AMENDED AND RESTATED ALLOCATION PROTOCOL This Amended and Restated Allocation Protocol Agreement ("Agreement") is made by and between Alaska Pipeline Company ("Buyer"). an Alaska corporation, with offices located at 3000 Spenard Road, Anchorage, Alaska 99503, and Hilcorp Alaskn, LLC ("Seller"), a Delaware limited liability company, with offices located at 3800 Centerpoint Drive, Suite 1400, Anchorage, Alaska 99503, effective the later of the first date of the month following approval by the Regulatory Commission of Alaska or June l, 2015 (the "Effective Date"). RECITALS A. Alaska Pipeline Company ("APC") and Marathon Oil Company ("Marathon") entered into a Gas Sales Agreement dated May l, 1988 ("GSA"). B. Effective April 11, 2008, APC and Marathon entered into an Allocation Protocol Agreement ("Allocation Protocol") to clarify certain operational issues under the GSA and establish clear rules relating to annual gas balancing, forecasting, nominations, allocation of deliveries among APC's suppliers, and enforcement of APC's transportation tariff. C. By assignment effective February l, 2013, Hilcorp Alaska, LLC, succeeded to the interest of Marathon as "Seller" in the GSA and the Allocation Protocol. D. The consolidation of the Kenai Kachemak Pipeline, Kenai Nikiski Pipeline, Cook lnlet Oas Gathering System and Beluga Pipe Linc resulted in a new pipeline named Kenai Beluga Pipeline ("KBPL"), effective November l, 2014 . The KBPL tariff mies and regulations include a number of operational changes which affect the manner in which gas shipments are made and allocated. Among the operational changes are the establishment of operational balancing agreements between KDPL and its interconnected parties. E. Buyer and Seller wish to amend and restate the Allocation Protocol, beginning as of the Effective Date and ending six months following the Effective Date to facilitate a relaxed nomination process and facilitate the implementation of operational balancing agreements. AGREEMENT 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION 1.1 Defined Terms Alloptcd; Amended Definitions. Unless otherwise defined herein, capitalized terms shall have the meaning ascribed to them in the GSA. The following terms in the GSA are redefined for the GSA and this Agreement as follows: "Alaska Clock Time" or "ACT" means Alaska Daylight Savings Time when Daylight Savi n gs Time is in effect and Alaska Standard Time when Daylight Saving Time is not in effect.
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AMENDED AND RESTATED ALLOCATION PROTOCOL
This Amended and Restated Allocation Protocol Agreement ("Agreement") is made by and between Alaska Pipeline Company ("Buyer"). an Alaska corporation, with offices located at 3000 Spenard Road, Anchorage, Alaska 99503, and Hilcorp Alaskn, LLC ("Seller"), a Delaware limited liability company, with offices located at 3800 Centerpoint Drive, Suite 1400, Anchorage, Alaska 99503, effective the later of the first date of the month following approval by the Regulatory Commission of Alaska or June l, 2015 (the "Effective Date").
RECITALS
A. Alaska Pipeline Company ("APC") and Marathon Oil Company ("Marathon") entered into a Gas Sales Agreement dated May l, 1988 ("GSA").
B. Effective April 11, 2008, APC and Marathon entered into an Allocation Protocol Agreement ("Allocation Protocol") to clarify certain operational issues under the GSA and establish clear rules relating to annual gas balancing, forecasting, nominations, allocation of deliveries among APC's suppliers, and enforcement of APC's transportation tariff.
C. By assignment effective February l, 2013, Hilcorp Alaska, LLC, succeeded to the interest of Marathon as "Seller" in the GSA and the Allocation Protocol.
D. The consolidation of the Kenai Kachemak Pipeline, Kenai Nikiski Pipeline, Cook lnlet Oas Gathering System and Beluga Pipe Linc resulted in a new pipeline named Kenai Beluga Pipeline ("KBPL"), effective November l, 2014. The KBPL tariff mies and regulations include a number of operational changes which affect the manner in which gas shipments are made and allocated. Among the operational changes are the establishment of operational balancing agreements between KDPL and its interconnected parties.
E. Buyer and Seller wish to amend and restate the Allocation Protocol, beginning as of the Effective Date and ending six months following the Effective Date to facilitate a relaxed nomination process and facilitate the implementation of operational balancing agreements.
AGREEMENT
1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
1.1 Defined Terms Alloptcd; Amended Definitions. Unless otherwise defined herein, capitalized terms shall have the meaning ascribed to them in the GSA. The following terms in the GSA are redefined for the GSA and this Agreement as follows:
"Alaska Clock Time" or "ACT" means Alaska Daylight Savings Time when Daylight Savings Time is in effect and Alaska Standard Time when Daylight Saving Time is not in effect.
"Day" means a period beginning at 0000, ACT, on a calendar day and ending at 2400, ACT on the same calendar day.
"Month" means a period beginning at 0000 hours ACT on the first Day of a calendar month and ending at 2400 hours ACT on the last Day of the same calendar month.
1.2 New Definitions. As used in this Agreement, the following words 01· expressions have the following meanings.
"Agreement" means this Amended and Restated Allocation Protocol Agreement.
"Annual Demand Forecast" has the meaning set forth in Section 2.
"APC" has the meaning set forth in Recital A.
"Buyer's Estimated Annual Gas Needs" means the amount of Gas that Buyer reasonably estimates (in light of the facts and circumstances present at the time of such estimation) in the Annual Demand Forecast, or any update thereto, that Buyer will take during a Year.
"Effective Date" has the me1ming set fo11h in the Preamble.
"ENSTAR" means the natural gas distribution utility named ENSTAR Natural Gas Company, a division of SEMCO Energy, Inc. EN STAR holds RCA Certificate No. 4, and ENST AR and Buyer are regulated as a single entity by the RCA.
"ENSTAR's Tariff" means the ENSTAR tariff on file with the RCA and in effect as of the Effective Date of this Agreement, as the same may be modified from time to time.
"GSA" has the meaning set forth in Recital A.
"Party" or "Parties" has the meaning set forth in the Preamble.
"Total Forecasted Peak Day Delivernbilily" means the amount of Gas that Buyer reasonably estimates (in light of the facts and circumstances present at the time of such estimation) in each Annual Demand Forecast, or any update thereto, as the maximum quantity of Gas that Buyer will require in any Day during the Year to which such Annual Demand Forecast relates.
"RCA" means the Regulatory Commission of Alaska.
"Seller's Pro Rata Share Percentage" means, for any Year, the percentage derived from the quotient of the Annual Contrnct Quantity divided by Buyer's Estimated Annual Gas Needs.
"Total Daily Deliverability" means the total amount of Gas that Buyer needs on any Day (expressed as MMcf per Day).
2. ANNUAL DEMAND FORECASTS ·
On or before October I of each Year, Buyer shall deliver a final demand forecast to Seller ("Annual Demand Forecast"). Buyer's Annual Demand Forecast for any Year shall contain the information and shall be based on the same principles and assumptions used in Buyer's pro forma Annual Demand Forecast attached as Exhibit A. Buyer shall deliver updates of its Annual Demand Forecast to Seller as necessary from time to time to correct clerical, administrative or other obvious errors in the Annual Demand Forecast.
3. NOMINATIONS
3.1 Daily Nominations and Deliveries.
(A) On any given Day, Buyer will use reasonable commercial efforts to nominate and take delivery of Seller's Prn Rata Share Percentage of Total Daily Deliverability. Buyer may vary its intra-Day nominations and physical deliveries for any reason, provided that such variations do not impose an unreasonable hardship on Seller and
(i) Buyer's maximum takes under the GSA (on a daily or hourly basis) do not exceed Seller's Pro Rata Share Percentage of Total Forecasted Peak Day Deliverability as shown in the most recent Buyer's Annual Demand Forecast; and
(ii) Buyer's minimum takes under the GSA (on a daily or hourly basis) are not less than Seller's Pro Rata Share Percentage as shown in the most recent Buyer's Annual Demand Forecast multiplied by 27 MMCF.
(D) Subject to the provisions of Section 3.1 (A), Buyer may take more or less than Seller's Pro Rata Share Percentage of Total Daily Deliverability in order to manage operational balancing agreements. Buyer will make reasonable efforts to identify such greater or lesser volumes as being taken to manage operational balancing agreements.
(C) Buyer will make reasonable effotts not to revise or initiate new nominations between 1630 on one Day and 0800 the next Day. Buyer and Seller will work collaboratively to flow gas between nominations as necessary to allow Buyer to balance unforeseen changes in supply or demand.
(0) Buyer acknowledges that Seller may be restricted in its ability to immediately increase 01· decrease the flow of Gas at particular Delivery
Points, and the failure to so alter such Gas flows shall not be a default under the GSA or this Protocol or otherwise result in liability to Seller; provided, that Seller uses reasonable efforts to increase or decrease the flow of Gas as promptly as reasonably practicable.
3.2 Annual Dclivcl'ies
(A) From time to time, Buyer will review and make any necessary adjustment to the Seller's Pro Rata Share Percentage to target receipt of between 100% and I 05% of the Annual Contract Quantity. Any such adjustment will take place commencing the first Day of the following Month. Buyer will communicate to Seller such adjustment, if any, no less than five Business Days prior to implementation. Notwithstanding any adjustments to Seller's Pro Rata Share Percentage, on any given Day, Buyer shall not take more than the maximum articulated in Section 3.l(A)(i) nor less than the minimum articulated in Section 3.1 (A)(ii).
(B) If Buyer anticipates that actual purchases in any Year will exceed 105% of the Annual Contract Quantity as set forth in the most recent Buyer's Annual Demand Forecast, then Buyer may request to purchase the excess volume from Seller, and Seller may deliver the additional gas in Seller's sole discretion, but it is not obligated to do so.
(C) fn the event Buyer takes less than 100% of the Annual Contract Quantity in a given Year, no later than the Pebruary statement of the following Year, Seller shall invoice Buyer for the shortfall between the volume taken and 100% of the Annual Contract Quantity at the price set for the Year in which the shortfall occurred.
4. GAS TRANSMISSION FACILITY ALTERATIONS
Buyer will provide Seller with commercially reasonable advance notice of any significant alterations that Buyer plans to make to its gas transmission facilities .
5. COUNTERPARTS
This Agreement may be executed in any number of counterparts and by the Parties hereto on separate counterparts, including electronic transmittals, each of which when so executed will be deemed an original, but all such counterparts, when taken together, will constitute but one and the same Agreement. In the event one Party executes the Agreement, and the other Party does not execute the Agreement within ten (10) days of the fil'st Pnrty's execution, the execution of the Agreement by the first Party will be deemed null and void.
HILCORP ALASKA, LLC ALASKA PIPELINE COMPANY
EXHIBIT A BUYER'S PROFORMA DEMAND FORECAST
C(YN·P·.1 D E~NTI AL l\lASKA PIP.EUN£ COMPANY Ailmi"al Oem'and ~orecast
