may exercise any remedies available to it under this Agreement
(other than termination), including the right to immediately seek temporary and
permanent injunctive relief for specific performance by THPP of the applicable
provisions of this Agreement, including, without limitation, the obligation to
make Restorations described herein.
14. SUSPENSION OF MANDAN REFINERY OPERATIONS
     (a) In the event that TRMC decides to permanently or indefinitely suspend
refining operations at the Mandan Refinery for a period that shall continue for
at least twelve (12) consecutive Months, TRMC may provide written notice to THPP
of TRMC’s intent to terminate this Agreement (the “Suspension Notice”). Such
Suspension Notice shall be sent at any time after TRMC has publicly announced
such suspension and, upon the expiration of the twelve (12) Month period
following the date such notice is sent (the “Notice Period”), this Agreement
shall terminate. If TRMC publicly announces, more than two Months prior to the
expiration of the Notice Period, its intent to resume operations at the Mandan
Refinery, then the Suspension Notice shall be deemed revoked and the applicable
portion of this Agreement shall continue in full force and effect as if such
Suspension Notice had never been delivered.
     (b) If refining operations at the Mandan Refinery are suspended for any
reason (including refinery turnaround operations and other scheduled
maintenance), then TRMC shall remain liable for Shortfall Payments under this
Agreement for the duration of the suspension, unless and until this Agreement is
terminated as provided above. TRMC shall provide at least thirty (30) days’
prior written notice of any suspension of operations at the Mandan Refinery due
to a planned turnaround or scheduled maintenance. Shortfall Payments due for
each Shipping Month during any such suspension period will be equal to (i) the
Minimum Volume Commitment for such Shipping Month multiplied by (ii) the
Weighted Average Committed Tariff Rate paid by TRMC for the period of twelve
(12) consecutive calendar Months prior to TRMC’s public announcement of such
suspension, less a credit equal to any amounts actually paid by TRMC to THPP
during such Shipping Month for the interstate shipment of crude petroleum on the
Pipeline System (other than fees for gathering, pumpover or other ancillary
services). Monthly reconciliation shall occur in the same manner as specified in
Section 6(c), with the exception that payments for interstate shipments subject
to a FERC tariff be credited against, and not added to, the Shortfall Payment in
the reconciliation calculation during a Notice Period.
15. ASSIGNMENT; PARTNERSHIP CHANGE OF CONTROL
     (a) TRMC shall not assign any of its rights or obligations under this
Agreement without THPP’s prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed; provided, however, that TRMC may
assign this Agreement without THPP’s consent in connection with a sale by TRMC
of the Mandan Refinery so long as the transferee: (i) agrees to assume all of
TRMC’s obligations under this Agreement and (ii) is financially and
operationally capable of fulfilling the terms of this Agreement, which
determination shall be made by TRMC in its reasonable judgment.
     (b) THPP shall not assign any of its rights or obligations under this
Agreement without TRMC’s prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed; provided, however, that (i) THPP
may assign this Agreement without TRMC’s consent in connection with a sale by
THPP of the Pipeline System so long as the transferee: (A) agrees to assume all
of THPP’s obligations under this Agreement; (B) is financially and operationally
capable of fulfilling the terms of this Agreement, which determination shall be
made by THPP in its reasonable judgment; and (C) is not a

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competitor of TRMC; and (ii) THPP shall be permitted to make a collateral
assignment of this Agreement solely to secure working capital financing for
THPP.
     (c) Any assignment that is not undertaken in accordance with the provisions
set forth above shall be null and void ab initio. A Party making any assignment
shall promptly notify the other Party of such assignment, regardless of whether
consent is required. This Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective successors and permitted
assigns.
     (d) TRMC’s obligations hereunder shall not terminate in connection with a
Partnership Change of Control, provided, however, that in the case of any
Partnership Change of Control, TRMC shall have the option to extend the Term of
this Agreement as provided in Section 4. THPP shall provide TRMC with notice of
any Partnership Change of Control at least sixty (60) days prior to the
effective date thereof.
16. NOTICE
All notices, requests, demands, and other communications hereunder will be in
writing and will be deemed to have been duly given: (i) if by transmission by
facsimile or hand delivery, when delivered; (ii) if mailed via the official
governmental mail system, five (5) Business Days after mailing, provided said
notice is sent first class, postage pre-paid, via certified or registered mail,
with a return receipt requested; (iii) if mailed by an internationally
recognized overnight express mail service such as Federal Express, UPS, or DHL
Worldwide, one (1) Business Day after deposit therewith prepaid; or (iv) if by
e-mail one Business Day after delivery with receipt confirmed. All notices will
be addressed to the Parties at the respective addresses as follows:
If to TRMC, to:
Tesoro Refining and Marketing Company
19100 Ridgewood Parkway
San Antonio, Texas 78259
For legal notices:
Attention: Charles S. Parrish, General Counsel
phone: (210) 626-4280
fax: (210) 745-4494
email: charles.s.parrish@tsocorp.com
For all other notices and communications:
Attention: Ralph J. Grimmer, Vice President, Logistics
phone: (210) 626-4379
fax: (210) 745-4631
email: Ralph.J.Grimmer@tsocorp.com
If to THPP, to:
Tesoro High Plains Pipeline Company LLC
19100 Ridgewood Parkway
San Antonio, Texas 78259
For legal notices:
Attention: Charles S. Parrish, General Counsel
phone: (210) 626-4280
fax: (210) 745-4494
email: charles.s.parrish@tsocorp.com

