HomeMy WebLinkAboutResolution - 1946 - Agreement - Gas Marketing Inc - Gas Purchase & Sales - 02_14_1985Resolution #1946
February 14, 1985
Agenda Item #34
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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 Gas Purchase
and Sales Agreement by and between Gas Marketing, Inc. and the City of
Lubbock, attached herewith, 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 14th day of February , 1985.
,104& V�L
ALAN HENRY, MA OR
ATTEST:
e boya, city
APPROVED AS TO CONTENT:
Carroll McDonald, Director of Electric
Utilities
APPROVED AS TO FORM:
-9).
Donald G. Vandiver, Assistant City
Attorney
s
s
GAS PURCHASE AND SALES AGREEMENT
between
GAS MARKETING, INC.
as "Seller"
and
CITY OF LUBBOCK
as 'Buyer"
Dated: February 1, 1985
I N D E X
ARTICLE
TITLE
PAGE
I
Definitions
1
II
Quantity
2
III
Delivery Point
3
IV
Delivery Pressure
3
V
Metering
4
VI
Units of Volume
6
VI I
Measurement
6
VIII
Price
8
IX
Heating Value
9
X
Billing and Payment
10
XI
Quality
11
XII
Title
12
XIII
Force Majeure
13
XIV
Notices
14
XV
Successors and Assigns
15
XVI
Maintenance of Facilities
15
XVII
Duration of Agreement
15
XVIII
Indemnification
16
XIX
Miscellaneous
16
XX
Governmental Regulations
16
GAS PURCHASE AND SALES AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of February,
19859 by and between GAS MARKETING, INC., a Texas corporation,
hereinafter called "Seller", and CITY OF LUBBOCK, hereinafter called
"Buyer";
W I T N E S S E T H
WHEREAS, Seller is the owner of a supply of natural gas from which
Seller will have available for sale certain volumes of gas; and
WHEREAS, Westar Transmission Company "Transporter" operates a natural
gas transmission system in the State of Texas on which Seller has made
certain transportation arrangements;
WHEREAS, the parties hereto desire to sell and purchase volumes of
gas for Buyer's electric generating facilities located near `
Transporters's facilities in accordance with the terms and conditions of
this agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
ARTICLE I
T%r!T'T%TTTTAT.T,-
Section 1. "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.
1
Section
3.
The term
1Wf" 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 4. The term 'Btu" shall mean British thermal unit.
Section 5. The term "Heating Value" shall mean the Btu content of
the gas delivered.
ARTICLE II
UQ ANTITY
Section 1. Commencing February 1, 1985, and continuing through the
remaining term of this Gas Purchase and Sales Agreement, Seller agrees to
sell and deliver to Buyer on a best efforts basis, and Buyer agrees to
purchase and receive on a best efforts basis that volume of gas which
Seller may have available for sale for use in Buyer's electric generating `
facility as a stand-by fuel.
Section 2. Buyer agrees to notify Transporter's Dispatching Office
in Amarillo, Texas as soon as possible of Buyer's desire to purchase
Seller's natural gas as a stand-by fuel. Seller will use reasonable
diligence in providing the volumes of gas that Buyer desires to purchase
for use in its electric generating facilities.
Section 3. Gas delivered under this contract shall be subject to
curtailment or interruption when necessary to protect public health and
2
safety or to maintain service to higher priority customers of
Transporter. Such curtailment or interruption shall be performed in
accordance with Transporter's applicable rules from time to time in
effect and on file with the Texas Railroad Commission or any successor
regulatory agency, and shall not be the basis for any claim for damages
sustained by any party.
Section 4. In the event an interruption in, or curtailment of,
deliveries shall become necessary or advisable, Seller or Transporter
shall notify Buyer as soon as possible before actual curtailment, by
telephone, telegraph or other means, of the nature, extent and probable
duration of such interruption or curtailment. Buyer shall resume the
taking of gas within a reasonable length of time following notification
that gas is again available if Buyer desires to purchase any volumes of
gas at that time.
ARTICLE III
DELIVERY POINT
Section 1. The delivery of gas hereunder shall be made at a point
one hundred ninety-one feet seven inches (1911711) South and two thousand
one hundred thirty-seven feet four inches (21371411) East from the
Northwest corner of Section 5, Block S, Lubbock County, Texas.
ARTICLE IV
DELIVERY PRESSURE
Section 1. Deliveries shall be made at the pressure requested by
Buyer, but not to exceed 75 psia except deliveries may be made at higher
pressures if neither party objects.
