Document:

exv10w6

 

Exhibit 10.6

NATURAL GAS PURCHASE AGREEMENT

By and Between

TARGA GAS MARKETING LLC

(“Buyer”)

And

TARGA NORTH TEXAS LP

(“Seller”)

January 1, 2007

 

 

NATURAL GAS PURCHASE AGREEMENT

This Natural Gas Purchase Agreement is dated and effective as of January 1, 2007 by and between
TARGA GAS MARKETING LLC (“Buyer”) and TARGA NORTH TEXAS LP (“Seller”) (each a “Party,” and
together, the “Parties”), and sets forth the terms and conditions pursuant to which Seller will
sell to Buyer, and Buyer will purchase from Seller, certain Gas (as hereinafter defined) produced
at natural gas processing facilities owned and operated by Seller.

1. Definitions.

As used in this Agreement, the following terms shall have the following meaning:

“Affiliate” means any Person that directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the Person specified,
with the term “control” (including the terms “controlled by” or “under common control with”)
meaning 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, by contract, or otherwise. Any
Person shall be deemed to be an Affiliate of any specified Person if (i) such Person owns fifty
percent (50%) or more of the voting securities of the specified Person, if the specified Person
owns fifty percent (50%) or more of the voting securities of such Person, or if fifty percent (50%)
or more of the voting securities of the specified Person and such Person are under common control,
or (ii) such Person has operational control of the specified Person pursuant to an operating
agreement, management agreement or other contractual rights.

“Buyer’s Adjustments” means, for each Delivery Point, (i) all transportation costs incurred
by Buyer, including pipeline tariff charges, imbalance charges, cash-out charges and other similar
imbalance-related charges attributable to the Gas, (ii) all other costs and charges reasonably
incurred by Buyer in connection with its sale of Gas to its customers, and (iii) all cost and
charges reasonably incurred by Buyer in connection with its purchase and transportation of
Replacement Gas.

“Business Day” means any day except Saturday, Sunday or Federal Reserve Bank holidays.

“Claims” means any and all claims, liabilities, losses, damages, demands, penalties, fines,
causes of action, remediation expenses, suits, judgments, arbitration awards, court orders,
directives, injunctions, decrees or awards of any jurisdiction, and any costs and expenses related
to the same (including court costs, reasonable attorneys’ fees, and other reasonable expenses of
litigation)

“Confidential Information” means this Agreement and any other written data or information
(or an oral communication if the Party requesting confidentiality for such oral communication
promptly confirms such communication in writing) which is privileged, confidential or proprietary,
except information which (i) is a matter of public knowledge at the time of its disclosure or is
thereafter published in or otherwise ascertainable from any source available to the public without
breach of this Agreement, (ii) constitutes information which is obtained from a third party (who or
which is not an Affiliate of one of the Parties) other than by or as a result of unauthorized
disclosure, or (iii) prior to the time of disclosure had been independently developed by the
receiving Party or its Affiliates not utilizing improper means.

“Delivery Point” is defined in Section 6.1.

“Early Termination Date” is defined in Section 14.2(i).

“Gas” means any mixture of hydrocarbons and non-combustible gases as a gaseous state, and
includes Plant Gas and Replacement Gas, as applicable.

“Intercompany Gas” means Plant Gas sold by Seller to Buyer for sale and delivery to an
Affiliate of Buyer.

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“Intercompany Gas Price” means, with respect to each Delivery Point, (a) for Plant Gas that
is designated by Buyer as Intercompany Gas for delivery beginning on the first day of any Month,
the price per MMBtu, as reported in the first publication of Inside FERC’s Gas Market
Report for such Month for the geographic location closest to such Delivery Point, less Buyer’s
Adjustments, or (b) for Plant Gas that is designated by Buyer as Intercompany Gas for delivery at
any time after the first day of any Month, the price per MMBtu, equal to the “Daily Midpoint” price
as reported in the “Daily Price Survey” of Platts’ Gas Daily for the relevant day, less
Buyer’s Adjustments. Notwithstanding the foregoing, if there is no single price published for such
day, but there is published a range of prices, then the Intercompany Gas Price for such day will be
the average of the high and low prices in that range. If no price or range of prices is published
for such day, the Intercompany Gas Price will be the be the average of the following: (i) the price
(determined as stated above) for the first day for which a price or range of prices is published
that next precedes the relevant day; and (ii) the price (determined as stated above) for the first
day for which a price or range of prices is published that next follows the relevant day.

“MMBtu” means 1,000,000 British thermal units.

“Month” shall mean the period beginning at 7:00 AM Central Standard Time (as adjusted for
Central Daylight Time) on the first day of a calendar month and ending at 6:59 AM on the last day
of such calendar month.

“Nominated Quantity” means the quantity of Plant Gas nominated by Seller to be delivered at
the applicable Delivery Point during the applicable period.

“Person” means any individual, corporation, partnership, limited liability company,
association, joint venture, trust, or other organization of any nature or kind.

“Plant” or “Plants” means one or more natural gas processing plants that are now or
hereafter owned or operated by Seller, including but not limited to the plants identified on
Exhibit “A,” attached hereto and incorporated herein by reference.

“Plant Gas” means all residue gas owned or controlled by Seller that is produced from
and/or processed at the Plants and is not now or hereafter committed by Seller for sale to third
parties.

“Plant Gas Proceeds” means, for each Delivery Point, the aggregate proceeds received by
Buyer from its sales of Plant Gas delivered at such Delivery Point to Buyer’s customers, including
third parties and Affiliates of Buyer.

“Receiving Transporter” means the transporter receiving Gas at a Delivery Point.

“Replacement Gas” means, for each Delivery Point, gas purchased by Buyer from a party other
than Seller to replace any Plant Gas for sale to Buyer’s customers or Affiliates in the event that
the quantity of Plant Gas reasonably anticipated by Buyer to be available for delivery at such
Delivery Point during any period is less than the Nominated Quantity.

“Replacement Gas Acquisition Cost” means, for each Delivery Point, the sum of (i) actual
costs paid by Buyer for Replacement Gas attributable to such Delivery Point, and (ii) Buyer’s
Adjustments attributable to such Replacement Gas.

“Replacement Gas Adjustment” is defined in Section 5.

“Replacement Gas Proceeds” means, for each Delivery Point, the aggregate proceeds received
by Buyer from its sales of Replacement Gas attributable to such Delivery Point to Buyer’s
Affiliates and third parties, less Buyer’s Adjustments.

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“Taxes” means any or all ad valorem, property, occupation, severance, generation, first
use, conversion, Btu or Gas, transport, transmission, utility, gross receipts, privilege, sales,
use, consumption, excise, lease, transaction, and other taxes, governmental charges, regulatory
assessments by federal, state or local agencies or commissions (including, but not limited to, FERC
assessments), license fees, permits or assessments or increases therein, other than taxes based on
net income or net worth

“Termination Payment” is defined in Section 14.2(i).

“WASP Price” means, for each Delivery Point, a price per MMBtu for each Month equal to (i)
Plant Gas Proceeds for such Month, less Buyer’s Adjustments for such Month, divided by (ii) the
total number of MMBtus of Plant Gas delivered at such Delivery Point during such Month.

2. Term; Termination.

     2.1 This Agreement shall commence on January 1, 2007 and shall continue in full force and
effect for a term of fifteen (15) years (the “Initial Term”). At the expiration of the Initial
Term, this Agreement shall be automatically extended for consecutive sixty (60) Month terms, unless
either Party shall have given written notice of termination to the other Party least one hundred
twenty (120) days prior to the expiration of (i) the Initial Term, or (ii) the then-current five
(5) year extension, as applicable.

     2.2 In the event that either Party ceases to be an Affiliate of Targa Resources, Inc., then
either Party may, at its sole discretion, elect to terminate this Agreement upon one hundred twenty
(120) Days notice to the other Party.

3. Quantity.

Subject to the terms and conditions of this Agreement, for each Month during the Term, Seller
agrees to sell and deliver and Buyer agrees to purchase and receive all of Seller’s Plant Gas.

4. Price.

     4.1 The price per MMBtu for all Plant Gas delivered by Seller hereunder during each Month
(other than Intercompany Gas) shall be the applicable WASP Price for such Month.

     4.2 Except as otherwise agreed by the Parties from time to time pursuant to a written addendum
to this Agreement, the price for Intercompany Gas delivered by Seller hereunder during each Month
shall be the applicable Intercompany Gas Price for such Month.

5. Replacement Gas Adjustment.

The amount payable to Seller under this Agreement for any Month will be adjusted by an amount,
determined for each Delivery Point, obtained by subtracting (i) the Replacement Gas Proceeds from
(ii) the Replacement Gas Acquisition Cost (the “Replacement Gas Adjustment”). If the Replacement
Gas Adjustment is a positive number, the amount payable to Seller for such Month will be decreased
by such amount, and if the Replacement Gas Adjustment is a negative number, the amount payable to
Seller will be increased by such amount.

6. Delivery Point; Transfer of Title.

The delivery point (“Delivery Point”) for each Plant shall be a point at or near the tailgate of
such Plant.

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7. Transportation; Nominations.

     7.1 Seller shall have the sole responsibility for delivering the Gas to the Delivery Points.
Buyer shall have the sole responsibility for transporting the Gas from the Delivery Points.

     7.2 Seller will nominate the total quantity of Plant Gas (in MMBtu per day) to be delivered to
each Delivery Point for such Plant during any Month, giving sufficient time to meet the applicable
pipeline or gathering company’s nomination deadlines for such Month, and will also provide Buyer
with any other operational information which could have a significant effect on the quantity of
Plant Gas delivered from each Plant for the Month. Seller and Buyer will cooperate in communicating
throughout each Month regarding any changes in the quantity of Plant Gas to be delivered at each
Delivery Point. Should Seller become aware that actual deliveries at any Delivery Point on any day
will be more or less than the Nominated Quantity, Seller shall promptly notify Buyer.

8. Quality; Delivery Pressure.

All Gas delivered by Seller hereunder shall meet the pressure, quality and heat content
requirements of the Receiving Transporter. The unit of quantity measurement for purposes of this
Agreement shall be one MMBtu dry. Measurement of Gas quantities hereunder shall be in accordance
with the established procedures of the Receiving Transporter.