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For all other notices and communications:
Attention: Victoria R. Somers, Contracts Administrator — Logistics
phone: (210) 626-6390
fax: (210) 745-4490
email: victoria.r.somers@tsocorp.com
or to such other address or to such other person as either Party will have last
designated by notice to the other Party.
17. CONFIDENTIAL INFORMATION
     (a) Obligations. Each Party shall use reasonable efforts to retain the
other Party’s Confidential Information in confidence and not disclose the same
to any third party nor use the same, except as authorized by the disclosing
Party in writing or as expressly permitted in this Section 17. Each Party
further agrees to take the same care with the other Party’s Confidential
Information as it does with its own, but in no event less than a reasonable
degree of care. Excepted from these obligations of confidence and non-use is
that information which:
          (i) is available, or becomes available, to the general public without
fault of the receiving Party;
          (ii) was in the possession of the receiving Party on a
non-confidential basis prior to receipt of the same from the disclosing Party
(it being understood, for the avoidance of doubt, that this exception shall not
apply to information of THPP that was in the possession of TRMC or any of its
affiliates as a result of their ownership or operation of the Pipeline System
prior to the Commencement Date);
          (iii) is obtained by the receiving Party without an obligation of
confidence from a third party who is rightfully in possession of such
information and, to the receiving Party’s knowledge, is under no obligation of
confidentiality to the disclosing Party; or
          (iv) is independently developed by the receiving Party without
reference to or use of the disclosing Party’s Confidential Information.
For the purpose of this Section 17, a specific item of Confidential Information
shall not be deemed to be within the foregoing exceptions merely because it is
embraced by, or underlies, more general information in the public domain or in
the possession of the receiving Party.
     (b) Shipper Information. THPP shall protect all shipper information of TRMC
to the full extent required under Applicable Law and accepted practices in the
crude petroleum pipeline industry.
     (c) Required Disclosure. Notwithstanding Section 17(a) and (b) above, if
the receiving Party becomes legally compelled to disclose the Confidential
Information by a court, Governmental Authority or Applicable Law, or is required
to disclose by the listing standards of the New York Stock Exchange, any of the
disclosing Party’s Confidential Information, the receiving Party shall promptly
advise the disclosing Party of such requirement to disclose Confidential
Information as soon as the receiving Party becomes aware that such a requirement
to disclose might become effective, in order that, where possible, the
disclosing Party may seek a protective order or such other remedy as the
disclosing Party may consider appropriate in the circumstances. The receiving
Party shall disclose only that portion of the disclosing Party’s Confidential
Information that it is required to disclose and shall cooperate with the
disclosing Party in allowing the disclosing Party to obtain such protective
order or other relief.

