Document:

exv10w5

Exhibit 10.5

FORM OF

OPERATIONAL SERVICES AGREEMENT

     THIS OPERATIONAL SERVICES AGREEMENT (this “Agreement”), dated as of _______ __, 2011,
is made and entered into by and among Tesoro Companies Inc. (“TCI”), Tesoro Refining and
Marketing Company, a Delaware corporation (“TRMC”), Tesoro Alaska Company, a Delaware
corporation (“TAK” and, together with TCI and TRMC, the “Tesoro Group”), Tesoro
Logistics GP, LLC, a Delaware limited liability company (the “General Partner”), Tesoro
Logistics Operations LLC, a Delaware limited liability company (“TLO”) and Tesoro High
Plains Pipeline Company LLC, a Delaware limited liability company (“THPPC” and together
with the General Partner and TLO, the “Logistics Group”). Each of TRMC, TAK, the General
Partner, TLO and THPPC is referred to herein as a “Party” and collectively as the “Parties.”

RECITALS:

     WHEREAS, in connection with the initial public offering of common units representing limited
partner interests in Tesoro Logistics LP (the “Partnership”), the ownership interests in
THPPC shall be contributed to the Partnership;

     WHEREAS, as of the effective date of such equity contribution to the Partnership (the
“Commencement Date”), the Logistics Group desires for the Tesoro Group to provide to the
Logistics Group certain services necessary to operate, manage, maintain and report the operating
results of the Logistics Group’s assets, including gathering pipelines, transportation pipelines,
storage tanks, trucks, truck racks, terminal facilities, offices and related equipment, real estate
and other assets or portions thereof of the Logistics Group, on the terms and conditions described
herein; and

     WHEREAS, there may be certain circumstances during the Term of this Agreement in which the
Tesoro Group will desire for the Logistics Group to provide it with various services.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties hereby agree as follows:

1. DEFINITIONS

As used in this Agreement, the following capitalized terms have the meanings set forth below:

     “AFE” has the meaning set forth in Section 2(c).

     “Agreement” has the meaning set forth in the Preamble.

     “Affiliate” means, with respect to any Person, (a) any other Person directly or
indirectly controlling, controlled by or under common control with such Person or (b) any Person
owning or controlling fifty percent (50%) or more of the voting interests of such Person. For
purposes of this definition, the term “controls,” “is controlled by” or “is under common control
with” shall mean the possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.

     “Annual Fee” has the meaning set forth in Section 2(d).

 

 

     “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.

     “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.

     “Claim” means any existing or threatened future claim, including third-party claims,
demand, suit, action, investigation, proceeding, governmental action or cause of action of any kind
or character (in each case, whether civil, criminal, investigative or administrative), known or
unknown, under any theory, including those based on theories of contract, tort, statutory
liability, strict liability, employer liability, premises liability, products liability, breach of
warranty or malpractice.

     “Commencement Date” has the meaning set forth in the Recitals.

     “Confidential Information” means all confidential, proprietary or non-public
information of a Party, whether set forth in 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.

     “Contribution Agreement” means that certain Contribution, Conveyance and Assumption
Agreement by and among Tesoro Logistics LP, Tesoro Logistics GP, LLC, Tesoro Corporation, Tesoro
Alaska Company, Tesoro Refining and Marketing Company and Tesoro High Plains Pipeline Company LLC,
dated as of the date hereof.

     “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.

     “Extension Period” has the meaning set forth in Section 5.

     “Facilities” means Mandan Rack, North Dakota; Anchorage Terminal, Alaska; Salt Lake
City Rack, Utah; Salt Lake City Storage Facility, Utah; Vancouver Terminal, Washington; Boise
Terminal, Idaho; Burley Terminal, Idaho; Stockton Terminal, California; Wilmington Terminal,
California; Salt Lake City Pipelines, Utah; and High Plains Pipeline System, North Dakota and
Montana.

     “Force Majeure” means circumstances not reasonably within the control of the Service
Provider and which, by the exercise of due diligence, the Service Provider is unable to prevent or
overcome that prevent performance of the Service Provider’s obligations, including: acts of God,
strikes, work stoppages, 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.

2

 

     “Force Majeure Notice” has the meaning set forth in Section 11(a).

     “General Partner” means Tesoro Logistics GP, LLC, and its successors and assigns, who
is the general partner of the Partnership.

     “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.

