HomeMy WebLinkAbout17997 ORD - 12/21/1983AN ORDINANCE
AUTHORIZING THE CITY MANAGER TO EXECUTE A CONTRACT BETWEEN
THE CITY AND VALERO TRANSMISSION COMPANY AMENDING EXISTING
CONTRACTS TO PROVIDE FOR THE SUPPLY OF GAS FOR THE NEXT FIVE
YEARS; AND DECLARING AN EMERGENCY.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI,
TEXAS:
SECTION 1. That the City Manager is hereby authorized to execute,a
contract with the Valero Transmission Company which amends the existing
contracts to provide for the supply of gas for the next five years, all as more
fully set forth in the contract, a substantial copy of which is attached hereto
and made a part hereof, marked Exhibit "A".
SECTION 2. That upon written request of. the Mayor or five Council
members, copy attached, to find and declare an emergency due to the immediate
need for efficient and effective administration of City affairs by approving the
the above mentioned contract for gas supply, such finding of an emergency is
made and declared requiring suspension of the Charter rule as to consideration
and voting upon ordinances or resolutions at three regular meetings so that this
ordinance is passed and shall take effect upon first reading as an emergency
measure this the ,2/ day of December, 1983.
ATTEST:
itC ySecretary MAYOR
APPROVED: IZ:DAY OF DECEMBER, 1983
J. BRUCE AYCOCK, CITY ATTORNEY
By
THE CITY
MICROFILMED
SEP. 2 8 tgA4
1703?
F CORPUS CHRISTI, TEXAS
GAS SALES CONTRACT NO. 5201-089
BETWEEN
VALERO TRANSMISSION COMPANY
"SELLER"
AND
CITY OF CORPUS CHRISTI
"BUYER"
F
Exb „a"
INDEX
ARTICLE PAGE
I Definitions 2
II Quantity 4
III Points of Delivery and Delivery Pressure 6
IV Measurement 6
V Measuring Equipment and Testing Provisions 9
VI Quality 12
VII Price 14
VIII Invoicing, Payment and Audit 14
IX Term 16
X Force Majeure 16
XI Successors and Assigns 17
XII Warranty of Title 18
'XIII Responsibility 18
XIV Regulatory Bodies 18
XV Notices 19
XVI Transportation Option 20
XVII Miscellaneous 24
Signatures 26
Acknowledgments 27
Exhibit "A" 28
GAS SALES CONTRACT
THIS CONTRACT is made and entered into this first (1st) day of
January 1984, herein referred to as "Effective Date", by and between
VALERO TRANSMISSION COMPANY, a Delaware corporation, hereinafter referred
to as "Seller", and CITY OF CORPUS CHRISTI, a Texas municipal corporation,
hereinafter referred to as "Buyer".
W ITNESSET H:
THAT WHEREAS, Buyer owns and operates a gas distribution system in
Corpus Christi, Nueces County, Texas, herein referred to as "distribution
system" and requires a supply of gas in and for the operation of said
distribution system; and
WHEREAS, Buyer and Seller are parties to two (2) separate gas sales
contracts known as Gas Sales Contract 5201-093 dated June 13, 1967,
between Buyer .and Lovaca Gathering Company (predecessor in interest to
Seller), as amended, and Gas Sales Contract 5201-089 dated December 7,
1962, as amended, between Buyer and Lumar Gas Corporation (having
previously been assigned to Seller), both of which are in full force and
effect and will be superseded by this substitute Contract; and
WHEREAS, Buyer and Seller desire to supersede all previous agreements
including, but not limited to, said Gas Sales Contracts 5201-093 and
5201-089 referenced above, except to monies due and owing by Buyer to
Seller pursuant to such Gas Sales Contracts 5201-093 and 5201-089; and
WHEREAS, Seller has a supply of gas which is available for sale.
Seller desires to sell and Buyer desires to purchase said gas from Seller
for the purpose and under the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements herein set forth, the parties covenant and agreed
as follows:
ARTICLE I
DEFINITIONS
Except as otherwise specified, the following terms as used herein
shall be construed to have the following scopes and meanings:
1. Day - shall mean the period of twenty-four (24) consecutive
hours commencing at seven o'clock (7:00) a.m. Local Time, herein referred
to as "LT"•, or such other period as the parties may agree upon.
2. Month - shall mean the period of one (1) calendar month
commencing at seven o'clock (7:00) a.m. LT on the first day of such month
and ending at seven o'clock (7:00) a.m. LT on the first day of the next
succeeding month.
3. Year or Calendar Year - shall mean the 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 such year which contains the
date of February 29 shall consist of three hundred sixty-six (366)
consecutive days.
4. Psia - shall mean pounds per square inch, absolute.
5. Gas - shall mean natural gas as produced in its natural state,
natural gas that has been previously liquefied and restored to its gaseous
state prior to delivery, gas synthesized or manufactured from oil,
naphtha, coal, or any other material that meets the quality standards
contained in this Contract.