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     (d) Return of Information. Upon written request by the disclosing Party,
all of the disclosing Party’s Confidential Information in whatever form shall be
returned to the disclosing Party upon termination of this Agreement or destroyed
with destruction certified by the receiving Party, without the receiving Party
retaining copies thereof except that one copy of all such Confidential
Information may be retained by a Party’s legal department solely to the extent
that such Party is required to keep a copy of such Confidential Information
pursuant to Applicable Law and the receiving Party shall be entitled to retain
any Confidential Information in the electronic form or stored on automatic
computer back-up archiving systems during the period such backup or archived
materials are retained under such Party’s customary procedures and policies;
provided, however, that any Confidential Information retained by the receiving
Party shall be maintained subject to confidentiality pursuant to the terms of
this Section 17, and such archived or back-up Confidential Information shall not
be accessed except as required by Applicable Law. Further, for confidential
shipper information of TRMC, THPP may retain such information as may be required
to document its performance in accordance with Applicable Law and customary
industry practices.
     (e) Receiving Party Personnel. The receiving Party will limit access to the
Confidential Information of the disclosing Party to those of its employees,
attorneys, and contractors that have a need to know such information in order
for the receiving Party to exercise or perform its rights and obligations under
this Agreement (the “Receiving Party Personnel”). The Receiving Party Personnel
who have access to any Confidential Information of the disclosing Party will be
made aware of the confidentiality provision of this Agreement, and will be
required to abide by the terms thereof. Any third party contractors that are
given access to Confidential Information of a disclosing Party pursuant to the
terms hereof shall be required to sign a written agreement pursuant to which
such Receiving Party Personnel agree to be bound by the provisions of this
Agreement, which written agreement will expressly state that it is enforceable
against such Receiving Party Personnel by the disclosing Party.
     (f) Survival. The obligation of confidentiality under this Section 17 shall
survive the termination of this Agreement for a period of two (2) years.
18. MISCELLANEOUS
     (a) Modification; Waiver. This Agreement may be terminated, amended or
modified only by a written instrument executed by the Parties. Any of the terms
and conditions of this Agreement may be waived in writing at any time by the
Party entitled to the benefits thereof. No waiver of any of the terms and
conditions of this Agreement, or any breach thereof, will be effective unless in
writing signed by a duly authorized individual on behalf of the Party against
which the waiver is sought to be enforced. No waiver of any term or condition or
of any breach of this Agreement will be deemed or will constitute a waiver of
any other term or condition or of any later breach (whether or not similar), nor
will such waiver constitute a continuing waiver unless otherwise expressly
provided.
     (b) Entire Agreement. This Agreement, together with the Schedules,
constitutes the entire agreement among the Parties pertaining to the subject
matter hereof and supersedes all prior agreements and understandings of the
Parties in connection therewith.
     (c) Governing Law; Jurisdiction. This Agreement shall be governed by the
laws of the State of Texas without giving effect to its conflict of laws
principles. Each Party hereby irrevocably submits to the exclusive jurisdiction
of any federal court of competent jurisdiction situated in the United States
District Court for the Western District of Texas, San Antonio Division, or if
such federal court declines to exercise or does not have jurisdiction, in the
district court of Bexar County, Texas. The Parties expressly and irrevocably
submit to the jurisdiction of said Courts and irrevocably waive any objection
which they may now or hereafter have to the laying of venue of any action, suit
or proceeding arising out of or

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relating to this Agreement brought in such Courts, irrevocably waive any claim
that any such action, suit or proceeding brought in any such Court has been
brought in an inconvenient forum and further irrevocably waive the right to
object, with respect to such claim, action, suit or proceeding brought in any
such Court, that such Court does not have jurisdiction over such Party. The
Parties hereby irrevocably consent to the service of process by registered mail,
postage prepaid, or by personal service within or without the State of Texas.
Nothing contained herein shall affect the right to serve process in any manner
permitted by law.
     (d) Counterparts. This Agreement may be executed in one or more
counterparts (including by facsimile or portable document format (pdf)) for the
convenience of the Parties hereto, each of which counterparts will be deemed an
original, but all of which counterparts together will constitute one and the
same agreement.
     (e) Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be valid and effective under applicable law,
but if any provision of this Agreement or the application of any such provision
to any person or circumstance will be held invalid, illegal or unenforceable in
any respect by a court of competent jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision hereof, and the Parties
will negotiate in good faith with a view to substitute for such provision a
suitable and equitable solution in order to carry out, so far as may be valid
and enforceable, the intent and purpose of such invalid, illegal or
unenforceable provision.
     (f) No Third Party Beneficiaries. It is expressly understood that the
provisions of this Agreement do not impart enforceable rights in anyone who is
not a Party or successor or permitted assignee of a Party.
     (g) WAIVER OF JURY TRIAL. EACH PARTY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY PERFORMANCE OR FAILURE TO
PERFORM OF ANY OBLIGATION HEREUNDER.
     (h) Schedules. Each of the Schedules attached hereto and referred to herein
is hereby incorporated in and made a part of this Agreement as if set forth in
full herein.
[SIGNATURE PAGES FOLLOW]

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     IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as
of the date first written above.

            TESORO REFINING AND MARKETING COMPANY
      By:   /s/ Gregory J. Goff         Name:   Gregory J. Goff        Title:  
President     

            TESORO HIGH PLAINS PIPELINE COMPANY LLC
      By:   TESORO LOGISTICS OPERATIONS LLC,
its sole member
      By:   TESORO LOGISTICS LP,
its sole member
      By:   TESORO LOGISTICS GP, LLC,
its general partner
      By:   /s/ Phillip M. Anderson         Name:   Phillip M. Anderson       
Title:   President     

Signature Page to
High Plains Pipeline
Transportation Services Agreement

 

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SCHEDULE A
[see attached Rate Tariff and Rules Tariff]

 

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SCHEDULE A
Supplement No. 5 to North Dakota P.S.C. No. 63
Tesoro High Plains Pipeline Company, LLC
SUPPLEMENT No. 5
TO
North Dakota P.S.C. No. 63
LOCAL TARIFF
Containing
RULES AND REGULATIONS
Governing
THE TRANSPORTATION
And
DIVERSION AND RECONSIGNMENT
Of
CRUDE PETROLEUM
By Pipeline
The rules and regulations published herein apply only under tariffs making
specific reference to this Tariff. Any such reference includes supplements and
successive issuances of these rules and regulations.
NOTE: This reissue of North Dakota P.S.C. No. 63 contains all changes from the
prior versions of North Dakota No. 63 as covered by Supplement Nos. 1, 2, 3 and
4.

      ISSUED December 10, 2010   EFFECTIVE January 12, 2011

     The provisions published herein, will, if effective, not result in an
effect on the quality of the human environment.
Issued by:
Michael L. McCann
President
Tesoro High Plains Pipeline Company, LLC
1900 Ridgewood Parkway
San Antonio, Texas 78259
(210) 626-4593
E-mail: Michael.l.McCann@tsocorp.com

 

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TABLE OF CONTENTS

              ITEM   PAGE SUBJECT   NO.   NO.
Abbreviations and Definitions
  5   4
Applicable Rates
  60   6
Barrel Defined
  5   4
Carrier Defined
  5   4
Charges, Payment of
  65   6
Commodity
  10   4
Claims, Time Limitation on
  80   7
Common Stream Petroleum Connecting Carriers
  105   7
Crude Petroleum Defined
  5   4
Deductions
  40   5
Definitions
  5   4
Delivery
  55   6
Demurrage
  55   6
Destinations Facilities
  35   5
Diversion or Reconsignment
  45   5
Facilities, Destination
  35   5
Gauging, Deductions and Adjustments
  40   5
General Application
      3
Gravity and Quality, Variations in
  30   5
Liability of Carrier
  70   6
Mixtures
  15   4
Payment of Charges
  65   6
Proration Procedures
  110   7
Quality
  28   4
Quality and Gravity, Variations in
  30   5
Quantities
  25   4
Rates Applicable
  60   6
Reconsignment
  45   5
Segregation
  30   5
Storage in Transit
  50   6
Suits, Time Limitation on
  80   7
Tender Defined
  5   4
Tenders
  20   4
Title
  75   6
Use of Communication Facilities
  85   7
Variation in Quality and Gravity, Segregation and
  30   5

2

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GENERAL APPLICATION
The rules and regulations published herein apply only under tariffs which make
specific reference to this tariff. Any such reference includes supplements and
successive issuances of these rules and regulations.
Crude Petroleum will be transported through Carrier’s facilities only as
provided in this rules and regulations tariff, except that specific rules and
regulations published in individual tariffs will take precedence over rules and
regulations published herein.

3

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RULES AND REGULATIONS
Crude petroleum will be transported through Carrier’s facilities only as
provided in these rules and regulations.

          ITEM NO.   SUBJECT   RULES AND REGULATIONS
5
  ABBREVIATIONS
AND
DEFINITIONS   As used in these rules and regulations, the following terms have
the following meanings:
“a.m.” means a time of day after midnight and before noon.
“Barrel” means forty two United States gallons.
“Carrier” means and refers to Tesoro High Plains Pipeline Company, LLC.
“Crude petroleum” means either the direct liquid products of oil wells or
synthetic crude petroleum. Excluded from the category of crude petroleum are
natural gasoline; condensate; and mixtures of direct products of oil wells and
indirect products. Also, specifically excluded in the definition of crude
petroleum that Carrier will transport are indirect products of oil wells or
natural gas wells, such as liquefied petroleum gases, as provided in Item 15.
“No.” means number.
“p.m.” means a time of day after noon and before midnight.
“Tender” means an offer by a shipper to Carrier of a stated quantity of crude
petroleum for transportation from a specified origin or origins to a specified
destination or destinations in accordance with these rules and regulations.
 
