SALES/PURCHASE AGREEMENT
BETWEEN
PG&E NGL MARKETING, L.P.
AND
PENN OCTANE CORPORATION
FOR
PRODUCT
AT
PG&E'S XXXXX PLANT
OCTOBER 1, 1999
PG&E NGL Marketing, L.P. and any other company referenced here which uses the
PG&E name or logo are not the same company as Pacific Gas and Electric Company,
the California Utility. These companies are not regulated by the California
Public Utilities Commission, and customer do not have to buy products from these
companies in order to continue to receive quality regulated services from the
utility.
TABLE OF CONTENTS
ARTICLE NUMBER TITLE PAGE NUMBER
-------------- ------------------------ -----------
1 DEFINITIONS. . . . . . . 1
2 TERM . . . . . . . . . . 2
3 QUANTITY . . . . . . . . 2
4 DELIVERY POINT . . . . . 3
5 QUALITY. . . . . . . . . 4
6 PRICE. . . . . . . . . . 5
7 MEASUREMENT AND ANALYSIS 6
8 BILLING AND PAYMENT. . . 6
9 TAXES. . . . . . . . . . 9
10 WARRANTIES . . . . . . . 9
11 LIMITATION OF LIABILITY. 10
12 FORCE MAJEURE. . . . . . 10
13 WARNING. . . . . . . . . 12
14 INDEMNITY. . . . . . . . 13
15 WAIVER . . . . . . . . . 14
16 ASSIGNMENT . . . . . . . 14
17 NOTICES. . . . . . . . . 14
18 CONFIDENTIALITY. . . . . 15
19 GOVERNING LAW. . . . . . 16
20 HEADING. . . . . . . . . 16
21 MODIFICATION . . . . . . 16
22 ENTIRE AGREEMENT . . . . 16
TABLE OF CONTENTS
(CONT.)
EXHIBIT A PRODUCT SPECIFICATION
EXHIBIT B MEASUREMENT & SAMPLING
EXHIBIT C MATERIAL SAFETY DATA SHEETS
PRODUCT
SALES/PURCHASE AGREEMENT
Effective upon completion of delivery facilities and first deliveries of
Product, estimated to be October 1, 1999 ("Effective Date"), PG&E NGL MARKETING,
L.P., a limited partnership organized under the laws of the state of Delaware,
whose principle address is 0000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000 ("Seller") and PENN OCTANE CORPORATION, a Delaware corporation, having an
office at 0000 Xxxxxxxx Xxxxx, Xxxxx 000X, Xxxxxxx, Xxxxx 00000 ("Buyer"), enter
into this Agreement for the sale and purchase of a propane stream ("Product")
produced at Seller's Xxxxx Fractionator. Seller and Buyer are sometime
hereinafter referred to as the "Parties" and individually as a "Party".
ARTICLE 1
---------
DEFINITIONS
-----------
1.0 The following terms when used in this Agreement shall have the following
meanings:
1.1 "Barrel" means forty-two Gallons.
1.2 "Contract Year" means the twelve Month period beginning as of the first
day of October, 1999, and each successive twelve Month period thereafter.
1.3 "Xxxxx Fractionator" refers to Seller's Xxxxx Fractionation Plant
located in Nueces County, Texas.
1.4 "Gallon" means one U.S. standard liquid gallon containing two hundred
and thirty-one cubic inches at a temperature of sixty degrees Fahrenheit and at
the equilibrium pressure of the liquid pressured.
1.5 "Month" means a period commencing at nine (9:00) a.m., local time, on
the first day of a calendar month and ending at nine (9:00) a.m., local time, on
the first day of the next succeeding calendar month.
1.6 "Pound" means a unit of weight equivalent to sixteen ounce avoirdupois.
1
1.7 "Price" means the price per Gallon of Product determined in accordance
with Article 6 hereof.
1.8 "Product" shall mean a predominantly propane stream which shall conform
to the specifications in Article 5.1 herein.
ARTICLE 2
---------
TERM
----
2.1 This Agreement shall be in effect for an initial term
___________________commencing upon completion of delivery facilities and first
deliveries of Product estimated to be October 1, 1999, and for additional terms
of one (1) year each, provided that either party may terminate this Agreement at
the end of the initial term or any subsequent one year term by giving net less
than six (6) months prior written notice to the other Party.
ARTICLE 3
---------
QUANTITY
--------
3.1 Seller shall sell and Buyer shall purchase a monthly average of
-----_________________plus/minus 10% at Seller's option.
3.2
3.3
3.4 In the event Seller loses feedstock in its system, as a result of
reduced production from the natural gas plants supplying feedstocks to Seller's
Xxxxx Fractionator, for reasons other than Force Majeure, such that Seller''
total volume of Propane is insufficient to meet Seller's obligations, then
Seller shall allocate available volumes to its customers on a ratable basis.
Such reduction of production shall include but not be limited to reductions due
to processing economics, or due to reduced gas volumes as a result of reduced
drilling or producing activity. Buyer's allocated volumes shall be determined
by multiplying Buyer's minimum contract volume by a fraction, the numerator of
which is the total available volume of propane at Seller's Xxxxx Fractionation
Plant and the denominator of which is the total minimum contract volume of all
of Seller's propane sales contracts at Seller's Xxxxx Fractionation Plant.
