1989-1922795L
ORDINANCE NO
AN ORDINANCE AWARDING A CONTRACT FOR THE TRANSPORTATION OF GAS TO
LONE STAR GAS COMPANY, PROVIDING FOR THE EXPENDITURE OF FUNDS
THEREFORE, AND PROVIDING FOR AN EFFECTIVE DATE
WHEREAS, the City has solicited, received and tabulated com-
petitive sealed proposals for the transportation of gas in accord-
ance with the procedures of state law and City ordinances, and
WHEREAS, the City Manager has reviewed and recommended that the
proposal of Lone Star Gas Company is the lowest responsible pro-
posal services as shown in the "Bid Proposals" submitted therefor,
and
WHEREAS, the City Council has provided in the City Budget for
the appropriation of funds to be used for the transportation of
gas, NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS
SECTION I That the proposal of Lone Star Gas Company is here-
by accepteU and approved as being the lowest responsible proposal
for the items set forth in the proposal
SECTION II That the City Manager is hereby authorized to
execute a contract with Lone Star Gas Company for the transporta-
tion of gas under the conditions set forth therein, a copy of
which is attached hereto and incorporated by reference herein
SECTION III That by the acceptance and approval of the above
proposal,--t-Fe City Council hereby authorizes the expenditure of
funds therefor in the amount and in accordance with the written
contract made pursuant thereto
SECTION IV That this ordinance shall become effective
imme ate y upon its passage and approval
PASSED AND APPROVED this the /f7 day of Ok wk&l. , 1989
RAY P , )RAYUK
ATTEST
APPROVED AS TO LEGAL FORM
DEBRA A DRAYOVITCH, CITY ATTORNEY
BY
LS T MC # 716
GAS TRANSPORTATION AGREEMENT
THIS AGREEMENT made and entered into the lst day of January 1990 to be
effective with the date of initial deliveries hereunder by and between LONE
STAR GAS COMPANY a Division of ENSERCH Corporation a Texas corporation
hereinafter referred to as 'Transporter' and CITY OF DENTON a municipal
corporation hereinafter referred to as Shipper
W T T N E S S F T H
WHEREAS, Shipper owns or controls certain quantities of natural gas and
desires that Transporter (a) receive gas from Shipper (or its designee) at the
Point(s) of Receipt hereinafter set forth and (b) deliver equivalent
quantities of gas to the Point of Delivery hereinafter set forth and
WHEREAS Transporter owns and operates a pipeline system and is willing to
transport gas for Shipper under the terms and conditions hereinafter set forth
NOW, THEREFORE for and in consideration of the mutual covenants and
conditions herein contained, Transporter and Shipper hereby agree as follows
ARTICLE I
QUANTITY
1 1 Shipper represents that from time to time it may desire for
Transporter to receive and deliver gas at the points hereinafter set forth in
quantities as agreed to by the parties It is agreed that the volume of gas to
be transported under this Agreement will not exceed a daily volume of twenty
five thousand (25 000) Mcf unless mutually agreed to by the parties hereto
Transporter's obligation to deliver gas to Shipper under any and all agreements
between Transporter and Shipper including but not limited to this Agreement,
shall not exceed a daily volume of thirty thousand (30 000) Mcf It is further
1
hereby agreed that the calculation of all quantities of gas received and
delivered hereunder shall, for all purposes including, but not limited to
payment and determination of imbalance and retention volumes be on an MMBtu
basis Transporter s receipt and delivery of such gas transportation volumes
will be done on a best efforts basis subject to Transporter's existing or
future pipeline capacity system transmissibility and operating capabilities
and Transporter may refuse to transport gas hereunder if in the reasonable
opinion of Transporter to do so would adversely affect Transporter's sales
service to residential and commercial customers and other priorities of sales
service established by the Railroad Commission of Texas, or any successor
thereto Transporter will in good faith endeavor to receive and deliver such
gas and will not arbitrarily and capriciously refuse to transport gas on behalf
of Shipper hereunder
1 2 It is recognized that a day to day balance of gas received by
Transporter and delivered to Shipper may not be possible due to the inability
of the parties to control precisely such receipts or deliveries However
Transporter to the extent practicable will deliver to Shipper each day a
quantity of gas equivalent to ninety nine percent (998) of the quantity of gas
received by Transporter from Shipper (or its designee) Transporter shall
retain the one percent (18) balance of the quantity of gas received as normal
gas lost gas used as fuel and gas used in day to day pipeline operations (the
Retention Volume') An imbalance shall exist hereunder where there is a
numerical difference between the quantity of gas delivered by Transporter to
Shipper exclusive of (i) the total of the volumes of gas delivered under the
Gas Sales Contract between Transporter and Shipper dated January 1 1990
(hereinafter referred to as the Gas Sales Contract') (ii) the total of any
volumes of gas delivered by Transporter to Shipper at the Point of Delivery
2
specified herein, under transportation agreements between Transporter and other
third parties, and (iii) the Retention Volume, and the quantity of gas received
by Transporter from Shipper (or its designee) during any month and any such
imbalance shall be corrected insofar as practicable during the month following
the month in which it occurs, provided, however should Shipper fail by the
end of any month of the term hereof to make up a prior month's imbalance due
Transporter, the cumulative imbalance, as hereinafter defined owed Transporter
by Shipper shall be deemed to be sold to Shipper by Transporter in accordance
