Exhibit 10.3.2 - Marathon and APC 1991 Amendment 2


    Exhibit
      10.3.2

    


    SECOND
      AMENDMENT TO GAS PURCHASE AGREEMENT

    BETWEEN
      MARATHON OIL COMPANY AND

    ALASX.A
      PIPELINE COMPANY

    DATED
      MAY
      1, 1988

    


    WHEREAS,
      Marathon Oil Company (“Seller”) and Alaska Pipeline Company (“Buyer”) entered
      into that certain Gas Purchase Agreement dated May 1, 1988 (“the Agreement”);
      and

    


    WHEREAS,
      Seller and Buyer have previously amended the Agreement; and

    


    WHEREAS,
      Seller and Buyer desire to make further modifications to the Agreement for
      the
      benefit of both parties;

    


    NOW,
      THEREFORE, in consideration of the premises and the mutual covenants and
      agreements herein contained, the parties do covenant and agree as
      follows:

    


    A. Section
      1.5
      of the Agreement is amended by adding the following sentence:

    After
      the
      Year 2001, the term “Annual Contract Quantity,” when applied to Gas sold
      pursuant to the Initial Commitment, shall mean the amount of Gas which Seller
      is
      obligated to sell and which Buyer is obligated to purchase pursuant to this
      Agreement.

    


    B. Section
      4.0
      of the Agreement is amended by deleting, from the last sentence, “immediately
      after Buyer has exhausted the Initial Commitment” and inserting in lieu thereof
“when volumes Seller is obligated to sell pursuant to the Initial Commitment
      are
      insufficient to meet Buyer’s New Gas needs.”


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    C. Section
      4.1
      of the Agreement is deleted and replaced with the following:

    An
      Annual
      Additional Commitment is the total amount of Gas in excess of the amount of
      Gas
      previously committed under this Agreement and all other contracts under which
      Buyer has the right to purchase Gas which Buyer forecasts will be necessary
      to
      meet its Gas supply requirements for the first nine (9) Years of any Option
      Forecast.

    


    Annual
      Additional Commitments are made pursuant to the procedures in Section
      4.4.

    


    D. The
      second
      sentence of Section 4.3(b) of the Agreement is deleted and replaced with the
      following:

    Any
      Supplemental Forecast which shows that the volumes Seller is obligated to sell
      pursuant to the Initial Commitment plus Annual Additional Commitments (if any
      have been made) will be insufficient to meet Buyer’s New Gas needs on or before
      the end of the ninth (9th) Year of the forecast and any Supplemental Forecast
      showing a Year after 2001 (except a ninth (9th) Year in which the Annual Volumes
      of Gas to be sold pursuant to Table 1 of Section 4.7 are adequate to meet
      Buyer’s New Gas needs) shall be called an “Option Forecast.”

    


    E. Option
      1 of
      Section 4.4(a) of the Agreement is deleted and replaced with the
      following:

    Option
      1: Seller
      will
      advise Buyer that sales pursuant to this Agreement shall terminate after Seller
      has sold to Buyer all Gas remaining to be delivered pursuant to the Initial
      Commitment plus any Annual Additional Commitments which have been previously
      made.

    


    F. Option
      2 of
      Section 4.4(a) of the Agreement is deleted and replaced with the
      following:

    


    2


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    Option
      2: Seller
      will
      make an Annual Additional Commitment calculated pursuant to Section
      4.1.

    


    G. Section
      4.4(b) is amended by changing the date “1995” in line 1 to “1994” and by
      changing the date “1996” in line 2 to “1995”.

    


    H. The
      following
      provision is added to the end of Section 4.5(c):

    
      	 	
              (3)

            	
              Maximum
                permissible Swing Rates calculated pursuant to Sections 4.5(c)(1)
                and (2)
                shall be based on the total Swing Rate for New Gas sold in the applicable
                Year pursuant to the Initial Commitment, the applicable Annual Additional
                Commitment, and/or the Final Additional
                Commitment.

