HomeMy WebLinkAboutResolution - 3275 - Contract - State Of Texas School Land Board - Natural Gas Supply - 12/14/1989Resolution # 3275!
BID #10357
December 14, 1989
Item #23
DGV:da
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 Sales
Contract by and between the City of Lubbock and the State of Texas School
Land Board, 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 December 1989.
Ranette Boyd, City Secr
APPROVED AS TO CONTENT:
KODert Massengale, Assistant C
Manager for Financial Services
APPROVED AS TO FORM:
Uoinia G. Vandiver, Firs
Assistant City Attorney
c�
B. C. Mc INN, MAYOR
Resolution #3275
BID #10357
12-14-89 GLOContrac2No. 90--086 P
GAS SALES CONTRACT
by and between
THE COMMISSIONER OF THE GENERAL LAND OFFICE
AND THE CHAIRMAN OF THE SCHOOL LAND
BOARD OF THE STATE OF TEXAS
•••• and
••• THE CITY OF LUBBOCK, TEXAS
••
•
INDEX
ARTICLE
CONTENTS
PAGE
I
Definitions
2
II
Quantity
3
III
Point of Delivery
3
IV
Measurement
3
V
Quality
5
VI
Price
6
VII
Invoicing, Payment & Audit
6
VIII
Term
7
IX
Force Majeure
7
X
Non -Waiver of Future Default
8
XI
Successors & Assigns
8
••
XII
Representation of Title
8
'
XIII
Responsibility
g
•
XIV
Regulatory Bodies
g
XV
Addresses
g
••
XVI
Miscellaneous
10
.....:
Signatures
10
Exhibit A
GAS SALES CONTRACT
THIS CONTRACT, made, entered into and effective the 1st day
of April, 1990, hereinafter referred to as "Effective Date"', by
and between the STATE OF TEXAS, acting by and through the School
Land Board and the Commissioner of the General Land Office,
hereinafter referred to as "'Seller", and the CITY OF LUBBOCK,
TEXAS, hereinafter referred to as "'Buyer".
• • • • WITNESSETH:
WHEREAS, Seller has available a supply of in-kind royalty
•� natural gas which has been produced in Texas; and
•••�; WHEREAS, Buyer owns and operates a 20 MW combustion turbine
•� located on the campus of Texas Tech University, (the "turbine"),
• and that said turbine generates and supplies steam and
•. electricity for the primary benefit of Texas Tech University in
Lubbock, Texas, and requires a supply of natural gas for the
• •• utilization of said turbine; and
WHEREAS, Seller desires to sell to Buyer and Buyer desires
• to purchase from Seller such natural gas under the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, and
pursuant to the authority provided the School Land Board and the
Commissioner of the General Land Office under Section 52.133,
Texas Natural Resources Code and other applicable law, and the
authority provided the City of Lubbock under Vernon's Ann. Civ.
St. art. 4413(32c) and other applicable law, the parties covenant
and agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise specified, the following terms as used
herein shall be construed to have the following meanings:
1. Day - shall mean a period of time commencing at seven
o'clock (7:00) a.m. Local Time, hereinafter referred to as "LT",
on any day and ending at seven o'clock (7:00) a.m. LT on the next
succeeding day.
2. Month - shall mean a period of time commencing at seven
o'clock (7:00) a.m. LT on the first day of any month and ending
at seven o'clock (7:00) a.m. LT on the first day of the following
month.
3. Year - shall mean a period of three hundred sixty-five
(365) consecutive days commencing and ending at seven o'clock
(7:00) a.m. LT; provided, however, that any year which contains
the date of February 29 shall consist of three hundred sixty-six
(366) consecutive days.
11. Gross heating value - shall mean the number of Btu's
produced by the complete combustion, at constant pressure, of the
amount of gas which would occupy a volume of one (1) cubic foot
at a temperature of sixty (60) degrees F, if saturated with water
vapor and at a constant pressure of fourteen and sixty-five
hundredths (14.65) psia and under standard gravitational force
(acceleration 980.655 centimeters per second) with air of the
same temperature and pressure as the gas when the 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, and when corrected from the conditions of testing
to that of the actual condition of the gas as delivered expressed
2
4.
Psia - shall mean pounds per square inch, absolute.
5.
Psig - shall mean pounds per square inch, gauge.
••••
. . .
6.
Gas - shall mean
natural as as
g produced in its natural
•
state.
7.
Cubic foot of gas - shall mean the volume of anhydrous
gas conta
ned in one (1)
cubic foot of space at a standard
•
00
pressure
base of fourteen
and sixty-five hundredths (14.65) psis
..
and a standard temperature
base of sixty (60) degrees Fahrenheit,
hereinafter referred to as
"F".
,••,
S.
Mcf - shall mean
one thousand (1,000) cubic feet.
.....:
9.
Btu - shall mean
British thermal unit.
10.
MMBtu - shall mean one million (1,000,000) Btu's.
11. Gross heating value - shall mean the number of Btu's
produced by the complete combustion, at constant pressure, of the
amount of gas which would occupy a volume of one (1) cubic foot
at a temperature of sixty (60) degrees F, if saturated with water
vapor and at a constant pressure of fourteen and sixty-five
hundredths (14.65) psia and under standard gravitational force
(acceleration 980.655 centimeters per second) with air of the
same temperature and pressure as the gas when the 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, and when corrected from the conditions of testing
to that of the actual condition of the gas as delivered expressed
2
in Btu per cubic foot and reported at a pressure base of fourteen
and sixty-five hundredths (14.65) psia; provided, however, if the
gas as delivered contains seven (7) pounds of water or less per
one million (1,000,000) cubic feet, such gas shall be deemed to
be anhydrous.
12. WACOG - shall mean the weighted average cost of gas as
recorded by the General Land Office - Gas Marketing Division for
sales of state royalty gas to state customers on a monthly basis
to which Buyer shall have reasonable access upon written request
to Seller.
13. Gas Transporter - shall mean any gas transportation
company w th which Seller may from time to time contract for the
purpose of providing transportation of Seller's gas as required
under this Contract.
ARTICLE II
QUANTITY
Commencing with the Effective Date and continuing throughout
the term hereof, Seller agrees to use its best efforts to deliver
and sell and Buyer agrees to accept and purchase up to 4,680
MMBtu's (based on a Btu content of 1,040 per cubic foot) of gas
each day during the term of this Contract for Buyer's operation
of the turbine; provided, however, that in the event Seller is
•• unable, for any reason other than force majeure, to deliver an
average of the full daily requirements up to 4,680 MMBtu's (based
on a Btu content of 1,040 per cubic foot), Buyer may, upon 10
•� days' written notice to Seller, reduce the volume under this
• Contract to the average daily volume delivered by Seller during
,. the preceding sixty (60) day period.
• • • ARTICLE III
• •• POINT OF DELIVERY
• Point of Delivery - The point of delivery shall be in
Hockley County, Texas, at Northern Natural's natural gas pipeline
where it connects with the Northern -Adobe interconnect serving
the Texas Tech University cogeneration facility.
ARTICLE IV
MEASUREMENT
1. Unit of Volume - The Unit of Volume for measurement of
gas sold and purchased hereunder shall be one (1) cubic foot of
gas at a base temperature of sixty (60) degrees F and at a
pressure of fourteen and sixty-five hundredths (14.65) psia, as
3
provided by the Natural Resources Code of the State of Texas
(Sections 91.051 through 91.062 of Vernon's Texas Codes
Annotated).
