HomeMy WebLinkAboutResolution - 2840 - Amendment To Agreement - Power Tex Joint Venture - Gas Purchase & Sales 1984 - 05_26_1988Resolution #2840
May 26, 1988
Item 8
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BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK:
THAT the Mayor of the City of Lubbock BE and is hereby authorized and
directed to execute for and on behalf of the City of Lubbock an Amendment to
the Gas Purchase and Sales Agreement of 1984, and associated documents, by
and between the City of Lubbock and Power -Tex Joint Venture, attached here-
with, which shall be spread upon the minutes of the Council and as spread
upon the minutes of this Council shall constitute and be a part of this Res-
olution as if fully copied herein in detail.
Passed by the City Council this 26th day of May , 1988.
B. C. McMINN, MAYOR
ATTEST:
Ranette Boyd, City Secretary
APPROVED AS TO CONTENT:
Carroll McDonald, Director of Electric
Utilities
APPROVED AS TO FORM:
Donald G. Vandiver, First Assistant
City Attorney
Resolution #2840
A
AGREEMENT AMENDING
GAS PURCHASE AGREEMENT
DATED MARCH 8, 1984
THIS AGREEMENT, made and entered into this 1st day of May,
1988, by and between the CITY OF LUBBOCK, hereinafter referred to
as "Buyer", and POWER-TEX JOINT VENTURE, hereinafter referred to
as "Seller".
W I T N E S S E T H:
WHEREAS, Buyer and Seller entered into a Gas Purchase
Agreement dated March 8, 1984, hereinafter referred to as
"Agreement" or "said Agreement", covering the sale and purchase
of gas to be used for the generation of electricity at Buyer's
Holly Avenue Electric Generation Plant; and
WHEREAS, Buyer and Seller desire to amend certain provisions
of said Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which are
hereby mutually acknowledged, the parties hereto covenant and
agree as follows:
I.
Article I. DEFINITIONS of said Agreement is amended by
deleting Section 1.04 in its entirety and substituting in lieu
thereof the following:
"l.04 "Accounting Period" means the period beginning at
7:00 a.m. local time on the first (1st) day of January and
continuing until twelve (12) calendar months from said date,
ending at 7:00 a.m. local time on the first (1st) day of
January the following year and each twelve (12) consecutive
month period thereafter for the term of this Agreement,
provided, however, the first (1st) Accounting Period shall
begin at 7:00 a.m. local time on May 1, 1988 and shall
continue until 7:00 a.m. local time on January 1, 1989."
II.
Article I. DEFINITIONS of said Agreement is further amended
by the addition of the following new Sections 1.10, 1.11, 1.12
and 1.13:
"1.10 "BCF" means one billion (1,000,000,000) cubic
feet of gas.
1.11 "Base Load Gas Requirements" means the m in i m um
volume of Gas Buyer is required to purchase from Seller
hereunder during each Accounting Period as follows:
2
Accounting Period
Base Load
May 1 - December 31, 1988
3,347,328 MCF
Calendar Year
1989
5,200,000 MCF
Calendar Year
1990
4,000,000 MCF
Calendar Year
1991
4,000,000 MCF
Calendar Year
1992
4,000,000 MCF
Calendar Year
1993
4,000,000 MCF
Calendar Year
1994
4,000,000 MCF
Calendar Year
1995
1,000,000 MCF
Calendar Year
1996
1,000,000 MCF
1.12 "Excess
Gas Requirements"
means the volume of Gas
required by Buyer
in excess of
Buyer's Base Load Gas
Requirements.
1.13 "Lease"
or "Leases" means
any written instrument
which conveys the
rights to drill for, produce and dispose
of Gas in, under,
and from the lands
described therein."
Said Agreement is further amended by deleting Article III.
VOLUMES in its entirety and substituting in lieu thereof the
following:
"3.01 Buyer agrees to receive and purchase, or pay for
if available for delivery and not taken, and Seller agrees
to deliver and sell, during each Accounting Period, a
3
quantity of Gas equal to Buyer's Base Load Gas Requirements.
Buyer agrees to use its best efforts to purchase the Base
Load Gas Requirements in equal monthly quantities during
each Accounting Period.
3.02 It is further agreed between the parties hereto
that the primary purpose of this Agreement is to provide a
sufficient and adequate supply of natural gas to Buyer for
use by it in the generation of electricity at its Holly
Avenue Electric Generation Plant. It is further agreed by
the parties hereto that Seller shall have the right to
transport and sell through the facilities constructed by it
additional natural gas over that required to supply the
Buyer upon terms and conditions satisfactory to the Seller.
3.03 Buyer and Seller understand that Buyer has entered
into a long term gas purchase agreement with Mid Plains
Petrochem, Inc. whereby Buyer may purchase a quantity of Gas
up to a maximum of 4,000 MCF per day. Buyer and Seller
agree that Buyer shall utilize the quantity of Gas so
purchased, up to the maximum of 4,000 MCF per day, to
satisfy all or a portion of Buyer's Excess Gas Requirements.
3.04 In the event Buyer's Excess Gas Requirements are
not fully satisfied by the quantity of Gas purchased from
Mid Plains Petrochem, Inc., Buyer may solicit proposals for
the supply of a quantity of Gas equal to Buyer's remaining
Excess Gas Requirements. Buyer agrees to provide to Seller
4
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a copy of the successful proposal and hereby grants unto the
Seller the right to beat same, which right should be
exercised by Seller within forty-eight (48) hours of such
receipt. Should Seller elect not to beat the terms of the
successful proposal, Buyer is free to execute the successful
proposal and Seller agrees to transport and deliver to Buyer
the quantity of Gas so purchased, if requested by Buyer.
Buyer agrees to pay to Seller each month an amount equal to
fifteen cents ($0.15) per MBtu for all Gas purchased from
third parties pursuant to this Section 3.03, whether or not
such Gas is transported and delivered by Seller.
3.05 In the event Buyer elects to purchase gas in place,
to satisfy its remaining Excess Gas Requirements, Buyer
hereby grants unto Seller the right to beat any third party
transportation, exchange, displacement, or other delivery
arrangements, which right shall be exercised by Seller
within thirty (30) days of Seller's receipt of information
sufficient to facilitate Seller's evaluation of such third
party arrangement.
3.06 Buyer has indicated an interest in acquiring
Leases from which a portion of Buyer's total Gas
requirements could be satisfied. In the event Buyer is
successful in this endeavor, Seiler hereby agrees that for
the Accounting Period beginning January 1, 1991, and for
each Accounting Period during the remaining term of this
Agreement, Buyer shall have the right to reduce the Base
5
a Load Gas Requirements set forth in Section 1.11 hereof by a
maximum of one (1) BCF per Accounting Period provided that:
A. all of Buyer's Excess Gas Requirements are
satisfied by Gas delivered from Buyer's Leases;
and
B. under no circumstances will Buyer's Base Load Gas
Requirements be less than three (3) BCF during the
Accounting Period beginning January 1, 1991; two
(2) BCF during the Accounting Period beginning
January 1, 1992; and one (1) BCF during each
Accounting Period for the remaining term of this
Agreement; and
C. as consideration to Seller, Buyer agrees to pay
to Seller each month an amount equal .to twenty
cents ($0.20) per MMBtu for all Gas utilized in
reducing Buyer's Base Load Requirements as
provided in this Section 3.05 whether or not such
gas is transported and delivered by Seller.
Buyer agrees to provide to Seller information sufficient to
ascertain the MCF and MMBtu delivered to Buyer from Buyer's
Leases.
3.07 If, at the end of any Accounting Period, Buyer
shall have failed to take during such period the quantity
required of it hereunder, Seller shall invoice Buyer for the
quantity not taken and Buyer shall pay Seller in full for
the amount of such invoice within fifteen (15) days from
2
receipt thereof. If Buyer shall have paid for any gas not
actually received by it during any Accounting Period, it
shall, subject to first satisfying the minimum requirements
set forth in Section 3.01 hereof, be entitled to receive,
without further payment, such quantity in installments as it
may from time to time designate during the remaining term of
this Agreement. In making up such gas deficiencies, if there
has been an increase in price between that upon which
payments were made and that applicable at the time of making
up deficiencies, Buyer shall pay Seller in cash for the
amount of the difference."
IV.
Article V. POINT OF DELIVERY AND PRESSURE is amended by
deleting Section 5.03 in its entirety and substituting in lieu
thereof the following:
"5.03 All Gas delivered by Seller to Buyer at the
aforementioned Point of Delivery shall be at pressures
sufficient to enter Buyer's facilities not to exceed five
hundred pounds per square inch gauge (500 psig), and not
less than three hundred pounds per square gauge (300 psig)."
V.
Said Agreement is further amended by deleting Article VI.
MEASUREMENT in its entirety and substituting in lieu thereof the
7
following:
116.01 The unit of volume for measurement of Gas
delivered hereunder shall be one (1) cubic foot of Gas at a
base temperature of sixty degrees Fahrenheit (60 deg. F) and
at an absolute pressure of fourteen and sixty-five
hundredths pounds per square inch (14.65 psia), and
otherwise as provided by the Standard Gas Measurement Law of
the State of Texas (Article 6066b of Vernon's Texas Civil
Statutes). Except as provided by that law, all fundamental
constants, observations, records, and procedures involved in
determining and/or verifying the quantity and other
characteristics of Gas delivered hereunder shall, unless
otherwise specified herein, be in accordance with the
standards prescribed in Report No. 3 of the American Gas
Association, as now and from time to time amended or
supplemented. All measurements of Gas shall be determined
by calculation into terms of such unit. All quantities
given herein, unless expressly stated, are in terms of such
unit.
6.02 Seller or its designee shall at its own expense
install, maintain and operate, or cause to be installed,
maintained and operated, the necessary measuring station at
the Point of Delivery. Said measuring station shall be so
equipped with orifice meters, recording gauges, or other
types of meters of standard make and design commonly
acceptable in the industry, as to accomplish the accurate
measurement of Gas delivered hereunder. The changing of
charts and calibrating and adjusting of meters shall be done
by Seller or its designee.
6.03 Buyer may at its option install check meters
downstream of Seller's measuring station for checking
Seller's metering equipment; and the same shall be so
installed as not to interfere with the operation of Seller's
or its designee's facilities.
6.04 The temperature of the Gas shall be determined by
the continuous use of a recording thermometer installed by
Seller or its designee so that it will properly record the
temperature of the Gas flowing through the meter. The
temperature recorded each day during the time that Gas was
actually flowing through the meter shall be used in
computing measurement for that day.
6.05 The specific gravity of the Gas shall be
determined by Seller's Gas chromatograph at fifteen minute
intervals, or more often, at Seller's election, or by means
mutually agreeable to Buyer and Seller which are approved by
the American Gas Association as set forth in its Gas
Measurement Manual. Specific gravities so determined will
be used in calculating Gas deliveries for the time interval
in which the test is made, and for following time intervals
until the next specific gravity test is made.
6.06 The heat content of the Gas shall be determined by
E
Seller's Gas chromatograph by taking samples of Gas at
Seller's meter. The result shall be applied to Gas
deliveries for the time interval when the sample is taken
and for all following time intervals until the next sample
is taken. Such samples shall be taken at fifteen minute
intervals, or more often, at Seller's election. The Btu
content per cubic foot shall be determined in accordance
with Section 1.06 hereof.
6.07 Each party shall have the right to be present at
the time of any installing, reading, cleaning, changing,
repairing, inspecting, testing, calibration, or adjusting
done in connection with the other's measuring equipment used
for measuring deliveries hereunder. The records from such
measuring equipment shall remain the property of their
owner, but upon request, each will submit to the other its
records and charts, together with calculations therefrom,
subject to return within fifteen (15) days after receipt
thereof, after which the charts shall be kept on file for a
period of two (2) years.
6.08 At least once each quarter, Seiler or its designee
shall calibrate the meter(s) and instruments or cause the
same to be calibrated. Seller shall give Buyer sufficient
notice in advance of such tests so that Buyer.may, at its
election, be present in person or by its representative to
observe adjustments, if any, which are made. For the
purpose of measurement and meter calibration, the
10
atmospheric pressure shall be assumed to be thirteen and
two -tenths pounds per square inch (13.2 psi), irrespective
of variations in natural atmospheric pressure from time to
time.