       
10
  COMMODITY   Carrier is engaged in the transportation of crude petroleum by
pipeline and will not accept any indirect products of oil and gas wells,
mixtures containing indirect products or other commodity for transportation.
 
       
15
  MIXTURES   Natural gasoline, condensate and the indirect liquid products of
oil or gas wells, including liquefied petroleum gases, hereinafter referred to
as indirect products, will not be accepted or transported as a mixture with the
direct liquid products of oil wells, herein referred to as direct products.
 
       
20
  TENDERS   (a) Crude petroleum will be transported only under a tender accepted
by Carrier, from origins (or from facilities connected to Carrier’s gathering
system when gathering service is to be performed by Carrier) to destinations
when a tariff covering the movement is lawfully in effect and on file with the
Federal Energy Regulatory Commission with respect to interstate traffic and with
the Public Service Commission with respect to intrastate traffic.
 
       
 
      (b) The transportation service offered by Carrier does not include any
truck or rail unloading facility. Any such facility is outside the scope of this
tariff.
 
       
 
      (c) Any shipper desiring to tender crude petroleum for transportation
shall make such tender to Carrier in writing on or before the twenty fifth
(25th) day of the month preceding the month during which the transportation
under the tender is to begin. Unless such notification is made, Carrier will be
under no obligation to accept crude petroleum for transportation. However, if
operating conditions permit and at the sole discretion of Carrier, tenders of
crude petroleum may be accepted for transportation after the 25th day of the
month preceding the month during which the transportation under the tender is to
begin.
 
       
25
  QUANTITIES   (a) A tender will be accepted only when the total quantity
covered by such tender will be made available for transportation within the
month in which the tender is to begin.
 
       
 
      (b) Any quantity of crude petroleum will be accepted from lease tanks or
other facilities to which Carrier is connected, if such quantity can be
consolidated with other crude petroleum so that Carrier can make a single
delivery of not less than five thousand barrels. The term “single delivery” as
used herein means a delivery of crude petroleum in one continuous operation to
one or more consignees into a single facility, furnished by such consignee or
consignees, to which Carrier is connected.
 
       
28
  QUALITY   (a) The presence of contaminants in Crude Petroleum including but
not limited to chemicals such as chlorinated and/or oxygenated hydrocarbons
and/or lead, shall be reason for carrier to reject a Crude Petroleum tender.
 
       
 
      (b) Carrier will reject any Crude Petroleum offered or received for
transportation when the Crude Petroleum’s sulfur content exceeds 0.5% by weight.

4

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          ITEM NO.   SUBJECT   RULES AND REGULATIONS
30-A
  SEGREGATION AND
VARIATIONS IN
QUALITY AND
GRAVITY   The following rules and regulations covering crude petroleum quality
apply to Carrier’s intrastate crude petroleum system

(a) As part of its common stream transportation, Carrier will not accept any
crude petroleum which does not meet the quality criteria of the common stream as
provided herein. Carrier will monitor the quality of its common streams and
shall investigate suspected abuses of common stream criteria violations.
Monitoring of common streams will include gravity and sulfur testing and could
include simulated distillation and other testing to determine quality.
 
       
 
      (b) If abuses of the common stream quality are determined, the shipper
causing such abuses shall be advised to cease and desist all such actions.
Failure to desist or failure to cooperate in ending such practices shall result
in that shipper being barred from shipping in the common stream where such
abuses occurred. Before such shipper is allowed to regain its shipper status in
the common stream where the abuses occurred, the shipper will be required to
provide Carrier with assurances that such abuses will not recur.
 
       
 
      (c) Carrier will work with connecting carriers regarding Carrier’s quality
issues and will advise such connecting carriers that any crude petroleum found
to be a detriment to Carrier’s common stream will be rejected for further
transportation on Carrier’s system.
 
       
 
      (d) Since variations in gravity and/or quality of common stream crude
petroleum are inherent in common stream operations, Carrier will not be liable
for such variations occurring while crude petroleum is in its custody, nor is
Carrier under any obligation to deliver the identical crude petroleum received,
but will make delivery out of such common stream.
 