     “Logistics Assets” means the gathering pipelines, transportation pipelines, storage
tanks, trucks, truck racks, terminal facilities, offices and related equipment, real estate and
other assets, or portions thereof, conveyed, contributed or otherwise transferred or intended to be
conveyed, contributed or otherwise transferred pursuant to the Contribution Agreement, together
with the additional conveyance documents and instruments contemplated or referenced thereunder, to
any member of the Logistics Group, or owned by, leased by or necessary for the operation of the
business, properties or assets of any member of the Logistics Group, prior to or as of the
Commencement Date.

     “Logistics Group” has the meaning set forth in the Preamble.

     “Logistics Group Indemnified Parties” has the meaning set forth in Section 10(a).

     “Loss” and “Losses” shall have the meaning set forth in Section 10(a).

     “Partnership” has the meaning set forth in the Recitals.

     “Partnership Change of Control” means Tesoro Corporation ceases to Control the general
partner of the Partnership.

     “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.

     “Receiving Party Personnel” has the meaning set forth in Section 14(d).

     “Service Coordinator” has the meaning set forth in Section 6(a).

     “Service Provider” has the meaning set forth in Section 3(a).

     “Service Recipient” has the meaning set forth in Section 3(a).

     “Services” has the meaning set forth in Section 2(a).

     “Service Schedules” has the meaning set forth in Section 2(a).

     “TAK” has the meaning set forth in the Preamble.

     “TCI” has the meaning set forth in the Preamble.

     “Term” and “Initial Term” shall have the meaning set forth in Section 5.

3

 

     “Terminated Service” has the meaning set forth in Section 8(a).

     “Tesoro Group” has the meaning set forth in the Preamble.

     “Tesoro Group Indemnified Parties” has the meaning set forth in Section 10(b).

     “Tesoro Services” has the meaning set forth in Section 2(b).

     “THPPC” has the meaning set forth in the Preamble.

     “TLO” has the meaning set forth in the Preamble.

     “TRMC” has the meaning set forth in the Preamble.

2. SERVICES; FEES

     (a) The Tesoro Group shall provide to the Logistics Group the services set forth below (the
“Services,” at the Facilities, as more particularly described in the Schedule for each
Facility attached to this Agreement (the “Service Schedules”). The Services provided by the
Tesoro Group shall include, but are not limited to, the following: (i) communications; (ii)
electricity; (iii) environmental permitting and maintenance and related services (including
permitting and wastewater management); (iv) Facility maintenance; (v) fire and safety; (vi) natural
gas; (vii) plant air; (viii) security; (ix) steam; (x) personnel support; and (xi) software
services. In addition, the Parties acknowledge and agree that there may be certain future matters,
from time to time, for which the Tesoro Group will need to provide assistance to the Logistics
Group. These items will be negotiated in good faith by the Parties and the Services will be revised
in writing by the Parties from time to time.

     (b) The Parties may from time to time, by mutual agreement, agree on various services to be
provided by TLO or the General Partner to TRMC (the “Tesoro Services”). The Tesoro Services
shall be provided at fees to be agreed upon by the Parties. The Tesoro Services shall be exclusive
of the primary services being provided by TLO to the Tesoro Group under the commercial agreements
and that certain Omnibus Agreement between the Parties dated as of the date hereof.

     (c) Reimbursement

     (i) The Logistics Group shall reimburse the Tesoro Group for any direct costs actually
incurred by the Tesoro Group in providing the Services, provided that TLO shall not be
required to pay or reimburse TRMC for Services that TRMC otherwise provides to support its
own assets or the assets of its Affiliates (other than the Logistics Group). Notwithstanding
the foregoing, to the extent that TLO requests TRMC to provide a Service (or acquire
equipment or inventory in connection with such Service), specifically for a Logistics Asset,
TRMC shall prepare a work order for such Service (or related equipment or inventory) or a
capital or expense approval for expenditure (“AFE”), and TLO shall pay and reimburse
TRMC for such Service (or related equipment or inventory), at TRMC’s actual cost, without
additional markup.

     (ii) The Tesoro Group shall reimburse the Logistics Group for any direct costs actually
incurred by the Logistics Group in providing the Tesoro Services, provided that TRMC shall
not be required to pay or reimburse the Logistics Group for Tesoro Services that TLO
otherwise provides to support its own assets or the assets of its Affiliates.
Notwithstanding the foregoing, to the extent that TRMC requests the Logistics Group to
provide a Tesoro Service (or acquire equipment or inventory in connection with such Tesoro
Service), the Logistics Group

4

 

shall prepare a work order for such Tesoro Service (or related equipment or inventory)
or a capital or expense AFE, and TRMC shall pay and reimburse the Logistics Group for such
Tesoro Service (or related equipment or inventory), at TLO or the General Partner’s actual
cost, without additional markup.

     (d) TLO shall pay to TRMC an annual fee, initially in the amount of $343,000 (the “Annual
Fee”) for certain Services performed by certain of TRMC’s field-level employees at the Mandan
Rack and Salt Lake City Storage Facility, as set forth on Schedule A, which Services, the
Parties agree, shall be performed under the direction and control of TLO.

     (e) TRMC and TLO shall review the Annual Fee each year to determine whether an increase or
decrease is appropriate with respect to the Services provided hereunder. If the Annual Fee is not
otherwise adjusted, the Annual Fee shall be increased on July 1 of
each year of the Term (as defined below), on an annual basis by a percentage equal to the greater of zero or the positive change in
the Consumer Price Index — All Urban Consumers, U.S. City Average, Not Seasonally Adjusted over the
previous 12 calendar months or to reflect any increase in the cost of providing Services to TLO due
to changes in Applicable Law, including any interpretation of such Applicable Laws.

3. PAYMENTS; AUDIT

     (a) The Party providing the Services or the Tesoro Services (the “Service Provider”),
as the case may be, shall invoice the recipient of Services or the Tesoro Services (the
“Service Recipient”) on a monthly basis and the Service Recipient shall pay all amounts due
no later than ten (10) calendar days after its receipt of the Service Provider’s invoices. Any past
due payments owed by the Service Recipient to the Service Provider shall accrue 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.

     (b) The Parties shall keep books of account and other records, in reasonable detail and in
accordance with generally accepted accounting principles and industry standards, consistently
applied, with respect to the provision of the Services or the Tesoro Services and the fees charged,
including time logs (or similar time allocation materials), receipts, and other related back-up
materials. Such books of account and other records shall be open for the Service Recipient’s
inspection during normal business hours upon at least five (5) Business Days’ prior written notice
for twelve (12) months following the end of the calendar year in which such Services or Tesoro
Services were rendered. This inspection right will include the right of the Service Recipient to
have its accountants or auditors review such books and records. If an audit reveals that the
Service Recipient paid more than the applicable fees for any applicable audited period or service,
the Service Provider shall reimburse the Service Recipient for any amounts overpaid together with
interest at a rate equal to the prime rate of interest on the original due date published by The
Wall Street Journal, accruing from the date paid by the Service Recipient to the date reimbursed by
the Service Provider.

5

 

4. COMMENCEMENT DATE

     The Parties anticipate that the Commencement Date will be _______ __, 2011. The actual
Commencement Date shall be the date specified by TLO 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.

5. TERM; RENEWAL

     This Agreement shall have a term beginning on the Commencement Date and shall terminate on
April 30, 2021 (the “Initial Term”). This Agreement may be extended by the Tesoro Group for
up to two (2) renewal terms of five (5) years each (each, an “Extension Period,” and
together with the Initial Term, the “Term”). To commence an Extension Period, the Tesoro
Group shall provide written notice of its intent to the Logistics Group no less than ninety (90)
days prior to the end of the Initial Term or the then-current Extension Period.

6. COVENANTS

     (a) Service Coordinators. The Logistics Group and the Tesoro Group shall each appoint
a contact person (each, a “Service Coordinator”) who shall serve as the primary point of
contact for communications among the Parties relating to the day-to-day operations of the Services
or the Tesoro Services, have overall responsibility for managing and coordinating the performance
of the Parties’ obligations under this Agreement, and be authorized to act for and on behalf of the
appointing Parties concerning all matters relating to this Agreement. Either of the Logistics Group
and the Tesoro Group may appoint a new Service Coordinator upon written notice to the other’s
Service Coordinator. If a Service Coordinator is reassigned or removed by the Party that appointed
it, such Party shall promptly appoint a new Service Coordinator and provide notice to the other
Parties of the new Service Coordinator so appointed.

     (b) Access to Premises. Each Party shall give the other Parties reasonable access to
its premises as may be required for the other Parties to provide or receive the Services or the
Tesoro Services, as applicable, hereunder. Unless otherwise agreed to in writing by the Parties,
each Party shall: (i) use the premises of the other Parties solely for the purpose of providing or
receiving the Services or the Tesoro Services and not to provide goods or services to or for the
benefit of any third party or for any unlawful purpose; (ii) comply with all policies and
procedures governing access to and use of such premises made known to such Party in advance,
including all reasonable security requirements applicable to accessing the premises and any
systems, technologies, or assets of the other Parties; (iii) instruct its employees and personnel,
when visiting the premises, not to photograph or record, duplicate, remove, disclose, or transmit
to a third party any of the other Parties’ Confidential Information, except as necessary to perform
or receive the Services and/or the Tesoro Services; and (iv) return such space to the other Parties
in the same condition it was in prior to such Party’s use of such space, ordinary wear and tear
excepted.

