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HomeMy WebLinkAboutResolution - 1541 - Agreement - Gas Maketing Inc - Gas Purchase & Sales, Municipal Power Plant - 12_08_1983RESOLUTION 1541 - 12/8/83 DGV:cl RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: WHEREAS, it is necessary that Lubbock Power and Light procure a supply of natural gas for generation of electric power for its customers, the citizens and businesses of Lubbock; and WHEREAS, Lubbock Power and Light has purchased such natural gas in 1983 and previous years from Pioneer Corporation; and WHEREAS, Lubbock Power and Light had an opportunity for 1984 and subsequent years to purchase such natural gas from a different producer at a significantly lower price and desired to do so; but WHEREAS, the only pipelines which could transport such cheaper gas agreed with Pioneer Corporation not to do so, so that Lubbock Power and Light would be compelled to continue to purchase the natural gas from Pioneer Corporation at its higher price; and WHEREAS, therefore, because of the actions of Pioneer Corporation in concert with the transmission companies, Lubbock Power and Light has no choice but to purchase the natural gas for 1984 from Pioneer Corporation, or its designated affiliate; NOW THEREFORE: BE IT FURTHER 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 an on behalf of the City of Lubbock a Gas Purchase and Sales Agreement between the City of Lubbock and Gas Marketing, Inc., of Amarillo, Texas, which agreement is attached hereto and which shall be spread upon the minutes of this 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 8th day of f ATTEST: Evelyn Wffga, C' retary-Treasurer APPROVED AS TO CONTENT: Robert Massengal , Assistant City Manager APPROVED AS TO FORM: . vanaiver, Assistant wiry Attorney ber // . 1983. RESOLUTION 1541 - 12/8/83 177 170RETAOYJREASURER GAS PURCHASE AND SALES AGREEMENT between GAS MARKETING, INC. as "Seller" and CITY OF LUBBOCK as "Buyer" Dated: November 21, 1983 I N D E X ARTICLE TITLE 1 Definitions I 1 Quantity 1 1 1 Delivery Point IV Delivery Pressure V Meteri ng V I Units of Volume VII Measurement V I 1 1 Price IX Heating Value X Billing and Payment xi Quality X11 Title X I 1 I Force Ma jeure XIV Notices XV Successor and Assigns XVI Maintenance of Facilities XVII Duration of Agreement XV I I I Indemnification XIX Descriptive Headings XX Governmental Regulations PAGE NUMBER 1 2 3 4 4 5 6 7 9 9 10 II II 12 13 13 13 14 14 14 RESOLUTION 1541 - 12/8/83 GAS PURCHASE AND SALES AGREEMENT th December THIS AGREEMENT, made and entered into as of the Xvtx day of Nti4�M 1983, by and between GAS MARKETING, INC., a Texas corporation, hereinafter called "Seller" and -CITY OF LUBBOCK, a municipal corporation, hereinafter called "Buyer"; W I T N E S S E T H: WHEREAS, Buyer is desirous of purchasing certain volumes of gas to be used in Buyer's municipal power plant located in Lubbock County, Texas; and WHEREAS, Seller can make available to Buyer certain volumes needed by Buyer in Buyer's municipal power plant and Seller desires to sell such volume of gas to Buyer; NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, Seller and Buyer do hereby mutually covenant and agree as follows: ARTICLE I DEFINITIONS Section I. "Day" shall mean the period of twenty-four (24) consecutive hours commencing at 7:00 A.M. on one calendar day and ending at 7:00 A.M. on the following calendar day. Section 2. "Billing Month" shall mean the period commencing at 7:00 A.M. on the first day of a calendar month and ending at 7:00 A.M. on the first day of the following calendar month. Section 3. "Accounting Year" shall mean a yearly period commencing at 7:00 A.M. on January I, and ending at 7:00 A.M. on the next succeeding January I. In the event deliveries commence hereunder on a date other than January I, 1984, the period of time from the date of first deliveries until January I, 1985 shall be considered as the first accounting year. In the event deliveries permanently cease on a date other than a January I, the period of time from the January I immediately preceding the date of such delivery cessation shall be considered as the final accounting year. Section 4. The term "Mcf" shall mean one thousand cubic feet at a temperature of 60 degrees Fahrenheit and an absolute pressure of 14.65 pounds per square inch. Section 5. The term "Btu" shall mean British thermal unit. Section 6. The term "Heating Value" shall mean the Btu content of the gas delivered. Section 7. "Buyer's Power Plant" shall mean the Holly Avenue electrical generating plant located in Lubbock