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HomeMy WebLinkAboutResolution - 3113 - Contract - Adobe Gas Pipeline Company - Natural Gas Boiler Fuel - 05/25/1989Resolution # 3113 May 25, 1989 Item #36 HW : j s RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for And on behalf of the City of Lubbock a Contract by and between the City of Lubbock and Adobe Gas Pipeline Company for 370,000 MCF natural gas boiler fuel, 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 25th ATTEST: Rane cmtary APPROVED AS TO CONTENT: Nene a s, Purchasing Manager APPROVED AS TO FORM: arold Willard, Assistant CiWy Attorney day of May , 1989. F B. C. McMIN , MAYOR GAS PURCHASE AGREEMENT BETWEEN POWER-TEX JOINT VENTURE SELLER • AND CITY OF LUBBOCK BUYER DATED: 1989 TABLE OF CONTENTS ARTICLE TITLE PAGE I DEFINITIONS................................2 II PRELIMINARY ACTS OF PARTIES................3 III VOLUMES....................................3 .IV QUALITY....................................3 V POINT OF DELIVERY AND PRESSURE.............3 VI MEASUREMENT................................4 VII PRICE AND BILLING ..........................7 VIII TAXES......................................7 IX REGULATORY BODIES ..........................7 X FORCE MAJEURE ..............................8 XI REPRESENTATIONS AND INDEMNIFICATIONS ....... 8 XII TERM.......................................9 XIII MISCELLANEOUS ..............................9 SIGNATURE PAGE .............................9 GAS PURCHASE AGREEMENT This Agreement made and entered into this day of 1989, by and between-Power—Tex JV , hereinafter called Seller, and the City of Lubbock, hereinafter called -Buyer: WHEREAS, Seller represents that it has or will have available for sale to the City of Lubbock adequate supplies of natural gas; and, WHEREAS, the City of Lubbock desires to enter into this Agreement to purchase natural gas from the Seller, said gas to be used by the Buyer for the purpose of providing fuel for the generation of electricity at its Plant 2 Site; and, WHEREAS; the Seller has made a firm offer as to the quantity of gas to be made available and the price to be charged for said gas; and, WHEREAS; the City of Lubbock deems it to be in its best interest to accept said offer providing for firm pricing and quantities of natural gas. - NOW THEREFORE, for and in consideration of the foregoing and in further consideration of the mutual Agreements herein contained, the parties hereto agree as follows: I. DEFINITIONS For the purposes of this contract, unless the context of the instrument requires otherwise, the following definitions shall be applicable: 1.01 "Gas" shall mean natural gas produced from gas wells, and gas produced in association with oil. 1.02 "Day" shall mean the 24-hour period commencing at 7:00 a.m. local time on one calendar day and ending at 7:00 a.m. local time on the next succeeding calendar day. 1.03 "Month" shall mean the period beginning at 7:00 a.m. local time on the first day of a calendar month and ending at 7:00 a.m. local time on the first day of the succeeding calendar month. 1.04 "Accounting Period" shall mean any twelve (12) month period beginning from date of initial delivery during the term of this Contract. 1.05 "MCF" shall mean one thousand (1,000) cubic feet of gas and "MMCF" shall mean one million (1,000,000) cubic feet of gas. 1.06 "BTU shall mean British thermal units measured at 14.65 psia, sixty degrees Fahrenheit (60 deg. F), and water vapor measured as delivered. 1.07 "MMBTU" shall mean one million (1,000,000) BTU. 1.08 "Psia" shall mean pounds per square inch, absolute. 1.09 "Psig" shall mean pounds per square inch, gauge. II. PRELIMINARY ACTS OF PARTIES 2.01 It is further agreed between the parties hereto that the primary purpose of this Agreement is to provide a sufficient and adequate supply of natural gas to Buyer for use by it in the generation of electricity at its Plant 2 Generation Plant. III. VOLUMES 3.01 Buyer agrees to purchase during the term of this Agreement the following quantities of natural gas: (a) Commencing on the date of initial delivery, Buyer agrees to receive and purchase, or pay for approximately 310,000 MCF. Said amount of natural gas will be required generally between the dates of'June 15, 1989 through September 30, 1989. IV. QUALITY All gas delivered by Seller to Buyer under this Contract shall be of such quality that it conforms to the specifications required by third -party transporting pipelines, with such specifications being subject to mutual agreement between Buyer and Seller in accordance with Article II hereof. V. POINT OF DELIVERY AND PRESSURE 5.01 The Point of Delivery for all gas purchased and sold pursuant hereto shall be ata point in to the Lubbock Energas distribution systems. 