6.09 If upon any test the metering equipment in the
aggregate is found to be inaccurate by two percent (2%) or
more, registration thereof and any payment based upon such
registrations shall be corrected at the rate of such
inaccuracy for any period of inaccuracy which is definitely
known or agreed upon, or if not known or agreed upon, then
for a period extending back one-half (1/2) of the time
elapsed since the last day of the calibration, not
exceeding, however, forty-five (45) days. Following any
test, any metering equipment found to be inaccurate to any
degree shall be adjusted immediately to measure accurately.
If for any reason any meter is out of service or out of
repair so that the quantity of Gas delivered through such
meter cannot be ascertained or computed from the readings
thereof, the quantity of Gas so delivered during such period
shall be estimated and agreed upon by the parties hereto
upon the basis of the best available data, using the first
of the following methods which is feasible:
A. By using the registration of any check
measuring equipment of Buyer, if installed
and registering accurately;
B. By correction of the error if the percentage
11
of error is ascertainable by calibration,
test, or mathematical calculation; or
C. By estimating the quantity of deliveries by
deliveries during preceding periods under
similar conditions when the meter was
registering accurately.
6.10 The measurement hereunder shall be corrected for
deviation from Boyle's Law at the pressure and temperature
under which gas is delivered hereunder.
VI.
Said Agreement is further amended by deleting Article VII.
PRICE AND BILLING in its entirety and substutiting in lieu
thereof the following:
"7.01 Commencing on May 1, 1988 and continuing through
December 31, 1988, Buyer shall pay to Seller for all Gas
delivered hereunder each month an amount equal to $2.45 per
MMBtu as measured on a dry basis.
7.02 Commencing January 1, 1989 and continuing through
December 31, 1989, Buyer shall pay to Seller for all Gas
delivered hereunder each month an amount equal to $2.50 per
MMBtu as measured on a dry basis.
7.03 Commencing January 1, 1990, and continuing for the
remaining term of this Agreement, Buyer shall pay to Seller
for all Gas delivered hereunder each month an amount
12
determined utilizing the following formula:
DP = [1.5 (A + B + C)I + 3
where:
DP = delivered price per MMBtu as measured on a dry basis.
A = the price equal to the middle of the price range of
spot gas delivered into E1 Paso Natural Gas Company in
Texas and Oklahoma as published monthly in "Inside
FERC's Gas Market Report".*
B = the price equal to the middle of the price range of
spot gas delivered into Transwestern Pipeline Company in
Texas as published monthly in "Inside FERC's Gas Market
Report".*
C = the price equal to the middle of the price range of
spot gas delivered into Northern Natural Gas Company in
Texas, Oklahoma and Kansas as published monthly in
"Inside FERC's Gas Market Report"* plus $0.12 per
MMBtu.
(* During months when more than one (1) price is
published, the earliest published price shall be used)
Buyer and Seller anticipate that the prices applicable
pursuant to this Section 7.03 will fluctuate from month to
month by virtue of the seasonal swings of spot market gas
prices used in formulating such prices (i.e. higher prices
during winter months and lower prices during summer months).
13
It is possible that the monthly prices determined as set
forth hereinabove will exceed the equivalent cost of firm
purchased electric power during all or a portion of the
winter months, but be far below such equivalent power cost
during the summer months. in such event, Seller agrees that
the price otherwise applicable under this Section 7.03 shall
be reduced to equal the equivalent cost of firm purchased
electric power during such months. Conversely, during
months when the price applicable under this Section 7.03 is
less than the equivalent cost of firm purchased electric
power, Seller shall increase such price to equal such
equivalent power cost to the extent necessary to recover the
full dollar value of the aforementioned price reductions.
Not later than the fifteenth (15th) day of each month after
which the price to be paid by Buyer to Seller is reduced or
increased as set forth herein, Buyer shall provide to Seller
written notice of the equivalent cost of firm purchased
electric power applicable to each such month to facilitate
Seller's calculation of the price to be charged hereunder.
7.04 If, at any time beginning January 1, 1990, and
continuing for the remaining term of this Agreement, Buyer's
total cost of generating electric energy (including the
total cost associated with all of Buyer's Gas purchases and
deliveries) exceeds the equivalent cost of purchasing firm
electric power on an annual basis, Buyer may request a
redetermination of the price applicable hereunder by
14
providing Seller with wr-Aten notice setting forth the
equivalent cost of purchasing long-term firm electric power
and giving particulars sufficient for verification by
Seller. In the event Seller is not willing to reduce the
applicable price hereunder to a level equal to the
equivalent cost of such purchased firm electric power, Buyer
may solicit proposals from third parties to satisfy all or a
portion of its Base Load Gas Requirements. Buyer agrees to
provide to Seller a copy of the successful proposal and
hereby grants unto Seller the right to beat same. Should
Seller elect not to beat the terms of the successful
proposal, nor meet the equivalent price for long-term
purchased power, Buyer is free to execute the successful
proposal and Seller agrees to transport and d e l i v e r t o
Buyer the quantity of Gas so purchased, if requested by
Buyer. Buyer agrees to pay to Seller each month an amount
equal to twenty cents ($0.20) per MMBtu for all Gas
purchased by Buyer from third parties and transported and
delivered to Buyer by Seller pursuant to this Section 7.04.
Further, Buyer's Base Load Gas Requirements during the
Accounting Period in which third party Gas is purchased by
Buyer pursuant to this Section 7.04 shall be reduced by a
volume equal to the volume so purchased from third parties.
7.05 If, beginning January 1, 1990 and continuing for
the remaining term of this Agreement, Seller's performance
hereunder is or becomes uneconomical, Seller may request a
15
price redetermination by providing written notice to Buyer
setting forth the price necessary to remedy the uneconomical
situation. Buyer shall have the right to examine the books
and records of Seller to the extent necessary to ascertain
Seller's financial condition. Further, Buyer may solicit
proposals from third parties to satisfy all or a portion of
its Base Load Requirements. Buyer agrees to provide to
Seller a copy of any third party proposals containing a
price less than that proposed by Seller pursuant to this
Section 7.05. Buyer hereby grants unto Seller the right to
beat the price set forth in any such third party proposals.
Should Seller elect not to beat the price set forth in the
successful proposal, Buyer is free to execute same and
Seller agrees to transport and deliver to Buyer the
quantity of Gas so purchased, if requested by Buyer. Buyer
agrees to pay to Seller each month an amount equal to twenty
cents ($0.20) per MMBtu for all Gas purchased by Buyer from
third parties and transported and delivered to Buyer by
Seller pursuant to this Section 7.05. Further, Buyer's Base
Load Gas Requirements during the Accounting Period in which
third party gas is purchased by Buyer pursuant to this
Section 7.05 shall be reduced by a volume equal to the
volume so purchased from third parties.
7.06 .On or about the tenth (loth) working day of each
month, Seller shall deliver to Buyer an invoice showing the
quantity of gas delivered to Buyer during the immediately
16
preceding month and the total amount due therefor. Invoices
shall be due and payable on the twentieth (20th) day of the
month in which they are delivered to Buyer unless such day
falls on Saturday, Sunday or generally recognized holiday,
in which case the invoice shall be due and payable on the
next succeeding business day. Buyer shall make payment, at
Seller's option, either by mailing its check to any address
specified by Seller by first class United States mail,
postage prepaid, or by bank transfer of funds to a bank
account to be designated by Seller.
7.07 Seller agrees to share with Buyer the before tax
net revenue of Seller which is attributable to Seller's
Power -Tex Transmission Line. On or about the thirty-fifth
(35th) day following May 31, 1988, and each month
thereafter, Seller shall submit to Buyer, by first class
United States mail, postage prepaid, a statement showing
gross revenue, total cost of gas, total operating expenses
and before tax net revenue along with Seller's credit
which represents five percent (5%) of before tax net
revenue for such month. As used herein, "before tax net
revenue" shall mean Seller's gross revenue less the sum of :
(1) Seller's total cost of gas and (2) Seller's total
operating expenses. It is understood and agreed by and
between Buyer and Seller that Buyer shall neither own an
interest in any physical assets of Seller nor exercise any
control over or in relation to Seller's operations as a
17
result of this Section 7.07.
7.08 Each party hereto shall have the right to examine
the books and records of the other party at the offices
where such records are kept to the extent necessary to
verify the accuracy of any statement, charge, computation,
or demand made under or pursuant to this Agreement. Any
statement shall be final as to both parties unless
questioned within one (1) year after such statement was
issued."
VII.
Said Agreement is further amended by renumbering Article
XII. TERM to Article XIII. TERM, and Article XIII. MISCELLANEOUS
to Article XIV. MISCELLANEOUS and adding the following new
Article XII. TRANSPORTATION SERVICES:
"XII. TRANSPORTATION SERVICES
12.01 Buyer has entered into an "Energy Agreement"
dated March 21, 1988, with Texas Tech University which
provides for the construction and operation of a
cogeneration project on the campus of Texas Tech University.
At Buyer's request, Seller agrees to construct, own,
operate and maintain approximately eight (8) miles of eight
inch (8") pipeline extension from its Frankfort Avenue and
82nd Street tap to a mutually agreeable point on the campus
of Texas Tech University for the primary purpose of
18
Fi
transporting and delivering a sufficient and adequate supply
of gas for use by such cogeneration project under the terms
and conditions set forth in Exhibit "C" attached hereto and
made a part hereof for all purposes. With regard to this
Article XII., it is the intent of the parties hereto that,
in the event of a conflict between the provisions of this
Agreement and those contained in Exhibit "C" attached
hereto, the provisions of Exhibit "C" shall control."
VIII.
Said Agreement is further amended by deleting renumbered
Article XIII. TERM in its entirety and substituting in lieu
thereof the following:
"13.01 With regard to the sale of gas by Seiler to
Buyer for use by Buyer in the generation of electricity at
its Holly Avenue Electric Generation Plant, this Agreement
shall become effective on the date hereof and shall remain
in full force and effect through December 31, 1996.
Thereafter, this Agreement shall continue in full force and
effect from year-to-year until canceled by either party
hereto upon ninety (90) days' prior written notice to the
other."
13.02 With regard to the transportation of gas for use
at the cogeneration project to be constructed on the campus
of Texas Tech University, this Agreement shall become
19
effective and continue in full force and effect as provided
in ARTICLE VI. TERM of Exhibit "C" attached hereto and made
a part hereof for all purposes.
IX.
Said Agreement is further amended by deleting renumbered
Section 14.08 in its entirety and substutiting in lieu thereof
the following:
"14.08 Market Value shall be determined in the
following manner:
A. One appraiser shall be appointed by Buyer.
B. One appraiser shall be appointed by Seller.
C. The two appraisers so appointed shall appoint a
third appraiser.
The three appraisers shall thereafter determine the market
value of the pipeline system (excluding the eight inch
lateral extending from the Frankfort Avenue and 82nd Street
tap to the campus of Texas Tech University) which
determination shall be binding on the parties hereto."
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate originals effective as of
the day and date first hereinabove written. This Agreement may
20
be executed in counterpart and each such counterpart shall have
the same effect as if all parties had executed the same
instrument.
SELLER
POWER-TEX JOINT VENTURE
By:
reeman, President
Yadobe Gas Co.
naging Venturer
ATTEST:
r
Floyd son
Assistant Secretary
21
BUYER
CITY OF LUBBOCK
c
By: � J
ATTEST:
APPROVED AS TO FORM:
C y At orney
APPROVED AS TO CONTENT:
s
Director of
Electric Utilities
THE STATE OF TEXAS
COUNTY OF LUBBOCK
BEFORE ME, the undersigned authority, on this day personally
appeared B. C. McMinn, Mayor for the CITY OF LUBBOCK, known to me
to be the person whose name is subscribed to the foregoing
instrument, and acknowledged to me that he executed the same for
the purposes and consideration therein expressed, in the capacity
therein stated, and as the act and deed of said city.
GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS C26 day of
1988.