County, Texas. ARTICLE 11 QUANTITY - Section I. Commencing January I, 1984, and continuing through the remaining term of this Gas Sales Agreement, Seller agrees to sell and deliver to Buyer the volume of gas as may be requested by Buyer for consumption in Buyer's Plant; provided, however, Seller shall not be obligated to make deliveries of gas to Buyer in excess of 30,000 Mcf on any one day. Section 2. Commencing January I, 19$4, Buyer agrees to take and pay for, or nevertheless pay for, if not taken, a minimum volume of U Mcf of gas during each accounting year thereafter during the term hereof. In the event any accounting year does not contain twelve (12) billing months, then Buyer shall be obligated to accept 1/12th of such volume for each complete billing month contained in such accounting year. Section 3. In the event Buyer fails to take from Seller during any accounting year of the term hereof the minimum volume of gas which Buyer is obligated to take and pay for from Seller during such accounting year pursuant to the provisions of Section 2 of this Article II, then within ninety (90) days after the end of such accounting year when there is a deficiency in takes, Buyer shall pay Seller for that quantity of gas which equals the rim difference between the minimum volumes Buyer was obligated to take and pay for and the volume which Buyer did actually take and pay for. The price which Buyer shall pay Seller for such deficiency shall be the price in effect at the time the deficiency occurred. Section 4. Gas delivered under this contract shall be subject to curtail- ment or interruption when necessary to protect public health and safety or to maintain service to higher priority customers of Seller or Seller's Agent. Such curtailment or interruption shall not be the basis for any claim for damages sustained by any party. Section 5. In the event an interruption in, or curtailment of, deliveries shall become necessary or advisable, then the party claiming such interruption or curtailment shall at once notify the other party by telephone, telegraph or other means of the nature, extent and probable duration of such interruption or curtailment. The other party shall resume the taking or delivery of gas within a reasonable length of time following notification by the first party that such interruption or curtailment no longer exists. Section 6. In the event the delivery of gas is interrupted or curtailed at the request of Seller pursuant to Section 4 of this Article II, or at the request of Buyer pursuant to Article XI I, then, in such event, the minimum volume of gas herein contracted for shall be reduced for that annual period by 1.5/365th of such minimum annual volume for each day or portion of a day that the delivery of gas hereunder was interrupted or curtailed. ARTICLE III DELIVERY POINT Section 1. The delivery of gas hereunder shall be made at a point one hundred ninety-one feet seven inches (191'7") south and two thousand one hundred thirty-seven feet four inches (2137'4") east from the northwest corner of Section 5, Block S, Lubbock County, Texas. - 3 - ARTICLE IV DELIVERY PRESSURE Section I. Deliveries shall be made at the pressure requested by Buyer, but not to exceed 75 psig except deliveries may be made at higher pressures if neither party objects. ARTICLE V METERING Section I. Seller, or Seller's agent, at its sole cost, risk and expense, shall install, maintain and operate a standard type orifice or positive meter or meters for measuring the volume of all gas purchased by Buyer hereunder and Seller shall cause said meters to be read daily or at other mutually agreeable intervals. Orifice meters and other facilities so installed at the point of delivery shall be constructed and installed in accordance with the , specifications prescribed by Report No. 3 of the Gas Measurement Committee of the American Gas Association dated April I, 1955, and supplements thereto, or other generally accepted specifications, agreed to by the parties. Section 2. Said meters and all meter readings and meter charts shall be accessible at all reasonable times to inspection and examination by Buyer, but the calibration and adjustment of Seller or Seller's Agent's meter or meters shall be done by Seller or Seller's Agent. Seller may destroy meter charts and other records after two years. Section 3. Buyer may install, maintain and operate such'check measur- ing equipment as it desires, provided that such check meter and equipment shall be so installed as not to interfere with the operation of Seller or Seller's Agent's meters. Section 4. Each such orifice meter installed by Seller or Seller's Agent shall be calibrated at least once each thirty (30) days by and at the expense of Seller, in the presence of Buyer's representative if Buyer so desires. - 4 - Seller shall give Buyer or Buyer's designated representative notice of each such calibration test in sufficient time to enable Buyer to have its representative present. If upon any such test, the measuring equipment is found to be not more than two percent (2%) erroneous in the aggregate, previous readings of such equipment shall be considered correct in computing the deliveries of gas hereunder, but such equipment shall be adjusted at once to read accur- ately. If upon any test the measuring equipment shall be found to be inaccurate in the aggregate by an amount exceeding two percent (2%) at a reading corres- ponding to the average rate of flow for the period since the last preceding test, then any previous readings of such equipment shall be corrected to zero error for any period which is known definitely or agreed upon, but in case the period is not known definitely or agreed upon, then for a period extending back one-half (1/2) of the time elapsed since the date of the last test, but not to exceed thirty (30) days. If for any reason any meter is out of service or out of repair so that the volume of gas purchased cannot be ascertained or computed from the reading thereof, the volume of gas purchased during the period such meter is out of service or out of repair shall be estimated or agreed upon by the parties hereto on the basis of data available using the first of the following methods which is feasible: (a) By using the registration of Buyer's or Buyer's agents check meter if installed and accurately registering. (b) By correcting the error in Seller's meter if the percentage of error is ascertainable by calibration or mathematical calculation. (c) By estimating the volume of delivery by using as a basis the volumes delivered during preceding periods under similar conditions when the meter was registering accurately. ARTICLE VI UNITS OF VOLUME Section 1. The unit of volume for gas delivered hereunder, except as other- wise specifically provided herein, shall be one thousand (1,000) cubic feet (some- times referred to herein as Mcf) at a base temperature of sixty (60) degrees Fahrenheit, and at an absolute pressure of fourteen and sixty-five hundredths (14.65) pounds per square inch, and the readings and registrations of the metering equipment herein provided for shall be converted into such units. ARTICLE VII MEASUREMENT Section I. All measurement of gas hereunder shall be in accordance with the recommendations for measuring gas contained in Report No. 3 of the Gas Mea- surement Committee of the American Gas Association dated April, 1955, including the supplements thereto, or other generally accepted tables relating to gas mea- surement applied in a practical and appropriate manner. Correction shall be made for deviation from Ideal Gas Laws as provided for in Section 5 of this Article V 1 1. Section 2. An assumed atmospheric pressure of thirteen and one -tenths (13.1) pounds per square inch absolute at the delivery point shall be utilized for measurement purposes, irrespective of any variation of the actual atmospheric pressure from such assumed pressures. Section 3. Seller or Seller's Agent, shall, at its sole cost, risk and ex- pense, install, maintain and operate a recording thermometer of standard manu- facture, so that it may properly record the temperature of gas flowing through Seller or Seller's Agent's meter or meters. The arithmetical average of the twenty- four (24) hour record, or that portion of the twenty-four (24) hours during which gas was passing, shall be assumed to be the temperature of the gas for that period and shall be used in making proper computations of measurement. Section 4. Seller or Seller's Agent shall, at its sole cost, risk, and ex- pense, maintain and operate a recording gravitometer of standard manufacture, so that it may properly record the gravity of the gas flowing through Seller or - 6 - Seller's Agent's orifice meter or meters. The gravity so determined shall be used in the computations of measurement. In the event Seller or Seller's Agent, has installed, or shall in the future install, a recording gravitometer at a point on its system which properly records the specific gravity of the total stream a portion of which is sold hereunder, said gravitometer may be used to ascertain the specific gravity for which correction is to be made. Section 5. The deviation of the gas from the Ideal Gas Laws shall be determined by tests at one (1) year intervals or at such other intervals as may be requested by Buyer. Buyer shall not request such test more frequently than once every three months. Such tests shall be made by a mutually agreeable industry accepted method. Each test shall determine the correction to be used in computing the volume of gas delivered hereunder until the next such test is made. Section 6. Each party hereto, or its designated representative, shall con- duct the tests and determination under this Article VII which are to be made with equipment owned or to be furnished by said party, but the party making such test or determination shall give the other party, or its designated represent- ative, notice of each such test or determination in sufficient time to enable said other party to have its representative present. ARTICLE VIII PRICE Section I. Commencing with the date of first deliveries hereunder and continuing through the term of this Agreement, Buyer shall pay Seller for each Mcf of gas delivered hereunder and measured as herein provided for, a price of Three Dollars and Fifty Cents ($3.50) for the months January through June and Three Dollars and Fifty -Eight Cents ($3.58) for the months July through December during the term provided herein. - 7• - Section Z. The above price provision, is based on the delivery of natural gas having an average heating value of 1,000 British thermal units per cubic foot. Should the average total heating value, as defined in Section 1 of Article IX of this contract, of the gas delivered hereunder in any billing period be more than 1,000 British thermal units per cubic foot, or less than 1,000 British thermal units per cubic foot, the total charge for such month shall be increased or de- creased respectively in the percentage by which the average total heating value of such gas is greater than 1,000 British thermal units per cubic foot, or less than 1,000 British thermal units per cubic foot. Section 3. In addition to the price to be paid for gas delivered hereunder Buyer agrees to pay to Seller an amount equal to all gross receipts taxes should such taxes be imposed on Seller for gas purchased by Buyer hereunder and all of any increased, additional or new production, severance, gathering, processing, transmission, sales or delivery taxes in excess of or in addition to those in exist- ence on January 1, 1980 which are levied upon or attributable to all or any portion of such gas, the value thereof or the processing or handling thereof before the delivery of such gas to Buyer or in connection with such delivery. .. Section 4. Applicable rulings or orders of governmental representatives in charge of the administration of any law or ordinance increasing or creating any tax shall be binding and conclusive upon Buyer until such time as the inval- idity thereof has been finally established by the decision of a court of competent jurisdiction. Section 5. Buyer shall be entitled to reimbursement from Seller to the extent of any payments made by it to Seller pursuant to this Article VIII which may subsequently be refunded to Seller by the taxing authority. Section 6. Buyer shall not be obligated to reimburse Seller for any ad - 8 - valorem taxes on properties or for taxes which are based upon or measured by the natural gasoline or other liquefied hydrocarbon content extracted from the gas before delivery to Buyer. ARTICLE IX HEATING VALUE Section 1. The Btu content of the gas delivered hereunder shall be determ- ined for a cubic foot of gas 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, and at dry conditions; provided, however, if the water vapor content is seven (7) pounds per million cubic feet or less, the gas shall be as- sumed to be dry. Such total heating value of the gas delivered shall be determ- ined by a composite sampling device of standard manufacture to be installed, maintained and operated by Seller or Seller's Agent at its sole cost, risk and expense. The moisture content of the gas delivered shall be determined by Seller or Seller's Agent as often as is found necessary in practice. Section 2. The average total heating value per cubic foot of gas shall be determined for any billing period by taking the arithmetic average of the heating value as determined pursuant to Section 1 of this Article IX, and such average total heating value shall be used in adjusting the price provisions here- under. In the event Seller or Seller's Agent has, or shall in the future install, a composite sampling device at a point on its system which properly records the heating value of the total stream a portion of which is sold hereunder, said sampl- ing device may be used to ascertain the heating value for which correction is to be made. ARTICLE X BILLING AND PAYMENT Section 1. On or before the 20th day of each calendar month, Seller shall render a statement to Buyer giving the total volume of gas purchased hereunder during the preceding monthly billing period and the monies due therefor. Such - 9 - statements to be rendered in accordance with this contract, and shall include any amounts due for tax reimbursement under the provisions of Article Vi l l hereof; 'provided, however, that if the amount of reimbursement to Seller cannot be determ- ined currently, Seller may bill Buyer and Buyer shall make payment therefor within a reasonable period after such amount becomes determinable. Section 2. Payment shall be made by Buyer to Seller within ten (10) days after receipt of the statement-. Section 3. Seller shall render to Buyer on or before the first day of March each year a statement setting out the amount of gas, if any, by which Buyer failed to take Buyer's minimum annual purchase obligation during the preceding account- ing year as provided in Article II hereof, and Buyer shall pay to Seller the amount due within thirty (30) days after receipt by Buyer of such statement. Section 4. All statements, bills and payments shall be subject to correction of any errors contained therein until the expiration of one year after date of payment. Section 5. Any amounts due for gas hereunder remaining unpaid after the due date for each payment provided for herein shall bear interest at the rate of fifteen percent (15%) per annum until paid. ARTICLE XI QUALITY Section 1. Gas delivered by Seller hereunder shall conform to the following specifications: (a) Liquids - The gas shall be commercially free from water and hydrocarbons in liquid form. (b) Hydrogen Sulfide - The gas shall not contain more than one I grain of hydrogen sulfide per one hundred (100) cubic feet. (c) Organic Sulfur - The gas shall not contain more than twenty .(20) grains of organic sulfur per one hundred (100) cubic feet. - 10 - (d) Carbon Dioxide - The gas shall not contain more than three percent 3 o carbon dioxide by volume. (e) Dust, Gums, etc - The gas shall be commercially free of dust, gums and other solid matter. (f) Water Vapor - The gas shall not contain more than seven (7) pounds of water in the vapor phase per million cubic feet. (9) Heating Value - The gas shall have a gross heating value of not more than twelve hundred fifty (1250) and not less than nine hundred fifty (950) British thermal units per cubic foot. (h) Temperature - The temperature of the gas shall not be less than forty 40 nor more than one hundred -twenty (120) degrees Fahrenheit. ARTICLE XII TITLE Section 1. Seller shall be in control and possession of the natural, gas delivered hereunder and responsible for any damage or' injuries caused thereby until the same shall have been delivered to Buyer at the point of delivery, after which delivery Buyer shall be deemed to be in exclusive control and possession thereof and responsible for any such damages or injuries. Section 2. Seller expressly warrants its title to and rights to sell the gas to be delivered hereunder free and clear of all liens and Seller will hold Buyer harmless against adverse claims thereon. ARTICLE XIII FORCE MAJEURE Section I. The obligations of either party hereto shall be suspended during such time as such party is prevented from complying therewith in whole or in part by acts of God, strikes, war, lockouts, orders or decrees of any lawfully constituted state, federal or local body, temporary failure of Seller's gas supply due to causes or conditions beyond Seller's control, or other causes or conditions - 11 reasonably beyond the control of either party, whether like or unlike those herein enumerated, or on account of either party making necessary repairs or replacements of facilities used in the delivery, receipt, transmission or utilization of gas, or because of any other cause, including acts of third parties, except financial, beyond the reasonable control of such party. Section 2. In the event of either Buyer or Seller being rendered unable wholly or in part by force majeure to carry out its obligations under this agree- ment, other than to make payments due hereunder, it is agreed that on such party giving notice and full particulars of such 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 parties, insofar 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. Section 3. The settlement of strikes or lockouts shall be entirely within the discretion of the party having the difficulty, and the above requirements 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 op- posing party when such course is inadvisable in the discretion of the party having the difficulty. ARTICLE X 1 V NOTICES Section 1. Notices to be given hereunder, unless otherwise designated in writing shall be deemed sufficiently given and served when deposited in the United States mail, postage prepaid and certified or registered to the following addresses: To Seller: Gas Marketing, Inc. P. O. Box 511 Amarillo, Texas 79163 To Buyer: City of Lubbock P . 