       
 
      (e) When requested by the shipper and if operationally feasible, Carrier
will endeavor to segregate crude petroleum of a kind and/or quality not
currently transported through Carrier’s facilities. Carrier will, to the best of
its abilities, make delivery of such crude petroleum at the destination,
specified by shipper in a form that is substantially the same as the crude
petroleum received by Carrier at origin. For such segregated batches, shipper
must provide crude petroleum in such quantities (see Note 1) and at such
specified times as may be necessary to permit such segregated movements via
Carrier’s existing facilities. Further, Carrier will not be liable for failure
to deliver the identical crude petroleum or for any variations in the gravity
and/or quality of crude petroleum occurring while such segregated crude is in
Carrier’s custody.
 
       
 
      Note 1 — The quantity to be accepted and transported under the provisions
of this Item will be determined by Carrier in accordance with current operations
through its existing facilities involved in the segregated movements, but in no
event shall the quantity for a single delivery be less than the minimum quantity
stated in Item 25; nor shall Carrier be required to make any changes to its
existing facilities or mode of operation to accommodate segregated batches.
 
       
35
  DESTINATION
FACILITIES   No duty to transport will arise until evidence satisfactory to
Carrier has been furnished that consignee has provided necessary facilities to
which Carrier is connected and has made necessary arrangements for accepting
delivery of shipments promptly on arrival at the destination. Carrier does not
provide truck or rail unloading facilities as part of its transportation
service.
 
       
40-A
  GAUGING,
DEDUCTIONS AND
ADJUSTMENTS   (a) Quantities of crude petroleum for receiving, delivering,
assessing charges and all other purposes will be corrected to a temperature of
sixty degrees Fahrenheit, after deduction of impurities shown by tests made by
Carrier prior to receipt and upon delivery. Quantities may be computed from tank
tables compiled or accepted by Carrier.
 
       
 
      (b) Pursuant to Item 70, crude petroleum quantities transported may be
adjusted to allow for inherent losses, including but not limited to shrinkage,
evaporation, interface losses and normal “over and short” losses. A deduction of
two tenths of one percent (0.2%) will be made to cover evaporation, interface
losses, and other normal losses during transportation.
 
       
 
      (c) The net quantities as determined under paragraphs (a) and (b) of this
item will be the amounts accountable at destination.
 
       
45
  DIVERSION OR
RECONSIGNMENT   Crude petroleum in transport may be diverted without an
additional charge to a destination other than the destination originally
specified on the tender, or crude petroleum in transport may be reconsigned
without an additional charge to another shipper at the point of destination only
if such diversion or reconsignment is made in writing by the shipper prior to
delivery at the original destination. Any such diversion will be permitted only
in accordance with and subject to the rates, rules and regulations applicable
from point of origin to point of final destination and, upon condition that no
out of line or backhaul movement will be made.

5

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          ITEM NO.   SUBJECT   RULES AND REGULATIONS
50
  STORAGE IN
TRANSIT   (a) Carrier has working tanks required to transport crude petroleum,
but has no other tankage and, therefore, does not have facilities for rendering,
nor does it offer, a storage service. Provisions for storage in transit in
facilities furnished by shipper at points on Carrier’s system will be permitted
only to the extent authorized under individual transit tariffs lawfully on file
with the Public Service Commission.
 
       
 
      (b) Each shipper will be required to furnish crude oil into inventory for
its proportionate share of the line fill in such amount as deemed necessary by
Carrier.
 
       
55
  DELIVERY
AND
DEMURRAGE   (a) Carrier will transport and deliver crude petroleum with
reasonable diligence and dispatch, but will not accept crude petroleum to be
transported in time for any particular market.
 
       
 
      (b) After any shipment has had time to arrive at the destination, and on
twenty-four hour notice to consignee, Carrier may begin delivery at its current
rate of pumping.
 
       
 
      (c) Commencing after the first seven o’clock a.m. after expiration of said
notice, a demurrage charge of one cent per barrel per day of twenty four hours
shall accrue on any part of said shipment offered for delivery and not taken as
prescribed in paragraph (b) of this item. After expiration of said notice,
Carrier’s liability for loss, damage, or delay shall be that of warehouseman
only.
 
       
60
  RATES
APPLICABLE   Crude petroleum transported shall be subject to the rates in effect
on the dates such crude petroleum is received by Carrier.
 
