Exhibit 10.1
TULSA REFINERY INTERCONNECTS TERM SHEET
This Term Sheet is intended to document discussions between Holly Refining &
Marketing-Tulsa, LLC (“Holly Tulsa”) and HEP Tulsa LLC (“HEP Tulsa”) regarding
the construction of facilities by HEP Tulsa at Holly Tulsa’s refinery in Tulsa,
Oklahoma (the “Tulsa Refinery”), including facilities and pipelines to
interconnect the Western and Eastern complexes of the Tulsa Refinery, as more
particularly described below. The following terms and conditions are for
discussion purposes only and nothing in this document shall be considered
binding upon either party hereto, other than the provisions in the section
entitled “Reimbursement,” which shall be fully binding on both parties hereto.

                   
Inter-Plant (Offsite) Pipelines Project:
               
Project Description:
          Construction of the following off-site pipelines:

     ·     8 inch hydrogen pipeline, capacity 10mm SCFD
     ·     12 inch sweet fuel gas, 32mm SCFD
     ·     10 inch sour fuel gas, 22mm SCFD
     ·     12 inch gas oil diesel fuel 45 MMBPD
     ·     12 inch spare bore for future line
     
Estimated Costs/AFE’s Approved:
           $11,140,000
     
Project Timing:
          Construction to begin during or about August 2010 with completion
estimated by the end of 2010
     
Intra-Plant (Onsite) Facilities Project:
          These pipelines and related facilities are needed to connect the new
Inter-Plant Pipelines to the respective processing facilities and storage tanks
to allow the two refinery complexes to operate as one connected facility.
     
   Phase I:
               
Project Description:
          Construction of the following facilities:

     ·     8 inch hydrogen to unit
     ·     16 inch sweet fuel gas to unit
     ·     12 inch gas oil/diesel fuel to tanks
     ·     8 inch and 10 inch east plant gasoline blending components
     
Estimated Costs:
           $16,802,136
     
Project Timing:
          Construction to begin during or about August 2010 with completion
estimated by the end of 2010
     

 

--------------------------------------------------------------------------------

 

                   
Other Terms/Arrangements:
               
Throughput Economics
          The parties would negotiate throughput commitments (probably through
an amendment to the existing First Amended and Restated Pipelines, Tankage and
Loading Rack Throughput Agreement (Tulsa East)) to provide HEP Tulsa with an
internal rate of return on invested capital similar to that negotiated with
other assets recently acquired from Holly Tulsa and its affiliates, which would
be subject to further approval by the HEP Board and Conflicts Committee.
Throughput fees and minimum volume commitments would be negotiated for:

     ·     8 inch hydrogen movements/capacities
     ·     12 inch sweet fuel gas movements/capacities
     ·     10 inch sour fuel gas movements/capacities
     ·     12 inch gas oil/diesel fuel movements/capacities
     
Other Related Contractual Arrangements
          Holly Tulsa Operating Agreement - The parties would negotiate an
operating agreement to provide for Holly Tulsa to maintain and operate the
Intra-Plant Pipelines.
 
Lease and Access Agreement — The parties would negotiate a typical lease and
access agreement to provide HEP Tulsa and its affiliates a ground lease and
access to the land underlying the facilities constructed. This could involve the
amendment of the existing Lease and Access Agreement for the Tulsa Refinery.
 
Site Services — The parties would negotiate a typical site services agreement
for Holly Tulsa to provide services to the facilities constructed. This could
involve the amendment of the existing Site Services Agreement for the Tulsa
Refinery.
     
Approved Amounts
          The HEP Board and Conflicts Committee have approved the expenditure of
up to $35.0 million (for all costs, including construction and capitalized
interest costs) by HEP in connection with projects discussed herein.
Expenditures in excess of that amount or material additional related projects
are subject to subsequent approval.
     
Reimbursement
          If the parties are unable to mutually agree upon definitive documents
regarding this transaction by December 31, 2010, Holly Tulsa will complete the
project and reimburse HEP for any costs (including construction and capitalized
interest costs) it incurred in connection with the projects described herein,
and HEP will convey any interest it has in such projects to Holly Tulsa.
     

2

--------------------------------------------------------------------------------

 

Acknowledged and Agreed this 9th day of August 2010.
HOLLY REFINING & MARKETING — TULSA LLC
By: Holly Refining & Marketing Company, its sole member

             
 
  By:   /s/ David L. Lamp    
 
           
 
      David L. Lamp
President    

HEP TULSA LLC

            By:   /s/ David G. Blair    
 
         
 
    David G. Blair    
 
    Senior Vice President