ARTICLE V
METERING
Section 1. Seller, or its designee at its sole cost, risk, and
expense, shall install, maintain and operate at the point or points of
delivery hereunder 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 as supplemented or amended from
time to time 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's or its designee's
meter or meters shall be done by Seller or its designee. Seller may
destroy meter charts and other records after two years.
Section 3. Buyer may install, maintain and operate check measuring
equipment as it desires, provided that such check meter and equipment
shall be so installed as not to interfere with the operation of Seller's
or its designee's meters.
Section 4. Each such orifice meter installed by Seller or its
designee shall, at the expense of Seller, be calibrated at least once
each month during which actual deliveries take place and at least once
each three (3) months otherwise in the presence of Buyer's representative
4
if. Buyer so desires. 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 precent (2%)
erroneous in the aggregate, previous reading of such equipment shall be
considered correct in computing the deliveries of gas hereunder, but such
equipment shall be adjusted at once to read accurately. 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 corresponding 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 fifteen (15) 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 the best data available using the first of the following
methods which is feasible:
(a) By using the registration of Buyer's or Buyer's agent's
check meter if installed and accurately registering.
E
(b) By correcting
the error
in
Seller's or its designee's
meter if the
percentage
of
error is ascertainable by
calibration, special test or mathematical calculation.
(c) By estimating the volume of delivery by using as a
basis the volumes delivered during precedings 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
otherwise specifically provided herein, shall be one thousand (1,000)
cubic feet (sometimes referred to herein as Mcf) at a base temperature of
sixty degrees (600) 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 1. All measurement of gas hereunder shall be in accordance
with the recommendations for measuring gas contained in Report No. 3 of
the Gas Measurement Committee of the American Gas Association as
supplemented or amended from time to time or other generally
2
accepted tables relating to gas measurement applied in a practical and
appropri ate manner. Correction shall be made for deviation from Ideal
Gas Laws as provided for in Section 5 of this Article VII.
Section 2. An assumed atmospheric pressure of thirteen and one tenth
(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 its designee, shall, at its sole cost, risk and
expense, install, maintain and operate a recording thermometer of
standard manufacture, so that it may properly record the temperature of
gas flowing through Seller's or its designee's meter or meters. The
arithmetical average 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 its designee, shall, at its sole cost, risk and
expense, maintain and operate a recording gravitometer of standard manu-
facture, so that it may properly record the gravity of the gas flowing
through Seller's or its designee's orifice meter or meters. The gravity
so determined shall be used in the computations of measurement. In the
event Seller or its designee, has installed, or shall in the future in-
stall, 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.
7
Section S. 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 here-
under until the next such test is made.
Section 6. Each party hereto, or its designated representative,
shall conduct 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 representative, notice of each such test or deter-
mination in sufficient time to enable said other party to have its repre-
sentative present.
ARTICLE VIII
PRICE
Section 1. During the term hereof, Buyer will pay to Seller for each
WBtu of gas delivered hereunder and measured as herein provided for a
price of Four Dollars and Two Cents ($4.02). The above price is subject
to the adjustment provided for in Section 3 of this Article VIII.
Section 2. During the term hereof, Buyer also agrees to pay Seller a
stand-by charge equal to one thousand five hundred fifty dollars
($1,550.00) per month.
8
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 existence as of
the date of this agreement, 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 con-
nection with such delivery. All taxes levied on such gas after delivery
shall be paid by Buyer.
Section 4. Applicable rulings or orders of governmental repre-
sentatives in charge of the administration of any law or ordinance in-
creasing or creating any tax shall be binding and conclusive upon Buyer
until such time as the invalidity thereof has been finally established by
the decision of a court of competent jursidiction.
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 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.
0
ARTICLE IX
HEATING VALUE
Section 1. The Btu content of the gas delivered hereunder shall be
determined for a cubic foot of gas at a temperature of sixty degrees
(600)Fahrenlheit, at an absolute pressure of fourteen and sixty-five one
hundredths (14.65) pounds
per
square inch,
and at
dry
conditions.
Such
total heating value of
the
gas delivered
shall
be
determined
by an
instrument of standard manufacture to be installed, maintained, and
operated by Seller or its designee, at its sole cost, risk and expense.
The moisture content of the gas delivered shall be determined by Seller
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 l of this
Article IX, and such average total heating value shall be used in deter-
mining the amount of gas sold hereunder. In the event Seller or its
designee has, or shall in the future install, an instrument at a point on
its system which properly records the heating value of the total stream a
portion of which is sold hereunder, said instrument may be used to
ascertain the heating value of the gas sold hereunder.
