Document:

Exhibit
10.32

 

OMNIBUS TERMINATION AGREEMENT

 

This Omnibus
Termination Agreement (this “Agreement”), is
made and entered into this 16th day of November, 2007 (“Effective
Date”), by and among Equitable Production
Company (“Equitable”), MarkWest Energy Appalachia, L.L.C.  (“MEA”) and MarkWest Hydrocarbon, Inc. (“MHI”)
(with MEA and MHI together referred to herein as “MarkWest”). Equitable, MEA and MHI are each sometimes referred
to herein, individually, as a “Party”, and,
collectively, as the “Parties”.

 

RECITALS:

 

WHEREAS, Equitable and MEA,
and their affiliates, have rearranged certain aspects of their ongoing natural
gas gathering, processing, transportation, fractionation and sales business
arrangements related to their facilities in Kentucky, and have entered into new
agreements (or amended certain existing agreements) to facilitate those
changes, which agreements are listed in Exhibit A to  this Agreement (“New
Contracts”);

 

WHEREAS, under the new
business arrangements among the Parties and their affiliates, certain existing agreements between the Parties
will be replaced and/or are no longer needed; and

 

WHEREAS, the New Contracts provide, concurrent with
execution thereof, or the new business arrangements between the parties
contemplate, for the termination of those certain existing agreements between
the Parties and/or their affiliates, as described below:

 

1)                                      Gas Processing Agreement (Maytown), dated May 28, 1999,
as amended by instruments dated March 26, 2002 and September 23, 2004
(as amended, the “Maytown Agreement”);

 

2)                                      Equipment Lease Agreement, dated May 28, 1999 (“Equipment Lease”);

 

3)                                      Pipeline Lease Agreement, dated May 28, 1999 (“Pipeline Lease”); and

 

4)                                      Lease Agreement, dated May 21, 2002 (“Ground Lease”).

 

5)                                      Guaranty from
MHI., to Equitable Production Company, dated March 26, 2002.

 

(collectively, together with all amendments or supplements thereto, the
“Terminated Contracts”);

 

NOW, THEREFORE, in
consideration of the premises and of the mutual promises, representations,
warranties, covenants, conditions and agreements contained herein, and for
other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree, on behalf of themselves and of their
affiliates, as follows:

 

 

ARTICLE 2

TERMINATION OF AGREEMENTS

 

Section 2.1            Termination.    Effective upon
the Effective Date, Equitable and MarkWest hereby agree that subject to their
execution of the New Contracts and to Section 2.3 below, the Terminated
Agreements are hereby terminated and shall, as of the Effective Date, be of no
further force or effect.  Each of
Equitable and MarkWest waives any applicable termination notice requirements,
and shall execute and place such amendments of record as are necessary to effectuate
said termination.

 

Section 2.2            No Cross Default.    Equitable  and MarkWest expressly agree that the termination of
the Terminated Contracts, including, without limitation, the termination of the
Maytown Agreement and Pipeline Lease, shall not act as or be construed as an
event of default or cross termination as set forth in any other agreement among
Equitable and MarkWest or their affiliates.

 

Section 2.3            Audit Rights.    The Parties agree that certain limited audit rights
with respect to the Terminated Agreements shall survive the termination thereof
solely to the extent provided in that certain New Contract captioned as the
Settlement and Release Agreement.

 

ARTICLE 3

TRANSFER OF POSSESSION AND RELEASE

 

Section 3.1            Transfer of Possession of
Maytown Plant and Pipeline.    As of the Effective
Date, MarkWest shall transfer possession and control of the Maytown Plant to
Equitable Gathering, LLC (“EG”),
subject to and in accordance with the terms and conditions of that certain New
Contract captioned as the Assignment and Bill of Sale and Assumption
Agreement.  As of the Effective Date,
MarkWest shall transfer possession and control of the Pipeline to EG, subject
to and in accordance with the terms and conditions of that certain New Contract
captioned as the Transfer of Operations and Reimbursement Agreement.

 

Section 3.2            Release.    As
of the Effective Date, Equitable and MarkWest shall have addressed, resolved or
released each other from all claims by, between, or among the Parties and their
affiliates, except as expressly set forth in that certain Settlement and Release Agreement by and among
Equitable, EG, MarkWest and MHI, dated November 16, 2007.

