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HomeMy WebLinkAbout1998-280ORDINANCE NO It "011 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON TEXAS, APPROVING INTERRUPTIBLE NATURAL GAS SALES AND PURCHASE AGREEMENTS BETWEEN THE CITY OF,DENTON AND CROSSTEX ENERGY SERVICES INC AND ENERGY UNLIMITED INC FOR THE PURCHASE OF SPOT MARKET NATURAL GAS, AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR, AND PROVIDING AN EFFECTIVE DATE (BID # 2258 NATURAL GAS AWARDED TO CROSSTEX ENERGY SERVICES INC AND ENERGY UNLIMITED INC) WHEREAS, the City has a need for interruptible natural gas purchases to provide fuel for the Spencer Electrical Generating Station, and WHEREAS, the City could realize price savings by purchasing gas on the spot market and WHEREAS, the City has solicited bids for the attached contracts Exhibit "A & B" with spot market suppliers of natural gas, in accordance with Chapter 252 of the Local Government Code, NOW THEREFORE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION I That the Council authorizes the Mayor to execute the attached Interruptible Natural Gas Sales and Purchase Agreements with Crosstex Energy Services Inc and Energy Unlimited Inc providing for the purchase of spot market natural gas SECTION II That it authorizes the expenditure of funds in accordance with the terms of the Agreements SECTION III, That this ordinance shall become effective immediately upon its passage and approval PASSED AND APPROVED this the of-t day of 998 JAC LLER, MAYOR ATTEST JENNIFER WALTERS, CITY SECRETARY BY _ APPROVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY 2258 NATURAL GAS CONTRACT ORDINANCE EXHIBIT "A" Standard Contract Standard Contract City of Denton Utilities Interruptible Natural Gas Sales And Purchase Contract Agreement Date August 17, 1998 Partnership] Crosstex Energy Services Ltd(SELLER)a Texas Limited agrees to deliver and sell gas to the City of Denton, Texas (Buyer) and BUYER agrees to purchase and receive said natural gas from SELLER pursuant to the terms and conditions hereinafter set forth I. DEFINITIONS: The term "Agreement" shall mean this Interruptible Natural Gas Sales and Purchase Contract including Attachment A which is incorporated herein The term "month" shall mean a calendar month The term "MMBtu" shall mean one million (1,000,000) British thermal units The term "Receiving Pipeline" shall mean the interstate, intrastate, or local distribution company immediately downstream of the Point Of Delivery The term "Buyers Notice" shall mean the letter agreement a form copy of which is attached hereto as Attachment A, which may be executed by BUYER and SELLER from time to time and which shall bind BUYER and SELLER to particular transactions for the purchase and sale of natural gas in accordance with the terms thereof and this Agreement The term "Point Of Delivery" shall mean the location of the physical delivery to the Receiving Pipeline 2. TERM: The initial term will be one year from the date hereof, and month to month thereafter, subject to the right of either party to terminate this Contract on 30 day's prior written notice to the other party 3. PRICE AND PAYMENT OF COSTS AND TAXES PRIOR TO DELIVERY: On a monthly basis, the price to be paid by BUYER for gas delivered by SELLER shall be specified on the 'Buyers Notice" shown in Attachment A Prices shall include and SELLER shall be responsible for payment of all royalties, production taxes, property taxes, severance taxes, purchaser taxes, and all other taxes and license fees which attach to the gas prior to delivery hereunder Prices shall also include and SELLER shall be responsible for payment Of gathering and transportation charges to the Point Of Delivery, payments or other charges thereon applicable before the title of gas passes to BUYER at the Point Of Delivery BUYER shall pay transportation charges on the Receiving Pipeline, downstream of the Point Of Delivery 4. QUANTITY AND POINTS OF DELIVERY: Gas quantities and points of delivery will be specified on a monthly basis on the "Buyers Notice", as shown in Attachment A, signed by BUYER and by SELLER Requests for bids, submission of bids, or preliminary correspondence will not act as a Buyers Notice and shall not be the basis for gas deliveries under this contract SELLER shall deliver gas quantities consistent with the quantity, Point Of Delivery, Receiving Pipeline, and dates as specified in the 'Buyers Notice" from the BUYER 5. BEST EFFORTS PERFORMANCE: SELLER will make a best effort to deliver, and BUYER best effort to receive, the gas quantities as specified in the Buyers Notice Either parry may at any time curtail or interrupt service with no liability to either party The curtailing party will make diligent efforts to notify the other parry of the situation within 48 hours 6. INCREASES IN QUANTITY AND CHANGES TO POINTS OF DELIVERY: BUYER may request increases to gas quantities or changes in points of delivery by specifying these requests in a revised "Buyers Notice" to the SELLER If accepted by SELLER, SELLER shall make all arrangements needed to revise deliveries within 24 hours If SELLER wishes to increase gas quantities or change points of delivery, he must notify BUYER, and receive a revised Buyers Notice signed by BUYER to do so 7. OVER -DELIVERIES If SELLER provides gas quantities for a month in excess of 41/o above the quantities in the "Buyers Notice" or at points of delivery not specified in the 'Buyers Notice", BUYER shall have the right to refuse the quantities of gas and shall be exempt from any payments on those gas quantities SELLER shall be liable for any penalties or excess storage or transportation charges owed by the BUYER as a result of the SELLERS deliveries in excess of 4% of the Buyers Notice or at locations not spectfied in the 'Buyers Notice" S. GAS AND PRICE UNITS: All gas quantities and prices shall be in M VMtu adjusted to 14 650 psi, at a temperature of 60 degrees Fahrenheit, with both Mcf and Btu free of water vapor (Dry) Prices will be :n US dollars 9. QUALITY AND PRESSURE: The gas delivered by SELLER shall meet the pressure requirements and quality specifications of the Receiving Pipeline 10, TITLE: SELLER warrants for itself; its successors, heirs and assigns, title to all gas delivered ana accepted by BUYER hereunder SELLER warrants it has the right and lawful authonq to sell the gas and that such gas is free from liens, encumbrances and claims of every kind SELLER shall indemnify and save BUYER harmless from all suits, claims, liens, damages costs, losses, expenses and encumbrances of whatsoever nature ansmg out of claims of any or all persons to said gas or the title of said gas SELLER shall be in control and possession of and responsible for any risk of loss, damage, claim, liability or injury caused thereby until the gas has been delivered to the BUYER at the Point Of Delivery Title and risk of loss shall pass at the Point Of Delivery from SELLER to BUYER 11. DETERMINING PAYMENT VOLUMES: On approximately the 15th day following the end of each month of gas deliveries, SELLER shall furnish BUYER a statement specifying volume delivered, location, and Receiving Pipeline If these volumes differ from BUYER's independent monitoring of deliveries or Receiving Pipeline's records, BUYER shall have the right to pay on the undisputed amount either (t) under protest, or (h) upon final agreement being made on the delivered volumes by BUYER, SELLER and Receiving Pipeline BUYER and SELLER shall have the right to later revise payment volumes as a result of additional or revised volumetric data from the Receiving Pipeline or other companies associated with the production, sale, storage, or transportation of the gas 12. PAYMENT Within 12 days of receipt of the statement, BUYER shall make payment to SELLER for the gas quantities as determined in Paragraph 11 Payments statements should be directed to BUYER at City of Denton Utilities Electric Production Division 1701-A Spencer Road Denton, TX 76205 Ann Phil Reanaker Manager, Electric Production 13. NOTIFICATION: Communications regarding the performance of this contract shall be directed to SELLER BUYER Crosstex Energy Services, Inc 2501 Cedar Springs, Suite 600 Dallas, TX 75201 Attn. Gas Marketing 14. PERFORMING NOMINATIONS: City of Denton Utilities Electric Production Division 1701-A Spencer Road Denton, TX 76205 Atin Fhil Rennaker Manager, Electric Production BUYER will be solely responsible for nomination of gas volumes to the Receiving Pipeline, unless SELLER is given specific written authorization from BUYER to perform these nominations SELLER shall be responsible for all necessary nominations to transporters and all others related to the supply of natural gas prior to Point Of Delivery 15. EXCHANGE OF GAS QUANTITY INFORMATION: During the period of actual gas deliveries, SELLER and BUYER shall make available to each other current estimates of gas flows at the Pomt(s) of delivery under this agreement for the purposes of nomination to others and the monitoring of actual gas quantities delivered If Seller is unable to provide current estimates of gas activity to BUYER, SELLER will assist BUYER in obtaining said information finm pipeline transporters, processing plant operators, well operators, or upstream suppliers 16. GOVERNING STATE: This agreement shall be construed pursuant to the laws of the State of Texas and venue for its construction and enforcement shall Ire in the courts of Denton County, Texas SELLER BUYER Crosstex Energy Services,Ltd. by its General Partner, By Crosstex Energy Services, IRS, John W Daugherty Title Vice President Date August 17, 1998 Title Date ATTACHMENT A DENTON MUNICIPAL UTILITIES - SPENCER STATION 1 701 A SPPNezR RoAo DD=N, 7be" 76205 Fax 940-349-7555 Date: Firm Address Dear Below is a Buyers Notice for (month, year) supply to the City of Denton, Texas. Under this purchase the City of Denton, Texas, will take title to the gas at the point of delivery and be responsible for payments subject to the terms of the purchase contract BUYERS NOTICE GAS SALES AND PURCHASE AGREEMENT Buyers Notice Number: Contract Date: BUYER: City of Denton, SELLER: Electric Production Division All volumes and prices are based on mmBtu's, adjusted to 14 65 dry/dry Prices are in U.S. dollars. Dates for Point of delivery delivery Pipeline Volume (MmBtu/ 14.65 D/D) Lone Star Accepted and Agreed Accepted and Agreed (Seiler) (Buyer) Dated: Dated. Price (S/mmBtu 14.65 D/D) To facdltate payment, please sign the above Buyers Notice and return via fax, attn- Phil Renaaker EXHIBIT "B" Standard Contract Standard Contract City of Denton Utilities Interruptible Natural Gas Sales And Purchase Contract Agreement (SELLER) a TEXAS Corporation agrees to deliver and sell gas to the City of Denton, Texas (Buyer) and BUYER agrees to purchase and receive said natural gas from SELLER pursuant to the terns and conditions hereinafter set forth I. DEFINITIONS: The term "Agreement" shall mean this Interruptible Natural Gas Sales and Purchase Contract including Attachment A witch is incorporated herein The term "month" shall mean a calendar month The term WNMtu" shall mean one million (1,000,000) British thermal units The term "Receiving Pipeline" shall mean the interstate, intrastate, or local distribution company immediately downstream of the Point Of Delivery The tern "Buyers Notice" shall mean the letter agreement a form copy of which is attached hereto as Attachment A, winch may be executed by BUYER and SELLER from time to time and which shall bind BUYER and SELJ ER to particular transactions for the purchase and sale of natural gas in accordance with the terms thereof and this Agreement The term "Point Of Delivery" shall mean the location of the physical delivery to the Receiving Pipeline 2. TERM: The initial term will be one year tram the date hereof, and month to month thereafter, subject to the right of either parry to terminate this Contract on 30 dav's prior written notice to the other party 3. PRICE AND PAYMENT OF COSTS AND TAXES PRIOR TO DELIVERY. On a monthly basis, the price to be paid by BUYER for gas delivered by SELLER shall be specified on the "Buyers Nonce" shown in Attachment A Prices shall include and SELLER shall be responsible for payment of all royalties, production taxes, property taxes, severance taxes, purchaser taxes, and all other taxes and license fees which attach to the gas prior to delivery hereunder Prices shall also include and SELLER shall be responsible for payment of gathering and transportation charges to the Point Of Delivery, payments or other charges thereon applicable before the title of gas passes to BUYER at the Point Of Delivery BUYER shall pay transportation charges on the Receiving Pipeline, downstream of the Point Of Delivery 4. QUANTITY AND POINTS OF DELIVERY: Gas quantities and points of delivery will be specified on a monthly basis on the "Buvers Notice", as shown in Attachmem A, signed by BUYER and by SELLER Requests for bids submission of bids, or preliminary correspondence will not act as a Buyers Notice and shall not be the basis for gas deliveries under this contract SELLER shall deliver gas quantities consistent with the quantity, Point Of Delivery, Receiving Pipeline, and dates as specified in the "Buyers Notice" from the BUYER S. BEST EFFORTS PERFORMANCE: SELLER will make a best effort to deliver, and BUYER best effort to receive, the gas quantities as specified in the Buyers Nonce Either parry may at any tune curtail or interrupt service with no Lability to either party The curtailing parry will make diligent efforts to notify the other parry of the situation within 48 hours 6. INCREASES IN QUANTITY AND CHANGES TO POINTS OF DELIVERY: BUYER may request increases to gas quammes or changes in points of delivery by specifying these requests in a revised 'Buyers Nonce" to the SELLER If accepted by SELLER SELLER shall make all arrangements needed to revise deliveries within 24 hours If SELLER wishes to increase gas quantities or change points of delivery, he must notify BUYER and receive a revised Buvers Nonce signed by BUYER to do so 7. OVER -DELIVERIES If SELLER provides gas quantities for a month in excess of 4% above the quantities in the "Buvers Notice" or at points of delivery not specified in the 'Buyers Notice", BUYER shall have the right to refuse the quantities of gas and shall be exempt from anv payments on those gas quantities SELLER shall be liable for any penalties or excess storage or transportation charges owed by the BUYER as a result of the SELLERS deliveries in excess of 4% of the Buvers Notice or at locations not specified in the "Buvers Nonce" s. GAS AND PRICE UNITS: All gas quantities and prices shall be in MMBtu adjusted to 14 650 psi, at a temperature of 60 degrees Fahrenheit, with both Mcf and Btu free of water vapor (Dry) Prices will be in US dollars 9. QUALITY AND PRESSURE: The gas delivered by SELLER shall meet the pressure requirements and quality specifications of the Receiving Pipeline 10. TITLE: SELLER warrants for itself; its successors, heirs and assigns, title to all gas delivered ana accepted by BUYER hereunder SELLER warrants it has the right and lawful authonn to sell the gas and that such gas is free from liens, encumbrances and clauns of every kind SELLER shall mdeamify and save BUYER harmless from all suits, chums, hens, damages. costs, losses, expenses and encumbrances of whatsoever nature ansing out of clam of any or all persons to said gas or the title of said gas SELLER shall be in control and possession of and responsible for any risk of loss, damage, claim, liability or injury caused thereby until the gas has been delivered to the BUYER at the Point Of Delivery Title and risk of loss shall pass at the Point Of Delivery from SELLER to BUYER 11. DETERMINING PAYMENT VOLUMES: On approximately the 15th day following the end of each month of gas deliveries, SELLER shall furnish BUYER a statement specifying volume delivered, location, and Receiving Pipeline If these volumes differ from BUYER's independent monitoring of deliveries or Receiving Pipeline's records, BUYER shall have the right to pay on the undisputed amount either (i) under protest, or (d) upon final agreement being made on the delivered volumes by BUYER, SELLER and Receiving Pipelne. BUYER and SEId.ER shall have the right to later revise payment volumes as a result of additional or revised volumetric data from the Receiving Pipeline or other companies associated with the production, sale, storage, or transportation of the gas 12. PAYMENT Within 12 days of receipt of the statement. BUYER shall make pavment to SELLER for the gas quantities as determined in Paragraph 11 Payments statements should be directed to BUYER at City of Denton Utilities Electric Production Division 1701-A Spencer Road Denton. TX 76205 Attu Phil Rennaker .Manager, Electric Production 13. NOTIFICATION: Communications regarding the performance of this contract shall be directed to SELLER Energy Unlimited, ALWER 1601 Capital Ave, Ste 101 Plano, TX 75074 Attn: N Berthusen CEO 14. PERFORMING NOMINATIONS: City of Denton Utilities Electric Production Division 1701-A Spencer Road Denton. TX 76205 Attn Phil Rennaker Manager, Electric Production BUYER will be solely responsible for nomination of gas volumes to the Receiving Pipeline unless SELLER is given specific written authorization from BUYER to perform these nominations SELLER shall be responsible for all necessary nomminanons to transporters ana all others related to the supply of natural gas prior to Point Of Delivery IS. EXCHANGE OF GAS QUANTITY INFORMATION: During the period of actual gas deliveries, SELLER and BUYER shall make available to each other current estimates of gas flows at the Pomt(s) of delivery under this agreement for the purposes of nomination to others and the monitoring of actual gas quantities dehvered If Seller is unable to provide current estimates of gas activity to BUYER, SELLER will assist BUYER in obtaining said rtiformation from pipeline transporters, processing plant operators well operators, or upstream suppliers 16. GOVERNING STATE: This agreement shall be construed pursuant to the laws of the State of Texas and venue for its construction and enforcement shall lie in the courts of Denton Countv, Texas SELLER ENER Y UNLIMITED, INC BUYER By n Berthuse n By Title Chief Executive Officer Title Date August 18, 1998 Date ATTACHMENT A DENTON MUNICIPAL UTILITIES- SPENCER STATION 1 701 A SPENCER ROAD OWioN 7tuAs 76205 Fax 940-349-7555 Date: Firm Address Dear Below is a Buyers Notice for (month. year) supply to the City of Denton. Texas. Under this Purchase the City of Denton, Texas, will take title to the gas at the point of delivery and be responsible for payments subject to the terms of the purchase contract. BUYERS NOTICE GAS SALES AND PURCHASE AGREEMENT Buyers Nonce Number: Contract Date. BUYER: City of Denton, SELLER: Electric Production Division All volumes and prices are based on mmBtu's, adjusted to 14 65 dry/dry Prices are in U.S. dollars. Dates for Point of delivery delivery Pipeline Volume (MmBtu/ 14 65 D/D) Lone Star Accepted and Agreed Accepted and Agreed (Seller) (Buyer) Dated: Dated: Price (S/mmBtu 14 65 D/D) To facilitate pavment. please sign the above Buyers Notice and return via fax, attn- Phil RannaKer