ARTICLE X
BILLING AND PAYME9T
Section 1. On or before the loth day of each calendar month, Seller
shall render a statement to Buyer giving the total volume of gas pur-
chased hereunder during the preceding monthly billing period, if any,
and the monies due therefor. Such statements to be rendered in
accordance with this contract, and shall include any amounts due for tax
10
reimbursement under the provisions of Article VIII hereof; provided,
however, that if the amount of reimbursement to Seller cannot be
determined 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 also render to Buyer a statement setting out
the monthly stand-by charge as provided in Article VIII hereof, and Buyer
shall pay to Seller the amount due within ten (10) 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 delivered hereunder or any
stand-by charges remaining unpaid after the due date for each payment
provided for herein shall bear interest at the lesser of the highest
lawful interest rate or the prime rate charged by Citibank, N. A. plus
two percent (2%) 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 (1) grain of hydrogen sulfide per one hundred (100)
cubic feet.
11
(c) Organic Sulfur - The gas shall not contain more than
twenty (20) grains of organic sulfur per one hundred
(100) cubic feet.
(d) Carbon Dioxide - The gas shall not contain more than
three percent (3%) 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.
(g) 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
degrees (400)
nor
more than
one
hundred twenty degrees (1200) 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.
12
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 1. 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, temp-
orary failure of Seller's gas supply due to causes or conditions beyond
Seller's control, or other causes or conditions reasonably beyond the
control of either party, whether like or unlike those herein enumerated,
or on account of necessary 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 agreement, 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
13
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 opposing party when such course is inadvisable
in the discretion of the party having the difficulty.
ARTICLE XIV
NOTICES
Section 1. Notices to be given hereunder, unless otherwise desig-
nated 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 90
Amarillo, Texas 79189
To Buyer: City of Lubbock
P.O. Box 2000
Lubbock, Texas 79457
Section 2. Routine communications, including monthly statements and
payments,_ 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.
14
ARTICLE XV
SUCCESSCRS AND ASSIGNS
Section 1. This agreement may not be assigned by either party with-
out 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 qualify to do business in any state in which any performance
of this agreement may occur. However, such assignment for security
purposes, shall not relieve the assigning party of any of its obligations `
under this agreement.
ARTICLE XVI
MAINTENANCE OF FACILITIES
Section 1. 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 AGREFMENT
Section 1. This agreement subject to the provisions hereof, shall be
effective February 1, 1985, and shall continue in effect for a primary
term ending the 31st day of January, 1986 and from month to month
thereafter until terminated by either party upon ten (10) days prior
written notice.
is
ARTICLE XVIII
INDEMNIFI CAT ION
Section 1. 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 oper-
ations hereunder. Buyer agrees to indemnify and hold harmless Seller
against any and all loss, claim or demand on account of any damage to
property or injury to persons arising or resulting from Buyer's or
Buyer's agents operations hereunder.
ARTICLE XIX
MISCELLANEOUS
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.
Section 2. No waiver by either party of any one or more defaults by
the other in the performance of the provisions of this contract shall
operate or be construed as a waiver of any other default or defaults,
whether of a like or a different character.
ARTICLE XX
GOVERNMENTAL REGULATIONS
Section 1. 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.
Seller and Buyer agree to obtain, if possible, whatever authority is
16
necessary, if any, to effectuate the purchase and sale of gas hereunder
in the event this agreement and the purchase 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.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to
be duly executed on this the day and year first above written.
"BUYER"
CIT
By
1 tJELL En
GAS MARKETING, INC.
By
7' Jkl-
17
STATE OF TEXAS
COUNTY OF POTTER
BEFORE ME, the i.LVersigned authority, on this day personally
appeared / A r , known to me to be the person
whose name is subscrhbed to the foregoing instrument
as , of , a
corporation, and ac nowle ged to me that he executed the same or the
purposes and consideration therein expressed, and in the capacity therein
stated, and as the act and deed of said corporation.
GLM4 UNDER MY HAND AND
of , 19811.�
My Commission Expires:
�/
STATE OF TEXAS
COUNTY OF POTTER
SEAL OF OFFICE, this _L� day
'
BEFORE , the undersigned authority, on this day personally
appeared a c. c— \�\, known to me to be the person
whose name is subsjcibed to the foregoing instrument
as of , a
corporation, and acEi6wl-e-d-g-e-a 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.
GIVEN UNDER MY HAND_AND SEAL OF OFFICE, this day
19
yMy Commi s�i�gn Expires: �-.-
Notary Public
O1OSB
18