with the terms and conditions of the Gas Sales Contract during the most recent
Billing Month, and thereafter such cumulative imbalance shall be accounted for
and construed for all purposes as gas sold under the Gas Sales Contract For
the purposes of this paragraph the term cumulative imbalance" shall mean the
sum of (i) any imbalance due Transporter and carried forward from an
immediately preceding month to the next succeeding month plus (ii) any
imbalance due Transporter based on the delivery and receipt of gas hereunder
during such succeeding month
1 3 At least two (2) working days prior to the first calendar day of each
month during the term hereof, Shipper and/or its designee shall notify
Transporter of the volumes of gas Shipper nominates for transportation at each
active Receipt and Delivery Point under this Agreement Each such
transportation nomination shall contain Shipper's nominated maximum quantities
for each applicable Receipt and Delivery Point designation of the appropriate
contract(s) covering such gas, and the identity by name and telephone number of
individual(s) who have authority to confirm the nominated gas volumes at each
Receipt and Delivery Point Timely nominations may be given by verbal notice
provided, however, Shipper shall furnish written confirmation thereof within
five (5) business days of the date of such verbal notice Shipper and/or its
3
designee may revise nominated quantities on any business day upon verbal
notice of any such reduction of nominated quantities Such verbal notice must
be received by Transporter prior to 12 00 noon Dallas time of any business day
to be effective the next succeeding business day If Shipper and/or its
designee does not furnish transportation nominations as required herein for
any month during the term hereof Transporter may interrupt transportation
service hereunder for such month and such interruption of service shall not
prevent enforcement by Transporter of any other of its legal rights or remedies
nor be construed as a breach of Transporter's obligations hereunder if
Shipper and/or its designee does not nominate any transportation volumes as
foresaid for twelve (12) consecutive months during the term hereof
Transporter, upon thirty (30) days' prior written notice to Shipper may
terminate this Agreement and all rights and obligations hereunder provided
however the obligation to make payment for monies due hereunder shall not be
extinguished Shipper shall be entitled to assign any or all such nomination
obligation(s) to a third party ("Shipper's designee") upon thirty (30) days
prior written notice to Transporter
ARTICLE II
LOCATIONS OF POINTS OF RECEIPT AND DELIVERY
2 1 Receipt Point Gas delivered by Shipper (or its designee) to
Transporter hereunder shall be delivered at points which are sometimes herein
referred to as the Receipt Point(s)' or Point(s) of Receipt' and which are
specifically set forth and identified in Exhibit "A" entitled "Transporter
Receipt Point(s)" which is attached hereto and is hereby incorporated in this
Agreement and made a part hereof for all purposes It is agreed that
additional points to be established hereunder pursuant to paragraph 2 3 will
be subject to Transporter's approval which shall not be unreasonably withheld
4
2 2 Delivery Point Gas transported by Transporter hereunder shall be
delivered to Shipper (or for its account) where gas first passes from
Transporter's metering equipment into Shipper's Spencer Steam Electric Station
in Denton, Texas (sometimes herein referred to as 'Point of Delivery ) or other
points as provided in the Transfer of Gas Agreement between Transporter and
Shipper dated January 1 1990
2 3 Additional Points It is understood by both parties that Shipper and
Transporter may mutually agree in writing to establish other Receipt Points
hereunder provided however, Transporter shall not be obligated to establish
new Receipt Points more frequently than once every two (2) months, unless due
to circumstances beyond Shipper's control Shipper (or its designee) is unable
to supply gas to the original Receipt Point(s) hereunder In such event and
upon receipt by Transporter of documentation satisfactory to Transporter
verifying such event and Shipper's inability to remedy same Transporter may
in its sole discretion agree to establish an additional Receipt Point In the
event Shipper desires that Transporter receive gas at a proposed point(s)
Shipper shall notify Transporter in writing of such proposed point(s)
including in such notice estimated maximum daily delivery volume(s) at such
point(s) and the location(s) thereof and Shipper shall therein warrant that the
quality of gas to be received at such proposed point(s) meets the quality
specifications as defined herein and that such gas and such proposed point(s)
meet the requirements of Article VI paragraph 2 of this Agreement and all
other applicable terms and conditions contained in this Agreement Transporter
will promptly evaluate each point and if such Receipt Point(s) is an
established Receipt Point on Transporter's pipeline system will notify Shipper
within ten (10) working days of Transporters receipt of Shipper's notice
unless otherwise mutually agreed to by the parties hereto whether or not
5
Transporter is able to accept gas from Shipper's proposed new Receipt Point(s)
If such Receipt Point(s) is not an established Receipt Point(s) on
Transporter's pipeline system Transporter will notify Shipper within thirty
(30) days of Transporter's receipt of Shipper's notice unless otherwise
mutually agreed to by the parties hereto, whether or not Transporter is able to
accept gas from Shipper's proposed new Receipt Point(s) In the event
Transporter anticipates the inability to complete said evaluation within the
specified ten (10) and/or thirty (30) day periods, Transporter will promptly
notify Shipper and provide the status of and estimated completion date of the
required evaluation, provided, however no additional Receipt Point(s) will be
established hereunder without prior written agreement between Shipper and
Transporter Upon Transporter's agreement to establish any additional Receipt
Point(s) pursuant hereto, Exhibit "A" shall be revised to reflect the
additional Receipt Point(s)
ARTICLE III
PRESSURES AT POINTS OF RECEIPT AND DELIVERY
3 1 Shipper and/or its designee shall deliver gas Lo Transporter at the
Receipt Point(s) at pressures sufficient to enter Transporter's pipeline system
at such point, provided however, that Shipper's delivery pressure into
Transporter's system at the Receipt Point(s) shall not exceed Transporter's
maximum allowable operating pressure at any such point
3 2 Transporter shall deliver gas to Shipper at Transporter's operating
pressure at the Delivery Point provided however Transporter shall not be
obligated to delivery gas at a pressure in excess of seventy five (75) psig
into Shipper's Spencer Steam Electric Station in Denton, Texas
6
ARTICLE IV
RATES
4 1 Shipper shall pay Transporter for services rendered hereunder at the
rates set forth below commencing with initial deliveries of gas hereunder
(a) If during any Billing Month Shipper delivers hereunder at the
Receipt Points an average volume of gas less than five thousand (5 000)
Mef per day during such Billing Month the fee charged hereunder shall be
twenty one cents (21C) for each MMBtu delivered hereunder at the Delivery
Point after allowing one percent (1%) reduction in such delivered
volumes for gas lost and unaccounted for gas used as fuel and gas used
in day to day pipeline operations pursuant to Article I, paragraph 1 2
(b) If during any Billing Month Shipper delivers hereunder at the
Receipt Points, an average volume of gas greater than or equal to five
thousand (5 000) Mcf per day the fee charged hereunder shall be sixteen
cents (16C) for each MMBtu delivered hereunder at the Delivery Point
after allowing one percent (18) reduction in such delivered volumes for
gas lost and unaccounted for, gas used as fuel and gas used in day to day
pipeline operations pursuant to Article I paragraph 1 2
(c) It is agreed by the parties hereto that the fees charged in
paragraphs (a) and (b) above shall escalate one cent (1(,) per MMBtu
beginning on January 1, 1991, and annually thereafter during the term of
this Agreement
(d) It is understood and agreed by the parties that the rates provided
for herein have been reached through arms length negotiations and that
neither party had an unfair advantage during the negotiations thereof
However should the appropriate regulatory agency find such rates to be
unreasonable for any reason or in any way in violation of any provision of
7
law and determine a rate lower than that provided for herein Transporter
may terminate this Agreement upon giving Shipper written notice of its
intention to do so within sixty (60) days after the date of such judgement
or order, which cancellation shall become effective at the end of thirty
(30) days from and after the date of such notice Should the agency
determine a rate higher than that provided for herein Shipper may
terminate this Agreement upon giving Transporter written notice of its
intention to do so within sixty (60) days after the date of such judgement
or order, which cancellation shall become effective at the end of thirty
(30) days from and after the date of such notice
(a) Shipper agrees to reimburse Transporter for any Taxes as defined in
Section 5 of GENERAL TERMS AND CONDITIONS attached hereto as APPENDIX 'A'
ARTICLE V
TERM
5 1 This Agreement is effective as of January 1 1990 and shall remain
in full force and effect for a primary term extending through December 31
1993 subject to the terms and provisions hereof and month to month thereafter
until cancelled by either party giving the other party thirty (30) days' prior
written notice Notwithstanding anything contained herein to the contrary in
the event of termination or cancellation of the Gas Sales Contract
Transporter shall have the right to terminate this Agreement by giving Shipper
one hundred (100) days notice of such termination Notwithstanding the above,
if an imbalance in deliveries exists on the date of termination hereof between
the quantities theretofore delivered at the Receipt Point(s) and Delivery
Point, the term of this Agreement shall be extended for a period sufficient to
allow the party whose deliveries are in arrears to eliminate promptly any
deficit Provided further, any termination cancellation or expiration of this
8
Agreement shall never operate to extinguish the obligation to make payment for
monies due hereunder
5 2 In the event that on or before January 1 1991 deliveries of gas for
transportation hereunder have not commenced then in such event and
thereafter, until such deliveries are tendered and accepted, Transporter may
cancel this Agreement by giving Shipper thirty (30) days' prior written notice
of such cancellation
ARTICLE VI
LAWS AND REGULATIONS
6 1 This Agreement shall be subject to all applicable State and Federal
laws and orders, directives, rules and regulations of any governmental body
official or agency having jurisdiction
6 2 Each party warrants to the other that its or its agent's facilities
utilized for the delivery and acceptance of gas hereunder are wholly intrastate
facilities and are not subject to the Natural Gas Act of 1938, as heretofore
amended As a material representation, without which both parties would not
have been willing to execute this Agreement each party warrants to the other
party that it will take no action nor commit any act of omission which will
subject its facilities this transaction or the other party's facilities to
jurisdiction of the Federal Energy Regulatory Commission or its successor
