Precedent Agreement Between Maritimes & Northeast And Anadarko Canada LNG Marketing, Corp.

EXHIBIT 10.4

PRECEDENT AGREEMENT

This PRECEDENT AGREEMENT (" Precedent Agreement" ) is made and entered into as of the 29 th day of June, 2005, by and between Maritimes & Northeast Pipeline Limited Partnership, a New Brunswick limited partnership (" Pipeline" ), and Anadarko Canada LNG Marketing, Corp. (" Customer" ). Pipeline and Customer are sometimes referred to herein individually as a " Party" , or collectively as the " Parties" .

W I T N E S S E T H:

WHEREAS, Pipeline and its U.S . pipeline affiliate, Maritimes & Northeast Pipeline, L.L.C. (" Maritimes - U.S." ), have developed and constructed a natural gas pipeline project (the " Maritimes Project" ), extending from the tailgate of a processing plant located near Goldboro, Nova Scotia, to the Canadian-United States border, through the states of Maine and New Hampshire and into Massachusetts with an interconnection with Tennessee Gas Pipeline Company at Dracut, Massachusetts and an interconnection with Algonquin Gas Transmission, LLC at Beverly, Massachusetts;

WHEREAS, Customer, or an affiliate thereof, is proposing to develop, construct, own, operate and maintain a liquefied natural gas (" LNG" ) regasification facility in Nova Scotia, Canada, referred to as the Bear Head LNG Project (" Customer' s Terminal" );

WHEREAS, in order to provide pipeline transportation access to enable Customer, and/or an affiliate thereof, or third parties purchasing gas from Customer and/or Customer' s affiliate to access natural gas markets in Canada and the United States, Customer desires to have Customer' s Terminal physically connected to Pipeline' s system;


WHEREAS, in order to establish such an interconnection and enable mainline service, it will be necessary for Maritimes - U.S. to construct own and operate certain compressor facility additions and pipeline facilities on its existing system to make available to Anadarko LNG Marketing LLC (" Customer-U.S." ) the quantity of firm transportation capacity contemplated in the precedent agreement between Customer-U.S. and Maritimes-U.S. being executed contemporaneously herewith (such precedent agreement is referred to hereinafter as the " Maritimes- U . S. Precedent Agreement" );

WHEREAS, in order to make available to Customer the quantity of firm transportation capacity contemplated in this Precedent Agreement, it will be necessary for Pipeline to construct, own and operate certain compressor facilities and pipeline facilities as will be described by Pipeline in its certificate application filed with the National Energy Board (" NEB" or " Board" ) as amended from time to time (the " Project" );

WHEREAS, Customer desires to obtain firm transportation service from Pipeline as part of the Project for specified quantities of Customer' s natural gas as hereinafter provided; and

WHEREAS, subject to the terms and conditions of this Precedent Agreement and applicable law, Pipeline shall construct the Project and provide the firm transportation service Customer desires.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and intending to be legally bound, subject to the terms and conditions hereof, Pipeline and Customer agree to the following:

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1. Pipeline' s Regulatory Authorizations . Subject to the terms and conditions of this Precedent Agreement, Pipeline shall proceed following the date hereof with due diligence to obtain from all governmental and regulatory authorities having competent jurisdiction over the Project, including, but not limited to, the NEB, the authorizations and/or exemptions Pipeline reasonably determines are necessary: (i) for Pipeline to construct, own, operate, and maintain the Project facilities necessary to provide the firm transportation service for Customer contemplated herein; and (ii) for Pipeline to perform its obligations as contemplated in this Precedent Agreement. Pipeline reserves the right to file and prosecute any and all applications for such authorizations and/or exemptions, any supplements or amendments thereto, and, if necessary, any court review, in a manner that Pipeline reasonably determines to be in its best interest and that is consistent with Pipeline' s obligations under this Precedent Agreement. Customer expressly agrees reasonably to support and cooperate with, and to not oppose, obstruct or otherwise interfere with in any manner whatsoever, the efforts of Pipeline to obtain all authorizations and/or exemptions and supplements and amendments thereto necessary for Pipeline to construct, own, operate, and maintain the Project facilities and to provide the firm transportation service contemplated in this Precedent Agreement and to perform its obligations as contemplated by this Precedent Agreement; provided, however, that Customer reserves all rights to protect its interests in the exercise of its sole discretion with respect to any proposal(s) (whether such proposals are made by Pipeline, or any other party or in connection with an industry-wide forum, conference or proceeding) to change, clarify, or restate any tariff provisions relating to natural gas quality, heating content, or ownership of hydrocarbons other than