     (c) Access to Systems. If any Party has access (either on-site or remotely) to any
other Party’s computer systems and/or information stores in connection with the Services and/or the
Tesoro Services, such Party shall limit such access solely to the use of such systems for purposes
of the provision or receipt of the Services or the Tesoro Services and shall not access, or attempt
to access, the other Party’s computer systems, files, or software other than those agreed to by the
Parties as being required for the Services or the Tesoro Services, or those that are publicly
available (e.g., public websites). Each Party shall limit such access to those of its employees,
agents, and representatives with a bona fide need to have

6

 

such access in connection with the Services or the Tesoro Services. Each Party shall follow,
and shall cause all of its applicable employees, agents, and representatives to follow, all of the
other Parties’ security rules and procedures when accessing the other Parties’ systems. All user
identification numbers and passwords disclosed by any Party to another Party and any information
obtained by any Party as a result of such Party’s access to and use of any other Party’s computer
systems shall be deemed to be, and treated as, Confidential Information of the other Party. The
Tesoro Group and the Logistics Group shall cooperate in the investigation of any apparent
unauthorized access to any computer system and/or information stores of any Party.

     (d) Data Back Up and Security. The Parties shall maintain industry standard data back
up and recovery procedures, as well as an industry standard disaster avoidance and recovery plan,
in connection with all of its systems used in performing the Services and the Tesoro Services. The
Parties shall maintain and enforce physical, technical and logical security procedures with respect
to the access and maintenance of any Confidential Information of the other Parties that is in the
Service Provider’s possession, which procedures shall: (i) be at least equal to industry standards;
(ii) be in full compliance with Applicable Law; and (iii) provide reasonably appropriate physical,
technical and organizational safeguards against accidental or unlawful destruction, loss,
alteration, unauthorized disclosure, theft or misuse.

     (e) Use of Resources. In the provision of Services and Tesoro Services hereunder, the
Parties shall have the right to use contractors, subcontractors, vendors or other third parties to
assist the Service Provider in the provision of the Services or Tesoro Services, provided that such
contractors, subcontractors, vendors or other third parties were providing services similar to the
Services or the Tesoro Services, as applicable, during the twelve months prior to the Commencement
Date. The Service Provider shall be responsible for the Services or the Tesoro Services performed
by its subcontractors and the Service Provider shall be the Service Recipient’s primary point of
contact regarding the Services or the Tesoro Services performed hereunder including with respect to
payment. No subcontractor will be provided access to any Confidential Information of the other
Party without first agreeing to protect the Confidential Information.

     (f) Taxes. The Service Recipient shall pay or cause to be paid all taxes, levies,
royalties, assessments, licenses, fees, charges, surcharges and sums due of any nature whatsoever
(other than income taxes, gross receipt taxes and similar taxes) imposed by any federal, state or
local government that the Service Provider incurs on its behalf for the services provided by the
Service Provider under this Agreement. If the Service Provider is required to pay any of the
foregoing, the Service Recipient shall promptly reimburse the Service Provider in accordance with
the payment terms set forth in this Agreement.

7. STANDARD OF PERFORMANCE

     The Parties shall perform the Services and the Tesoro Services, as applicable, using at least
the same level of care, quality, timeliness, skill and adherence to applicable industry standards,
in providing the Services and Tesoro Services, as applicable, as such Parties do in providing the
Services and the Tesoro Services to such Party’s subsidiaries and Affiliates.

8. TERMINATION

     (a) Termination for Convenience. Any specific service from the Service Schedules may
be terminated by TLO (each such specific Service that has been terminated by TLO, a “Terminated
Service”) upon ninety (90) days’ prior written notice to TRMC.

7

 

     (b) Termination for Default.

     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;

     (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, 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; or

     (iii) If any of the Parties is in default as described above, then (i) if any
member of the Tesoro Group is in default, the Logistics Group may or (ii) if any
member of the Logistics Group is in default, any of the Tesoro Group 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.

     (c) Effect of Termination. Upon expiration or termination of this Agreement, all
rights and obligations of the Parties under this Agreement shall terminate; provided, however, that
such termination shall not affect or excuse the performance of any Party (i) for any breach of this
Agreement occurring prior to such termination or (ii) under any of the following provisions of this
Agreement that survive the termination of this Agreement indefinitely: Section 5; Section 10;
Section 14; and Section 15. Upon expiration or termination of this Agreement or any Service, the
each Party shall return to the other Party any equipment or other property or materials of such
other Party (including but not limited to any materials containing Confidential Information) that
are in the possession or control of such Party or any of its contractors (except to the extent they
are required for use in connection with any non-terminated Services).

