HomeMy WebLinkAboutResolution - 5742 - Contract - Energas Company - Fuel Delivery Pipeline - 01_08_1998RESOLUTION NO. 5742
Item #26
January 8, 1998
RESOLUTION
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 a Contract and all related
documents by and between the City of Lubbock and Energas Company for fuel delivery
pipeline and related facilities, which contract is attached hereto, 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 Resolution as if fully copied herein in detail.
Passed by the City Council this gtb day of .Taney 199JL.
�A" A4
WINDY SITTO , MAYOR
ATTEST:
KaFlhUarnell, City Secretary
APPROVED AS TO CONTENT:
Director of Electric Utilities
APPROVED AS TO FORM:
Ij 4-,- .0 t " S-
Anita E. Burgess, City Attorney
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Dmauber 23, 1997
RESOLUTION No. 5742
Item #26
January 8, 1998
MUNICIPAL MAIN EXTENSION,
GAS TRANSPORTATION AND
PIPELINE OPERATION AND
MAINTENANCE AGREEMENT
Between
CITY OF LUBBOCK, d/b/a
LUBBOCK POWER & LIGHT
and
ENERGAS COMPANY,
A Division Of
ATMOS ENERGY CORPORATION
Lubbock County, Texas
TABLE OF CONTENTS
ARTICLE
TITLE
PAGE
1
Definitions
2
2
Acquisition of Right -Of -Way
3
3
Construction
4
4
Operation and Maintenance of Plant Pipeline
6
5
Use and Modification of Plant Pipeline
7
6
Transportation of Gas
7
7
Quality of Gas
9
8
Operation and Maintenance of LP&L Pipeline
10
9
Measurement and Testing
11
10
Heating Value
14
11
Transportation Charge
14
12
Billing and Payment
15
13
Default and Remedies
16
14
Title and Interest in Lateral
18
15
Warranty of Title to Gas
18
16
Indemnity
18
17
Force Majeure
19
18
Term
20
19
Governmental Regulations
20
20
Assignment
21
21
Gas Imbalances
21
22
Additional Service
22
23
Miscellaneous
22
Signature Page 24
Exhibit "A"— List of Municipal Facilities 25
Exhibit "B" — Depiction of Plant Pipeline 26
MUNICIPAL MAIN EXTENSION, GAS TRANSPORTATION AND PIPELINE
OPERATION AND MAINTENANCE AGREEMENT
THIS MUNICIPAL MAIN EXTENSION, GAS TRANSPORTATION AND
PIPELINE OPERATION AND MAINTENANCE AGREEMENT (hereinafter "Agreement")
is made by and between ENERGAS COMPANY, a division of Atmos Energy
Corporation, a Texas and Virginia corporation (hereinafter "Energas"), and the CITY OF
LUBBOCK, dlbla LUBBOCK POWER & LIGHT, a Texas incorporated municipality
(hereinafter "LP&L").
WITNESSETH:
WHEREAS, Energas owns and operates a natural gas distribution system (the
"System"} within the State of Texas which is used for the delivery of natural gas to
commercial, industrial and residential customers; and
WHEREAS, LP&L has requested Energas to expand the System by
constructing an eight -inch natural gas pipeline approximately eight miles in length,
together with appropriate regulating and metering facilities (such pipeline and all of
Energas' metering and regulating facilities appurtenant thereto being hereinafter
collectively referred to as the "Energas Lateral"), for purposes of transporting natural
gas to LP&L's power facility commonly known as the Municipal Hill Plant (the "Plant") in
Lubbock County, Texas; and
WHEREAS, LP&L has requested Energas to connect the Energas Lateral to,
and to utilize a portion of, an existing eight -inch natural gas pipeline owned by LP&L
(the "LP&L Lateral") extending from Holly Station near the Southeast comer of the city
limits of Lubbock, Texas, in a Southeasterly direction to the KN (Red River) pipeline,
and to construct an interconnection and other necessary facilities to tie into the existing
LG&E (PowerTex) and KN (Red River) pipelines of sufficient capacity to meet the
needs of the Plant; and
WHEREAS„ LP&L has also requested Energas to transport natural gas to
certain other municipal facilities through portions of the System within and around the
City of Lubbock, Texas (the "Lubbock System"), and to assume the operation and
maintenance of an eight -inch natural gas line owned by LP&L and which is
approximately thirty miles in length (the "LP&L Pipeline");
WHEREAS, Energas agrees to construct the Energas Lateral and to connect
the Energas Lateral to the LP&L Lateral, to connect the LP&L Lateral to the LG&E
(PowerTex) and KN (Red River) pipelines, to transport natural gas for LP&L to the Plant
through the LP&L Lateral and the Energas Lateral, to transport gas for LP&L through
the Lubbock System to the municipal facilities herein designated, and to assume the
operation and maintenance of the LP&L Pipeline, all in accordance with the terms and
conditions of this Agreement.
Municipal Main Extension, Gas Transportation and Pipeline Operation and Maintenance Agreement- Page 1
NOW THEREFORE, in consideration of the mutual promises herein contained,
and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Energas and LP&L agree as follows:
Article 1
Definitions
For purposes of this Agreement, unless the context hereof requires otherwise,
the following definitions shall be applicable:
1.01 Accounting Period shall mean a period of one calendar month,
commencing at 8:00 a.m. Central Time ("Cr) on the first day of each calendar month,
and ending at 8:00 a.m. CT on the first day of the succeeding calendar month.
1.02 Commission shall mean the Texas Railroad Commission, and any
successor regulatory authority.
1.03 Day shall mean the twenty-four (24) hour period commencing at 8:00
a.m. CT on one calendar day and ending at 8:00 a.m. CT on the following calendar
day.
1.04 Month shall mean the period beginning at 8:00 a.m. CT on the first day
of a calendar month and ending at 8:00 a.m. CT on the first day of the next succeeding
calendar month.
1.05 Gas shall mean natural gas produced from gas wells (i.e., gas -well gas),
gas produced in association with oil (i.e., casinghead gas), and the residue gas
resulting from the processing of both casinghead gas and gas -well gas.
1.06 Mcf shall mean the volume of gas which occupies a space of one
thousand (1,000) cubic feet at a temperature of 601, Fahrenheit and at an absolute
pressure 14.65 Psia.
1.07 Btu ("British Thermal Unit") shall mean the quantity of heat that must be
added to one pound of pure water to raise its temperature from fifty-eight and five -
tenths degrees (58.50) Fahrenheit to fifty-nine and five -tenths degrees (59.50)
Fahrenheit under standard pressure conditions as set forth at Page 158 of the 1963
edition of the American Gas Association publication, AGA Gas Measurement Manual.
1.08 MMBtu shall mean one million British Thermal Units.
1.09 Plant Pipeline shall mean the pipeline comprised of the LP&L Lateral
and the Energas Lateral.
1.10 Municipal Facilities shall mean those buildings or other improvements
owned, operated or leased by LP&L and/or the City of Lubbock, Texas, and served by
the accounts and meters listed and described in Exhibit A attached hereto and by this
reference made a part hereof.
Municipal Main Extension, Gas Transportation and Pipeline Operation and Maintenance Agreement- Page 2
1.11 Points of Receipt shall mean as follows:
a. For the Plant Pipeline, the Points of Receipt shall be the interconnection
between the LP&L Lateral and the KN (Red River) pipeline located in the
Northwest Comer, Section 54, Block S, Lubbock County, Texas, the
interconnection between the LP&L Lateral and the LG&E (PowerTex) pipeline
located in Section 54, Block S, Lubbock County, Texas, and the point of
connection of the LP&L Pipeline to the LP&L Lateral (as more particularly
described in Section 8.01 of this Agreement).
b. For Municipal Facilities, the Points of Receipt shall be points of inlet into
the Lubbock System at the North Town Border Station of Energas located in
Block D-3, Section 2, Lubbock County, Texas, and the Southwest Town Border
Station of Energas located in Block S, Section 3, Lubbock County, Texas.
1.12 Points of Delivery shall mean as follows:
a. For the Plant Pipeline, the Point of Delivery shall be the inlet flange of
the LP&L site distribution line at the Plant.
b. For Municipal Facilities, the Points of Delivery shall be metering facilities
for the accounts and meters Ilsted and described in Exhibit A attached hereto.
1.13 Psig shall mean pounds per square inch, guage.
1.14 Psia shall mean pounds per square inch, absolute.
1.15 Heating Value shall mean the number of Btus produced by the complete
combustion, at a constant pressure, of the amount of gas that would occupy a volume
of one (1) cubic foot at a temperature of sixty degrees (600) Fahrenheit if saturated with
water vapor and at a constant pressure of 14.65 Psia and under standard gravitational
force (acceleration 980.665 cm per sec per sec) with air of the same temperature and
pressure as the gas when products of combustion are cooled to the initial temperature
of the gas and air and when the water formed by combustion is condensed to the liquid
state.