governmental agency under the terms of the Natural Gas Act of 1938, as amended
The gas delivered and accepted hereunder shall not have been nor shall be sold
transported, or otherwise utilized in interstate commerce in a manner which
will subject either party to the terms of the Natural Gas Act of 1938 as
amended In addition to and without excluding any remedy the aggrieved party
may have at law or in equity, the party who breaches the above warranties and
representations shall be liable to the aggrieved party for all damages injury
9
and reasonable expense the aggrieved party may sustain by reason of any breach
hereof Further should either party perform any act or cause any action to
be performed at any time, that results in any gas covered hereunder becoming
regulated by or subject to the jurisdictional consequences of the Natural Gas
Act of 1938, as amended, or successor governmental authority contrary to this
agreement this agreement shall be deemed of its own terms to terminate on the
day before the date of such occurrence provided however such termination
shall never be construed to impair any right under this paragraph
ARTICLE VII
GENERAL TERMS AND CONDITIONS
7 1 The GENERAL TERMS AND CONDITIONS attached hereto as APPENDIX "A are
incorporated herein and made a part hereof by this reference
ARTICLE VIII
MISCELLANEOUS
8 1 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns provided however,
that this Agreement shall not be transferred or assigned by either party
without the prior written consent of the other party which shall not be
unreasonably withheld Any purported transfer or assignment without such
consent shall be null and void and shall not operate to release the transferror
or assignor from its obligations hereunder
8 2 Any notice, request, demand, statement or payment provided for in
this Agreement may be given in writing directed to the party to whom given and
mailed or delivered at such party's address as follows
City of Denton
Municipal Building
Denton Texas 76701
Attn Executive Director of Utilities
10
(Notices) (Payments)
Lone Star Gas Company Lone Star Gas Company
301 S Harwood Street P 0 Box 910255
Dallas Texas 75201 Dallas, Texas 75391 0255
ATTN Transportation Department
or at such address as each party may by like notice give to the other Such
mailed notices shall be deemed to have been given when deposited in the United
States mail (first class registered or certified) postage prepaid or in the
case of hand delivery, when accepted by a representative of either party from a
representative of the other party
8 3 This Agreement constitutes the entire agreement between the parties
covering the subject matter hereof and there are no agreements modifications
conditions or understandings, written or oral express or implied pertaining
to the subject matter hereof which are not contained herein
8 4 Modifications of this Agreement shall be or become effective only
upon the mutual execution of appropriate supplemental agreements or amendments
hereto by duly authorized representatives of the respective parties
ACCEPTED AND AGREED to this 19 -kti day of
0~C(- s'.
1989
LONE STAR GAS COMPANY a Division
of ENSERCH Corporation
By l ad -4 J A 1--L ^q)
Jr ll~r
W WeTnt
Titl 1 Attest
By
G'bO MW
CITY OF DENTON
Attest
By
11
STATE OF TEXAS
COUNTY OF DENTON
BEFORE ME the undersigned authority a Notary Public in and for said
County and State on this day personally appeared Lloyd V Harrell, City
Manager of the City of Denton a corporation known to
me to be the person whose name is subscribed to the foregoing instrument and
acknowledged to me that he executed the same for the purposes and consideration
therein expressed, in the capacity therein stated and as the act and deed of
said corporation
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 27th day of
December , A D 1989
JEETTE SCOTT
*AN
NOTARY PUSUG STALE Of TEXAS
~ Wm mom E~pm ANr 31 ISSS
STATE OF TEXAS
COUNTY OF DALLAS
A~7-
No r Public in and for
nton County Texas
My commission expires the 31st
day of March 19 93
BEFORE ME the undersigned authority a Notary Public in and for the
State of Texas on this day personally appeared W. F. Weidler. Jr.. Vice
President of LONE STAR GAS COMPANY, a Division of ENSERCH Corporation, a Texas
corporation, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed the same for the
purposes and consideration therein expressed, in the capacity therein stated
and as the act and deed of said corporation
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the
A D 19
Notary Public in and for
the State of Texas
12
day of
STATE OF
COUNTY OF
BEFORE ME the undersigned authority a Notary Public in and for said
County and State on this day personally appeared
of a corporation known to
me to be the person whose name is subscribed to the foregoing instrument and
acknowledged to me that he executed the same for the purposes and consideration
therein expressed, in the capacity therein stated and as the act and deed of
said corporation
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of
A D , 19
STATE OF TEXAS
COUNTY OF DALLAS
Notary Public in and for
County,
My commission expires the
day of , 19
BEFORE ME, the undersigned authority a Notary Public in and for the
State of Texas on this day personally appeared W. F. Weidler. Jr.. Vice
President of LONE STAR GAS COMPANY a Division of ENSERCH Corporation, a Texas
corporation, known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he executed the same for the
purposes and consideration therein expressed in the capacity therein stated
and as the act and deed of said corporation
L-A
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the .~v day of
A D 190
NANCY TAYLOR
MY COMMIRRION RRPIRRR
May 27, 1994
G~
Notary Publ in an or
the State Texas
12
SHEET NO 1
APPENDIX A'
GAS TRANSPORTATION AGREEMENT
GENERAL TERMS AND CONDITIONS
