HomeMy WebLinkAboutChevron Products - 1997-04-07�-4//i ~n , r 4-A- 7-
Council/Agency Meeting Held: ']
Deferred/Continued to:
Ik'Approved Conditionally Approved 0 D nied
City Clerk's Sighature
Council Meeting Date: 04/07/97
Department ID Number: 97-003
CITY OF HUNTINGTON BEACH
REQUEST FOR COUNCIL ACTION
SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL
SUBMITTED BY: MICHAEL T. UBERUAGA, City Adm
PREPARED BY: MICHAEL P. DOLDER, Fire Chief
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SUBJECT: CRUDE OIL AGREEMENT - CHEVRbN PRODUCTS COMPANY
Statement of Issue, Funding Source, Recommended Action, Alternative Actlon(s), Analysis, Environmental Status,
Attachment(s)
Statement of Issue: Should the City of Huntington Beach enter into a Crude Oil
Agreement with Chevron Products Company, a division of Chevron USA Inc. to purchase
City produced oil?
Funding Source: None.
Recommended Action: Motion to approve and authorize the Mayor to sign the Huntington
Beach Crude Oil Agreement Chevron Contract No. 97A120474 between the City of
Huntington Beach and Chevron Products Company, a division of Chevron USA Inc.
Alternative Actions): Do not sign the contract and forfeit $150,000 per year net revenue.
There are no other economically available alternate purchasers for City produced oil.
Analysis: The City has always used the Miley -Keck Tank Farm as its dehydration facility
for City oil production and shipment. Until recently, the Huntington Beach Company (HBC)
maintained the facility, provided the dehydration service, shipped the oil, received payment
from Chevron USA Inc., deducted HBC fees and royalty, and provided the City with a check
for the balance of monies for City oil production..
On September 16, 1996, the City entered into a lease agreement with HBC to directly lease
the tank farm facility and eliminate HBC from all production and shipping activities. This
means the City must provide tank farm maintenance, ship and sell its oil, and pay HBC the
lease and royalty. In order to sell the City's oil, the City must enter into a Crude Oil
Agreement (Attachment 1) with Chevron USA Inc., the buyer. Only after entering into this
agreement will Chevron USA Inc. purchase City produced oil. The agreement is a standard
crude oil agreement and has been reviewed and approved by the City Attorney.
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REQUEST FOR COUNCIL ACTION
MEETING DATE: 04/07/97 DEPARTMENT ID NUMBER: 97-003
Environmental Status: Not applicable.
Attachments :
_ 1. Huntington Beach Crude Oil Agreement
Chevron Contract No. 97A120474 (2)
rca97003 -2- 03/26/97 5:15 PM
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A, CITY OF HUNTINGTON BEACH
2000 MAIN STREETCALIFORNIA 92648
OFFICE OF THE CITY CLERK
CONNIE BROCKWAY
CITY CLERK
ITY CLERK L T ER QF TI N 1•I L REGARDING IT AI APPROVED BY THE
CITY COUNC TUREDEVELOPMENT AGENCY APPROVED ITEM
DATE: 4--d 3 J-2
TO: -PPrs21.6�-oni)-, S�✓p�lV�
N'`O,relron/ Gfs Goo.
Street d,#,Ve, Sv.iG il/oZoop
City, State, Zip
ATTENTION:
DEPART11TFNT:
REGARDING:
See Attached Action Agenda Item h —.7/ Date of Approval V - 7 j:2
Enclosed For Your Records Is An Executed Copy Of The Above Referenced Item For Your Records,
Connie Brockway U
City Clerk
Attachments: Action Agenda Page _L�L Agreement V Bonds Insurance
RCA Deed Other
Remarks:
CC: To ��'4 yr s _ ,� D t- —1/ V/-
Narne Deparment F RCA Agrcemcnt Insurance Othcr
Name Department RCA Auccmcm Insurance Othcr
Name Department RCA
Risk Management Department Insurance Copy
Agreement Insurance Oilier
G: Folb« cp'agrnts. trar.shr
{Telephone: 714.536-5227 )
(15) 04/07/97 - Council/Agency Agenda - Page 15
W E-19. (rily_CS uncj.l Recognition Of The Huntingtgn EjoajLH.umanBelatim Task Force
Members - Designatign Of The lask Force As_A City Of Huntington Beilrh Committee
(110.20) - Designate the existing Huntington Beach
Human Relations Task Force as a City of Huntington Beach Committee and appoint the
current Human Relations Task Force members on an interim basis, until the posting
requirements of the Maddy Act are met. The Committee will continue until
January 02, 2001 at which time the Committee would be either re -authorized to continue or
disbanded and recognize the current leadership and members of the Huntington Beach
Task Force, including terms, as follows: Brian J. Ar stm rung (January 1999);
Rose M glioa-6rmstrong (Secretary) (January 2001); (January 1999);
Lisa Betancourt (January 2001); Jean Bogen (January 1999);Mike-Bqen (January 2001);
Margie Bunten (January 2001); Aig' QIer gns (January 2001); Ding -Jo Currie
(January 1999); Kay DoJion (January 1999); Regina B, Front (Treasurer) (January 2001);
Mary Lou -Hughes (January 1999); Kenneth Inouye (Chair of the Task Force & Chair of the
Education Sub -Committee) (January 2001); Karen Jackle (Vice -Chair) (January 1999);
Vickie Kain (January 1999); Carol KaDode (January 1999); Jeff Lebow (Chair, Outreach
Committee) ( January 2001); Marilyn ModkI (Vice -Chair) (January 2001); Joseph Nunn
(January 1999); Fred B. Promenghir (January 2001); (January 1999); Billie
S1uj5ky (January 2001); Charles JbDm9fiffl Thomas January 2001); Martha Villasenor
(January 1999); and Daria Waetien (January 1999). Submitted by the Deputy City
Administ[atgrlPublic Relations Qf ricer
[Approved - 6-0 (Julien -- Absent)]
W
E-20.
Mpl2gnn@ll Centre Business Park apecifcPlan.And Environment ImRactt R12ortAnd
Amenftgnj N12. I Ig Specific Plan and Environmental_ Impact Renort Reimbursement
Agme-meet Retween The City And McDonnell Douglas Realty_ CQml2any (600.10) -
1. Approve Amendment No_ 1 To Professional Services Agreement Between The City Of
Huntington Beach And EDAW, Inc. For Planning Consulting Services For The Preparation
Of The McDonnell Centre Business Park Specific Plan And Environmental Impact Report _
for additional services in the amount of $80,500 to prepare the McDonnell Centre Business
Park Specific Plan and Environmental impact Report, for a total contract fee not to exceed
$238,474.00 and authorize execution by the Mayor and City Clerk. 2. Approve Amendment
No. 1 To Specific Plan And Environmental Impact Report Reimbursement Agreement
Between The City Of Huntington Beach And McDonnell Douglas Realty Company for
additional consulting services in the amount of $80,500 to prepare the McDonnell Centre
Business Park Specific Plan and Environmental Impact Report, for a total agreement fee
not to exceed $238,474.00 and authorize execution by the Mayor and City Clerk. Submitted
try the Community Deyelopment Daoftmal
E-21. (City C
No. 97 120474For The Purchase By CheyLon Qf C ty Produced Oil (600.10) -Approve
and authorize the Mayor to sign the Huntington Beach Crude Oil Agreement Chevron
Contract No. 97A120474 Between the City of Huntington Beach and Chevron Products
Company, a Division of Chevron USA, Inc. Submitted -by the Fire Chief
(16)
[neuron
Chevron
March 5, 1997
City of Huntington Beach
P. O. Box 190
Huntington Beach,.CA 92648
Attn: Mr. Tim Greaves
Re: Huntington Beach Crude Oil Agreement
Chevron Contract No. 97A120474
Chevron Products Company
Logistics and Trading
Raw Materials
575 Lennon Lane, Suite N2000
Walnut Creek, CA 94598
M .