 

ARTICLE 4

MISCELLANEOUS

 

Section 4.1            Governing Law.    This
Agreement shall be governed by, construed, and enforced in accordance with the
laws of the State of Kentucky without regard to choice of law principles. It is
agreed that venue regarding any action or proceedings with respect to any claim
or dispute arising out of or related to the matters described herein shall lie
exclusively in the Federal Court for the Eastern District of Kentucky, or, if
the Federal Court does not exercise jurisdiction, in the State Court located in
Fayette County, Kentucky.

 

Section 4.2            Severability.    Upon a
determination by a court of competent jurisdiction that any term or other
provision of this Agreement is invalid, illegal or incapable of being 

 

2

 

enforced,
then (i) all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect, (ii) the parties shall
negotiate in good faith to modify this Agreement to give effect to the original
economic and legal intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated by this
Agreement are fulfilled to the extent possible and (iii) if the Parties
are unable to agree on such modifications to this Agreement and the economic or
legal substance of the transactions contemplated by this Agreement is affected
in any manner materially adverse to any Party, then this Agreement shall be
interpreted to give effect to the original economic and legal intent of the
Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated by this Agreement are fulfilled to the extent
possible.

 

Section 4.3            Amendments and Waivers.     No
amendment, supplement, waiver or termination of this Agreement shall be binding
unless executed in writing by each Party to be bound thereby.  No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
(whether or not similar) nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.

 

Section 4.4            Counterparts.    This
Agreement may be executed in one or more counterparts, including facsimile
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

Section 4.5            Further AssurancesSection    Each Party
hereafter shall take all such further actions and to execute, acknowledge and
deliver all such further documents that are reasonably necessary or useful in
carrying out the purpose of this Agreement.

 

(signature
page follows)

 

3

 

IN
WITNESS WHEREOF, each Party
hereto, intending to be legally bound, has executed this Agreement as its free
act and deed on the day first set forth above.

 

	
  EQUITABLE
  PRODUCTION COMPANY

  	
   

  	
  MARKWEST
  ENERGY APPALACHIA, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ JOSEPH O’BRIEN

  	
   

  	
  By:

  	
  /s/ FRANK M. SEMPLE   

  
	
  Name:

  	
  Joseph O’Brien  

  	
   

  	
  Name:

  	
  Frank M. Semple  

  
	
  Title:

  	
  President

  	
   

  	
  Title:

  	
  CEO & President

  

 

	
  MARKWEST
  HYDROCARBON, INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/ FRANK M. SEMPLE

  
	
  Name:

  	
  Frank M. Semple

  
	
  Title:

  	
  CEO & President

  

 

 

EXHIBIT A

 

TO THE OMNIBUS TERMINATION
AN RELEASE AGREEMENT

 

New Contracts:

 

1.                                       Settlement and Release
Agreement, by and among Equitable Gathering, LLC (“EG”),
Equitable Production Company (“EPC”), MarkWest
Energy Appalachia, L.L.C. (“MEA”) and
MarkWest Hydrocarbon, Inc. (“MHI”), dated  November 16, 2007

 

2.                                       Transfer of Operations,
Assignment and Reimbursement Agreement, by and among EPC, EG and MEA, dated November 16, 2007

 

3.                                       Closing Agreement, by and
among EPC, EG, MEA and MHI, dated November 16,
2007

 

4.                                       Natural Gas Liquids
Transportation, Fractionation and Marketing Agreement, by and between EG and
MEA, dated November 16, 2007

 

5.                                       Natural Gas Liquids Exchange
Agreement, by and between EG and MEA, dated November 16,
2007

 

6.                                       Assignment and Bill of Sale
and Assumption Agreement, by and among EPC, EG and MEA, dated November 16, 2007

 

7.                                       Amendment to Netting,
Financial Responsibility and Security Agreement, by and between EPC and MHI,
dated September 23, 2004, as amended on November 16,
2007

 

8.                                       Amendment to Netting,
Financial Responsibility and Security Agreement, by and between EPC and MEA,
dated September 23, 2004, as amended on November 16,
2007

 

9.                                       Amendment to Firm Gas
Processing Agreement (Dwale), by and between EPC and MHI, dated September 23,
2004, as amended on November 16, 2007

 

10.                                 Amendment to Firm Gas
Processing Agreement (Non-Dwale), by and between EPC and MHI, dated September 23,
2004, as amended on November 16, 2007

 

11.                                 Amendment to Guaranty, by
and between EPC and MarkWest Energy Partners, Inc., dated March 26,
2002, as amended on November 16, 2007Exhibit 10.33

 

Execution Version

 

SPECIFIC
TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR
THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPERATELY FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT
THE APPROPRIATE PLACE WITH TWO ASTERISKS (**). 
APPROXIMATELY FIVE (5) PAGES HAVE BEEN OMITTED FROM ARTICLE 7 AND
FROM EXHIBIT D PURSUANT TO THE CONFIDENTIAL TREATMENT REQUEST.