1 Definitions
(a) "Gas" shall mean natural gas produced from gas wells vaporized
natural gas liquids gas produced in association with oil (casinghead gas)
and/or the residue gas resulting from processing casinghead gas and/or gas
well gas
(b) "Day shall mean the 24 hour period beginning at 7 00 a m Dallas
time, on one calendar day and ending at 7 00 a m Dallas time on the
following calendar day
(c) "Month" or "Billing Month" shall mean the period beginning at 7 00
a m Dallas time on the first day of a calendar month and ending at 7 00 a m ,
Dallas time, on the first day of the succeeding calendar month
(d) "Year" shall mean a period of twelve (12) consecutive months
beginning at 7 00 a m , Dallas time on January 1 of each calendar year of the
term hereof and ending at 7 00 a m, Dallas time, on the same date of each
succeeding year during the term hereof
(e) "Mcf" shall mean one thousand (1 000) cubic feet
(f) The term "Btu" as used herein shall mean British Thermal Unit and,
wherelappropriate the plural thereof The term MMBtu shall mean one million
(1 000,000) Btu
(g) "Heating Value" or "Heat Content" shall mean the total heating value
expressed in Btu per cubic foot (gross heating value) of the gas delivered
hereunder, and shall be determined at a temperature of sixty (60) degrees
Fahrenheit, saturated with water vapor and under a pressure equivalent to that
SHEET NO 2
of thirty (30) inches of mercury at thirty two (32) degrees Fahrenheit
converted to base conditions of sixty (60) degrees Fahrenheit and an absolute
pressure of fourteen and sixty five one hundredths (14 65) pounds per square
inch and adjusted to reflect actual water vapor content
(h) "Psis' shall mean pounds per square inch absolute
(i) "Psig" shall mean pounds per square inch gauge
(j) "Point of Receipt" or "Receipt Point" shall mean the point(s) where
Transporter receives gas delivered to it by Shipper or by the designee of
Shipper for Shipper's account
(k) "Point of Delivery" or "Delivery Point" shall mean the point where
Transporter delivers gas to Shipper
2 Measuring Equipment and Testing
(a) The gas delivered to Transporter at the Receipt Point(s) shall be
measured by means of measuring devices of standard type which shall be
installed, operated and maintained by Transporter (or its designee) and gas
delivered to Shipper (or for its account) at the Delivery Point shall be
measured by meters of standard type which shall be installed operated and
maintained by Transporter (or its designee) Measurement devices and equipment
shall be tested and adjusted for accuracy on a regular schedule by the party
metering the gas ( the "metering party")
(b) Shipper agrees to reimburse Transporter within ten (10) days from
the date of receipt of Transporter's invoice for any tap valves metering
facilities and associated equipment and all labor and overhead expenses
attributable to the installation of such equipment incurred by Transporter in
effectuating the receipt and delivery of gas hereunder If the invoiced amount
is not paid when due, interest on all unpaid amounts shall accrue at the rate
SHEET NO 3
of one and one half percent (lh%) per month from the date such amount is due
Transporter provided however, no interest shall accrue on unpaid amounts when
failure to make payment is the result of a bona fide dispute between the
parties hereto regarding such amounts and Shipper timely pays all amounts not
in dispute Failure of Transporter to receive total reimbursement for any
amounts not in dispute within thirty (30) days of Shipper's receipt of
Transporter's invoice will allow Transporter to suspend and/or terminate this
Agreement It is understood that although Shipper shall reimburse Transporter
for any tap valves, metering facilities and all associated costs incurred by
Transporter in establishing any Receipt and/or Delivery Point(s), Shipper shall
receive ownership of only the metering facilities and Transporter will be
solely responsible for all activities in connection with said metering
facilities including, but not limited to operation testing calibration
adjusting repair and replacement (at Shipper's expense) and maintenance
necessary for performance hereunder until Transporter disconnects and removes
the metering facilities within a reasonable time after termination of this
Agreement After said disconnection and removal Shipper will have the right
within a reasonable period of time thereafter to pick up the metering
facilities from Transporter Shipper's failure so to claim the metering
facilities within ninety (90) days of Transporter's notice to Shipper of the
disconnection and removal thereof shall constitute a waiver by Shipper of any
right, title or interest in and to such metering facilities and all right
title and interest therein shall thereafter vest in Transporter Transporter
shall retain ownership of all equipment associated with the tap and tap valve
installation Notwithstanding the above, if adequate metering facilities are
already in existence at the Receipt and/or Delivery Points hereunder, such
SHEET NO 4
existing metering facilities shall be used and the party having title to such
facilities shall retain title to such facilities
(c) The other party shall have access to the metering party's metering
equipment at all times, but the maintenance, calibration and adjustment thereof
shall be done only by the employees or agents of the metering party Records
from such metering equipment shall remain the property of the metering party
and shall be kept on file by said party for a period of not less than three (3)
years However, upon request of the other party, the metering party shall
make available to the other party volume records from its metering equipment
together with calculations therefrom, for inspection and verification subject