P. M. Bond
Supply Representafnre
(510) 943-2539
This is to. confirm Bond / Greaves phonecon January 17, 1997, wherein it was agreed that the
City of Huntington Beach ("Seller") and Chevron Products Company, a division of Chevron
U.S.A. Inc. ("Buyer"), shall enter into a crude oil agreement under the following terms and
conditions:
Quantity and Quality: Seller hereby sells and agrees to deliver to Buyer, during the
effective term of this contract, approximately 1,000 barrels of Huntington Beach type
crude oil (hereinafter called "oil") of a gravity not less than 20 degrees A.P.I. , produced
from the property situated in the Huntington Beach Oil field, described as follows:
2. Property Description:
Miley -Keck Lease
Parcel 3. All of Blocks 2001 and 2002, Tract 12, City of Huntington Beach, according to
the map thereof recorded in Book 9, Page 13, Miscellaneous Maps, Orange County,
California.
Term: This contract shall be effective on February 1, 1997, and shall continue thereafter
until terminated by either party by giving not less than thirty (30) days' prior written notice
of termination to the other party.
4. Deliveries: All deliveries hereunder shall be made from tankage on the property described
above and into the Buyer's nominated pipeline (as set forth in this contract). Seller shall,
at its expense, install, maintain and operate all tankage, pumps, pipelines and other
facilities necessary to make such deliveries of oil from time to time. Seller shall, at its
expense, install and maintain a gate valve in the outlet line from each tank. Any changes in
connections or other facilities to accommodate Seller shall be made at Seller's expense. If
City of Huntington Beach
Contract No. 97A120474
Page 2 of 5
pipelines are not available for transporting said oil from such field, Seller shall arrange and
pay for the cost of transporting such oil by tank trucks, provided that deliveries are made
in normal size tank truck and trailer quantities (currently 141 barrels minimum per load).
All deliveries shall be gauged in Seller's tankage, provided that said tankage is properly
calibrated. In the event they are not, then deliveries shall be made from Seller's tank
trucks, and quantity shall be determined by weight established by use of Commercial
Scales or by Lease Automatic Custody Transfer (LACT) meter, Buyer's option. Quality
of deliveries shall be determined from samples taken from Seller's lease shipping tanks
except for those deliveries made through LACT meters where sampling equipment
associated therewith shall apply. Title and risk of loss shall pass from Seller to Buyer as
the crude oil enters Buyer's nominated pipeline system.
5. Condition of Volume Delivered: This Agreement -is entered into on the basis that Seller
shall deliver to Buyer Seller's entire production of crude oil and/or condensate produced
from said property at a rate of approximately twenty-five (25) barrels per day, subject to
any facilities limitations in Buyer's ability to receive daily and/or monthly deliveries into
Buyer's receiving facilities associated with the deliveries made hereunder. Seller shall
notify Buyer in advance. of any anticipated significant increase in said volume to ensure
that Buyer has the continuing ability to receive deliveries hereunder. Failure by Seller to
give such notice shall subject this Agreement to immediate renegotiation at Buyer's sole
option.
6. Sand and Water Tests: Buyer shall not be obligated to take delivery hereunder of any
oil containing more than two (2) percent of water, sand, and other foreign substances, as
ascertained by Centrifuge Method ASTM D-4007. If buyer accepts oil containing any
percent of water, sand, and other foreign substances, Buyer shall make deduction for the
amount of water, sand, and other foreign substances therein as shown by said test.
7. Samples: All tests shall be made by Buyer at its laboratory or at such other point as may
be agreed upon by Buyer and Seller, and all tests shall be made in the presence of a
representative of Seller, should Seller so desire. All samples for testing shall be taken by
Buyer from the tankage of Seller except for those deliveries made through LACT meters
where sampling equipment associated therewith shall apply.
8. Gravity: The gravity of oil delivered hereunder shall be deemed to be the gravity of the
samples thereof taken as hereinabove provided, as indicated by the hydrometer and
corrected to sixty (60) degrees Fahrenheit as shown in Table 5A, ASTM Petroleum
Measurement Table 1250-80 in its then latest revision.