5.02 Seller shall construct, equip, maintain and operate all facilities necessary to deliver Seller's gas to Buyer at the Point of Delivery or bear responsibility for same. Gas delivered by Seller to Buyer under this contract shall have a heat content no greater than One thousand one hundred and twenty (1120) British Thermal Units per MCF and said gas shall have a heat content not less than Nine hundred and eighty (980) British Thermal Units per MCF. 5.03 All gas delivered by Seller to Buyer at the aforementioned Point of Delivery shall be at pressures MMM X as required by Energas for receipt into its system. 5.04 Seller shall be in control and possession of the gas sold and purchased hereunder and responsible for any damage or injury caused thereby until the same shall have been delivered to Buyer at the Point of Delivery. 5.05 Buyer shall be in control and possession of the gas sold and purchased hereunder and responsible for any damage or injury caused thereby after the same shall have been delivered at the Point of Delivery. VI. MEASUREMENT 6.01 The Unit of Volume for measurement of gas delivered hereunder shall be one (1) cubic foot of gas at a base temperature of sixty degrees Fahrenheit (60 deg. F) and at an absolute pressure of fourteen and sixty-five hundredths pounds per square inch (I4.65 psi), and otherwise as provided by the Standard Gas Measurement Law of the State of Texas (Article 6066b of Vernon's Texas Civil Statutes). Except as provided by that law, all fundamental constants, observations, records, and procedures involved in determining and/or verifying the quantity and other characteristics of gas delivered hereunder shall, unless otherwise specified herein, be in accordance with the standards prescribed in Report No. 3 of the American Gas Association, as now and from time to time amended or supplemented. All measurements of gas shall be determined by calculation into terms of such unit. All quantities given herein, unless expressly stated, are in terms of such unit. 6.02 Seller or its designee shall at its own expense install, maintain and operate, or cause to be installed, maintained and operated, the necessary measuring station at the Point of Delivery. Said measuring station shall be so equipped with orifice meters, recording gauges, or other types of meters of standard make and design commonly acceptable in the industry, as to accomplish the accurate measurement of gas delivered hereunder. The changing of charts and calibrating and adjusting of meters shall be done by Seller or its designee. 6.03 Buyer may at its option install check meters downstream of Seller's measuring station for checking Seller's metering equipment; and the same shall be so installed as not to interfere with the operation of Seller's or its designee's facilities. 6.04 The temperature of the gas shall be determined by the continuous use of a recording thermometer installed by Seller or its designee so that it will properly record the temperature of the gas flowing through the meter. The temperature recorded each day during the time that gas was actually flowing through the meter shall be used in computing measurement for that day. 6.05 The specific gravity of the gas shall be determined by Seller or Seller's designee by continuous or from composite sample, or more often, at Seller's election, by means elected by Seller which are approved by the American Gas Association as set forth in its Gas Measurement Manual. Specific gravities so determined will be used in calculating gas deliveries for the day on which the test is made, and for all following days until the next specific gravity test is made. 6.06 The heat content of the gas shall be determined by Seller or its designee by taking samples of gas at Seller's meter. Determination of BTU content will be performed by an impartial third party testing company. The result shall be applied to gas deliveries for the month when the sample is taken. Such samples shall be taken continuously or by composite sample, at Sellers election. The BTU content per cubic foot shall be determined in accordance with Article 1.06 hereof. 6.07 Each party shall have the right to be present at the time of any installing, reading, cleaning, changing, repairing, inspecting, testing, calibrating, or adjusting done in connection with the other's measuring equipment used for measuring deliveries hereunder. The records from such measuring equipment shall remain the property of their owner, but upon request, each will submit to the other its records and charts, together with calculations therefrom, subject to return within fifteen (15) days after receipt thereof, after which the charts shall be kept on file for a period of two (2) years. At least once each quarter, Seller or its designee shall calibrate the meter(s) and instruments or cause the same to be calibrated. Seller shall give Buyer sufficient notice in advance of such tests so that Buyer may, at its election, be present in person or designate its representative to observe adjustments, if any, which are made. For the purpose of measurement and meter calibration, the atmospheric pressure shall be assumed to be thirteen and two-tenths pounds per square inch (13.2 psi), irrespective of variations in natural atmospheric pressure from time to time. 6.08 If upon any test the metering equipment in the aggregate is found to be inaccurate by two percent (2%) or more, registration thereof and any payment based upon such registrations shall be corrected at the rate of such inaccuracy for any period of inaccuracy which is definitely known or agreed upon, or if not known or agreed upon, then for a period extending back one-half (1/2) of the time elapsed since the last day of the calibration, not exceeding, however, forty-five (45) days. Following any test, any metering equipment found to be inaccurate to any degree shall be adjusted immediately to measure accurately. If for any reason any meter is out of service or out of repair so that the quantity of gas delivered through such meter cannot be ascertained or computed from the readings thereof, the quantity of gas so delivered during such period shall be estimated and agreed upon by the parties hereto upon the basis of the best available data, using the first of the following methods which is feasible: (a) By using the registration of any check measuring equipment of Buyer, if installed and registering accurately; (b) By correcting the error if the percentage of error is ascertainable by calibration, test, or mathematical calculation; or, (c) By estimating the quantity of deliveries by deliveries during preceding periods under similar conditions when the meter was registering accurately. 6.09 The measurement hereunder shall be corrected for deviation from Boyle's Law at the pressure and temperature under which gas is delivered hereunder. V'II PRICE AND BILLING 7.01 Commencing on the date of initial deliveries of gas hereunder and continuing for the specified term, the first day of the month succeeding such initial delivery date, Buyer shall pay Seller a price of :�-°fes -j,75l perMMBTU. v� 7.02 After delivery of gas has commenced, or payments are due under the terms of this Contract, Seller shall, on or before the fifteenth (15th) day of each month, render to Buyer a statement showing the quantity of gas delivered the previous month and Buyer will on the 25th day of such month, pay Seller the amount due for all such gas. 7.03 Each party hereto shall have the right at all reasonable times to examine the books and records of the other party to the extent necessary to verify the accuracy of any statement, charge, computation, or demand made under or pursuant to this Contract. Any statement shall be final as to both parties unless questioned within two (2) years after -payment thereof has been made. VIII. TAXES Seller hereby agrees that it will be responsible for and pay all existing excise, severance, production, sales, occupation, and other taxes of like nature levied in respect to the gas and handling thereof in existence and levied on the date of the 1st delivery of gas to Buyer under this contract. Buyer agrees that save and except as to those taxes Seller has heretofore agreed to pay to reimburse Seller for any and all new taxes levied upon the gas and handling thereof not in existence upon the date of 1st delivery of gas to Buyer under this Agreement and to further reimburse Seller for any and all increases in excise, severance, production, sales, occupation and other taxes of like nature over the amount Seller has heretofore agreed to absorb and pay. Both parties agree that Federal Income Taxes paid by Seller shall not be considered taxes of a like nature under this contract. 