Seller shall provide Buyer with written notice of planned reductions as soon as
reasonably possible.
2
ARTICLE 4
---------
DELIVERY POINTS
---------------
4.1 The Product to be sold hereunder shall be delivered or caused to be
delivered by Seller to Buyers, or Buyer's designated representative for the
account of Buyer, by pipeline at the Points of Delivery set forth below.
4.2 The Point of Delivery for all Product sold and delivered hereunder shall
be i) Seller's meter station at a newly constructed interconnected between
Seller's propane pipeline and the Exxon 12" propane pipeline located near Xxxx
Xxxxxx road in Nueces County, Texas and ii) Seller's meter station located at
the existing interconnect of Seller's propane pipeline with the Seadrift Xxxx
Pipeline, located in Nueces County, Texas. Seller shall own, operate and
maintain at its sole cost and expense the meter and delivery facilities located
at the Points of Delivery.
4.3 Title and risk of loss to all Product sold hereunder shall pass from
Seller to Buyer at the Points of Delivery.
4.4 The delivery pressure shall be sufficient to allow Product to enter
Buyer's or Buyer's designee's pipeline at the Points of Delivery at the then
prevailing operating pressure therein, which may vary from time to time, but
Seller shall not be obligated to deliver at a pressure in excess of 600 psig to
the Exxon pipeline or 1,000 psig to the Seadrift pipeline.
ARTICLE 5
---------
QUALITY
-------
5.1 The Product shall meet the specification ("Specifications") set forth in
Exhibit A. If the Product does not meet the Specifications, the Party becoming
aware of such failure shall immediately notify the other Party and Seller shall
use best efforts to immediately correct or cause to be corrected such failure,
so as to deliver Product conforming to the Specifications. If Seller is unable
to deliver Product conforming to the Specification, Buyer may at its election
accept or reject deliveries of such off-specification Product.
3
5.2 If accepted by Buyer the Product shall be paid for as outlined in
Article 6, Price. Buyer's acceptance of Product that does not conform to the
Specifications shall not constitute a waiver of such Specifications by Buyer
regarding Product subsequently delivered under this Agreement after such
acceptance.
ARTICLE 6
---------
PRICE
-----
6.1
6.2
a)
b)
c)
ARTICLE 7
---------
MEASUREMENT AND ANALYSIS
------------------------
7.1 All aspect of measurement and analysis regarding Product deliveries
under this Agreement shall be conducted in accordance with the provisions of
Exhibit B which is attached hereto and incorporated by reference. It is
understood that the measurement and analytical equipment described in Exhibit B
shall be installed, owned and operated by Seller.
4
ARTICLE 8
---------
BILLING AND PAYMENT
-------------------
8.1 Buyer shall maintain during the entire term of this Agreement an
irrevocable stand-by Letter of Credit ("LC") issued from a "A" rated bank,
acceptable to Seller, in sufficient amount to secure amounts due to payable to
Seller. Expiration of the LC should be no earlier than 45 days after
termination of the contract.
8.2 On or before the fifth (5th) work Day of each Month Seller shall render
an invoice showing the quantity of Product, by individual components, purchased
and sold hereunder during the preceding Month, and the amount due. Duplicate
original invoices shall be mail to:
Penn Octane Corporation
Attn: Accounts Payable
0000 Xxxxxxxx Xxxxx, Xxxxx 000X
Xxxxxxx, XX 00000
8.3 Buyer shall pay invoices(s) by wire transfer or automated clearing house
("ACH") within ten (10) working days from the date of Seller's invoice, without
any adjustments (unless such adjustments are for invoiced amounts disputed in
good faith), discounts or set-offs. Buyer shall include in the wire transfer or
ACH detail, the invoice number(s), source of payment, and amount of payment. In
the event the payment due date falls on a Saturday or New York bank holiday
other than a Monday New York bank holiday, payment shall be due on the
immediately preceding New York banking day. In the event the payment due date
falls on a Sunday or Monday New York bank holiday, payment shall de due on the
next succeeding New York banking day.
8.4 Seller reserves the right to withhold delivery of Product to Buyer at
any time Buyer's payments becomes five (5) days past due, provided that Seller
gives Buyer five (5) days prior written notice of such default and its intent to
withhold delivery. If at the end of such five (5) day period, Buyer has not
cured its default, Seller may withhold delivery of Product upon forty eight (48)
house notice. If Buyer becomes current in its payments, Seller shall resume
deliveries of Product hereunder. Seller shall have the right to terminate this
Agreement if such default is not cured within sixty (60) days from Seller's
delivery of the notice of default to Buyer. The foregoing rights to withhold
delivery and terminate this Agreement shall not apply to failure to pay which
such payments are disputed in good faith. Buyer shall have no obligation to pay
for any Product withheld by Seller pursuant to this section.
5
8.5 Buyer shall pay interest on all past due invoices at the then effective
prime rate of interest as published under "Money Rates" by The Wall Street
---------------
Journal on the date the invoice is due, plus two percentage points above the
-------
published rate, from the date due until the date of payment. Interest shall be
calculated by multiplying the total amount due by the daily interest rate by the
number of days past due. In addition, Buyer shall pay all costs and expenses,
including reasonable attorney fees, incurred by Seller in collecting past due
payments.
8.6 In the event either Party shall (i) make an assignment or any general
arrangement for the benefit of creditors, (ii) default in the payment
obligation, (iii) file a petition or otherwise commence, authorized, or
acquiesce in the commencement of a proceeding or cause under any bankruptcy or
similar law for the protection of creditors or have such petition filed or
proceeding commenced against it which remains unvacated and unstayed for more
than 60 days; or (iv) otherwise becomes bankrupt or insolvent (however
evidenced); then the other Party shall have the right to either withhold
payment and/or suspend deliveries or terminate the Agreement upon 48 hours prior
written notice.
8.7 Each shall have the right, using third party auditors at its own
expense, upon reasonable notice and at reasonable times, to examine the books
and records of the other Party only to the extent reasonable necessary to verify
the accuracy of any statement, change, payment or computation made under this
Agreement. All invoices and xxxxxxxx will be conclusively presumed final and
accurate unless objected to in writing, with adequate explanation and/or
documentation, within two years after the month of delivery. All retroactive
adjustments under this Section 8.7 shall be pain in full by the Party owing
payment within 30 days of notice and substantiation of such inaccuracy.
6
ARTICLE 9
---------
TAXES
-----
9.1 Seller agrees to pay any and all property taxes, fees, or other charges
imposed or assessed by governmental or regulatory bodies, the taxable incident
of which occurs prior to the transfer of title to Buyer.
9.2 Buyer agrees to pay any and all property taxes, fees, or other charges
imposed or assessed by governmental or regulatory bodies, the taxable incident
of which occurs after transfer of title to Buyer.
9.3 Any and all taxes, fees, or other charges imposed or assessed by
governmental or regulatory bodies, the taxable incident of which is the transfer
of title or the delivery of the Product hereunder, or the receipt of payment
therefor, regardless of the character, method of calculation, or measure of the
levy or assessment, shall be paid by the Party upon whom the tax, fee, or
charges is imposed by law.
9.4 Buyer shall furnish Seller with an exemption or resale certificate or
other document necessary to comply with any applicable sales and use tax laws.
ARTICLE 10
----------
WARRANTIES
----------
10.1 Seller warrants that it has title to the Product delivered under this
Agreement, that the Product shall be free from all liens, encumbrances and
security interests, and that the Product shall meet the Specifications set forth
in Exhibit A. THERE ARE NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE
WARRANTIES OF MERCHANTABILITY OR FITNESS OF THE PRODUCT FOR A PARTICULAR
PURPOSE, EVEN IF SUCH PURPOSE IS KNOWN TO SELLER.
7
ARTICLE 11
----------
LIMITATIONS OF LIABILITY
------------------------
11.1 Neither party shall be liable on any claim under or arising out of or
for breach of this Agreement unless such action to enforce such claim is brought
not later than two years from the date of cause of action arose.
11.2 IN NO EVENT SHALL EITHER PARTY BE LIABLE UNDER THIS AGREEMENT, WHETHER
IN WARRANTY, CONTACT, OR TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR
OTHERWISE, FOR ANY INCIDENTAL OR CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES
WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING, WITHOUT
LIMITATION THE NEGLIGENCE OF ANY PART, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR
CONCURRENT, OR ACTIVE OR PASSIVE.
ARTICLE 12
----------
FORCE MAJEURE
-------------
12.1 No failure or omission by either party to carry out or observe any of
the terms or conditions of this Agreement, including, but not limited to such
party's delay or failure to perform as a result of such party's failure to
manufacture, deliver, receive, transport, use, or consume Product due to
occurrences set forth below, shall, except in relation to obligations to make
payments under this Agreement for Product sold and delivered, give rise to any
claim against the party in question or be deemed a breach of the Agreement to
the extent such failure or omission arises from the cause reasonably beyond the
control of the party, including but not limited to:
(a) Compliance (voluntary or involuntary) with laws, decrees, guidelines,
requests, or like of any government or person authorized to act therefor, or of
international organizations of which the United States is a member including,
without limitation, the international Energy Agency.
8
(b) Restriction or cessation of production of Product by reason of the
imposition by any government or person acting under the color or claim of any
governmental authority of conditions or requirements which make it necessary to
cease or to reduce the production or use of the Product.
(c) Hostilities of war (declared or undeclared), embargoes, blockades, civil
unrest, riots or disorders, terrorism, or sabotage.
(d) Fires, explosions, lightning, maritime peril, collisions, storms,
landslides, earthquakes, floods, and other acts of nature.
(e) Strikes, lockouts, or other labor difficulties (where or not involving
employees of Seller or Buyer).
(f) Disruption or breakdown of facilities or equipment, or shortage or
interruption of supply of labor, or materials affecting facilities engaged in
production, transportation or use of Product.
(g) Closing or restrictions on the use of harbors, railroads or pipeline.