1.16 Accounting Year shall mean a twelve-month period commencing at 8:00
a.m. CT on each October 1 and ending at 6:00 a.m. CT on the next succeeding
October 1, except that the first Accounting Year shall commence on the Completion
Date and shall end at 6:00 a.m. CT on the October 1 next succeeding the Completion
Date, and in the event gas deliveries permanently cease on a date other than October
1; the final Accounting Year shall be the period from October 1 immediately preceding
the date of such delivery cessation until the date of such cessation.
Article 2
Acquisition of Right -Of -Way
2.01 Pursuant to the terms of this Agreement, Energas will, to the extent
practicable, utilize existing easements and rights -of -way held by Energas or LP&L, and
Municipal Main Extension, Gas Transportation and Pipeline operation and Maintenance Agreement - Page 3
will acquire, at Energas' sole cost and expense, such additional easements, rights -of -
way, licenses, permits or deeds (hereinafter collectively referred to as "Easements") as
are reasonably necessary to extend the Plant Pipeline from the Points of Receipt to the
Point of Delivery therefor, such path for the Plant Pipeline being hereinafter referred to
as the "Right -Of -Way". The approximate location of the Right -Of -Way from the Points
of Receipt to the Point of Delivery of the Plant Pipeline is depicted in Exhibit B attached
hereto and by this reference made a part hereof. The Right -Of -Way as depicted in
Exhibit B shall serve only as a general point of reference and may not accurately depict
the actual location of the Right -Of -Way after all Easements comprising the Right -Of -
Way shall have been acquired by Energas. The parties expressly understand and
agree that Energas shall, in its sole discretion, determine those Easements which are
necessary for the Right -Of -Way.
2.02 Energas shall not be compelled to accept any offer of an Easement for
the Right -Of -Way if, in Energas' sole discretion, such offered Easement will not safely
accommodate the installation, operation and maintenance of the Lateral.
2.03 Upon the date of execution of this Agreement by the Mayor of the City of
Lubbock, Texas (the "Effective Time'), Energas will proceed with reasonable diligence
to obtain all Easements for the Right -Of -Way, and Energas shall use its best efforts to
complete the acquisition of the Right -Of -Way so that the installation and construction of
the Energas Lateral will be completed on or before the end of six (6) months after the
Effective Time (the "Completion Time'). Notwithstanding the foregoing, Energas shall
be entitled to extend the Completion Time as provided in Article 17 of this Agreement if,
through no fault on the part of Energas, the completion of the acquisition of the Right -
Of -Way is delayed.
2.04 Each and every Easement for the Right -Of -Way shall be upon terms and
conditions which, in Energas' sole discretion, are acceptable to Energas. The means
and method of procuring all such Easements shall lie within the sole discretion of
Energas as Energas deems appropriate. LP&L shall not be entitled to prescribe any
terms or conditions for any such Easement nor the means or method utilized by
Energas to obtain the same.
2.05 LP&L shall, for no additional consideration other than as expressly set
forth in this Agreement, grant all rights -of -way or easements upon, across or through
real property owned by LP&L which Energas may require for the Right -Of -Way. Rights
to easements or rights -of -way granted to Energas by LP&L hereunder shall end upon
the expiration or earlier termination of this Agreement.
Article 3
Construction
3.01 Pursuant to the terms of this Agreement, Energas will, at Energas' sole
cost and expense, install the Energas Lateral in the Right -Of -Way, and connect the
Energas Lateral to the LP&L Lateral, so that the Plant Pipeline extends from the Points
of Receipt to the Point of Delivery for the Plant Pipeline. Further, Energas will, at
Municipal Main Extension, Gas Transportation and Pipeline Operation and Maintenance Agreement- Page 4
Energas' sole cost and expense, construct the necessary interconnections between the
LP&L Lateral and the KN (Red River) Pipeline and the LG&E (PowerTex) Pipeline at
the Points of Receipt therefor. The Lateral will be comprised of approximately eight (8)
miles of eight -inch steel pipeline, grade X-42, having a wall thickness of .322. Except
as otherwise specifically provided in this Agreement, Energas is not obligated to
upgrade or modify the LP&L Lateral and shall be entitled to use the same as it exists as
of the Effective Time. The approximate location of the Plant Pipeline from the Points of
Receipt to the Point of Delivery therefor is depicted in Exhibit B attached hereto and by
this reference made a part hereof. However, the Plant Pipeline as depicted in Exhibit B
shall serve only as a general point of reference and may not accurately depict the
actual location of the Plant Pipeline upon the completion of the construction and
installation of the Energas Lateral. Energas may, but shall not be obligated to,
commence construction of the Energas Lateral before the acquisition of the Right -Of -
Way has been completed. The parties understand and agree that the actual length of
the Plant Pipeline will be dependent upon the course and path of the Right -Of -Way and
that the length herein expressed is but an estimate thereof.
3.02 The Energas Lateral will be constructed to accommodate the
transportation of up to 35,000 MMBtu of gas per day with a delivery pressure of 600
Psig at the Point of Delivery when received at the Point(s) of Receipt with a pressure of
850 Psig or greater. The maximum operating pressure of the Energas Lateral shall not
exceed 1,200 Psig.
3.03 Except as otherwise provided herein, Energas will provide all labor,
materials and equipment for the construction of the Energas Lateral and the
interconnection of the LP&L Lateral to the KN (Red River) and LG&E (PowerTex)
pipelines, including all appropriate taps, valves, meters, risers and regulators. In
addition, Energas or its designee will install and maintain measurement facilities at the
Points of Receipt and Point of Delivery of the Plant Pipeline as may be required under
the provisions of Article 9 of this Agreement (save and except for any such equipment
therein specified for which LP&L is responsible), which will be used for determining
transported volumes and for billing purposes.
3.04 If Energas elects, in its sole discretion, to commence the construction
and installation of the Lateral prior to the completion of the acquisition of the Right -Of -
Way, then it shall send prior written notice of Intent to commence construction to LP&L.
Otherwise, after the completion of the acquisition of the Right -Of -Way, Energas will
send written notice of intent to commence construction to LP&L. Such notice, whether
given by Energas before or after the completion of the acquisition of the Right -Of -Way,
shall be hereinafter referred to as the "Construction Notice". After giving the
Construction Notice to LP&L, Energas shall proceed with reasonable diligence to
complete the construction and installation of the Energas Lateral, and the
interconnections between the LP&L Lateral and the KN (Red River) and LG&E
(PowerTex)- pipelines, within the Completion Time. Notwithstanding the foregoing,
Energas shall be entitled to extend the Completion Time as provided in Article 17 of this
Agreement if, through no fault on the part of Energas, the completion of the
construction and installation of the Energas Lateral is delayed. Within three (3)
business days after the date of the completion of the installation and construction of the
Lateral, Energas shall send written notice to LP&L (the "Completion Notice'), which
notice shall specify the date (the "Completion Date"), as determined solely by Energas,
Municipal Main Extension, Gas Transportation and Pipeline operation and Malntanance Agreement - Page 5
of the completion of the installation and construction of the Lateral. Any failure of
Energas to timely give the Completion Notice shall not operate to extend the
Completion Date.
3.05 In no event shall Energas be obligated to begin transporting gas or
receiving gas into the Plant Pipeline before the Completion Date.
Article 4
Operation and Maintenance of Plant Pipeline
4.01 Energas shall operate, maintain and repair the Plant Pipeline in
accordance with Energas' applicable service regulations, as well as in accordance with
the applicable regulations of the Commission and any other governmental authorities
having jurisdiction. In the event that any maintenance or repair necessitates an
interruption or curtailment of the transportation of natural gas through the Plant
Pipeline, Energas shall, except in cases where health or safety concerns require
immediate action, give written notice to LP&L at least five (5) days prior to commencing
such repair or maintenance. Where any such repairs or maintenance are immediately
necessary for reasons of health or safety, Energas shall give written notice to LP&L as
soon as practicable after commencement of the repairs or maintenance. Energas will
proceed in a timely and diligent manner to effect any maintenance or repair in order to
minimize any interruption or curtailment of the transportation of natural gas through the
Plant Pipeline. However, Energas shall in no event be liable for any damages which
may occur as a result of any maintenance or repair which necessitates an interruption
or curtailment of the transportation of natural gas through the Plant Pipeline.
4.02 Except as otherwise provided herein, any and all costs associated with
the operation, maintenance or repair of the Plant Pipeline shall be the responsibility of
Energas.
4.03 If LP&L shall exercise its option to acquire the Energas Lateral from
Energas pursuant to Section 14.02 of this Agreement, then Energas shall have a right
of first refusal to provide operation and maintenance services for the Plant Pipeline to
LP&L. Within thirty (30) days of exercising its purchase option, LP&L shall provide to
Energas copies of any written estimate or proposal received by LP&L from a third party
to provide operation or maintenance services for the Plant Pipeline. Within thirty (30)
days thereafter, Energas shall notify LP&L if Energas will provide operation and
maintenance services for the Plant Pipeline upon the same terms and conditions as set
forth in the third party offer, and Energas and LP&L shall thereafter enter into a written
operation and maintenance agreement for the Plant Pipeline containing the terms and
conditions of the third party offer, as well as other terms and conditions upon which the
parties shall mutually agree. The effective date of such operation and maintenance
agreement shall be the date upon which this Agreement terminates under Article 18
hereof. If Energas has not timely notified LP&L in writing of its election to match a third
party offer of operation and maintenance services, then Energas shall be deemed to
have waived its right of first refusal hereunder. If LP&L and Energas enter into an
operation and maintenance agreement pursuant to this Section 4.03, then such
Agreement shall, subject to the right of LP&L to utilize the transportation capacity of the
Plant Pipeline for LP&L's own benefit, grant unto Energas a right of first refusal with
Municipal Main Extension, Gas Transportation and Pipeline operation and Maintenance Agreement- Page 6
i
respect to any excess transportation capacity on the Plant Pipeline. "Excess
transportation capacity" shall mean the difference between the volume of gas being
transported by LP&L through the Plant Pipeline at any given time and the maximum
volume of gas which the Plant Pipeline is capable of transporting under applicable
technical and regulatory limitations. In connection therewith, Energas shall be entitled
to construct and install necessary facilities to utilize its right of excess transportation
capacity, but all of such equipment and facilities constructed for such purpose shall be
at the sole risk and cost of Energas. In consideration of such right of first refusal,
Energas shall pay to LP&L a transportation charge equal to $0.05 per MMBtu of gas
which is transported by LP&L through the Plant Pipeline for the benefit of Energas.
4.04 If LP&L fails to timely exercise its option to purchase the Energas Lateral
under Section 14.02 of this Agreement, then, after the expiration of the primary term of
this Agreement, LP&L shall, unless and until this Agreement is terminated as provided
in Article 16, reimburse Energas for any and all costs associated with the operation,
maintenance or repair of the Plant Pipeline as such expenses are incurred (hereinafter
referred to as "O&M Costs"). O&M Costs will be billed to LP&L by Energas at a rate
equal to the actual costs plus twenty percent (20%). For purposes hereof, O&M Costs
shall include any and all costs and expenses, or any portion thereof, incurred by
Energas which Energas determines are attributable to, allocable to or associated with
the maintenance, operation or repair of the Plant Pipeline for the benefit of LP&L.
Article 5
Use and Modification of Plant Pipeline
5.01 Subject to the volumetric and pressure requirements for the delivery of
gas pursuant to this Agreement, Energas shall have the right to connect other gas lines
or mains to the Plant Pipeline at its sole discretion and to transport gas through the
Plant Pipeline for the benefit of third parties. Any costs incurred in connection with any
such other gas lines or mains shall be the sole responsibility of Energas.
5.02 In the event that it becomes necessary, as mutually agreed by LP&L and
Energas, to modify or upgrade the Plant Pipeline because of an increase in the volume
of gas transported through the Plant Pipeline for the benefit of LP&L, or to modify or
upgrade the LP&L Lateral to conform to the gas delivery requirements hereof or to
comply with applicable legal requirements, then Energas and LP&L agree that an
appropriate increase in the monthly Transportation Charge to be paid by LP&L to
Energas hereunder will be made based upon the costs associated with making the
required modifications or upgrades to the Plant Pipeline. Any increase in the
Transportation Charge shall be reflected in an amendment to this Agreement.
Article 6
Transportatlon of Gas
6.01 Subject to the provisions of this Agreement and commencing upon the
date ' of initial receipt of gas hereunder into the Plant Pipeline, Energas agrees to
receive, transport and deliver, on a firm basis, for and on behalf of LP&L through the
Plant Pipeline, and LP&L agrees to deliver or cause to be delivered to Energas for
redelivery through the Plant Pipeline, volumes of gas up to a maximum of 35,000
Municipal Main Extension, Gas Transportation and Pipellne Operation and Maintenance Agremment- Page 7
MMBtu gas per day. Energas shall receive the gas at the designated Point(s) of
Receipt and deliver it to LP&L at the Point of Delivery. It is further understood and
agreed that the daily volume may be adjusted from time to time by mutual written
agreement between Energas and LP&L. Receipt and delivery of more than 35,000
MMBtu of gas per day through the Plant Pipeline by Energas hereunder is conditioned
upon availability of capacity in the Plant Pipeline to provide such service. If
modifications must be made to the Plant Pipeline to accommodate greater capacity for
the benefit of LP&L, then the same shall be made pursuant to Section 5.02 of this
Agreement.
6.02 LP&L's gas shall be delivered at the Point(s) of Receipt for the Plant
Pipeline at a pressure sufficient to enter the Plant Pipeline, but not less than a minimum
inlet pressure of 850 Psig. Energas shall deliver the gas to LP&L through the Plant
Pipeline at the Point of Delivery therefor with a normal pressure drop based on volume
and inlet pressure, but not less than a minimum inlet pressure of 600 Psig. Any
modifications to the Plant Pipeline to accommodate a greater pressure shall be made
pursuant to Section 5.02 of this Agreement.
6.03 Subject to the provisions of this Agreement and commencing on May 1,
1898, Energas agrees to receive, transport and deliver, on an interruptible basis, for
and on behalf of LP&L, and LP&L agrees to deliver or cause to be delivered to Energas
for redelivery through the Lubbock System, all of the gas that LP&L or the City of
Lubbock purchases and uses to meet all of LP&L's or the City of Lubbock's
requirements at the Municipal Facilities identified in Exhibit A attached hereto, all of
which are located in or near the City of Lubbock, Texas; provided, however, that
Energas shall have no obligation to transport gas hereunder through the Lubbock
System on account of LP&L or the City of Lubbock in excess of 300 MMBtu per day.
Energas shall receive such gas at the designated Point(s) of Receipt therefor and
transport the same through the Lubbock System to the Point(s) of Delivery therefor.
Receipt and delivery of more than 300 MMBtu per day through the Lubbock System is
subject to available capacity therein.
6.04 Deliveries of gas by LP&L at the Point(s) of Receipt for Municipal
Facilities and redeliveries of gas by Energas at the Point (s) of Delivery for Municipal
Facilities shall be made at pressures mutually agreeable by the parties hereto and
sufficient to effect delivery Into the facilities of the party receiving such gas at such
points; provided, however, that neither party shall be required to install or operate any
compression facilities in order the deliver the gas at any specific pressure.
6.05 LP&L acknowledges and agrees that all gas to be transported under
Section 6.03 of this Agreement is subject to curtailment when necessary to protect the
health and safety of, or to maintain service to, Energas' higher priority customers, and
that, in the event of such a curtailment, such curtailment shall not be the basis for any
claim for damages sustained by LP&L or the City of Lubbock. In the event a
curtailment becomes necessary, Energas shall perform such curtailment in accordance
with Energas' applicable rules from time to time in effect and on file with the
Commission or any successor regulatory agency and will use its best efforts to curtail
all customers of the same classification in the immediate vicinity proportionately. In the
event a curtailment of delivery shall become necessary or advisable, Energas shall, as
soon as possible prior to the actual curtailment, notify LP&L by telephone, telegraph,
Municipal Main Extension, Gas Transportation and Pipeline Operation and Maintenance Agreement - Page 8
facsimile, or other means, of the nature, extent and probable duration of such
curtailment.
6.06 LP&L agrees that, during the time that gas being transported hereunder
is in the possession of Energas, Energas shall have the right to commingle such gas
with other gas in the Lubbock System or the Plant Pipeline, as applicable, and to
redeliver molecules of gas different from those actually received from LP&L at the
Point(s) of Receipt.
6.07 Prior to delivering gas to Energas for transportation hereunder, LP&L
shall notify Energas as to which Point(s) of Receipt the gas will be delivered.
Article 7
Quality of Gas
7.01 All gas delivered by LP&L to Energas at the Points of Receipt shall
conform to the following specifications:
(a) The gas shall be commercially free of dust, gums and other solid matter.
(b) The gas shall not at any time have an oxygen content in excess of two -
tenths of one percent (.2%) by volume.
(c) The gas shall not at any time have a carbon dioxide content in excess of
one percent (1%) by volume.
(d) The gas shall be commercially free of water and hydrocarbons in liquid
form at the temperature and pressure at which the gas is delivered.
(e) The gas shall not contain more than two -tenths (2) per Mcf of liquefiable
hydrocarbons having a molecular weight equal to or greater than pentanes.
(f) The gas shall not contain more than one -quarter (114) grain of hydrogen
sulfide per one hundred (100) cubic feet.
(g) The gas shall not contain more than five (5) grains of sulphur per one
hundred (100) cubic feet.
(h) The gas shall have a gross heating value of not less than nine hundred
fifty (950) Btus per cubic foot and not more than one thousand one hundred
(1,100) Btus per cubic foot.
(i) The gas shall not contain more than seven (7) pounds of water vapor per
million cubic feet.
0) The gas shall not be delivered at a temperature in excess of one
hundred degrees (100°) Fahrenheit.
Municipal Main Extension, Gas Transportation and Pipeline Operation and Maintenance Agreament- Page 9
7.02 All gas redelivered by Energas to the Point(s) of Delivery shall be, and
hereby is, deemed to be of equal quality with the gas delivered by LP&L to Energas at
the Points of Receipt.
7.03 if any of the gas delivered by LP&L to Energas hereunder shall fail to
conform to the quality specifications set forth in Section 7.01 above, Energas, at its
option, may, in addition to any and all other remedies otherwise available to Energas,
take one or more of the following actions: (a) immediately terminate this Agreement;
(b) refuse to accept for further delivery any gas hereunder until LP&L shall remedy
such quality nonconformity to Energas' satisfaction; or (c) make or cause to be made,
at LP&L's expense, such changes to the gas as may be necessary to bring such gas
into conformity with the quality specifications set forth herein, the costs and expenses
of making such changes to be reimbursed by LP&L to Energas within fifteen (15) days
after notice from Energas of the amount to be reimbursed.
Article 8
Operation and Maintenance of LP&L Pipeline
8.01 Commencing May 1, 1998, and subject to the provisions of this
Agreement, and for the consideration hereinafter specified, Energas agrees to operate
and maintain, for and in behalf of LP&L, the LP&L Pipeline, from the point of beginning
thereof at the inlet flange of the LP&L Pipeline at the Cedar Hill gas processing plant in
Garza County, Texas, to the point thereof ending at the interconnection between the
LP&L Lateral and the KN (Red River) pipeline In Lubbock County, Texas. Although the
LP&L Lateral is not physically separate from the LP&L Pipeline, it shall, for all purposes
of this Agreement, be deemed to be separate and apart from the LP&L Pipeline and
not subject of the provisions of this Article 8.
8.02 Energas agrees to furnish all necessary materials and labor for the
operation and.maintenance of the LP&L Pipeline. Such operation and maintenance
services shall include those which Energas customarily performs on comparable gas
pipelines owned and operated by Energas and as may be from time to time required by
the Commission. However, in no event shall Energas be required to install or maintain
compression facilities for the LP&L Pipeline unless LP&L requests such in writing and
agrees to pay all costs in connection or associated therewith. Further, Energas shall
have no obligation to assure that the pressures prevailing from time to time in the LP&L
Pipeline are sufficient to enable any gas transported through the LP&L Pipeline to enter
the Plant Pipeline against any prevailing pressures in the Plant Pipeline or from another
pipeline at an interconnection point. However, Energas agrees that from time to time
during the term of this Agreement, and upon request by LP&L, it will advise LP&L of the
amount of such prevailing pressures as indicated by any meters maintained hereunder
by Energas at the Point(s) of Receipt for the Plant Pipeline.
8.03 In consideration of the operation and maintenance services to be
performed by Energas under this Article 8, LP&L agrees to pay Energas a monthly
charge ('O&M Fee") equal to $.020 per MMBtu of gas which is moved through the
LP&L Pipeline as measured at the meter located, or to be located, at the inlet flange of
the LP&L Pipeline from the Cedar Hill gas processing plant in Garza County, Texas
Municipal Main EAenslon, Gas Transportation anti Pipeline Operation and Maintenance Agreement- Page 10
(the "O&M Metering Point"}. In addition, LP&L agrees to pay to Energas an amount
equal to any and all taxes and charges of any nature imposed on Energas on account
of any O&M Fee charged by Energas, or the maintenance or operation of the LP&L
Pipeline, including, but not limited to, sales taxes, gross receipts taxes, franchise fees
and other similar taxes and charges.
8.04 In the event that any maintenance or repair necessitates an interruption
or curtailment of the transportation of natural gas through the LP&L Pipeline, Energas
shall, except in cases where health or safety concerns require immediate action, give
written notice to LP&L at least five (5) days prior to commencing such repair or
maintenance. Where any such repairs or maintenance are immediately necessary for
reasons of health or safety, Energas shall give written notice to LP&L as soon as
practicable after commencement of the repairs or maintenance. Energas will proceed
in a timely and diligent manner to effect any maintenance or repair in order to minimize
any interruption or curtailment of the movement of natural gas through the LP&L
Lateral. However, Energas shall in no event be liable for any damages which may
occur as a result of any maintenance or repair which necessitates an interruption or
curtailment of the transportation of natural gas through the LP&L Pipeline.
8.05 LP&L shall bear all costs and expenses associated with modifying or
upgrading the LP&L Pipeline for any reason. Energas may, but shall not be obligated,
to perform any such upgrades or modifications if requested by LP&L, and any such
modifications or upgrades performed by Energas shall be reimbursed by LP&L to
Energas at a rate equal to Energas' rate in effect at the time of such modifications or
upgrades.
Article 9
Measurement and Testing
9.01 Unless otherwise specifically provided herein, the unit of volume of gas
for purposes of measurement of gas delivered hereunder at the Points of Receipt and
the Point of Delivery, and for purposes of calculating the O&M Fee under Section 8.03
hereof, shall be one MMBtu. An MMBtu of gas shall be determined by multiplying the
measured volume of gas expressed in Mcf times the total (gross) heating value
(expressed in Btu, dry basis) and then dividing this product by one thousand (1,000).
An Mcf of gas shall be determined by dividing the measured volume of gas by one
thousand (1,000).
9.02 The computation of the volumes of gas delivered hereunder shall be
made in accordance with the American Gas Association Measurement Committee
Report No. 3, including the appendix thereto, as published in April, 1955 and amended
from time to time. For purposes of the measurement of gas and calibration of meters,
the atmospheric (barometric) pressure at the Point(s) of Receipt, the Point of Delivery
and the O&M Metering Point shall be assumed to be the local pressure determined by
Energas for the area in which the Point(s) of Receipt, Point of Delivery or the O&M
Metering Point, as applicable, are located unless otherwise specified by Energas.
9.03 Each of the parties hereto acknowledges and agrees that the measuring
facilities located, or to be located, at the Points of Receipt shall, for purposes of Article
Municipal Main Extenslon, Gas Transportation and Pipeline Operedon and Maintenance Agreement- Rage 11
11 hereof, be used to measure the gas delivered by LP&L to Energas hereunder, that
the measuring facilities located, or to be located, at the O&M Metering Point shall be
used for purposes of Article 8 hereof, and that the owner of such facilities (the
"Owner'), or such other party as the Owner and Energas (in the event Energas is not
the Owner) may mutually designate, shall perform the reading, calibrating, and
adjusting of, and the changing of charts on, the equipment in such facilities and shall
perform all gas analyses relating to the gas delivered pursuant to this Agreement.
9.04 Energas shall install, if necessary, and maintain and operate, at the
Point(s) of Delivery, such equipment as may be necessary to control and accurately
measure the flow of gas redelivered by Energas hereunder, and to install, if necessary,
and maintain and operate, at the O&M Metering Point, such equipment as may be
necessary to accurately measure the flow of gas into the LP&L Pipeline. At the Points
of Delivery for the Plant Pipeline, Energas shall install equipment, which, as of the date
of the installation thereof, is state of the art in the industry with recording capabilities
and a gas chromatograph with input being fed into the EFM for real time gas data,
which data may, at LP&L's sole cost and expense, be retrieved by LP&L. The type of
meters to be used at all other Point(s) of Delivery and the O&M Metering Point shall be
determined in Energas' sole discretion, but, in any event, shall conform to industry and
A.G.A. measurement standards. LP&L shall have access to all such equipment at
reasonable hours upon giving Energas at least twenty-four (24) hours prior written
notice of its desire to obtain such access, but the reading, calibrating and adjusting of
the equipment, the changing of the charts thereon, and all analyses relating to the gas
redelivered hereunder, if made, shall be performed by Energas.
9.05 In addition to those metering facilities set forth in Section 9.04, Energas
shall also install, if necessary, and maintain and operate, such equipment as may be
necessary to control and accurately measure the flow of gas which is displaced from
the Plant Pipeline. For purposes hereof, gas which is displaced from the Plant Pipeline
shall mean gas which is released from the Plant Pipeline into the Holly Station located
in Block S, Section 4, Lubbock County, Texas.
9.06 To the extent permitted by Owner, Energas and LP&L each may install,
maintain, and operate check measuring instruments and telemeters in, and connected
to, the Owner's measuring facilities located at the Points of Receipt, and Energas
hereby grants to LP&L the right to install, maintain and operate (at LP&L's sole cost
and expense) check measuring instruments and telemeters in, and connected to,
Energas' equipment at the Point(s) of Delivery and the O&M Metering Point, for
purposes of checking the Owner's and Energas' meters, provided, however, that all gas
measurements required in this Agreement shall be determined by the Owner's and
Energas' meters, and further provided that such check measuring and telemetering
instruments and connections shall be installed so as not to interfere with the operation
or future modification of Owner's or Energas' meters or appurtenances. LP&L hereby
agrees to indemnify, defend and hold Energas harmless from any and all damages and
liabilities arising or relating to the installation, operation, maintenance or removal of
LP&L's check measuring and telemetering instruments. Each party shall have access
to the other party's check measuring and telemetering instruments at reasonable hours
and to the extent permitted by Owner when applicable, but the reading, calibrating and
adjusting thereof and the changing of charts thereon, shall be performed by such other
party -
Municipal Main Extension, Gas Transportadon and Pipeline Operadon and Maintenance Agraornent- Page 12
9.07 The accuracy of Energas' and LP&L's measuring equipment shall be
verified at reasonable intervals or when requested by either party (which requests shall
be made no more frequently than once in any thirty -day period) by a test to be
conducted by the party owning such equipment, using methods generally accepted in
the gas industry. The party performing such test shall notify the other party sufficiently
in advance of the test in order to permit such party to have a representative present at
the test, provided, however, that such other parry's election not to have a
representative present shall not affect the validity of the test. All tests shall be made at
the expense of the party performing the test, provided, however, that the party
requesting a test shall bear the expense thereof if the inaccuracy in the equipment is
not greater than two percent (2%).
9.08 If, upon testing, any billing meter or meters or any related instrument or
device, the readings of which are used in the registration, integration or computation of
quantities that affect the billing hereunder, is found to be in error to the extent that it
produces not more than a two percent (2%) measurement error in the individual billing
meter or meters affected, then previous records of such equipment shall be considered
accurate in computing deliveries hereunder. If, upon such testing, any such measuring
equipment shall be found to be inaccurate to the extent that it causes the end result
measurement of the individual billing meter or meters so affected to be in error by an
amount exceeding two percent (2%) at a recording corresponding to the average hourly
rate of flow to the individual billing meter or meters affected for the period since the last
preceding test, such billing meter or meters affected shall be corrected to zero error for
any part of the period since the last test during which such error is known to have
existed or which may be agreed upon in actual practice by the operating
representatives of the parties. In case the period of such error is not definitively known
or agreed upon, such correction shall be for a period of one-half of the time elapsed
since the date of the last such test but not exceeding a correction period of three (3)
months. After any such test that shows any error on any of Energas' billing meters,
such equipment shall be adjusted immediately to function correctly.
9.09 In the event a billing meter goes out of service or Is determined to be
registering inaccurately, the volume of gas delivered hereunder during such period shall
be estimated as follows:
(a) by using the registration of any approved check meter or meters existing
and agreed upon as being accurately registering, or, in the event no such
approved check meter or meters shall exist, then;
(b) by recalculating, if the quantity or percentage of air is ascertainable to
calibration, test, or mathematical calculation, or, in the event neither of the
methods described above are available, then;
(c) by relating the quantity of delivery to deliveries during periods under
similar conditions when the billing meter was deemed to have been registering
accurately.
9.10 Each party shall have the right to be present at the time of any installing,
reading, cleaning, changing, repairing, inspecting, testing, calibrating or adjusting done
Municipal Main Extension, Gas Transportation and Pipeline Operation and Maintenance Agraement - Page 13
in connection with the other party's and, subject to the approval of the Owner, the
Owner's, measuring equipment that may be used hereunder. All records obtained from
such measuring equipment shall be the property of the owner of such equipment. Each
party agrees, however, to submit to the other party, upon such party's request, its
records and charts, together with the calculations made therefrom, for purposes of
inspection and verification. In lieu of originals, the submitting party may provide true
and correct copies of the originals. Such records and charts shall be returned within
thirty (30) days after receipt thereof. Each party further agrees to preserve and retain
all of its test data, meter charts and other records relating to the gas transported
hereunder for a period of at least two (2) years or such longer period as may be
required by law.
Article 10
Heating Value
The total (gross) heating value of the gas delivered at the Point(s) of Receipt, as
determined in accordance with Section 1.15 of this Agreement, shall be corrected from
the conditions of testing and analysis to that of the actual condition of the gas as
delivered, expressed in Btus per cubic feet and reported at a pressure base of 14_65
Psia at sixty degrees (600) Fahrenheit on a dry basis when the gas as delivered
contains seven (7) pounds of water or loss per one million cubic feet.
Article 11
Transportation Charge
11.01 For all volumes of gas transported through the Plant Pipeline, and for all
volumes of LP&L's or the City of Lubbock's gas transported through the Lubbock
System, by Energas during each month of the term of this Agreement, L.P&L agrees to
pay to Energas a transportation charge determined as follows:
(a) If the total volume of gas transported in a month is 330,000 MMBtu or
less, then the transportation charge for such month shall be the fixed sum of
Ten Thousand and No/100 Dollars ($10,000.00).
(b) If the total volume of gas transported in a month is 330,001 to 670,000
MMBtu, then $0.025 per MMBtu.
(c) If the total volume of gas transported in a month is 670,001 MMBtu or
greater, then the transportation charge for such month shall be the fixed sum of
Sixteen Thousand Seven Hundred Fifty and No/100 Dollars ($16,750.00).
11.02 In addition to the price to be paid for gas transported hereunder, LP&L
agrees to pay to Energas an amount equal to any and all taxes and charges of any
nature imposed on Energas for gas transported hereunder for LP&L or as a result of
such transportation, including, but not limited to, sales taxes, gross receipts taxes,
franchise fees, and other similar taxes and charges.
11.03 For purposes of calculating the transportation charge under Section
11.01, all volumes of gas transported through the Plant Pipeline, whether for the benefit
Municipal Main Extension, Gas Transportation and Pipeline Operation and Maintenance Agreement- Page 14
of LP&L or third parties, shall be included for measurement purposes. Gas transported
through the Lubbock System for measurement purposes and Section 11.01 hereof,
however, shall include only that gas transported through the System for the benefit of
LP&L.
11.04 The Transportation Charge specified in Section 11.01 hereof will remain
In effect unless and until redetermined in accordance with the provisions hereof. Not
less than sixty (60) days before the end of the fifth Accounting Year of this Agreement,
and every fifth Accounting Year thereafter, any party hereto who desires to redetermine
the Transportation Charge shall give written notice (the "Redetermination Notice)
thereof to the other party. The Redetermination Notice shall include the proposed
alternative Transportation Charge and specify the beginning date of the Accounting
Year (the "Redetermination Date") for which such proposed alternative Transportation
Charge is requested. Upon the giving of such notice, the parties will negotiate in good
faith to determine a mutually acceptable alternative Transportation Charge. If the
parties are unable to agree upon a mutually acceptable alternative Transportation
Charge on or before the Redetermination Date specified in the Redetermination Notice,
then the Transportation Charge in effect as of the date of the Redetermination Notice
shall remain effective. If a new Transportation Charge is determined under the
provisions hereof, such new Transportation Charge shall become effective at the
beginning of the Accounting Period which immediately follows the Redetermination
Date for such Transportation Charge.
Article 12
Billing and Payment
12.01 Commencing with the 101h day of the month following the month in which
the Completion Date occurs, and on or before the 10t' day of each month thereafter,
Energas shall render an invoice to LP&L indicating the following:
(a) the quantity of gas transported and delivered to the Point(s) of Delivery
during the preceding month, adjustments, if any, and the amount due Energas
as the transportation charge;
(b) the quantity of gas transported by LP&L through the LP&L Pipeline
during the preceding month, and the amount due Energas as the O&M Fee;
(c) the volume of displaced gas as determined under Section 9.05 hereof;
(d) all amounts due for sales taxes, gross receipts taxes, franchise fees and
other similar taxes and charges; and
(e) any other charges or amounts due to Energas, or credits to LP&L,
pursuant to the terms of this Agreement.
LP&L shall pay each invoice within fifteen (15) days after the date thereof and shall
send such payment to the address of Energas noted on the invoice.
