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HomeMy WebLinkAboutResolution - 3616 - Agreement - Adobe Gas Marketing Company - Natural Gas Supply, Brandon Station - 05/09/1991DGV:dw RESOLUTION Resolution No. 3616 May 9, 1991 Item #30 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 Sale Agreement by and between the City of Lubbock, Texas, and Adobe Gas Marketing Company, 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 9th A "teBoyi, RaCity Secretary— APPROVED AS TO CONTENT: c i Garro Mc-DonalcT, Assistant City Manager/Utilities APPROVED AS TO FORM: a Ddtald G. Valfdiver, first ASS1sta City Attorney day of May , 1991. B. C. MCMI N, MAYOR R-eJOIV-6017 Subsidiaries: Adobe Gas Marketing Co. Adobe Gas Gathering & Processing Co. Adobe Gas Co. ADOBE GAS PIPELINE COMPANY August 20, 1991 City of Lubbock P. O. Box 2000 Lubbock, Texas 79457 Attn: Mr. Carroll McDonald Ref: Gas Sales Agreement dated May 9, 1991 Adobe Gas Marketing Co. ("Seller") City of Lubbock ("Buyer") Dear Mr. McDonald: After a recent review of the above mentioned contract between Adobe Gas Marketing Co. ("Seller") and City of Lubbock ("Buyer") it was noticed that a typographical error had been made in Section 4.1 of the agreement. Each Contract Year is erroneously shown to end on August 30th instead of August 31st. Please sign below to show your concurrence that the Contract Years end on August 31. If you have any questions I can be reached at (713) 654-9922. Very truly yours, ADOBE GAS MARKETING CO. Sn� #.G6*9 Sonia J. Scott Administrative Assistant - Contracts N_d Agreed to this .2 of_, 1991 W BBOCA A lazI CITYLU61.AMD/sjs SA1111 cc: J. K. Freeman Citicorp Center, Ste. 1600 • 1200 Smith St. • Houston, Texas 77002 • (713) 654-9922 A Wholly Owned Subsidiary Of Adobe Resources Corporation Resolution No. 3616 May 9, 1991 Item #30 GAS SALES AGREEMENT This Agreement is made and entered into as of the 9th day of May , 1991 by and between ADOBE GAS MARKETING CO., a Delaware corporation ("Seller"), and the CITY OF LUBBOCK ("Buyer"), both Buyer and Seller sometimes referred to collectively as "Parties" or singularly as "Party". I. DEFINITIONS 1.1 "Agreement" means the provisions contained in this document. 1.2 "Gas" or "Natural Gas" means gas produced from gas wells, and gas produced in association with oil. 1.3 "Btu" (British Thermal Unit) means the amount of heat energy required to raise the temperature of one avoirdupois pound of water from fifty -nine -degrees Fahrenheit (59°F) to sixty degrees Fahrenheit (600F), as determined on a dry basis. 1.4 "MMBtu" means one million (1,000,000) Btu. 1.5 "Transporter" means Northern Natural Gas Company (NNG) and any other pipeline(s) transporting the Gas delivered under this Agreement from the source of supply to the Delivery Point(s). 1.6 "FERC" means the Federal Energy Regulatory Commission or any successor government authority. 1.7 "Daily Contract Quantity" or "DCQ" means 4,500 MMBtu per day of Gas. 1.8 "Contract Year" means a twelve (12) month period commencing on September 1, 1991, and each successive 12 month period thereafter during the term of this Agreement. II. QUANTITY 2.1 Subject to the remaining provisions of this Agreement, Seller shall have available for sale and delivery to Buyer and Buyer shall purchase and receive the DCQ. Buyer represents that it is purchasing Gas under this Agreement to satisfy one hundred percent (100%) of Buyer's needs for the Texas Tech cogeneration facility in Lubbock, Texas ("Cogeneration Facility") and that Buyer will not purchase any alternate energy supplies from third party suppliers for the Cogeneration Facility. Seller represents that gas delivered up to the DCQ will be transported to the Primary Delivery Point utilizing a firm transportation agreement with Transporter. Upon mutual agreement, the parties may agree to deliver and receive a quantity in excess of the DCQ at the price as per this agreement. 2.2 On or before the twentieth (20th) of the month prior to the month of deliveries, Buyer shall notify Seller of the daily quantity to be purchased by Buyer during the coming month to serve the Cogeneration Facility. During a given month Buyer will keep Seller advised of operational changes that affect gas purchases as they occur. Deliveries of the quantities established herein shall be at steady rates of flow. 2.3 Seller shall be required to sell and deliver to Buyer and Buyer shall be required to purchase and receive from Seller a "Minimum Annual Quantity" or "MAQ" which shall be equal to ninety percent (90%) of the DCQ multiplied by the number of days in the applicable Contract Year. 2.4 Buyer and Seller shall cooperate to ensure that nominations are timely made to Transporter and that such K nominations reflect the actual expected deliveries and receipts. 