(h) Freezing of xxxxx or lines of pipelines or inability to secure
rights-of-way.
(i) Any substantial reduction in availability of feedstock and/or other
materials necessary to make Product.
(j) Any other cause, whether or not of the same class of kind, beyond the
control of either party which prevents or interferes with the performance of
this Agreement.
12.2 Notwithstanding the provisions of Article 12.1 hereof, nothing
contained in this Agreement shall relieve Buyer of the obligation of pay in full
the purchase price of any other amounts due for the Product actually delivered
hereunder.
12.3 Upon the occurrence of any of the Force Majeure events described in
Article 12.1 hereof, the party claiming Force Majeure shall notify the other
party promptly in writing of such event and, to the extent possible, inform the
other party of the expected duration of the Force Majeure event and the
quantities of Product to be affected by the suspension or curtailment of
performance under this Agreement.
12.4 No curtailment or suspension of deliveries or acceptance of deliveries
pursuant to this Section shall operate to extend the period of this Agreement or
to terminate this Agreement. Neither Seller nor Buyer shall have any obligation
to make up deliveries or purchases of Product that were suspended during the
force Majeure event.
9
ARTICLE 13
----------
WARNING
-------
13.1 The Material Safety Data Sheet attached hereto as Exhibit C contains
information regarding health risks and recommendations for the safe use and
handling of such Product. Buyer acknowledges and represents that it has read
and understands the material Safety Data Sheet, and warnings. Buyer's
obligations in this regard will include but not be limited to (i) warning the
employees of Buyer and its affiliates who may become exposed to such Product of
the hazards described in such documents; (ii) taking measures to assure that
such employees have appropriate safety equipment which is adequately maintained
and properly used and that all precautions contained in the Material Safety Data
Sheet, and other warnings are followed; and (iii) warning third parties,
including but not limited to Buyer's customers who may use or be exposed to such
product, of such hazards, and requiring that the precautions contained in such
Material Safety Data Sheet, and other warnings are followed. If Buyer does not
so comply with its obligation with respect to all hazards disclosed in such
Material Safety Data Sheet, or warnings, Buyer will indemnify and hold Seller
harmless from any claims, causes of action, liabilities losses or expenses on
account of injury or death of person and/or damage to property arising directly
out of Buyer's failure to fulfill its obligations under this paragraph.
10
ARTICLE 14
----------
INDEMNITY
---------
14.1 To the fullest extent permissible by law, Buyer agrees to indemnify,
defend with counsel of Buyer's choice, and hold Seller harmless from and against
any and all claims, demands, liabilities, losses, costs and expenses (including
reasonable attorney's fees and costs of investigation and/or litigation), causes
of action, and damages (exclusive of consequential, incidental, punitive,
exemplary, and indirect damages) (i) following the commencement of deliveries of
Product hereunder at the Delivery Point(s) and downstream from the Delivery
Point(s) or (ii) that arise out of the violation of any federal, state, or local
regulations by Buyer or its employees or agents in connection with the
performance of this Agreement.
14.2 To the fullest extent permissible by law, Seller agrees to indemnify,
defend with counsel of Seller's choice, and hold Buyer harmless from and against
any and all claims, demands, liabilities, losses, costs and expenses (including
reasonable attorneys' fees and costs of investigation and/or litigation), causes
of action, and damages (exclusive of consequential, incidental, punitive,
exemplary, and indirect damages) asserted against Buyer (i) upstream of the
Delivery Point(s) prior to the commencement of deliveries of Product hereunder
or (ii) that arise out of the violation of any federal, state, or local
regulations by Seller or (ii) its employees or agents in connection with the
performance of this Agreement.
14.3 IT IS THE INTENT OF THE PARTIES THAT THIS INDEMNITY AND THE LIABILITY
ASSUMED UNDER IT BE WITHOUT REGARD TO THE CAUSE(S) THEREOF, INCLUDING, WITHOUT
LIMITATION, THE NEGLIGENCE OF ANY INDEMNIFIED PARTY, WHETHER SUCH NEGLIGENCE BE
SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE; PROVIDED, NEITHER PARTY SHALL
BE LIABLE IN RESPECT OF ANY CLAIM TO THE EXTENT SAME RESULTED FROM THE GROSS
NEGLIGENCE, WILLFUL MISCONDUCT OR BAD FAITH OF THE INDEMNIFIED PARTY.
11
ARTICLE 15
----------
WAIVER
------
15.0 No waiver, either express, or by course of dealing or course of
performance, of any of the terms and conditions contained in this Agreement, or
waiver of any breach of any of the terms and conditions contained in this
Agreement, shall be construed as a subsequent waiver of any of the terms and
conditions of this Agreement or as a waiver of any subsequent breach of the same
or any other term or condition of this Agreement.
ARTICLE 16
----------
ASSIGNMENT
----------
16.0 Neither party shall assign this Agreement without the prior written
consent of the other party, which consent shall not be unreasonable withheld.
ARTICLE 17
----------
NOTICES
-------
17.0 All notices required or permitted by the terms of this Agreement shall
be deemed sufficient if given by personal delivery, telegram, telex, or
facsimile, or by prepaid, certified mail and addressed to the Seller and to the
Buyer as follows:
To Seller: PG&E NGL MARKETING, L.P.
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Director, NGL Marketing
Telephone No: (000) 000-0000
Fax No: (000) 000-0000
To Buyer: PENN OCTANE CORPORATION
0000 Xxxxxxxx Xxxxx, Xxxxx 000-X
Xxxxxxx, Xxxxx 00000
Attn: Vice president
Telephone No: (000) 000-0000
Fax No: (000) 000-0000
12
17.1 Notices of change of address, facsimile to telephone numbers, or
designated department or individuals of either party shall be given in writing
to the other party.
ARTICLE 18
----------
CONFIDENTIALITY
---------------
18.0 During the term of this Agreement Seller and Buyer will maintain the
confidentiality of this Agreement and will not disclose the terms hereof to any
third party, except independent auditors who are under written obligations of
confidentiality with respect to this Agreement, and as may be required in the
option of such party's counsel to comply with orders of any court or
governmental agency, or comply with any laws, rules and regulations of
applicable governmental agencies, including without limitation, federal and
state securities laws and authorities. The obligations of confidentiality
hereunder will not apply to any such information which is or becomes, through no
fault of the respective party, generally known to the public, or which was
previously known to the respective party or is received by the respective party
from a third party who warrants it is legally free to disclose such information.
ARTICLE 19
----------
GOVERNING LAW
-------------
19.0 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS, U.S.A. WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW. THE PARTIES HERETO AGREE THAT VENUE AND JURISDICTION WILL LIE IN
HOUSTON, XXXXXX COUNTY, TEXAS.
13
ARTICLE 20
----------
HEADING
-------
20.0 The section headings contained in this Agreement are for the
convenience of the parties only and shall not be interpreted as part of this
Agreement.
ARTICLE 21
----------
MODIFICATION
------------
21.0 This Agreement shall not be modified except by written instrument
executed by duly authorized representatives of the respective Parties.
ARTICLE 22
----------
ENTIRE AGREEMENT
----------------
22.0 This Agreement, including all Exhibits, contains the full and complete
understanding of the parties with respect to the purchase and sale of Product.
This Agreement shall not be affected by the acknowledgment or acceptance by
Seller or Buyer of purchase orders, acknowledgements, sales orders, releases or
any other form submitted by the other Party, which contain other or different
terms and conditions from those included in this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their authorized representatives as of the day and year first above written.
PG&E NGL MARKETING, X.X. XXXX OCTANE CORPORATION
by PG&E NGL Hydrocarbons Company
its General Partner
By: By:
-------------------------------- --------------------------------
Title: Title:
----------------------------- -----------------------------
14
EXHIBIT A
SPECIFICATION FOR PROPANE
PG&E XXXXX FRACTIONATOR
THE PROPANE SHALL BE FREE FROM OILS, SOLVENTS, ALCOHOL, DIRT, FOREIGN MATTER AND
OTHER CONTAMINANTS AND SHALL HAVE A COMPOSITION CONFORMING TO THE FOLLOWING:
Minimum Maximum
------- -------
Composition
-------------------------
Vapor Pressure @ 100 F 208
Composition,(Liq. Vol%):
Butanes & Heavier 2.5
Propylene Content 5.0
Propane Content 90.0
Corrosion, Copper Strip 1.0
Total Sulfur,(PPMW) 123
Free Water Content None
EXHIBIT B
MEASUREMENT AND SAMPLING
CONTENTS PAGE
-------- ----
Section 1.0 Introduction 2
Section 2.0 General Criteria 2
Section 3.0 LPG Measurement by Orifice Meter 4
3.1 Orifice Run Criteria 4
3.2 Installation Considerations 6
3.3 Secondary Devices 7
3.3.1 Differential Pressure Transmitters 7
3.3.2 Static Pressure Transmitters 8
3.3.3 Temperature Transmitters 9
3.3.4 Product Analysis 9
3.3.5 Densitometers 12
3.3.6 Flow Computers 12
3.3.7 Calibration and Checking Procedures 13
3.4 Orifice Flow Calculation Procedure 14
Section 4.0 Final Accounting Procedure 15
4.1 Conversion to Liquid Volume 15
4.2 Registration Corrections 15
4.3 Statements 16
EXHIBIT B
---------
MEASUREMENT AND SAMPLING
XXXXX PROPANE SALES
OCTOBER 1, 1999 PAGE 2
--------------------------------------------------------------------------------
Section 1.0 Introduction
------------
This document details criteria, equipment and procedures relevant to the,
measurement of LPG. It must be read in conjunction with the following flow
measurement standards, which are considered part of the document:
1) API Manual of Petroleum Measurement - 14.3, 14.6 latest edition, and
14.8.
2) GPA Standard 8173 - Latest Edition.
3) API Standard 2530 (AGA Report No 3) Second Edition.
Scope
-----
LPG or Product as used herein is meant to refer to propane, a predominantly
propane stream with minor amounts of carbon dioxide, methane, ethane and
butanes. Operational limits shall be as follows:
Pressure: 250 to 450 psig
Temperature: Maximum 120'F
Section 2.0 General Criteria
-----------------
1) The quantities of delivered LPG shall be measured and calculated in mass
pounds using an orifice meter with differential pressure, temperature and
pressure transmitters; densitometer, microprocessor-based flow
computertotalizer, printer, and composite sampler or on-stream analyzer.
2) The measurement facilities shall be designed, installed, maintained, and
operated, and have data accumulation features with sufficient quality to assure
overall flow measurement system uncertainty of no more than +1.0%.
-
EXHIBIT B
---------
MEASUREMENT AND SAMPLING
XXXXX PROPANE SALES
OCTOBER 1, 1999 PAGE 3
--------------------------------------------------------------------------------
3) The fluid measured shall always be maintained at a pressure and
temperature assuring that only a single phase shall exist. This fluid will be
measured in a liquid phase.
4) The procedures and methods used shall be applicable to high quality LPG.
5) Product analysis shall be determined by Seller's gas laboratory and
proved to both parties.
6) Either party, at their option and expense, may install check measuring
equipment in series with the other parties' measuring equipment; provided
however, that such check measuring equipment shall be so installed as not to
interfere with the operation of the other parties' measuring equipment. Each
party shall have access to all measuring equipment at reasonable hours, but
Seller shall be responsible for the reading, calibrating and adjusting thereof
of such measuring equipment.
7) Each party, at their option and expense, may install telemetry or
telephone equipment to communicate flow data and analysis; provided, however,
that such equipment does not interfere with operation or accuracy of the other
parties measuring equipment.
8) Seller shall remove meter ticket(s) from the meter station every fifteen
(15) days. Seller shall sent to Buyer copies of all tickets, and sample
analysis with calculations pertaining to LPG deliveries.
EXHIBIT B
---------
MEASUREMENT AND SAMPLING
XXXXX PROPANE SALES
OCTOBER 1, 1999 PAGE 4
--------------------------------------------------------------------------------
9) Pulsation levels shall not degrade measurement quality. The maximum
allowable level of dynamic peak-to-peak differential pressure across the orifice
place shall not exceed 0.3 times the expected steady-state differential pressure
over the entire
facilities operating conditions. The dynamic differential pressure shall be
that as measured at the orifice meter taps.
Section 3.0 LPG Measurement by Orifice Meter
------------------------------------
3.1 Orifice Run Criteria
----------------------
The meter primary measuring device shall be an orifice run with a sharp edged
concentric orifice place. The meter tube and orifice place shall be designed,
sized and maintained to meet the following design criteria:
1) The combination of the orifice diameter (d) and the inside pipe diameter
(D) shall result in a Beta Ratio (d/D) between the limits of 0.20 and 0.60 for
2" to 6" meter tubes. Orifice Places, differential pressure device ranges or
even meter tube sizes shall be changed as needed to meet this design criteria.
Under special circumstances, other Beta Ratios may be utilized for short terms
if mutually agreed.
2) The primary element sizing results shall be such that the normal long
duration readings of the differential pressure will not be lower than 20 inches
of water nor greater than 400 inches of water. Very short duration, strictly
abnormal, readings of the differential pressure shall be maintained between 10
inches and 400 inches of water whenever the secondary device capability is
provided. The obvious need for multiple parallel differential rangeability
exceeding 4:1) will be discussed with the secondary device equipment. Orifice
plate size changing will be utilized, whenever practical, to maintain
differential pressures measuring devices at 20 percent to 90 percent of their
calibrated range.
EXHIBIT B
---------
MEASUREMENT AND SAMPLING
XXXXX PROPANE SALES
OCTOBER 1, 1999 PAGE 5
--------------------------------------------------------------------------------
3.2 Installation Considerations
----------------------------
1) The central section of a meter run shall be vendor fabricated and
certified in accordance with ANSI/API-2530 (American Gas Association Report
No.3). The orifice meter tube shall have a dual chamber orifice fitting for
inspection of the orifice place without disrupting flow. In any type fitting
where plate carriers are used, seal rings shall be utilized and will be
inspected each time the place is removed and replaced if necessary. Provisions
shall be made for periodic inspection of the meter tube on a 1-2 year basis.
2) Pressure reduction valves, compressors, heat exchangers and other
equipment producing unsteady flow should be located at a distance great enough
so that measurable effects cannot be detected in the vicinity of the meter tube.
The upstream meter run length shall meet or exceed the requirements of
ANSI/API-2530 for Beta Ratio 0.7 installation configuration. The downstream
meter run shall be have a minimum length of 10 diameters. Two thermowells shall
be located in the primary element between 10 and 15 diameters downstream from
the orifice plate.
EXHIBIT B
---------
MEASUREMENT AND SAMPLING
XXXXX PROPANE SALES
OCTOBER 1, 1999 PAGE 6
--------------------------------------------------------------------------------
3) The orifice plate shall be constructed of stainless steel and conform to
specifications meeting ANSI/API2530. Universal type places of 1/8 inch or
inch thickness shall be used as appropriate for meter run size. The orifice
bore size shall conform to standard sizes available in 1/8" increments.
3.3 Secondary Devices
------------------
Secondary devices utilized for the mass measurement shall be as follows and be
of sufficient quality to provide overall flow measurement uncertainty of one
percent maximum.
1) Differential pressure measurement devices used with orifice measurements
shall have vendor's specified inaccuracy of a maximum of +0.25 percent of
-
calibrated span with +0.10 percent being preferred. The ambient temperature
-
effect on the differential pressure device shall not exceed 1.0 percent of total
combined span and zero effect per 100 F. If a 0.25% D/P transmitter is used, a
heated housing (3.3.8) is required. If 0.1% D/P transmitter is used (i.e.,
"smart" transmitter) no heated enclosure is required. Differential pressure
devices shall be compensated by online computation for any vendor specified
static pressure effect (as with capacitance type detector). No single
differential pressure device shall be utilized over a differential rangeability
in excess of 4:1 (i.e. 100" to 25"). Two parallel devices should be utilized
for a rangeability up to 16:1, however, if absolutely necessary, a third
differential device could be utilized to provide differential rangeability to
64:1 (flow rangeability of 8:1). Expanded rangeabilities require sound
engineering judgement and require mutual consent of the Parties. Very low flow
rates at very low differentials could not be expected to provide a one percent
or less flow measurement uncertainly. Differential pressure measurement devices
shall not be utilized with calibration of less than one-half of its maximum span
rating.
EXHIBIT B
---------
MEASUREMENT AND SAMPLING
XXXXX PROPANE SALES
OCTOBER 1, 1999 PAGE 7
--------------------------------------------------------------------------------
The meter run and orifice shall be properly sized and the facility operated in
such a manner that the normal long duration flow rates operates above 50 percent
(preferably about 75 percent) of the calibrated range of the primary
differential device.
2) Static Pressure Transmitters
------------------------------
The pressure device specifications should be equal to the differential pressure
device given above. The general specification should be at least +0.25 percent
-
of span accuracy with a stability effect of +0.25 percent over a six-month
-
period and an ambient temperature effect equal to or better than 1.0 percent of
total combined span and zero effect per 100 F. The static pressure device for
an orifice meter shall be connected to the downstream orifice tap.
3) Temperature Transmitter
------------------------
An RTD temperature sensor with a vendor specified accuracy of the transmitter
shall be +0.2 percent of span or less with the ambient temperature effect being
-
+0.3 percent of span per 100 F ambient temperature change. The location of the
RTD temperature sensor is between 10 and 15 diameters downstream of the orifice
plate. A test thermowell shall be located six inches downstream of the RTD
sensor for checking the primary temperature device at operating conditions.
EXHIBIT B
---------
MEASUREMENT AND SAMPLING
XXXXX PROPANE SALES
OCTOBER 1, 1999 PAGE 8
--------------------------------------------------------------------------------
4) Product Analysis
-----------------
Automatic continuous sampling equipment for sampling the Product delivered by
Seller to Buyer under this Agreement shall be installed at the meter site or
other agreed upon location. The sampler shall be operated so it samples the
flowing stream proportional to the volume measured. The sampler shall be
located downstream of the meter and density meter but upstream of the back
pressure control valve. The sampler shall be operated at a pressure sufficient
to ensure a single phase liquid sample. The sampler shall be designed so as to
permit a thorough mixing of the samples and to accumulate a truly representative
sample of the Product passing through Seller's facilities. The sample shall
accumulate and continuous sample, or a continuous series of small withdrawals at
a frequency with shall vary directly with the delivery rate of flow of the
Produce.
The sample collection system shall be designed to contain the collected sample
in the liquid state. Buyer shall have the right to have a representative
present to witness the filling of sample containers and accordingly Seller shall
notify Buyer in advance of such activity. Obtaining a representative sample of
the product for transport to the laboratory shall be in accordance with GPA
Publication 2174 or Appendix B of API-2529.
EXHIBIT B
---------
MEASUREMENT AND SAMPLING
XXXXX PROPANE SALES
OCTOBER 1, 1999 PAGE 9
--------------------------------------------------------------------------------
The composite sample collected as above described shall be analyzed at Seller's
expense. Sample shall be analyzed by a standard analytical procedure mutually
agreed to by Seller and Buyer to determine the composition.
If Buyer does not contest the analysis of Seller's laboratory within fifteen
(15) days after notification of the analysis, the remaining portion of the
sample will be released. The analysis of the mixture agreed upon by both
parties shall be used to determine the mol percent and liquid volume of each
component herein and for settlement purposes hereunder. The results of
analyses shall be applied to the
accounting period during which samples were taken. If the sampler becomes
inoperative during the month or if the sample is determined to be unsuitable,
the parties will agree upon the best method to accurately estimate the analysis
of the produce received.
Each party hereto, or its representative, may take samples for verification of
composition and may be present during any of the other party's sampling
operation, at its own risk, cost and expense.
EXHIBIT B
---------
MEASUREMENT AND SAMPLING
XXXXX PROPANE SALES
OCTOBER 1, 1999 PAGE 10
--------------------------------------------------------------------------------
5) Densitometer
------------
The measurement facility shall be equipped with an on-line vibrating type
densitometer with an accuracy of +0.3% for determining the density at flowing
-
conditions. Installation should be in accordance with API Chapter 14.6. The
densitometer should be of quality wherein the effect of ambient temperature
changes are negligible. Any densitometer shall be installed downstream of the
metering tube (10 to 15 pipe diameters) and installed and operated in such a
manner that the temperature of the product in the densitometer will be within
one-half degree Fahrenheit (0.5 F) of product passing through the measurement
facility and so the pressure in the desitometer will be within three pounds per
square inch (3 psi) of the pressure of the product passing through the
measurement facility. An adequate driving force shall be provided for assuring
that proper flow is maintained through the desitometer. Online compensation of
density for pressure and temperature effects must be used for densitometers
requiring these corrections.
6) Flow Computers
---------------
Local mounted flow computers shall be utilized for determining mass flow rate
and accumulating mass flow totals. The computer shall have serial output and
printer capability, telemetry to be used in lieu of printer if available. A
"ticket" shall be automatically printed one each 24-hour period (or more often
if required) and contained time, date, current mass flow rate, factors, 24 hours
average pressure and temperature, density and accumulated mass flow. At lease
one electromechanical counter shall be included to accumulated mass flow.
Battery backup of UPS system shall be used for flow measurement system in case
of line power failure. A minimum of 24 hour uninterruptable service is
desirable. The vendor stated inaccuracy of the flow computer shall be not more
than +0.10 percent.
-
Chart recording of measured variables to quantity flow shall be used as backup.
EXHIBIT B
---------
MEASUREMENT AND SAMPLING
XXXXX PROPANE SALES
OCTOBER 1, 1999 PAGE 11
--------------------------------------------------------------------------------
7) Calibration and Checking Procedures
--------------------------------------
All instruments shall be checked and calibrated at least monthly. Traceability
on pressure, differential pressure, temperature and density transmitters should
be provided where possible by checking with primary equipment certified and
traceable to the National Institute of Standards Technology (NIST). A written
detailed calibration, checking and maintenance procedure for the differential
pressure, and temperature devices shall be used. Reference to Chapter 14.6 of
the
API Petroleum Measurement Standards Manual should be made for calibration of
densitometers.
For maintenance, the manufacturer's instruction and operating manuals must be
followed. Adequate spares and special equipment at to be available to perform
maintenance and reduce downtime.
EXHIBIT B
---------
MEASUREMENT AND SAMPLING
XXXXX PROPANE SALES
OCTOBER 1, 1999 PAGE 12
--------------------------------------------------------------------------------
On a scheduled day of each month, or at other mutually agreed intervals, the
accuracy of the measurement facility shall be verified. Seller shall give Buyer
reasonable notice when such tests are to be made in order that Buyer's
representative will have the opportunity to witness all such verifications and
procedures and shall receive copies of all calculations and reports pertaining
thereto.
3.4 Orifice Flow Calculation Procedure
-------------------------------------
All orifice flow calculations shall conform to API/ANI-2530/AGA3 AGA Report No.
3, Rev. 1969 or latest revisions.
Section 4.0 Final Accounting Procedure
----------------------------
4.1 The resultant pounds mass will be converted to individual component
pounds mass or gallons by procedures represented in the latest issue of GPA
standard 8173 (Standard for Converting Natural Gas Liquids and Vapors to
Equivalent liquid Volumes). Conversion factors as published in GPA Publication
2145-83 or latest edition "Physical Constants of Paraffin hydrocarbons" will be
used in making calculations of individual components volumes.
4.2 Registration Corrections - any meter(s) found to be registering
-------------------------
inaccurately or out of service shall be adjusted to read accurately and placed
in service immediately. For any error in excess of one-half percent (0.5%) not
known or agreed upon for the period in which the meter was inaccurate or out of
service, the quantity of the stream shall be estimated by the first one of the
following methods which is feasible in the order listed below.
EXHIBIT B
---------
MEASUREMENT AND SAMPLING
XXXXX PROPANE SALES
OCTOBER 1, 1999 PAGE 13
--------------------------------------------------------------------------------
4.2.1 By using measurements from an accurate check meter which was
calibrated for such purpose, and was in operation during the period the custody
meter was registering inaccuracy, or,
4.2.2 By correcting the error if the percentage of error is ascertainable by
calibration test, or calculation; or
4.2.3 By comparison with quantities flowing under similar conditions when
the meter was registering accurately and by the use of pertinent records.
4.2.4 The method used shall be agreed upon by both parties. The correction
shall be retroactive for any period definitely known or agreed upon by the
parties, however, if they do not agree, it shall be retroactive for one-half of
the period elapsed since the last test of the measuring equipment affected not
to exceed sixteen (16) days.
4.3 Statements
----------
Seller will provide monthly statements including the following:
1) Total mass flow in pounds for specified period of time.
2) Copy of analysis of monthly composite sample to include CO2, methane,
ethane, ethylene, propylene, propane, isobutane, normal butane and isopentane
and heavier compounds.
3) Breakdown of individual component volumes in gallons.