Rotary Public in and for
The State of Texas
My Commission Expires:
MY COMMISSION EXPIRES
NOVEMBER 30, 1989
OLIVIA R. SOLIS
THE STATE OF TEXAS
COUNTY OF MIDLAND
BEFORE ME, the undersigned authority, on this day personally
appeared J. K. Freeman, President of Adobe Gas Co., a corporation
known to me to be the person whose name is subscribed to in the
foregoing instrument, and acknowledged to me that he executed the
same for the purposes and consideration therein expressed, in the
capacity therein stated, and as the act and deed of said
corporation.
GIVEN ER MY HAND AND SEAL OF OFFICE this day
of 1988.
^'�� LI
State of 7-1-Na' Notary Public in and for
the State of Texas
.:37i i;1"1ia:iv.'d C:t�iiO � ,L ,1�► �+�
My Commission Expires:
22
EXHIBIT "C"
TO
GAS PURCHASE AGREEMENT
DATED MARCH 8, 1984
GAS TRANSPORTATION AGREEMENT
BETWEEN
POWER-TEX JOINT VENTURE
TRANSPORTER
AND
CITY OF LUBBOCK
SHIPPER
TABLE OF CONTENTS
ARTICLE
TITLE
PAGE
I
Definitions
2
II
Preliminary Acts of the Parties
4
III
Point(s) of Delivery and Point(s)
of Redelivery
5
IV
Ownership and Control
6
V
Quantity
7
VI
Term
7
VII
Fee
8
VIII
Pressures
9
IX
Quality
9
X
Metering Facilities and Measurement
10
XI
Force Ma j eure
13
XII
Warranties and Indemnifications
15
XIII
Billing, Payment and Notices
16
XIV
Successors and Assigns
17
XV
Miscellaneous
17
Signature Page
19
Notary Page
20
"Attachment 1"
21
"Attachment 2"
22
GAS TRANSPORTATION AGREEMENT
THIS AGREEMENT, made and entered into this day
of , 1988, by and between the CITY OF LUBBOCK,
hereinafter referred to as "Shipper", and POWER-TEX JOINT
VENTURE, hereinafter referred to as "Transporter".
W I T N E S S E T H:
WHEREAS, Transporter is the owner of a natural gas
transmission system in Hockley and Lubbock Counties, Texas,
through which Transporter has the capability to transport certain
volumes of gas; and
WHEREAS, Shipper has entered into an "Energy Agreement"
dated March 21, 1988, with Texas Tech University which provides
for the construction and operation of a cogeneration project on
the campus of Texas Tech University; and
WHEREAS, Transporter desires to transport and Shipper
desires to receive such volumes of gas as may be required from
time to time for the operation of the aforementioned cogeneration
facility; and
WHEREAS, Shipper desires that Transporter deliver such
volumes of gas as may from time to time be required for the
operation of such cogeneration facility;
NOW, THEREFORE, in consideration of the premises, the
1
mutual covenants and agreements herein contained and other good
and valuable consideration, the receipt and sufficiency of which
are hereby mutually acknowledged, the parties hereto covenant and
agree as follows:
ARTICLE I. DEFINITIONS
For the purposes of this Agreement, unless the context
of the instrument requires otherwise, the following definitions
shall apply:
1.01 "Gas" or "Natural Gas" means the effluent
vapor stream, in its natural state, produced from wells,
including all hydrocarbon and nonhydrocarbon constituents, and
including casinghead gas produced with crude oil, and residue gas
resulting from the processing of gas well gas or casinghead gas.
1.02 "Day" means the 24-hour period commencing at
7:00 a.m. local time on one calendar day and ending at 7:00 a.m.
local time on the next succeeding calendar day.
1.03 "Month" means the period beginning at 7:00
a.m. local time on the first day of a calendar month and ending
at 7:00 a.m. local time on the first day of the succeeding
calendar month.
1.04 "Year" means the twelve (12) month period
beginning at 7:00 a.m. local time on the first (1st) day of the
month following the month in which transportation commences under
this Agreement and each subsequent twelve (12) month period.
1.05 "MCF" means one thousand (1,000) cubic feet
of gas.
1.06 "MMCF" means one million (1,000,000) cubic
feet of gas.
1.07 "BCF" means on billion (1,000,000,000) cubic
feet of gas.
1.08 "Btu" means British thermal units measured at
14.65 psis, sixty (60) degrees Fahrenheit, and water vapor
measured as delivered.
1.09 "MMBtu" means one million (1,000,000) Btu.
1.10 "Psis" means pounds per square inch,
absolute.
1.11 "Psig" means pounds per square inch, gauge.
1.12 "Gross Heating Value" means the number of
Btu's produced by the complete combustion, at constant pressure,
of the amount of gas which would occupy a volume of one (1) cubic
foot at a temperature of sixty (60) degrees Fahrenheit if
saturated with water vapor and under a pressure equivalent to
that of 30 inches of mercury at thirty-two (32) degrees
Fahrenheit, and under standard gravitational force (acceleration
980 cm per second squared) with air of the same temperature and
pressure as the gas when the products of combustion are cooled to
3
the initial temperature of the gas and air and when the water
formed by combustion is condensed to the liquid state. The gross
heating value of the gas obtained shall be expressed on the
measurement basis set forth in this Agreement and shall be
adjusted from a saturated basis to the actual moisture content of
the gas actually delivered, provided, however, if the gas as
delivered contains seven pounds of water or less per on million
(1,000,000) cubic feet, such gas shall be deemed to be dry.
ARTICLE II. PRELIMINARY ACTS OF THE PARTIES
2.01 Transporter does hereby agree to construct,
own, operate and maintain approximately eight (8) miles of eight
inch (8") pipeline extension from its Frankfort Avenue and 82nd
Street tap to a mutually agreeable point on the campus of Texas
Tech University for the primary purpose of transporting and
delivering a sufficient and adequate supply of gas to Shipper for
use by the cogeneration facility to be constructed at or near
such point.
2.02 It is further agreed between the parties
hereto that Transporter will not allow additional taps on this
new pipeline extension without the express written concurrence of
Shipper; and, that Transporter will allow Shipper additional taps
as Shipper may require.