9. RELATIONSHIP OF THE PARTIES

     This Agreement does not form a partnership or joint venture between the Parties. This
Agreement does not make any member of the Tesoro Group an agent or a legal representative of any
member of the Logistics Group. No member of the Tesoro Group shall assume or create any obligation,
liability, or responsibility, expressed or implied, on behalf of or in the name of any member of
the Logistics Group.

10. INDEMNIFICATION

     (a) Indemnification by the Tesoro Group. The Tesoro Group, jointly and severally,
shall indemnify and hold harmless the Logistics Group, and the officers, directors, employees,
agents and representatives of each member of the Logistics Group (collectively, the “Logistics
Group Indemnified Parties”) from and against all Claims, and upon demand by the Logistics
Group, shall protect and defend the Logistics Group Indemnified Parties from the same, alleged,
asserted or suffered by or arising in favor of any Person, and shall pay any and all judgments or
settlements of any kind or nature (to include interest) as well as court costs, reasonable
attorneys’ fees and expenses, and any expenses incurred in

8

 

enforcing this indemnity provision (each a “Loss” and collectively, “Losses”),
incurred by, imposed upon or rendered against one or more of the Logistics Group Indemnified
Parties, whether based on contract, or tort, or pursuant to any statute, rule or regulation, and
regardless of whether the Claims are foreseeable or unforeseeable, all to the extent that such
Losses are in respect of or arise from (i) willful and material breaches by the Tesoro Group of
this Agreement, or (ii) Claims by a third-party relating to (A) willful and material breaches by
the Tesoro Group of this Agreement or (B) the Tesoro Group’s gross negligence or willful misconduct
in connection with the performance of the Services, PROVIDED THAT THE TESORO GROUP SHALL NOT BE
OBLIGATED TO INDEMNIFY OR HOLD HARMLESS THE LOGISTICS GROUP INDEMNIFIED PARTIES FROM AND AGAINST
ANY CLAIMS TO THE EXTENT THEY RESULT FROM THE BREACH OF CONTRACT, GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY LOGISTICS GROUP INDEMNIFIED PARTY.

     (b) Indemnification by the Logistics Group. The Logistics Group shall indemnify and
hold harmless the Tesoro Group, and the officers, directors, employees, agents and representatives
of the Tesoro Group (collectively, the “Tesoro Group Indemnified Parties”) from and against
all Claims, and upon demand by the Tesoro Group, shall protect and defend the Tesoro Group
Indemnified Parties from the same, alleged, asserted or suffered by or arising in favor of any
Person, and shall pay any and all Losses incurred by, imposed upon or rendered against one or more
of the Tesoro Group Indemnified Parties, whether based on contract, or tort, or pursuant to any
statute, rule or regulation, and regardless of whether the Claims are foreseeable or unforeseeable,
all to the extent that such Losses are in respect of or arise from (i) willful and material
breaches by the Logistics Group of this Agreement or (ii) Claims by a third-party relating to (A)
willful and material breaches by the Logistics Group of this Agreement or (B) the Logistics Group’s
gross negligence or willful misconduct in connection with the performance of the Tesoro Services,
PROVIDED THAT THE LOGISTICS GROUP SHALL NOT BE OBLIGATED TO INDEMNIFY OR HOLD HARMLESS THE TESORO
GROUP INDEMNIFIED PARTIES FROM AND AGAINST ANY CLAIMS TO THE EXTENT THEY RESULT FROM THE BREACH OF
CONTRACT, GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT OF ANY TESORO GROUP INDEMNIFIED PARTY.

     (c) Indemnification Procedure. The indemnified Party agrees that within a reasonable
period of time after it becomes aware of facts giving rise to a claim for indemnification under
this Section 10, it will provide notice thereof in writing to the indemnifying Party, specifying
the nature of and specific basis for such Claim.

     (i) The indemnifying Party shall have the right to control all aspects of the
defense of (and any counterclaims with respect to) any Claims brought against the
indemnified Party that are covered by the indemnification under this Section 10,
including, without limitation, the selection of counsel, determination of whether to
appeal any decision of any court and the settling of any such claim or any matter or
any issues relating thereto; provided, however, that no such settlement shall be
entered into without the consent of the indemnified Party unless it includes a full
release of the Indemnified Party from such Claim.