 

NATURAL GAS
LIQUIDS TRANSPORTATION, FRACTIONATION AND MARKETING AGREEMENT

 

THIS NATURAL GAS LIQUIDS
TRANSPORTATION, FRACTIONATION AND MARKETING AGREEMENT (this “Agreement”) is made and entered into this 16th day of
November, 2007, by and between EQUITABLE GATHERING, LLC
(herein referred to as “Equitable”),
and MARKWEST ENERGY APPALACHIA, L.L.C.
(herein referred to as “MEA”).

 

RECITALS:

 

A.            Equitable operates and is acquiring that certain existing
gas processing plant and related facilities together with gas compression
facilities located in the vicinity of Langley, Kentucky, known as the “Maytown Plant”; and

 

B.            Equitable is constructing and installing additional gas
processing and gas compression facilities located in the vicinity of Langley,
Kentucky, to operate in conjunction with the Maytown Plant, said additional
facilities referred to herein as the “Langley Plant”;

 

C.            Equitable desires to deliver to MEA and MEA desires to
receive from Equitable, natural gas liquids recovered at the Plant (as defined
herein), and recovered from other sources, as provided herein, and the parties
desire to have such natural gas liquids transported to the Siloam Facility (as
defined herein), fractionated into commercial components at the Siloam
Facility, and to have such fractionated components marketed and Sold.

 

NOW THEREFORE, in
consideration of the mutual covenants contained herein, the parties hereby
agree as follows:

 

ARTICLE 1

DEFINITIONS

 

The following definitions
shall apply for all purposes of this Agreement unless otherwise indicated:

 

Accounting Period.  The period commencing at 10:00 a.m.,
Eastern Time, on the first day of a calendar month and ending at 10:00 a.m.,
Eastern Time, on the first day of the next succeeding month.

 

Affiliate.  When used with
respect to a Person, means any other Person that directly or indirectly
controls, is controlled by or is under common control with such first Person,
where 

 

 

control, and its derivatives, 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 majority
ownership of securities or partnership or other ownership interests, by
contract or otherwise, including,
without limitation, through the ownership of the general partner of any
partnership).

 

Delivery Point.  **

 

Effective Date.  The date upon which MEA has transferred and
conveyed the Maytown Plant to Equitable.

 

Equitable Group.  Equitable Production Company, Equitable
Gathering, LLC, and each current and subsequently created Affiliate of each of
them.

 

Equitable Pipeline.  The existing pipeline running from the Plant
to the interconnection, near Ranger, West Virginia, with the MEA Pipeline,
including any replacement of such pipeline.

 

Fractionated Products.  The component products derived from the
fractionation operations at the Siloam Facility.

 

Gathering Area.  The area of gas production and gathering as
described in Exhibit B.

 

MEA Pipeline.  The
pipeline to transport natural gas liquids running from the point commonly
referred to as “Ranger, West Virginia” to the Siloam Facility.

 

Net Sales Price. 
**

 

Person or person. Any individual,
corporation, limited liability company, limited or general partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity,
or any group comprised of two or more of the foregoing.

 

Plant Products.  Liquid hydrocarbon components (ethane,
propane, iso-butane, normal butane, iso-pentane, normal pentane, hexanes plus,
any other liquid hydrocarbon product, or any mixtures thereof, and any
incidental methane included in any of the foregoing), which are separated,
extracted or condensed from natural gas at the Plant.

 

Plant.  The Maytown
Plant and the Langley Plant, including (i) any and all gas processing and
compression facilities to be installed to replace any of the foregoing or to
expand or alter any of the foregoing, all located in the vicinity of Langley,
Kentucky; (ii) gas refrigeration and chilling equipment, gas compression
and cooling equipment, product separation and fractionation vessels, product
storage vessels, and associated condensing, heating, compressing, pumping,
conveying, and other equipment and instrumentation; (iii) all existing
piping, valves and fittings; including any refrigeration compression required
by plant operations; (iv) all control systems and equipment; (v) all
measurement and communications equipment; (vi) all utility system; and
including all structures associated with those facilities; and (vii) all
easements, rights-of-way, and other property rights pertaining to the
construction and operation of those facilities wherever those facilities,
structures, easements, rights-of-way, and other property rights are located.