9. Taxes, Royalties and Other Charges.

Seller is liable for and shall pay, or cause to be paid, all Taxes applicable to the purchase or
sale of Gas at a particular Delivery Point arising prior to the Delivery Points. Seller will
release, indemnify, defend and save Buyer harmless from and against all Claims for such Taxes. In
the event Buyer is required to remit such Taxes, Seller shall reimburse Buyer for such amount.
Buyer is liable for and shall pay or cause to be paid all Taxes applicable to the purchase or sale
of Gas to a particular Delivery Point arising at or after the Delivery Points. Buyer shall
release, indemnify, defend and save Seller harmless from and against all Claims for such Taxes. In
the event Seller is required to remit such Taxes, Buyer shall reimburse Seller for such amount.

10. Billing and Payments.

     10.1 On or before the fifteenth (15th) day following each Month during the Term (and for the
first Month following the expiration or termination of this Agreement, Buyer shall deliver to
Seller a statement for the preceding Month showing the daily and total volume of Gas delivered to
each Delivery Point, the applicable price for such Gas, any Replacement Gas Adjustment, and any
other amounts and adjustments due hereunder, and the total amount due from Buyer to Seller. If the
actual volume delivered is not available by such billing date, Buyer shall use an estimated volume
based on nominations. The estimated volume will then be corrected to the actual volume on the
following Month’s billing or as soon thereafter as transport information is available.

     10.2 On or before the twenty-fifth (25th) day of each Month, Buyer will pay Seller
at the notice address set forth in Section 11, in immediately available funds, for Gas delivered
during the preceding Month. In the event that either Party discovers any underpayment or
overpayment, such Party shall promptly notify the other Party, and Seller or Buyer, as applicable
shall make a payment to the other Party in the amount of any undisputed overpayment or
underpayment, as applicable, no later than thirty (30) days after receipt of such notice. The
Parties agree that, notwithstanding the provisions of this Section 10, no retroactive adjustment
shall be made for any overpayment or underpayment more than twenty-four (24) months from the date
of the original payment to which such overpayment or underpayment relates.

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11. Notices.

Every notice, request, statement or bill provided for in this Agreement shall be in writing
directed to the Party to whom given, made or delivered at such Party’s address as set forth below
and as such address may be changed from time to time with written notice to the other Party.

Buyer: TARGA GAS MARKETING LLC

	 	 	 
	Notices and Correspondence:

	 	Invoices and Statements:
	 
	 	 
	Targa Gas Marketing LLC

	 	Targa Gas Marketing LLC
	1000 Louisiana, Suite 4300

	 	1000 Louisiana, Suite 4300
	Houston, TX 77002

	 	Houston, TX 77002
	Attn: Contract Administration

	 	Attn: Gas Marketing Accounting
	Phone: (713) 584-1000

	 	Phone: (713) 584-1000
	Fax: (713) 584-1503

	 	Fax: (713) 584-1100
	 
	 	 
	Operational Matters:

	 	Duns No.: 61-094-6290
	 
	 	 
	Targa Gas Marketing LLC

	 	Federal Tax ID: 20-1884884
	1000 Louisiana, Suite 4300
	 	 
	Houston, TX 77002
	 	 
	Attn: Manager, Gas Scheduling
	 	 
	Phone: (713) 584-1354
	 	 
	After Hours Number: (713) 584-1354
	 	 
	 
	 	 
	Seller: TARGA NORTH TEXAS LP
	 	 
	 
	 	 
	Notices and Correspondence:
	 	 
	 
	 	 
	Targa North Texas LP

	 	Duns No.: 00-947-4847
	1000 Louisiana, Suite 4300

	 	Federal Tax ID: 20-4036176
	Houston, TX 77002
	 	 
	Attn: Contract Administration

	 	Wire Transfer: JP Morgan Chase
	Phone: (713) 584-1000

	 	Account #5567890
	Fax: (713) 584-1503

	 	ABA #00071000013

12. Title, Warranty and Indemnity.

     12.1 Seller shall have title, custody and control of the Gas and shall assume liability and
risk of loss with respect to the Gas prior to the applicable Delivery Point. Buyer shall have
title, custody and control of the Gas and shall assume liability and risk of loss with respect to
the Gas at and after the applicable Delivery Point.

     12.2 Seller warrants that it will have the right to convey and will transfer good and
merchantable title to all Gas sold hereunder and delivered by Seller to Buyer, free and clear of
all liens, encumbrances, and claims. EXCEPT AS PROVIDED IN THIS SECTION 12.2 AND IN SECTION 15.7,
SELLER DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE.

     12.3 Seller shall release, indemnify, defend and hold harmless Buyer from and against all
Claims arising from or relating to the Gas prior to the Delivery Points. Buyer shall release,
indemnify, defend and hold harmless Seller from and against all Claims arising from and relating to
the Gas at and after the Delivery Points.

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     12.4 Notwithstanding the other provisions of this Article 12, as between Seller and Buyer,
Seller will be liable for, and shall release, indemnify, defend and hold harmless Buyer from and
against all Claims arising from or related to the failure of Gas delivered by Seller to meet the
quality requirements of Section 8.

     12.5 EXCEPT AS OTHERWISE PROVIDED HEREIN, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR
CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS
INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR AGREEMENT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE.
IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF
DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY
PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE.

13. Force Majeure.

     13.1 In the event that either Party is rendered unable, by reason of an event of force
majeure, to perform, wholly or in part, any obligation or commitment set forth in this Agreement,
then upon such Party’s giving notice and full particulars of such event of force majeure, this
Agreement shall be suspended, except for the payment of monies owed hereunder, to the extent and
for the period that such ability to perform is prevented by such force majeure condition. Initial
notice may be given orally; however, written notification with reasonably full particulars of the
event or occurrence is required as soon as reasonably possible.

     13.2 The term “force majeure” as employed in this Agreement shall mean acts of God,
strikes, lockouts or industrial disputes or disturbances, civil disturbances, failure or inability
to secure or maintain capacity for purposes of transportation of gas on any pipeline system, acts
of the public enemy, wars, riots, terrorism, blockades, insurrections, freezing of wells or
pipelines, or any other cause, whether of the kind herein enumerated or otherwise, not reasonably
within the control of the Party claiming force majeure.

14. Events of Default; Termination.

     14.1 It shall be an “Event of Default” if:

i. Either Party becomes insolvent, makes an assignment for the benefit of
creditors, or a receiver or trustee is appointed for the benefit of such Party’s
creditors, or a Party makes a filing for protection from creditors under any
bankruptcy or insolvency laws, or such filing is made against a Party;

ii. Buyer fails to make any payment when due and such nonpayment shall
have continued for ten (10) Days or more after notice of same from Seller; or

iii. Either Party fails to perform any of its material obligations
hereunder and such nonperformance shall have continued for thirty (30) Days or more
after notice of same from the other Party.

     14.2 If an Event of Default occurs and is continuing, the non-defaulting Party may, by written
notice to the defaulting Party, designate a day no earlier than the day such notice is effective as
an early termination date (“Early Termination Date”). On the Early Termination Date, all
obligations due on or after the Early Termination Date under the Agreement shall be terminated
except as provided herein. If an Early Termination Date has been designated, the non-defaulting
Party shall in good faith calculate the amount due between the parties as of the Early Termination
Date. The non-defaulting party shall notify the defaulting Party in writing of the amount due and
whether it is owed to or from the defaulting Party (the “Termination Payment”). The party owing
the Termination Payment shall pay it to the other party within

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two (2) Business Days after the effective date of such notice, with interest at the Base Rate
from the Early Termination Date until paid.

In addition, the defaulting Party hereunder shall reimburse the non-defaulting Party, on
demand, for actual, reasonable out-of-pocket expenses (with interest at the Base Rate), including,
without limitation, reasonable legal fees and expenses incurred by the other Party in connection
with the enforcement of the Agreement.

If an Early Termination Date is designated, the non-defaulting party shall be entitled, in its sole
discretion, to set-off any amount payable by the non-defaulting Party or any of its Affiliates to
the defaulting Party under the Agreement or otherwise, against any amounts payable by the
defaulting Party to the non-defaulting Party or any of its Affiliates under this Agreement or
otherwise. This provision shall be in addition to any right of setoff or other right and remedies
to which any party is otherwise entitled (whether by operation of law, contract or otherwise). If
an obligation is unascertained, the non-defaulting party may in good faith estimate that obligation
and set-off in respect of the estimate, subject to the non-defaulting party accounting to the
defaulting Party when the obligation is ascertained.

15. Miscellaneous.

     15.1 Each Party agrees that it shall not disclose Confidential Information whether acquired
before or after the Effective Date, to any third party other than each Party’s officers, directors,
employees, advisors or representatives who need to know and agree to maintain the confidentiality
of the Confidential Information (collectively, “Representatives”) during the Term and for a period
of not more than three (3) years after the end of the Term. Each Party shall be responsible for
any breach of this Agreement by its Representatives. Notwithstanding anything contained in this
Section 16.1, Confidential Information may be disclosed to any governmental, judicial or regulatory
authority requiring such Confidential Information, provided that: (i) such Confidential Information
is submitted under applicable provisions if any, for confidential treatment by such governmental,
judicial or regulatory authority; (ii) prior to such disclosure, the Party who supplied the
information is given notice of the disclosure requirement so that it may take whatever action it
deems appropriate, including intervention in any proceeding and the seeking of an injunction to
prohibit such disclosure; and (iii) the Party subject to the governmental, judicial or regulatory
authority endeavors to protect the confidentiality of any Confidential Information to the extent
reasonable under the circumstances and to use its good faith efforts to prevent the further
disclosure of any Confidential Information provided to any governmental, judicial or regulatory
authority.

     15.2 This Agreement shall be binding upon and inure to the benefit of the successors and
assigns of the respective Parties hereto, and the covenants, conditions, rights and obligations of
this Agreement shall run for the full term of this Agreement. No assignment of this Agreement, in
whole or in part, will be made without the prior written consent of the non-assigning Party, which
consent will not be unreasonably withheld or delayed; provided, either Party may (i) transfer,
sell, pledge, encumber, or assign this Agreement or the accounts, revenues, or proceeds hereof in
connection with any financing or other financial arrangements, or (ii) transfer its interest to any
parent or Affiliate by assignment, merger or otherwise without the prior approval of the other
Party. Upon any such assignment, transfer and assumption, the transferor shall remain principally
liable for and shall not be relieved of or discharged from any obligations hereunder.

     15.3 The invalidity of any one or more covenants or provisions of this Agreement shall not
affect the validity of any other provisions hereof or this Agreement as a whole, and in case of any
such invalidity, this Agreement shall be construed to the maximum extent possible as if such
invalid provision had not been included herein. No waiver of any breach of this Agreement shall be
held to be a waiver of any other or subsequent breach.