     (ii) The indemnified Party agrees to cooperate fully with the indemnifying
Party, with respect to all aspects of the defense of any Claims covered by the
indemnification under this Section 10, including, without limitation, the prompt
furnishing to the indemnifying Party of any correspondence or other notice relating
thereto that the indemnified Party may receive, permitting the name of the
indemnified Party to be utilized in connection with such defense, the making
available to the indemnifying Party of any files, records or other information of
the indemnified Party that the indemnifying Party considers relevant to such defense
and the making available

9

 

to the indemnifying Party of any employees of the indemnified Party; provided,
however, that in connection therewith the indemnifying Party agrees to use
reasonable efforts to minimize the impact thereof on the operations of the
indemnified Party and further agrees to maintain the confidentiality of all files,
records, and other information furnished by the indemnified Party pursuant to this
Section 10(c). In no event shall the obligation of the indemnified Party to
cooperate with the indemnifying Party as set forth in the immediately preceding
sentence be construed as imposing upon the indemnified Party an obligation to hire
and pay for counsel in connection with the defense of any claims covered by the
indemnification set forth in this Section 10; provided, however, that the
indemnified Party may, at its own option, cost and expense, hire and pay for counsel
in connection with any such defense. The indemnifying Party agrees to keep any such
counsel hired by the indemnified Party informed as to the status of any such
defense, but the indemnifying Party shall have the right to retain sole control over
such defense.

     (iii) In determining the amount of any loss, cost, damage or expense for which
the indemnified Party is entitled to indemnification under this Agreement, the gross
amount of the indemnification will be reduced by (i) any insurance proceeds realized
by the indemnified Party, and such correlative insurance benefit shall be net of any
incremental insurance premium that becomes due and payable by the Indemnified Party
as a result of such claim and (ii) all amounts recovered by the indemnified Party
under contractual indemnities from third Persons.

     (d) Limitation on Liability. Notwithstanding anything to the contrary contained
herein, neither Party shall be liable or responsible to the other Party or such other Party’s
Affiliates 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 Affiliates
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. FORCE MAJEURE

     (a) The Service Provider’s obligations under this Agreement may be temporarily suspended
during the occurrence of, and for the entire duration of, a Force Majeure. As soon as possible upon
the occurrence of a Force Majeure, the Service Provider shall provide the Service Recipient with
written notice of the occurrence of such Force Majeure (a “Force Majeure Notice”). The
Service Provider shall identify in such Force Majeure Notice the approximate length of time that it
reasonably believes in good faith such Force Majeure shall continue. During the period of the Force
Majeure event, the Service Provider shall be excused from the performance with respect to its
obligations related to the provision of the applicable Service(s) or Tesoro Service(s) hereunder.
The Service Recipient shall not be required to pay fees for any affected Service(s) or Tesoro
Service(s), as the case may be, during the Force Majeure. The Service Provider shall use
commercially reasonable efforts to mitigate and to overcome the effects of such event or
circumstances and shall resume performance of its obligations as soon as practicable.

     (b) If a Force Majeure preventing performance of any of the Services or any of the Tesoro
Services hereunder continues for twelve (12) consecutive months or more, either Party shall have
the right to terminate its obligations under this Agreement with respect to the applicable Service
or the applicable Tesoro Service suspended by such Force Majeure.

10

 

12. ASSIGNMENT; PARTNERSHIP CHANGE OF CONTROL

     (a) Neither the Logistics Group nor the Tesoro Group may assign this Agreement without the
prior written consent of the other Party; provided, however, that either Party may subcontract any
of the Services or Tesoro Services provided hereunder so long as such Services or Tesoro Services
continue to be provided in a manner consistent with past practices and industry standards and in
accordance with Section 6(e) above. Notwithstanding the foregoing, the Logistics Group shall be
permitted to make a collateral assignment of this Agreement solely to secure working capital
financing for TLO. This Agreement shall be binding upon and inure to the benefit of the Parties
hereto and their respective successors and permitted assigns.

     (b) The Tesoro Group may terminate this Agreement upon a Partnership Change of Control. The
Logistics Group shall provide the Tesoro Group with notice of any Partnership Change of Control at
least sixty (60) days prior to the effective date thereof.

13. 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

Attention:

phone:

email:

If to TLO or the General Partner, to:

Tesoro Logistics Operations LLC

19100 Ridgewood Parkway

San Antonio, Texas 78259

Attention:

phone:

email:

or to such other address or to such other person as either Party will have last designated by
notice to the other Party.

14. CONFIDENTIAL INFORMATION

     (a) Obligations. Each Party shall use reasonable efforts to retain the other Parties’
Confidential Information in confidence and not disclose the same to any third party nor use the
same,

11

 

except as authorized by the disclosing Party in writing or as expressly permitted in this
Section 14. 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 the Logistics Group that was in the possession of the
Tesoro Group or any of its Affiliates as a result of their ownership or operation of the Logistics
Assets 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 14, 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) Required Disclosure. Notwithstanding Section 14(a) 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.

     (c) 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 14, and
such archived or back-up Confidential Information shall not be accessed except as required by
Applicable Law.

     (d) 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

12

 

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.

     (e) Survival. The obligation of confidentiality under this Section 14 shall survive
the termination of this Agreement for a period of two (2) years.

15. 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 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

13

 

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.

[Signatures of the Parties follow on the next page.]

14

 

     IN WITNESS WHEREOF, the Parties have executed this Operational Services Agreement on _____
___, 2011, to be effective as of the Commencement Date.

	 	 	 	 	 
	 	TESORO COMPANIES INC.

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 	TESORO REFINING AND MARKETING COMPANY

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 	TESORO ALASKA COMPANY

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 	TESORO LOGISTICS GP, LLC

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 	TESORO LOGISTICS OPERATIONS LLC

 	 
	 	By:  	 	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 	TESORO HIGH PLAINS PIPELINE COMPANY LLC

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

 

 

Schedule A

Mandan Rack, North Dakota

Unless otherwise noted below, TRMC will provide the following Services to TLO in accordance with
Section 2 of the Agreement:

	 	 	 	 	 
	Service	 	Amounts
	Communications
	 	 	 	 
	Electricity
	 	$	30,000	 
	Environmental Permitting and Maintenance
	 	 	 	 
	Facility Maintenance
	 	 	 	 
	Fire and Safety
	 	 	 	 
	Natural Gas
	 	 	 	 
	Water
	 	 	 	 
	Wastewater
	 	 	 	 
	Personnel Support – Operations, Supply & Trading, Marketing,
Security and Maintenance
	 	$	213,000	 

 

 

Schedule B

Anchorage Terminal, Alaska

Unless otherwise noted below, TRMC will provide the following Services to TLO in accordance with
Section 2 of the Agreement:

	 	 	 	 	 
	Service	 	 	 	 
	Communications
	 	 	 	 
	Electricity
	 	 	 	 
	Environmental Permitting and Maintenance
	 	 	 	 
	Facility Maintenance
	 	 	 	 
	Fire and Safety
	 	 	 	 
	Natural Gas
	 	 	 	 
	Water
	 	 	 	 
	Wastewater
	 	 	 	 

 

 

Schedule C

Salt Lake City Rack, Utah

Unless otherwise noted below, TRMC will provide the following Services to TLO in accordance with
Section 2 of the Agreement:

	 	 	 	 	 
	Service	 	 	 	 
	Communications
	 	 	 	 
	Electricity
	 	 	 	 
	Environmental Permitting and Maintenance
	 	 	 	 
	Facility Maintenance
	 	 	 	 
	Fire and Safety
	 	 	 	 
	Natural Gas
	 	 	 	 
	Plant Air
	 	 	 	 
	Steam
	 	 	 	 
	Water
	 	 	 	 
	Wastewater
	 	 	 	 

 

 

Schedule D

Salt Lake City Storage Facility, Utah

Unless otherwise noted below, TRMC will provide the following Services to TLO in accordance with
Section 2 of the Agreement:

	 	 	 	 	 
	Service	 	Amounts
	Communications
	 	 	 	 
	Electricity
	 	 	 	 
	Environmental Permitting and Maintenance
	 	 	 	 
	Facility Maintenance
	 	 	 	 
	Fire and Safety
	 	 	 	 
	Water
	 	 	 	 
	Wastewater
	 	 	 	 
	Personnel Support – Maintenance and Operations
	 	$	100,000	 

 

 

Schedule E

Vancouver Terminal, Washington

Unless otherwise noted below, TRMC will provide the following Services to TLO in accordance with
Section 2 of the Agreement:

	 	 	 	 	 
	Service	 	 	 	 
	Communications
	 	 	 	 
	Electricity
	 	 	 	 
	Environmental Permitting and Maintenance
	 	 	 	 
	Facility Maintenance
	 	 	 	 
	Fire and Safety
	 	 	 	 
	Water
	 	 	 	 
	Wastewater
	 	 	 	 

 

 

Schedule F

Boise Terminal, Idaho

Unless otherwise noted below, TRMC will provide the following Services to TLO in accordance with
Section 2 of the Agreement:

	 	 	 	 	 
	Service	 	 	 	 
	Communications
	 	 	 	 
	Electricity
	 	 	 	 
	Environmental Permitting and Maintenance
	 	 	 	 
	Facility Maintenance
	 	 	 	 
	Fire and Safety
	 	 	 	 
	Natural Gas
	 	 	 	 
	Water
	 	 	 	 
	Wastewater
	 	 	 	 

 

 

Schedule G

Burley Terminal, Idaho

Unless otherwise noted below, TRMC will provide the following Services to TLO in accordance with
Section 2 of the Agreement:

	 	 	 	 	 
	Service	 	 	 	 
	Communications
	 	 	 	 
	Electricity
	 	 	 	 
	Environmental Permitting and Maintenance
	 	 	 	 
	Facility Maintenance
	 	 	 	 
	Fire and Safety
	 	 	 	 
	Natural Gas
	 	 	 	 
	Water
	 	 	 	 
	Wastewater
	 	 	 	 

 

 

Schedule H

Stockton Terminal, California

Unless otherwise noted below, TRMC will provide the following Services to TLO in accordance with
Section 2 of the Agreement:

	 	 	 	 	 
	Service	 	 	 	 
	Communications
	 	 	 	 
	Electricity
	 	 	 	 
	Environmental Permitting and Maintenance
	 	 	 	 
	Facility Maintenance
	 	 	 	 
	Fire and Safety
	 	 	 	 
	Water
	 	 	 	 
	Wastewater
	 	 	 	 

 

 

Schedule I

Wilmington Terminal, California

Unless otherwise noted below, TRMC will provide the following Services to TLO in accordance with
Section 2 of the Agreement:

	 	 	 	 	 
	Service	 	 	 	 
	Communications
	 	 	 	 
	Electricity
	 	 	 	 
	Environmental Permitting and Maintenance
	 	 	 	 
	Facility Maintenance
	 	 	 	 
	Fire and Safety
	 	 	 	 
	Natural Gas
	 	 	 	 
	Water
	 	 	 	 
	Wastewater
	 	 	 	 

 

 

Schedule J

Salt Lake City Pipelines, Utah

Unless otherwise noted below, TRMC will provide the following Services to TLO in accordance with
Section 2 of the Agreement:

	 	 	 	 	 
	Service	 	 	 	 
	Communications
	 	 	 	 
	Electricity
	 	 	 	 
	Environmental Permitting and Maintenance
	 	 	 	 
	Facility Maintenance
	 	 	 	 
	Fire and Safety
	 	 	 	 
	Water
	 	 	 	 
	Wastewater
	 	 	 	 

 

 

Schedule K

High Plains Pipeline System, North Dakota and Montana

Unless otherwise noted below, TRMC will provide the following Services to TLO in accordance with
Section 2 of the Agreement:

	 	 	 	 	 
	Service	 	 	 	 
	Communications
	 	 	 	 
	Electricity
	 	 	 	 
	Environmental Permitting and Maintenance
	 	 	 	 
	Facility Maintenance
	 	 	 	 
	Fire and Safety
	 	 	 	 
	Water
	 	 	 	 
	Wastewaterexv10w6

Exhibit 10.6

FORM OF

TRANSPORTATION SERVICES AGREEMENT

(High Plains Pipeline System)

     This TRANSPORTATION SERVICES AGREEMENT (this “Agreement”) is dated as of ______ __,
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.

 

 

     “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.

- 2 -

 

     “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

- 3 -

 

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.

- 4 -

 

     “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.

- 5 -

 

     (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

- 6 -

 

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.

- 7 -

 

3. COMMENCEMENT DATE

The Parties anticipate that the “Commencement Date” will be _________ __, 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.

- 8 -

 

     (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 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

- 9 -

 

	 	(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

     (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).

- 10 -

 

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 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

- 11 -

 

     (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 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:

- 12 -

 

     (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,
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

- 13 -

 

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, 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.

- 14 -

 

     (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 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

- 15 -

 

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 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

- 16 -

 

     (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 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

Attn:

19100 Ridgewood Parkway

San Antonio, Texas 78259

Phone:

Facsimile:

e-mail:

If to THPP, to:

Tesoro High Plains Pipeline Company LLC

- 17 -

 

Attn:

19100 Ridgewood Parkway

San Antonio, Texas 78259

Phone:

Facsimile:

e-mail:

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

- 18 -

 

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.

     (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

- 19 -

 

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 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]

- 20 -

 

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

	 	 	 	 	 

	 	 	TESORO REFINING AND MARKETING COMPANY
	 
	 	 	 	 
	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TESORO HIGH PLAINS PIPELINE COMPANY LLC
	 
	 	 	 	 
	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 

Signature Page to

High Plains Pipeline

Transportation Services Agreement

 

 

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

 

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

 

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

 

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

 

	 	 	 	 	 
	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

 

	 	 	 	 	 
	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

 

	 	 	 	 	 
	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

 

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

 

 

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00187-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00187-of-00352.parquet"}]]