2.5 If either Party becomes aware of any reason which the quantities established in accordance with Paragraphs 2.1 and 2.2 or the quantities nominated in accordance with Paragraph 2.3 may not be delivered or taken, then that Party shall notify the other Party as soon as possible. The Parties will cooperate to ensure that corrected nominations are provided to Transporter as soon as possible. 2.6 During the term of this Agreement, Seller will not require a demand charge payment during one (1) scheduled plant shutdown period, not to exceed six (6) weeks in duration. Buyer must provide Seller with advance written notice at least ninety (90) days prior to the beginning of this shutdown period which is currently estimated to begin in October, 1993. III. DELIVERY POINTS) 3.1 The Primary Delivery Point hereunder shall be at the interconnect of Power -Tex Pipeline and facilities owned by NNG in Hockley County, Texas (NNG facility number 36383 - Adobe/NNG Interconnect). 3.2 In the event of force majeure resulting in Buyer being unable to accept the DCQ at the Primary Delivery Point, Buyer may elect to accept all or a portion of the DCQ at the Secondary Delivery Point for its Excess Gas Requirements at its Holly Avenue Generating Station. The Secondary Delivery Point shall be at the interconnect of the Power -Tex Pipeline and NNG in Hockley County, Texas (NNG facility number 2568 - Adobe/NNG Interconnect). All deliveries to the Secondary Delivery Point will be on an 3 interruptible basis only. 3.3 If Buyer elects to accept all or a portion of the DCQ at the Secondary Delivery Point for reasons other than force majeure, Buyer will pay any additional costs charged by Transporter to move to the Secondary Delivery Point. 3.4 The Parties may agree to make delivery of the Gas into the Power -Tex Pipeline utilizing pipeline facilities other than NNG. Seller shall properly notify and coordinate this effort with Buyer. 3.5 The Delivery Point(s) shall be the point at which title to the Gas passes to Buyer and the point at which Gas is delivered for the account of the Buyer. IV. PRICE 4.1 The price per MMBtu to be paid for Gas delivered and measured in accordance with this Agreement will be comprised of a demand charge and a commodity charge as follows: Contract Demand Commodity Year Charge Charge Total August 8, 1991 - $0.120 $1.615 $1.735 August 30, 1992 September 1, 1992 - $0.126 $1.704 $1.830 August 30, 1993 September 1, 1993 - $0.133 $1.798 $1.931 August 30, 1994 September 1, 1994 - $0.141 $1.896 $2.037 August 30, 1995 September 1, 1995 - $0.148 $2.001 $2.149 August 30, 1996 September 1, 1996 - $0.157 $2.111 $2.268 August 30, 1997 September 1, 1997 - $0.165 $2.227 $2.392 August 30, 1998 4 4.2 For purposes of billing and payment each month, the Demand Charge shall be calculated by multiplying the DCQ by the applicable Demand Charge and multiplying by the number of days in the month. The Commodity Charge shall be calculated monthly by multiplying the monthly quantity delivered in accordance with this Agreement by the applicable Commodity Charge. V. RESPONSIBILITY 5.1 All charges, expenses, fees, taxes, damages, injuries, and other costs incurred in or attributable to the handling or transportation of the Gas delivered in accordance with this Agreement (or otherwise caused by or attributable to the Gas) prior to delivery to Buyer at the Delivery Point (s) shall be the responsibility of Seller, as between the Parties hereto, and Seller shall indemnify, defend, and hold Buyer harmless from all such costs. 5.2 Seller shall be responsible for the maintenance and operation of any of its facilities (including those it owns an interest in) and shall indemnify, defend, and hold Buyer harmless for any and all costs arising from any act or accident in connection with the installation, presence, maintenance, and operation of the facilities. 5.3 All charges, expenses, fees, taxes (including sales or transfer taxes), damages, injuries, and other costs incurred in or attributable to the purchase and transfer, transportation, and handling of the Gas (or otherwise caused by or attributable to the Gas) from and after delivery shall be the responsibility of Buyer, as between the Parties hereto, and Buyer shall indemnify, defend, 9 and hold Seller harmless from all such costs. 5.4 As used in this Agreement, "indemnify, defend, and hold harmless", means that the indemnifying Party shall pay any and all costs incurred by the indemnified Party (including, but not limited to, attorneys' fees and court costs) associated with or relating to any breach of warranty or any responsibility or risk assigned to the indemnifying Party under this Agreement. VI. TERM 6.1 This Agreement shall commence as of August 8, 1991 and continue for a term of seven (7) years through August 31, 1998. 6.2 This Agreement shall continue from month to month beyond the period described in Paragraph 6.1 until terminated by either Party on thirty (30) days advance written notice. If this Agreement is continued as per the above, the price will be that specified in Article IV for the seventh contract year. VII. MEASUREMENT 7.1 The quantity of Gas delivered at the Delivery Point(s) shall be calculated from the measurements taken by the Transporter transporting the Gas to the Delivery Point(s) and from the heating value determined by the instruments operated by the Transporter at the Delivery Point(s). The quantity so measured shall be adjusted to the unit of measurement in this Agreement. 7.2 The unit of measurement shall be one MMBtu. VIII. QUALITY 8.1 The Gas delivered to Buyer at the Delivery Point(s) shall be of merchantable quality and shall meet the quality 2 specifications (including the specifications regarding heating content) of the Transporter transporting the Gas to the Delivery Point(s). Transporter's quality specifications are as follows: A. Liquids: The gas shall be commercially free from water and hydrocarbons in liquid form. B. Hydrogen Sulphide: The gas shall not contain more than one quarter (1/4) grain of hydrogen sulphide per one hundred (100) cubic feet. C. Organic Sulphur: The gas shall not contain more than five (5) grains sulphur per one hundred (100) cubic feet. 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 six (6) pounds of water in the vapor phase per million cubic feet. G. Heating Value: The gas shall have a gross heating value of not more than eleven hundred twenty (1120) and not less than nine hundred fifty (950) British thermal units per cubic foot. H. Temperature: The temperature of the gas shall not exceed one hundred twenty (120) degrees. IX. FORCE MAJEURE 9.1 Except as provided in Article V of this Agreement, and except for failure to make payment for Gas tendered for delivery, neither Party shall be liable for a failure to perform hereunder, where such failure was caused by an event of force majeure. Force majeure shall include those events outside of the reasonable 7 control of the Parties: (1) physical events such as acts of God, landslides, lightning, earthquakes, fires, storms or warnings thereof, floods, washouts, explosions, breakage or accident or necessity of repairs to machinery or equipment or lines of pipe, freezing or failure of wells, or changes in pipeline operating conditions; (2) acts of others such as strikes, riots, insurrections, war, declarations of force majeure, or interruption of transportation; provided, however, that neither Party may claim force majeure for interruption in transportation, unless such Party has reserved firm capacity for the transportation of the firm quantities hereunder; (3) Regulatory actions or changes such as laws, regulations, or orders preventing performance; and any other causes, whether of the kind herein enumerated or otherwise not reasonably within the control of the Parties to prevent or overcome. 9.2 Seller and Buyer shall make reasonable efforts to avoid force majeure events and to remedy them once they have occurred. The affected Party shall give notice to the other Party if performance is affected by force majeure and, if requested, shall provide particulars in writing. X. GOVERNMENT REGULATION 10.1 This Agreement shall be subject to all valid rules, regulations, statutes, and laws of any government body having jurisdiction. 10.2 The Parties are entitled to act in accordance with a law until such law is amended, reversed or otherwise disposed on a final nonappealable order. 8 10.3 The Parties shall cooperate to ensure compliance with all governmental regulation, including any reasonable exchange or provision of information needed for filing or reporting requirements. XI. BILLING AND PAYMENT 11.1 On or before the fifteenth (15th) day of each calendar month, Seller shall submit to Buyer (by telecopy, mail, or other means, at Seller's option) a statement showing the amount of Gas purchased during the preceding month and the amount due Seller for such purchases as calculated in accordance with the terms of this Agreement. If actual amounts are unavailable, billing and payment shall be made on estimates subject to adjustment in succeeding months. If it is required at any time to bill based upon an estimate, Buyer's meter located at the Cogeneration Facility will be utilized for the purpose of such estimate provided, however, there is no reason to suspect that Buyer's meter is inaccurate. Buyer shall make payment of the amount specified in Seller's statement on or before the twenty-fifth (25th) day of the calendar month by wire transfer as follows: TEXAS COMMERCE BANK -MIDLAND ABA NO. 116314651 FOR CREDIT TO: ADOBE GAS MARKETING CO. Account No. 100-786-6 XII. SUCCESSION AND ASSIGNMENT 12.1 This Agreement shall be binding upon and inure to the benefit of the respective representatives, successors and assigns of the Parties hereto; provided, however, that this Agreement may not be transferred or assigned by operation of law or otherwise, in whole or in part, by either Party except to affiliates, subsidiaries or successor -in -interest of all or part of the business of either Party or with the prior written consent of the other Party. XIII. NOTICES 13.1 Any notice, demand, request, statement, or correspondence provided for in this Agreement, or any notice which a Party may desire to give to the other, shall be in writing (unless otherwise provided) and shall be considered duly delivered when received by mail, telecopy, or overnight courier, at the addresses below: (i) To Buyer: CITY OF LUBBOCK P. O. Box 2000 Lubbock, Texas 79457 Attention: Mr. Carroll McDonald Telecopy No.: (806) 741-1069 (ii) To Seller - Notices and Correspondence ADOBE GAS MARKETING CO. 1200 Smith Street, Suite 1600 Houston, Texas 77002 Attention: Mr. M. Brad Strong General Manager - Marketing & Supply Telecopy No.: (713) 951-0294 13.2 Either Party may change the information shown in Paragraph 13.1 by giving written notice to the other Party. XIV. MISCELLANEOUS 14.1 This Agreement shall be governed in accordance with the laws of the State of Texas. 10 14.2 THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT OF THE PARTIES AND CANNOT BE ALTERED, MODIFIED, OR AMENDED EXCEPT IN A WRITING SIGNED BY THE PARTY AGAINST WHOM IT IS TO BE ENFORCED. 14.3 Any waiver of any default under this Agreement shall not be construed as a waiver of any future defaults, whether of like or different character. 14.4 This Agreement shall be governed in accordance with the laws of the State of Texas (including the Uniform Commercial Code as adopted in Texas). NOW THEREFORE, the Parties evidence their consent and agreement to the foregoing by executing below: SELLER: ADOBE GAS MARKETING CO. By: jn&=M V J. K. Freeman President Attest: CITYLUB2/sjs BUYER: CITY OF LUBBOCK By Mayor . C. McMinn Attec4i Secretary Ranette Boyd Approved as to Form: By: , 'e y Attorney 11 Approved as /to Content: By: Assistant City Manager Carroll McDonald THE STATE OF TEXAS § CITY OF LUBBOCK § BEFORE ME, the undersigned authority, on this day personally appeared J. K. Freeman, President of Adobe Gas Marketing Co., known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed the same for the purposes and consideration therein expressed, in the capacity therein stated, and as the act and deed of said company. GIVEN UNDER MY HAND AND SEAL OF OFFICE this � C'4 --h day of Q�ti j , 1991. �tt*T. 't' s 3 Fiftnsy :X.My coxnlrv�z-sk�n �'OaYfdr '' f1k1K!�,��±�y�gyxt�!N'Ws11�9wM.b.9rtT_ _n.3 Nis: 'J • -J Notary Public in and for The State of Texas My Commission Expires: 12 (~2- _ -.1 2- _ 9 Lk THE STATE OF TEXAS CITY OF LUBBOCK BEFORE ME, the undersigned authority, on this day personally appeared B. C. McMinn, Mayor for the CITY OF LUBBOCK, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed the same for the purposes and consideration therein expressed, in the capacity therein stated, and as the act and deed of said city. GIVEN UNDER MY HAND AND SEAL OF OFFICE this day of 1991. ft 1 Notary Public in and for The State of Texas My Commission Expires: 13