2. Basis - All measurement facilities hereunder shall be
operated Tn accordance with the standards approved by the
American National Standards Institute of June 28, 1977 and
prescribed in the Gas. Measurement Committee of the American Gas
Association, hereinafter referred to as IwAGA", Report Number 3
(ANSI/API 2530, First Edition) as it is now and from time to time
may be revised, amended or supplemented. Where measurement is by
other than orifice meters, determination of the necessary factors
for proper volume shall be as mutually agreed by the Parties.
Buyer understands that Seller does not own or control any
measuring facilities of gas transporter. However, Seller agrees
to use its best efforts to assure Buyer's access to gas
transporter's measuring facilities to the extent that in the
event the meters are found to be inaccurate, such meters will be
adjusted to register accurately. Also, in the event Seller
and/or Buyer desires a special test of said measuring facilities,
the Seller and/or Buyer shall cooperate to secure prompt
verification of the accuracy of such facilities. Seller and/or
Buyer agree to give the other parties sufficient advance notice
of the time of all such special tests so that any party may
conveniently be present or have its representative present. If
•••. upon any test, the percentage of inaccuracy of the measuring
• facilities is found to be in excess of one (1) percent, Seller
and/or Buyer shall use its best efforts to assure that
••• registrations thereof shall be corrected for a period extending
• back to the time such inaccuracy occurred if such time is
• . ascertainable, and if not ascertainable, then back one-half (1/2)
• •� of the time elapsed since the last date of calibration not to
exceed fifteen (15) days.
3. Ideal Gas Laws - The measurement hereunder shall,
unless otherwise agreed to by the parties, be corrected for
•�•�•; deviation from Ideal Gas Laws, such shall be determined by use of
• the tables of formulas published by the AGA Par Research Project
NX -19, corrected for carbon dioxide and nitrogen. Determination
of the molecular percentage of carbon dioxide and nitrogen in the
gas shall be made within thirty (30) days after initial
deliveries commence hereunder and at least quarterly thereafter.
The molecular percentage of carbon dioxide and nitrogen thus
determined will be used to determine the supercompressibility
factors during the ensuing period, with corrections for specific
gravities, temperatures and pressures under which gas is
delivered hereunder.
4. Determination of Flowing Temperature - The temperature
of the gas flowing through the measure facilities hereunder shall
be determined by means of the continuous use of a recording
thermometer, or by such other methods as the parties may mutually
U
agree. The arithmetic average temperature of the gas each day,
during periods of flow only, shall be used in computing the
quantity of gas delivered for that day.
5. Determination of Specific Gravity - The specific
gravity of the gas flowing through the measuring facilities
hereunder shall be determined by means of the continuous use of a
recording gravitometer, or such other methods as may be agreed to
by the parties. The arithmetic average specific gravity recorded
each day, during periods of flow only, shall be used in computing
the gas volume for that day.
6. Determination of Gross Heating Value - The gross
heating value of the gas hereunder shall be determined by means
of a recording calorimeter, employing the Thomas principle of
calorimetry, proportional to flow continuous sampler or such
other recording device mutually agreed upon by the parties hereto
and acceptable within the industry. The arithmetical average of
the hourly gross heating value recorded each day, during period
of flow only, shall be considered as the heat content of the gas
during such day. The gross heating value of such sample to be
obtained either by calorimeter or chromatographic analysis using
the values of the physical constants for the gas compounds and
the procedure for determining the gross heating value of the gas
shall be on a real basis in accordance with ANSI/ASTM D3588-79,
as it is now and from time to time may be revised, amended or
••.. supplemented. The gross heating value of gas so determined in
•••� Btu's shall be considered for all purposes to be the gross
• •• heating value of the gas hereunder for the month in which the
• •• sample is taken and all succeeding months until that month in
which a new sample is taken.