to return by the other party to the metering party within thirty (30) days
after receipt thereof
(d) The other party may, at its option and expense, install and operate
meters, instruments and equipment in a manner which will not interfere with
the metering party's equipment, to check the metering party s meters
instruments and equipment but the measurement of gas for the purpose of this
Agreement shall be by the metering party's meter only except as hereinafter
specifically provided The meters check meters instruments and equipment
installed by each party shall be subject at all reasonable times to inspection
or examination by the other party, but the calibration and adjustment thereof
shall be done only by the installing party
(e) Each party shall give to the other party notice of the time of all
tests of meters sufficiently in advance of such tests so that the other party
may conveniently have its representatives present provided, however that if
either party has given such notice to the other party and such other party is
not present at the time specified, then the party giving the notice may proceed
SHEET NO 5
with the test as though the other party were present
(f) Meter measurements computed by the metering party shall be deemed to
be correct except where the meter is found to be inaccurate by as much as one
percent (18) fast or slow or to have failed to register in either of which
cases the metering party shall repair or replace the meter The quantity of
gas delivered while the meter was inaccurate or failed to register shall be
determined by the readings of the other party's check meter, if installed and
in good operating condition, or by correcting the error if the percentage of
error is ascertainable by calibration or mathematical calculation If not so
ascertainable, then it shall be determined by estimating the quantity on a
basis of deliveries under similar conditions when the meter was registering
accurately Such adjustments or correction shall be made only for one half (h)
of the period between the test in which the inaccuracy was discovered and the
previous test for accuracy provided however such adjustment or correction
period shall not exceed ninety (90) days
3 Measurements
(a) In gas measurement computations the metering party may use the
findings and rules of the Railroad Commission with respect to flowing
temperature the metering party shall at its expense properly install and
operate a device of standard make to continuously determine or record flowing
temperature With respect to specific gravity, such shall be determined by
"on site" sampling and laboratory analysis or any other mutually agreeable
method which is of standard industry practice (provided, however that either
party may at its expense properly install and operate a recording specific
gravity instrument of standard make and in this event the specific gravity as
recorded shall be used)
SHEET NO 6
(b) The meters for measurement of volumes at the Receipt Point(s) and
Delivery Point hereunder shall be installed and operated and computations
shall be made, in accordance with current industry standards The unit of
measurement of gas shall be one thousand (1 000) cubic feet at a pressure base
of fourteen and sixty five one hundredths (14 65) pounds per square inch
absolute and at a temperature base of sixty (60) degrees Fahrenheit Meter
measurements shall be computed by the measuring party into such units in
accordance with the Ideal Gas Laws for volume variations due to metered
pressure and corrected for deviation using daily averages of recorded specific
gravity and flowing temperature, or by using the calculated specific gravity
determined by the method mentioned in paragraph (c) below
(c) The daily average heating value and specific gravity of the gas
delivered hereunder by either party may be determined by the use of BTU
recording instruments of standard type which may be installed and operated by
the metering party at the metering point or at such other point or points as
are mutually agreeable to both parties provided however if there is no BTU
recording instrument at a particular receipt or delivery point specified herein
or agreed upon hereunder, then the heating value and specific gravity of the
gas at such point may be determined by "on site" sampling and laboratory
analysis or any other mutually agreeable method which is of standard industry
practice
(d) The daily average meter pressure, specific gravity flowing
temperature and heating value shall be determined only during periods of time
when the gas is actually flowing
4 Quality
(a) Each party shall deliver to the other party hereto natural gas which
SHEET NO 7
is of merchantable quality and is commercially free from water other
objectionable fluids, sand and other objectionable solids or gas components and
which contains (i) no oxygen (ii) not more than five (5) grains of total
sulphur consisting of not more than one quarter (4) grain of hydrogen sulphide
and one (1) grain of mercaptan sulphur per one hundred (100) cubic feet of gas
(iii) not more than three percent (38) by volume of carbon dioxide and (iv)
not more than seven pounds (7#) of water vapor per one million (1,000 000)
cubic feet of gas The gas shall be at temperatures not in excess of one
hundred twenty (120) degrees Fahrenheit nor less than forty (40) degrees
Fahrenheit and shall have a heat content of not less than nine hundred fifty
(950) or more than eleven hundred fifty (1 150) British Thermal Units per cubic
foot under the conditions of measurement contained herein Transporter shall
not be obligated to accept any gas delivered by Shipper (or its designee)
hereunder which is not interchangeable with other gas in Transporter's pipeline
at the Point(s) of Receipt hereunder Transporters determination of such
interchangeability shall be based upon a factor which is equivalent to the
quotient obtained by dividing the total heating value of such gas expressed in
BTU's, by the square root of the specific gravity of such gas Such factor
must be within ±78 of the interchange factor so calculated by Transporter for
the gas in its system at the Receipt Point(s) hereunder
(b) If at any time the gas fails to meet the quality specifications
enumerated herein, the party receiving such gas shall notify the party
delivering such gas and the delivering party shall immediately correct such
failure If the delivering party is unable or unwilling to deliver gas
according to such specifications the party receiving such gas may refuse to
accept delivery of gas hereunder for so long as such condition exists
SHEET NO 8
5 Taxes
(a) Shipper agrees to pay Transporter by way of reimbursement all
Taxes levied and imposed upon Transporter with respect to the transport of gas
and associated facilities related to the performance of this Agreement If any
such Taxes levied and imposed upon Transporter by any governmental authority
are calculated based upon the value or sales price of the gas transported
hereunder Shipper shall disclose to Transporter the value or sales price of
such gas to enable Transporter to calculate and pay all such fees and taxes to
appropriate governmental authorities in a timely manner If Shipper fails or
refuses to disclose the value or sales price of such gas Transporter shall
have the right to terminate this agreement by giving Shipper ten (10) days'
prior written notice and Shipper hereby agrees to indemnify and hold
Transporter harmless from and against any and all claims demands losses or
expenses, including attorneys' fees which Transporter may occur as a result of
Shipper's failure or refusal to disclose the value or sales price of gas
transported hereunder
(b) The term "Taxes" as used herein, shall mean all taxes levied upon
and/or paid by Transporter (other than ad valorem capital stock income or
excess profit taxes, except as provided herein general franchise taxes
imposed on corporations on account of their corporate existence or on their
right to do business within the state as a foreign corporation and similar
taxes), including, but not limited to, gross receipts tax, street and alley
rental tax licenses fees and other charges levied assessed or made by any
governmental authority on the act, right or privilege of transporting,
handling or delivering gas, where such taxes are based upon the volume heat
content, value or sales price of the gas or transportation fee payable
SHEET NO 9
hereunder
6 Billing. Accounting and Reports
(a) On approximately the 15th day of each month Transporter shall render
to Shipper a statement for the preceding month showing the Mcf and MMBtu
delivered at the Receipt Point(s) and Delivery Point the amount of
compensation due to Transporter hereunder including the tax reimbursement and
other reasonable and pertinent information which is necessary to explain and
support same and any adjustments made by Transporter in determining the amount
billed
(b) Shipper shall pay Transporter within twelve (12) days from the date
Transporter's statement is deposited postage prepaid in the United States mail
or in the case of hand delivery within ten (10) days from the date
Transporter's statement is delivered to a representative of Shipper from a
representative of Transporter, for gas transported hereunder during the
preceding month or as to payment which is otherwise due hereunder according
to the measurements computations and rates herein provided Transporter
hereby agrees, however, that Shipper may pay any such statement by bank wire
transfer by directing the bank wire transfer to Lone Star Gas Company at Texas
Commerce Bank, Dallas, Texas, ABA No 111001150, for deposit to Lone Star Gas
Company Account No 08805016795 To assure proper credit Shipper should
designate the company name, invoice number and amount being paid in the
Fedwire Text Section If the invoiced amount of any payment due is not paid
when due, interest on all unpaid amounts shall accrue at the rate of one and
one half percent (lh$) per month from the date such amount is due Transporter
provided however no interest shall accrue on unpaid amounts when failure to
make payment is the result of a bona fide dispute between the parties hereto
SHEET NO 10
regarding such amounts and Shipper timely pays all amounts not in dispute
(c) Each party hereto shall have the right at all reasonable times to
examine the measurement records and charts of the other party to the extent
necessary to verify the accuracy of any statement, charge, computation or
demand made under or pursuant to any of the provisions in this Agreement if
any such examinations reveal or if either party should discover any inaccuracy
in such billing theretofore made the necessary adjustments in such billing and
payment shall be made, provided, that no adjustments for any billing or payment
shall be made for any inaccuracy claimed after the lapse of two (2) years from
the rendition of the invoice relating thereto
7 Ike spons ib i 1 i ty
Shipper shall be deemed to be in control and possession of the gas until
such gas shall have been delivered to Transporter at the Receipt Point(s) and
after such gas shall have been delivered at the Delivery Point Transporter
shall be deemed to be in control and possession of the gas after receipt of the
gas at the Receipt Point(s) and until such gas shall have been delivered to
Shipper (or for its account) at the Delivery Point Each party shall have
responsibility for gas handled hereunder or for anything which may be done,
happen or arise with respect to such gas only when such gas is in its control
and possession as aforesaid Each party shall be responsible for any damage or
injuries caused thereby until the same shall have been delivered to the other
party at the Receipt Point(s) or Delivery Point, except injuries and damages
which shall be occasioned solely and proximately by the negligence of the
receiving party
8 Warranty
Each party hereto warrants to the other that at the time of delivery of
SHEET NO 11
gas hereunder it will have good title or the right to deliver such gas and
that such gas shall be free and clear of all liens and adverse claims and
each party agrees, with respect to the gas delivered by it, to indemnify the
other against all suits, actions, debts accounts, damages costs (including
attorneys' fees), losses and expenses arising from or out of any adverse claims
of any and all persons to or against said gas Title to and ownership of the
gas delivered hereunder shall pass to and vest in the party receiving the gas
9 Force Majeure
(a) In the event either party is rendered unable wholly or in part by
force majeure to carry out its obligations under this Agreement, except the
obligation to pay monies due hereunder it is agreed that on such party's
giving notice and reasonably full particulars of such force majeure in writing
or by telegraph, to the other party within a reasonable time after the
occurrence of the cause relied on the obligations of the party giving such
notice so far as they are affected by such force majeure shall be suspended
during the continuance of any inability so caused but for no longer period,
and such cause shall, so far as possible be remedied with all reasonable
dispatch
(b) The term "force majeure", as employed herein, shall mean acts of
God strikes, lock outs or other industrial disturbances acts of the public
enemy, wars, blockades insurrections civil disturbances and riots and
epidemics landslides, lighting earthquakes fires storms floods and
washouts arrests orders directives restraints and requirements of the
government and governmental agencies, either federal or state civil and
military and application of governmental conservation rules and regulations
explosions, breakage or accident to machinery or lines of pipe outages
SHEET NO 12
(shutdowns) of power plant equipment or lines of pipe for inspection
maintenance or repair, freezing of wells or lines of pipe, the partial or
entire nonperformance of any third party transportation pipeline which is
necessary to receive and deliver gas under this Agreement, and any other
causes, whether of the kind enumerated or otherwise not reasonably within the
control of the party claiming suspension It is understood and agreed that the
settlement of strikes or lockouts shall be entirely within the discretion of
the party having the difficulty, and that the above reasonable dispatch shall
not require the settlement of strikes or lockouts by acceding to the demand of
the opposing party when such course is or is deemed to be inadvisable or
inappropriate in the discretion of the party having the difficulty
10 ~Zaiver of Breaches. Defaults or Rights
No waiver by either party hereto of any one or more breaches defaults or
rights under any provisions of this Agreement shall operate or be construed as
a waiver of any other breaches, defaults or rights, whether of a like or of a
different character By providing written notice to the other party, either
party may assert any right not previously asserted hereunder or may assert its
right to object to a default not previously protested Except as specifically
provided herein in the event of any dispute under this Agreement the parties
shall notwithstanding the pendency of such dispute diligently proceed with
the performance of this Agreement without prejudice to the rights of either
party
11 Remedy for Breach
Except as otherwise specifically provided herein if either party shall
fail to perform any of the covenants or obligations imposed upon it in this
Agreement (except where such failure shall be excused under the provisions of
SHEET NO 13
Section 9 hereof) then, and in that event, the other party may, at its option
(without waiving any other remedy for breach hereof) by notice in writing
specifying wherein the default has occurred, indicate such party's election to
terminate this Agreement by reason thereof, provided however, that Shipper's
failure to pay Transporter within a period of ten (10) days following Shipper's
receipt of written notice from Transporter advising of such failure to make
payment in full within the time specified in Section 6 hereof, shall be a
default which shall give Transporter the right to immediately terminate this
Agreement unless such failure to pay such amounts is the result of a bona fide
dispute between the parties hereto regarding such amounts hereunder and Shipper
timely pays all amounts not in dispute With respect to any other matters the
party in default shall have thirty (30) days from receipt of such notice to
remedy such default, and upon failure to do so, this Agreement shall terminate
from and after the expiration of such thirty (30) day period Such termination
shall be an additional remedy and shall not prejudice the right of the party
not in default to collect any amounts due it hereunder for any damage or loss
suffered by it and shall not waive any other remedy to which the party not in
default may be entitled for breach of this Agreement
EXHIBIT "A"
TO
GAS TRANSPORTATION AGREEMENT
BETWEEN
LONE STAR GAS COMPANY
AND
CITY OF DENTON
Transporter Receipt Point(s)
Description
1 Lone Star's interconnection with
Valero at Ennis (Ellis County, Texas)
2 Lone Star's interconnection with
Mobil at Waha (Pecos County, Texas)
3 Lone Star's interconnection with
Exxon's Katy Plant (Waller County Texas)
4 Lone Star's interconnection with
Palo Duro Pipeline (Nolan County Texas)
5 Lone Star's interconnection with
Delhi (Denton County, Texas)
Maximum Daily Volume
25,000
Mcf
25 000
Mcf
25,000
Mcf
25,000
Mcf
25,000
Mcf
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