Amended and Restated Joint Development and Ownership Agreement between Colorado Interstate Gas Company and Questar Pipeline Company (March 8, 2000, as amended January 12, 2001)

Summary

This agreement between Colorado Interstate Gas Company (CIG) and Questar Pipeline Company outlines their collaboration on developing, owning, constructing, and operating new and expanded natural gas pipeline facilities from Utah to Nevada. The project will be completed in two phases, with each company having specific ownership rights and responsibilities. The agreement also covers the sale and lease of ownership interests, conditions for participation in further pipeline development, and procedures for resolving disputes. Key obligations include construction, regulatory filings, and good faith negotiations for joint venture agreements, with specific timelines and arbitration provisions if disagreements arise.

EX-10.10. 2 0002.txt Exhibit No. 10.10. March 8, 2000 (amended and restated as of January 12, 2001) Mr. Alan K. Allred Vice President, Business Development Questar Pipeline Company 180 East 100 South P.O. Box 45360 Salt Lake City, UT 84145-0360 Dear Mr. Allred: This letter sets forth the terms of an agreement between Colorado Interstate Gas Company ("CIG") and Questar Pipeline Company ("Questar"), concerning (i) the joint development, ownership, and construction and operation of new and/or expanded natural gas pipeline facilities extending westward from an interconnection with CIG's pipeline facilities near the Natural Buttes area in Utah through the Price, Utah area, continuing westward to a pipeline interconnection with the Kern River natural gas pipeline near Elberta, Utah and extending to the vicinity of Elko, Nevada, and (ii) gas transportation service for CIG's affiliate over a portion of such facilities (such new and/or expanded pipeline facilities and the related gas transportation service shall hereinafter be referred to as the "Project"). In consideration of the mutual premises and covenants of the parties, and subject to the conditions identified below, the parties hereto agree as follows: Pipeline Construction Phases of the Project: The Pipeline Construction will take place in two phases: Phase I: Construction of a new 1440 p.s.i.g. 24-inch pipeline loop (including compression)f of Questar's existing pipeline system from the Price, Utah area to a delivery point inter- connection with the Kern River Pipeline near Elberta, Utah (the "Questar Loop"). Phase II: Construction of a new interstate natural gas pipeline (the "Ruby Pipeline") from the Questar/Kern River Pipeline delivery point interconnection near Elberta, Utah to the vicinty of Elko, Nevada. Ownership of Pipeline Facilities: Questar Loop - Questar shall cause the construction of the Questar loop. Questar shall file a certificate application with the Federal Energy Regulatory Commission ("FERC") for authorization to construct and operate the new facilities. Questar shall pursue "rolled-in" rate treatment for the new facilities and the capacity created by those facilities, and shall attempt to avoid incremental pricing of those facilities and that capacity. Questar shall have full responsibility and authority for all elements of the certificate application. CIG will use all reasonable efforts to assist Questar in this process and will support the application. If CIG terminates this Letter Agreement, CIG will not oppose the construction of Phase I at the FERC but will retain the right to intervene and take positions on issues such as pipe size, compression, rates, etc. that are in CIG's best interests. Questar will not be required to accept a certificate which, in its sole judgment, is detrimental to its interests. Upon the in-service date of the new facilities Questar shall sell a 31.3%(1) undivided interest in the Questar Loop to CIG Gas Supply Company ("Supply") at Questar's cost. Coincident with the sale of the undivided interest, Supply will lease its undivided interest in the Questar Loop to Questar under a thirty-three (33) year and four month lease with full possessory and operational rights. The lease payments will be tied to the sales price, will be cost of service based, and will be calculated annually using rate of return, depreciation, capital structure and income tax factors authorized by the FERC for use in setting Questar's rates. The Lease Agreement between Questar and Supply dated August 22, 2000, shall be revised to reflect the foregoing provisions. If CIG Resources Company ("Resources") terminates the Gas Transportation Services agreement discussed below, or at the termination of the lease, Questar shall have the right to re-purchase Supply's interest in the Questar Loop at the then present net book value. If Questar elects to re-purchase Supply's interest, CIG shall have the right to re-purchase Questar's interest in the Ruby Pipeline described below at the then present net book value. ____________________ 1 This percentage interest may be increased as provided in the separate letter agreement between CIG and Questar dated January 12, 2001. Ruby Pipeline - Questar shall have the right, exercisable by written notice to CIG, to participate in the ownership of the Ruby Pipeline. CIG will provide Questar with the economics supporting the Ruby Pipeline (including details of costs incurred to date and the supporting contracts, which may include the gas transportation agreement discussed below). Based upon its review of these economics and supporting documents, Questar shall have ninety (90) days from the Trigger Date to exercise Questar's right to participate in the Ruby Pipeline, during which 90-day period Questar will seek any necessary approvals of its board of directors for the exercise of such right. The "Trigger Date" means the date of receipt of the last of: (1) a fully-executed and binding precedent agreement providing for firm gas transportation service by CIG/Ruby for Newmont Gold Company's ("Newmont's") processing load requirements; (2) a fully-executed and binding precedent agreement providing for firm gas transportation service by CIG/Ruby for the proposed Elko power plant's full requirements (such precedent agreements are to provide for a total firm transportation capacity of approximately 82,000 Dth/day); and (3) written notification from CIG that it intends to continue pursuing the Ruby Pipeline project. If Questar elects to participate in the Ruby Pipeline: (i) it shall purchase a 31.3%(2) ownership interest; and (ii) Questar and CIG agree to use good faith efforts to negotiate and execute a joint venture agreement, operating agreement and/or other appropriate agreements ("Joint Venture Agreements") for the ownership and operation of the Ruby Pipeline that include provisions for proportionately sharing costs of the Ruby Pipeline project. Such provisions shall also be consistent with the terms of this Letter Agreement. CIG (or the participating CIG affiliate) may offer an equity ownership interest in the Ruby Pipeline to Southwest Gas Corporation, in which event the ownership interests of the CIG and Questar participating affiliates shall be diluted on a pro rata basis. Third party ownership in excess of 25% must be agreed to by both parties. The parties shall exercise good faith efforts to complete the Joint Venture Agreements described herein prior to the end of the 90-day period described above, which Joint Venture Agreements shall require approval by the parties' senior management or boards of directors, provided however that opposition to any points specifically set forth in this Letter Agreement shall not be a basis for withholding of such approvals. If, notwithstanding such good faith efforts, the parties fail to reach agreement in principal on the terms of the Joint Venture Agreements by the end of such 90-day period, then - unless otherwise agreed - the parties shall refer the terms on which they have not been able to agree upon in principal to a mutually acceptable arbitrator selected within 30 days of the end of the 90-day period to resolve the disputed issues. Such arbitration shall be governed by the rules of the American Arbitration Association. The costs of such arbitration shall be borne equally by the parties. If the parties reach agreement at least in principal on the terms of the Joint Venture Agreements by the end of such 90-day period, the parties shall finalize and execute the Joint Venture Agreements by no later than the date that is 120 days from the Trigger Date. In the event of arbitration as provided for above, the parties shall finalize and execute the Joint Venture Agreements by no later than the date that is 30 days from the date of issuance of the arbitrator's decision. ____________________ 22 Should Supply's equity interest in the Questar Loop be increased per the provisions of footnote 1, this percentage interest will also be increased to the same number. Gas Transportation Services: CIG Resources Company ("Resources") has contracted, subject to the provisions of this Letter Agreement, for 94 MDth/day of firm transportation capacity from the interconnection of Questar's and CIG's facilities near Natural Buttes, Utah (including up to 25 MDth/day from the Dragon Trail-Questar receipt point) to the delivery point interconnection with Kern River Pipeline near Elberta, Utah (at a pressure sufficient to enter into the Kern River Pipeline). Such transportation agreement shall contain or be subject to the terms of this Letter Agreement, notwithstanding any other provisions of the transportation agreement or Questar's FERC gas tariff. Service and payment obligations under the transportation agreement shall commence on the first day of the month following the date the Questar Loop is ready for service. Such transportation agreement shall have a term of twenty (20) years commencing upon the date discussed above, and shall provide Resources the right to terminate, with 12 month prior notification, at any time on or after ten years. The transportation agreement shall have a two-part rate (reservation/usage) equivalent to a 100% load factor rate of $0.13/Dth. If Questar agrees to provide firm transportation on the Questar Loop for other similarly-situated shippers on similar terms to those provided for in the Resources transportation agreement, Questar shall offer to provide the same rates and terms to Resources under the Resources transportation agreement and to any third party shippers under any releases of the Resources transportation capacity. If by November 1, 2002, Resources requests an additional 56 MDth/d of capacity from Questar from Natural Buttes to Elberta, Questar will hold an open season and if Questar can provide Resources with 56 MDth/d of firm capacity from Natural Buttes to Elberta it will do so at a 100% load factor rate of $.13 per Dth, so long as the $.13 per Dth is above Questar's incremental costs for constructing such capacity. Additional Provisions: Overthrust Pipeline Sale - Provided that Supply acquires the above-described interest in the Questar Loop, CIG shall cause CIG Overthrust, Inc. ("CIG Overthrust") to agree to a sale to Questar of CIG Overthrust's 10% equity interest in Overthrust Pipeline Company at an amount equal to CIG Overthrust's net book value at the date of the sale adjusted to compensate CIG Overthrust for any tax obligations that are created by the sale.(3) Such sale shall take place within 30 days following the in-service date of the Questar Loop, subject to any necessary regulatory approvals and Questar's commitment that neither CIG nor its affiliate Wyoming Interstate Company will be adversely affected due to future operations or rate structures of the Overthrust pipeline, to the extent such matters are under Questar's control. ____________________ 33 Attached as Exhibit A is an example of how the purchase price will be calculated. Construction and Operation - It is the general intent of the parties that Questar will construct the expansions of its pipeline, that CIG shall construct the Ruby Pipeline and that Questar shall operate all facilities which are constructed as a part of Questar Pipeline. The parties specifically reserve to a later time the determination of the operator of the Ruby Pipeline. Ruby Pipeline Extensions - The parties agree to evaluate a possible lateral north to Northwest Pipeline and further agree that such a lateral would be an opportunity that is initially reserved to the Ruby Pipeline. Such evaluation shall be conducted by March 1, 2002. The Joint Venture Agreements shall contain provisions governing such potential extensions and shall provide procedures permitting members the right to participate in such extensions or to decline such participation opportunities . Board Approvals - Questar's acceptance of the FERC certificate is subject to the approval by the senior management and, if applicable, Board of Directors of Questar. The resulting capital investment obligations contemplated herein by Supply, are subject to the approval by the senior management and, if applicable, Board of Directors of Supply (or Supply's parent corporation.) Legal Relationship - It is the intent of the parties that as a result of the sale and lease-back of the ownership interest in the Questar Loop facilities, Supply will not be deemed to be an owner of any other portion of Questar Pipeline's facilities. Further the parties will have no legal, financial or fiduciary obligations to one another other than those specifically set forth in this Letter Agreement arising out of Supply's ownership interest in the Questar Loop facilities except for previously executed agreements. Confidentiality and Exclusivity - The parties agree that the terms of this Letter Agreement shall fall under the terms of the Confidentiality Agreement previously executed by the parties. The parties further agree that during the term of this Letter Agreement neither party shall take any action inconsistent with the joint development of the Project, provided however that such agreement shall not preclude either party from seeking transportation commitments for the capacity discussed herein. Choice of Law - This Letter Agreement shall be construed and enforced in accordance with the laws of the State of Utah. Prevailing Agreement - This Letter Agreement amends, restates and supersedes in its entirety the Letter Agreement as signed by the Parties and dated March 8, 2000, as amended and restated. Please indicate the agreement of Questar to the terms outlined above by signing below and returning one fully executed copy of this Letter Agreement to me. Sincerely, Colorado Interstate Gas Company By: /s/Craig R. Coombs Craig R. Coombs Assistant Vice President ACCEPTED AND AGREED TO this 12th day of January, 2001: Questar Pipeline Company By: /s/Alan K. Allred Alan K. Allred Vice President, Business Development