            


    

    


    I. Section
      4.7
      is amended by deleting the first paragraph and replacing it with the following
      paragraph:

    Subject
      to
      Buyer’s rights to take Gas purchased from other sellers pursuant to Section
      4.13, Buyer shall take from Seller through December 31, 2001, all of Buyer’s New
      Gas requirements that Seller can supply. Beginning January 1, 2002, Buyer shall
      be obligated to purchase, and Seller shall be obligated to sell, each Year
      only
      the Annual Volumes of Gas shown in Table 1 below (which are part of the Initial
      Commitment) plus Annual Additional and Final Additional Commitments until the
      Initial, Annual Additional, and Final Additional Commitments, net of any
      reductions (including purchases pursuant to Section 4.13) permitted by this
      Agreement, have been exhausted; provided, however, that Buyer shall never be
      obligated to take and purchase from Seller, or to pay for if not taken, any
      Gas
      in excess of Buyer’s New Gas requirements less any Gas purchased pursuant to
      Section 4.13.

    


    3


    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

      
        	
                Table
                  1

              
	 	 
	
                Year

              	
                Annual
                  Volumes of Gas (Bcf)

              
	 	 
	
                2002

              	
                21

              
	
                2003

              	
                19

              
	
                2004

              	
                17

              
	
                2005

              	
                15

              
	
                2006

              	
                13

              
	
                2007

              	
                11

              
	
                2008

              	
                9

              
	
                2009

              	
                7

              
	
                2010

              	
                5

              
	
                all
                  later years

              	
                5

              


      



    The
      Annual
      Volumes of Gas in Table 1 are part of the Initial Commitment but do not increase
      the Initial Commitment.

    


    J. The
      first
      sentence of Section 4.8 is deleted and replaced with the following:

    Subject
      to
      all of the terms of this Agreement, Seller shall deliver all of Buyer’s
      requirements for New Gas each day through December 31, 2001. In any Year after
      2001 for which Seller has made an Annual Additional Commitment, Seller shall
      deliver all of Buyer’s requirements for New Gas each Day until the Initial and
      Annual Additional Commitments have been exhausted. In any Year after 2001 for
      which Seller has not made an Annual Additional Commitment or Final Additional
      Commitment, the Swing Rate shall be a pro-rata share of Buyer’s projected
      maximum daily demand on all suppliers calculated as follows:

    


    No
      later than
      October 1 of each Year (beginning in 2000), Buyer shall give Seller a projection
      (“Swing Rate Forecast”) of Buyer’s maximum daily demand on all suppliers and
      total purchases from all suppliers, including Seller, for each of the next
      two
      Years. Buyer’s Swing Rate Forecast will not exceed Buyer’s historical daily
      peaks reasonably adjusted for known or estimated changes, including load growth
      or decline. Seller shall have the right to review all data on which a Swing
      Rate
      Forecast is based. The Swing Rate for the second year of each Swing Rate
      Forecast shall be calculated by:

    


    4


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    (i) using
      Table 1
      to determine the Annual Volume of Gas Seller must deliver to Buyer;

    


    (ii) dividing
      the
      result of (i) by Buyer’s forecast of total purchases from all suppliers;
      and

    


    (iii) multiplying
      the result of (ii) by Buyer’s forecast of maximum daily demand on all suppliers,
      including Seller.

    


    All
      calculations are based on data from the second Year of the Swing Rate Forecast.
      The first Year of the Swing Rate Forecast is informational only and will be
      updated as the forecast “rolls” forward the following Year. The calculations are
      not applicable and will not be made for any Year in which Seller has made an
      Annual or Final Additional Commitment.

    


    An
      example of
      the calculation of Swing Rate for 2004 follows. Assume that on October 1 of
      2002, Buyer makes the following Swing Rate Forecasts:

    


    
      	 	 	
              2003

            	
              2004

            	 
	 	 	 	 	 
	 	
              Maximum
                daily demand (MMcf) on all suppliers, including Seller

            	
              270.00

            	
              275.00

            	 
	 	 	 	 	 
	 	
              Total
                purchases (Bcf) from all suppliers, including Seller

            	
              35.00

            	
              36.00

            	 
	 	 	 	 	 
	 	
              The
                Annual Volume of Gas (Table 1)

            	
              19.00

            	
              17.00

            	 
	 	 	 	 	 
	 	
              Swing
                rate for 2004 =

              17
                x 275
                =

              36

            	
               

              N/A

            	
               

              129.86

            	 


    

    


    Buyer
      shall
      have the option to purchase daily quantities of Gas, if any, in excess of the
      Swing Rate then in effect which, in Seller’s sole judgment, can be produced and
      delivered efficiently and in accordance with good operating practices and
      without impairment of Seller’s obligations under other Gas sales contracts and
      under Seller’s other needs for Gas. Buyer has the right, but not the obligation,
      to purchase the Swing Rate from Seller on any day of the Year, regardless of
      whether Buyer has already taken the Annual Volume of Gas (Table 1) for that
      Year, provided that Buyer is also purchasing the maximum daily quantities of
      Gas
      available from its other suppliers.

    


    5


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    K. The
      first
      sentence of Section 4.9 is deleted and replaced with the following:

    Subject
      to
      all of the terms of this Agreement, Seller shall immediately begin deliveries
      of
      the Final Additional Commitment when the last Annual Additional Commitment
      is
      exhausted or, if earlier, in any Year in which the Initial Commitment is not
      adequate to meet Buyer’s demands for New Gas.

    


    L. Section
      4.13(f) is amended by inserting, before the period, the following:

    or,
      to the
      extent Seller is not obligated to supply all of Buyer’s New Gas requirements
      because Seller has exercised Option 1 of Section 4.4(a), for delivery in any
      Year in which Seller is not so obligated.

    


    M. The
      heading
      of Section 19.4 is amended by deleting the word “Draftsman” and inserting in
      lieu thereof the word “Drafter.”

    


    N. Exhibit
      A is
      amended by adding to it the following contract amendments:

    Agreement
      between Shell Western E & P Inc. and Alaska Pipeline Company dated November
      15, 1991, to amend the agreement between Shell Oil Company and Alaska Pipeline
      Company dated December 20, 1982, and amended May 24, 1982.

    


    Agreement
      between ARCO Alaska, Inc. and Alaska Pipeline Company dated November 15, 1991,
      to amend the agreement between Shell Oil Company and Alaska Pipeline Company
      dated December 20, 1982, and amended May 24, 1982.

    


    6


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    O. This
      Second
      Amendment cannot be permanently implemented until it has been approved by the
      Alaska Public Utilities Commission (APUC). This Second Amendment shall be deemed
      approved when the APUC issues a final order, which is no longer subject to
      appeal, finding that approval is in the public interest.

    


    If
      the APUC
      does not approve this Second Amendment by January 1, 1993, either party may
      cancel the Second Amendment after thirty (30) days’ written notice to the other
      party and to the APUC. If the APUC approves this Second Amendment subject to
      terms and conditions which are unacceptable to either party, either party may
      petition for reconsideration. The party finding the terms and conditions
      unacceptable must, within five (5) business days of being served with the order,
      notify the other party in writing of the terms and conditions which are
      unacceptable and state whether it will petition for reconsideration. If a
      petition for reconsideration is filed and if the unacceptable terms and
      conditions are not cured, the party finding the terms and considerations
      unacceptable may cancel the Second Amendment by giving notice within thirty
      (30)
      days following the last day on which the petition for reconsideration could
      be
      granted or within thirty (30) days following the APUC’s order on
      reconsideration, whichever is earlier. If petition for reconsideration is not
      filed, either party may cancel this Second Amendment by giving written notice
      within thirty (30) days of the service of the order containing the unacceptable
      terms and conditions.

    


    7


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    P. Except
      as
      expressly modified by this Second Amendment, the Agreement remains in effect
      and
      the terms used in this Second Amendment shall have the same meaning as in the
      Agreement. In the event that this Second Amendment is inconsistent with the
      Agreement, this Second Amendment shall govern the interpretation of the
      Agreement as amended by this Second Amendment.

     

    
      	ALASKA
              PIPELINE COMPANY 	 	 	
              MARATHON OIL
                COMPANY

               

               

            
	By:
              /s/R. F. Barnes 	 	 	By:
              /s/Richard G. Grammer 
	
              

            	 	 	
              

            
	Its: 
              President

Dated:  November 19, 1991	 	 	Its: 
              Vice President

Dated:  November 15,
              1991




    


    


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