High Island Offshore System, L.L.C.

Third Revised Volume No. 1

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Effective Date: 11/01/2007, Docket: RP08- 55-000, Status: Effective

Original Sheet No. 238 Original Sheet No. 238 : Effective

 

 

FORM OF RESERVE COMMITMENT AGREEMENT

(Continued)

 

 

(b) Shipper shall be entitled to unitize any Committed Lease(s) with one or more

additional OCS leases without the consent of Transporter. In the event of such

unitization, then (i) such unitization shall not be deemed a transfer or

assignment of Shipper's interest for the purpose of this Agreement and (ii) only

the gas production attributable to Shipper's interest in the unit shall be

subject to the provisions of this Agreement or be entitled to the services

provided by the associated Transportation Agreement. For purposes of this

Section 2.2 (b), "unitize" or "unitization" shall mean the combination of all or

parts of the leases in a prospect, reservoir, or field such that development and

operation of the unit are provided for without regard to separate property

interests and with unit production and costs allocated among the various

parties, whether pursuant to formal or informal joint operating agreements.

 

2.3 From the obligations in Section 2.1, Shipper expressly reserves unto itself,

its successors and assigns, the following rights and quantities of production

sufficient to satisfy such rights:

 

(a) The right to operate the Committed Lease(s) free from any control by

Transporter including, without limitation, the right (but never the

obligation) to drill new wells, to repair and rework old wells, to plug

and abandon any well, to shut in wells and to renew, surrender, release

or terminate any lease (in whole or in part) included in the Committed

Lease(s);

 

(b) The right to deliver production to lessors of the Committed Leases in

quantities sufficient to fulfill Shipper's lease obligations from time

to time, including the right to deliver royalty in kind; and

 

(c) The rights to use production for the development and operation of the

Committed Lease(s), including, but not limited to, the use of gas for

fuel, drilling (including gas drilling), deepening, reworking,

development system installation and startup, compressing, gas lifting,

processing, treating, cycling, repressuring or other supplemental

recovery operations, provided, however, that any gas so used but not

consumed by such uses shall remain committed under this Agreement.

 

(d) The right to process gas from the Committed Lease(s), prior to delivery

to Transporter, by the use of mechanical separators for the recovery of

any component from the gas other than methane, except such methane

incidentally removed through such separation.

 

2.4 Temporary Release.

 

(a) In the event that HIOS is unable to accept Shipper's Gas for any reason

(including, without limitation, a force majeure event as set forth in

Section 13 of the General Terms and Conditions of HIOS' FERC Gas Tariff)

and such inability is not the result of any action or inaction by

Shipper ("HIOS' Inability"), Shipper shall be entitled to deliver to and

transport Shipper's Gas on another pipeline(s) during the duration of

HIOS' Inability.

 

(b) In the event that any occurrence of HIOS' Inability lasts for a period

exceeding ninety (90) consecutive days, Shipper shall have thirty five

(35) days from its receipt of written notice of HIOS' ability to

recommence receipts of Shipper's Gas to resume deliveries of Shipper's

Gas to HIOS.