       
65
  PAYMENT OF
CHARGES   The shipper shall be responsible for payment of transportation and all
other charges applicable to the shipment, and if required, shall prepay such
charges or furnish guaranty of payment satisfactory to Carrier. Carrier will
have a lien on all crude petroleum accepted for transportation to secure the
payment of all charges, including demurrage charges, and may refuse to deliver
crude petroleum until all charges have been paid. If said charges or any part
thereof shall remain unpaid five days, computed from the first seven o’clock
a.m. after written notice is mailed to shipper of intention to enforce Carrier’s
lien as herein provided, or when there shall be failure to take the crude
petroleum at the point of destination as provided in Item 55 within five days,
computed from the first seven o’clock a.m. after expiration of the notice
therein provided, Carrier shall have the right through an agent, to sell said
crude petroleum at public auction for cash, between and not less than twenty
four hours after notice of the time and place of such sale and the quantity,
general description, and location of the crude petroleum to be sold has been
published in a daily newspaper of general circulation published in the town or
city where the sale is to be held, and sent by electronic mail or facsimile to
shipper. Carrier may be a bidder and purchaser at such sale. Out of the proceeds
of said sale Carrier may pay itself all transportation, demurrage, and other
lawful charges, expense of notice, advertisement, sale, and other necessary
expense, and of caring for and maintaining the crude petroleum, and the balance
shall be held for whomsoever may be lawfully entitled thereto.
 
       
70
  LIABILITY
OF
CARRIER   (a) Carrier, while in possession of any crude petroleum, will not be
liable for any loss thereof, or damage thereto, or delay, caused by an act of
God, the public enemy, quarantine, the authority of law, or of public authority,
strikes, riots insurrection, inherent nature of the goods, or the act or default
of a shipper consignee.
 
       
 
      (b) Any losses of crude petroleum will be charged proportionately to each
shipper in the ratio that its petroleum products, or portion thereof, received
and undelivered at the time the loss occurs, bears to the total of all crude
petroleum then in the custody of Carrier for transportation via the lines or
other facilities in which the loss occurs; and Carrier will be obligated to
deliver only that portion of such crude petroleum remaining after deducting
shipper’s proportion of such loss determined as aforesaid. Transportation
charges will be assessed only on the quantity delivered.
 
       
75
  TITLE   A tender of crude petroleum shall be deemed a warranty of title by the
party tendering, but acceptance shall not be deemed a representation by Carrier
as to title. Carrier may, in the absence of adequate security, decline to
receive any crude petroleum which is in litigation or with respect to which a
dispute over title may exist, or which is encumbered by any lien of which
Carrier has notice.

6

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          ITEM NO.   SUBJECT   RULES AND REGULATIONS
80
  TIME LIMITATION
ON CLAIMS   As a condition precedent to recovery for loss, damage, or delay to
shipments, claims must be filed in writing with Carrier within nine months and
one day after reasonable time for delivery, based on Carrier’s normal
operations, has elapsed; and suits shall be instituted against Carrier only
within two years and one day from the day when notice in writing is given by
Carrier to the claimant that Carrier has disallowed the claim or any part or
parts thereof specified in the notice. Where claims are not filed or suits are
not instituted thereon in accordance with the foregoing provisions, Carrier will
not be liable with respect to any such claim, and no such claim will be paid.
 
       
105
  COMMON STREAM
PETROLEUM
CONNECTING
CARRIERS   When both receipts from and deliveries to a connecting Carrier of
substantially the same grade of Crude Petroleum are scheduled at the same
interconnection. Carrier reserves the right, with the cooperation of the
connecting Carrier, to offset like volumes of such common stream Crude Petroleum
in order to avoid the unnecessary use of energy which would be required to
physically pump the offsetting volumes. Carrier will apply to such offsetting of
volumes the applicable tariff rate.
 
       
110
  PRORATION
PROCEDURES   When there shall be tendered to Carrier for transportation on
Carrier’s pipeline system or any part thereof under applicable tariffs, more
crude petroleum than can be currently transported, the transportation furnished
by Carrier shall be apportioned in the following manner:
 
       
 
      (1) Capacity will be allocated first to the volumes of crude petroleum
that a shipper has agreed, in a transportation service agreement with Carrier,
that it will ship, or in the event it does not ship, will nonetheless pay for at
the Firm Committed Rate;
 
       
 
      (2) The remaining capacity will be allocated in a fair and equitable
manner so as to avoid discrimination among shippers, properly take into account
the historic volumes that shippers have shipped on Carrier’s pipeline in the
past and avoid adversely affecting the reasonable operation of Carrier’s
facilities.