 

2

 

Siloam Facility.  MEA’s Siloam fractionation facility located
near South Shore, Kentucky, including (i) any treating equipment, products
separation and fractionation vessels; (ii) all above ground products
storage vessels and all below ground products storage caverns and facilities; (iii) all
associated condensing, heating, pumping, conveying, and other equipment and
instrumentation; (iv) all structures associated with those facilities; (v) all
products loading facilities, including railcar loading, truck loading and barge
loading facilities; (vi) all control systems and equipment; (vii) all
measurement and communication equipment; (viii) all utility systems, and
including all structures associated with those facilities; and (ix) all
easements, rights-of-way, and other property rights pertaining to the
construction and operation of those facilities wherever those facilities,
structures, easements, rights-of-way, and other property rights are located.

 

Sold.   Any physical sale or similar transaction.

 

ARTICLE 2

EQUITABLE COMMITMENTS

 

2.1           (a) As
of the Effective Date and subject to the restrictions set forth in this Article
2 and elsewhere in this Agreement, Equitable commits to deliver **  calculated on an average daily basis
during an Accounting Period.  **

 

2.2           Nothing
herein shall constitute any guarantee or warranty by Equitable of minimum
volumes of natural gas delivered to the Plant, or the content of hydrocarbon
liquids thereof, or the amount of Plant Products recovered therefrom or that there
exists sufficient trucking capacity and/or pipeline capacity to effectuate
delivery of the Plant Products and natural gas liquids, as set forth in Section 2.1,
to the applicable Delivery Point.

 

2.3           Equitable
will operate the Plant in accordance with the standard a prudent operator under
similar conditions would operate, and in compliance with applicable laws, rules and
regulations.

 

2.4           **

 

2.5           Equitable
commits to use commercially reasonable efforts to construct the Langley Plant
and to put it in service for use under the terms of this Agreement by **.

 

2.6           In
addition, and as a material inducement for MEA to expand its Siloam Facility,
Equitable commits to cause itself or an affiliate of Equitable to construct and
place into service, within a commercially reasonable time, the replacement for
the current Equitable Pipeline, ** (the “Replacement
Equitable Pipeline”).

 

ARTICLE 3

MEA COMMITMENTS

 

3.1           Subject
to the other provisions of this Agreement, as of the Effective Date, MEA shall

 

3

 

(a)                                  Receive the natural gas liquids (inclusive of Plant
Products) delivered by Equitable at the applicable Delivery Point, fractionate
such Plant Products and natural gas liquids at the Siloam Facility, market (in
the manner set forth in Section 7.3 of this Agreement) the fractionated
components derived from the Plant Products and natural gas liquids and remit
payment to Equitable for such Plant Products and natural gas liquids pursuant
to the provisions of Article 7 below.

 

(b)                                 As of the Effective Date:

 

(i)                                     MEA shall
arrange for fractionation at the Siloam Facility and pipeline transportation
from the point where the Replacement Equitable Pipeline interconnects with MEA’s
liquid line (collectively, the “Capacity”)
of up to a maximum of ** gallons, on any day, of Plant Products and natural gas
liquids delivered by Equitable hereunder; provided, however, MEA shall not be
responsible to provide such pipeline transportation until such time as the
Replacement Equitable Pipeline is placed into service, or at such time that
Equitable has the ability to deliver natural gas liquids (inclusive of Plant
Products) to the ** through a partially completed Replacement Equitable
Pipeline, it being understood that any such commitment on the part of MEA is
subject to the terms herein (including but not limited to Article 4 and Article 5)
and MEA’s ability to meet any regulatory or safety requirements with regards to
operating the MEA Pipeline.  Equitable
will give MEA at least 30 days advance written notice prior to commencing
deliveries to **; provided, however, such deliveries to ** may not commence
prior to **.

 

(ii)                                  MEA shall
arrange for trucking and provide capacity for truck unloading at the Siloam
Facility of up to a maximum of ** gallons, on any day, of Plant Products and
natural gas liquids delivered by Equitable hereunder.