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methane produced from Pipeline' s processing of gas to meet pipeline specifications, as contemplated in the Service Agreement (as defined in Paragraph 4 hereof). Such support and cooperation may include providing reasonable assurances and undertakings to the NEB and other regulatory authorities with jurisdiction relating to the Project or Customer' s Terminal, including the adequacy of Customer' s LNG supply to the extent requested or required by the NEB process or process of such other regulatory authority , subject to Customer' s obligations under non-disclosure agreements with third parties; provided that Customer shall use reasonable efforts to obtain any waivers necessary under such non-disclosure agreements to ensure that Customer is able to provide any such reasonable assurances and undertakings. Customer shall have the right to seek confidential treatment from such regulatory authorities for any such reasonable assurances or undertakings and Pipeline shall support or not oppose such request for such confidential treatment. Pipeline agrees to promptly notify Customer in writing when each of the required authorizations, approvals and/or exemptions set forth in the NEB application and accompanying materials for the Project are received, obtained, rejected or denied. Pipeline shall also promptly notify Customer in writing as to whether any such authorizations, approvals, and/or exemptions received or obtained are acceptable or unacceptable to Pipeline.

2. Description of Customer' s Facilities and List of Customer' s Authorizations . Within sixty (60) days after execution of this Precedent Agreement, Customer, or an affiliate thereof, will advise Pipeline in writing of: (i) any material facilities which Customer, or an affiliate thereof, must construct, or cause to be constructed, in the Province of Nova Scotia in order for Customer, or an affiliate thereof,

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to complete Customer' s Terminal and to connect Customer' s Terminal to Pipeline' s facilities (" Customer' s Facilities" ); (ii) any necessary governmental and/or regulatory authorizations, approvals, certificates, permits and/or exemptions associated with the facilities identified pursuant to (i) above (" Customer' s Authorizations" ); and (iii) any necessary authorizations to import and export natural gas or LNG, as applicable, through the facilities of Customer' s Terminal and across the Canadian-US border. Customer, or an affiliate thereof, shall, however, have the right to update, modify or supplement the list of Customer' s Facilities or Customer' s Authorizations periodically.

3. Customer' s Regulatory Authorizations . Subject to the terms and conditions of this Precedent Agreement, Customer shall proceed with due diligence to obtain Customer' s Authorizations. Customer reserves the right to file and prosecute applications for Customer' s Authorizations in a manner it deems to be in its best interest; provided, however, Customer shall pursue Customer' s Authorizations in a manner designed to implement the firm transportation service contemplated herein in a timely manner and Customer shall not take any action that would obstruct, interfere with or delay Pipeline' s receipt of the authorizations and/or exemptions and any supplements and amendments thereto contemplated hereunder or otherwise jeopardize timely implementation of the firm transportation service contemplated in this Precedent Agreement. Pipeline expressly agrees reasonably to support and cooperate with, and to not oppose, obstruct or otherwise interfere with in any manner whatsoever, the efforts of Customer to obtain all authorizations and/or exemptions and supplements and amendments thereto necessary for Customer to construct, own, operate and maintain Customer' s Terminal and to perform its obligations as contemplated by this Precedent

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Agreement; provided, however, that the foregoing commitment shall not preclude Pipeline in the exercise of its sole discretion from seeking to change, clarify, or restate any provision of Pipeline' s NEB Gas Tariff (the " Tariff" ) with respect to any proposal(s) to change, clarify, or restate any tariff provision relating to natural gas quality or heating content or to participate in any NEB proceeding or any industry wide forum to protect its interests in the exercise of its sole discretion with respect to any proposal(s) to change, clarify, or restate any tariff provision relating to natural gas quality or heating content. Customer agrees to promptly notify Pipeline in writing when each of the required authorizations, approvals and/or exemptions is received, obtained, rejected or denied. Customer shall also promptly notify Pipeline in writing as to whether any such authorizations, approvals, and/or exemptions received or obtained are acceptable or unacceptable to Customer.

4. Firm Transportation Service Agreement

(A) To effectuate the firm transportation service contemplated herein, Customer and Pipeline are executing contemporaneously herewith a firm transportation service agreement under Pipeline' s Rate Schedule MN365 (" Service Agreement" ) which shall become effective in accordance with its terms. The Service Agreement: (i) specifies a Maximum Daily Transportation Quantity (" MDTQ" ) of 857,444 GJ, exclusive of fuel requirements, subject to the further conditions noted below; (ii) specifies a primary term of twenty (20) years, with renewal or right of first refusal extension rights, to the extent such rights are approved by the NEB for this particular transaction and reflected in the Service Agreement; (iii) specifies a primary point(s) of receipt at the interconnection of Pipeline' s facilities and Customer' s Facilities and Primary Point(s) of Delivery as

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reflected in Schedule A hereto and in the Service Agreement; and (iv) shall be subject to Pipeline' s MN365 toll which shall be filed initially by Pipeline as a 100% load factor rolled-in toll plus fuel and any other charges and surcharges specified in the Tariff, as amended from time to time.

(B) In the event that the Project Description indicates that the Project facilities are designed for no more than 211,011 GJ/d of service to any shipper or shippers other than for service contemplated under the Precedent Agreement at the time that Pipeline files with the NEB the certificate application for approval of the Project, then Pipeline and Customer agree as follows:

(i) the total Project costs, as reflected in Exhibit K (as adjusted for construction year dollars) to the certificate application to be filed by Maritimes-U.S. with the Federal Energy Regulatory Commission (the " FERC" ) for its related expansion project (" Exhibit K" ) and the capital amounts (converted to U.S. dollars using the then current exchange rate and adjusted for construction year dollars) used by Pipeline in the certificate application to be filed with the NEB for the Project shall be added together and shall be deemed to be the combined target capital costs for Pipeline and Maritimes-U.S. (the " Target Capital Costs" ); (ii) the Target Capital Costs shall be restated to reflect the exchange rate on the later of (aa) the filing by Maritimes-U.S. of its cost report with the FERC (the " Cost Report" ); or (bb) the filing of the post construction cost

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report as required by the NEB for the Project (the " Canadian Cost Report" ), and the capital amounts (as adjusted for construction year dollars) used by Pipeline in the certificate application filed with the NEB for the Project (as referred to in Paragraph 4(B)(i) herein) shall be converted to U.S. dollars using the then current exchange rate and this will be added to the amount set forth in the Exhibit K (as adjusted for construction year dollars) and together shall be deemed to be the revised target capital costs (the " Revised Target Capital Costs" ); (iii) to the extent that any action or inaction of Customer or an affiliate of Customer causes an actual delay in the construction of the Project facilities such that, in Pipeline' s reasonable determination, the Service Commencement Date will be delayed more than sixty (60) days beyond November 1, 2008, then, on or before November 1, 2008, Pipeline shall adjust the amounts reflected in the capital amounts used by Pipeline in the certificate application filed with the NEB for the Project (as referred to in Paragraph 4(B)(i) herein) and the amounts reflected Exhibit K associated with the Allowance for Funds Used During Construction, materials and labor to reflect Pipeline' s good faith estimate of such amounts (if and to the extent that Pipeline has not previously incurred such costs prior to the date of such actual delay) in light of its estimate of the expected Service Commencement Date and the information it has at the time. Pipeline shall provide Customer with reasonable supporting documentation to allow