7

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NORTH DAKOTA P.S.C. No. 83
Cancels NORTH DAKOTA P.S.C. No. 82
TESORO HIGH PLAINS PIPELINE COMPANY, LLC
LOCAL TARIFF
Applying To
CRUDE PETROLEUM
Governed, except as otherwise provided herein, by rules and regulations shown in
Tesoro High Plains Pipeline Company, LLC’s North Dakota P.S.C. No. 63,
supplements thereto and successive issues thereof.
TABLE OF RATES

                                              Rates in     Rates in            
        Dollars per     Dollars per                     Barrel of 42     Barrel
of 42                     United States     United States                    
Gallons     Gallons Firm     Pipeline               Uncommitted     Committed  
  Gathering   From   To   Rates     Rates     Charges   North Dakota Stations
                           
1701 Central
  Billings County         1.029       1.129          
1906 Central
  Billings County         1.023       1.123          
Alexander Station
  McKenzie County         1.171       1.271          
Alexander Truck Station
  McKenzie County         1.171       1.271          
Anderson 10-33
  McKenzie County         1.213       1.313       0.5134  
Anderson 32
  McKenzie County         1.213       1.313       0.5134  
Battleview
  Burke County         1.248       1.348          
Black Slough
  Burke County         1.353       1.453       0.5691  
Blue Buttes
  McKenzie County         0.940       1.040       0.5691  
Bratcher 10-44
  McKenzie County   Mandan, ND     1.193       1.293       0.5134  
Cartwright Station
  McKenzie County   (Morton County)     1.276       1.376       0.5134  
Charlson Station
  McKenzie County         1.000       1.100       0.5691  
Connolly
  Dunn County         0.751       0.851          
Dodge
  Dunn County         0.603       0.703          
Elletson 33-1
  Williams County         1.282       1.382       0.5134  
Fritz
  Billings County         1.035       1.135          
Highway 22
  Dunn County         0.804       0.904          
Iszley #1
  McKenzie County         1.282       1.382       0.5134  
Kasper 1-14-4c
  Billings County         0.820       0.920          
Keene Station
  McKenzie County         0.952       1.052          
Little Knife
  Dunn County         0.887       0.987       0.5134  
ND State E-1
  McKenzie County         1.181       1.281          
Novak 25-11
  McKenzie County         1.195       1.295       0.5134  
Novak 26-41
  McKenzie County         1.195       1.295       0.5134  
Poker Jim
  McKenzie County         1.434       1.534          
Ramberg Station
  Williams County         1.118       1.218          
Stepanek #1
  McKenzie County         1.189       1.289          
Taylor Station
  Billings County         1.014       1.114       0.5134  
Tioga
  Williams County         1.159       1.259       0.5691  
Treetop
  Billings County         1.006       1.106       0.5134  
Wiser #1
  McKenzie County         1.180       1.280       0.5134  
Whitetail Station
  Billings County         1.118       1.218       0.5134  
Yttredahl
  McKenzie County         1.047       1.147       0.5691  

APPLICATION OF RATES FROM INTERMEDIATE POINTS
Rates from any origin not specified above to Mandan, North Dakota shall be the
rate indicated for the North Dakota Station listed above that is the closest
geographic point on the pipeline to the unspecified origin.
Pumpover Fee: When shipments are transferred from tank or truck facilities into
the main line facilities of Tesoro High Plains Pipeline Company, LLC, a charge
of 14.45 cents per barrel will be made in addition to the transportation rate
stated above.

      ISSUED December 10, 2010   EFFECTIVE January 12, 2011

Michael L. McCann
Vice President
Tesoro High Plains Pipeline Company, LLC
19100 Ridgewood Parkway
San Antonio, TX 78259
Phone: 210-626-4593
Fax: 210-745 4574
Michael.L.McCann@tsocorp.com

 

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SCHEDULE B

              Segment #   From   To     1     Lignite  
Black Slough
  2     Portal  
Black Slough
  3     Black Slough  
Tioga
  4     Tioga  
Ramburg
  5     Tioga  
Dunn Center
  6     Richey  
Putnam
  7     Fairview  
Putnam
  8     Putnam  
Sidney
  9     Sidney  
Alexander
  10     Alexander  
Keene
  11     Sidney  
Poker Jim
  12     Poker Jim  
Tree Top
  13     Tree Top  
Fryburg
  14     Fritz  
Tree Top
  15     Tree Top  
Dunn Center
  16     Little Knife  
Dunn Center
  17     Dunn Center  
Mandan