HomeMy WebLinkAbout19605 ORD - 01/12/1987A RESOLUTION
AUTHORIZING THE EXECUTION OF THE "GAS PURCHASE CONTRACT
NO. , CITY OF CORPUS CHRISTI, BUYER, AND THE COASTAL
CORPORATION, SELLER," AND "GAS TRANSPORTATION AGREEMENT,
CITY OF CORPUS CHRISTI, SHIPPER, AND VALERO TRANSMISSION
COMPANY"; AND DECLARING AN EMERGENCY.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI,
TEXAS:
SECTION 1. The City Manager is authorized to execute on behalf of the
City of Corpus Christi (1) "Gas Purchase Contract No. , City of Corpus
Christi, Buyer, and the Coastal Corporation, Se er, and (2) "Gas
Transportation Agreement, City of Corpus Christi, Shipper, and Valero
Transmission Company," true copies of which are attached hereto.
SECTION 2. That upon written request of the Mayor or five Council
members, copy attached, to find and declare an emergency due to the need for
efficient and effective administration of City affairs, such finding of an
emergency is made and declared requiring suspension of the Charter rule as to
consideration and voting upon ordinances or reso ons at three regular
meetings so that this resolution is passeiand sha take effect uponlfirst
reading as an emergency measure this the) Agot day of9d . i �� , 1'
ATTEST:
City Secretary
APPROVED: a DAY OF 3atmva v y
HAL GEORGE, CITY ATTORNEY
MAYOR
THE
19 g7
O1P.032.01
CITY OF CORPUS
CHRISTI, TEXAS
19605 MICROFILMED \-'-
0 6 2 0 U . C
GAS PURCHASE CONTRACT NO.
City of Corpus Christi
"BUYER,"
AND
THE COASTAL CORPORATION,
"SELLER"
- r1
oazou0c i•
GAS PURCHASE CONTRACT
Index
Article Contents Page
I. DEFINITIONS 3
II. • PREIIMINARY ACTS OF PARTIES 5
III. TREATING AND PROCESSING OF GAS 7
IV. QUANTITY 7
V. QUALITY 8
VI. DELIVERY AND PRESSURE 9
VII. MEASUREMENT 10
VIII. PRICE AND BILLING 15
IX. TAXES 16
X. REGULATORY BODIES 16
XI. FORCE MAJEURE 17
XII. WARRANTY OF TITLE TO GAS 19
XIII. TERM 20
XIV. MISCELLANEOUS 25
O&.OU.C;
Contract No.
GAS PURCHASE CONTRACT
THIS CUSTOMER CONTRACT, made and entered into to be
effective as of the Effective Date defined below, between the
undersigned "Buyer," and The Coastal Corporation; a Delaware
corporation, herein referred to as "Seller";
W I TN E S S E T H:
In consideration of the mutual covenants and
agreements herein contained, and pursuant to the Gas Search
Amendment identified below, the parties hereto mutually
covenant and agree as follows:
ARTICLE I
DEFINITIONS
Unless otherwise specifically stated herein, all terms
defined in the Gas Search Amendment identified below shall have
the meaning therein specified when used in this Customer
Contract. Additionally, for the purpose of this Customer
Contract, unless the context of this Customer Contract requires
otherwise, the following definitions shall be applicable:
1. "British Thermal Unit," herein called "Btu," shall
mean the amount of heat required to raise the temperature of
one (1) pound of water, herein called "H20," one (1) degree
Fahrenheit from fifty-eight and five -tenths (58.5) degrees
Fahrenheit to fifty-nine and five -tenths (59.5) degrees
Fahrenheit.
2. "Cubic foot of Gas" shall mean the volume of Gas
contained in one (1) cubic foot of space at a standard pressure
of fourteen and sixty-five/one hundredths (14.65) psia and a
standard temperature of sixty (60) degrees Fahrenheit.
3. "Customer Contract" shall mean this Gas Purchase
Contract.
0 6 4,0 U. C
4. "Day" shall mean the period commencing at 7:00
a.m. local time on any calendar day and ending at 7:00 a.m.
local time on the following calendar day.
5. "Delivery Points" shall mean the places of
delivery of Gas from Coastal Sellers to Lo -Vaca for redelivery
to Buyer provided for in_the Gas Transportation Agreement.
6. "Effective Date" shall have the meaning specified
in Section 7.03 of the Gas Search Amendment. As provided in
Section 7.03 of the Gas Search Amendment, if the Effective Date
does not occur and the Gas Search Amendment terminates pursuant
to said Section 7.03, this Customer Contract will likewise
terminate and be void and of no force or effect upon
termination of said Gas Search Amendment.
7. "Gas" shall mean natural gas, including gas well
gas, casinghead gas or the residue gas resulting from
processing either casinghead gas or gas well gas.
8. "Gas Search Amendment" shall mean that certain
Amendment of Gas Search Agreement, Gas Availability Agreement
and Exploration and Development Agreement executed by The
Coastal Corporation on , 1986, and by Valero Energy
Corporation, Valero Transmission Company, Texas Commerce Bank,
National Association (in its capacity as "Trustee" as therein
described), Border Exploration Company, Coastal Oil & Gas
Corporation and Coastal Limited Ventures, Inc.
9. "Gas Transportation Agreement" means the gas
transportation agreement between Buyer, as "Shipper," and
Valero Transmission Company becoming effective as of the
Effective Date, which has been executed pursuant to the Gas
Search Amendment to provide for the transportation of Gas
purchased by Buyer under this Customer Contract from the
Delivery Points to the "Redelivery Points" provided for therein.
10. "Gross Heating Value" shall mean the number of
Btu's liberated by the complete combustion at constant pressure
of one (1) cubic foot of Gas, at a base temperature of sixty
-2-
0 6 2 0 U. c;
(60) degrees Fahrenheit and a reference pressure base equal to
fourteen and sixty-five/one hundredths (14.65) psia, with air
of the temperature and pressure of the Gas, after the products
of combustion are cooled to the initial temperature of the Gas,
and after the H2O of the combustion is condensed to the
liquid state, corrected for the H2O vapor content of the Gas
being tested, except that if the H2O vapor content is seven
(7) pounds or less per one million (1,000,000) cubic feet, the
Gas shall be assumed to be dry.
11. "Mcf" shall mean one thousand (1,000) cubic feet.
12. "MMBtu" shall mean a quantity of Gas having a
Gross Heating Value of one million (1,000,000) Btu's.
13. "Month" shall mean the period beginning at 7:00
a.m. local time on the first (1st) day of a calendar month and
ending at 7:00 a.m. local time on the first (1st) day of the
next succeeding calendar month.
14. "Psia" shall mean pounds per square inch,
absolute.
15. "Psig" shall mean pounds per square inch, gauge.
ARTICLE II
PRELIMINARY ACTS OF PARTIES
1. This Customer Contract is being executed by Buyer
incident to submitting its vote as a Settling Customer
concerning execution of the Gas Search Amendment by the Trustee
pursuant to the Settlement Trust Agreement as contemplated in
the Gas Search Amendment. After execution hereof by Seller as
provided for in the Gas Search Amendment, this Customer
Contract will be and become effective as of the Effective Date.
2. Seller represents and warrants to Buyer that all
Gas which Coastal Sellers deliver or cause to be delivered
hereunder will be produced from reserves not "committed or
dedicated to interstate commerce," within the meaning of
section 2(18) of the Natural Gas Policy Act of 1978 (herein
called "NGPA"); provided, however, that Gas which is produced
-3-
06 0U•C
from reserves that are "committed or dedicated to interstate
commerce" may be delivered if any required abandonment
authority under the Natural Gas Act of 1938 (herein called
"NGA"), has been obtained first or if such Gas is Gas defined
in section 601(a)(1)(B)(i)-(iii) of the NGPA. Seller agrees
' that, unless Lo -Vaca shall otherwise agree .in• writing, no
Coastal Seller will make any transportation arrangements with
respect to the Gas involved herein which would subject Lo -Vaca
or any Lo -Vaca Affiliate, or its •facilities to the
"nondiscriminatory access to self -implementing transportation
services" provisions under section 311 of the NGPA or any
orders or regulations thereunder, including but not limited to
Federal Energy Regulatory Commission (herein called "FERC")
Order No. 436 and FERC Order No. 436-A and their regulations
thereunder; provided, however, that if Lo -Vaca or a Lo -Vaca
Affiliate otherwise subjects itself, or its facilities, to such
provision, then this limitation shall no longer apply. 'Seller
agrees to indemnify and hold Buyer and Lo -Vaca harmless from
and against any and all consequences, suits, actions, damages,
costs, losses and expenses of any kind or nature sustained by
Buyer or Lo -Vaca relative to any breach by Seller of the
covenants expressed in this paragraph.
3. Buyer represents and warrants to Seller that Gas
purchased under this Customer Contract will not be sold,
consumed, transported, exchanged or otherwise utilized in
interstate commerce or commingled at any point (after delivery
at the Delivery Points) with other Gas which is or may be sold,
consumed, transported, exchanged or otherwise utilized in
interstate commerce in such a manner which will subject the Gas
delivered hereunder or any pipeline system or facilities
delivering such Gas to the Delivery Points hereunder, or any
portion thereof, to the jurisdiction of the FERC, or any
successor authority, under the NGA or the "nondiscriminatory
access to self -implementing transportation services" portion
-4-
0 6'2 0 U
under section 311 of the NGPA or any orders or regulations
thereunder, including but not limited to FERC Order No. 436 and
FERC Order No. 436-A and their regulations thereunder;
provided, however, that if a Coastal Seller or its designee
otherwise subjects itself, or its facilities, to such
'provision, then this -limitation shall no longer apply. Buyer
agrees to indemnify and hold Seller and all Coastal Sellers
harmless from and against any and all consequences, suits,
actions, damages, costs, losses and expenses of any kind or
nature sustained by Seller or any Coastal Seller relative to
any breach by Buyer of the covenants expressed in this
paragraph.