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Customer to verify the adjusted amounts. The adjusted amounts shall be utilized by the Parties (along with all other applicable unadjusted amounts) in determining (i) the Exhibit K amount utilized in the definition of " Rate Base (2)" and in Paragraph 1(h) of the Negotiated Rate Agreement (defined in Paragraph 4 of the Maritimes U.S. Precedent Agreement); and (ii) the amount in the NEB certificate application for the Maritimes-Canada Project utilized in Paragraph 4(B)(i). (iv) the sum of the total amount for the Project set forth in the Canadian Cost Report (once converted into U.S. dollars using the then current exchange rate) and the total amount for the Maritimes-U.S. project set forth in the Cost Report shall be deemed to be the final capital costs (the " Final Capital Costs" ); and (v) in the event that the Final Capital Costs exceed the Revised Target Capital Costs by more than 120%, then Pipeline, in making its initial or any further rate filing with the NEB for tolls incorporating Project capital costs, will exclude costs that, when converted to U.S. dollars using the then current exchange rate, exceed 120 percent of the Revised Capital Costs .

(C) (i) Pipeline and Customer agree that the Primary Points of Delivery reflected on Schedule A may be modified, prior to September 1, 2005, by mutual written agreement of the Parties from time to time. The Parties agree further that such

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modifications may encompass changes to the projected Primary Points of Delivery and delivered volumes or to the allocation of delivered volumes between U.S. and Canadian Primary Points of Delivery.

(ii) After September 1, 2005, Pipeline shall use its reasonable efforts to accommodate changes in Primary Points of Delivery and delivered volumes, to the extent such changes are operationally feasible, will not result in material adverse changes in the cost of providing service by Pipeline under the Service Agreement, and will not result in the need to re-file or file an amendment to Pipeline' s NEB certificate application related to the Project facilities or materially delay, in Pipeline' s reasonable judgment, its ability to promptly complete the NEB certificate application for the Project facilities.

5. Service Commencement Date

(A) Customer shall have a right to elect partial service under the Service Agreement subject to the provisions of this Paragraph 5(A):

(i) No later than the tenth (10 th ) day following the date on which Pipeline provides Customer with the Project Description (defined below), Customer may elect to receive partial service as contemplated under Paragraphs 5(B) and 5(C) by notifying Pipeline in writing of such election.

(ii) In the event that Customer has not elected to receive partial service by the deadline set forth under sub-paragraph 5(A)(i), then no later than one hundred and eighty (180) days following the date on which Pipeline provides

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Customer with the Project Description, Customer may elect to receive partial service as contemplated under this Paragraph 5(A)(ii) by notifying Pipeline in writing of such election.

(iii) The election rights set forth in sub-paragraphs 5(A)(i) and (ii) are the exclusive means for Customer to elect to receive partial service. If Customer does not elect to receive partial service in strict compliance with either such provision, Customer shall have no right to partial service under the Service Agreement and the provisions of Paragraphs 5(B) and 5(C) of this Precedent Agreement shall have no further force or effect.

(B) Service under the Service Agreement for the Initial MDTQ (as defined below) under the Service Agreement shall commence on the later of: (i) the Target Date for Partial Service; or (ii) the date that all of the conditions precedent set forth in Paragraph 8 of this Precedent Agreement are satisfied or waived in writing to the extent necessary to permit the transportation of such Initial MDTQ under the Service Agreement (" Initial Commencement Date" ).

(C) The " Target Date for Partial Service" and the Initial MDTQ shall be established as follows:

(i) The Parties will use reasonable efforts to ensure that an " Initial MDTQ," equal to the maximum percentage of the full MDTQ under the Service Agreement that Pipeline can make available, will be available to Customer under the Service Agreement within a