Municipal Main Extension, Gas Transportation and Pipeline Operation and Maintenance Agreement- Page 15
12.02 Should LP&L fail to pay an invoice on or before the due date thereof,
then interest shall accrue on any unpaid balance at the lesser of (i) eighteen percent
(18%) per annum or (ii) the highest rate permitted by applicable law, calculated from the
due date until the actual date of payment.
12.03 Each party hereto, at its own expense, shall have the right at all
reasonable times to examine those books and records of the other party relating to the
transactions contemplated in this Agreement during normal working hours at the offices
of the other party where such records are kept in the ordinary course of business, to
the extent necessary to verify the accuracy of any statement, charge, computation or
demand made under or pursuant to this Agreement. Each party agrees to keep
records and books of account in accordance with generally accepted accounting
principles in the industry. AJI such books, records, charts and other relevant data
relating to the transportation of LP&L's gas, shall, unless otherwise provided elsewhere
in this Agreement, be retained for a period of at least one (1) year, or longer if required
by applicable rules and regulations of governmental bodies or agencies having
jurisdiction thereof. Any invoice, bill or statement shall be final as to both parties unless
questioned in writing within one (1) year after payment was made.
Article 13
Default and Remedies
13.01 The following shall be deemed to be events of default by LP&L under
this Agreement:
(a) LP&L shall fail to pay, within thirty (30) days after the same is due, any
invoice submitted to LP&L pursuant to Article 11 of this Agreement;
(b) LP&L shall in any way default under the terms of this Agreement, other
than with respect to any obligation for the payment of money to Energas, and
fails to cure such default within thirty (30) days after written notice thereof from
Energas;
(c) LP&L shall file a petition in bankruptcy or be adjudged bankrupt or
insolvent, or an order for relief shall be entered against LP&L, under any
applicable federal or state bankruptcy or insolvency law, or LP&L shall admit
that it cannot meet its financial obligations as they become due, or a receiver or
trustee shall be appointed for all or substantially all of the assets of LP&L;
(d) LP&L shall make a transfer in fraud of creditors or shall make an
assignment for the benefit of creditors; or
(e) LP&L shall be in default of any other term, provision or covenant of this
Agreement, other than those specified in subparts (a) through (d) above, and
such default is not cured within thirty (30) days after written notice thereof to
LP&L.
13.02 Upon the . occurrence of any event of default concerning the non-
payment of a monetary obligation, Energas may suspend further deliveries of LP&L's
Municipal Main Extension, Gas Tnansportation and Pipeline Operation and Maintenance Agreement- Page 16
gas until such payment is made and received. If three (3) or more events of default
concerning the non-payment of a monetary obligation shall occur within a twelve-month
period, Energas may terminate this Agreement and seek damages in accordance with
Section 13.04 of this Agreement.
13.03 Upon the occurrence of any event of default enumerated in subparts (b)
through (e) of Section 13.01, Energas shall be entitled to terminate this Agreement and
seek damages in accordance with Section 13.04 of this Agreement.
13.04 If Energas terminates this Agreement pursuant to Sections 13.02 or
13.03 of this Agreement, then LP&L shall reimburse Energas as liquidated damages in
an amount equal to the difference between (a) the total of all costs incurred by Energas
in connection with the acquisition of the Right -Of -Way and the construction and
installation of the Lateral, together with Energas' rate of return for facilities as
established under Energas' tariff prevailing as of the date of the termination of this
Agreement by Energas, and (b) the total of all Transportation Charges paid to Energas
by LP&L prior to the termination of this Agreement. The parties agree that the
damages to be suffered by Energas in connection with a breach by LP&L of this
Agreement which results in the termination hereof will be impracticable or extremely
difficult to estimate and Energas shall therefore be entitled to recover the foregoing
amount as liquidated damages, and not as a penalty, as a reasonable pre -estimate of
Energas' probable loss on account of such breach. Upon payment of such liquidated
damages, together with any and all other sums due to Energas under the terms of this
Agreement. LP&L shall be entitled to receive title to all of the Plant Pipeline and all
facilities constituting any part thereof.
13.05 All rights and remedies of Energas under this Agreement, or existing at
law or in equity, are cumulative and the exercise of any one or more rights or remedies
shall not be taken to exclude or waive the right to the exercise of any other. Any
termination of this Agreement shall not relieve LP&L from paying any and all charges
due hereunder to Energas through and including the date of termination.
13.06 If Energas defaults in the performance of any covenant or condition
required to be performed by Energas under this Agreement, Energas shall have thirty
(30) days following the receipt of written nonce from LP&L specifying such default to
commence to cure such default, provided that if Energas has commenced actions to
reasonably cure such default within said thirty (30) day period, Energas shall have all
reasonable and necessary time to complete such cure. If Energas shall fail to cure
such default, then LP&L may, at LP&L's option, terminate this Agreement and receive
title to all of the Plant Pipeline and facilities constituting any part thereof upon payment
to Energas of an amount equal to the unamortized portion, as of the date of default, of
the actual costs of construction of the Energas Lateral and interconnections and
Improvements to the Plant Pipeline, together with the actual costs for, acquisition of
Easements therefor, when originally amortized over the initial term of this Agreement.
Municipal Main Exurislon, Gas Transportation and Pipeline operation and Maintenance Agreement - Page 17
Article 14
Title and Interest In Lateral
14.01 Subject to the provisions of Section 14.02 hereof, all right, title and
interest to the Lateral or any portion thereof, together with any and all equipment and
appurtenances thereto or connected with or relating thereto and installed by Energas
pursuant to this Agreement, shall vest exclusively in Energas and LP&L shall have no
right, title or interest thereto. To the extent that Energas may require, LP&L shall
execute bills of sale or other documents evidencing Energas' ownership and title.
14.02 At the end of the primary term of this Agreement, LP&L, at LP&L's
option, shall be entitled to purchase the Lateral from Energas for the sum One and
No/100 Dollars ($1.00). if LP&L desires to purchase the Lateral, then, at least ninety
(90) days prior to the expiration of the primary term of this Agreement, LP&L shall notify
Energas in writing of LP&L's election to purchase the Lateral. Thereupon, Energas
shall execute and deliver to LP&L a bill of sale transferring all of Energas' right, title and
interest in and to the Lateral to LP&L, and LP&L shall be obligated to assume all
obligations with respect to the operation and maintenance of the Lateral unless it has
entered into an operation and maintenance agreement with Energas in accordance
with the provisions of Section 4.03 of this Agreement.
14.03 This Agreement shall in no way be construed as creating any form of
joint tenancy, joint venture or partnership by or between the parties hereto.
Article 15
Warranty of Title to Gas
15.01 LP&L hereby warrants title to the gas delivered to Energas hereunder or
the good right to deliver the same for transportation. LP&L further warrants that its gas
Is free and clear of all liens, claims and encumbrances. In the event any claim of any
character is asserted with respect to any gas delivered to the Point(s) of Receipt for
transportation hereunder, including, but not limited to, any claim to such gas or for
royalties, taxes, license fees, payments or other charges, LP&L agrees to indemnify,
defend and hold harmless Energas from and against any and all liabilities, damages,
suits, debts, losses, costs, and expenses (including attorney's fees) arising out or or in
connection with such claim.
15.02 Any and all revenue which is derived from the sale of gas which
condenses and is removed from the Plant Pipeline or the LP&L Pipeline in a liquid
hydrocarbon form ("drip") shall be shared equally by the parties hereto. Neither party,
however, shall be obligated to recover or sell drip.
Article 16
Indemnity
16.01 Each parry hereto agrees, whether or not the transactions contemplated
by this Agreement are consummated and whether or not this Agreement has expired or
been terminated, to assume liability for, and each party hereby agrees to indemnify,
defend and save and keep the other party, its agents, employees and representatives,
Municipal Main Extension, Gas Transportation and Pipeline Operation and Maintenance Agreement- Page 18
from and against, any and all liabilities, obligations, losses, damages, penalties, fines,
amounts in settlement, claims, actions, proceedings, suits, judgments, costs, interest,
expenses and disbursements of any kind and nature whatsoever arising under any
theory of legal liability (including attorneys fees and costs) (a Claim") that may be
imposed on, incurred by or asserted against the indemnified party, its agents,
employees or representatives, in any way relating to, resulting from, based upon or
arising out of this Agreement or the transactions contemplated by this Agreement or the
subject matter of this Agreement, including without limitation (i) any breach or violation
of this Agreement by the indemnifying party or (ii) any breach or alleged breach of the
representations, warranties or covenants made in this Agreement by the indemnifying
party; provided, however, that the indemnifying party is not required to indemnify the
indemnified party, its agents, employees or representatives, for any Claim against an
indemnitee to the extent that such Claim resulted from the negligence of such
indemnitee (unless attributed or Imputed to such indemnitee by reason of any act or
omission of the indemnifying party, whether as agent for the indemnifying party or
otherwise). 'Theories of Legal Liability" include, but are not limited to, contract, tort,
strict liability, breach of express or implied warranty and breach of implied covenant.