City of Huntington Beach
Contract No. 97A120474
Page 3 of 5
9. Temperature Corrections: The quantity -of oil delivered hereunder shall be corrected
som observed temperature to sixty (60) degrees Fahrenheit in accordance with Table 6A
API Standard 2540 in its then latest revision. The temperature delivered shall be deemed
to be the temperature of the crude oil in Seller's tankage prior to delivery or the
temperature determined from a LACT meter.
10. Irregular Deliveries: If at any time oil offered for delivery hereunder shall be of a gravity
lower than the minimum specified above, Buyer, at its option, may refuse to take delivery
of said oil or purchase said oil at such price as Buyer will pay and Seller accept. If at any
time oil offered for delivery hereunder shall contain more than the maximum percentage
specified above of water, sand, or other foreign substances, as ascertained by a test
provided for herein, Buyer, at its option, may accept said oil and make deduction for such
water, sand, or other foreign substances as determined by said test. No purchase of oil by
Buyer under the provisions of this paragraph shall be deemed a waiver of Buyer's right to
require all deliveries hereunder at any time thereafter to be strictly in accordance with the
terms and conditions set forth in the other paragraphs of this contract.
11. Oil under 20 Degrees Gravity: When requested to do so by Buyer, Seller will deliver
all oil of a gravity of less than twenty (20) degrees API, including oil delivered under the
provisions of the preceding paragraph entitled "Irregular Deliveries," at whatever
temperature, from one hundred (100) degrees Fahrenheit to one hundred seventy (170)
.degrees Fahrenheit, Buyer may from time to time specify.
12. Price: The average of Chevron's posted prices as quoted during the month of delivery for
Huntington Beach crude oil. Price shall be adjusted for actual gravity delivered per
Chevron's gravity adjustment scale. For pricing purposes, volumes shall be assumed to be
delivered on an equal daily quantity basis.
13. Payment: Payment for the oil delivered shall be made by the twentieth (20th) day of the
month following the month of delivery. In the event of dispute as to the title to said oil, or
any part thereof, or as to any payment hereunder, or any portion thereof, Buyer may,
without incurring any liability, withhold payment pending determination of such dispute,
or may interplead the claimants, and the payment into court by Buyer of the amount due
for oil delivered hereunder shall be deemed a compliance with the provision hereof in
respect to payment for such oil. Payments shall be forwarded to:
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Telephone: (714) 536-5227
City of Huntington Beach
Contract No. 97A120474
Page 4 of 5
14. Contacts: Any notice hereunder shall be in writing and transmitted by personal delivery,
telegram, fax or mail to the addresses in the contacts section below, or such other
addresses as the parties may agree to in writing.
Jolene Moore
PAL Scheduler (Raw Material)
Chevron Products Company
Phone: 510-944-6257
Rani Agustin
Contract Administrator
Chevron Products Company
Phone: 510-944-6277
Deborah Friedman
Accountant/Operations Specialist
Chevron Products Company
Phone: 510-944-2518
Tim Greaves
City of Huntington Beach
Phone: 714-536-5531
15. Notice: Any notice hereunder shall be in writing and transmitted by personal delivery,
telegram, telefax or mail to the following addresses or to such other addresses as either
party may designate in writing.
16. General Provisions: All other terms and conditions not covered within Contract shall be
in accordance with the latest Chevron General Provisions, currently dated September 30,
1994. Usual industry practice shall apply for terms and conditions not covered by the
Contract or Chevron's General Provisions.
City of Huntington Beach
Contract No. 97A120474
Page 5 of 5
IN WITNESS WHEREOF, the City of Huntington Beach and Chevron Products Company have
executed this Agreement in duplicate by and through their duly authorized officers, as of the date
first herein stated.
CITY OF HUNTINGTON BEACH, A
municipal corporation of the State of
California
By
MAYOR
Date 3-i7 _ 'o
CHEVRON PRODUCTS COMPANY
A DIVISION OF CHEVRON U.S.A. INC.
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Central Files: City of Huntington Beach 97AI20474 - Huntington Beach Oil Field