4
2.03 Shipper and Transporter agree that time is of
the essence in the construction of the pipeline extension to be
built by Transporter under this Agreement. Transporter agrees
that the pipeline extension will be in service prior to initial
startup of the cogeneration facility which is currently projected
to occur during the last quarter of 1989, or the first quarter of
1990.
ARTICLE III. POINT(S) OF DELIVERY AND POINT(S) OF REDELIVERY
3.01 The Point(s) of Delivery for all Gas
delivered or caused to be delivered by Shipper to Transporter for
transportation hereunder shall be at mutually agreeable point(s)
on Transporter's pipeline system, which delivery point(s) are
more fully described on "Attachment 1" attached hereto and made a
part hereof for all purposes. "Attachment 1" may be amended from
time to time by mutual agreement of the parties hereto.
3.02 The Point(s) of Redelivery for all gas that
Transporter transports hereunder shall be at mutually agreeable
point(s) on Transporter's pipeline system, which redelivery
point(s) are more fully described on "Attachment 2" attached
hereto and made a part hereof for all purposes. "Attachment 2"
may be amended from time to time by mutual agreement of the
parties hereto.
9
3.03 Shipper agrees, to the extent it has the
right to do so, to furnish, or cause to be furnished, to
Transporter at no expense to Transporter, sites together with
the rights of ingress and egress, at the Point(s) of Delivery and
the Point(s) of Redelivery suitable for Transporter's facilities.
All property of Transporter placed on or under the property of
Shipper, or its designee, shall be deemed the personal property
of Transporter whether or not affixed to the realty, and shall at
all times be subject to the absolute control and disposition of
Transporter.
ARTICLE IV. OWNERSHIP AND CONTROL
4.01 As between the parties hereto, Transporter
shall be deemed to be in control and possession of the Gas after
such Gas has been received at the Point(s) of Delivery hereunder
for transportation and until such Gas has been delivered by
Transporter to Shipper at the Point(s) of Redelivery. It is
agreed that during and only during the time the Gas is in the
possession of Transporter, Transporter shall be responsible for
injury and damage proximately caused by such possession and shall
have the unqualified right to commingle said Gas with other
natural gas in its pipeline system. Further, the parties hereto
understand, acknowledge and agree that title to all Gas
0
transported hereunder shall at all times remain with Shipper.
ARTICLE V. QUANTITY
5.01 Transporter agrees to accept, on a firm
basis, those daily quantities of Shipper's Gas tendered at the
Point(s) of Delivery; provided, however, in no event shall
Shipper tender volumes of Gas for transportation hereunder on any
Day in excess of the volumes of transport Gas that Shipper can
utilize at the Point(s) of Redelivery each Day. Transporter
agrees to transport and redeliver on a firm basis to the Point(s)
of Redelivery a daily volume of Gas equivalent in Gross Heating
Value to the daily volume of Gas delivered by or for the account
of Shipper at the Point(s) of Delivery.
5.02 In the event during any Month it is
determined that there is an imbalance, in terms of MMBtu's,
caused by differences in delivery and redelivery of quantities,
such imbalance shall be corrected during the next succeeding
Month by adjusting the quantity of gas redelivered for the
account of Shipper hereunder.
latter of:
ARTICLE VI. TERM
6.01 This Agreement shall become effective on the
A. the first (1st) day of the Month following
7
the Month during which initial startup of the cogeneration
facilities contemplated by this Agreement are achieved; or
B. the first (1st) day of the Month following
the Month during which transportation commences under this
Agreement and shall continue in full force and effect for a
period of twenty (20) years.
6.02 At the end of the term of this Agreement,
Transporter agrees to transfer ownership of the eight inch (8")
pipeline extension described in Section 2.01 hereof to Shipper,
provided, Shipper provides to Transporter at lease three (3)
Month's prior written notice of its desire to acquire ownership
of such pipeline extension, and Shipper is ready, willing and
able to assume full ownership and operation of such pipeline
extension within one (1) Month after the expiration of the term
hereof.
ARTICLE VII. FEE
7.01 For any and all Gas redelivered hereunder at
the Point(s) of Redelivery, Shipper shall pay Transporter a
transportation fee for each MMBtu transported equal to twenty
cents ($0.20) per MMBtu of Gas. Additionally, Shipper shall
reimburse Transporter for any and all other costs of any nature
whatsoever (except income taxes, operational costs or maintenance
costs) levied upon Transporter as a result of Transporter's
performance under this Agreement.
P
ARTICLE VIII. PRESSURES
8.01 The Gas delivered at the Point(s) of Delivery
hereunder shall be delivered at a pressure sufficient to overcome
the operating pressure existing in Transporter's facilities from
time to time. The Gas redelivered at the Point(s) of Redelivery
shall be delivered by Transporter at the pressure required by
Shipper's facilities at the Point(s) of Redelivery from time to
time, which pressure is estimated to be four hundred (400) psig.
Transporter shall not be required to deliver gas at pressures
greater than 420 psig.
ARTICLE IX. QUALITY
9.01 Shipper and Transporter agree that all Gas
delivered by Shipper to Transporter at the Point(s) of Delivery
and all Gas redelivered by Transporter to Shipper at the Point(s)
of Redelivery shall be merchantable Gas which shall conform to
the following specifications:
A. Liquids: The gas shall be commercially free
from water and hydrocarbons in liquid form.
B. Hydrogen Sulphide: The gas shall not contain
more than one quarter (1/4) grain of hydrogen sulphide per one
hundred (100) cubic feet.
C. Organic Sulphur: The gas shall not contain
more than five (5) grains sulphur per one hundred (100) cubic
feet.
0
D. Carbon Dioxide: The gas shall not contain
more than three percent (3%) carbon dioxide by volume.
E. Dust, Gums, etc.: T h e g a s s h a l l be
commercially free of dust, gums and other solid matter.
F. Water Vapor: The gas shall not contain more
than six (6) pounds of water in the vapor phase per million cubic
feet.
G. Heating Value: The gas shall have a gross
heating value of not more than eleven hundred twenty (1120) and
not less than nine hundred fifty (950) British thermal units per
cubic foot.
H. Temperature: The temperature of the gas
shall not exceed one hundred twenty (120) degrees.
Shipper shall be responsible for odorizing all or any part of the
Gas delivered hereunder which is diverted and/or used for any
purpose for which odorization is required pursuant to regulations
of the Railroad Commission of Texas.
ARTICLE X. METERING FACILITIES AND MEASUREMENT
10.01 The metering facilities measuring the volumes
of Gas delivered at the Point(s) of Delivery and at the Point(s)
of Redelivery hereunder shall be maintained and operated by
Transporter. The Btu content of the Gas shall be determined by
samples of such gas taken at the facilities at the Point(s) of
10
Delivery and at the Point(s) of Redelivery. Such facilities and
measurement data with respect to the Gas covered hereby shall at
all reasonable times be subject to joint inspection by the
parties hereto. All Gas delivered and redelivered hereunder
shall be measured in accordance with the provisions of the Gas
Measurement Committee Report No. 3 of the American Gas
Association, as amended from time to time. The unit of volume
for measurement of gas delivered hereunder shall be one (1) cubic
foot of gas at a base temperature of sixty (60) degrees
Fahrenheit and at an absolute pressure of fourteen and sixty-five
one hundredths (14.65) pounds per square inch absolute.
Atmospheric pressure shall be assumed to be thirteen and two -
tenths (13.2) pounds per square inch absolute at the Point(s) of
Delivery and Redelivery irrespective of the actual atmospheric
pressure at such points from time to time. Temperature shall be
determined by a recording thermometer of standard make acceptable
to both parties. Specific gravity and Btu shall be determined by
gas chromatograph or other methods as may be mutually agreed
upon. The numerical value of the continuous temperature
recorded during each fifteen minute period, the factor for
specific gravity according to the latest test therefore, and the
correction for deviation from Ideal Gas Laws applicable during
each fifteen minute period shall be used to make proper
computations of volumes hereunder. In determining the gross
11
heating value (Btu content) to be used hereunder, the gross
heating value of the Gas thus obtained shall be adjusted to a dry
basis at a temperature of sixty (60) degrees Fahrenheit at an
absolute pressure of fourteen and sixty-five one -hundredths
(14.65) pounds per square inch absolute.
10.02 At least once a month, and so far as
convenient and practicable upon the corresponding day of each
month, the measuring party shall calibrate its meters and
appurtenant instruments, all in the presence of representatives
of the other party, as hereinafter provided, and the parties
shall jointly observe any adjustment made. If the aggregate
error in these measuring devices is found upon testing to
register not more than two percent (2t) in error, then they shall
be deemed to be correct. All measuring devices shall be adjusted
upon test to register accurately within the tolerance allowed by
their respective manufacturers. If the aggregate error in these
measuring devices is more than two percent (2%) in error,
adjustments shall be made by applying the percentage of error to
the volume involved during the time the metering equipment was
out of calibration, if this period can be ascertained. If the
length of time the metering equipment was out of calibration
cannot be ascertained, then the percentage of error will be
applied to the volume delivered for one-half of the time elapsed
since the date of the last calibration. During the time any
12
meter is out of repair or is being tested, or in the event of
sudden failure of any meter to register for any period accurately
within the two percent (2%) variation allowed herein, and if it
is not feasible to install another meter, then the volume of gas
flowed shall be estimated until a new or repaired meter is
installed. Adjustment and settlement shall be made at the
regular monthly periods on the basis of the amount of gas
registered at like pressures for like periods of time when the
meter was registering accurately. The measuring party shall give
the other party notice of the time of all tests of meters and
appurtenant instruments sufficiently in advance of the holding of
such tests so that the other party may have its representatives
present, provided, however, if the measuring party has given such
notice to the other party and the other party is not present at
the time specified, then the measuring party may proceed with the
tests as though the other party were present, and the results
therefrom shall be deemed correct and accurate.
ARTICLE XI. FORCE MAJEURE
11.01 In the event of either party hereto being
rendered unable, wholly or in part, by force majeure to carry out
its obligations under this Agreement, other than to make
payments for gas delivered and received hereunder, it is agreed
that on such party's giving notice and full particulars of such
13
force majeure in writing or by telegraph to the other party as
soon as possible after the occurrence of the cause relied on,
then the obligations of the party giving such notice, so far as
they are affected by such force majeure, shall be suspended
during the continuance of any inability so caused but for no
longer period, and such cause shall as far as possible be
remedied with all reasonable dispatch.
11.02 The term "force majeure" as employed herein
shall mean acts of God, strikes, lockouts, or other industrial
disturbances, acts of the public enemy, wars, blockades,
insurrection, riots, epidemics, landslides, lightning,
earthquakes, fires, storms, floods, washouts, arrest and
restraints of governments and people, civil disturbances,
explosions, breakage, accidents to machinery, lines of pipe,
freezing of wells or lines of pipe, partial or entire failure of
wells. It is understood and agreed that the settlement of
strikes or lockouts shall be entirely within the discretion of
the party having the difficulty, and that the above requirement
that any force majeure shall be remedied with all reasonable
dispatch shall not require the settlement of strikes or lockouts
by acceding to the demands of opposing party when such course is
inadvisable in the discretion of the party having the
difficulty.
14
ARTICLE XII. WARRANTIES AND INDEMNIFICATIONS
12.01 Shipper warrants title to all Gas delivered
by it hereunder, that it has the right to deliver same hereunder
and that such Gas is free from liens and adverse claims of every
kind. Shipper will indemnify and save Transporter harmless
against all losses, damages and expenses of every character with
respect to the Gas delivered by Shipper or on account of
royalties, taxes, payments, or other charges applicable before or
upon delivery of the Gas at the Point(s) of Delivery hereunder.
12.02 Each of the parties hereto agrees that it
will assume all risk and liability for the maintenance and
operation of its respective property to itself, and for the acts
of its agents or employees, for any injury, including death, or
damages resulting in any manner from the conduct in connection
with installation,
presence, maintenance and operation of the property and
equipment hereunder, and will save and hold harmless and
indemnify the other party for any and all losses, suits, claims
or actions, costs, damages, demands or expenses resulting at
anytime from any and all causes due to any act or omission of
itself or its agents or employees. It is the purpose of this
clause that each party will be responsible for its own acts and
results thereof.
15
ARTICLE XIII. BILLING, PAYMENT AND NOTICES
13.01 On or before the fifteenth (15th) day of each
Month, Transporter will provide Shipper with a statement showing
the total volumes of Gas received by Transporter at the Point(s)
of Delivery and redelivered to Shipper at the Point(s) of
Redelivery during the preceding Month and the amounts due
hereunder. On or before the twenty-fifth (25th) day of each
calendar Month, Shipper agrees to pay Transporter the full amount
payable according to such statement provided by Transporter.
Each party hereto or its representative shall have the right at
all reasonable times to examine the books and records of the
other party to the extent necessary to verify the accuracy of any
statement, charge, computation or demand made under or pursuant
to this Agreement. Any statement shall be final as to all
parties unless questioned within one (1) year after such
statement is issued. Any notice, request, demand, statement,
payment or other correspondence shall be mailed to the post
office address of each of the parties hereto, hereinafter stated,
or to such other address as such party may hereafter designate to
the other in writing:
To Transporter: Power -Tex Joint Venture
300 W. Texas, Suite 1100
Midland, Texas 79701
To Shipper: City of Lubbock
P. 0. Box 2000
Lubbock, Texas 79457
16
13.02 It is understood and agreed by and between
the parties hereto that the fees paid by Shipper to Transporter
under this Agreement shall not be used in computing the amount of
net revenue sharing which Transporter has agreed to under other
agreements between Transporter and Shipper.
ARTICLE XIV. SUCCESSORS AND ASSIGNS
14.01 This Agreement may not be assigned by either
party without the written consent of the other party, which
consent shall not be unreasonably withheld.
14.02 Either party may assign its rights, title and
interest in, to and under this Agreement to a trustee or
trustees, individual or corporate, as security for bonds or other
obligations or securities, without such trustee or trustees
assuming or becoming in any respect obligated to perform the
obligations of the assignor under this Agreement, and, if any
such trustee be a corporation, without its being required to
qualify to do business in any state in which any performance of
this agreement may occur. However, such assignment for security
purposes, shall not relieve the assigning party of any of its
obligations under this Agreement.
ARTICLE XV. MISCELLANEOUS
15.01 The descriptive headings of the provisions of
17
this Agreement are formulated and used for convenience only and
shall not be deemed to affect the meaning or construction of any
such provisions.
15.02 This Agreement contains the entire agreement
between the parties hereto on the date hereof, respecting the
subject matter hereof, and there are no prior or contemporaneous
agreements or representations affective such subject matter other
than those herein expressed.
15.03 It is further agreed that no modification or
change herein shall be enforceable unless reduced to writing and
executed by both parties.
15.04 No waiver by either party hereto of any one
or more defaults by the other in the performance of any of the
provisions of this Agreement shall operate or be construed as a
waiver of any future default or defaults whether of a like kind
or different nature.
15.05 This Agreement shall be subject to all valid
laws of the State of Texas and of the United States and
regulations or order of duly constituted governmental authorities
having jurisdiction which are applicable to the subject matter
hereof and effective from time to time, and to the provisions of
the applicable franchises, if any, under which Transporter
operates. This Agreement shall not be effective until approved,
if necessary, by the appropriate regulatory authority.
18
Transporter and Shipper agree to cooperate to obtain, if
possible, whatever approval or authority, if any, is necessary to
effectuate the transportation and delivery of Gas hereunder.
15.06 The provisions of this Agreement shall not
impart rights enforceable by any person, firm or organization not
a party or not bound as a party, or not a successor or assignee
of a party bound to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed in multiple originals as of the day
and year first hereinabove written.
1
O u .
Asst. Secretary
ATTEST:
aA�tj' "O-�
-frg-_ Rd_tk_� 166z_�
APPROVED AS TO FO M:
A56f„C y Attorney
POWER-TEX JOINT VENTURE
By: QZ - , -
K. Freeman, PrZ'�ident
Adobe Gas Co.
Managing Venture
Date:
CITY OF LUBBOCK
By: C//�i
. � CAr-�
APPR
OVED AS TO CONTENT:
zC L
Director of Electric Utilities
19
4 .. r
THE STATE OF TEXAS
COUNTY OF LUBBOCK
BEFORE ME, the undersigned authority, on this day personally
appeared B. C. McMinn, Mayor for the CITY OF LUBBOCK, known to me
to be the person whose name is subscribed to the foregoing
instrument, and acknowledged to me that he executed the same for
the purposes and consideration therein expressed, in the
capacity therein stated, and as the act and deed of said city.
GIVEN'4NDER MY HAND AND SEAL OF OFFICE THIS oc10 — day of
A -0 - , 1988.
My Commission Expires:
THE STATE OF TEXAS
COUNTY OF MIDLAND
4-.Z-
Rot'dry Public in and for
The State of Texas
MY COMMISSION EXPIRES
NOVEMBER 30, 1989
OLIVIA R. SOLIS
BEFORE ME, the undersigned authority, on this day personally
appeared J. K. Freeman, President of Adobe Gas Co., a corporation
known to me to be the person whose name is subscribed to in the
foregoing instrument, and acknowledged to me that he executed the
same for the purposes and consideration therein expressed, in the
capacity therein stated, and as the act and deed of said
corporation.
G V N U ER MY HAND AND SEAL OF OFFICE this AO . day of
1988.
rnjj r
77.
Stat® of Texas
otary Public in and for
.I'�"� The State of Texas
My Commission expires:
20
•
"ATTACHMENT 1"
DELIVERY POINTS
1. The existing point of interconnection of Transporter's
facilities and the 30 inch diameter pipeline of Northern
Natural Gas Company located in Section 64, Donley County
School Land Survey, Hockley County, Texas.
2. The existing point of interconnection of Transporter's
facilities and the 10 inch diameter pipeline of El Paso
Natural Gas Company located in Labor 7, League 72, Val
Verde County School Land, Hockley County, Texas.
21
r ..
"ATTACHMENT 2"
REDELIVERY POINTS
1. The outlet flange of Transporter's metering facilities to be
located at a mutually agreeable point adjacent to the
cogeneration facility to be constructed on the campus of
Texas Tech University, Lubbock, Lubbock county, Texas.
22