16.02 The obligation of a party to defend the other, its agents, employees or
representatives, against any Claim is separate and distinct from the obligation of
indemnity set forth in this Agreement. The indemnifying party shall have the right and
obligation to assume the defense of any Claim with counsel chosen by the indemnified
party and reasonably acceptable to the indemnifying party, provided that counsel to the
indemnifying party may participate in the defense of the Claim with counsel for the
indemnified party, and such counsel shall remain at the cost and expense of the
indemnifying party. The indemnifying party will not have the right to assume the
defense of a Claim made against both the indemnified party, its agents, representatives
or employees, and the indemnifying party if counsel for the indemnifying party or the
indemnified party advises in writing that conflicts of interest would under applicable
ethical principles preclude a single counsel or firm from defending both parties.
Article 17
Force Majeure
17.01 Except for obligations to make payment hereunder, in the event either
Energas or LPL is rendered unable, by reason of any force majeure, to perform,
wholly or in part, any obligation or commitment set forth in this Agreement, then upon
such party giving notice and full particulars (including all supporting documentation) of
such event as soon as practicable after the occurrence thereof, the obligations of both
parties shall be suspended to the extent and for the period of such force majeure
provided that the party claiming an event of force majeure shall make all resonable
attempts to remedy the same with all reasonable dispatch.
17.02 The term force majeure as employed in this Agreement shall mean acts
of God, strikes, lockouts or industrial disputes or disturbances, civil disturbances, arrest
and restraint of rulers or people, interruptions by government or court orders, necessity
for compliance with any present and future valid orders of court, or any law, statute,
ordinance or regulation promulgated by any governmental or regulatory authority
having proper jurisdiction, acts of the public enemy, wars, riots, blockades,
Municipal Main Utenslon, Gas Transportation and Pipeline Operation and Maintenance Agreement- page 19
insurrections, inability to secure materials, including inability to secure materials by
reason of allocations promulgated by authorized governmental agencies, epidemics,
landslides, lightning, earthquakes, fires, storms, floods, washouts, inclement weather
which necessitates extraordinary measures to construct facilities and/or maintain
operations, explosions, partial or entire failure of gas supply, breakage or accident to
machinery or lines of pipe, freezing of wells or pipelines, inability to obtain or delays in
obtaining easements or rights -of -way, the shutting in of facilities for the making of
repairs, alterations or maintenance to wells, pipelines or plants, or any other cause
whether of the kind herein enumerated or otherwise, not reasonably within the control
of the parry claiming force majeure.
17.03 Settlement of strikes and lockouts shall be entirety within the discretion
of the party affected, and the duty that any event of force majeure shall be remedied
with all reasonable dispatch shall not require the settlement of strikes and lockouts by
acceding to the demands of the parties directly or indirectly involved in such strikes or
lockouts when such course is inadvisable in the discretion of the party having such
difficulty.
Article 18
Term
This Agreement shall become effective upon execution by both parties and shall
continue in full force and effect for a primary term of twenty (20) years from and after
the Completion Date. Thereafter, and if LP&L has not timely exercised its option to
purchase the Lateral under Section 14.02 hereof, this Agreement shall continue on a
month -to -month basis unless and until terminated by either party hereto upon thirty (30)
days prior written notice to the other party. If LP&L shall timely exercise its option to
purchase the Lateral under Section 14.02, then this Agreement shall terminate at the
end of the primary term.
Article 19
Governmental Regulations
19.01 This Agreement is subject to (1) all applicable and valid statutes,
ordinances, rules, regulations, and orders of the Commission and any other federal,
state or local governmental authority having jurisdiction over either of the parties, their
facilities, or the subject matter of this Agreement and (ii) the provisions of applicable
tariffs and franchises, if any, under which Energas or LP&L operates.
19.02 LP&L hereby represents and warrants to Energas that none of the gas
transported hereunder has been or will be resold, transported or used in such a manner
or under any circumstances that would cause the gas transported hereunder, Energas,
or any facilities used or owned by Energas, to become subject to the jurisdiction and
regulations of the Federal Energy Regulatory Commission or any successor body.
LP&L recognizes and acknowledges that Energas has entered into this Agreement in
reliance upon such warranty and representation and that Energas would have been
unwilling to enter into this Agreement in the absence of such warranty and
representation. Consequently, LP&L agrees that it will not voluntarily commit the gas
transported hereunder to interstate commerce as that term is defined in the Natural
Municipal Main Extension, Gas Transportation and Pipeline operation and Maintenance Agreement - Page 20
Gas Act, 15 U.S.C. §717 of seq., but would do so only under compulsion of
governmental authority, and LP&L agrees that, in the event that Energas becomes or
reasonably expects to become subject to the jurisdiction of the Federal Energy
Regulatory Commission ("FERC") or any successor body as a result of the performance
of its obligations hereunder, Energas may terminate this Agreement upon thirty (30)
days prior written notice to LP&L. However, if the circumstances under which Energas
becomes or may become subject to the jurisdiction of FERC renders the giving of thirty
(30) days notice impractical, then Energas shall give notice of termination to LP&L as
soon as practical before becoming subject to FERC jurisidiciton. Upon such
termination, Energas shall, in addition to other amounts then due to Energas
hereunder, be entitled to recover liquidated damages from LP&L as provided in Section
13.04 of this Agreement and, upon payment thereof, LP&L shall be entitled to receive
title to the Plant Pipeline as provided in Section 13.04.
Article 20
Assignment
Neither party to this Agreement may assign any of its right, title, interest or
obligations under this Agreement without the express written consent of the other party,
which consent shall not be unreasonably withheld.
Article 21
Gas Imbalances
21.01 Each of the parties hereto agrees to maintain the delivery and redelivery
of gas hereunder in continuous balance or as near thereto as practicable on an MMStu
basis, and further agree that no adjustments of any kind, including, but not limited to,
price adjustments, will be required or necessary because of any difference between the
heating value of the gas delivered by Energas at the Point(s) of Delivery and the gas
delivered by LP&L to Energas. Each of the parties further acknowledges that the gas
transported hereunder will be delivered to Energas at least forty-eight (48) hours prior
to the scheduled redelivery of such gas by Energas to LP&L. Nothing in this
Agreement is intended, or shall be deemed, to obligate Energas to redeliver any gas to
the Point(s) of Delivery if LP&L has not previously delivered an equal volume of gas at
the Point(s) of Receipt in accordance with this Agreement.
21.02 For purposes hereof, an imbalance with respect to the Plant Pipeline
shall occur when more or less gas is received by Energas from the interstate pipeline
supplier or LP&L at the Point(s) of Receipt of the Plant Pipeline for LP&L's account,
less an unaccounted for gas adjustment of one percent. Any imbalance with respect to
the Plant Pipeline that may occur from time to time in the quantities, on an MMBtu
basis, of gas delivered to Energas on account of LP&L shall be resolved by LP&L
directly with the interstate pipeline or transmission line supplier in accordance with such
supplier's applicable tariff provisions, and LP&L shall pay any under or over delivery
charges or penalties assessed directly to the supplier.
21.03 Any imbalance that may occur from time to time in the quantities of gas
delivered by the parties hereto through the Lubbock System shall be corrected as soon
as practicable under normal operating conditions; provided, however, that any such
Municipal Main Extension, Gas Transportation and Pipeline Operation and Maintenance Agreement- Page 21
imbalance existing at the termination of this Agreement shall be corrected within thirty
(30) days following such termination.
21.04 With respect to gas transported through the Lubbock System, LP&L
acknowledges and agrees that a certain amount of gas ("Shrinkage Gas" j is lost and
unaccounted for during the transportation process. Consequently, LP&L agrees to
reimburse Energas, either in kind or by monetary payment, for the amount of Shrinkage
Gas in each month during the term of this Agreement. In the event LP&L elects to
make such reimbursement in kind, LP&L shall deliver to Energas, at the Point(s) of
Receipt for Municipal Facilities, an amount of gas equal to the product of the "lost and
unaccounted for' rate for Energas' West Texas Distribution System, as set froth in the
applicable tariff of Energas on file with the Commission, at the most recent twelve-
month average rounded to the nearest one -tenth of one percent (.1%) times the volume
of gas transported and delivered by Energas through the System to Municipal Facilities
during the month for which such reimbursement is applicable; provided, however, that
such reimbursement in kind shall never be an amount of gas exceeding five percent
(S%) of the volume transported and delivered by Energas during such month. In the
event LP&L elects to make such reimbursement by monetary payment, such amount
shall be calculated using Energas' West Texas Distribution System weighted average
cost of gas for the pertinent month. The reimbursements for Shrinkage Gas required
hereunder shall be made within thirty (30) days after the end of the month during which
such shrinkage occurred.
Article 22
Additional Service
From time to time during the term of this Agreement, LP&L may elect for
Energas to construct and install additional laterals to serve other facilities of LP&L, to
connect other LP&L facilities to the Plant Pipeline, or add further Municipal Facilities to
which Energas will transport gas. In such event, the parties shall enter into an
appropriate amendment to this Agreement with respect to the added LP&L facilities
which addresses all matters subject of this Agreement applicable thereto. However,
any modifications or upgrades to the Plant Pipeline to accommodate the
interconnection of other laterals or facilities of LP&L to the Lateral shall be governed by
Section 5.02 of this Agreement.
Article 23
Miscellaneous
23.01 This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas, except to the extent local or Federal law governs any of
the rights or obligations of the parties hereto. Venue for any action arising under or
relating to this Agreement shall be brought in a court of appropriate jurisdiction in
Lubbock, Texas.
23.02 All covenants and agreements herein contained shall be extended to
and be binding upon the successors and assigns of parties hereto.
Municipal Main Extension, Gas Transportatlon and pipeline operation and Maintenance Agreament - Rage 22
23.03 Any notice provided for in this Agreement, unless specifically provided
otherwise herein, shall be in writing and shall be considered as having been given if
mailed by registered or certified mail, postage prepaid. Any notice to Energas shall be
given to Energas Company, P.O. Box 650205, Dallas, Texas 75265-0205, Attention:
Gas Supply Department, and any notice to LP&L shall be given to Lubbock Power &
Light, P.O. Box 2000, 1301 Broadway, Lubbock, Texas 79457, Attention: Managing
Director. Either party to this Agreement may change the address for such party's
receipt of any notice required by this Agreement by giving written notice thereof to the
other party in accordance with the requirements of this section. The failure of any
notice to be delivered to the attention of a particular designated recipient herein for a
party shall not affect the validity of such notice if such notice shall have been given in
the manner herein prescribed and addressed to the party at the address designated
herein or such address said party may hereafter designate in accordance herewith.
23.04 This Agreement may only be amended or modified by written instrument
executed by both parties to this Agreement.
23.05 The headings used in this Agreement are used for administrative
purposes only and do not constitute substantive matters to be considered in construing
the terms of this Agreement.
23.06 This Agreement supersedes any prior understandings or oral
agreements between the parties with respect to the subject matter hereof and
constitutes the entire understanding and agreement between the parties as to said
subject matter.
23.07 This Agreement may be executed in multiple counterparts, each of which
shall constitute an original. and in the aggregate shall constitute one agreement.
23.08 If any provision contained in this Agreement is held to be invalid, illegal
or unenforceable in any respect, that invalidity, Illegality or unenforceability shall not
affect any other provision of this Agreement, and this Agreement shall be construed as
If such invalid, illegal or unenforceable provision had never been contained In it.
23.09 Whenever the context requires, all singular words shall include the
plural, and vice versa.
23.10 In the event any action is initiated by any party to this Agreement relating
to this Agreement or its subject matter, the party prevailing in that action shall be
entitled to recover, in addition to all damages allowed by law and other relief, all court
costs and reasonable attorneys' fees incurred in connection with the action.
[The remainder of this page Intentionally left blank.]
Municipal Main Extension, Gas Transportation and Pipeline Operation and Maintenance Qgreoment- Page 23
EXHIBIT "A"
LIST OF MUNICIPAL FACILITIES
Municipal Main Expansion, Gas Transportation and Pipeline Operation and Maintenance Agreement- Page 25
UST OF MUNICIPAL FACILITIES
CITY OF LUBBOCK, TEXAS
Facility
Account #
Meter #
Lubbock Memorial Civic Center
05056070025900
069-0022557
Fire Station #11
05056070026770
064-0043457
Garage
05056070026700
054-5008025
Pollee Department
05056070026730
010-2142823
Power Station #1
05056070026720
064-0062708
Ford Properties
05056070028210
010-4721377
Police Property Room
05056070028300
064-0036990
Data Processing
05056070023320
032-1192067
City Hall
05056070028350
103-9338371
Fire Station #4
05056070026400
033-0513439
Landwer House
05056070028180
031-0075528
Canyon Lakes
05056070028160
034-5096422
City of Lubbock Health
05056070028151
NIA
Fire Station #14
05056070029210
077-5368121
Fire Station #6
05056070029400
030-0126303
City Coliseum Audit
05056070026250
069-0021692
Rogers Community Center
05056070026480
077-1659584
Arnett Bensen Senior Cit.
05056070026550
075 7006383
Fire Station #12
05056070029500
077-5726224
City County Library
05056070029520
033-0513538
Fire Station #9
05056070029450
053-0513614
A.B. Davis Party House
05056070029370
080-0777609
Maxey Park Swimming
05056070029380
053-0012592
Meadowbrook Golf Course
05056070027150
NIA
Park Greenhouse
05056070027120
078-5735245
Power Plant #2
05056070026710
064-0049208
Municipal Air Terminal
05056070028100
064-0037001
Maintenance Shop - Airport
05056070028030
030-0095752
Maintenance Building —Airport
05056070028090
056-0005602
Executive Air Terminal Restaurant
05056070028122
030-0111374
Executive Air Terminal
05056070028131
NIA
Air Terminal Building (Int.)
05056070025951
103-8713097
Flre Station #8
05056070029250
061-9718046
K.N. Clapp Swimming Pool
05056070029300
077-5691111
Garden and Art Center
05056070029360
061-9718094
Clapp Park Rental
0505607001930344
010-2597346
Hodges Community Center
05056070029320
064-0134001
Senior Citizens Center
05056070026000
064-0000807
Senior Citizens Center
05056070026100
080-2183831
Lou Stubbs Party House
05056070029220
080-2597385
Health Department
05056070028450
067-0016402
Rental Property
05056070025821
NIA
Rental PropeLbj
05056070028271
051-0880377
Municipal Main Extension, Gas Transportation and Pipeline operation and Maintenance Agreement- Page 26
Municipal Building
05056070028250
101-8457349
Fire Station #11
05056070025852
077-5726323
Civic Center/Ubrary Power Plant
05056070028500
006-0012623
#2 Power Station
05056070027700
NIA
#2 Power Station
05056070027710
NIA
#1 Power Station
05056070028200
900-0020727
Fire Station #10
05056070029140
078-6152223
Garage
05056070029180
010-4858019
Mae Simmons Swimming
05056070029100
NIA
Water Reclamation
05056070029050
102-9226841
Cemetary
05056070029000
061-9719508
East Lubbock Senior Citizens
05056070028801
075-7023369
Mae Simmons Community Center
05056070029120
077-5368305
McKenzie Pottery Center
05056070028160
NIA
McKenzie Party House
05056070028652
NIA
Canyon Lakes
05056070028620
NIA
Fire Station #5
05056070028700
078-5426119
Swimming Pool
05056070028680
067-0044873
Animal Shelter
05056070028140
033-0513579
Fire Training Station
05056070028170
053-039009
Garage
05056070028110
056-5002064
Central Warehouse
05056070027400
036-6069647
Street and Water Maintenance
05056070027170
053-0026164
Pump Station
05056070027200
051-4614564
Street and Water Dept. Office
05056070027160
NIA
FAA —City of Lubbock
05056070027450
101-8817939
Flre Station #7
05056070029550
061-9717101
Fire Station #13
05056070027500
077-2948031
Fire Station #3
05056070028750
053-0025516
Water Treatment (Chemical)
0505607010003058
078-6668437
Water Treatment (Control)
0505607010003060
054-5006053
Fire Station #11
05056070028061
078-4941719
Patterson Branch Library
05056070028550
077-1648201
Detention Center
05056070028000
077-1428785
Groves Branch Library
05056070029530
036-6123098
Fire Station #7
05056070029510
034-5107817
Municipal Main Extension, Gas Transportation and Pipeline Operation and Maintenance Agreement - Page 27
EXHIBIT "B"
DEPICTION OF PLANT PIPELINE
Municipal Main Extension: Gas Transportation and Pipeline Operation and Maintenance Agreement - Page 28
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year last written below.
I=l
COMPANY, a division of
e A. Ehler
Title: President - Ene
Date: _ 1.2 - %-.t a
Eta,
,/�wr;
. n , " ro
RRtton, Mayor
Date: anu
Attest: K 1, A'k 1-4
ayt I Darnell
City cretary
Approved as to Content:
. Robert Massengale
Managing Director, Lubbock Power
and Light
Approved as to Form:
Donald G. Vandiver
First Assistant City Attorney
Municipal Main Extension, Gas Transportation and Pipeline Operation and Maintenance Agreement - Page 24