     15.4 This Agreement sets forth all understandings between the Parties respecting each
transaction subject hereto, and any prior Agreements, understandings and representations, whether
oral or written, relating to such transactions are merged into and superseded by this Agreement and
any

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effective transaction(s). This Agreement may be amended only by a writing executed by both
Parties. Each Party shall take such acts and execute and deliver such documents as may be
reasonably required to effectuate the purposes of this Agreement.

     15.5 The interpretation and performance of this Agreement shall be governed by the laws of the
State of Texas, excluding, however, any conflict of laws rule which would apply the law of another
jurisdiction. This Agreement and all provisions herein will be subject to all applicable and valid
statutes, rules, orders and regulations of any governmental authority having jurisdiction over the
Parties, their facilities, Gas supply, this Agreement or transaction or any provisions thereof.
The Parties shall comply with all applicable laws in the performance of their respective
obligations under this Agreement.

     15.6 Each Party to this Agreement represents and warrants that it has full and complete
authority to enter into and perform this Agreement. Each person who executes this Agreement on
behalf of either Party represents and warrants that it has full and complete authority to do so and
that such Party will be bound thereby.

     15.7 The provisions of Section 14.2 and Article 12, shall survive any expiration or
termination of this Agreement.

     15.8 Nothing in this Agreement shall entitle any person other than Seller or Buyer, or their
successors or assigns, to any claim, cause of action, remedy or right of any kind relating to the
transaction(s) contemplated by this Agreement.

     15.9 In construing this Agreement, the following principles shall be followed: (i) no
consideration shall be given to the fact or presumption that one Party had a greater or lesser hand
in drafting this Agreement; (ii) examples shall not be construed to limit, expressly or by
implication, the matter they illustrate; (iii) the word “includes” and its syntactical variants
mean “includes, but is not limited to” and corresponding syntactical variant expressions; (iv) the
plural shall be deemed to include the singular and vice versa, as applicable, and (v) unless the
context otherwise requires, any reference to a statutory provision (including those contained in
subordinate legislation) is a reference to the provision as amended or re-enacted, or as modified
by other statutory provisions from time to time, and includes subsequent legislation made under the
relevant statute.

	 	 	 	 	 	 	 
	“BUYER”	 	“SELLER”
	 
	 	 	 	 	 	 
	TARGA GAS MARKETING LLC	 	TARGA NORTH TEXAS LP
	 
	 	 	 	 	 	 
	 	 	 	 	By: Targa North Texas GP LLC
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Name

	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Title:

	 	 	 	Title:	 	 
	 

	 	 
	 	 	 	 

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EXHIBIT “A”

To Natural Gas Purchase Agreement

Dated January 1, 2007

Between Targa Gas Marketing, Buyer

and

Targa North Texas LP, Seller

Plants:

Chico Gas Processing Plant

Shackelford Gas Processing Plant

A - 1exv10w7

 

Exhibit 10.7

TARGA LIQUIDS MARKETING AND TRADE

PRODUCTS PURCHASE AGREEMENT

EFFECTIVE DATE:       January 1, 2007

			
	Seller:	 	Targa North Texas LP

1000 Louisiana, Suite 4300

Houston, TX 77002-5050

Fax No. (713) 584-1503

Attn: Contracts Administration

			
	Buyer:	 	Targa Liquids Marketing and Trade

1000 Louisiana, Suite 4300

Houston, TX 77002-5050

Fax No. (713) 584-1503

Attn: Contracts Administration

1. SALE AND PURCHASE

     Seller agrees to sell and deliver to Buyer, and Buyer agrees to purchase and receive from
Seller, the Products on the terms and conditions set forth in this Products Purchase Agreement (the
“Agreement”).

2. TERM

     This Agreement shall commence on the Effective Date and shall continue in full force and
effect for one hundred eighty (180) Months thereafter (the “Initial Term”). At the end of the
Initial Term, this Agreement shall automatically be extended for successive sixty (60) Month terms,
unless either Party shall have given the other Party no less than one hundred twenty (120) Days
written notice of its intent to terminate this Agreement prior to the end of (i) the Initial Term,
or (ii) the then-current sixty (60) Month extension term, as applicable (the Initial Term, as
extended by any sixty (60) Month extension terms, the “Term”).

3. TERMS OF SALE AND PURCHASE

     3.1. VOLUMES – COMMITMENT & DEDICATION

     Seller shall commit and dedicate, for sale to Buyer under this Agreement, all volumes of
Products owned or controlled by Seller, including such volumes as are produced at the Originating
Facility; provided, however, with respect to High Pressure Condensate, Seller shall have the right
to retain all or a portion of such Product for sale to third parties at its sole election.

     3.2. DELIVERY OF PRODUCTS

     Buyer may elect to receive Product from Seller as follows:

	 	(a)	 	Raw Product:

	 	(i)	 	At the tailgate of the Originating Facility
into a Raw Product Pipeline designated by Buyer.
	 
	 	(ii)	 	At the truck rack of the Originating Facility
onto tank trucks provided by Buyer.

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	 	(b)	 	High Pressure Condensate:

	 	(i)	 	At the tailgate of the Originating Facility
into a Raw Product Pipeline designated by Buyer.
	 
	 	(ii)	 	At the truck rack of the Originating Facility
onto tank trucks provided by Buyer.

	 	(c)	 	For Specification Products:

	 	(i)	 	At the truck rack of the Chico Plant onto tank
trucks provided by Buyer.
	 
	 	(ii)	 	At the tailgate of the Chico Plant into a Raw
Product Pipeline designated by Buyer.
	 
	 	(iii)	 	At the tailgate of the Chico Plant into a
crude oil or NGL Component Pipeline designated by Buyer.

     3.3. CHICO FRACTIONATION FEE

     In the event that Buyer elects to take delivery of Specification Products at the Chico Plant
by truck or by injection into a crude oil or NGL Component Pipeline, in addition to the Product
price described at Section 4.1(a), Buyer shall pay Seller the Chico Fractionation Fee or the
Adjusted Chico Fractionation Fee, as applicable. There shall be no fractionation fee paid to
Seller for Specification Products designated by Buyer to be re-injected into a Raw Product Pipeline
at the tailgate of the Chico Plant.

     3.4. SHIPMENT

     Buyer shall procure transportation for all Products from the applicable Originating Facility
to the applicable Destination.

     3.5. ODORIZATION

     Seller shall odorize all propane delivered by tank truck unless Buyer requests that specific
loads be delivered unodorized. Seller shall not odorize Products delivered via Pipelines or
Specification Products (other than propane) delivered by tank truck, unless Buyer requests that
specific loads to be delivered odorized. With respect to Products delivered unodorized hereunder,
Buyer certifies, pursuant to 49 C.F.R. Sec. 173.315(b)(1), that odorization of such Products will
be harmful in the use or further processing of such Products, and that odorization will serve no
useful purpose as a warning agent in such use or further processing. Buyer agrees to comply with
all legal requirements (including 49 C.F.R. Sec. 173.315(b)(1)) concerning odorization that are
applicable to Buyer’s further use or distribution of Products delivered by Buyer under this
Agreement and any Products derived therefrom by, or on behalf of, Buyer from and after the physical
receipt of same at the Originating Facility by Buyer or Buyer’s designees.

     Seller, its suppliers, and/or the personnel at the Originating Facility where the tank trucks
are to be loaded are hereby authorized to load tank trucks furnished or arranged by Buyer, or its
designees, with unodorized liquefied petroleum gas and/or natural gas liquids.

4. PRICE

     4.1. PRICE DETERMINATION

     Buyer shall pay to Seller for each Gallon of Product delivered under this Agreement a price
for each Gallon calculated as follows:

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	 	(a)	 	Chico Price: For Specification Products from the Chico
Plant that will not be further fractionated at Mont Belvieu, an amount equal
to:
	 
	 	 	 	Sale Price per Gallon of the applicable Products minus the sum of (i) the
Marketing Fee, (ii) the Transportation Costs, and (iii) the Chico
Fractionation Fee.
	 
	 	(b)	 	Mont Belvieu Price: For all other Products an amount
equal to:
	 
	 	 	 	OPIS Index Price for the applicable Products minus the sum of (i) the
Marketing Fee, (ii) the Transportation Costs, and (iii) the Mont Belvieu
Fractionation Fee.

     In the event that the Chico Price, as calculated above, is less than the Mont Belvieu Price,
then the Chico Price shall be recalculated as follows:

	 	 	Sale Price per Gallon of the applicable Products minus the sum of (i) the
Marketing Fee, (ii) the Transportation Costs, and (iii) the Adjusted Chico
Fractionation Fee.

     4.2. PRICE-RELATED DEFINITIONS

	 	(a)	 	“Adjusted Chico Fractionation Fee” means Chico Fractionation
Fee minus the difference between (i) the Mont Belvieu Price, and (ii) the Chico
Price, but in no event shall Chico Fractionation Fee be less than zero.
	 
	 	(b)	 	“Chico Fractionation Fee” means those costs, stated in cents
per Gallon, relating to the fractionation of the Products, which costs shall be
calculated as follows:
	 
	 	 	 	
	 
	 	(c)	 	“CPIU” means the latest available Consumer Price Index, All
Urban Consumers – (“CPI U” and/or the “CPI-U Index”), U.S. city average, All
Items (1982-84=100), as published by the United States Bureau of Labor
Statistics or any successor agency thereto (the “BLS”). The CPI-U shall be
taken from the data published by the BLS either electronically at the then
current BLS internet site or in the then current official BLS hardcopy version.
	 
	 	(d)	 	“Electricity” means the average cost of purchased electricity
(in ¢/KWH) at the Cedar Bayou Fractionators fractionation facility in Mont
Belvieu, Texas, for the calendar month that is two calendar months prior to the
Month of Product delivery.
	 
	 	(e)	 	“Gas Price” means the Houston Ship Channel Index published in
the first of the month edition of INSIDE FERC’s GAS MARKET REPORT, for one
MMBtu of natural gas for the Month of Product delivery for which the fee is
being calculated. Should such index be discontinued, the Parties shall
mutually agree upon a comparable successor index and/or publication.
	 
	 	(f)	 	“Marketing Fee” means the greater of (i) two and one-half
percent (2.5%) of the Sale Price or OPIS Index Price, as applicable, per Gallon
of the applicable Product or (ii) one cent ($0.01) per Gallon of the applicable
Product.

