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HomeMy WebLinkAboutC-1799 - Sale of crude oilCITY OF NEWPORT BEACH NOTICE OF TERMINATION TO: Kern County Refinery, Inc. 100 Oceangate Long Beach, California OFFICE OF THE CITY CLERK (714) 640 -2251 PLEASE TAKE NOTICE that effective 11:59 p.m., January 25, 1981, that certain CRUDE OIL PURCHASE CONTRACT dated March 10y 1970 between the City of Newport Beach and Kern County Refinery, Inc. shall be terminated. This document shall serve as'the' notice of termination of said contract. ...__.. Original notice was sent to you at 10929 South Street, Suite 202, Cerritos, as set forth in subject agreement, but returned to us as not forwardable, on December 24, 1980. Dated this 7th day of January, 1981. Wanda E. Andersen City Clerk City Mall • 3300 Newport Boulevard. Newport Beach, California 92663 CITY OF NEWPORT BEACH OFFICE OF THE CITY CLERK (714) 640 -2251 NOTICE OF TERMINATION TO: Kern County Refinery, Inc. 10929 South Street, Suite 202 Cerritos, California 90701 Armstrong Petroleum Corporation P.O. .Box 1546 Newport Beach, California PLEASE TAKE NOTICE that effective 11:59 p.m., January 25, 1981, that certain CRUDE OIL PURCHASE CONTRACT dated March 10, 1976 between the City of Newport Beach and Kern County Refinery, Inc. shall be terminated. This document shall serve as the notice of termination of said contract. Dated this 24th day of December, 1980. Wane.', E. Andersen City Clerk cc: City Attorney / Contract file ✓ CRY Ilall • 3300 ;Newport Boulei'ard. Aewpon Beach. California 92663 "y.. 0 0 9953 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH GIVING NOTICE OF TERMINATION TO KERN COUNTY REFINERY, INC., OF EXISTING OIL PURCHASE AGREEMENT AND AUTHORIZING STAFF TO. NEGOTIATE A NEW OIL PURCHASE AGREEMENT WHEREAS, the City Council of the City of Newport Beach on March 22, 1976, authorized the execution of an agreement between the City of Newport Beach and Kern County Refinery, Inc., for the purchase of crude oil; and WHEREAS, said agreement provides for a division of the payment for crude oil delivered, 7/8 to Armstrong Petroleum Corporation and 1/8 to the City of Newport Beach; and WHEREAS, the City of Newport Beach intends to operate the oil fields of the City of Newport Beach as of January 26, 1981, and said division of purchase price would be rendered inappropriate; and WHEREAS, it is desirable to terminate said agreement with Kern County Refinery, Inc., and to authorize the staff of the City of Newport Beach to negotiate a new crude oil purchase contract, NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Newport Beach that said agreement between the City of Newport Beach the Kern County Refinery, Inc., be terminated, effective 11:59 p.m. January 25, 1981. The City Clerk is hereby authorized and directed to prepare and serve on Kern County Refinery, Inc., a notice of termination as provided in said agreement. BE IT FURTHER RESOLVED that the City Council of the City of Newport Beach hereby authorizes and directs the staff of the City of Newport Beach to enter into negotiations for a new crude oil purchase contract, to be effective January 26, 1981. ATTEST: City Cler ADOPTED this day of WC 7, , 1980. Mayor K HRC /kv 122280 0 TO: FINANCE DIRECTOR FROM: City Clerk VA - CITY OF NEWPORT BEACH SUBJECT: Contract No. 1799 CALIFORNIA City Hall 3300 W. Newport Blvd. Area Code 714 673 -2110 M' T V-4140 V71 Description of Contract Sale Of Crude Oil Authorized by Resolution No. 9731 , adopted on March 22, 1976 Effective date of Contract April 1, 1976 Contract with gMM ckgmty gafjjw=_ I)nr- Oarriboe, CA 90701 Amount of Contract am OO[1trwt City Clerk 0 March 25, 1976 Kern County Refinery, Inc. 10929 South Street, Suite 202 Cerritos, CA 90701 0 Subject: Your purchase of crude oil from the City of Newport Beach C -1799 Hnclosed is an executed copy of the above agreement. This agreement was authorized by the City Council of the City of Newport Beach by the adoption of Resolution No. 8732.on March'122, 1976. Doris George Acting City Clerk swk enc. 0 0 CRUDE OIL PURCHASE CONTRACT THIS CONTRACT is made and entered this 10th day of March, 1976, by and between THE CITY OF NEWPORT BEACH (herein referred to as "SELLER "), and KERN COUNTY REFINERY, INC. (herein referred to as "BUYER "). SELLER agrees to sell and deliver to BUYER and BUYER agrees to purchase and receive from SELLER crude oil subject t o and in accordance with the terms herein stated. TERM The term of this agreement shall begin on April 1, 1976, and shall continue until terminated by at least thirty (30) days' prior written notice from one party to the other, provided, however, that the term of this agreement may not be thus terminated so as to end before June 1, 1976. QUANTITY SELLER agrees to sell to BUYER all of the crude oil available to SELLER for purposes of sale from the property situated in the oil field or oil fields described herein as determined from gauges taken in SELLER'S delivery tanks or as determined from meters when delivery is made by means of an automatic custody transfer unit approved by BUYER. Said quantities, so determined, are subject to corrections for temperature and volumetric deduction for water, sand and other foreign substances as hereinafter provided. BUYER reserves the right, at any time, upon not less than thirty (30) days' prior written notice, to limit monthly deliveries to a quantity specified by BUYER, which quantity shall not be less than 12000 barrels per calendar month. l • 0 The term "barrel" whenever iced in this agreement shall mean a barrel of forty -two (42) U.S. gallons in bulk. 600 Fahrenheit is established as thermal temperature for crude oil to be delivered. The quantity and temperature of the crude oil in any tank shall be determined at time of delivery, and the volume at 600 Fahrenheit shall be ascertained by multiplying the measured volume by the factor corresponding to the observed temperature as published 11itthe American Society for Testing Materials Petroleum Measurement Tables designation D -1250 or latest revision thereof. The net quantity of crude oil sold and delivered by SELLER and purchased, received and paid for by BUYER shall be the quantity at 600 Fahrenheit determined as provided above less full volumetric deduction for all water, sand or other foreign substances as determined by tests hereinafter specified. LOCATION AND PROPERTY DESCRIPTION BUYER agrees to purchase and receive crude oil and SELLER agrees to sell and deliver crude oil from the oil fields located in the State of California and from leases in said oil fields described in EXHIBIT "ONE" to this agreement. WARRANTY SELLER represents and warrants that it has good title to crude oil delivered and the right to deliver the same free and clear tions, and that said crude oil will be produced applicable laws and rules and regulations issued and hold BUYER harmless from all loss, damage or by reason of the breach or failure of any of the guarantees above set forth. -2- of encumbrances or other obliga- in strict compliance with all thereunder. SELLER will indemnify liability which BUYER may sustain representations, warranties or 0 ft TITLE Title to the crude oil shall pass to BUYER as and when it is delivered to BUYER at the Armstrong Petroleum Company Tank Farm. UALITY The quality of crude oil delivered by SELLER to BUYER hereunder shall be determined by the tests hereinafter specified. BUYER shall not be obligated to accept any crude oil containing more than three per cent (3 %) by volume of water, sand and other foreign substances nor having a gravity lower than 170 A.P.I. The viscosity of the crude oil delivered by SELLER into the pipeline utilized by BUYER shall be no higher than that required by BUYER for operation of the peipline utilized by BUYER. BUYER reserves the right to establish such maximum viscosity. In the event that SELLER requires the use of a dilutent to obtain such viscosity, the quality of the dilutent used shall be subject to BUYER'S approval, provided, however, that BUYER shall not act unreasonably in this regard. If at any time crude oil offered for delivery shall be of a lower gravity than the minimum gravity hereinbefore specified, BUYER, at its option, may accept said crude oil. If at any time crude oil offered for delivery shall contain more than three per cent (3 %) of water, sand or other foreign substances, ascertained as hereinafter provided, BUYER, at its option, may accept such crude oil and make deductions for all water, sand or other foreign substances as determined by said test. BUYER shall be entitled to make a dehydration charge and SELLER agrees that BUYER can deduct said charge from payments hereunder. Neither acceptance shall be deemed a waiver of BUYER'S right at any time thereafter to require strict compliance with the requirements and conditions hereinbefore specified, or of BUYER'S right to refuse to accept thereafter crude oil failing to meet such require- ments and conditions. Isla 0 0 SAMPLES All samples for testing shall be taken by BUYER through sample cocks from SELLER'S delivery tanks or by means of an approved delivery line sampler. Sample cocks shall be installed on SELLER'S shipping tanks in accordance with A.P.I. standards. TESTS Crude oil shall be tested in a laboratory agreed to between the parties hereto and such tests may be witnessed by SELLER'S representative should it so desire. Tests shall be conducted in accordance with methods prescribed in ASTM Standards on Petroleum Products and Lubricants as designated hereinbelow in their latest revision at time of delivery. Water, Sand and Other Foreign Substances: Crude oil delivered must be free from water, sand and other foreign substances as ascertained by the Centrifuge Method (ASTM D -96), using a solvent for such test approved by BUYER. Should said test fail to prove the existence of more than three per cent (3 %) of water, sand or other foreign substances, BUYER willaccept the crude oil and make deduction for all water, sand and other foreign substances determined by such test. The solvent used in said Centrifuge Method shall be of such composition as may be required to wholly precipitate the water, sand and other foreign substances in the crude oil. Gravity: The gravity of the crude oil delivered shall be the gravity of the samples as determined by ASTM Method D -287 corrected to 600 F. as shown in Table No. 5 of ASTM -IP Measurement Tables. Viscosity: The viscosity of the crude oil delivered shall be determined in accordance with ASTM Method D -88. -4- C] s DELIVERIES 0 Deliveries shall be made as and when crude oil is produced and accumulated in approximately shipping tank lots. Whenever a tank of crude oil is tendered by SELLER and accepted by BUYER, delivery of the crude oil so tendered and accepted shall be made by SELLER and received by BUYER without unnecessary delay. BUYER shall have the right but not the obligation to lay, maintain, operate and remove such pipelines across and from the above described property as it may deem necessary in connection with the receipt and movement of crude oil delivered hereunder. Should trucking be required in the judgement of BUYER, such trucking shall be scheduled by BUYER and the expense therefor shall be borne by BUYER. FORCE MAJEURE In the event of interruption of the operations of SELLER by reason of, caused by or arising out of strikes, fires, washouts, sanding of wells, breakage of tankage or pipelines, war, inevitable cause or any other cause whatsoever, not under the reasonable control of SELLER, then SELLER shall not be required to deliver crude oil so affected during the period of such interruption but deliveries shall commence immediately upon cessation of such interruption. In the event of the total or partial interruption of the business of BUYER by reason of, or caused by or arising out of any of the aforesaid causes, or any other cause not under the reasonable control of BUYER, then BUYER shall not be required to receive any of said crude oil during the period of such interruption, but the receipt thereof shall commence immediately upon the cessation of such interruption. -5- PRICE For all crude oil delivered hereunder, BUYER agrees to pay and SELLER agrees to accept the posted prices of Standard Oil Co. of California