1X REGULATORY BODIES This Contract is subject to all present and future valid laws and lawful orders of all regulatory bodies now or hereafter having jurisdiction of the parties or either of them; and should either of the parties, by force of any such law or regulation imposed at any time during the term of this Contract, be rendered unable, wholly or in part, to carry out its obligations under this Contract, other than to make payments due hereunder, the Contract shall continue nevertheless and shall then be deemed modified to conform with the requirements of such law or regulation. X. FORCE MAJEURE In event of either party hereto being rendered unable, wholly or in part, by force majeure to carry out its obligations under this Contract, other than to make payments for gas delivered and received hereunder, it is agreed that on such party's 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 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 as far as possible be remedied with all reasonable dispatch. The term "force majeure" as -employed herein shall mean acts of God, strikes, lockouts, or other industrial disturbances, acts of the public enemy, wars, blockades, insurrection, riots, epidemics, landslides, lightning, earthquakes, fires, storm, floods, washouts, arrest and restraints of governments and people, civil disturbances, explosions, breakage, accidents and/or maintenance to machinery, lines of pipe, freezing of wells or lines of pipe, partial or entire failure of wells. It is understood and agreed that the settlement of strikes or lockouts shall be entirely within the discretion of the party having the difficulty, and that the above requirement 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. Xi. REPRESENTATIONS AND INDEMNIFICATIONS Seller hereby represents that it has authority to commit to this Contract the gas to be sold and delivered hereunder. Seller agrees to indemnify Buyer and save it harmless from all suits, actions, debts, accounts, damages, costs, losses and expenses arising from or out of adverse claims of any and all persons, firms, or corporations to said gas or.to royalties, overriding royalties, taxes, license fees, or charges thereon, which are applicable before title to the gas passes to Buyer. I. TERM 12.01 The primary term hereof shall be for the term specified commencing on the date of initial deliveries hereunder. XIII. MISCELLANEOUS 13.01 No waiver by either Seller or Buyer of any default of the other under this Contract shall operate as a waiver of future default, whether of like or different character or nature. 13.02 This Contract shall be binding upon and inure to the benefit of the successors and assigns, or the heirs, administrators, or executors of the parties hereto. Any party hereto may assign his or its right, title, and interest in, to and under this Contract, including, without limitation, any and all renewals, extensions, amendments, and/or supplements hereto to any individual, bank, trustee, company or corporation as security for any note, notes, bonds, or other obligations or securities of such assignor; provided, however, that no such assignment shall be made without the prior written consent of the other party, which consent shall not be unreasonably withheld. Any such assignment shall in no way operate to enlarge, alter, or change any obligation of the other party or parties hereto. 13.03 Seller expressly does not by the terms of this Contract sell, transfer, or assign unto Buyer any title or interest whatsoever, in Seller's pipe, meters, lines or other equipment of any nature owned or used by Seller in the operation of its system. 13.04 All notices, presentments and other correspondence provided for herein, or arising herefrom shall be in writing, and shall be deemed to have been delivered when deposited in the United States Mail, postage prepaid, and addressed to the appropriate party as indicated: Seller:Power-Tex Joint Venture c/o Adobe Gas Co. 300 W. Texas Suite 1100 Midland, Texas 79701 Buyer: The City of Lubbock P.O. Box 2000 Lubbock, Texas 79457 or to such other single name and address as either party may, by written notice, designate to the other. 13.05 The parties hereto agree and confirm that in the consideration and interpretation of this Contract same shall be construed under the laws of the State of Texas, and this Contract was prepared by all parties hereto and not by any party to the exclusion of the other or others. 13.06 No modification of the terms and provisions of this Agreement shall be or become effective except pursuant to and upon the due and mutual execution of an appropriate supplemental written Contract by the parties hereto. IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the day and date first herein above written in multiple originals, each of which shall constitute and be an original Contract. SELL BY: V, C -K. Freeman President - Adobe Gas Co. Managing Venturer CITY OF LUBBOCK-BUYER BY: Mayor ATTEST: City Secretary APPROVED AS TO FORM: City Attorney APPROVED AS TO CONTENT: