Rules for NGL Allocation and Proration

NGL Outlet Capacity
Allocation and Proration Policy 

I. Purpose: 

Blue Racer Midstream, LLC (“Blue Racer”) provides for NGL takeaway from the tailgate of its Natrium Complex via rail, pipeline, and truck, each of which has a specific maximum capacity at which it can be safely and reliably operated. As such, Blue Racer anticipates that it may be required to allocate and/or prorate capacity across one or more of its NGL outlets during any given NGL year. 

Blue Racer developed the Allocation and Proration Policies (the “Policies”) set forth below to facilitate the allocation and/or proration of available capacity across its various NGL outlets in a non-discriminatory manner and while adhering to its primary objective of operating the Natrium Complex safely and effectively. 

The Policies apply to Blue Racer’s customers, including those that are taking product in-kind. 

II. Affected Products: 

The Policies apply to propane, normal butane and mixed butane. 

  1. Blue Racer will prorate such rail and pipeline capacity proportionately to all Blue Racer producers, and communicate such proration prior to each NGL sales year. Blue Racer will work with Producers to accommodate changes between products, as long as total rail/pipeline volume remains the same. 
  2. Blue Racer NGL Pipelines will operate G-150 in accordance with the batch schedule required by ME II.  

III. Affected Outlets: 

The Policies apply to Blue Racer’s rail rack, its G-150 Pipeline for deliveries to Mariner East II and TEPPCO, and its truck rack. Note that for deliveries into the Mariner East II Pipeline (“ME II”), Blue Racer NGL Pipelines, LLC, the owner of the G-150 Pipeline (“G150”), will operate G150 in accordance with the batching schedule established by ME II. 

IV. General Procedures: 

Prior to the beginning of each NGL year, Blue Racer will estimate the total volume of propane and mixed/normal butane it expects to produce each month (“Estimated Monthly Production Volume”). If Blue Racer determines that the Estimated Monthly Production Volume exceeds the operating capacity of any of its various NGL outlets, Blue Racer will notify its TIK customers regarding same and that capacity on certain of its NGL outlets may be subject to proration. 

If proration of a particular NGL outlet is required, Blue Racer will use the month in each season (summer/winter) with the highest Estimated Monthly Production Volume to establish the maximum amount (expressed as a percentage) each producer can sell of its total propane and mixed/normal butane production on such outlet. 

V. Rail Rack Proration Procedure: 

  1. If the Estimated Monthly Production Volume of propane and mixed/normal butane is greater than Blue Racer’s maximum rail loading capacity of 21,000 Bbls/day, capacity on the rail rack will be prorated as follows: 
    1. Each customer will be allowed to sell an amount of propane and mixed/normal butane through the rail rack equal to the ratio, expressed as a percentage, of that customer’s estimated monthly production volume of propane and mixed/normal butane to the Estimated Monthly Production Volume. 
    2. Each customer’s remaining volumes of propane and mixed/normal butane, if any, will be required to be sold via G-150 (excluding any sales made in accordance with the Truck Proration Policy). 

VI. G-150 Proration Procedure: 

  1. If the total Estimated Monthly Production Volume is greater than G150’s maximum operating capacity of 25,000 Bbls/day, capacity on G150 will be prorated as follows: 
    1. Each customer will be allowed to sell an amount of propane and mixed/normal butane through G150 equal to the ratio, expressed as a percentage, of that customer’s estimated monthly production volume of propane and mixed/normal butane to the Estimated Monthly Production Volume. 
    2. Each customer’s remaining volumes of propane and mixed/normal butane, if any, will be required to be sold via the rail rack (excluding any sales made in accordance with the Truck Proration Policy). 

VII. Truck Rack Proration Procedure: 

  1. Producers are entitled to their respective portion of the truck rack facility. 
  2. The total amount of trucks that Blue Racer can accept will be allocated proportionately based on each producers’ percentage of the total frac production. 

VIII. TEPPCO Proration Procedure: 

Nominations into TEPPCO are subject to confirmation by Enterprise and may be prorated under the following conditions:  

  1. If the total volume nominated into TEPPCO is greater than the physical delivery capabilities (meter size, pumping ability, etc). 
  2. If TEPPCO is constrained on the volume it can take due to un-ratable deliveries from G-150. 

IX. Additional Considerations: 

  1. If, after proposed producer annual nominations have been submitted (in accordance with Blue Racer’s take in kind rules), the total propane and mixed/normal butane nominations are greater than the capacity of either of the rail rack or G150, producers may be required to modify nominations to comply with initial allocated percentages. 
  2. This Allocation and Proration Policy is subject to change from time to time in Blue Racer’s sole discretion.

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