ARTICLE III
TREATING AND PROCESSING OF GAS
1. Seller reserves the right, at its expense, to
treat or process Gas to be sold hereunder prior to delivery at
Delivery Points, through field -type separators or Gas
processing plants for the recovery, extraction or separation
from such Gas of liquid hydrocarbons, helium, propane, butane
and other liquefiable hydrocarbons or other substances;
provided that such Gas, after treating or processing, shall
meet the quality specifications or other requirements set forth
in this Customer Contract.
2. All liquid hydrocarbons, helium, propane, butane,
liquifiable hydrocarbons and other substances recovered,
separated or extracted from Gas by Seller pursuant to
paragraph 1 of this Article III shall be and remain the
property of Seller.
ARTICLE IV
QUANTITY
1. During the term of this Customer Contract, Buyer
shall have the right to take and purchase, and upon request by
Buyer from day to day, Seller agrees to sell to Buyer and
deliver or cause to be delivered to the Delivery Points on each
-5-
06,; oU.C;
day of the term of this Customer Contract a quantity of Gas up
to, but not in excess of, the Daily Contract Quantity set forth
in paragraph 8 of Article XIV hereof.
2. The quantity, if any, of Gas which shall be deemed
and considered to have been requested by and delivered and sold
to Buser during each -day of the term of this Customer Contract
shall be determined in accordance with the provisions of
Section 3.05 and, if applicable, Section 3.09 of the Gas Search
Amendment.
3. In view of the fact that the quantity of Gas
deemed and considered to have been delivered and sold to Buyer
during each day of the term of this Customer Contract under the
provisions of Section 3.05 (and, if applicable, Section 3.09)
of the Gas Search Amendment is dependent upon the quantity of
Gas delivered on such day from Lo -Vaca to Buyer at the
Redelivery Points under the Gas Transportation Agreement, Buyer
covenants and agrees that it will cause Lo -Vaca to redeliver to
Buyer at the Redelivery Points on each day under and pursuant
to the Gas Transportation Agreement an aggregate number of
MMBtu's of Gas, measured pursuant to its Gas Transportation
Agreement, which shall be deemed Coastal Sale Gas sold and
delivered to Buyer under this Customer Contract, equal to the
aggregate number, if any, of MMBtu's of Coastal Sale Gas to be
purchased by Buyer under this Customer Contract on such day,
measured pursuant to this Customer Contract.
ARTICLE V
QUALITY
1. The Gas as delivered by Seller for sale hereunder
shall be of such quality that it shall meet the following
specifications:
a. Contain not more than one-fourth (1/4) grain
of hydrogen sulfide or more than ten (10) grains of
total 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
when saturated with H2O vapor;
-6-
06 3 .c•'
c. Have a temperature of not greater than one
hundred twenty (120) degrees Fahrenheit or less than
forty (40) degrees Fahrenheit;
d. Contain not more than three (3) percent by.
volume of carbon dioxide or one (1) percent by volume
of oxygen or five (5) percent by volume of total inert
gas;
e. Be commercially free of all liquids,
suspended matters, dust, all gums and gum -forming
constituents, and other liquid or solid matter which
might become separated from the Gas in the course of
transportation through Lo-Vaca's pipeline or which
might cause injury to or interfere with the proper
operation of such pipeline; and
f. Contain not more than seven (7) pounds of
H=O vapor per one million (1,000,000) cubic feet.
2. Should the Gas tendered by Seller fail at any time
to conform to any of the specifications of Paragraph 1 of this
Article V, Buyer shall notify Seller of any such failure. If,
within thirty (30) days following receipt of such notice,
Seller does not notify Buyer that Seller will treat the Gas so
as to make it meet the above specifications, Buyer may accept
delivery of such Gas and, at its option, treat or have same
treated, for a reasonable cost at Seller's expense, so that it
will conform to the above specifications. In any event, Buyer
may refuse to accept any Gas not meeting the above
specifications. Buyer's acceptance of Gas that does not
conform to the quality specifications stated above shall not
constitute a waiver of such specifications by Buyer in regard
to Gas thereafter tendered for delivery hereunder.
ARTICLE VI
DELIVERY AND PRESSURE
1. Title to all Gas delivered hereunder shall pass
from Seller to Buyer at the Delivery Points.
2. Seller, at its expense, shall construct, equip,
maintain and operate or cause to be constructed, maintained and
operated all lines and necessary facilities to deliver Gas to
be sold hereunder at the Delivery Points, including, but not
limited to, installation and maintenance of separation
equipment equipped with a high liquid level shut-in device
-7-
0 6.2 0 U . C .
and/or dehydration equipment when required to meet the quality
specifications of Article V hereof.
3. Buyer shall cause Lo -Vaca, as transporter under
the Gas Transportation Agreement, at no expense to Seller, to
construct, equip, maintain and operate, or cause to be
constructed, equipped, maintained and operated, all necessary
facilities to accept Gas delivered hereunder from Coastal
Sellers at the Delivery Points.
4. Seller will deliver or cause to be delivered Gas
at the required pressure at the Delivery Points sufficient to
enter Lo-Vaca's line at the working pressure of such line from
time to time, but not in excess of the maximum operating
pressure of Lo-Vaca's system at the applicable Delivery Point;
provided, however, that Seller shall not be required, unless it
so elects, to deliver Gas at more than one thousand fifty
(1,050) psig.
5. As between Buyer and Seller, Seller shall be in
control and possession of the Gas sold and purchased hereunder
and responsible for any damages, injuries or deaths caused
thereby until the same shall have been delivered at a Delivery
Point.
6. As between Buyer and Seller, Buyer shall be deemed
in control and possession of the Gas sold and purchased
hereunder and responsible for any damages, injuries or deaths
caused thereby after the same shall have been delivered at a
Delivery Point.
ARTICLE VII
MEASUREMENT
1. The unit of volume for measurement of all Gas
delivered and redelivered hereunder shall be one (1) cubic foot
of Gas at a base temperature of sixty (60) degrees Fahrenheit
and at a pressure of fourteen and sixty-five/one hundredths
(14.65) psia, as provided by the Natural Resources Code of the
-8-
0 6 2 0 U. C
State of Texas (sections 91.051 through 91.062 of Vernon's
Texas Civil Statutes).
2. All measurement facilities .hereunder shall be
installed and operated in accordance with the standards
approved by the American National Standards Institute of
June 29, 1977, and prescribed in the Gas Measurement Committee
of the American Gas Association (herein called "AGA") Report
Number 3 (ANSI/API 2530, First Edition), as it is now and from
time to time may be revised, amended or supplemented.
3. Buyer shall cause Lo -Vaca as transporter under the
Gas Transportation Agreement to install, maintain and operate,
at no expense to Seller, or cause same to be done, a measuring
station located on its system adjacent to each Delivery Point
and each Redelivery Point; provided that Seller will be
required to reimburse Lo -Vaca for the cost of acquiring and
installing any new measuring devices or facilities required to
be installed at any new or additional Delivery Point hereafter
mutually agreed upon between a Coastal Seller and Lo -Vaca as
provided for in and subject to the provisions of paragraph 1.c
of Article III of the Gas Transportation Agreement. All
measuring stations shall be so equipped with orifice meters,
recording gauges or other types of measuring devices of
standard make and design commonly acceptable in the industry as
to accomplish the accurate measurement of Gas delivered and
redelivered hereunder. The changing of the charts and
calibrating and adjustment of meters shall be done by Lo -Vaca.
Seller and Buyer shall each 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 equipment used in measuring Gas hereunder.
The records from such measuring equipment shall remain the
property of Lo -Vaca or its representatives, but upon request,
Buyer will cause Lo -Vaca to submit to Seller the records and
charts, together with calculations therefrom, subject to their
-9-
0.z ou.C.
return within forty-five (45) days after receipt thereof, after
which the charts shall be retained for a period of two (2)
years.
At least once each calendar quarter or more often as
Lo -Vaca may deem necessary, Buyer shall cause Lo -Vaca to
calibrate the meters and instruments or cause same to be
calibrated. Lo -Vaca shall give Seller and Buyer sufficient
notice in advance of such tests so that Seller or Buyer may, at
its election, be present in person or by its representative to
observe adjustments, if any, which are made. For the purpose
of measurement and meter calibration, the atmospheric
(barometric) pressure shall be assumed, unless otherwise
determined by the Standard Gas Measurement Law, to be fourteen
and four -tenths (14.4) psia at the Delivery Points and
Redelivery Points, irrespective of variations in actual
atmospheric pressure from time to time.
4. Seller may, at its option and expense, install
check meters for checking Lo-Vaca's metering equipment at any
Delivery Point; and same shall be so installed as not to
interfere with the operation of Lo-Vaca's facilities.
5. The temperature of the Gas hereunder shall be
determined by the continuous use of a recording thermometer.
The temperature recorded each day, during periods of flow only,
shall be used in computing the Gas volume for that day.
6. The specific gravity of the Gas hereunder may, at
Lo-Vaca's option, be determined by means of a recording
gravitometer. The 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 quarterly intervals or more often as Lo -Vaca may
deem necessary, 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
-10-
0 & 2 .0 u . C
applicable Delivery Points or Redelivery Points. 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. If spot samples are taken,
specific gravities so determined will be used in calculating
Gas deliverids hereunder for the month in which the test is
made and shall remain in effect until the month in which a new
sample is taken.
7. The Gross Heating Value of the Gas hereunder shall
be determined from time to time by means of a recording
calorimeter, employing the Thomas principle of calorimetry.
The arithmetical average of the hourly Gross Heating Value
recorded each day shall be considered as the heat content of
the Gas delivered or redelivered during such day. If a
recording calorimeter is not available, the Gross Heating Value
shall be determined at quarterly intervals or more often as
Lo -Vaca may deem necessary by the use of a spot or continuous
sample taken at the applicable Delivery Points or Redelivery
Points. The Gross Heating Value of such sample shall be
obtained either by calorimeter or chromatographic analysis
using the value 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 now and from time to time may be
revised, amended or supplemented. If spot samples are taken,
the Gross Heating Value of the Gas hereunder shall be effective
for the month in which the sample is taken and shall remain in
effect until the month in which a new sample is taken.
8. t£, upon any test, the metering equipment in the
aggregate is found to be inaccurate by one (1) percent or more,
registration thereof and any payment based upon such
registration 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
-11-
0 6 2 0 U. C
extending back one half (1/2) of the time elapsed since the day
last calibrated not to exceed 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 Zuantity of Gas delivered or redelivered
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
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 installed and registering;
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 or
redeliveries based upon preceding periods when gas was
flowing under similar conditions and the meter was
registering accurately.
9. Measurements hereunder shall be corrected for
deviation from The Ideal Gas Laws, by use of tables or 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 commencement of deliveries
at each Delivery Point and at least quarterly thereafter or
more often as Valero may deem necessary. The molecular
percentage of carbon dioxide and nitrogen thus determined will
be used to determine the supercompressibility factors during
the ensuing period until the next test, with corrections for
specific gravities, temperatures and pressures under which Gas
is delivered hereunder.
-12-
o6;ou.c'
ARTICLE VIII
PRICE AND BILLING
1. The price to be paid by Buyer to Seller for each
MMBtu of Gas delivered hereunder from time to time shall be
equal to the Applicable Price per MMBtu in effect during the
month when such Gas is redelivered to Buyer et Redelivery
Points under the Gas Transportation Agreement, determined in
accordance with the provisions of Section 3.07 of the Gas
Search Amendment.
2. Seller shall, on or before the thirtieth (30th)
working day after the end of each calendar month after the
Effective Date, render to Buyer a statement showing the MMBtu's
of Coastal Sale Gas received by Buyer at each Redelivery Point
during such calendar month under and measured pursuant to
'Buyer's Gas Transportation Agreement, and the Applicable Price
thereof. Buyer shall thereafter pay Seller the amount due for
all such Gas on or before the fifteenth (15th) day after
receipt of such statement; provided that Seller may require
that payment for Gas delivered hereunder during any month be
made to a Coastal Seller (other than Seller) by so directing 'in
the applicable statement delivered to Buyer hereunder. If
Buyer, in good faith, disagrees with the amount of any
statement from Seller, Buyer shall immediately notify Seller of
such disagreement, so that the difference may be resolved
before the date for payment of such statement. If Buyer fails
to give such notification, or if Buyer and Seller do not
resolve such disagreement before the due date, the amount of
the statement not in dispute shall be paid by Buyer on the due
date, such payment to be subject to adjustment, with interest
as below provided, within ten (10) days after final resolution
of the disagreement. Any such adjustment shall bear interest
from the due date of the applicable statement until paid at the
lesser of 15% per annum or the applicable maximum lawful rate.
-13-
O62)U.0 ,
3. Each party hereto shall have, at its expense, the
right during normal business hours to examine and audit 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 Customer Contract. Each
party agrees to keep recorCs and books of account in accordance
with generally accepted accounting principles and practices in
the industry. Any statement or payment shall be final as to
both parties unless questioned within two (2) years after the
date of delivery of such statement or making of such payment.
ARTICLE IX
TAXES
Seller shall pay or cause to be paid all excise,
severance, sales, occupation and other taxes of like nature
levied with respect to the production of Gas and the handling
thereof prior to (but not after) the delivery thereof at the
Delivery Points. Seller shall also pay or cause to be paid all
such taxes levied with respect to the processing of Gas to be
sold hereunder by or for the account of Seller and with respect
to liquifiable hydrocarbons and other substances separated or
extracted from Gas in the processing plant if and to the extent
that Seller exercises its right to process Gas in a processing
plant pursuant to Article III hereof. No Coastal Seller shall
have any liability for any gross receipts tax or any other tax
levied or assessed with respect to the transportation or
handling of Gas or redelivery thereof by Lo -Vaca to Buyer or
others after such Gas is delivered to the Delivery Points under
the Gas Transportation Agreement.
ARTICLE X
REGULATORY BODIES
This Customer 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
-14-
0 6.2, 0 U . C.
law or regulation imposed at any time during the term of this
Customer Contract, be ordered or required to do any act
inconsistent with the provisions of this Customer Contract,
this Customer Contract shall continue nevertheless and shall be
deemed modified to conform with the requirements of such law or
regulation.
ARTICLE XI
FORCE MAJEURE
In the event either party hereto is rendered unable,
by reason of force majeure, to carry out in whole or in part
its obligations under this Customer Contract, other than the
obligation to make payments of moneys due hereunder, such party
shall give notice and full particulars of such force majeure
in writing or by telegraph to the other party within a
reasonable time, but not in excess of ten (10) days, after the
occurrence of said force majeure and the determination of the
cause relied upon, and if such notice is given, the obligations
of such party shall, insofar as they are affected by such
force majeure, 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
include causes not reasonably within the control of the party
claiming suspension and which such party is unable to prevent
or overcome by the exercise of reasonable diligence, including
strikes, lockouts or
blockades, insurrection
landslides, lightning,
other industrial
disturbances; wars,
or acts of the public enemy; epidemics,
earthquakes,
fires, storms, floods,
washouts or other acts of God; arrests and restraints of
governments and people; federal, state or local laws, rules or
regulations, acts, orders, directives, requisitions or requests
of any official Cr agency of the federal, state or local
governments (whether civil or military); rationing of,
-15-
O6 0U.c'
shortages of or inability to obtain or to use any material or
equipment; riots or civil disturbances; fires, explosions,
failures, disruptions, breakdowns or accidents to machinery,
wells, facilities or lines of pipe; freezing of wells or
pipelines;
embargoes, priorities or expropriations by
government or governmental authorities; interference by civil
or military authorities, legal or de facto, whether purporting
to act under some constitution, decree, law or otherwise; or
any other cause, whether of the kind herein enumerated or
otherwise, which is not reasonably within the control of the
party claiming suspension and which such party is unable to
prevent or overcome by the exercise 'of reasonable diligence.
Such term shall likewise include: (a) delays in acquiring or
inability to acquire, at reasonable costs and after exercising
reasonable diligence, any contractual rights, servitudes,
rights-of-way, permits or licenses necessary to enable a party
to fulfill its obligations hereunder; (b) the inability of a
party to acquire, or delays on the part of such party in
acquiring, at reasonable cost and after exercising reasonable
diligence, such materials or supplies or governmental permits
or permissions as are necessary to enable such party to fulfill
its obligations hereunder; (c) as to Buyer, the inability of
Buyer to receive and use Gas in any plant or other facility
served at any Redelivery Point under its Gas Transportation
Agreement on any day or days as a result of shutting down or
curtailing operation of such plant or other facility to effect
scheduled maintenance operations thereon; and (d) as to Seller,
the unavailability of sufficient Gas on any day or days from
the Dedicated Wells and COGC Properties (collectively) to
supply the Total Daily Volume of Coastal Sale Gas for such day
or days as a result of any force majeure condition (as
hereinabove defined, but not including normal depletion of
producible reserves of Gas) affecting such Dedicated Wells or
COGC Properties (or any or all thereof) or the production and
-16-
L
delivery of Gas therefrom. It is understood and agreed that
reasonable diligence as used herein shall not require either
party to resort to litigation. 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 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 the
opposing party when such course is inadvisable in the sole
discretion of the party having the difficulty.
ARTICLE XII
WARRANTY OF TITLE TO GAS
Seller hereby warrants the title of each Coastal
Seller as to the Gas sold and delivered by such Coastal Seller
hereunder and the right of such Coastal Seller to sell the
same; and Seller warrants that all such Gas shall be owned by
such Coastal Seller and/or that such Coastal Seller will have
the right to market said Gas free from all liens and adverse
claims, including liens to secure payment of production taxes,
severance taxes and other taxes. As between Seller and Buyer,
Seller shall at all times have the obligation to make (or cause
to be made) settlements for all amounts and payments becoming
due to owners of Appurtenant Gas sold hereunder, and to make
settlements with all other persons having any interest in the
Gas sold 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 the title to
the Gas passes to Buyer. Buyer may, at any time when it
appears to Buyer that the ownership or title to all or part of
said Gas may be in a party or parties other than a Coastal
Seller or owner of an Appurtenant Interest or upon learning of
-17-
0620 U.C.
any other claims, liens, taxes, royalties, fees, expenses or
other adverse claims, retain as security for the performance of
Seller's obligations with respect hereto the entire purchase
price of the Gas until (a) Buyer has thus retained an amount
equal to the full amount of such adverse ownership interest or
claim as determined by Buyer in i..s good' faith discretion, or
(b) such adverse ownership interest or claim has been finally
resolved and settled to Buyer's reasonable satisfaction, or
(c) Seller shall have furnished bond to Buyer in an amount and
with sureties satisfactory to Buyer, conditioned upon the
protection of Buyer with respect to such adverse ownership
interest or claim.
ARTICLE XIII
TERM
1. This Customer Contract shall be effective from
7:00 a.m. on the Effective Date and shall continue and remain
in full force and effect for a period of six (6) years until
7:00 a.m. on the sixth (6th) anniversary of such Effective
Date, unless the term hereof is sooner terminated under the
provisions of paragraph 2 or paragraph 4 of this Article XIII.'
2. It is agreed and stipulated that the term of this
Customer Contract may be terminated by written notice from
Seller to Buyer as follows:
a. If (i) no amount of Coastal Sale Gas Is
deemed delivered to and purchased by Buyer pursuant to
Section 3.05 and, if applicable, Section 3.09 of the
Gas Search Amendment during any one full calendar
month after the Effective Date, and (ii) Buyer is not
wholly excused from taking delivery of and purchasing
Coastal Sale Gas during such entire month by force
majeure, then the term of this Customer Contract may
be terminated by written notice given by Seller to
Buyer within sixty (60) days after the end of such
month, effective as of the date of giving of such
notice; or
b. If the total MMBtu's of Coastal Sale Gas
deemed delivered to and purchased by Buyer pursuant to
Section 3.05 and, if applicable, Section 3.09 of the
Gas Search Amendment during any period of six (6)
consecutive months after the Effective Date shall be
less than eighty-five (85) percent of the sum of the
Monthly Contract Quantities of Buyer for such six (6)
months, then the term of this Customer Contract may be
-18-
06.2A U C'
terminated by written notice given by Seller to Buyer
within sixty (60) days after the end of such six (6)
months' period, effective as of the date of giving of
such notice; or
c. If Buyer fails to make payment of any amount
owing to Seller or any other Coastal Seller for any
Gas deemed delivered to and purchased by Buyer under
this Customer Contract which is not then disputed in
good faith by Buyer as permitted under paragraph 2 of
Article VIII hereof, within thirty (30) days after the
due date of such undisputed amount under the
provisions of said paragraph 2 of Article VIII hereof,
Seller may give written notice of proposed termination
to Buyer, specifying the undisputed amount thus due
and unpaid by Buyer for such Gas, and the term of this
Customer Contract will terminate on the thirtieth
(30th) day after such notice is given by Seller to
Buyer (or such later date as is specified in such
notice) unless, prior to such termination, Buyer has
paid Seller or any applicable Coastal Seller such
undisputed amount due by Buyer for such Gas.
3. Failure of Seller to exercise a right to terminate
this Customer Contract arising under any of the provisions of
paragraph 2 of this Article XIII shall not waive or affect
Seller's right to terminate this Customer Contract on any other
or subsequent occasion when such right arises or exists under
the terms and provisions of said paragraph 2. Termination of
this Customer Contract pursuant to paragraph 2 of this
Article XIII shall not in anywise waive or release any claim,
liability or right of either Seller or Buyer arising prior to
such termination. It is expressly stipulated in this regard,
however, that under no circumstances shall Buyer be liable to
Seller for failure or refusal to accept delivery of or purchase
any amount of Gas hereunder at any time or times.
4. It is agreed and stipulated that the term of this
Customer Contract may be terminated by written notice (a
"Material Default Notice") from Buyer to Seller as follows:
a. If (i) no amount of Coastal Sale Gas is
tendered by any Coastal Seller for delivery to Lo -Vaca
at any Delivery Point for sale to Participating
Customers during any one full calendar month after the
Effective Date and prior to termination of the term of
this Customer Contract pursuant to paragraph 1 or
paragraph 2 of this Article XIII, and (ii) Seller is
not wholly excused from tendering delivery of Coastal
Sale Gas to Lo -Vaca for sale to Buyer during such
entire month by force majeure, such occurrence shall
be deemed to constitute a "Material Default" by Seller
with respect to its obligations under this Customer
-19-
062.013.C:
Contract to sell and deliver Coastal Sale Gas to Buyer
during (but only during)such entire month, and the
term of this Customer Contract may be terminated by a
Material Default Notice given by Buyer to Seller
within sixty (60) days after the end of such month,
effective as of the date of giving of such Material
Default Notice; or
b. If the total Mcf's of Coastal Sale Gas
tendered by all Coastal Sellers for delivery to
Lo-Jaca at all Delivery Points for sale to
Participating Customers during any period of six (6)
consecutive months after the Effective Date and prior
to termination of the term of this Customer Contract
pursuant to paragraph 1 or paragraph 2 of this
Article XIII shall be less than eighty-five percent
(85%) of a total number of Mcf's of gas calculated (in
the aggregate for all Participating Customers and for
all days of such entire six-month period) by adding
the number of Mcf's of gas determined separately for
each day and separately for each Participating
Customer whose Customer Contract has not terminated
prior to commencement of such six (6) month's period,
by application of the following formula:
with:
(A minus B) plus C, minus D
E
A being the Daily MMBtu Contract Quantity of a
Participating Customer for a day during
which its Customer Contract remains in force
and effect;
B being equal to the excess, if. any, of A
above the total number, if any, of MMBtu's
of Coastal Sale Gas which Lo -Vaca delivered
to such Participating Customer at all
Redelivery Points under and pursuant to its
Gas Transportation Agreement on such day (in
excess of all Other Transportation Gas
Volume delivered to such Participating
Customer on such day);
C being equal to the total number, if any, of
MMBtu's of Coastal Sale Gas which such
Participating Customer requested that
Lo -Vaca deliver to it (and would have been
able to take and use if delivered) at all
Redelivery Points under and pursuant to its
Gas Transportation Agreement on such day and
which Lo -Vaca declined to deliver to such
Participating Customer on such day in the
proper exercise of its right to so decline
pursuant to and as provided for in
Section 3.09 of the Gas Search Amendment;
provided that in no event shall C exceed B;
D being equal to such Participating Customer's
Customer Fraction of a number of MMBtu's
determined by multiplying the Btu Factor for
the then current month times the total
number of Mcf's, if any, of Coastal Sale Gas
(less than the Total Daily Volume for such
day) which Seller was excused by force
majeure from tendering at Delivery Points
-20-
for delivery to Participating Customers on
such day pursuant to the Customer Contracts
of all such Participating Customers; and
E being the Btu Factor for the month including
such day,
then such occurrence shall be deemed to constitute a
"Material Default" by Seller with respect to its
obligations under this Customer Contract to sell and
deliver Coastal Sale Gas to B“yer during (but only
during) such entire six (6) months' period, and the
term of this Customer Contract may be terminated by a
Material Default Notice given by Buyer to Seller
within sixty (60) days after the end of such six (6)
months' period, effective as of the date of giving of
such Material Default Notice.
5. If the term of this Customer Contract is
terminated by a Material Default Notice given by Buyer to
Seller pursuant to and as authorized in paragraph 4 of this
Article XIII, then it is agreed and stipulated that Seller
shall pay to Buyer, within ten (10) days after receipt of such
Material Default Notice, the "Liquidated Damages Amount”
(determined as below provided) as substitute consideration for
termination of the gas search program under the Gas Search
Agreement pursuant to the Amendment Agreement and as agreed,
stipulated, liquidated damages, which shall constitute and be
accepted by Buyer as full and complete compensation and payment
for and in full and complete satisfaction of all claims and
rights of Buyer against Seller for damages (whether actual or
punitive and whether direct or indirect or consequential) or
other relief for termination of this Customer Contract and for
the Material Default which gave rise to such Material Default
Notice and as substitute consideration for termination of the
gas search program under the Gas Search Agreement pursuant to
the Amendment Agreement. As used herein, the "Liquidated
Damages Amount" shall be a dollar amount determined as of the
date of termination of the term of this Customer Contract
pursuant to paragraph 4 of this Article XIII, by application of
the following formula:
with:
A times B times C
-21-
062.0U.C•
A being $90,000,000;
B being a fraction having "40,000" as its
denominator and having as it numerator a number
equal to the number of Mcf's constituting the
Daily Contract Quantity as specified in
paragraph 8 of Article XIV below;
C being a fraction determined as of the applicable
date of termination, as follows:
(1) from the Effective Date for one (1) year to
the first anniversary date of the Effective
Date --"12/12,"
(2) from the first anniversary of the Effective
Date to the second anniversary of the
Effective Date --"11/12,"
(3) from the second anniversary of the Effective
Date to the third anniversary of the
Effective'Date--"10/12,"
(4) from the third anniversary of the Effective
Date to the fourth anniversary of the
Effective Date --"9/12,"
(5) from the fourth anniversary of the Effective
Date to the fifth anniversary of the
Effective Date --"8/12," and
(6) from the fifth anniversary of the Effective
Date to the end of the six (6) year term
hereof --"7/12."
6. Buyer's only remedy for any Material Default by
Seller shall be to terminate this Customer Contract and require
payment by Seller of the Liquidated Damages Amount as provided
for in paragraphs 4 and 5 of this Article XIII; and if Buyer
shall fail to give a Material Default Notice within the time
specified in said paragraph 4 after any. Material Default by
Seller, Buyer shall be conclusively deemed and considered to
have waived such particular Material Default, but the waiver by
Buyer of any one or more Material Defaults shall not deprive
Buyer of the right, at its election, to give a Material Default
Notice and require payment of the Liquidated Damages Amount
with respect to any other Material Default by Seller. It is,
however, expressly stipulated that in the event of any other
default by Seller (a "Non -Material Default") in performing its
obligations or agreements under this Customer Contract which
does not constitute (and is not encompassed within) a Material
-22-
6620U...C.
Default, Buyer shall be entitled to recover appropriate
damages, if any, or exercise any other appropriate right or
remedy available under applicable law for and with respect to
such Non -Material Default. Neither the termination of this
Customer Contract by giving of a Material Default Notice
pursuant to paragraph 4 above, the paymE:::: by Seller to Buyer
of the Liquidated Damages Amount on account of a" Material
Default pursuant to paragraph 5 above, nor the waiver by Buyer
of a Material Default pursuant to this paragraph 6 shall in
anywise terminate, waive, release, affect or impair Buyer's
right to recover appropriate damages, if any, or enforce any
other appropriate right or remedy against Seller available
under applicable law for and with respect to any Non -Material
Default occurring at any time or times prior to termination of
this Customer Contract.
ARTICLE XIV
MISCELLANEOUS
1. No waiver by either Seller or Buyer of any default
of the other under this Customer Contract shall operate as a
waiver of any future default, whether of like or different
character or nature, nor shall any failure to exercise any
right hereunder be considered as a waiver of such right in the
future, except as otherwise provided in Paragraph 6 of
Article XIII above.
2. Respecting the rights of third parties hereunder:
a. This Customer 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; provided that:
(i) No assignment of this Customer Contract
by either party hereto shall in any way operate
to enlarge, alter or change any obligation or
right of the other party hereto;
(ii) No such assignment shall in any way
operate to release or relieve the assigning party
from continuing liability and responsibility for
the performance by its assignee of all
obligations, duties and agreements of the
assigning party under this Customer Contract for
-23-
06 Z0U.C•
and during the remainder of the term of this
Customer Contract;
(iii) The rights and obligations of the
Buyer under this Customer Contract may not be
assigned to any person other than a "Permitted
Assignee" (as below defined) without the prior
written consent of Seller;
(iv) No assignment of the rights and
obligations of either party under• this Customer
Contract shall be binding upon the other party
hereto until such other party has received
written notice and• a signed copy of such
assignment including an agreement by the assignee
to assume and perform the obligations, duties and
agreements of the assigning party under this
Customer Contract; and
(v) As used herein, a "Permitted Assignee"
shall include and be such one person selected by
Buyer on one occasion to whom the entire rights
and obligations of Buyer under this Customer
Contract are assigned; and further, if the rights
and obligations of the Buyer under this Customer
Contract are assigned to a Permitted Assignee as
defined above in this subparagraph (v), the
person which was originally named in and executed
this Customer Contract as "Buyer" shall be deemed
a "Permitted Assignee" to whom the rights and
obligations of the "Buyer" under this Customer
Contract may be reassigned at any time by such
first Permitted Assignee.
b. Nothing in this Customer Contract, express or
implied, -confers any right or remedies on any person
or entity not a party hereto other than successors and
assigns or heirs, administrators or executors of the
parties hereto; provided that Lo -Vaca shall be
entitled. to enforce the indemnification agreement of
Seller set forth in paragraph 3 of Article II hereof.
3. Seller expressly does not by the terms of this
Customer Contract sell, transfer or assign unto Buyer any title
or interest whatsoever in the leases or any pipe, meter, lines
or other equipment of any nature owned or used by any Coastal
Seller in the operation of its system and leases.
4. Any notice, request, demand, statement or payment
provided for in this Customer Contract, except as otherwise
herein provided, shall be given in writing, delivered in person
or by United States mail, to Buyer or Seller at the addresses
shown below their signature hereto or at such other addresses
as may be hereafter furnished to the other party in writing.
5. As reflected in the Gas Search Amendment, it is
recognized that Gas to be sold and delivered to Delivery Points
-24-
06 r°U.0 .
hereunder may be provided by any Coastal Seller or Coastal
Sellers, but that, subject to the terms and provisions hereof,
the Seller named herein shall have and continue to have full
corporate responsibility for the sale and delivery of the
volumes of Gas herein provided to be sold and delivered to
Delivery Points to the extent such Gas is r.ot so sold and
delivered by Coastal Sellers other than such named Seller.
6. Buyer hereby appoints and designates Seller as
Buyer's agent and attorney in fact with full power and
authority, on behalf of and in the name of Buyer, to prepare,
execute and file with the Railroad Commission of the State of
Texas or any other appropriate governmental agency or
regulatory authority nominations for purchase and any other
notices or statements as may be required or appropriate from
time to time to evidence the desire of Buyer to purchase up to
the Daily Contract Quantity on each day of the term of this
Customer Contract from . the Dedicated Wells and from any
additional wells or fields from which Coastal Sellers propose
to produce Coastal Sale Gas for sale to Buyer hereunder, as may
be appropriate or necessary to obtain, to the extent possible,
production allowables and regulatory approval for the
production of Coastal Sale Gas by Coastal Sellers for sale
hereunder. The power of attorney herein granted by Buyer to
Coastal is coupled with an interest and shall be irrevocable
during the term of this Customer Contract.
7. As contemplated in Section 3.02(a) of the Gas
Search Amendment, Buyer stipulates that the "Daily Maximum" for
purposes of this Customer Contract shall be 7,000 Mcf's.
8. As contemplated in Section 3.03 of the Gas Search
Amendment, it is stipulated and provided that the Daily
Contract Quantity under this Customer Contract, calculated in
the manner provided in said Section 3.03 of the Gas Search
Amendment, shall be Mcf's.
-25-
•
0620U.0
9. The parties hereto agree and confirm that in the
consideration and interpretation of this Customer Contract same
shall be construed under the laws of the State of Texas and
that this Customer Contract was prepared jointly for both
parties hereto and not by one party to the exclusion of the
other.
IN WITNESS WHEREOF, the parties have executed this
Customer Contract in multiple copies or counterparts, each of
which when executed by Buyer and Seller shall constitute and be
an original effective contract between Buyer and Seller and all
of which shall constitute but one and the same contract and
agreement.
BUYER SELLER
NAME: THE COASTAL CORPORATION
City of Corpus Christi
By By
City Manager
ADDRESS: ADDRESS:
302 S. Shoreline The Coastal Tower
P.O. Box 9277 Nine Greenway Plaza
Corpus Christi, Texas 78469 Houston, Texas 77046-0995
ATTEST:
City Secretary
Approved day of December 1986.
City Attorney
-26-
0618U.0
GAS TRANSPORTATION AGREEMENT
City of Corpus Christi
"SHIPPER,"
AND
VALERO TRANSMISSION COMPANY
O6 1 B U. C
GAS TRANSPORTATION AGREEMENT
Index
Article Contents Page
I. GENERAL 4
II. DEFINITIONS 6
III. QUANTITY, DELIVERY POINTS AND
REDELIVERY POINTS 8
IV. PRESSURE 10
V. QUALITY 11
VI. MEASUREMENT 12
VII. DELIVERIES 16
VIII. TRANSPORTATION FEE 17
IX. ACCOUNTING AND BILLING 17
X. TAXES 18
XI. TERM 18
XII. FORCE MAJEURE 19
XIII. WARRANTY OF TITLE 20
XIV MISCELLANEOUS 20
06IaU.0
GAS TRANSPORTATION AGREEMENT
THIS AGREEMENT is made and entered into to be
effective as of the Effective Date defined below, by and
between VALERO TRANSMISSION COMPANY, a Delaware corporation,
herein called "Valero," and the undersigned "Shipper,"
WITNESSETH:
WHEREAS, Shipper, as Buyer, and The Coastal
Corporation ("Coastal"), as Seller, have entered into a certain
"Customer Contract" becoming effective on the Effective Date
pursuant to which Shipper may purchase certain volumes of Gas
from Coastal or other Coastal Sellers during the term of
Customer Contract;
WHEREAS, the aforesaid Customer Contract was entered
into as contemplated and provided for under the terms of that
certain Amendment of Gas Search Agreement, Gas Availability
Agreement and Exploration and Development Agreement (the "Gas
Search Amendment") between and among Coastal, Valero Energy
such
Corporation,
as Trustee,
Corporation
Valero, Texas Commerce Bank, National Association,
Border Exploration Company, Coastal Oil & Gas,
and Coastal Limited Ventures, Inc., becoming
effective as of the Effective Date and to which reference is
here made for all purposes; and
WHEREAS, as contemplated in the Gas Search Amendment,
Shipper and Valero have entered into this Gas Transportation
Agreement (herein called "this Agreement") to provide for the
receipt by Valero into its gas pipeline system of Coastal Sale
Gas delivered by Coastal Sellers for sale to Shipper pursuant
to the aforesaid Customer Contract and the transportation of
such Gas by Valero to Shipper;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements herein contained, Valero
and Shipper hereby covenant and agree as follows:
0610(1. C.
ARTICLE I
GENERAL
1. Shipper represents and warrants to Valero that all
Gas which Shipper delivers or causes to be delivered hereunder
will be owned by Shipper and will have been produced from
reserves not "committed or dedicated to interstate commerce,"
within the meaning of section 2(18) of the Natural Gas Policy
Act of 1978 (herein called "NGPA"); provided, however, that Gas
which is produced from reserves that are "committed or
dedicated to interstate commerce" may be delivered if any
required abandonment authority under the Natural Gas Act of
1938 (herein called "NGA") has been obtained first or if such
Gas is Gas defined in section 601(a)(1)(B)(i)-(iii) of the
NGPA. Shipper agrees that, unless Valero shall otherwise agree
in writing, it will not make any transportation arrangements
with respect to the Gas involved herein which would subject
Valero or any Lo -Vaca Affiliate, or its facilities to the
"nondiscriminatory access to self -implementing transportation
services" provisions under section 311 of the NGPA or any
orders or regulations thereunder, including but not limited to'
Federal Energy Regulatory Commission (herein called "FERC")
Order No. 436 and FERC Order No. 436-A and their regulations
thereunder; provided, however, that if Valero or a Lo -Vaca
Affiliate otherwise subjects itself, or its facilities, to such
provision, then this limitation shall no longer apply. Shipper
agrees to indemnify and hold Valero harmless from and against
any and all consequences, suits, actions, damages, costs,
losses and expenses of any kind or nature sustained by Valero
relative to any breach by Shipper of the covenants expressed in
this paragraph.
2. Valero represents and warrants to Shipper that all
Gas which Shipper delivers or causes to be delivered to Valero
or which Valero redelivers to Shipper or to Shipper's designee
for Shipper's account hereunder will not be or have been
-2-
06100. C
commingled at any point upstream from the Redelivery Point with
other Gas which is or may be sold, consumed, transported,
exchanged or otherwise utilized in interstate commerce in such
a manner which will subject the Gas subject to this Agreement,
Shipper, its suppliers or its designee, or their pipeline
system, or any portion thereof, to the jurisdiction of the
FERC, or any successor authority, under the NGA or the
"nondiscriminatory access to self -implementing transportation
services" provisions under section 311 of the NGPA or any
orders or regulations thereunder, including but not limited to
FERC Order No. 436 and FERC Order No. 436-A and their
regulations thereunder; provided, however, that if Shipper or
its suppliers or its designee otherwise subjects itself, or its
facilities, to such provision, then this limitation shall no
longer apply. Valero agrees to indemnify and hold Shipper
harmless from and against any and all consequences, suits,
actions, damages, costs, losses and expenses of any kind or
nature sustained by Shipper relative to any breach by Valero of
the covenants expressed in this paragraph.
3. Shipper recognizes that the capacity in Valero's
gas pipeline system (the "Valero System") must first be used to
meet its Gas sales to its customers; therefore, all Gas
tendered by Shipper shall be subject to Valero having
sufficient remaining existing capacity in the Valero System to
transport such Gas. In the event Valero encounters capacity
problems in meeting contractual obligations to its customers,
Shipper shall share existing pipeline capacity on a pro rata
basis with other firm transport customers bf the same class of
service. Valero shall be under no obligation to construct
additional pipeline or compression facilities for the receipt,
transportation or redelivery of Transport Gas hereunder.
Subject to the provisions of the Gas Search Amendment, Shipper
may, however, use existing capacity rights under any Gas Sales
-3-
0 6 1 a U. C •
Agreement now existing between Valero and Shipper for delivery
of Transport Gas.
ARTICLE II
DEFINITIONS
In addition to the terms elsewhere defined herein, for
the purpose of this Agreement, unless the context of this
Agreement requires otherwise, the following definitions shall
be applicable:
1. "British Thermal Unit," herein called "Btu," shall
mean the amount of heat required to raise the temperature of
one (1) pound of water, herein called "H20," one (1) degree
Fahrenheit from fifty-eight and five -tenths (58.5) degrees
Fahrenheit to fifty-nine and five -tenths (59.5) degrees
Fahrenheit.
2. "Cubic foot of Gas" shall mean the volume of Gas
contained in one (1) cubic foot of space at a standard pressure'
of fourteen and sixty-five/one hundredths (14.65) psia and a
standard temperature of sixty (60) degrees Fahrenheit.
3. "Day" shall mean the period commencing at 7:00
a.m. local time on any calendar day and ending at 7:00 a.m.
local time on the following calendar day.
4. "Delivery Points" shall mean the places of
delivery of Transport Gas from Coastal Sellers to Valero for
redelivery to Shipper as described in paragraph 1 of
Article III of this Agreement.
5. "Effective Date" shall have the meaning specified
in Section 7.03 of the Gas Search Amendment. As provided in
Section 7.03 of the Gas Search Amendment, if the Effective Date
does not occur and the Gas Search Amendment terminates pursuant
to said Section 7.03, this Gas Transportation Agreement will
likewise terminate and be void and of no force or effect upon
termination of said Gas Search Amendment.
-4-
0618U.0
6. "Gas" shall mean natural gas, including gas well
gas, casinghead gas or the residue gas resulting from
processing either casinghead gas or gas well gas.
7. "Gross Heating Value" shall mean the number of
Btu's liberated by the complete combustion at constant pressure
of one (1) cubic foot of Gas, at a base temperature of sixty
(60) degrees Fahrenheit and a reference pressure base equal to
fourteen and sixty-five/one hundredths (14.65) psia, with air
of the temperature and pressure of the Gas, after the products
of combustion are cooled to the initial temperature of the Gas,
and after the H2O of the combustion is condensed to the
liquid state, corrected for the H2O vapor content of the Gas
being tested, except that if the H2O vapor content is seven
(7) pounds or less per one million (1,000,000) cubic feet, the
Gas shall be assumed to be dry.
8. "Mcf" shall mean one thousand (1,000) cubic feet.
9. "MMBtu" shall mean a quantity of Gas having a
Gross Heating Value of one million (1,000,000) Btu's.
10. "Month" shall mean the period beginning at 7:00
a.m. local time on the first (1st) day of a calendar month and
ending at 7:00 a.m. local time on the first (1st) day of the
next succeeding calendar month.
11. "Psia" shall mean pounds per square inch,
absolute.
12. "Psig" shall mean pounds per square inch, gauge.
13. "Redelivery Points" shall mean the point or
points designated by agreement of Shipper and Valero pursuant
to paragraph 2 of Article III of this Agreement at which
Transport Gas is to be redelivered by Valero to Shipper
hereunder.
14. "Transport Gas" shall mean Coastal Sale Gas
delivered or caused to be delivered by Coastal Sellers to
Valero at the Delivery Points on the Valero System, as it
exists from time to time, for transportation by Valero and
-5-
061 8 U. C
delivery by Valero at the Redelivery Points under this
Agreement; provided, however, it is understood and agreed that
the Gas delivered at the Redelivery Points may not be Transport
Gas in kind, but that the Transport Gas will be part of the
commingled delivery of Gas and, for all purposes hereunder, the
commingled Gas can be substituted for Transport Gas on a
heat -equivalent basis.
Unless otherwise specifically stated herein, all terms
defined in the Gas Search Amendment shall have the meaning
therein specified when used in this Agreement.
ARTICLE III
QUANTITY, DELIVERY POINTS AND REDELIVERY POINTS
1. The Delivery Points for all Transport Gas
delivered or caused to be delivered by Coastal Sellers to
Valero for transportation hereunder shall be as follows:
a. All delivery points for the delivery of Gas
to the buyer provided for in each of the Seller's
Contracts and Section 4.06 Contracts referred to and
identified in the Gas Search Amendment;
b. All delivery points for the delivery of Gas
to the buyer provided for in each of the existing gas
purchase contracts between COGC and Valero covering
the COGC Properties from which Valero has agreed to
release Gas to enable COGC to sell Coastal Sale Gas to
Participating Customers as recited in Section 6.04 of
the Gas Search Amendment; and
c. All additional points, if any, on the Valero
System at which Valero and a Coastal Seller shall
hereafter mutually agree that Transport Gas may be
delivered to Valero for redelivery to Shipper
hereunder, it being stipulated that Valero will not
unreasonably withhold approval of any such additional
delivery point requested by a Coastal Seller from time
to time; provided that such Coastal Seller shall be
required to reimburse Valero for the cost of acquiring
and installing any new measuring devices or facilities
required to be installed at any such additional
delivery point; provided, further, that when any such
additional Delivery Point ceases to be used for
delivery of gas to Valero by such Coastal Seller,
Valero shall refund to such Coastal Seller the salvage
value of such measuring devices or facilities which
Valero sells or continues to use at the same location
or elsewhere on the Valero System, except any item or
items of such measuring devices or facilities which
are moved to an additional Delivery Point requested by
a Coastal Seller hereunder, as to which Valero shall
omit a charge for such item or items from its bill to
such Coastal Seller under this paragraph c for
-6-
0 e{ e u. C
measurement devices or facilities installed at such
additional Delivery Point.
Valero agrees to receive into the Valero System up to the Daily
Contract Quantity (as specified in paragraph 5 of Article XIV
below) of Transport Gas per day at such Delivery Points for the
account of Shipper, subject to available pipeline capacity, as
determined in Valero's discretion, to be reasonably exercised.
2. The Redelivery Points for Gas redelivered by
Valero to or for the account of Shipper hereunder shall be at
measurement facilities now existing or to be installed at
interconnection(s) of the Valero System and Shipper's
facilities which shall be mutually agreed upon by Shipper and
Valero from time to time, it being stipulated that Valero will
not unreasonably withhold approval of any such redelivery point
requested by Shipper from time to time; provided that Shipper
shall be required to reimburse Valero for the cost of acquiring
and installing any new measuring devices or facilities required
to be installed at any such Redelivery Point; provided,
further, that when any such Redelivery Point for which Shipper
reimburses Valero for the cost of new measuring devices or,
facilities ceases to be used for delivery of gas from Valero to
Shipper (under this or any other agreement or arrangement),
Valero shall refund to Shipper the salvage value of such
measuring devices or facilities which Valero sells or continues
to use at the same location (for deliveries to persons other
than Shipper) or elsewhere on the Valero System, except any
item or items of such measuring devices or facilities which are
moved to an additional Redelivery Point requested by Shipper,
as to which Valero shall omit a charge for such item or items
from its bill to Shipper under this paragraph 2 for measurement
devices or facilities installed at such additional Redelivery
Point. In order to permit delivery of Gas from Valero to
Shipper to commence on the Effective Date, it is stipulated and
agreed that Valero and Shipper will mutually agree upon one or
0618U.0
more appropriate Redelivery Points including (unless otherwise
requested by Shipper) all presently existing interconnections
of the Valero System and Shipper's facilities (if any exist)
after execution of this Agreement by both parties and prior to
the Effective Date hereof.
3. All measuring facilities of Valero now existing or
hereafter installed by Valero at Delivery Points and Redelivery
Points shall be owned, maintained and operated by Valero or its
designee. It is understood that Shipper shall not own any
interest in any facilities heretofore or hereafter installed by
Valero or its designee.
ARTICLE IV
PRESSURE
1. The Gas delivered for Shipper's account at the
Delivery Points hereunder shall be delivered by Coastal Sellers
at a pressure sufficient to overcome the operating pressure
existing in Valero's facilities from time to time; provided,
however, in no event shall such delivery pressure exceed the
maximum operating pressure of the system receiving the Gas; and
provided, further, that such Coastal Sellers shall not be
required, unless they so elect, to deliver Gas at more than one
thousand fifty (1,050) psig. The Gas redelivered at the
Redelivery Points shall be delivered by Valero at the pressure
existing from time to time in Valero's facilities.
2. As between Shipper and Valero, the party in
possession or control of the Gas delivered hereunder shall be
responsible for any damage or injury caused thereby until the
Gas shall have been delivered or redelivered to the other party
or its designee at the Delivery Points and Redelivery Points;
provided, however, the parties hereto understand and
acknowledge that title to all Gas being transported hereunder
shall at all times remain with Shipper.
-8-
06160.0
ARTICLE V
QUALITY
1. The Gas as delivered at Delivery Points for
transportation hereunder shall be of such quality that it shall
meet the following specifications:
a. Contain not more than one-fourth (1/4) grain
of hydrogen sulfide or more than ten (10) grains of
total 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
when saturated with Hz0 vapor;
c. Have a temperature of not greater than one
hundred twenty (120) degrees Fahrenheit or less than
forty (40) degrees Fahrenheit;
d. Contain not more than three (3) percent by
volume of carbon dioxide, one (1) percent by volume of
oxygen or five (5) percent by volume of total inert
gas;
e. Be commercially free of all liquids,
suspended matters, dust, all gums and gum -forming
constituents, and other liquid or solid matter which
might become separated from the Gas in the course of
transportation through Lo-Vaca's pipeline or which
might cause injury to or interfere with the proper
operation of such pipeline; and
f. Contain not more than seven (7) pounds of
H2O vapor per one million (1,000,000) cubic feet.
2. The Gas redelivered hereunder shall meet those
quality specifications set forth in the existing gas sales
agreements, if any, between Valero and Shipper governing
deliveries of Gas from Valero to Shipper at Redelivery Points;
provided that, if no such gas sales agreement exists on the
Effective Date, the Gas redelivered hereunder shall meet the
quality specifications set forth in paragraph 1 of this
Article V.
3. In the event any Gas delivered or redelivered
hereunder should fail to meet the quality specifications stated
above, then the party receiving such Gas shall notify the other
party which shall make a diligent effort to correct the
situation. Either party shall have the right to refuse to
accept such Gas for so long as the other is unable to deliver
Gas conforming to such specifications, or may accept delivery
-9-
0 B I B U. C •
of such Gas or any part thereof during such period. A party's
acceptance of Gas that does not conform to the quality
specifications stated above shall not constitute a waiver of
such specifications by that party in regard to Gas delivered or
redelivered under this Agreement after such acceptance.
ARTICLE VI
MEASUREMENT
The volumes of Mcf's and MMBtu's of all Gas delivered
at Delivery Points under this Agreement shall be measured and
calculated in accordance with the succeeding paragraphs of this
Article VI. Likewise, unless otherwise specifically agreed in
writing between Shipper and Valero, the volumes of Mcf's and
MMBtu's of all Transport Gas redelivered at Redelivery Points
under this Agreement shall be measured and calculated in
accordance with the succeeding paragraphs of this Article VI.
1. The unit of volume for measurement of all Gas
delivered and redelivered hereunder shall be one (1) cubic foot
of Gas at a base temperature of sixty (60) degrees Fahrenheit
and at a pressure of fourteen and sixty-five/one 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).
2. All measurement facilities hereunder shall be
installed and 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 called "AGA") Report
Number 3 (ANSI/API 2530, First Edition), as it is now and from
time to time may be revised, amended or supplemented.
3. Valero agrees to install, maintain and operate, at
its own expense (except as provided in paragraph 1.c or
paragraph 2 of Article III above), or cause same to be done, a
measuring station located on the Valero System adjacent to each
Delivery Point and each Redelivery Point. Said measuring
-10-
0618U.0
stations shall be so equipped with orifice meters, recording
gauges or other types of measuring devices of standard make and
design commonly acceptable in the industry as to accomplish the
accurate measurement of Gas delivered and redelivered
hereunder. The changing of the charts and calibrating and
adjustment of meters shall be done by Valero or its designee.
Coastal and Shipper shall each 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 equipment used in measuring Gas
hereunder. The records from such measuring equipment shall
remain the property of Valero or its representatives, but upon
request, Valero will submit to Coastal or Shipper the records
and charts, together with calculations therefrom, subject to
their return within forty-five (45) days after receipt thereof,
after which the charts shall be retained for a period of two
(2) years.
At least once each calendar quarter or more often as
Valero may deem necessary, Valero shall calibrate the meters
and instruments or cause same to be calibrated. Valero shall
give Coastal and Shipper sufficient notice in advance of such
tests so that Coastal or Shipper may, at its or their election,
be present in person or by its or their representative to
observe adjustments, if any, which are made. For the purpose
of measurement and meter calibration, the atmospheric
(barometric) pressure shall be assumed, unless otherwise
determined by the Standard Gas Measurement Law, to be fourteen
and four -tenths (14.4) psia at the Delivery Points and
Redelivery Points, irrespective of variations in actual
atmospheric pressure from time to time.
4. Coastal or Shipper may, at its option and expense,
install check meters for checking Valero's metering equipment
at any Delivery Point or Redelivery Point; and same shall be so
-11-
0 6' 8 U. C
installed as not to interfere with the operation of Valero's
facilities.
5. The temperature of the Gas hereunder shall be
determined by the continuous use of a recording thermometer.
The temperature recorded each day, during periods of flow only,
shall be used in computing the Gas volume for that day.
6. The specific gravity of the Gas hereunder may, at
Valero's option, be determined by means of a recording
gravitometer. The 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 quarterly intervals or more often as Valero may
deem necessary, 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
applicable Delivery Points or Redelivery Points. 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. If spot samples are taken,
specific gravities so determined will be used in calculating
Gas deliveries hereunder for the month in which the test is
made and shall remain in effect until the month in which a new
sample is taken.
7. The Gross Heating Value of the Gas hereunder shall
be determined from time to time by means of a recording
calorimeter, employing the Thomas principle of calorimetry.
The arithmetical average of the hourly Gross Heating Value
recorded each day shall be considered as the heat content of
the Gas delivered or redelivered during such day. If a
recording calorimeter is not available, the Gross Heating Value
shall be determined at quarterly intervals or more often as
Valero may deem necessary by the use of a spot or continuous
sample taken at the applicable Delivery Points or Redelivery
-12-
0 6 1 8 U. C
Points. The Gross Heating Value of such sample shall be
obtained either by calorimeter or chromatographic analysis
using the value 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 now and from time to time may be
revised, amended or supplemented. If spot samples are taken,
the Gross Heating Value of the Gas hereunder shall be effective
for the month in- which the sample is taken and shall remain in
effect until the month in which a new sample is taken.
8. If, upon any test, the metering equipment in the
aggregate is found to be inaccurate by one (1) percent or more,
registration thereof and any payment based upon such
registration 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 day
last calibrated not to exceed 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 or redelivered
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
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 Coastal or Shipper installed
and registering;
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 or
redeliveries based upon preceding periods when gas was
-13-
06IaU.0 -
flowing under similar conditions and the meter was
registering accurately.
9. Measurements hereunder shall be corrected for
deviation from The Ideal Gas Laws, by use of tables or formulas
published by the AGA Par Research Project NX -19, corrected for
carbbn dioxide and nitrogei,.Determination' of the molecular
percentage of carbon dioxide and nitrogen in the Gas shall be
made within thirty (30) days after commencement ofdeliveries
at each Delivery Point and Redelivery Point and at least
quarterly thereafter or more often as Valero may deem
necessary. The molecular percentage of carbon dioxide and
nitrogen thus determined will be used to determine the
supercompressibility factors during the ensuing period until
the next test, with corrections for specific gravities,
temperatures and pressures under which Gas is delivered
hereunder.
10. The number of MMBtu's of Transport Gas which
shall be deemed and considered to be redelivered to Shipper at
Redelivery Points on each day of the term of this Agreement
shall be determined in accordance with the provisions of,
Section 3.05 and, if applicable, Section 3.09 of the Gas Search
Amendment.
ARTICLE VII
DELIVERIES
1. Subject to all other provisions of this Agreement,
Valero shall on each day redeliver to Shipper at the respective
Redelivery Points such number, if any, of MMBtu's of Transport
Gas as shall be requested by Shipper, up to the lesser of
(i) the Daily MMBtu Contract Quantity of Shipper for such day,
or (ii) such lesser maximum number of MMBtu's of available
Coastal Sale Gas which can be allocated to and deemed purchased
by Shipper on such day under the provisions of Section 3.09 of
the Gas Search Amendment.
-14-
0618U.0 •
2. Subject to the provisions of Section 3.05 and, if
applicable, Section 3.09 of the Gas Search Amendment, the Gas
to be transported hereunder shall be delivered and redelivered
as nearly as practicable at uniform hourly and daily rates of
flow.
ARTICLE VIII
TRANSPORTATION FEE
Shipper agrees to pay Valero a transportation fee of
fifteen (15) cents for each MMBtu of Transport Gas redelivered
at the Redelivery Points commencing as of the Effective Date.
ARTICLE IX
ACCOUNTING AND BILLING
On or before the twentieth (20th) working day of each
calendar month, Valero will render to Shipper a statement
setting forth the total quantity of Transport Gas, in terms of
Mcf and Btu, delivered for the account of Shipper at the
Delivery Points and redelivered at the Redelivery Points
hereunder, during the immediately preceding calendar month and
the amount of the transportation fee payable therefor. Shipper
agrees to pay Valero the full amount of transportation fee
payable according to such statement on or before the
twenty-fifth (25th) day of each month. If Shipper, in good
faith, disagrees with the amount of any invoice, Shipper shall
immediately notify Valero of such disagreement, so that the
difference may be resolved before the date for payment of such
invoice. If Shipper fails to give such notification, or if
Shipper and Valero do not resolve such disagreement before the
due date, the amount of the invoice not in dispute shall be
paid by Shipper on the due date, such payment to be subject to
adjustment, with interest as below provided, upon final
resolution of the disagreement. Any such adjustment shall bear
interest from the due date of the applicable statement until
paid at the lesser of 15% per annum or the applicable maximum
lawful rate. The remittance address shall be such address as
-15-
is reflected on Valero's statement from time to time. Shipper
or Coastal or its representative shall have the right at all
reasonable times to examine the books and records of Valero to
the extent necessary to verify the accuracy of any statement,
charge, computation or demand made under or pursuant to this
Agreement. Any statement shall be final as to all parties
unless questioned within two (2) years after payment thereof
has been made. Any notice, request, demand, statement, payment
or other correspondence shall be mailed to the post office
address of each of the parties hereto shown below their
signatures below or to such other post office address as such
party shall from time to time designate as the address for such
purpose, by certified letter addressed to the other party. The
mailing of notice by certified mail duly addressed and stamped
shall constitute service of notice hereunder.
ARTICLE X
TAXES
Each of the parties hereto shall respectively be
solely responsible for and agrees to hold the other harmless
from payment of all gross production, severance and all other
related taxes or charges of every kind and character required
by statute or by order of governmental authorities with respect
to all Gas delivered and redelivered hereunder prior to such
delivery or redelivery to the other party. Shipper agrees,
however, to reimburse Valero one hundred (100) percent of any
new or increased taxes that may hereafter be levied and paid by
Valero directly associated with the transportation or other
handling of Gas hereunder.
ARTICLE XI
TERM
This Agreement shall be effective from 7:00 a.m. local
time on the Effective Date and shall continue and remain in
full force and effect for a period of six (6) years until 7:00
a.m. local time on the sixth (6th) anniversary of such
-16-
0618U.0
Effective Date; provided that, if the term of the Customer
Contract between Coastal and Shipper terminates prior to such
date, the term of this Agreement will terminate on such earlier
date when the term of such Customer Contract terminates.
ARTICLE XII
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 which
such party is unable to prevent or overcome by the exercise of
reasonable diligence, including acts of God, strikes, lockouts
or other industrial disturbances, inability to obtain pipe or
other material or equipment or labor, wars, riots,
insurrections, epidemics, landslides, lightning, earthquakes,
fires, storms, floods, washouts, interruptions by government 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.
Such causes or contingencies affecting the performance
by either party, however, shall not relieve it of liability in
the event of its failure to use reasonable diligence to remedy
the situation and remove the cause in an adequate manner and
with all reasonable dispatch, nor shall such causes or
contingencies relieve either party of liability otherwise
unless such party shall give notice and full particulars of the
same in writing or by telegraph to the other party promptly,
but not in excess of ten (10) days, after the occurrence relied
on.
2. Effect of Force Majeure. In the event of either
Shipper or Valero being rendered unable by force majeure
-17-
06tau.0
affecting itself or a necessary third party to wholly or in
part carry out its obligations under the provisions of this
Agreement, it is agreed that the obligations of the party
affected by such force majeure, other than the obligation to
make payments hereunder, 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. Nothing contained herein,
however, shall be construed to require either party to settle
or compromise a strike or other labor dispute against its will.
ARTICLE XIII
WARRANTY OF TITLE
Each party hereby warrants title to all Gas delivered
or redelivered by it hereunder to, or for the account of, the
other party, that it has the right to deliver same and that
such Gas shall be free from all liens and adverse claims of
every kind. Each party will indemnify and save the other party
harmless against all loss, damage and expense of any character
with respect to the Gas delivered or redelivered by it for or
on account of royalties, taxes, payments or other charges
applicable before or upon delivery or redelivery of Gas
hereunder.
ARTICLE XIV
MISCELLANEOUS
1. This Agreement shall extend to and be binding upon
the successors and assigns of the respective parties hereto,
but no assignment or change of interest shall have the effect
of releasing the assigning party from any of its obligations
hereunder unless such release of said assigning party is
assented to in writing by the other party to whom the
obligations are owing hereunder, such agreement not to be
unreasonably withheld; provided that, unless the prior written
consent of Valero is first obtained, the rights and obligations
of Shipper under this Agreement may not be assigned to any
-18-
0618U.0
person other than a "Permitted Assignee" as defined in
paragraph 2 of Article XIV of the Customer Contract between
Coastal and Shipper to which the rights and obligations of the
"Buyer" under such Customer Contract have been assigned; and
provided, further, that no assignment of the rights or
obligations of either party under this Agreement shall be
binding upon the other party hereto until such other party has
received written notice and a signed copy of such assignment
including an agreement by the assignee to assume and perform
the obligations, duties and agreements of the assigning party
under this Agreement.
2. Mention is made of the fact that, under a Mortgage
and Deed of Trust dated as of June 15, 1963, as supplemented
and amended, Valero Natural Gas Company, together with Valero
Transmission Company, has assigned to 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 said Mortgage
and Deed of Trust.
3. The sidehead captions and the index of this
Agreement are for the convenience of the parties in
identification of the provisions hereof and shall not
constitute a part of this Agreement nor be considered
interpretive thereof.
4. This Agreement shall be construed under the laws
of the State of Texas. This Agreement and all operations
hereunder are subject to the applicable orders, rules and
regulations of the Railroad Commission of Texas and of any
other federal or state authority having or asserting
jurisdiction; provided that nothing herein shall be construed
as a waiver of any right to question or contest any such law,
order or regulation in any forum having jurisdiction in the
premises.
-19-
06IOU.0
5. As contemplated in Section 3.04 of the Gas Search
Amendment, it is stipulated and provided that the Daily
Contract Quantity under this Agreement, calculated in the
manner provided in Section 3.03 of the Gas Search Amendment,
shall be Mcf's.
IN WITNESS WHEREOF, the parties hereto have caused
this instrument to be executed in multiple copies or
counterparts, each of which when executed by their respective
representatives thereunto duly authorized shall constitute and
be an original effective agreement and all of which shall
constitute but one and the same agreement.
SHIPPER
ATTEST: NAME:
City Secretary
Approved this the
day of December 1986.
City Attorney
By
City of Corpus Christi
Name: Craig A. McDowell
Title: City Manager
ADDRESS:
302 S. Shoreline
P.O. Box 9277
Corpus Christi, Texas 78469
VALERO
VALERO TRANSMISSION COMPANY
By
Name: Leroy O. Lamprecht
Title: Senior Vice President
ADDRESS:
For Correspondence Purposes:
Valero Transmission Company
Gas Marketing Department
P. 0. Box 500
San Antonio, Texas 78292-0500
For Accounting Matters:
Valero Transmission Company
Volume Administration
P. 0. Box 500
San Antonio, Texas 78292-0500
-20-
Corpus Christi, T
/3,A day of
, 1982
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 CITY CORPUS CHRISTI, TEXAS
The above ordinance was passed by the following vote:
Luther Jones
Dr. Jack Best
David Berlanga, Sr.
Leo Guerrero
Joe McComb
Frank Mendez
Bill Pruet
Mary Pat Slavik
Linda Strong
19605
1