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	 	(g)	 	“Mont Belvieu Fractionation Fee” means those costs, stated in
cents per Gallon, relating to the fractionation of the Products, which costs
shall be calculated as follows:
	 
	 	 	 	
	 
	 	(h)	 	“OPIS Index Price” means the monthly average of the daily high
and low prices per Gallon, for the Month in which delivery occurs, as quoted by
the Oil Price Information Service (“OPIS”) in the OPIS LP-Gas Report for “Any
Current Month” volumes in the “Mont Belvieu Spot Gas Liquids Prices” table;
using (i) the Non-TET prices for the propane, isobutane, normal butane and
natural gasoline NGL Components; and (ii) the EP Mix price for the ethane NGL
Component.
	 
	 	(i)	 	“Transportation Costs” means all costs and expenses, stated in
cents per Gallon, reasonably incurred in connection with the transportation of
Products hereunder from the applicable Originating Facility to the applicable
destination, including pipeline costs; railcar costs; truck costs; Product
losses (other than as a result of Buyer’s gross negligence or willful
misconduct); demurrage, and loading, unloading, terminalling, handling and
storage charges. With regard to transportation provided in whole or in part by
third parties, “Transportation Costs” means the actual costs and expenses
incurred by Buyer in connection therewith. With regard to transportation
provided in whole or in part by Buyer or any Affiliate of Buyer,
“Transportation Costs” means the commercially reasonable costs and expenses
charged by Buyer or its Affiliate (excluding any general and administrative
costs and expenses). For all Specification Products transported by truck from
the Chico Plant, an additional loading fee of one and one-half cents ($0.015)
per Gallon shall be assessed. For Specification Products injected into any
crude oil or NGL Component Pipeline at the Chico Plant, an additional injection
fee of one and one-half cents ($0.015) per Gallon shall be assessed.

     4.3. ALTERNATIVE INDEX

     If for any reason the OPIS Index for a particular Product should (i) cease to be published or
(ii) be materially changed, the Parties agree promptly and in good faith to negotiate a mutually
satisfactory alternate index or substitute methodology for calculating the price for such Product
(the “Alternate Index”). If, on or before thirty (30) Days after the index used to determine the
price hereunder ceases to be published, the Parties are unable to agree on an Alternate Index upon
which to base the calculation of the price, the Parties shall submit such determination to
arbitration in accordance with the provisions of Article 20, which arbitration procedure will
determine the Alternate Index. From the date on which the index price used to determine the price
for a particular Product ceases to be available until the Alternate Index is determined, the price
for such Product shall be the average of the prices in effect hereunder (or that would have been in
effect hereunder) during the twelve (12) Months preceding the Month in which the index upon which
the price was based ceased to be available, which price shall be effective until the effective date
of the Alternate Index determined as set forth in this Section 4.3. Upon the determination of an
Alternate Index, the price will be adjusted retroactively to the date on which the index upon which
the price previously was based ceased to be available. Any payments hereunder that are delayed
pending the determination of an Alternate Index shall bear interest, at the Base Rate, from the
date that such payment would have been due without such delay until the date of payment.

4

 

5. REPRESENTATIONS AND WARRANTIES

     5.1. SELLER REPRESENTATIONS AND WARRANTIES

     Seller represents and warrants to Buyer that (i) Seller has Good And Marketable Title to the
Products delivered by it to Buyer hereunder and the right to sell and deliver same to Buyer, and
SELLER AGREES TO RELEASE, INDEMNIFY, DEFEND AND HOLD BUYER HARMLESS FROM AND AGAINST ANY CLAIMS
ARISING OUT OF OR RELATED TO ANY FAILURE OF SUCH TITLE OR BREACH OF THIS WARRANTY; and (ii) Seller
shall deliver all Products sold to Buyer hereunder in compliance with all Applicable Laws.

     5.2. BUYER REPRESENTATION AND WARRANTY

     Buyer represents and warrants to Seller that Buyer shall receive all Products sold by Seller
hereunder in compliance with all Applicable Laws.

     5.3. BUYER ACKNOWLEDGMENT

     Buyer acknowledges that the Product delivered hereunder is hazardous and that Buyer is
knowledgeable of (i) the hazards and risks associated with such Product, and (ii) the handling,
receipt, transportation, storage and use of such Product.

6. WAIVER OF CONSUMER RIGHTS

     Each of Buyer and Seller hereby waives its respective rights, if any, under the Texas
Deceptive Trade Practices-Consumer Protection Act, Sections 17.41 et seq., except for Section
17.555 Texas Business & Commerce Code, a law that gives consumers special rights and protections.
After consultation with an attorney of its own selection, Buyer and Seller voluntarily consent to
this waiver.

7. DELIVERY

     Delivery shall be deemed to have been completed when the Product has been delivered to the
Measurement Points. As between the Parties, Seller shall be deemed to be in exclusive possession
and control (and responsible for any damages or injury resulting therefrom or caused thereby) of
the Product prior to and at the Measurement Points and Buyer shall be deemed to be in exclusive
control (and responsible for any damages or injury resulting therefrom or caused thereby) of the
Product from the Measurement Points. The “Measurements Points” are defined as follows:

	 	(a)	 	In the case of deliveries by tank truck: when the Product has
passed the Seller’s loading equipment for open hatch deliveries and when the
Product enters the tank truck’s loading equipment for all other deliveries.
	 
	 	(b)	 	In the case of deliveries by Pipeline: when the Product has
passed the downstream flange of the meter measuring the Product for delivery
into the Pipeline at the Originating Facility.

8. PASSAGE OF TITLE

     Title to, and risk of loss for, the Products shall pass from Seller to Buyer at the applicable
Measurement Points. Notwithstanding the foregoing, title to, and risk of loss associated with, any
Offspec Product shall remain with Seller.

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9. MEASUREMENT & ANALYSIS

     9.1. MEASUREMENT

     All Products under this Agreement shall be measured as follows:

	 	(a)	 	On all deliveries into/out of transport and tank truck
equipment, quantities shall be determined (in the following order of preference
and based on equipment available at the Delivery Point) by: (i) weighing, (ii)
meter with no vapor return or (iii) slip tube, magnetic gauging or rotary
gauging device and applicable tank capacity tables.
	 
	 	(b)	 	On all deliveries into/out of pipelines, quantity shall be
determined by turbine or positive displacement pipeline meter in accordance
with API Manual of Petroleum Measurement Standards.
	 
	 	(c)	 	Metering systems used for quantity determinations shall not
allow vapor return or shall compensate for any vapor return.
	 
	 	(d)	 	All quantities shall be corrected to 60 degrees Fahrenheit and
equilibrium vapor pressure of the applicable Product at 60 degrees Fahrenheit.
	 
	 	(e)	 	Volume and compressibility correction factors shall be
determined from referenced API tables or computer programs used to generate
these tables.

     9.2. PRODUCT SAMPLING & ANALYSIS

	 	(a)	 	Buyer will obtain a sample or samples of the applicable Product
from an appropriate location at the Originating Facility, the tank truck, or
pipeline, as applicable, and/or the loading/unloading facilities connected to
the applicable means of transport; at an appropriate time or times and on a
frequency established by Buyer; with the exact sampling locations, times and
frequencies to be determined by Buyer, in its sole discretion, in order to
obtain representative samples of the Raw Product, High Pressure Condensate and
the Mixed Butanes Specification Product being delivered by Seller under this
Agreement.
	 
	 	(b)	 	Representative samples of the Raw Product, High Pressure
Condensate and the Mixed Butanes Specifications Product shall be analyzed by
Buyer.
	 
	 	(c)	 	Other provisions and standards referenced herein
notwithstanding, the volume of the natural gasoline NGL Component contained in
the Raw Product and High Pressure Condensate shall be calculated using the
component densities of the pentanes and the hexanes plus (C6+).
	 
	 	(d)	 	Buyer reserves the right, but shall not have the obligation, to
similarly obtain samples for other Products being purchased hereunder and to
analyze same to confirm compliance with the Specifications applicable to that
Product.

     9.3. STANDARDS

     Measurement, sampling and analysis, pursuant to the above provisions, shall be conducted in
accordance with the GPA Standards applicable to the methodology used; including GPA Standards 8182,
8173, 2177 and all other appropriate GPA, API and ASTM standards, with all such standards being
incorporated herein for all purposes, including all revisions of those standards adopted and in
effect during the term of this Agreement.

6

 

10. CLAIMS

     All claims by Buyer for deficiencies in Product quantity or quality shall be made to Seller
within one hundred eighty (180) days of delivery of the applicable Product. All notices regarding
Product deficiencies shall be made in accordance with Article 19. Failure by Buyer to timely
notify Seller of any deficiency shall be deemed a waiver by Buyer of any claims with regard to such
Product deficiencies.

11. QUALITY

     All Products delivered to Buyer under this Agreement shall meet the applicable Specifications
and shall not contain any contaminants that may make it or its components commercially
unacceptable. In addition, any Product transported via any Pipeline shall meet the specifications
governing the applicable Pipeline receipt point. Seller may be required, on Buyer’s behalf as
shipper, to furnish any Pipeline on which Products are transported, with a certificate setting
forth the specifications of each shipment of Product to be transported on such Pipeline. Seller
acknowledges that any such Pipeline shall have the right to: (i) refuse to accept any Product for
transportation which do not meet such Pipeline’s specifications or which are not of good and
merchantable quality suitable for transportation through Pipeline’s existing facilities and (ii)
sample and/or test any shipment of Product prior to acceptance or during receipt of same, and in
the event of variance between Seller’s certificate and Pipeline’s test, the latter shall prevail.

12. OFFSPEC PRODUCTS

     In the event any of Seller’s Products are contaminated or otherwise fail to conform to the
Specifications (“Offspec Product”), either Party may notify the other Party of any such failure,
and Seller immediately shall undertake and diligently pursue such acts as may be necessary to
correct such failure so as to deliver Product conforming to the applicable Specifications. Buyer
shall have the right, at any time and from time to time, to reject any Product not conforming to
such Specifications and to refuse or suspend receipt until it is established to Buyer’s reasonable
satisfaction that subsequent deliveries of Product will conform to the applicable Specifications,
and nothing contained in this Article 12 or the Agreement is intended or shall be construed to
limit such right. If it is subsequently determined that Buyer unknowingly accepted Offspec
Product, the Parties will mutually agree upon a discounted price for such Offspec Product to
reflect (i) its diminution in value, if any, from Product meeting the applicable Specifications or
(ii) the cost incurred by Buyer in handling such Offspec Product. SELLER AGREES TO RELEASE,
INDEMNIFY, DEFEND AND HOLD HARMLESS BUYER, ITS AFFILIATES, AND ITS AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS AND CONTRACTORS FROM AND AGAINST ANY CLAIMS ARISING OUT OF, OR RELATED
TO, THE DELIVERY OF OFFSPEC PRODUCT TO BUYER WHICH ARE UNKNOWINGLY ACCEPTED BY BUYER.

13. INSPECTIONS

     Each Party shall be entitled to have its representatives present during all loadings,
unloadings, tests and measurements involving delivery of Product under this Agreement. Either
Party may engage certified independent inspectors to perform gauging, sampling, and testing up to
four (4) times during each twelve (12) Month period during the Term, in which event such
inspector’s determinations shall be conclusive and binding on the Parties. Payments for such
outside inspector’s services will be shared equally among the Parties unless some other arrangement
for payment is mutually agreed upon.

14. NOMINATIONS

     14.1. NOMINATIONS FOR RAW PRODUCTS AND HIGH PRESSURE CONDENSATE

     No later than the third Business Day prior to the end of a calendar month, Buyer will notify
Seller of its requested fractionating and processing schedule and means of taking delivery for Raw
Products and High Pressure Condensate at each Originating Facility for the succeeding Month. In
the event from

7

 

time-to-time during a Month Buyer desires to make a change to such nomination, then Buyer
shall give Seller notice of such change at least one Business Day prior to the day on which the
requested change is to become effective.

     14.2. NOMINATIONS TO THE CHICO PLANT FOR SPECIFICATION PRODUCTS

     No later than the first Business Day of each calendar quarter during the Term: (i) Buyer shall
provide to Seller an estimate of the volume of Specification Products that Buyer will designate for
delivery at the Chico Plant during such calendar quarter, and (ii) Seller shall provide to Buyer a
schedule of any planned maintenance and shall notify Buyer of other operational constraints then
known to Seller which might reduce Seller’s fractionation capacity during such calendar quarter.

     No later than the last Business Day of each week during the Term, Buyer shall provide Seller
with a nomination of the volume of Specification Products to be delivered by Seller to Buyer at the
Chico Plant the following week. Such weekly nomination shall designate the volume of each
Specification Product to be delivered to Buyer at the tailgate of the Chico Plant (i) by truck,
(ii) by re-injection into a Raw Product Pipeline, and (iii) by injection into a crude oil or NGL
Component Pipeline. After the nomination has been provided, Seller and Buyer shall cooperate in
communicating throughout each week regarding any changes effecting such nomination, including as a
result of operational constraints. Seller shall use commercially reasonable efforts to accommodate
any requests of Buyer to (i) change the volumes of Specification Products to be delivered, and (ii)
change the means by which Buyer elects to take delivery of such Specification Products.

15. DEFAULT; TERMINATION

     15.1. EVENTS OF DEFAULT

     It shall be an “Event of Default” if:

	 	(a)	 	Either Party becomes insolvent, makes an assignment for the
benefit of creditors, or a receiver or trustee is appointed for the benefit of
such Party’s creditors, or a Party makes a filing for protection from creditors
under any bankruptcy or insolvency laws, or such filing is made against a
Party;
	 
	 	(b)	 	Buyer fails to make any payment when due and such nonpayment
shall have continued for ten (10) Days or more after notice of same from
Seller;
	 
	 	(c)	 	Either Party fails to perform any of its material obligations
hereunder and such nonperformance shall have continued for thirty (30) Days or
more after notice of same from the other Party.

     15.2. TERMINATION FOR DEFAULT

	 	(a)	 	If an Event of Default occurs and is continuing, the
non-defaulting Party may, by written notice to the defaulting Party, designate
a day no earlier than the day such notice is effective as an early termination
date (“Early Termination Date”). On the Early Termination Date, all
obligations due on or after the Early Termination Date under the Agreement
shall be terminated except as provided herein. If an Early Termination Date
has been designated, the non-defaulting Party shall in good faith calculate the
amount due between the parties as of the Early Termination Date. The
non-defaulting party shall notify the defaulting Party in writing of the amount
due and whether it is owed to or from the defaulting Party (the “Termination
Payment”). The party owing the Termination Payment shall pay it to the other
party within two (2) Business Days after the effective date of

8

 

	 	 	 	such notice, with interest at the Base Rate from the Early Termination Date
until paid.
	 
	 	(b)	 	In addition, the defaulting Party hereunder shall reimburse the
non-defaulting Party, on demand, for actual, reasonable out-of-pocket expenses
(with interest at the Base Rate), including, without limitation, reasonable
legal fees and expenses incurred by the other Party in connection with the
enforcement of the Agreement.
	 
	 	(c)	 	If an Early Termination Date is designated, the non-defaulting
party shall be entitled, in its sole discretion, to set-off any amount payable
by the non-defaulting Party or any of its Affiliates to the defaulting Party
under the Agreement or otherwise, against any amounts payable by the defaulting
Party to the non-defaulting Party or any of its Affiliates under this Agreement
or otherwise. This provision shall be in addition to any right of setoff or
other right and remedies to which any party is otherwise entitled (whether by
operation of law, contract or otherwise). If an obligation is unascertained,
the non-defaulting party may in good faith estimate that obligation and set-off
in respect of the estimate, subject to the non-defaulting party accounting to
the defaulting Party when the obligation is ascertained.

     15.3. OTHER TERMINATION RIGHTS

     In the event that either Party ceases to be an Affiliate of Targa Resources, Inc., then either
Party may, at its sole discretion, elect to terminate this Agreement upon no less than one hundred
twenty (120) Days written notice to the other Party.

16. FORCE MAJEURE

     16.1. SUSPENSION

     In the event of either Party being rendered unable, wholly or in part, by reason of force
majeure to carry out its obligations under this Agreement, other than to make payments due
hereunder, the obligations of the Party suffering force majeure shall be suspended to the extent
affected by and for the period of such force majeure condition. Such Party suffering force majeure
shall give notice and full particulars of such force majeure in writing or by facsimile to the
other Party as soon as possible after the occurrence of the cause. Such cause shall as far as
possible be remedied with all reasonable dispatch.

     16.2. DEFINITION

     The term “force majeure” as employed herein shall mean acts of God, strikes, lockouts or other
industrial disputes or disturbances, acts of the public enemy, wars, blockades, insurrections,
riots, epidemics, landslides, lightning, earthquakes, fires, tornadoes, hurricanes or storms, and
warnings for any of the foregoing which may necessitate the precautionary shut-down of wells,
plants, gathering systems or other related facilities, floods, washouts, arrests and restraints of
governments and people, civil disturbances, explosions, sabotage, breakage or accidents to
equipment, machinery, plants, or lines of pipe, the making of repairs or alterations to lines of
pipe or plants, inability to secure labor or materials, freezing of wells or lines of pipe, partial
or entire failure of the Originating Facility or the facilities used to accept delivery of Product
and/or measure the same, electric power shortages, necessity for compliance with Applicable Laws,
inclement weather that necessitates extraordinary measures and expense to construct facilities
and/or maintain operations and any other causes, whether of the kind enumerated herein or
otherwise, not within the control of the Party claiming suspension and which by the exercise of
reasonable diligence such Party is unable to prevent or overcome. Such term shall likewise
include, in those instances where either Party hereto is required to obtain permits or licenses
from any governmental agency to enable such Party to fulfill its obligations hereunder, the
inability of such Party to acquire, or delays on the part of such Party in acquiring, such permits
or licenses. The term “force majeure” shall

9

 

also include any event of force majeure occurring with respect to the facilities or services
of either Party’s suppliers or customers delivering or receiving any Product, fuel, feedstock, or
other substance necessary to the performance of such Party’s obligations, and shall also include
curtailment or interruption of deliveries or services by such third party suppliers or customers as
a result of an event of force majeure.

     16.3. LABOR DISPUTES

     It is understood and agreed that the settlement of strikes or lockouts shall be entirely
within the discretion of the Party having the difficulty, and that the above requirements that any
force majeure shall be remedied with all reasonable dispatch shall not require the settlement of
strikes or lockouts by acceding to the demands of an opposing party when such course is inadvisable
in the sole discretion of the Party having difficulty.

     16.4. MAINTENANCE

     Either Party and/or its designee may briefly interrupt its performance hereunder for the
purpose of making necessary or desirable inspections, alterations and repairs; and the Party
requiring such relief shall give to the other Party reasonable notice of its intention to suspend
its performance hereunder, except in cases of emergency where such notice is impracticable, in
cases where the operations of the other Party will not be affected, or as to Buyer’s performance,
in cases where the Product is being delivered to a terminal or a fractionation facility operated by
a third party and the operator of such plant fails to give Buyer notice of such plant maintenance.
The Party requiring such relief shall endeavor to arrange such interruptions so as to inconvenience
the other Party as little as possible.

17. INDEMNITIES

     SELLER SHALL INDEMNIFY, RELEASE, DEFEND AND HOLD HARMLESS BUYER AND ITS AFFILIATES, AND ITS
AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS FROM AND AGAINST ANY CLAIMS ARISING
OUT OF OR IN ANY WAY RELATING TO SELLER’S OWNERSHIP, POSSESSION OR CONTROL OF THE PRODUCT UP TO THE
MEASUREMENT POINTS, AND BUYER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS SELLER AND ITS AFFILIATES,
AND ITS AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS FROM AND AGAINST ANY CLAIMS
ARISING OUT OF OR IN ANY WAY RELATING TO BUYER’S OWNERSHIP, POSSESSION OR CONTROL OF THE PRODUCT AT
AND AFTER THE MEASUREMENT POINTS.

18. ASSIGNMENT

     Should the rights of Seller giving rise to its ownership and/or control of the Product
dedicated hereunder be assigned during the term of this Agreement (such as sale of any interest in
an Originating Facility wherein Seller’s ownership and control of Product therefrom arises from
Seller’s ownership interest in the Originating Facility), Seller shall make any such a transfer
expressly subject to the terms and conditions of this Agreement and shall (i) require its successor
in interest to expressly assume and agree to perform Seller’s obligations under this Agreement and
to the extent of such assignment or transfer should Seller transfer less than all of its such
rights. Nothing herein shall be construed to release Seller from its obligations hereunder This
Agreement may be assigned by either Party to any of its Affiliates or any Party that is the
transferee or successor to all or substantially all of the assets of the assigning Party without
the prior written consent of the other Party; provided that the assignee shall expressly agree to
assume and perform all of the assigning Party’s obligations hereunder. Any other assignment of
this Agreement shall require the prior written consent of the non-assigning Party, which consent
shall not be unreasonably withheld or delayed. Any assignment in violation of this Section 18
shall be void ab initio.

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19. NOTICE

     Any notice, claim, demand or other correspondence hereunder shall be in writing and shall be
delivered personally by courier or overnight delivery service, by certified mail, return receipt
requested, or by fax (promptly followed by a copy sent by mail or personal delivery), to the
Party’s address set forth in this Agreement, unless changed by notice. Such notice, claim, demand
or correspondence shall be deemed to have been given on the date of the actual delivery thereof to
the Party receiving such notice, or, if receipt is refused or rejected, upon attempted delivery.

20. DISPUTE RESOLUTION

     20.1. INITIAL NOTICE

     Either Party may initiate dispute resolution procedures by sending written notice (the
“Initial Notice”) to the other Party specifically stating the complaining Party’s claim and
requesting dispute resolution in accordance with this Article 20. The Parties shall attempt in
good faith to resolve any dispute arising out of or relating to this Agreement promptly by
negotiation between executives who have authority to settle the controversy and who are at a higher
level of management than the persons with direct responsibility for administration of this
contract. Within ten (10) Business Days after delivery of the Initial Notice, the receiving Party
shall submit to the other a written response. The Initial Notice and response shall include (a) a
statement of that Party’s position and a summary of arguments supporting that position, and (b) the
name and title of the executive who will represent that Party and of any other person who will
accompany the executive. Within twenty-five (25) Business Days after delivery of the Initial
Notice, the executives of both Parties shall meet at a mutually acceptable time and place, and
thereafter as often as they reasonably deem necessary, to attempt to resolve the dispute. All
negotiations pursuant to this clause are confidential and shall be treated as compromise and
settlement negotiations for purposes of applicable rules of evidence.

     20.2. PROCEEDINGS

     Any dispute arising out of or relating to this Agreement, including the breach, termination or
validity thereof, which has not been resolved by negotiation between executives herein within
forty-five (45) Business Days after delivery of the Initial Notice, shall be finally resolved by
arbitration in accordance with the CPR Rules for Non-Administered Arbitration then currently in
effect by three arbitrators appointed by CPR under the terms of CPR Rule 6; provided, however, that
if one Party fails to participate in negotiation as agreed herein, the other Party can commence
arbitration prior to the expiration of the time periods set forth above. The arbitration shall
commence upon the receipt of a notice of arbitration by either Party. The arbitration shall be
governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. and the Texas Arbitration Act, TEX.
CIV. PRAC. & REM. CODE §§ 171.000 et seq., to the extent applicable and not in conflict with the
Federal Arbitration Act. The arbitrators shall render a reasoned award, and judgment upon the
award may be entered by any court having jurisdiction thereof. The place of the arbitration shall
be Houston, Texas. Unless the Parties to this Agreement agree in writing otherwise, the
arbitrators shall not have the power to award, nor shall they award, any punitive or consequential
damages (however nominated); however, the arbitrators may award specific performance where
appropriate. Each Party shall pay its own attorneys fees and costs, and each Party shall pay
one-half of the arbitrators’ fees and costs, no matter which side prevails. Except as required by
law or necessary to confirm or enforce an award, all proceedings hereunder shall remain
confidential.

     20.3. PRELIMINARY INJUNCTIONS; PERFORMANCE PENDING RESOLUTION

     Notwithstanding the foregoing, either Party may request preliminary injunctive and/or
equitable relief from a court of competent jurisdiction at any time before an arbitrator has been
selected in order to protect the rights or property of such Party pending the resolution of the
dispute as provided hereunder. Despite such action the Parties will continue to participate in the
procedures specified in this Agreement. Each Party is required to continue to perform its
obligations under this Agreement pending final resolution

11

 

of any dispute arising out of or relating to the Agreement, unless to do so would be
impossible or impracticable under the circumstances.

21. STATEMENTS, AUDIT

     On or before the tenth (10th) Business Day of the Month following the Month of delivery, Buyer
shall deliver to Seller a statement showing for the Month of delivery the amount and type of
Product delivered for sale hereunder, and the applicable Product price(s). Payment shall be made
by Buyer in accordance with such statement as set forth in Section 3.5. Buyer may net against
payments owed to Seller under this Agreement any outstanding payments owed by Seller to Buyer under
this Agreement. If Seller in good faith disputes all or part of any statement or payment, then
Seller shall provide Buyer with a written notice and explanation of the basis for the dispute, but
shall have no right to suspend performance under this Agreement.

     Subject to the limitations set forth in the following paragraph, if an error is discovered in
any statement or payment, then the Party entitled to receive such payment shall be paid by the
other Party within 10 days after issuance of a corrected invoice, together with interest at the
Base Rate.

     For a period of twenty-four (24) Months from the date of any statement or invoice, each Party
and its duly authorized representatives shall have access to the accounting records and other
documents maintained by the other Party which relate to the Product being delivered under this
Agreement and any other matters covered by this Agreement and shall have the right to audit such
records and other documents once a year in the offices of the Party to be audited at any reasonable
time or times upon at least fifteen (15) Days prior written notice Neither Party shall make any
claim on the other for any adjustment twenty (24) Months after the date of any statement or
invoice.

22. TAXES

     Seller shall be responsible for any royalties, overriding royalties, and other payments due or
to become due on the hydrocarbons which are subject to this Agreement. Seller shall be liable for
and shall pay, or cause to be paid, or reimburse Buyer if Buyer has paid, all taxes applicable to
the sale of Product by Seller to Buyer hereunder. SELLER SHALL RELEASE, INDEMNIFY, DEFEND AND HOLD
BUYER, ITS DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS
ARISING OUT OF OR RELATING TO THE PAYMENT OF ANY TAXES, ROYALTIES, OVERRIDING ROYALTIES AND OTHER
PAYMENTS DUE OR TO BECOME DUE ON THE PRODUCTS AND WHICH SELLER IS OBLIGATED TO PAY UNDER THIS
AGREEMENT.

23. LIMITATION OF LIABILITY

     Neither Party shall be liable to the other Party for any indirect, incidental, punitive,
exemplary, consequential or special damages save and except only to the extent such damages are
imposed on a Party entitled to indemnity under the terms of this Agreement in favor of an
unaffiliated third party and such damages arise from an underlying claim, liability or damages
against which such Party entitled to indemnity is indemnified by a Party to this Agreement.

24. CONFLICTS OF INTEREST

     No director, employee or agent of either Party shall give or receive any commission, fee,
rebate, gift or entertainment of significant cost or value in connection with this Agreement. Any
representative(s) authorized by either Party may, at its sole expense, audit the applicable records
of the other Party solely for the purpose of determining whether there has been compliance with
this Article 24.

12

 

25. CONDUCT OF PARTIES’ BUSINESS

     Each Party in the performance of this Agreement is engaged in an independent business and
nothing herein contained shall be construed as giving either Party any right to control the other
Party in any way in the performance of the other Party’s business. Neither Party shall have any
right to exercise control over any of the other Party’s employees, representatives, agents or
contractors of any level except to the extent of any safety requirements for delivery of Product
under this Agreement. All employees, representatives, agents or contractors of any level of a
Party shall be entirely under the control and direction of that Party, which shall be entirely
responsible for their actions and omissions.

26. GOVERNING LAW

     THIS AGREEMENT SHALL BE SUBJECT TO THE JURISDICTION OF, GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, INCLUDING THE UNIFORM COMMERCIAL CODE EXCEPT AS
OTHERWISE SPECIFIED HEREIN, WITHOUT REGARD TO ANY CONFLICT OF LAWS RULES THAT MAY DIRECT THE
APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.

27. CONFIDENTIALITY

     Each Party agrees that it shall not disclose Confidential Information whether acquired before
or after the Effective Date, to any third party other than each Party’s officers, directors,
employees, advisors or representatives who need to know and agree to maintain the confidentiality
of the Confidential Information (collectively, “Representatives”) during the Term and for a period
of not more than three (3) years after the end of the Term. Each Party shall be responsible for
any breach of this Agreement by its Representatives.

     Notwithstanding anything contained in this Article 27, Confidential Information may be
disclosed to any governmental, judicial or regulatory authority requiring such Confidential
Information, provided that: (i) such Confidential Information is submitted under applicable
provisions if any, for confidential treatment by such governmental, judicial or regulatory
authority; (ii) prior to such disclosure, the Party who supplied the information is given notice of
the disclosure requirement so that it may take whatever action it deems appropriate, including
intervention in any proceeding and the seeking of an injunction to prohibit such disclosure; and
(iii) the Party subject to the governmental, judicial or regulatory authority endeavors to protect
the confidentiality of any Confidential Information to the extent reasonable under the
circumstances and to use its good faith efforts to prevent the further disclosure of any
Confidential Information provided to any governmental, judicial or regulatory authority.

28. SEVERABILITY

     The invalidity of any one or more covenants or provisions of this Agreement shall not affect
the validity of any other provisions hereof or this Agreement as a whole, and in case of any such
invalidity, this Agreement shall be construed to the maximum extent possible as if such invalid
provision had not been included herein.

29. NO THIRD PARTY BENEFICIARY

     Nothing in this Agreement shall entitle any Person other than Seller or Buyer, or their
successors or assigns, to any claim, cause of action, remedy or right of any kind relating to the
transaction(s) contemplated by this Agreement.

13

 

30. WAIVER

     Waiver by either Party of the breach of any provision(s) hereof by the other Party shall not
be deemed to be a waiver of the breach of any other provision(s) hereof or of any subsequent or
continuing breach of such provision(s).

31. ENTIRE AGREEMENT – ALTERATIONS OR AMENDMENTS

     This Agreement contains the entire agreement of the Parties respecting the matters addressed
herein and no oral promises, agreements or warranties shall be deemed a part hereof, nor shall any
alteration or amendment of this Agreement, or waiver of any of its provisions, be binding upon
either Party hereto unless the same be in writing and signed by both Parties.

32. COMPLIANCE WITH LAWS

     The Parties shall comply with all Applicable Laws in the performance of their respective
obligations under this Agreement.

33. HEADINGS

     The headings of the Articles, Sections and Paragraphs of this Agreement are for convenience of
reference only and shall not constitute a part, nor modify, define or limit any of the terms or
provisions, hereof.

34. SURVIVAL

     The provisions of Articles 15, 15, 20, 23, 26 and 27 shall survive any expiration or
termination of this Agreement.

35. FURTHER ASSURANCES

     Each Party shall take such acts and execute and deliver such documents as may be reasonably
required to effectuate the purposes of this Agreement.

36. RULES OF CONSTRUCTION

     In construing this Agreement, the following principles shall be followed:

	 	(a)	 	No consideration shall be given to the fact or presumption that
one Party had a greater or lesser hand in drafting this Agreement.
	 
	 	(b)	 	Examples shall not be construed to limit, expressly or by
implication, the matter they illustrate.
	 
	 	(c)	 	The word “includes” and its syntactical variants mean
“includes, but is not limited to” and corresponding syntactical variant
expressions.
	 
	 	(d)	 	The plural shall be deemed to include the singular and vice
versa, as applicable.
	 
	 	(e)	 	Unless the context otherwise requires, any reference to a
statutory provision (including those contained in subordinate legislation) is a
reference to the provision as amended or re-enacted, or as modified by other
statutory provisions from time to time, and includes subsequent legislation
made under the relevant statute.

14

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Accepted and Agreed to:	 	 	 	Accepted and Agreed to:
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Targa North Texas LP	 	 	 	Targa Liquids Marketing and Trade
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Name:	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Title:	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 

15

 

EXHIBIT A

DEFINITIONS

In addition to any terms defined in the Products Purchase Agreement to which this Exhibit A is
affixed, as used herein, the following terms shall be given the following meanings:

“Affiliate” means any Person that directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Person specified, with the term
“control” (including the terms “controlled by” or “under common control with”) meaning 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, by contract, or otherwise. Any Person shall
be deemed to be an Affiliate of any specified Person if such Person owns fifty percent (50%) or
more of the voting securities of the specified Person, if the specified Person owns fifty percent
(50%) or more of the voting securities of such Person, or if fifty percent (50%) or more of the
voting securities of the specified Person and such Person are under common control.

“Alternative Index” is defined in Section 4.3.

“API” means the American Petroleum Institute.

“Applicable Laws” means all applicable laws, statutes, regulations, rules, authorizations and
orders of, and all applicable restrictions imposed by, any Governmental Authority

“ASTM” means ASTM International (formerly American Society for Testing and Materials).

“Base Rate” means the lesser of (i) two percent (2%) above the per annum rate of interest announced
from time to time as the “prime rate” for commercial loans by JPMorgan Chase, as such “prime rate”
may change from time to time, or (ii) the maximum applicable non-usurious rate of interest

“Barrel” means forty-two (42) Gallons of an equivalent liquid volume.

“Business Day” means any day other than a Saturday, Sunday or a weekday that is observed as a
holiday by federal reserve banks located in Houston, Texas.

“Buyer” means Targa Liquids Marketing and Trade, a Delaware general partnership.

“Central Time” means Central Time as adjusted for daylight savings time.

“Chico Fractionation Fee” is defined in Section 4.2.

“Chico Plant” means Seller’s Chico Gas Processing Plant located in Wise County, Texas

“Chico Price” is defined in Section 4.1.

“Claims” means any and all losses, damages, fines, liens, levies, penalties, claims, demands,
causes of action, suits, legal or administrative proceedings, orders, governmental actions and
judgments of every kind and character, and any and all costs and expenses (including, without
limitation, attorneys’ fees, expert witness fees, and court costs) related thereto.

“Confidential Information” means this Agreement and any other written data or information (or an
oral communication if the Party requesting confidentiality for such oral communication promptly
confirms such communication in writing) which is privileged, confidential or proprietary, except
information which (i) is a matter of public knowledge at the time of its disclosure or is
thereafter published in or otherwise

Exhibit A-1

 

 

ascertainable from any source available to the public without breach of this Agreement, (ii)
constitutes information which is obtained from a third party (who or which is not an Affiliate of
one of the Parties) other than by or as a result of unauthorized disclosure, or (iii) prior to the
time of disclosure had been independently developed by the receiving Party or its Affiliates not
utilizing improper means.

“Day” or “Daily” means shall mean a twenty-four (24) hour period commencing 7:00 a.m. Central Time
and extending until 7:00 a.m. Central Time on the following Day.

“Early Termination Date” is defined in Section 15.2(a).

“Gallon” means one U.S. liquid Gallon, which is the unit of volume used for the purpose of
measurement of liquid. One U. S. liquid Gallon contains 231 cubic inches when the liquid is at a
temperature of sixty 60 degrees Fahrenheit (60ƀ F) and at the vapor pressure of the liquid being
measured.

“Good and Marketable Title” means such title free from all liens, mortgages, security interests,
encumbrances and adverse claims or other charges.

“Governmental Authority” means any federal, national, state, regional, municipal or local
governmental or quasi-governmental authority or regulatory department, agency, legislative,
judicial or administrative body, taxing authority or other governmental or quasi-governmental
authority in any jurisdiction having jurisdiction over any Party or the performance of the
obligations set forth in this Agreement

“GPA” means the Gas Processors Association, headquartered in Tulsa, Oklahoma, U.S.A.

“High Pressure Condensate” means a mixture of liquid hydrocarbons meeting the Specifications for
High Pressure Condensate.

“Initial Notice” is defined in Section 20.1

“Measurement Points” is defined in Section 7.

“Mont Belvieu Fractionation Fee” is defined in Section 4.2.

“Mont Belvieu Price” is defined in Section 4.1.

“Month” or “Monthly” means a period commencing at 7:00 a.m. Central Time on the first Day of a
calendar month and extending until 7:00 a.m. Central time on the first Day of the next succeeding
calendar month.

“NGL Component” means each of the five individual hydrocarbon constituents contained in the Raw
Product and High Pressure Condensate, including ethane, propane, isobutane, normal butane and
natural gasoline (with natural gasoline including all pentane and heavier hydrocarbon components).

“Offspec Product” has the meaning ascribed to it in Section 10 of these General Terms.

“OPIS Index” means the Oil Price Information Service Index.

“OPIS Index Price” is defined in Section 4.2.

“OPIS LP Report” means the OPIS LP – Gas Price Report published by Oil Price Information Service.

“Originating Facility” means the Chico Plant, the Shackelford Plant or any other natural gas
processing facility now or hereafter owned by Seller.

“Parties” means Buyer and Seller collectively.

Exhibit A-2

 

 

“Party” means each of Buyer or Seller, as applicable.

“Person” means any individual, corporation, partnership, limited liability company, association,
joint venture, trust, or other organization of any nature or kind.

“Pipeline” shall mean any crude oil, natural gas liquids or Raw Product pipeline through which the
Raw Product or any other Products are being transported and at which the Products are being
delivered, in accordance with Section 4.

“Pound” means sixteen (15) ounces avoirdupois.

“Product” means Raw Product, High Pressure Condensate or a Specification Product, as applicable.

“Raw Product” means a mixture of liquid hydrocarbons meeting the specifications governing the
applicable Pipeline receipt point.

“Sale Price” means the price at which Product(s) are sold to third parties.

“Seller” means Targa North Texas LP, a Delaware limited partnership.

“Shackelford Plant” means Seller’s Shackelford Gas Processing Plant in Shackelford County, Texas

“Specification Product” means any of the individual liquid hydrocarbon products meeting the
Specifications applicable thereto.

“Specifications” means the specifications for Specification Products, Mixed Butanes and High
Pressure Condensate, Natural Gasoline, respectively set forth in Exhibit B.

“Term” is defined in Section 2.1.

“Termination Payment” is defined in Section 15.2(a).

“Transportation Costs” are defined in Section 4.2.

 

 

EXHIBIT B

Product Specifications

Set forth in this Attachment B below are the product characteristics, and respective test methods
for such characteristics, required to be met for each of the Products being sold and delivered
pursuant to the attached Agreement.

MIXED BUTANE SPECIFICATIONS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	TEST METHODS
	 	 	PRODUCT CHARACTERISTICS	 	MINIMUM	 	MAXIMUM	 	LATEST REVISIONS
	1.
	 	Composition	 	 	 	 	 	 
	 
	 	Percent by Liquid Volume	 	 	 	Predominantly Isobutane	 	 
	 
	 	 	 	 	 	&Normal ButaneASTM E-260	 	 
	 
	 	Propane and Lighter	 	 	 	3.0 of Isobutane	 	ASTM D-2163
	 
	 	Butadiene	 	 	 	0.01 of Normal Butane	 	 
	 
	 	Butylene	 	 	 	0.35 of Normal Butane	 	 
	 
	 	Pentanes & Heavier	 	 	 	1.5 of Normal Butane	 	 
	 
	 	Hexanes & Heavier	 	 	 	0.05 of Normal Butane	 	 
	 
	 	 	 	 	 	 	 	 
	2.
	 	Vapor Pressure	 	 	 	 	 	 
	 
	 	Psig @ 100ƀF	 	 	 	70	 	ASTM D-1267
	 
	 	 	 	 	 	 	 	 
	3.
	 	Corrosion	 	 	 	 	 	 
	 
	 	Copper Strip @ 100ƀF	 	 	 	1-b	 	ASTM D-1838
	 
	 	(Invalid if additive or inhibitor is used)	 	 	 	 	 	 
	 
	 	Corrosion Additive or Inhibitor, PPM by Weight	 	 	 	1	 	Applicable Industry Practices
	 
	 	 	 	 	 	 	 	 
	4.
	 	Total Sulfur	 	 	 	 	 	 
	 
	 	PPM by Weight in Liquid	 	 	 	140	 	ASTM D-3246
	 
	 	 	 	 	 	 	 	 
	5.
	 	Volatile Residue	 	 	 	 	 	 
	 
	 	95% Evaporated, Temperature, ƀF	 	 	 	+36	 	ASTM D-1837
	 
	 	 	 	 	 	 	 	 
	6.
	 	Dryness  No Free Water Visual	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	7.
	 	Hydrogen Sulfide	 	 	 	 	 	 
	 
	 	PPM by Weight in Liquid	 	 	 	1.0	 	Field - Length of Stain Tube.
	 
	 	(Lab test required if field	 	 	 	 	 	 
	 
	 	Lab - Gas Chromatography test is positive.)	 	 	 	 	 	with Flame Photometric Detector
	 
	 	 	 	 	 	 	 	 
	8.
	 	Floride	 	 	 	 	 	 
	 
	 	PPM by Weight in Liquid	 	 	 	0.5	 	Gas Chromatography

Product Accounting

For accounting purposes, propane shall be considered isobutene, butylenes shall be considered
normal butane, and pentanes and heavier shall be considered normal butane within the above listed
specification limits

			
	NOTE:	 	The test method for Items 2 and 5 are not necessary if an adequate compositional analysis is
available which indicates compliance with this requirement.

Exhibit B-1

 

 

NATURAL GASOLINE SPECIFICATION

TEST METHODS

	 	 	 	 	 	 	 	 	 
	 	 	PRODUCT CHARACTERISTICS	 	MINIMUM	 	MAXIMUM	 	LATEST REVISIONS
	1.
	 	Composition 	 	 	 	ASTM E-260	 	 
	 
	 	Percent by Liquid Volume	 	 	 	 	 	 
	 
	 	Butanes and Lighter	 	 	 	3.0	 	GPA 2177
	 
	 	Pentanes & Heavier	 	97.0	 	100.0	 	 
	 
	 	 	 	 	 	 	 	 
	2.
	 	Vapor Pressure (see note below)	 	 	 	 	 	 
	 
	 	Psig @ 100ƀF, Reid	 	 	 	Nominally 13.5 to 14	 	ASTM D-323
	 
	 	 	 	 	 	(See Note Below)	 	 
	 
	 	 	 	 	 	 	 	 
	3.
	 	Corrosion	 	 	 	 	 	 
	 
	 	Copper Strip @ 100ƀF	 	 	 	1-b	 	ASTM D-130
	 
	 	(Invalid if additive or inhibitor is used)	 	 	 	 	 	 
	 
	 	Corrosion Additive or Inhibitor, PPM by Weight	 	 	 	1	 	Applicable Industry Practices
	 
	 	 	 	 	 	 	 	 
	4.
	 	Doctor Test for Sulfur	 	 	 	 	 	 
	 
	 	 	 	 	 	Negative	 	GPA Publication 1138
	 
	 	 	 	 	 	 	 	 
	5.
	 	Dryness	 	 	 	 	 	 
	 
	 	 	 	 	 	No Free Water	 	Visual
	 
	 	 	 	 	 	 	 	 
	6.
	 	Color	 	 	 	 	 	 
	 
	 	 	 	+25	 	No Color	 	Field White Cup Method
	 
	 	 	 	 	 	 	 	Lab – ASTM D-156
	 
	 	 	 	 	 	 	 	 
	7.
	 	Distillation	 	 	 	 	 	 
	 
	 	End Point, °F	 	 	 	375	 	ASTM D-216

			
	NOTE:	 	The test methods for Items 2 and 7 are not necessary if an
adequate compositional analysis is available which
indicates compliance with these requirements.

Exhibit B-3

 

 

DE-ETHANIZED RAW PRODUCT AND HIGH PRESSURE CONDENSATE SPECIFICATIONS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	TEST METHODS
	 	 	PRODUCT CHARACTERISTICS	 	MINIMUM	 	MAXIMUM	 	LATEST REVISION
	 	 	 
	 	 	 	 	 	 
	1.	 	Composition
	 	 	 	 	 	ASTM E-260
	 	 	 
	 	 	 	 	 	 
	 	 	Percent by Liquid Volume	 	Predominantly ethane, propane,	 	 
	 	 	 	 	butanes & natural gasoline	 	 
	 	 	 	 	(pentanes & heavier)	 	GPA 2177
	 	 	 
	 	 	 	 	 	 
	 	 	Ethane & Ethylene
	 	 	 	As limited by other	 	 
	 	 	 
	 	 	 	NGL Components	 	 
	 	 	 
	 	 	 	and vapor pressure	 	 
	 	 	 
	 	 	 	 	 	ASTM D-2163
	 	 	 
	 	 	 	 	 	 
	 	 	Propylene
	 	 	 	5.0 of Propane	 	 
	 	 	Butylene
	 	 	 	0.35 of Normal Butanes	 	 
	 	 	 
	 	 	 	 	 	 
	2.	 	Product Vapor Pressure
	 	 	 	240 psig	 	ASTM D-1267
	 	 	 
	 	 	 	 	 	 
	3.	 	Loading Temperature
	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	Minimum Product Loading Temperature, °F
	 	0	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	4.	 	Corrosion
	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	Copper Strip @ 100° F (Invalid if additive
	 	 	 	1-b	 	ASTM D-1838
	 	 	or inhibitor is used.)
	 	 	 	 	 	 
	 	 	Corrosion Additive or Inhibitor, PPM by Weight
	 	 	 	1	 	Applicable Industry Practices
	 	 	 
	 	 	 	 	 	 
	5.	 	Total Sulfur
	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	PPM by Weight in Liquid
	 	 	 	150	 	ASTM D-3246
	 	 	 
	 	 	 	 	 	 
	6.	 	Carbon Dioxide
	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	PPM by Weight in Liquid
	 	 	 	1000	 	GPA 2177
	 	 	 
	 	 	 	 	 	 
	6.	 	Dryness
	 	 	 	No Free Water	 	Visual
	 	 	 
	 	 	 	 	 	 
	7.	 	Pentanes & Heavier
	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	Perform the Saybolt color test
	 	 	 	No Color	 	Visual Using White Cup
	 	 	after weathering sample to 70° F
	 	 	 	 	 	Method
	 	 	if white cup indicates possible color.
	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	Color
	 	 	 	 	 	 
	 	 	Saybolt No.
	 	Plus 25	 	 	 	ASTM D-156
	 	 	Distillation
	 	 	 	 	 	 
	 	 	End Point, °F
	 	 	 	375	 	ASTM D-86
	 	 	 
	 	 	 	 	 	 
	8.	 	Odorization
	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	This product shall not be odorized.
	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	9.	 	Deleterious Substances (PPM by Weight in Liquid)
	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	COS
	 	 	 	1	 	 
	 	 	Ammonia
	 	 	 	1	 	 
	 	 	Fluorides
	 	 	 	1	 	 

Product Accounting: For accounting purposes, ethylene shall be considered ethane, propylene shall be considered propane, and butylenes shall be considered normal butane within the above listed specification limits. Any excess of these hydrocarbon components above the
specification limits shall not be accounted for.

Methanol: Shippers should reduce methanol levels to the lowest practical level. Injection rates above the minimum are expensive and wasteful and methanol can destroy catalyst beds in downstream operations

Exhibit B-4

 

TARGA HD-5 PROPANE FUEL SPECIFICATIONS

	 	 	 	 	 	 	 	 	 
	 	 	PRODUCT CHARACTERISTICS	 	MINIMUM	 	MAXIMUM	 	LATEST REVISION
	 	 	 
	 	 	 	 	 	 
	1.	 	Composition
	 	 	 	As limited by other	 	ASTM E-260
	 	 	Percent by Liquid Volume Ethane
	 	 	 	NGL Components	 	 
	 	 	 
	 	 	 	& vapor pressure	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	Propane
	 	90.0	 	100	 	 
	 	 	Propylene
	 	 	 	5.0	 	ASTM D-2163
	 	 	Butanes & Heavier
	 	 	 	2.5	 	 
	 	 	 
	 	 	 	 	 	 
	2.	 	Vapor Pressure
	 	 	 	 	 	 
	 	 	Psig @ 100°F
	 	 	 	208	 	ASTM D-1267
	 	 	 
	 	 	 	 	 	 
	3.	 	Corrosion
	 	 	 	 	 	 
	 	 	Copper Strip @ 100°F
	 	 	 	1-b	 	ASTM D-1838
	 	 	(Invalid if additive or
inhibitor is used.) Corrosion
	 	 	 	 	 	 
	 	 	Additive or Inhibitor, PPM by Weight
	 	 	 	1	 	Applicable Industry Practices
	 	 	 
	 	 	 	 	 	 
	4.	 	Total Sulfur
	 	 	 	 	 	 
	 	 	PPM by Weight in Liquid
	 	 	 	120	 	ASTM D-3246
	 	 	 
	 	 	 	 	 	 
	5.	 	Hydrogen Sulfide
	 	 	 	 	 	 
	 	 	PPM by Weight in Liquid
	 	 	 	1	 	Field - Length of Stain Tube
	 	 	(Lab test required if field test is positive.)
	 	 	 	 	 	Lab Chromatography with
	 	 	 
	 	 	 	 	 	Flame Photometric Detector
	 	 	 
	 	 	 	 	 	 
	6.	 	Carbonyl Sulfide
	 	 	 	 	 	 
	 	 	PPM by Weight in Liquid
	 	 	 	2	 	Field-Length of Stain Tube
	 	 	(Field test invalid if C4+ exceeds 1.0 LV%)
	 	 	 	 	 	Lab-UOP 212 or UOP 791
	 	 	(Lab test required if field test is positive)
	 	 	 	 	 	Lab-Gas Chromatography with
	 	 	 
	 	 	 	 	 	Flame Photometric Detector
	 	 	 
	 	 	 	 	 	 
	7.	 	Non-Volatile Residue
	 	 	 	 	 	 
	 	 	a) Milliliters @ 100°F
	 	 	 	0.05	 	ASTM D-2158
	 	 	b) Oil Stain
	 	 	 	Pass	 	 
	 	 	 
	 	 	 	 	 	 
	8.	 	Dryness
	 	 	 	 	 	 
	 	 	Freeze Valve, Seconds
	 	 	 	60 (Note 2)	 	ASTM D-2713
	 	 	 
	 	 	 	 	 	 
	9.	 	Volatile Residue
	 	 	 	 	 	 
	 	 	95% Evaporated-Temperature, °F
	 	 	 	-37	 	ASTM D-1837
	 	 	 
	 	 	 	 	 	 
	10.	 	Ammonia
	 	 	 	 	 	 
	 	 	PPM by Weight in Liquid
	 	 	 	1	 	Field-Length of Stain Tube
	 	 	 
	 	 	 	 	 	Lab - UOP 430
	 	 	 
	 	 	 	 	 	 
	11.	 	Fluorides
	 	 	 	 	 	 
	 	 	PPM by Weight in Liquid as
	 	 	 	1	 	Field-Length of Stain Tube
	 	 	Monatomic Fluorine
	 	 	 	 	 	Lab-UOP-619-83
	 	 	 
	 	 	 	 	 	 
	12.	 	Other Deleterious Substances (PPM by Weight in Liquid)	 	 	 	 
	 	 	Includes but not limited to
	 	 	 	1	 	Gas chromatography with flame
	 	 	(Isoprene, Butadiene, Vinyl
	 	 	 	 	 	ionization or electron
	 	 	Chloride, glycol, amine, caustic)
	 	 	 	 	 	capture detection or other

 

			
	NOTES:	 	(1) The test methods for items 2 and 7 are not necessary if a compositional analysis is available which indicates compliance with these requirements. (2) The addition of methanol in the distribution system should be on a spot basis and must not
exceed a rate of 5 gallons per 10,000 Gallons of Product.

Exhibit B-5

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