1993-138E: \WPOOMORDVAURUS.O
ORDINANCE NO. 9J - J&O
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, AP-
PROVING AN INTERRUPTIBLE NATURAL GAS SALES AND PURCHASE AGREEMENT
BETWEEN THE CITY OF DENTON AND TAURUS ENERGY CORPORATION FOR THE
PURCHASE OF SPOT MARKET NATURAL GAS; AUTHORIZING THE EXPENDITURE OF
FUNDS; AND PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the City has a need for interruptible natural gas pur-
chases to provide fuel for the Spencer Electrical Generating
Station; and
WHEREAS, the City may realize price savings by purchasing gas
on the spot market; and
WHEREAS, the City has solicited bids for one year contracts
with spot market suppliers of natural gas, in accordance with Chap-
ter 252 of the Local Government Code; NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION I. That the City Council authorizes the Mayor to exe-
cute the attached Interruptible Natural Gas Sales and Purchase
Agreement with Taurus Energy Corporation providing for the purchase
of spot market natural gas.
SECTION II. That the expenditure of funds in accordance with
the terms of the Agreement is authorized.
SECTION III. That this ordinance shall become effective immed-
iately upon its passage and approval.
PASSED AND APPROVED this the ~ day of I
CASTLEBERRY,
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:
APPROVED AS TO LEGAL FORM:
DEBRA A. DRAYOVITCH, CITY ATTORNEY
BY :
1993.
July 20, 1993
CITY COUNCIL AGENDA ITEM
TO: MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Lloyd V. Harrell, City Manager
SUBJECT: ADDITIONAL NATURAL GAS SPOT SUPPLIER CONTRACTS
RECOMMENDATION:
The Public Utilities Board, at their meeting of June 9, 1993,
recommend approval of the contracts being executed with Taurus
Energy Corporation and Highland Energy Company for natural gas
spot supply.
SUMMARY:
Taurus and Highland have responded to requests for natural gas
spot supply per the "Standard Contract, City of Denton
Utilities". Both firms meet requirements of the City of
Denton, Electric Production Division, and Spot Fuel Purchase
Program for natural gas spot supply.
BACKGROUND:
In May 1992, the City of Denton instituted bidding procedures
for spot purchase of natural gas whereby contracts are
established with gas companies interested in participating in
the City's monthly spot gas purchase program. Contract format
was submitted to the Public Utility Board and City Council for
approval along with gas contracts completed with several
potential suppliers.
The Electric Utility currently has contracts for natural gas
spot supply with Enserch, Mobil, Trinity and Tristar. Those
contracts were executed approximately one (1) year ago and
will remain in effect until either party cancels. The
contracts will allow competitive bidding on a monthly basis.
Execution of additional contracts with Taurus and Highland
will extend the competitive opportunities for natural gas spot
supply.
PROGRAMS, DEPARTMENTS OR GROUPS AFFECTED:
City of Denton, Electric Production Division, Spot Fuel
Purchase Program.
Page 2
FISCAL IMPACT:
Increased competition for the supply of fuel gas requirements.
Prepared by:
Jim Thune, Plant Manager
Approved by:
R.E. 14elson,, Executive Director
Department of Utilities
EXHIBITS: I. Signed Contract Taurus Corporation
II. Signed Contract Highland Corporation
III. PUB Minutes of 6/9/93
Respectfully submitted,
EXCERPT FROM
PUBLIC UTILITIES BOARD MINUTES
June 9, 1993
The following item was considered:
4. CONSIDER APPROVAL OF CONTRACT EXECUTION WITH TAURUS ENERGY
CORPORATION AND HIGHLAND ENERGY COMPANY FOR NATURAL GAS SPOT
SUPPLY.
Harder presented this item. After extensive discussion, Giese
made a motion to approve Item #4 as presented by staff. Second
by Coplen. All ayes, no nays, motion carried.
pub excerpt
5/26/93
EXHIBIT. RL
Standard
Contract
Standard Contract
City of Denton Utilities
Interruptible Natural Gas Sales And Purchase Contract Agreement
Date: AUGUST 3, 1993
TAURUS ENERGY CORP. (SELLER) a
TEXAS
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.
1. 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.
2.
The term "HMBtu" 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.
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.
Corporation
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
SELLER will make a best effort to deliver, and BUYER best effort to
receive, the gas quantities as specified in the Buyers Notice. Either
party 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 party 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 4% 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
specified in the "Buyers Notice".
8. 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 U.S. 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 and accepted by BUYER hereunder. SELLER warrants it has the
right and lawful authority 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 arising 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
(i) under protest, or (ii) 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
13.
statements should be directed to BUYER at:
City of Denton Utilities
Electric Production Division
1701-A Spencer Road
Denton, TX 76205
Attn: Jim Thune,
Manager, Electric Production
Within 12 days of receipt of the statement, BUYER shall make payment to
SELLER for the gas quantities as determined in Paragraph 11. Payments
NOTIFICATION:
Communications regarding the performance of this contract shall be directed
to:
SELLER: TAURUS ENERGY CORP. BUYER:
LINCOLN PLAZA, LB32
500 N. AKARD
City of Denton Utilities
Electric Production Division
1701-A Spencer Road
Denton, TX 76205
Attn: Jinn Thune,
Manager, Electric Production
DALLAS, TEXAS 75201
ATTN: STEPHEN D. HAYWOOD,V.P.
14.
15.
PERFORMING NOMINATIONS:
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.
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 Point(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 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 County, Texas.
SELLER:
By:
Title:
Date:
BUYER:
By: Io
Title:
v
Date: 0?0, 19? ,3
VICE PRESIDENT
~ /3 5 ~
Attachment A
BUYERS NOTICE
GAS SALES AND PURCHASE AGREEMENT
CONTRACT DATE:
Date of Buyers Notice:
Buyers Notice Number:
BUYER: City of Denton, Electric Production Division
SELLER:
Natural gas purchase quantities for the calendar month of
All volumes and prices are based on mmEtu's, adjusted to 14.65
dry/dry. Prices are in U.S. dollars.
Total mmBtu
Dates for
Point of
Receiving
per period
Price
Delivery
Delivery
Pipeline
(14.65 D/D)
($/mmBtu)
Lone Star
Gas Company
Lone Star
Gas Company
Lone Star
Gas Company
Lone Star
Gas Company
Lone Star
Gas Company
Lone Star
Gas Company
Accepted and Agreed
(Seller)
Accepted and Agreed
(Buyer)
Jim Thune
Dated: Dated: