HomeMy WebLinkAboutC-1254 - Crude Oil Purchase Agreement7
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TO: FINANCE DIRECTOR
FROM: City Clerk
SUBJECT: Contract No. 0-1254
Description of Contract Crude oil ptmchase Agm meet
Authorized by Resolution No. R -7090 , adopted on October 29. 1969
Effective date of Contract 1st day of Nor. 1969
Contract with Golden FAg1e Refining Cmqmy
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Pmunt of Contract See g= of contract attached
city Clerk
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CRUDE OIL PURCHASE CONTRACT,
THIS CONTRACT, . , tgd this 9 617// day of _62 e_.To S,�F R ,
1969, by and between CITY OF NEWPORT BEACH as first party, here
inafter called the Seller, and GOLDEN EAGLE REFINING COMPANY, INC.,
a corporation, as second party, hereinafter called the Buyer,
W I T N E S S E T H:
1. TERM. The term of this Contract shall commence on
the lst day of November, 1969, and shall end on the 1st day of
November, 1971, and shall continue thereafter until termination
by either party hereto at any time such termination to become
effective only after at least One Hundred Eighty (180) days'
written notice of termination shall have been served by the party
terminating upon the other party hereto. This Contract is,also
subject to termination at the option of Buyer under the circum-
stances set forth in paragraph 16.
2. QUANTITY. The Seller hereby sells and agrees to
deliver to the Buyer all the crude petroleum oil (herein called
the "Crude "), subject to the maximum limitation set forth in
paragraph 12 hereof of a gravity of not less than seventeen (17 °)
degrees A.P.I. at a temperature of sixty degrees Fahrenheit
produced during the term hereof by the Seller from the property
situated in the Newport oil field on property more particularly
described in paragraph 3 hereof.
3. PROPERTY DESCRIPTION. The description of the propert,
included within the terms and provisions of this Contract is set
forth at length in Exhibit One, attached hereto.
4. EXISTING CONTRACTS. Any and all contracts between
Seller and Buyer covering Crude produced from the hereinabove
described property„ existing at the effective'd to of this contract
shall be deemed terminated and cancelled as ofd such date.
5. GUARANTEE. The Seller represents that the Crude to
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be"csd from the above property and the right of the Seller to
deliver same are free and cle of, encumbrance or other obligation,
and Seller.hereby warrants the title to all Crude delivered here -
under. Seller agrees to indemnify and 'hold harmless the Buyer
from all loss, damage, co 9r liability whinh it may sustain by
reason of any encumbrance or other obligation affecting the right
of the Seller to produce, sell or deliver Crude or by reason of the
title to Crude not being in the Seller or by reason of Crude not
having been produced in strict compliance with all applicable laws,
and rules and regulations issued thereunder.
6. DELIVERY. All deliveries hereunder are to be made
from the tankage of Seller situated on the property described in
paragraph 3 hereof and either (i) into the pipeline or (ii) into
tank trucks and trailers nominated by Buyer (as specified in
paragraph 15 hereof) as and when.the oil is produced and accumulate
in approximately shipping tank lots (subject to the limitation set
forth in paragraph 16 hereof if by reason of the provisions of
paragraph 14 Crude is to be delivered hereunder into tank trucks
and trailers). Whenever a tank of Crude is tendered by Seller and
accepted by Buyer hereunder, delivery of the Crude so tendered and
accepted shall be made by.Seller and accepted by Buyer without any
unnecessary delay,. Buyer shall have the right to demand, and Selle
shall be obligated to make, delivery of Crude at any time,,if in
the opinion of Buyer a quantity of Crude is stored in said tankage
sufficient to warrant Buyer in taking delivery. Deliveries shall
be guaged in the tankage of Seller, or if delivered into tank truck
and trailers, then the quantity of oil deliver..ed shall be determine
by weighing the tank trucks at a certified scale before and after
delivery. Delivery shall not be considered made nor shall title
to Crude pass to Buyer until Crude has been delivered into pipe
line or tank trucks and trailers nominated by Buyer. The Seller
32. 'shall equip each of its delivery tanks with a gate valve and .shall
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1 connect its delivery t Gs+gether with a suitable such on line.
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2 Delivery tanks .,P Seller are to be calibrated by licensed tank
3 calibrating engineers whenever, in.the opinion of Buyer, such
4 calibrating is necessary and such calibrations shall govern the
5 measurement of Crude subsequently delivered from such delivery
6 tanks. Cost of`.sucb calibrating is to be paid by Buyer. When
7 required by Buyer, the Seller will deliver all Crude of a gravity
8 under twenty degrees (20 °) A.P.I. at a temperature of not less than
9 one hundred degrees (100 °) Fahrenheit nor more than one hundred
10 seventy degrees (170 °) Fahrenheit; the proper temperature within
11 this range being dependent upon the gravity of the Crude. Buyer
12 will advise Seller the proper temperature.
13 7. GRAVITY. The.gravity of the Crude delivered hereunde
14 shall be determined in accordance with A. S. T. M. 287 in its latest
15 revision.
16 8. B. S. W. The B—S. & W. content of the Crude
17 delivered hereunder shall be determined in accordance with A. P. I.
18 Standard 2500 in its latest revision, using such mutually satis-
19 factory cutting solution as will fully precipitate the B. S. & W.
20 determined in the Crude by the above tests. Buyer shall make a
21 deduction for all B. S. & W. as determined by the tests hereinabove
22 mentioned. Buyer shall have the right to refuse to accept any
23 Crude containing in excess of three percent (3 %) B. S. & W. In the
24 event Buyer agrees to accept Crude in excess of three percent (3%)
25 B. S. & W., then Buyer shall charge a dehydration charge and Seller,.
26 agrees that said charge can be deducted by Buyer from payments
27 hereunder.
28 9. .TEMPERATURE. Sixty degrees (60 °) Fahrenheit is
29 established as the normal temperature for all crude delivered
30 hereunder. Correction in volume for Crude delivered at temperature
31 other than sixty degrees (600) Fahrenheit shall be made according.
32 to the "Standard Abridged Volume Correction Table for Petrolv4p
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Oils" A. S. T. M:. designa D- 206 -36.
10. SAMPLES, Seller agrees to cause all delivery tanks
to be equipped with three petcocks,located at_the _bottom, in the
middle and at the top of each 'tank. All samples for testing shall
be taken from said delivery tar by the Buyer in the presence of
a representative of Seller, should it so desire, one -third of said
sample being taken from each of said petcocks and thoroughly mixed
together. Until such time as said delivery tanks be so equipped
with petcocks, Buyer shall take all samples by the "running thief"
method. All such samples shall be tested by the Buyer at its
laboratory or such other point as may be mutually agreed upon, and,
if required by Seller, shall be made in the presence of its
representative. In the event the delivery of Crude is made by tank
truck and trailer then Buyer shall have the option to take.samples
for testing by method to be determined by Buyer, from said vehicles
at the delivery point and Buyer's test of said sample shall be
final and conclusive.
It is expressly understood and agreed that Buyer shall
not be required to accept any Crude produced in violation of the
orders of any properly constituted State or Federal authority or
produced in excess of the quotas fixed from time to time by any
reasonable conservation or curtailment program or fixed by the Oil
Umpire or any deputy umpire of the State of California.
11. TESTING. Buyer shall notify. Seller at least oae .
(1) day prior to conducting gravity of B. S. & W. tests. The to
shall be conducted in the presence of a representative of the
Seller if the Seller so requests.
12. MAXIMUM LIMIT. Buyer shall not be required to
accept Crude under this contract in excess of twenty thousand
(20,000) barrels during any one month. In the event the total
quantity of oil available for delivery in any one month should
exceed the twenty thousand (20,000) barrels specified herein,
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Seller shall notify Buyer of such excess. Within ten (10) days
after such notification by Seller, Buyer shall advise Seller in
writing whether it is willing to accept the excess in accordance
with the terms of this agreement or is declining to purchase the
same. In the event Buyer declines to purchase the excess, Seller
may make the surplus quantities available to any other buyer.
13. INTERRUPTION OF DELIVERIES OR RECEIPTS. In the event
of any temporary interruption of the operations of Seller by reason
of or caused by or arising out of strikes, fires, washouts, sanding
of wells, breakage of equipment, tankage or pipe lines, war,
declared or undeclared, inevitable cause, or any cause whatsoever,
not under the control of Seller, the Seller shall not be required
to deliver Crude hereunder during the period of such temporary
interruption, but deliveries shall commence immediately upon the
cessation of such temporary interruption. In the event of the
total or partial .temporary interruption of the business of the
Buyer by reason of or caused by or arising out of any of the afore-
said causes, or any cause whatsoever, not under the control of the
Buyer, the Buyer shall not be required to receive any Crude here-
under during the period of such temporary interruption but receipt
thereof shall --commence immediately upon cessation of such temporary
linterruption.
14. PRICE. For all crude oil delivered hereunder Buyer
agrees to pay and Seller agrees to accept the price posted by
Buyer for crude oil of like gravity and quality at the well in the'
Newport - Anaheim Sugar Area Field in effect onthe date of each
delivery according to the schedule of such prices published by
Buyer from time to time; provided, however, that during the period
from November 1, 1969, to and including October 31, 1971, the price
payable by Buyer to Seller shall not be less than the posted price
of Standard Oil Company of California, or the average of the prices
posted by Mobil Oil Company, a Division of Socony Mobil Oil Company,
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Inc., Union Oil Company of.Cali,,fornia, Standard Oil Company of
California, Western Operations,'-lnc:,:'and Buyer, or such of them
as post prices, whichever is higher,. for ¢rude =oil of like gravity,
quality and character in said, field in-effect on the date of
delivery.
If at any time or if from time to time Seller should
receive a bona fide offer from a responsible third party to purchase
all of the oil produced from the property covered by this contract
situated in the Offshore Area of the Newport Field at a price
than that then payable hereunder and for a term of at least twelve
(12) months, which offer Seller desires to accept, Seller shall
notify Buyer in writing advising Buyer of such higher price and the
term contained in such offer and the identity of the offeror. Said
notice shall give Buyer thirty (30) days after receipt thereof
within which to meet such offer as to the price specified therein
for the term thereof. If Buyer advises Seller in writing within
said thirty (30) day period that it agrees to meet such offer, then
Buyer and S-eller shall amend this contract so as to incorporate
herein such price specified in said offer for the term offered.
If Buyer advises Seller'in writing within said thirty (30) day
period that it does not elect to meet such offer or if Buyer fails
to notify Seller within said thirty (30) day period as to whether
or not it elects to meet such offer, this contract shall terminate
effective thirty (30) days after (i) such first thirty (30) day
period, or (ii) the date of Buyer's notice that it does not elect
to meet such offer, whichever shall occur first, subject to
.Seller's right to make such termination effective at any time
within such second thirty (30) day period on not less than fifteen
(15) days' written notice to Buyer.
15. PRICE ADJUSTMENT FOR DELIVERY INTO TANK TRUCKS AND
TRAILERS. If the truck tariff rate established by the Public
Utilities Commission of the State,. of California and effective at
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1 the date of this contract for hauling Crude via tank, trucks and
2 trailers from Seller's shipping point to Buyer's facilities at
3 Signal Hill is higher or lower than the rate therefor effective
4 at the date of any shipment, the price for such shipment shall be
5 decreased by any increase and shall be increased by any decrease.
6 Buyer shall not be obligated to accept Crude into tank
7 trucks and trailers of less than the minimum quantity as establish-
8 ed by the Public Utilities Commission of the State of California.
9 16. IRREGULAR DELIVERIES. If at any time Crude offered
10 for delivery hereunder shall not be.within.the limitations and
11 specifications herein prescribed, Buyer, at its option, may accept
12 said Crude, but no such acceptance shall be deemed a waiver of
13 Buyer's right at any time thereafter to require deliveries hereunder
14. to strictly conform to the herein limitations and specifications,
15 or the Buyer's right to thereafter refuse to accept oil not conform -
16 ing to said limitations and specifications.
17 17. PAYMENTS. All payments for Crude delivered hereunder
18 shall be made to Seller.or to_Seller's assignee named in a written
19 assignment which has actually been received by Buyer at the time
20 payment is due hereunder. Such payments for Crude delivered here -
21 under in any calendar month shall be made on or before the fifteenth
22 day of the following month. If, at the time any payment is due but
23 unpaid, a conflicting claim or claims are or may be made against
24 Buyer as to title of Seller or Seller's assignee to any Crude
25 delivered hereunder or any part thereof or any payment due hereunder
26 or any portion thereof, Buyer may, without incurring liability, (i)
27 withhold all payments then and thereafter becoming due hereunder
28 pending final determination of the rights of conflicting claimants
29 or (ii) file an appropriate action in interpleader and thereafter
30 discharge all further obligations to make payments hereunder, by
31 paying the Court the amount of any withheld payments as well as all
32 payments thereafter becoming due. A conflicting claim or claims
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shall be deemed-to exist whenever.buyer has reason to believe that
there is any..defect,in.Sellerts title to the Crude produced frstm
the property described in Paragraph'3, iricluding but not limited to
any attachment or any lien asserted on any Crude delivered hereunder'.
or any payment therefor otherwise due hereunder. In.the event that
such,conflicting claim exists at any time during the term hereof.
then Buyer may terminate this Contract by thirty days# written
notice to Seller. In the event there shall be imposed by any
properly constituted governmental authority, a sales tax in addition'I
to any such taxes as now existing, Seller agrees to pay the same,
further agreeing that if they be not paid by Seller, they may be
paid by Buyer and deducted from the amount of payments otherwise
due hereunder.
18. NOTICES. any notice required or desired to be
served hereunder may be served by registered.U. S. Mail, postage
prepaid.with . return receipt requested, posted in the State of
California and addressed to the parties hereto at the.addresses
indicated below or at such.other addresses in California as either
party may designate by notice to the other:
Golden Eagle Refining.Company, Inc.
615 South Flower Street
Los Angeles, California 90017
City of Newport Beach
3300 Newport Boulevard
Newport Beach, California 92660
Notice by mail shall be deemed served on the expiration of the
second business day following mailing.
Time is the essence,of this contract..
Everyting herein contained which binds or affects the
parties.hereto shall in like manner.bind and affect their
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TLW:e$
10/13/6931
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respective successors and assigns.
IN WITNESS WHEREOF, the said parties hereto have caused
this contract to be. executed in duplicate.
APPROVED AS TO RM:
W. _
City At Varney
CITY OF NEWPORT BEACH
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9OLD�N EAGLE REFINING COMPANY,_:ING.
H. G. McKAY
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ADDENDUM
Reference is hereby made to Crude Oil Purchase Contract dated
the a°/7 -H day of 4Vc7'of3, R , 1969, by and between the CITY
OF NEWPORT BEACH, as Seller and GOLDEN EAGLE REFINING COMPANY,
INC., as Buyer.
Reference is further made to Paragraph 6 (DELIVERY) Item (ii)
referring to deliveries into tank truck and trailers nominated by Buyer.
In the event Seller for any reason should make deliveries into
tank truck and trailers nominated by Buyer, then Buyer shall pay Seller for
such deliveries the price as outlined in Paragraph 14 (PRICE) less thirty -one
and 7/10 cents ($.317) per barrel..
CITY OF NEWPORT BEACH
COQ �Nl.�\ `1t VIJ t�lbYJ�
�u( Mayor
G�t.cc�
City Clerk
GOLDEN EAGLE REFINING COMPANY, INC.
DAVID ORECK President
EXHIBIT ONE,
All those certain uplands, tidelands, sub-
merged lands and filled lands owned by the City of
Newport Beach, lying between the southwesterly pro-
longation of the southeasterly line of 53rd Street,
as said 53rd Street is laid out and shown upon a map
of Ocean Front Tract, Newport Beach, recorded in Book
4, p�ge.12 of Miscellaneous Maps, records of Orange
County, California, and the westerly boundary line of
the City of Newport Beach, and southwesterly of the
Northeasterly line of Ocean Font, formely Ocean
Avenue, as said Ocean Avenue is laid out and shown
upon said map of Ocean Front, and map of Seashore
.Colony Tract, recorded in Book 7, page 25 of Mis-
cellaneous Maps, records of said County,
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RESQ3.UTION not 7090
A RISOU MON OF. TU CITY COUNCIL Of THE 4'M
CW NEWPORT B99M AiT MIZING liiliMM OF AN
AdRPUUW 88MEIN THE Cr f Of NOPORT BEACH
AND GOLDEN EAGLE RE►INM COKFANT FM TO
PEASE OF CRUDE OIL
WAS, there has been presented to- the City Council
of the City of Newport Beach a certain eontredt between the %ty
of Newport Beach and GOLDEN VALE RUMIN COWANY, M. ter
the purchew of crude oil, and
WHIRUgg, the City Council has considered the tares and
conditions of said contract and found them to be fair and
equitable;
M. We THE19tErMZ, U IT RESOLVED that said contract for
the purchase of crude oil is approved, and the Mayor ftd! City
Cleric are hereby authorized and directed to execute the same an
behalf of the City of Newport beach.
ADOPTED this 27th day of October. 1969.
ATTZST :
city CIOPE
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