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window from November 1, 2007 to November 1, 2008 (the " First Window Period for Partial Service" ). (ii) By the later of (a) September 15, 2005, or (b) forty-five (45) days after the conclusion of the open season and reverse open season procedures and the Maritimes-U.S. Joint Facilities Expansion Notice Procedures (defined in Paragraph 6 of the Maritimes-U.S. Precedent Agreement) all of which will be conducted with respect to the Project and all of which are more fully described below, (x) the Parties shall meet and negotiate in good faith to establish in writing a 180-day window within the First Window Period for Partial Service (the " Second Window Period for Partial Service" ), whereby the Preliminary Initial MDTQ under the Service Agreement will be available to Customer; and (y) Pipeline shall establish the " Preliminary Initial MDTQ," which will be Pipeline' s good faith estimate of the percentage of the full MDTQ (less than the full MDTQ) that Pipeline will be able to provide by the Initial Commencement Date. (iii) Twelve (12) months prior to the first day of the Second Window Period for Partial Service, (a) the Parties shall meet and negotiate in good faith to establish in writing a 90-day window within the Second Window Period for Partial Service (the " Third Window Period for Partial Service" ), whereby the Preliminary Initial MDTQ will be available to Customer; and (b) Pipeline shall provide a good

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faith estimate of any modifications that are necessary to the Preliminary Initial MDTQ. In the event that the Parties are unable to agree in writing upon such 90-day window period, the Third Window Period for Partial Service shall be the 90-day period ending on the last day of the Second Window Period for Partial Service(iv) Twelve (12) months prior to the first day of the Third Window Period for Partial Service, Pipeline shall establish the " Initial MDTQ," which will be any quantity less than the full MDTQ under the Service Agreement, but will be based upon the Preliminary Initial MDTQ and all information regarding the status of the development of the Project that Pipeline has in its possession at the time. (v) Six (6) months prior to the first day of the Third Window Period for Partial Service, the Parties shall meet and negotiate in good faith to establish in writing the targeted in-service date within the Third Window Period for Partial Service (the " Target Date for Partial Service" ), whereby the Initial MDTQ will be available to Customer. In the event that the Parties are unable to agree in writing upon such Target Date for Partial Service, the last day of the Third Window Period for Partial Service shall be the Target Date for Partial Service. (vi) Commencing six (6) months prior to the Target Date for Partial Service, the Parties agree that their respective project teams will

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meet on a regular basis, to be no less frequent than monthly, to update each other on the progress of their respective projects. (vii) Any agreement or notice of the Parties that establishes the Preliminary Initial MDTQ, the Initial MDTQ and/or the timing of the commencement of partial service described in this Paragraph 5(C) shall be made in writing.

(D) The " Target Date for Full Service" shall be established as follows:

(i) The Parties shall use reasonable efforts to ensure that the full MDTQ under the Service Agreement will be available to Customer within a window from June 1, 2008 to November 1, 2009 (the " First Window Period for Full Service" ). (ii) By the later of (a) September 15, 2005, or (b) forty-five (45) days after the conclusion of the open season and reverse open season procedures and the Maritimes-U.S. Joint Facilities Expansion Notice Procedures (defined in Paragraph 6 of the Maritimes-U.S. Precedent Agreement) all of which will be conducted with respect to the Project and all of which are more fully described below, the Parties shall meet and negotiate in good faith to establish in writing a 270-day window within the First Window Period for Full Service (the " Second Window Period for Full Service" ), whereby the full MDTQ under the Service Agreement will be available to Customer (in the event that the Parties are unable to agree in writing upon

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such 270-day window period, the Second Window Period for Full Service shall be the 270-day period ending on the last day of the First Window Period for Full Service). (iii) Twenty-four (24) months prior to the first day of the Second Window Period for Full Service, the Parties shall meet and negotiate in good faith to establish in writing a 180-day window within the Second Window Period for Full Service (the " Third Window Period for Full Service" ), whereby the full MDTQ under the Service Agreement will be available to Customer (in the event that the Parties are unable to agree in writing upon such 180-day window period, the Third Window Period for Full Service shall be the 180-day period ending on the last day of the Second Window Period for Full Service). (iv) Twelve (12) months prior to the first day of the Third Window Period for Full Service, the Parties shall meet and negotiate in good faith to establish in writing a 90-day window within the Third Window Period for Full Service (the " Fourth Window Period for Full Service" ), whereby the full MDTQ under the Service Agreement will be available to Customer (in the event that the Parties are unable to agree in writing upon such 90-day window period, the Fourth Window Period for Full Service shall be the 90-day period ending on the last day of the Third Window Period for Full Service).

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(v) Six (6) months prior to the first day of the Fourth Window Period for Full Service, the Parties shall meet and negotiate in good faith to establish in writing the targeted in-service date for full service, which shall be a date within the Fourth Window Period for Full Service (the " Target Date for Full Service" ), whereby the full MDTQ under the Service Agreement will be available to Customer (in the event that the Parties are unable to agree in writing upon such targeted in-service date, the Target Date for Full Service shall be the last day of the Fourth Window Period for Full Service). (vi) Commencing six (6) months prior to the Target Date for Full Service, the Parties agree that their respective project teams will meet on a regular basis, to be no less frequently than monthly, to update each other on the progress of their respective projects.

(E) Service under the Service Agreement for the full MDTQ under the Service Agreement shall commence on the latest to occur of: (i) the Target Date for Full Service; (ii) the date Customer' s Facilities are ready for service; provided that, such date shall be no later than the Target Date for Full Service, plus 120 days; or (iii) the date that all of the conditions precedent set forth in Paragraph 8 of this Precedent Agreement are satisfied or waived in writing to permit transportation of the full MDTQ under the Service Agreement (" Service Commencement Date" ).

(F) To facilitate full and complete understanding, at the Parties' senior management levels of the status and progress of both Parties' respective projects, the

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Parties agree that their respective project teams will make project update presentations (with respect to Pipeline, Pipeline shall provide information regarding the development of the Project, and with respect to Customer, Customer shall provide information regarding the development of Customer' s Terminal and the status of Customer' s LNG supply commitments) to joint meetings of the Parties' designees no less than quarterly, commencing September 1, 2005.

(G) At least thirty (30) days prior to the date on which Pipeline files its certificate application with the Board regarding the Project, Pipeline shall provide Customer with a draft of the estimated capital costs that will accompany such application (the " Estimated Capital Costs" ) . Pipeline shall respond to reasonable requests from Customer for information related to the amounts set forth in such draft Estimated Capital Costs. At Customer' s request, Pipeline shall meet with Customer regarding such Estimated Capital Costs within fifteen (15) days following Customer' s receipt of such Estimated Capital Costs, to discuss the Estimated Capital Costs and, subject to Customer' s reasonable request, to provide additional information regarding the amounts set forth in such Estimated Capital Costs .

6. Design and Permitting of Facilities.

(A) Promptly following the date hereof, Pipeline will undertake the design of the Project facilities and any other preparatory actions necessary for Pipeline to complete and file its certificate application(s) with the Board including, but not limited to, conducting a reverse open season and an open season and the Joint Facilities Expansion Notice (as defined in Paragraph 6 of the Maritimes U.S. Precedent

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Agreement). Prior to satisfaction of the conditions precedent set forth in Paragraph 8 of this Precedent Agreement, and consistent with the requirements of Paragraph 5 hereof, Pipeline shall have the right, but not the obligation, to proceed with the necessary design of facilities, acquisition of materials, supplies, properties, rights-of-way and any other necessary preparations to implement the firm transportation service under the Service Agreement as contemplated in this Precedent Agreement.

(B) Within forty-five (45) days following the conclusion of the reverse open season and open season procedures and the Joint Facilities Expansion Notice Procedures (as defined in Paragraph 6 of the Maritimes-US Precedent Agreement) relating to the Project, Pipeline shall provide Customer with a written detailed description of the Project to be constructed, the estimated costs of the Project and the volumes (for both partial service, rounded to the nearest increment of ten thousand five hundred and fifty (10,550) GJ/d, and full service) that can be transported through Pipeline' s facilities as expanded by the Project (the " Project Description" ). In addition, Pipeline shall, within the same forty-five (45) day period, provide Customer with a written good faith estimate of the MN365 toll to be applicable for service to Customer on Pipeline' s system under the Service Agreement.

7. Construction of Project . Upon satisfaction of all of the conditions precedent set forth in Paragraph 8 of this Precedent Agreement (except for the conditions in Paragraphs 8(A)(x) and 8(B)(vi)), or waiver in ...