• i •
• ARTICLE V
UALITY
••�•' 1. All gas delivered hereunder shall conform to the
•••,•� following specifications. The gas will:
(a) Contain not more than one-quarter (1/4) grain of
hydrogen sulfide or more than ten (10) grains of
sulphur per one hundred (100) cubic feet;
(b) Have a"Gross Heating Value of not less than nine
hundred fifty (950) Btu's per cubic foot of gas
but not more than one thousand one hundred eighty
(1180) Btu's when saturated with H2O vapor;
(c) Have a temperature of not greater than one hundred
twenty (120) degrees F or less than forty (40)
degrees F;
5
(d) Contain not more than three (3) percent by volume
of carbon dioxide or one (1) percent by volume of
oxygen;
(e) Be commercially free of all liquids, suspended
matters, dust, all gums and gum forming
constituents, and other objectionable substances;
and
(f) Contain not more than seven (7) pounds of H2O
vapor per one million (1,000,000) cubic feet.
2. If at any time gas tendered hereunder shall fail to
substantially conform to any of the quality specifications set
forth above, Buyer shall notify Seller of such deficiency and
Seller shall remedy such deficiency as soon as practicable. If
Seller shall not have corrected any failure to meet such quality
specifications within thirty (30) days after receiving notice
from Buyer of such failure, then Buyer shall have the right to
terminate this contract by giving Seller notice of termination
after said thirty (30) day period and prior to the date Seller's
gas being delivered to Buyer begins to meet such quality
specifications.
ARTICLE VI
600:% PRICE
•• .
• ••0 08 The price for gas delivered to the Point(s) of delivery
shall be the General Land Office -Gas Marketing Division monthly
• in-kind Weighted Average Cost of Gas (WACOG) plus $.03 per MMBTU.
•;�•�� In addition to the WACOG plus $.03 per MMBTU mentioned in the
first sentence of this paragraph, $.03 per MMBTU shall be due as
•. •„ a contract maintenance fee. In addition, Buyer shall reimburse
Seller for all transportation and fuel charges, including any
.. Federal Energy Regulatory Commission fees or charges, and
•• compression fees assessed Seller by any pipeline companies
•����; transporting gas sold under this contract, including, without
• • limitation, those charges set out in Exhibit A. Seller will use
its best efforts to use the lowest priced gas transportation
available to it that will substantially achieve the objectives of
this Contract.
ARTICLE VII
INVOICINGo. PAYMENT & AUDIT
1. Invoice - On or before the last day of each calendar
month, Seller shall render unto Buyer at Buyer's address, as
reflected in Article XV hereof, an invoice showing the amount of
gas delivered to Buyer during the previous month at the
applicable price or rate, as defined in Article VI hereof. This
invoice shall also include any other amount due under the terms
and conditions of this Contract, including any transportation
costs, fuel charges, Federal Energy Regulatory Commission fees
and compression fees.
2. Payment - On or before the 15th day of the second month
following the month of delivery, Buyer shall pay to the
Commissioner of the General Land Office in Austin, Texas the
amount due pursuant to this Contract for deliveries during the
second preceding month.
3. Penalty Clause - Payments received after the due date
will be subject to the following penalty:
1 - 30 days 5%
31 - 59 days 10%
Over 59 days 10% + 12% interest per annum
The annual interest rate of 12% shall begin to accrue on the 60th
day following the due date and accrue at the rate of .0329% per
day. The minimum penalty is $25.00 per monthly payment.
4. Adjustment of Errors - In the event an error is
discovered by either party in any statement or payment hereunder,
such error shall be adjusted within ninety (90) days of the
determination thereof.
•••;•• 5. Examination of Books Records and Charts - Each party r
•• hereto shall have, at is own expense, the ght, at reasonable
hours, to examine the books, records and charts of the other
party to the extent necessary to verify the accuracy of any
statement, charge, computation, or demand made under or pursuant
•, ••; to the provisions of any article hereof. Each party agrees to
.. keep records and books of account in accordance with generally
•.; accepted accounting principles and practices in the industry.