2
6. Cubic foot of gas - shall mean the volume of anhydrous gas
contained in one (1) cubic foot of space at a standard pressure base of
fourteen and sixty-five hundredths (14.65) psia and a standard temperature
base of sixty (60) degrees Fahrenheit, herein referred to as "F".
7. Mcf - shall mean one thousand (1,000) cubic feet.
8. British thermal unit or Btu - shall mean one (1) Btu and is
defined as the quantity of heat required to raise the temperature of one
(1) avoirdupois pound of pure water from fifty-eight and five -tenths
(58.5) degrees F to fifty-nine and five -tenths (59.5) degrees F at a
constant pressure of fourteen and sixty-five hundredths (14.65) psia.
9. MMBtu - shall mean one million (1,000,000) Btus.
10. Gross heating value - shall mean the number of Btus 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. The
gross heating value so determined shall be corrected from the conditions
of testing to that of the actual conditions of the gas as delivered
expressed 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.
3
11. MAOP - shall mean maximum allowable operating pressure.
12. Seller's Weighted Average Cost of Gas or WACOG - shall mean
Seller's WACOG as provided in Appendix "A" of the September 4, 1979 Final
Order of the Texas Railroad Commission, herein referred to as "RRC", in
Gas Utilities Docket 500, herein referred to as "GUD 500", as same may be
changed or superseded from time to time by order of the RRC, or other
governmental body having jurisdiction.
13. Regulated Cost of Service Factor - shall mean Seller's Cost of
Service Factor as provided in GUD 500, as same may be changed or
superseded from time to time by order of the RRC, or other governmental
body having jurisdiction.
14. Transport Gas - shall mean that gas as defined in Paragraph 1.
of Article XVI hereof.
15. Mineral Interest Gas - shall mean that gas as defined in
Paragraph 8. of Article XVI hereof.
ARTICLE II
OUANTITY
1. Subject to the terms and conditions hereof, commencing with the
Effective Date and continuing throughout the term hereof, Seller agrees to
deliver and sell and Buyer agrees to accept and purchase all of Buyer's
gas requirements in Buyer's distribution system, for resale within the
operation of Buyer's distribution system as such distribution system
exists and may be enlarged or extended from time to time, except for
quantities of "transport gas" and Buyer's "mineral interest gas".
4
2. Notwithstanding anything herein to the contrary, Buyer and
Seller agree that Buyer has the option of acquiring a portion of Buyer's
total gas requirements, as provided in Article XVI hereof, from sources
other than Seller; provided, however, that Buyer utilizes Seller to
transport all "transport gas" acquired from other sources through Seller's
pipeline system, as further provided in Article XVI hereof. The annual
quantity of gas that may be acquired by Buyer from said sources other than
Seller are also as set forth in Article XVI hereof.
3. In the event that Seller is unable to supply the full gas
requirements for all of its customers, including Buyer, Seller shall have
the right to deliver and sell gas to Buyer and its other customers in
accordance with curtailment, allocation, end-use limitation orders, rules
or regulations, as issued by the RRC or other governmental body having
jurisdiction. In the event no such valid curtailment order, rule or
regulation is then in effect, Seller shall allocate its gas supplies among
its customers, including Buyer, in a manner reasonably considered by
Seller to be fair, equitable and consistent with the public interest and
without discrimination between similar customers. To the extent Seller
allocates its gas supplies consistent with applicable governmental order,
rule or regulation, or, in the absence thereof, in a manner consistent
with the public interest, Seller shall have no liability to Buyer for such
curtailment, except in the event of gross negligence or willful misconduct
by Seller.
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ARTICLE III
POINTS OF DELIVERY AND DELIVERY PRESSURE
1. Points of Delivery and Delivery Pressure - The Points of
Delivery for all gas to be sold and purchased hereunder shall be at the
outlet of Seller's existing metering facilities identified in Exhibit "A",
attached hereto and made a part hereof, which may be amended from time to
time as Points of Delivery are added or deleted.
2. The gas delivered hereunder pursuant to Paragraph A. of Exhibit
"A" shall be measured through facilities which are existing and are owned,
operated and maintained by Seller. The gas delivered hereunder pursuant
to Paragraph B. of Exhibit "A" shall be measured through facilities which
are existing and are owned, operated and maintained by Buyer.
3. The gas delivered hereunder by Seller to Buyer shall be
delivered at the pressure existing from time to time in the facilities of
Seller, or its designee, at the Points of Delivery.
ARTICLE IV
MEASUREMENT
The Measurement provisions for Points of Delivery shall be as
follows:
a. 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 provided by the
Natural Resources Code of the State of Texas (Sections 91.051
through 91.062 of Vernon's Texas Civil Statutes).
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b. Basis - All measurement facilities hereunder shall be
operated in 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, herein
referred to as AGA, 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.
c. Atmospheric Pressure - The atmospheric pressure applic-
able at the Points of Delivery shall be fourteen and seven tenths
(14.7) psia irrespective of the actual atmospheric pressure exist-
ing from time to time at such points.
d. Ideal Gas Laws - The measurement hereunder shall, unless
otherwise agreed by the parties, be corrected for deviation from
Ideal Gas Laws, such shall be determined by use of the tables or
formulas published by the AGA Par Research Project NX-19, corrected
for carbon dioxide and nitrogen. Determinations 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 deter-
mine the supercompressibility factors during the ensuing period,
with corrections for specific gravities, temperatures and pressures
under which gas is delivered hereunder. Where a displacement meter
is used,' the square of the orifice meter supercompressibility
7
factor shall be applied, except as may be otherwise agreed by the
parties.
e. Determination of Flowing Temperature - The temperature of
the gas flowing through the measuring facilities hereunder shall be
determined by means of the continuous use of a recording thermome-
ter or by such other method as the parties hereto may agree. The
arithmetic average temperature of the gas recorded each day, during
periods of flow only, shall be used in computing the quantity of
gas delivered for that day.
f. 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 gravi-
tometer. The arithmetic average specific gravity recorded each
day, during periods of flow only, shall be used in computing the
gas volume for that day. In the event a recording gravitometer is
not installed, the specific gravity of the gas hereunder shall be
determined at one (1) month intervals or at such other intervals as
may be mutually agreed upon by the parties hereto, by means which
are'approved by the AGA as set forth in its Gas Measurement Manual
or by fractional analysis by the use of a spot or continuous sample
taken at the Points of Delivery. Fractional analysis will be on a
real gas basis in accordance with ANSI/ASTM D3588-79, as it is now
and from time to time may be revised, amended or supplemented.
Specific gravities so determined will be used in calculating gas
hereunder for the month in which the test is made and all
succeeding months until that month in which a new sample is taken.
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g. 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 calori-
metry, proportionate to flow continuous sampler, or such other
method mutually agreed upon by the parties hereto. The arith-
metical average of the hourly gross heating value recorded each
day, during periods of flow only, shall be considered as the heat
content of the gas during such day. If a recording calorimeter is
not available, the gross heating value shall be determined at one
(I) month intervals or at such other intervals as may be mutually
agreed upon by the parties hereto, by the use of a spot or con-
tinuous sampling device taken at the Points of Delivery. 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 Btus 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.
ARTICLE V
MEASURING EOUIPMENT AND TESTING PROVISIONS
The Measuring Equipment and Testing Provisions for Points of Delivery
shall be as follows:
9
a. Access - The parties hereto shall at all reasonable times
have access to the premises of each other insofar as such premises
are connected with any matter or thing covered hereby, for inspec-
tion, operation, installation, removal, repair and testing of
equipment, but the operation of measuring equipment and changing of
charts shall be done only by the employees or agents of Seller.
b. Testing and Repair of Equipment - Seller shall keep its
• measuring equipment, including calorimeters, accurate and in repair,
making such monthly tests as Seller may deem necessary. Seller
agrees to •give Buyer sufficient advance notice of the time of such
tests of the measuring equipment so that Buyer may conveniently have
its representative present. In the event the meters are found to be
inaccurate, such meters will be adjusted to register accurately. In
the event either party desires a special test of said measuring
equipment, the parties shall cooperate to secure prompt verification
of the accuracy of such equipment. Seller agrees to give Buyer
sufficient advance notice of the time of all such special tests so
that Buyer may conveniently have its representative present. If
upon any test, the percentage of inaccuracy of the measuring
equipment is found to be in excess of one (1) percent, 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) of the time elapsed since the
last date of calibration not to exceed fifteen (15) days.
c. Correction for Inaccurate Measurement - If for any reason
any meter is out of service or out of repair so that the quantity of
10
gas delivered through such meter cannot be ascertained or computed
from the readings thereof, the quantity of gas so delivered during
such period same is out of service or out of repair shall be esti-
mated 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:
(1) By using the registration of any check measuring
equipment registering accurately;
(2) By correcting the error if the percentage of error
is ascertainable by calibration, test of mathematical calcu-
lation; or
(3) By estimating the quantity of gas hereunder during
preceding periods under similar conditions when the respective
meter was registering accurately.
d. Inspection of Charts and Records - The charts and
records from the measuring equipment shall remain the property
of the Seller and same shall be retained for a period of not
less than two (2) years. At any time within such period, upon
request of Buyer, Seller will submit records and charts from
the measuring equipment, together with calculations therefrom,
for inspection and verification by Buyer. Such records and
charts shall be returned to Seller within thirty (30) days
after receipt by Buyer from Seller.
e. Installation of Check Meters - Buyer may, at its
option, install a check meter for checking the metering
equipment at the Points of Delivery; same shall be installed so
11
as not to interfere with the operation of Seller's metering
facilities at the Points of Delivery.
ARTICLE VI
QUALITY
1. The Quality provisions for Points of Delivery shall conform to the
following specifications:
a. Oxygen - The oxygen content shall not exceed one (1)
percent by volume.
b. Hydrogen Sulphide/Mercaptan - Neither the hydrogen
sulphide nor the mercaptan content shall exceed one-half (z) grain
per one hundred (100) cubic feet.
c. Total Sulphur - The total sulphur content shall not exceed
twenty-(20) grains per one hundred (100) cubic feet.
d. Nitrogen - The nitrogen content shall not exceed two (2)
percent by volume.
e. Carbon Dioxide - The carbon dioxide content shall not
exceed three (3) percent by volume.
f. Liquids - The gas shall be free of water and hydrocarbons
in liquid form at the temperature and pressure at which the gas is
delivered and have been dehydrated prior to being delivered by any
method other than the use of calcium chloride as a desiccant for
removal of entrained water present therein in a vapor state and
shall in no event contain water vapor in excess of seven (7) pounds
per one million (1,000,000) cubic feet.
g. Dust, Gums and Solid Matter - The gas shall be commer-
cially free of dust, gums and other solid matter.
12
h. Gross Heating Value - The gas delivered shall contain a
' heating content of not less than one thousand (1,000) Btus per cubic
foot.
i. Temperature - The gas shall have a temperature of not less
than forty (40) degrees F and not more than one hundred twenty (120)
degrees F.
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 if Seller fails to remedy such deficiency
within a reasonable period of time, Buyer may, at its option, refuse to accept
delivery pending correction of the deficiency by Seller and 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 after said thirty (30) day
period and prior to the date Seller's gas being delivered to
Buyer begins to meet such quality specifications. However, Buyer may accept
delivery of gas hereunder at a Gross heating value of less than one thousand
(1,000) Btus per cubic foot in accordance with Paragraph 2. of Article VIII.
. 3. Notwithstanding anything to the contrary contained herein, Seller
may odorize the gas sold hereunder, if, in its sole opinion, such odorization
is necessary to protect the public or to comply with RRC or other Regulatory
directives. In the event Seller determines that odorization is necessary,
Seller shall notify Buyer thirty (30) days prior to such odorization, or
change in current odorization; and Seller shall cooperate with Buyer to insure
that the the malodorant Seller utilizes in its facilities will not be
incompatible with the malodorant Buyer may input, provided that Seller is not
13
compelled to incur any unreasonable additional expense in conforming to such
compatibility. In the event a malodorant is added to the gas purchased
hereunder and Buyer desires to remove same, such removal shall be solely at
Buyer's risk and expense.
ARTICLE VII
PRICE
1. The price or rate for gas sold by Seller and purchased by Buyer
hereunder shall be that price or rate, consisting of Seller's Cost of Service
Factor plus Seller's WACOG, as established by the Final Order entered on
September. 4, 1979, by the RRC in GUD 500, or any superseding amendments or
orders of the RRC or applicable rate schedules filed and in effect with the
RRC or other governmental regulatory body having such rate -setting authority.
2. In the event no price or rate is set by the RRC, or other govern-
mental bbdy having jurisdiction, or the price or rate for the sale of gas
hereunder is deregulated, then Buyer and Seller, as soon as practicable, shall
mutually determine such price or rate. The price or rate to be paid for gas
sold and pruchased hereunder between the date of deregulation and the date
such new price is determined shall be the greater of Seller's WACOG plus
Seller's Cost of Service Factor charged to Buyer for the month immediately
preceding the month in which deregulation occurred, or the average of those
prices or rates Seller charges its other gas distribution customers.
ARTICLE VIII
INVOICING, PAYMENT AND AUDIT
1. Invoice - On or before the tenth (10th) day of each calendar month,
Seller shall render to Buyer at Buyer's address, as reflected in Article XV
hereof, an invoice reflecting the quantity of gas delivered to and purchased
14
by Buyer during the preceding calendar month at the price established in
Article VII hereof.
2. Payment - On or before the twenty-fifth (25th) calendar day of each
month, Buyer shall pay to Seller, by wire transfer, the amount due pursuant to
this Contract for deliveries during the preceding calendar month. The remit-
tance address for Seller shall be the address set forth on Seller's invoice
from time to time. If Buyer in good faith disagrees with the amount of any
invoice, Buyer shall immediately notify Seller of such disagreement, so that
it may be resolved before the date for payment of such invoice. If Buyer
fails to give such notice of disagreement, or if Buyer and Seller do not
resolve such disagreement before the due date, the amount of the invoice not
in dispute, shall be paid by Buyer on the due date. Such payment shall be
subject to adjustment without penalties upon final resolution of the
disagreement.
3. Adjustment of Errors - In the event an error is discovered in any
statement or payment hereunder, such error shall be adjusted within ninety
(90) days of the determination thereof; provided, however, that claim there-
fore shall have been made within two (2) years from the date of such statement
or payment.
4. Audit - Each party hereto shall have, at his expense, 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, computa-
tion, or demand made under or pursuant to this Contract. Each party agrees to
keep records and books of account in accordance with generally accepted
accounting principles and practices in the industry. Any statement shall be
15
final as to both parties unless questioned within two (2) years after payment
thereof has been made.
ARTICLE IX
TERM
Subject to the provisions hereof, the primary term of this Contract shall
be effective as of 7:00 a.m. LT on January 1, 1984 and continue in full force,
ending at 7:00 a.m. LT on January 1, 1989. Thereafter, this Contract shall
remain in full force and effect until terminated by either party upon written
notice to the other party at least thirty (30) days prior to the effective
termination date.
ARTICLE X
FORCE MAJEURE
1. Definition of Force Majeure - The term "force majeure" as employed
herein shall mean acts and events not within the control of the party claiming
suspension and shall include the failure or unavailability of gas supply, acts
of God, strikes, lockouts or other industrial disturbances, inability to
obtain pipe or other material or equipment or labor, wars, riots, insurrec-
tions, epidemics, landslides, lightning, earthquakes, fires, storms, floods,
washouts, arrests and restraint of rulers and people, interruptions by govern-
ment or court orders, present or future orders of any regulatory body having
proper jurisdiction, civil disturbances, explosions, breakage or accident to
machinery or lines of pipe, freezing of wells or pipelines, and any other
cause whether of the kind herein enumerated or otherwise, not within the
control of the party claiming suspension and which, by the exercise of due
diligence, such party is unable to overcome. Nothing contained herein,
16
however, shall be construed to require either party to settle a strike against
its will
2. Effect of Force Majeure - In the event of either Seller or Buyer
being rendered unable by force majeure to itself or a necessary third party to
wholly or in part carry out its obligations under the provisions of this
Contract, it is agreed that the party so affected shall give prompt notice to
the other party and the obligations of the party affected by such force
majeure, other than the obligation to make payments thereunder, shall be
suspended during the continuance of any inability sc caused but for no longer
period, and such cause shall, so far as possible, be remedied with all reason-
able dispatch.
ARTICLE XI
SUCCESSORS AND ASSIGNS
Any company which shall succeed by purchase, merger or consolidation to
the properties, substantially as an entirety, of Seller or Buyer shall be
entitled to the rights and shall be subject to the obligations of its prede-
cessor in title under this Contract. No other 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. Seller or Buyer may pledge or assign, their respective right, title and
interest in and to and under this Contract to a trustee or trustees, indivi-
dual, or corporate, as security for bonds or other obligations or securities
without the necessity of such trustee(s) becoming in any respect obligated to
perform the obligations of the assignor under this Contract and, if any such
trustee be a corporation, without its being required to qualify to do business
in any State in which performance of this Contract may occur.
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ARTICLE XII
WARRANTY OF TITLE
Seller warrants the title to all gas delivered by Seller hereunder and
agrees to indemnify Buyer from all suits, actions, debts, accounts, damages
and losses arising from or out of adverse claims by any and all persons to
said gas or to royalties or to any charges against said gas.
ARTICLE XIII
RESPONSIBILITY
1. As between Buyer and Seller, Seller shall be deemed 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 Points of Delivery.
2. As between Buyer and Seller, Buyer shall be in control and pos-
session of the gas sold and purchased hereunder and responsible for any damage
or injury caused thereby after the same shall have been delivered to Buyer at
the Points of Delivery.
ARTICLE XIV
REGULATORY BODIES
1. This Contract is subject to all valid orders, rules and regulations
of any State, Federal or other regulatory body having jurisdiction over the
purchase, 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.
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2. Buyer warrants and represents that gas tendered for transportation
pursuant to Article XVI hereof will not subject the gas subject to this
Contract, Seller's pipeline system, or any portion thereof, or any portion of
Seller's gas supply to the jurisdiction of the Federal Energy Regulatory
Commission or any successor authority. Buyer agrees to indemnify and hold
Seller harmless from and against any and all suits, actions, damaaes, costs,
losses and expenses sustained by Seller relative to any breach by Buyer of the
covenants expressed in this Paragraph.
3. Each of the parties understand that should the RRC, or other govern-
mental regulatory body, require approval for the sale and purchase of gas
under this Contract, then each of the parties will make any necessary applica-
tions or filings and will submit any records or data to the regulatory body so
that requisite regulatory authorization may be granted. In the event that
such authority is not granted, then the parties understand that their mutual
obligations under this Contract as expressed herein will have no force or
effect as to the sale and purchase of gas and there will be no liability on
the part of either of the parties.
ARTICLE XV
NOTICES
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:
BUYER: FOR BILLING, ACCOUNTING AND
CORRESPONDENCE PURPOSES
CITY OF CORPUS CHRISTI
GAS SUPERINTENDENT
4225 SOUTH PORT AVENUE
CORPUS CHRISTI, TEXAS 78415
19
SELLER: FOR CORRESPONDENCE PURPOSES
VALERO TRANSMISSION COMPANY
ATTENTION: GAS SALES
FOUR ALLEN CENTER, SUITE 1700
1400 SMITH STREET
HOUSTON, TEXAS 77002
FOR ACCOUNTING MATTERS
VALERO TRANSMISSION COMPANY
ATTENTION: VOLUME ADMINISTRATION
P. 0. BOX 500
SAN ANTONIO, TEXAS 78292
FOR REMITTANCE
VALERO TRANSMISSION COMPANY
(See Paragraph 2. of Article VIII)
or at such other post office address as such party shall from time to time
designate as the address for such purpose, by registered or certified letter
addressed to the other party. The mailing of notice by registered or
certified letter shall constitute service of notice hereunder.
ARTICLE XVI
TRANSPORTATION OPTION
1. Seller grants to Buyer the option to have Seller transport through
Seller's pipeline system a maximum quantity of gas, herein referred to as
"transport gas", equal to three thousand (3,000) Mcf of gas per day from the
Effective Date of this Contract until January 1, 1985 and during each calendar
year thereafter, an amount equal to twenty (20) percent of the average daily
quantity of gas consumed by Buyer in Buyer's distribution system durino the
prior calendar year, or three thousand (3,000) Mcf of gas per day, whichever
is the greater. The total "transport gas" and Buyer's "mineral interest gas"
shall not exceed fifty (50) percent of the total daily consumption of gas for
use in Buyer's distribution system as acquired by Buyer from any and all
sources, as provided hereunder, on any one day. As used herein, the term
"transport gas" means gas from Texas intrastate gas reserves, dedicated to
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Buyer on a well-by-well basis or on such other basis as may be mutually
agreeable between Buyer and Seller, which Buyer may acquire, including any gas
from property where the Buyer has mineral interest and where Buyer owns or
will acquire such interest, and which is delivered into Seller's pipeline
system. If Buyer elects to have such gas transported by Seller, then the
quantity of gas transported hereunder shall be pursuant to the terms and
conditions of a separate and definitive gas transportation agreement to be
negotiated and entered into by the parties hereto on or before the date of the
initial deliveries of such "transport gas". Said gas transportation agreement
will be for the delivery into and transportation of such quantities of gas
through Sellers interconnected pipeline system at no cost to Seller provided
that Seller has adequate line capacity in the area where Buyer's gas is
located. The point of receipt into Seller's pipeline shall be by mutual
agreement between Buyer and Seller.
2. When gas is available for tender to Seller as "transport gas", Buyer
shall notify Seller in writing, specifying the location of such gas, Btu
content, estimated reserves, pressure at which such gas can be delivered,
estimated daily quantity to be delivered, initial deliverability, suggested
point of receipt and further that such gas meets the quality specifications
herein set forth.
3. Upon receipt of notice of tender, Seller shall ascertain and advise
Buyer within ten (10) days whether the physical conditions on Seller's
pipeline system will permit the handling of the proposed quantities and
quality of gas. If physical conditions do not reasonably permit, Seller shall
advise, to the extent practical, as to the date Seller may be able to accept
such "transport gas" and promptly provide Buyer with any information
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ascertained to render such determination. Seller shall not be obligated to
take "transport gas" which does not conform to the specifications and
conditions regarding the sales gas as stipulated in this Contract. If
facilities are required to receive, process and/or transport the "transport
gas", Seller shall install, maintain and operate all such facilities necessary
and Buyer shall promptly reimburse Seller for all actual costs for such
installations, including, but not limited to labor, material and overhead.
Upon reimbursement, Seller shall retain title to all tap(s) and tap valves.
4. The point(s) of redelivery and the redelivery pressure necessary to
accomplish the redelivery of "transport gas" shall be as provided in Article
III of this Contract.
5. The "transport gas" shall be delivered to Seller at a pressure
sufficient to enter the respective portion of Seller's pipeline system;
however, Seller shall not be obligated to receive gas at pressures exceeding
the MAOP of Seller's respective pipeline, as solely established from time to
time by Seller.
6. The "transport gas" shall be delivered and redelivered as nearly as
practicable at uniform hourly rates of flow. Subject to all other provisions
of this Contract, Seller shall as nearly as practicable each day redeliver to
Buyer such daily quantities of "transport gas" as are delivered to Seller
during such day, with all deliveries and redeliveries hereunder to be balanced
on a Btu basis and with all quantities referred to herein to be adjusted for
the Gross heating value thereof; provided, however, that for the purpose of
determining the Btu content of the quantity of gas delivered into Seller's
pipeline system the average Gross heating value per cubic foot shall be deemed
to be the lesser Btu of (i) the delivered "transport gas" at such points where
22
"transport.gas".enters Seller's pipeline system or (ii) the average Btu per
Mcf of gas delivered at the Points of Delivery as provided in Paragraph 4. of
this Article XVI. Such average Gross heating values shall respectively be
computed by dividing the total cumulative deliveries or redeliveries of Btus
delivered to or redelivered by Seller, as the case may be, by the total
cumulative deliveries or redeliveries of Mcf delivered to or redelivered by
Seller, as the case may be, for such month during the term.
7. The transportation fee(s) for services rendered are to be determined
in the manner that Seller charges other transport customers for similar
services, taking into consideration the quantity, quality, distance, com-
pression and other relevant factors, and an amount equivalent to the storage
fee per Mcf included in Seller's WACOG each month; provided, however, that any
amounts attributable to the storage fee component shall reduce the amounts
otherwise included in Seller's WACOG to all its customers. Each package of
"transport gas" shall have a transportation fee calculated by Seller which
shall have been mutually agreed upon by the respective parties. During the
term of this Contract, such total transportation fee, exclusive of the storage
fee, shall not exceed twenty-five (25) cents per Mcf, plus one (1) cent per
Mcf escalation each year. If Buyer elects to purchase gas from Reata
Industrial Gas Company, herein referred to as "Reata", an affiliate of Seller,
in lieu of acquiring a portion or all of the "transport gas" pursuant to
Paragraph 1. of this Article XVI, no transportation and/or storage fees as
stated in this Paragraph 7. shall apply to Reata sales gas.
8. Additionally, Seller grants to Buyer the option to have up to five
hundred (500) Mcf of gas per day transported by Seller under the same trans-
portation conditions as provided in this Article XVI, from properties wherein
Buyer has a mineral interest, herein referred to as "mineral interest gas";
provided, however, that Buyer owns such "mineral interest gas" properties on
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October 1, A983 and further that Buyer has the legal right to take such
"mineral interest gas" in kind. If the "mineral interest gas" under this
Paragraph S. is connected directly to Buyer's distribution system without
utilizing Seller's system then Buyer shall have no obligation to pay Seller
any transport fee for "mineral interest gas" so accommodated; provided,
however, Buyer shall pay the applicable storage fee per Mcf, as further
provided in RRC Gas Utilities Docket 3215, for all such "mineral interest gas"
utilized. Any "mineral interest gas" connected to Seller's system shall be
treated as "transport gas" as provided hereunder; furthermore, said "mineral
interest gas" shall not reduce the quantities of "transport gas" optioned
hereunderParagraph 1. of this Article XVI.
9. All gas delivered hereunder, either by sale or under the transpor-
tation option by Seller shall be utilized by Buyer in its own facilities and
no such gas shall be resold by Buyer other than through its gas distribution
system in its franchised areas of operation.
10. "Transport gas" accommodated shall contain a Gross heating content
of not less than one thousand (1,000) Btus per cubic foot
ARTICLE XVII
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 provisions of this Contract are
formulated and used for convenience only and shall not be deemed to effect the
meaning or construction of any such provision.
3. Mention is made of the fact that under a Mortgage and Deed of Trust
dated as of June 15, 1963, as supplemented and amended, Seller has assigned to
24
The Bank of New York and S. L. deVausney. (now The Bank of New York and K. G.
Pittius), as Trustees, certain properties described therein, and that this
Agreement shall, upon the Effective Date hereof, become a part of the
mortgaged properties pledged under the Mortgage and Deed of Trust.
4. The parties hereto recognize that by entering into this Contract,
Buyer does not relinquish any of his rights or benefits under the Settlement
Agreement as approved and adopted by the RRC under the September 4, 1979 Final
Order, GUD 500, including Buyer's right to continued gas service from Seller.
5. 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.
6. Seller shall enter into no new firm sales obligation except in
accordance with the applicable and effective orders of the RRC or any other
regulatory body having jurisdiction.
7. Seller shall not lease or commit to third parties any use of the
existing four (4) salt dome caverns developed by or for and committed to
Seller. Furthermore, Seller commits all rights in said storage caverns to the
benefit of its customers, except in accordance with the applicable and
effective orders of the RRC or any other regulatory body having jurisdiction.
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IN WITNESS WHEREOF, the parties have caused this Contract to be executed
in multiple counterparts, by their respective personnel thereunto duly
authorized, as of the Effective Date herein above written.
BUYER:
CITY OF CORPUS CHRISTI
ATTEST:
By
• BILL G. READ, EDWARD A. MARTIN,
City Secretary City Manager
J. BRUCE AYCOCK
City Attorney
By:
JAY B. DOEGEY,
Assistant City Attorney
By
JAMES K. LONTOS,
Assistant City Manager
SELLER:
ATTEST: VALERO TRANSMISSION COMPANY
By
Secretary JOSEPH R. JUENGER,
Vice President
26
STATE OF TEXAS
BEFORE ME, the undersigned authority, on this day personally
appeared EDWARD A. MARTIN, City Manager, CITY OF CORPUS CHRISTI, a Texas
municipal corporation, known to me to be the person whose name is subscribed
to the foregoing instrument and acknowledged to me that he executed the same
as the act and deed of said corporation for the purposes and consideration
therein expressed and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, on this the day of
198 .
Notary Public in and for
The State of T E X A S
STATE OF TEXAS §
BEFORE ME, the undersigned authority, on this day personally
appeared JOSEPH R. JUENGER, Vice President, VALERO TRANSMISSION COMPANY, a
Delaware corporation, known to me to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he executed the same as
the act and deed of said corporation for the purposes and consideration
therein expressed and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, on this the day of
198 .
Notary Public in and for
The State ofTEXAS
27
EXHIBIT "A"
POINTS OF DELIVERY
A. Title for gas sold and purchased hereunder at the following Point(s) of
Delivery shall pass from Seller to Buyer at the outlet side of the respective
measuring facilities.
STATION NAME
363161 Kelly Bell
441007 Lantana 100"
441008 Main Drive
441009 McKenzie
441010 Tuloso
441012 Clarkwood
441014 Manchester
441016 North Hunter
441017 South Hunter
441018 Violet
•441019 Tule Lake
441020 Alpine
441023 Lantana 20"
441025 Padre Island
441043 Shell Road 41
441044 Shell Road 42
441054 Lantana 41-A
441099 Corpus Christi 41
441113 Kelly Bell Tex-Mex RR
441115 Kosar 41
441116 Kosar -1-A
441117 Kosar #2
441118 Davis Walter, Wilson 41
441145 Shell Road 20"
441174 Farm Road 24 100"
441175 Farm Road 24 20"
441227 Cain Sechrist 41
441047 Bush 41
441048 Bush 42
B. Title for gas sold and purchased hereunder at the isolated service
areas, as such service areas exist on the Effective Date and may change
from time to time, shall pass from Seller to Buyer at the interconnect of
Seller's and Buyers's respective facilities at each such respective point.
Such Point(s) of Delivery being identified by Seller's accounting control
(station) numbers 441051, 441083 and 441177.
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Reata
Industrial Gas Company
Post Office Box 500 • San Antonio, Texas 78292 • Telephone (512) 246-2000
December 16, 1983
City of Corpus Christi
4225 South Port Avenue
Corpus Christi, Texas 78415
Attention: Mr. Edward A. Martin,
City Manager
Re: Letter Agreement (Gas Sales Contract 8000-30)
Gentlemen:
Reference is made to that certain Gas Sales Contract No. 5201-089
(Contract) by and between Valero Transmission Company (Valero) and City
of Corpus Christi (Buyer) dated January 1, 1984.
It is Valero'•s and Reata Industrial Gas Company's (Seller) intention,
subject to the terms and provisions contained in the above referenced
Contract, with the following exceptions, to sell gas thereunder to Buyer:
1. TERM - The term of this Letter Agreement shall be
effective contemporaneous with the referred Contract
and continue on a day to day basis, subject to a
twenty-four (24) hours notice of cancellation by
either party, followed by written notification.
2. QUANTITY - Seller shall deliver and sell to Buyer
and Buyer shall receive and buy from Seller up to a
maximum quantity of three (3,000) Mcf of natural gas
per day on a best efforts basis.
3. PRICE - The price or rate for natural gas sold and
purchased hereunder shall be three dollars and forty
cents ($3.40) per MMBtu.
4. OTHER TERMS & CONDITIONS - All other terms and
conditions, including gas quality, as are necessary
hereunder will be pursuant to the above referenced
Contract.
' CITY OF CORPUS CHRISTI
December .16', 4983-
page
983page two
If the foregoing is agreeable to you, please indicate your acceptance and
intent to purchase gas under the terms and conditions of this Letter
Agreement and the above referenced Contract, as it pertains to this Letter
Agreement, by executing all four (4) copies of this Letter Agreement and
returning same to the attention of the undersigned. Upon Seller's
execution, a fully executed copy will be returned to Buyer.
Very truly yours,
STAN R. GOODSON
Representative
SRG/pr
ACCEPTED and AGREED to this
day of 198 .
CITY OF CORPUS CHRISTI
By
EDWARD A. MARTIN,
City Manager
ACCEPTED and AGREED to this
day of 198 .
REATA INDUSTRIAL GAS COMPANY
By
JOSEPH R. JUENGER,
Vice President
ACCEPTED and AGREED to this
day of 198 .
VALERO TRANSMISSION COMPANY
By
JOSEPH R. JUENGER,
Vice President
Corpus Christi, Texas
,;?,/ day of
eOv4 , 1933
TO THE MEMBERS OF THE CITY COUNCIL
Corpus Christi, Texas
For the reasons set forth in the emergency clause of the foregoing ordinance
or resolution, an emergency exists requiring suspension of the Charter rule
as to consideration and voting upon ordinances or resolutions at three
regular meetings; I/we, therefore, request that you suspend said Charter rule
and pass this ordinance or resolution finally on the date it is introduced,
or at the present meeting of the City Council.
Respectfully, Respectfully,
Council Members
MAYOR
THE CITgr
OF CORPUS CHRISTI, TEXAS
The above ordinance was passed by the following vote:
Luther Jones
Betty N. Turner
David Eerlanga, Sr.
Leo Guerrero
Herbert L. Hawkins, Jr.
Dr. Charles W. Kennedy
Joe McComb
Frank Mendez
Mary Pat Slavik
1"•':;97