0. Box 2000 Lubbock, Texas 79457 Section 2. Routine communications, including monthly statements and pay- ments, shall be considered duly delivered when mailed, postage prepaid, by either first class or registered mail to the above addresses, or to such other address as may be mutually agreed upon. ARTICLE XV SUCCESSORS AND ASSIGNS Section I. This agreement may not be assigned by either party without the consent of the other party. Section 2. 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 quality 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 XVI MAINTENANCE OF FACILITIES Section I. Each party hereto shall maintain the equipment, including meters, and facilities owned by it and used in its performance hereof in good, safe, efficient operating condition and repair. ARTICLE XVII DURATION OF AGREEMENT Section 1. This agreement subject to the provisions hereof, shall be effective s of 7:00 A.M. on the first day of January, 1984 and shall continue and remain 'n full force and effect for a term ending Decembe 317 1 84. /J pS� Q �j Section 2. It is agreed that on or before Qe+&ber--I, 1984, the parties IN shall meet to begin discussions on an extension of the term set forth in Section 13 - of this Article and any proposed amendments to other provisions of this agreement including, by way of example, Article Vlll supra.. ARTICLE XV I I I INDEMNIFICATION Section I. Seller agrees to indemnify and hold harmless Buyer against any and all loss, cost, claim or demand on account of any damage to property or injury to persons arising or resulting from Seller's operations hereunder. Buyer agrees to indemnify and hold harmless Seller against any and all loss, claim or demand resulting from Buyer's or Buyer's agents operations hereunder, ARTICLE XIX DESCRIPTIVE HEADINGS Section 1. The descriptive headings of the provisions of this agreement are formulated and used for convenience only and shall not be deemed to affect the meaning or construction of any such provisions. ARTICLE XX GOVERNMENTAL REGULATIONS Section I. This agreement shall be subject to all valid laws of the State of Texas and of the United States and regulations or orders 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 appli- cable franchises, if any, under which Seller operates. Seller and Buyer agree to obtain, if possible, whatever authority is necessary, if any, to effectuate the purchase and sale of gas hereunder in the event this agreement and the pur- chase and sale of gas hereunder for any reason becomes subject to the jurisdiction of any governmental authority, which at the present time does not have such jurisdiction. - 14 - IN WITNESS WHEREOF, the parties hereto have caused this agreement to be duly executed on this the day and year first above written. ATTEST: - Xss anf Secrefary "SELLER" "BUYER" ATTEST:- CITY OF LUBBOCK By STATE OF TEXAS + COUNTY OF POTTER PeR E, a ciersig d authority, on this day personally appeared known to me o be V. person H hos name Is subscribed to the foregoing instrun3ent as a corpora ion, and acknowledged to me t at he executed the same for the purposes and consideration therein expressed, and in the capacity therein stated, and as the act and deed of said corporation. IVEN UND R MY HAND AND SEAL OF OFFICE, this % lam- day of 1983. _ My - commission Expires: r STATE OF Gt/.Y COUNTY OF LIP Notary Public in and for County, 7 lZ�► EFORE , the undersigned authority, on this day personally appeared known to me to be the person whose name is subscribed to the fo egoing instrument as MAYOR of CITY OF LURBOCK , a corporation, and acknowledged to me that he executed the same for the purposes and consideration therein expressed, and in the capacity therein - stated, and as the act and -deed of said corporation. 01YE-N NDER MY HAND AND SEAL OF OFFICE, this day of 1983. My Commission Expires: It /30 zjz� 4 i6L' Not'ZTr P I is n and for _...-County, � I