• ARTICLE VIII
• TERM
Subject to the provisions hereof, this Contract shall
commence April 1, 1990 and continue through March 31, 1991 and
month to month thereafter until either party terminates by giving
at least 120 days written notice to the other party of its intent
to terminate.
ARTICLE IB
FORCE MAJEURE
1. The parties hereto shall be excused from performing
under this Contract, to the extent they are rendered unable to
perform an obligation in whole or in part by force majeure but
only for the period of time and to the extent such force majeure
7
continues. The term "'force majeure" as employed herein shall
mean any occurrence not reasonably within the control of the
party claiming suspension and which by the exercise of due
diligence such party is unable to prevent or overcome, including,
but not limited to, the gas transporter's inability to transport
gas on behalf of Seller. It is agreed that on such party's
giving notice and reasonably full particulars of any force
majeure, in writing or by telegraph, to the other party within a
reasonable time after the occurrence of the cause relied on, then
the obligations of the party giving such notice, so far as they
are affected by such force majeure, shall be suspended during the
continuance of any inability so caused, but for no longer period,
and such cause shall, so far as possible, be remedied with all
reasonable dispatch.
2. It is agreed and understood by the parties that in the
event Seller's source of gas is no longer available due to
circumstances beyond Seller's control to perform any act
necessary to permit Seller to deliver gas to Buyer pursuant to
the terms and provisions of this Contract, then such event shall
per se constitute force majeure. In the event of Gas
Transporter's inability to transport Seller's gas, Seller will
use its best efforts to arrange alternative delivery of its gas
as provided in this Contract. Buyer shall reimburse Seller for
such transportation and any affiliated costs as provided in
Article VI.
••�••� ARTICLE B
• •• NON -WAIVER OF FUTURE DEFAULT
• No waiver by either Seller or Buyer of any default by the
other in performance of any of the provisions of this Contract
•shall operate or be construed as a waiver of any other existing
•� or future default, whether of a similar or of a different
•• character.
• ARTICLE XI
SUCCESSORS & ASSIGNS
No assignment of this Contract or any of the rights or
obligations thereunder shall be made unless there first shall
have been obtained the written consent thereto of the non -
assigning party.
ARTICLE XII
REPRESENTATION OF TITLE
Seller represents that it has good title to all gas
delivered by Seller hereunder.
Cj
ARTICLE XIII
RESPONSIBILITY
1. Buyer shall be in control and possession of the gas sold
and purchased hereunder and responsible for any damage or injury
caused thereby and shall bear the risk of any loss or destruction
of said gas after the same shall have been delivered to Buyer at
the Point of Delivery.
2. Each party will be responsible for its own acts and
omissions and costs of defending, including attorneys fees, all
suits, actions and claims for debt, damages and losses arising
from its own acts or omissions or out of adverse claims by any
and all persons to said gas or to royalties or to any charges
against said gas.
ARTICLE XIV
REGULATORY BODIES
This Contract is subject to all valid orders, rules and
regulations of any state, federal or other regulatory body having
jurisdiction over the purchase, transportation, sale or use of
the gas sold hereunder and the parties agree to comply with such
orders, rules and regulations. Should either of the parties by
law or regulation, be ordered or required to do any act
•••• inconsistent with the provisions of this Contract, this Contract
• shall be deemed to be modified to conform with such law or
• •• regulation.
••�; ARTICLE XV
ADDRESSES
Any notice or request provided for in this Contract shall be
•. mailed or delivered to the party to whom given at such party's
• •• address as follows:
• SELLER: COMMISSIONER OF THE GENERAL
LAND OFFICE
STEPHEN F. AUSTIN BUILDING
1700 NORTH CONGRESS AVENUE
AUSTIN, TEXAS 78701
ATTN: ANTHONY GALINDO
BUYER: CITY OF LUBBOCK
LUBBOCK POWER & LIGHT COMPANY
P.O. BOX 2000
LUBBOCK, TEXAS 79457
ATTN: CARROLL MCDONALD
9
or at such other post office address as such party shall from
time to time designate as the address for such purpose, by
registered letter addressed to the other party. The mailing of
notice by registered mail shall constitute service of notice
hereunder.