for upper or lower tier crude oil for the Newport (other than Anaheim Sugar type) Field for crude oil of like gravity and quality notwithstanding sulphur content at the well in the field where produced in effect on the date of each delivery. SELLER shall certify to BUYER all quantities of crude oil that are exempt. PAYMENT All payments for the crude oil delivered during each calendar month shall be made by the fifteenth day of the succeeding calendar month, by mailing check therefor to: 7 /8ths to: ARMSTRONG PETROLEUM CORPORATION P.O. BOX 1546 NEWPORT BEACH, CALIFORNIA 1 /8th to: THE CITY OF NEWPORT BEACH 3300 NEWPORT BOULEVARD NEWPORT BEACH, CALIFORNIA 92660 With each payment to the CITY OF NEWPORT BEACH, BUYER will simultaneously provide a declaration under penalty of perjury, in the format prescribed by the CITY OF NEWPORT BEACH, indicating the quantity of crude oil purchased during the calendar month for which payment is being made, the amount paid to ARMSTRONG PETROLEUM CORPORATION in connection therewith, the amount paid to the CITY OF NEWPORT BEACH in connection therewith, plus any other information relevent thereto requested by the CITY OF NEWPORT BEACH. In the event of a dispute as to the title to crude oil deliverable, or as to any payment therefor, BUYER may withhold payment pending determination of such dispute, or may interplead the claimants; the payment into court by BUYER of the amount due for crude oil delivered shall be compliance with the providions hereof in respect to payment therefor. 10 • NOTICES E Any notice hereunder addressed to the respective parties at the address stated below, or to such other address as each of them may hereafter from time to time designate in writing to the other, and deposited in a United States Post Office, postage prepaid, shall be considered good and valid notice hereunder effective from the date of mailing: CITY OF NEWPORT BEACH 3300 NEWPORT BOULEVARD NEWPORT BEACH, CALIFORNIA 92660 ARMSTRONG PETROLEUM CORPORATION P.O. BOX 1546 NEWPORT BEACH, CALIFORNIA KERN COUNTY REFINERY, INC. 10929 SOUTH STREET, SUITE 202 CERRITOS, CALIFORNIA 90701 MISCELLANEOUS This agreement shall inure to the benefit and be binding upon the heirs, successors, and assigns of the parties hereto. Time is expressly made of the essence in this agreement. This agreement is entered into with reference to the laws of the State of California which shall be applied with regard to any disputes arising hereunder. CITY OF NEWPORT BEACH BYAW.G MAYUK ATTEST: BY Acting City erk KERN COUNTY REFINERY, INC. BY M. LeDoux, Vice President D. -7- Crude Oil Supply 0 RESOLUTION NO. 8 73 2 0 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE AN AGREE- MENT BETWEEN THE CITY OF NEWPORT BEACH AND KERN COUNTY REFINERY, INC. FOR THE PURCHASE OF CRUDE OIL, AND AUTHORIZING THE TERMINATION OF THE EXISTING AGREEMENT BETWEEN THE CITY OF NEWPORT BEACH AND GOLDEN EAGLE REFINING COMPANY, INC. WHEREAS, there has been presented to the City Council of the City of Newport Beach, a certain contract between the City of Newport Beach and Kern County Refinery, Inc., for the purpose of crude oil; and WHEREAS, the City Council has considered the terms and conditions of said agreement and found them to be fair and equitable; and WHEREAS, the presently existing contract regarding the purchase of crude oil with Golden Eagle Refining Company will terminate since Golden Eagle Refining Company has given the City of Newport Beach a thirty day notice of cancellation, effective March 31, 1976; and WHEREAS, it is desirable and necessary to terminate said agreement. NOW, THEREFORE, BE IT RESOLVED that said contract above described is approved, and the Mayor and City Clerk are hereby authorized and directed to execute the same on behalf of the City of Newport Beach; BE IT FURTHER RESOLVED that the City Clerk is hereby authorized and directed to forward written notice to Golden Eagle Refining Company that its agreement with the City of Newport Beach is terminated effective March 31, 1976. ADOPTED this 22nd day of March , 1976 yor ATTEST: City Clerk HRC:yz 3/18/76