 

(c)                                  Prior to the commencement of operations of the Replacement
Equitable Pipeline, MEA will arrange truck transportation, and Equitable will
cooperate and coordinate deliveries with MEA, as to delivery of Plant Products
and natural gas liquids to the Siloam Facility by truck transportation in
quantities above the applicable volumes set forth in Section 3.1(b)(ii) above
and Section 3.1(d) below, as MEA, in its sole and reasonable
discretion, determines it can accommodate at the Siloam Facility.  **

 

(d)                                 Notwithstanding anything to the contrary herein, MEA will
have the following available capacities at the Siloam Facility for truck
unloading and for fractionation of Plant Products and natural gas liquids by
the following dates:

 

(i)                                     ** gallons per
day by **; and

 

(ii)                                  ** gallons per
day by ** (“First Expansion Date”).

 

4

 

(e)                                  By ** (“Second Expansion
Date”), MEA shall provide Capacity for a total of ** gallons per day
of Plant Products and natural gas liquids delivered by Equitable hereunder
through the Replacement Equitable Pipeline.

 

(f)                                    MEA may
accelerate the First Expansion Date to no earlier than ** (and such earlier date
shall be referred to as the “Early First Expansion Date”);
and may accelerate the Second Expansion Date to no earlier than ** (“Early Second Expansion Date”).  If either of the foregoing Early Expansion
Dates will become effective, due to MEA providing the capacities required
before the applicable Expansion Date, MEA will give written notice to Equitable
of the completion of the expansion to provide the applicable capacity and the
applicable Early Expansion Date will be effective two days following such notice.

 

(g)                                 MEA commits to expand the MEA Pipeline and Siloam Facility
as necessary to provide an additional ** gallons per day of Capacity over that
provided pursuant to 3.1(e) above, for Plant Products and natural gas
liquids delivered by Equitable hereunder, on the following terms and
conditions:

 

(i)                                     Equitable shall
have the right to request incremental additional Capacity above the ** gallons
per day Capacity by providing MEA with written notice ** in advance of the date
on which Equitable anticipates the need for any portion of such requested
incremental additional Capacity (“Incremental
Capacity Start-Up Date”). The request shall cover Equitable’s
anticipated requirements for additional Capacity for the ** period following
the Incremental Capacity Start-Up Date (“Ramp-Up
Period”), and the request shall include reasonable projections of
the need for incremental additional Capacity on a monthly basis during the
Ramp-Up Period, up to the total of the requested additional Capacity (the “Ramp-Up Schedule”).

 

(ii)                                  MEA shall have
no obligation to provide total Capacity to Equitable for Plant Products and
natural gas liquids delivered by Equitable hereunder in excess of ** gallons
per day.

 

(iii)                               Each request
for additional Capacity shall be in increments of ** gallons per day or
greater; provided, if a request for additional Capacity occurs when the
difference between ** gallons per day and the then current Capacity is less
than ** gallons per day, such request may be made for the remaining increment
to bring total capacity to ** gallons per day.

 

(iv)                              MEA shall
acknowledge and confirm, in writing, Equitable’s request(s) for capacity
within twenty (20) days of receipt.

 

(v)                                 MEA shall
construct, install and make operational the requested additional Capacity in increments
and with timing that meets the Ramp-Up Schedule submitted by Equitable for the
applicable Ramp-Up Period.

 

(vi)                              **

 

5

 

3.2           Notwithstanding
anything to the contrary herein, within ninety (90) days from the date hereof,
MEA and Equitable shall cooperate to identify other options, and the associated
costs for implementing such options, that may be available to increase the
available capacity at the Siloam Facility for truck unloading and for fractionation
of Plant Products and natural gas liquids to ** gallons per day, or to identify
other options, and costs, to market unfractionated natural gas liquids to other
markets.  The undertaking and
implementation of any of the foregoing options shall be subject to the mutual
agreement of the parties which shall include agreement upon the allocation of
any incremental costs which would be incurred in implementing such option.

 

3.3           MEA
will operate the MEA Pipeline and the Siloam Facility in accordance with the standard
a prudent operator under similar conditions would operate, and in compliance
with applicable laws, rules and regulations.

 

3.4           Equitable
and MEA acknowledge and agree that, contemporaneous with the execution of this
Agreement, the parties have amended that certain Netting, Financial
Responsibility and Security Agreement by and between Equitable Production
Company and MarkWest Hydrocarbon, Inc., dated September 23, 2004,
that certain Netting, Financial Responsibility and Security Agreement by and
between Equitable Production Company and MEA, dated September 23, 2004
and/or entered into other agreements to provide for performance assurances by
MarkWest Hydrocarbon, Inc. in the event of a decline in MEA’s financial
condition and for certain changes in the value and volume of fractionated
products under this Agreement.

 

ARTICLE 4

QUALITY SPECIFICATIONS

 

4.1           The
Plant Products, and other natural gas liquids, delivered by Equitable to MEA
from the Plant shall be of a quality which, when fractionated, meets the
applicable specifications set forth on Exhibit A,
attached hereto.  In particular, but
without limiting the other specifications on Exhibit A,
the Plant Products and other natural gas liquids delivered hereunder shall only
contain such amount of ethane such that the propane products fractionated by
MEA will not exceed the ethane content set forth on Exhibit A.

 

4.2           Should
any of the Plant Products or natural gas liquids fail to meet the above
specifications, then:

 

(a)                                  MEA may take receipt of the non-conforming Plant Products or
natural gas liquids, and that receipt shall not be construed as a waiver or
change of standards for future Plant Product or natural gas liquid deliveries;
or

 

(b)                                 MEA may, at its sole but reasonable discretion, cease
receiving the non-conforming Plant Products or natural gas liquids, and shall
notify Equitable that it has, or will, cease receiving the non-conforming Plant
Products or natural gas liquids; provided that such rejection shall not
otherwise excuse Equitable from its delivery obligations pursuant to Section 2.1
of this Agreement for the time period during which MEA ceases receiving
deliveries.

 

6

 

4.3           All
Plant Products and natural gas liquids delivered to ** shall be delivered at a
pressure sufficient to effect delivery into ** at the pressures at the **.  Plant Products and natural gas liquids
delivered to ** will be delivered at as uniform of flow rate as is practical.

 

4.4           All
MEA deliveries at Equitable facilities shall comply with Equitable’s safety
policies and procedures.

 

ARTICLE 5

MEASUREMENT

 

5.1           Truck Measurement.  Until the Replacement Equitable Pipeline has
been constructed, installed and made operational, quantities of Plant Products
and natural gas liquids delivered into trucks at the ** will be determined by
weighing each truck, using State certified scales, both full and after the
Plant Products and natural gas liquids have been unloaded and calculating the
weight of the Plant Products and natural gas liquids delivered.  A sample of the Plant Products and natural
gas liquids will be taken and analyzed, using means and methods generally
acceptable in the gas industry, to determine the component composition and
specific gravity of the delivered Plant Products and natural gas liquids.  The measured weight and compositional
analysis will be applied in accordance with the ASTM-IP Petroleum Measurement
Tables, American Edition, ASTM designation D 1250, Table No. 24, to
determine the volume of Plant Products and natural gas liquids delivered by
component, corrected to 60°F.

 

5.2           Pipeline Interconnect Measurement.  Equitable shall design and construct a liquid
hydrocarbon metering facility containing meters for both custody transfer
measurement and for check measurement meeting the specifications set forth in
this Agreement and reasonably acceptable to MEA.  The liquid hydrocarbons shall be measured in
pounds (lbm) by coriolis meters mutually acceptable to Equitable and MEA.  Two meters shall be installed in series
(Meter A and Meter B).  Meter A shall be
the first meter in the line of flow and shall be designated as the “Check Meter”.  Meter B shall be the second meter in the line
of flow and shall be the “Accounting Meter”. 
If additional meter runs are required, they shall be configured in the
same manner.  The facility will be
constructed with prover loops and sufficient access for either truck mounted or
trailer mounted provers so that the custody and check meters can be proved on
site with ball provers (if agreed upon by the parties herein).

 

The liquid stream shall be
analyzed with a gas chromatograph mutually acceptable to Equitable and
MEA.  The gas chromatograph shall be
housed in a temperature controlled building. 
The natural gas liquid will be vaporized to a gas state prior to
analysis by the chromatograph.  The
analysis results shall be used to calculate the hydrocarbon liquids physical
properties.  The calibration gas shall be
certified by the supplier, and shall be stored and used in a
temperature-controlled environment so that condensation of any component does
not occur.

 

5.3           Btu Calculation.  The quantity of Btus in the liquid
hydrocarbon stream shall be calculated by using the accumulated mass of the
hydrocarbon liquid stream from the Accounting Meter and the weight percent of
each liquid hydrocarbon component determined by chromatographic analysis.  More specifically, the calculation steps are:

 

7

 

(a)                                  Calculate the weight fraction of each component by multiplying
the mole fraction of each component (from chromatographic analysis) by its
molecular weight (from latest approved edition of GPA standard 2145) to obtain
the weight (lbs).  The component weight
is then divided by the total composite weight to obtain the weight fraction of
each component.

 

(b)                                 Calculate the composite total Btu of each pound (Btu/lbm) of
liquid hydrocarbon mixture.  This is
obtained by multiplying the weight fraction of each component from (a) by
its standard Gross Heating Value.  For purposes
of this section, Gross Heating Value is obtained from Gas Processor Association
(GPA), Standard 2145, latest edition. 
The value used is “Btu/lbm, fuel as ideal gas”.  Hexanes+ shall initially be 20,899 subject to
subsequent determination by a mutually agreeable third-party laboratory.  Analysis shall be conducted at intervals not
to exceed one year.

 

(c)                                  Calculate each liquid hydrocarbon component’s portion of the
total Btu of each pound of liquid hydrocarbon by taking the total Btu of each
pound (Btu/lbm) value from (b) and multiplying by the weight fraction of
each component.

 

(d)                                 Calculate the total Btus in the liquid hydrocarbon stream by
multiplying the total mass (lbm) from the Accounting Meter by the total Btus
per pound (Btu/lbm) from (c).

 

5.4           Meter Operation.  MEA shall own and be responsible for the
operation and maintenance and all associated operation and maintenance costs of
the Accounting Meter(s).  Equitable shall
own and be responsible for the operation and maintenance and all associated
operation and maintenance costs of the Check Meter(s).  An online comparison of the difference in
measurements by the two (2) meters shall be maintained.  If the difference between the daily
accumulated total mass flow readings (lbm) at Meter A and Meter B exceeds 1% of
the reading of Meter B, for longer than (10) consecutive days, the meter
with the smaller mass flow reading shall be returned to the factory for repair
and calibration.  The calibration may
also be performed by mutually agreed upon means between Equitable and MEA. The
remaining meter will serve as the Accounting Meter during this period.  After calibration of the meter with the
smaller mass flow reading, if the difference between the meter readings still
exceeds 1% of the meter of Meter B, for longer than ten (10) consecutive
days, then the other meter will be returned to the factory for repair and
calibration or calibrated by means mutually agreed upon between Equitable and
MEA.  Readings during the period where
the difference exceeds 1% shall be adjusted to reflect readings based upon the
meter determined to be more accurate during that period.  If both Meter A and Meter B should fail,
recordings and quantities shall be determined as followed in descending order:

 

(a)                                  Using measurement from other check meters, if any, which
were in operation during the period to be corrected; or if this cannot be done,

 

(b)                                 By correcting the error if the percentage of error is
ascertainable by calibration or calculation; or if this cannot be done,

 

8

 

(c)                                  By comparison with quantities flowing under similar
conditions when the meter was registering accurately and by the use of
pertinent plant records, including, but not limited to, storage tank readings.

 

(d)                                 If the preceding methods cannot be done, an alternate method
agreed to by the parties herein shall control.

 

Any correction shall be
retroactive for any period definitely known or, if not known, it shall be
retroactive for one-half of the volume displaced since the last test of the
measuring equipment affected, not to exceed 50% of the volume displaced.  However, no correction shall be made if the
magnitude of the error is determined to be .0050 (0.50%) or less.  Any corrections shall be debited or credited on
the next subsequent statements for the Accounting Period.

 

5.5           Measurement Accuracy and Testing.  The liquid hydrocarbon measurement equipment
shall be calibrated at least once every 12 month period.  The calibration procedure will be either the
manufacturer’s recommended methods or by other means mutually agreed upon by
Equitable and MEA.  The calibration
frequency may be altered in the future if agreed upon by both parties in
writing.  The Check Meter will serve as
the Accounting Meter during all periods the Accounting Meter is out of service.
When the Accounting Meter is returned, the Check Meter shall be calibrated by
the same method as the Accounting Meter. 
If a meter is calibrated due to differences exceeding 1% of Meter B
before the 12 month period is reached, the period between calibrations will
start at the last completed calibration. 
MEA and Equitable shall share all costs of recalibration.  Each party shall promptly provide the other
the results of all meter calibrations in writing following their receipt of the
results.

 

If field meter proving
equipment is used for calibration, it shall be designed, manufactured, and
tested in accordance with Chapter 4 of the “API Manual of Petroleum Measurement
Standards” as current at the time of such design, manufacture, and
testing.  Proving equipment shall be
recertified to NIST (National Institute of Standards and Technology) at least
annually.  Meter proving shall be done at
least annually by a mutually agreed upon third party meter proving service, in
accordance with Chapters 4 and 5 of the “API Manual Of Petroleum Measurement
Standards”, as amended from time to time. 
The calibration frequency may be altered in the future if agreed upon by
both parties in writing.  Recalibration
of gravitometers, densitometers or such other similar devices, or the
determination of a gravitometer adjustment factor shall be done once per
quarter, by use of a pyonometer to an accuracy of fifty one-hundredths percent
(0.50%).

 

The chromatographic
equipment shall be tested and recalibrated on a monthly basis.  MEA shall own and be responsible for the
operation and maintenance and all associated operation and maintenance costs of
the chromatograph.  At any time that
inaccuracies in the chromatograph is suspected, MEA shall obtain samples of the
natural gas liquid and calibration gas and shall have a mutually agreeable
third party laboratory analyze the samples. 
If inaccuracies are found, the calibration gas shall be changed to be
representative of the natural gas liquid.

 

Both parties shall have
access to the metering equipment at all reasonable times.  Each party must notify the other party a
minimum of twenty four (24) hours in advance of any planned 

 

9

 

testing,
calibrations, or meter provings.  Each
party may have a representative present during any of the foregoing
activities.   Representatives of both
parties shall have the right to be present during any repairing, inspecting,
testing, calibrating, or adjusting done in connection with the measuring
equipment. Each party reserves the right at a future date to install additional
check meters; such meters shall be of a type mutually agreeable to both parties
and shall not be installed in such a manner as to interfere with the proper
operation of other existing measurement equipment.

 

If either party to this
Agreement notifies the other party that it desires a special test of any
measuring equipment, the parties shall cooperate to secure a prompt
verification of such equipment, at the expense of the party requesting such
special test.  However, if a meter or
other equipment is found to be in error by more than 1%, MEA shall bear the
expense of such special test.

 

5.6           Standards. 
The measurement equipment shall maintained and operated in accordance
with the latest amended and revised edition of (a) “API Manual of
Petroleum Measurement Standards”, Chapters 1, Vocabulary; Chapter 4, Proving
Systems; Chapter 5, Metering; Chapter 12, Calculation of Petroleum Quantities;
and Chapter 14, Section 6, Installing and Proving Density Meters; (b) GPA
Publication 2145-95, “Table of Physical Constants of Paraffin Hydrocarbons and
Other Components of Natural Gas”; (c) GPA Publication 2174, “Methods for
Obtaining Hydrocarbon Fluid Samples Using a Floating Piston Cylinder”; (d) GPA
Publication 2177, “Methods for Analysis of Demethanized Natural Gas Liquid
Mixtures by Gas Chromatography”; (e) GPA Publication 8173, “Standard for
Converting Natural Gas Liquids and Vapors to Equivalent Liquid Volumes”; and (f) GPA
Publication 8182, “Standard for the Mass Measurement of Natural Gas Liquids”,
and any other API and GPA standards and publications that are considered
industry standards that are applicable.

 

5.7           Record Retention.  All records shall be retained for audit
purposes for a period of two (2) years or a longer period if required by
any applicable law and/or regulatory body. 
Each party reserves the right to contract outside services to
participate in any audits or review of data.

 

5.8           Flow Computer / RTU.  The custody transfer flow computer / RTU
shall be mutually agreed upon by both parties. 
MEA shall operate and maintain the custody transfer flow computer / RTU.  Equitable shall have the right to install an
audit flow computer / RTU and share any electronic signals that are necessary
to audit the station.

 

5.9           Gallons Calculation. 
For purposes of fees and compensation, gallons of individual
Plant Products and natural gas liquids shall be calculated in the following
manner:

 

Divide
the individual Plant Product or natural gas liquid mass (lbm) by the individual
liquid absolute density (lbm/gal).  The
individual liquid absolute density values shall be taken from the latest
edition of GPA Standard 2145, except for the component “Hexanes plus”, for
which “pounds per gallon” shall be analytically determined.

 

10

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