ARTICLE RVI
MISCELLANEOUS
1. This Contract constitutes the entire understanding of
the parties relating to the sale and purchase of gas and there
shall be no modification or waiver hereof except by writing,
signed by the party claimed to be bound thereby.
2. The descriptive headings of the provision of this
Contract are formulated and used for convenience only and shall
not be deemed to affect the meaning or construction of any such
provision.
3. The provisions of this Contract shall not impart rights
enforceable by any person, firm or organization not a party or
not a successor or assignee of a party to this Contract.
4. This Contract, its performance, enforcement and
interpretation, shall be governed to the fullest extent possible
•..�.• by the laws of the State of Texas, without giving effects to
•• principles of conflict of laws.
"• IN WITNESS WHEREOF, the parties have caused this Contract to
be executed in multiple counterparts by their respective officer
• thereunto duly authorized, as of the Effective Date hereof.
• SIGNATURES
��•��� SELLER: BUYER:
• STATE DF TEXAS CITY OF LUBBOCK
SCHOOL LAND BOARD
4
BBy'1l�• l� • �i'G�'
Vnd
sioner9-the General B. C. McMinn
lei Office and Chairman TITLE: Mayor
of the School Land Board
UK.
its]
THE STATE OF TEXAS §
COUNTY OF TRAVIS §
BEFORE,ME, the u ersigne authority, on this day personally
appeared Commissioner of the General
Land Off ic4/ of the State of Texas, 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 purpose and
consideration therein expressed and the capacity therein stated.
GIV UNDER MY HAND AND SEAL OF OFFICE, THIS THE A?*day of
198 9
OL C4.
Woitatwy Public in and f
Travis County, Texas
My commission expires:
THE STATE OF TEXAS §
COUNTY OF LUBBOCK §
BEFORE ME, the undersigned authority, on this day personally
appeared 6.(2. MC M i n Q , of CITY OF
LUBBOCK, TEXAS, 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 purpose and consideration
therein expressed and the capacity therein stated.
GI N UNDER MY HAND AND SEAL OF OFFICE, THIS THE I day of
198_
NotAry Public in and for
'= f Lubbock County, Texas
My commission expires:
11
04'
EXHIBIT A
EFFECTIVE DATE: APRIL 1, 1990
AGENCY NAME: CITY OF LUBBOCK
SERVICE ADDRESS: LUBBOCK
REIMBURSABLE COST
GENERAL LAND OFFICE RATE/MMBTU
-----------•----- ---------------
BASE PRICE * $1.58
CONTRACT MAINTENANCE FEE 50.03
BASE RATE TOTAL 51.61
PIPELINE COMPANY
-----•-----------
VALERO TRANSMISSION $0.18
VALERO COMPRESSION ** $0.07
NORTHERN NATURAL *** $0.15
TOTAL COST $2.01
FUEL CHARGE
---------------
2.00%
1.00%
1.25%
THESE RATES ARE ROUNDED TO THE NEAREST CENT AND ARE SUBJECT TO REASONABLE ADJUSTMENTS
AS CONDITIONS WARRANT. RECEIVING AGENCY WILL BE NOTIFIED OF ANY SUCH CHANGES.
A FERC FILING FEE OF $240 MUST ALSO BE REIMBURSED TO THE GENERAL LAND OFFICE.
* THE BASE PRICE WILL BE BASED ON A MONTHLY WACOG PLUS 3 CENTS.
** THESE ARE VARIABLE RATES WHICH CAN INCREASE OR DECREASE DEPENDING ON THE VOLUME
OF GAS COMPRESSED.
*** 4,680 MMBTU/D HAS BEEN RESERVED FOR FIRM TRANSPORTATION