DOE NEHHOR_2024 PWS.pdf

SPE600-15-R-5X01

U.S. DEPARTMENT OF ENERGY

OFFICE OF PETROLEUM RESERVES

STRATEGIC PETROLEUM

RESERVE

NORTHEAST HOME

HEATING OIL RESERVE

(NEHHOR)

PERFORMANCE WORK

STATEMENT (PWS)

Operations and Readiness Division Washington, DC

03 JANUARY 2024

Definitions

Calendar NYMEX – the arithmetic average of the daily settlement price for the ULSD front month futures contract reported by the NYMEX during the physical month of delivery, excluding weekend and holidays

DOE – the U.S. Department of Energy

DLA Energy – the U.S. Department of Defense, Defense Logistics Agency Energy

Day of Award – the day of DOE announcement of Successful Purchasers

EPA – the U.S. Environmental Protection Agency

FOB Destination – Free-On-Board delivery to a Government specified destination

Government – the United States Government

HO – Heating Oil

QAR – a Government Quality Assurance Representative responsible for verifying quality and quantity at the storage contractor’s terminal

Reserve – the Northeast Home Heating Oil Reserve (NEHHOR)

SPR – the Strategic Petroleum Reserve

ULSD – Ultra Low Sulfur Diesel / Distillate

I. INTRODUCTION

A. The Northeast Home Heating Oil Reserve (NEHHOR) was established by the

Department of Energy (DOE) in 2000, to provide an emergency stock of Heating Oil in the event of a winter supply shortage. The DOE, Office of Fossil Energy – Strategic Petroleum Reserve is soliciting offers on behalf of DOE for the storage and potential distribution of its 1,000,000 barrel Northeast Home Heating Oil Reserve (NEHHOR) – Ultra Low Sulfur Diesel (ULSD).

B. DOE Energy is soliciting storage in the following locations:

1. 300,000 barrels in the coastal areas of New York Harbor – For the purpose of this

PWS, New York Harbor shall extend from the East River west of Hunts Point;

Gowanus Bay west of the Hamilton Avenue Bridge; the Hudson River south of George Washington Bridge; the Upper Bay; the Narrows; the Lower Bay west of Morton Point; the Newark Bay; the Hackensack River south of the Witt-Penn Bridge; the Passaic River south of the Pulaski Skyway Bridge; the Kill Van Kull;

the Arthur Kill and the Raritan River east of the Garden State Parkway Bridge.

2. 300,000 barrels in the coastal areas of Connecticut and Rhode Island of the following locations: Providence, RI; New London / Groton, CT; New Haven, CT;

and Bridgeport, CT.

a. Providence Harbor is defined as: The area along the Providence River bounded by Swan Point to Bucklin Point in the north and Pawtuxet Cove to Sabin Point in the south.

b. New London / Groton Harbor is defined as: The area along the Thames River bounded by the Gold Star Memorial Bridge (I-95) river crossing in the north to Long Island Sound in the south.

c. New Haven Harbor is defined as: The area along the Quinnipiac River bounded by the Interstate 91 / Middletown Avenue river crossings in the north and Sandy Point to Fort Hale Point in the south.

d. Coastal areas of Bridgeport Harbor are defined as: The area along the Pequonnock River bounded by the Governor John Davis Lodge / Connecticut Turnpike (I-95) and Stratford Avenue river crossings in the north; Black Rock Harbor – to include Burr Creek, Cedar Creek Harbor and Cedar Creek Reach in the west; Bruce Brook / Lewis Gut – to include White Rock Creek and Johnsons Creek in the east; and, Black Rock Entrance Channel and Bridgeport Entrance Channel to Long Island Sound in the south.

3. 400,000 barrels in the New England/Boston Harbor areas and/or the Portland Harbor areas in and around South Portland, ME.

a. Boston Harbor is defined as: Inner harbor and Outer harbor - The inner harbor is the main port of Boston. The inner harbor extends from the mouths of the Charles River and the Mystic River, both of which empty into the harbor, to Logan International Airport and Castle Island, where the inner harbor meets the outer harbor. The outer harbor stretches to the south and east of the inner harbor. To its landward side, and moving in a counterclockwise direction, the harbor is made up of the three small bays of Dorchester Bay, Quincy Bay and Hingham Bay. To seaward, the two deep water anchorages of President Roads and Nantasket Roads are separated by Long Island.

b. South Portland Harbor is defined as: The south side of the Portland Maine inner harbor.

C. Terminal(s) must be capable of delivery by truck and commercial barge. Access to pipeline delivery is preferred but not required. The Government reserves the right to utilize multiple contracts and service providers to meet this requirement Contract award(s) will be made at the discretion and the best interest of the Government in increments, with the minimum amount being 100,000 barrels with further increments of 50,000 barrels, not to exceed 1,000,000 barrels. Contracts may be awarded in any combination as outlined above; but will not exceed 1,000,000 barrels in total.

Responsive offers within the designated locations where offered prices can be determined fair and reasonable will be awarded contracts in the increments reflected above until max capacity is obtained.

D. The storage contractor must have the ability to operate without commercial electric power. This can be accomplished by any one of the following:

1. On-site backup generation capable of meeting the minimum requirements for the distribution of Government products.

2. Backup generator capable by way of an installed transfer switch and a contract for obtaining backup generator capable of meeting the minimum requirement of the issue of Government products within 24-hours of the loss of commercial power for the distribution of Government products.

E. The NEHHOR must be available 01 April 2024 for delivery of product. Contract duration shall be for a base period of one year (01 April 2024 - 30 March 2025) and three (3) one year option periods:

Base year: 01 April 2024 - 30 March 2025 Option year 1: 01 April 2025 - 30 March 2026 Option year 2: 01 April 2026 - 30 March 2027 Option year 3: 01 April 2027 - 30 March 2028

II. REQUIREMENTS

A. The Reserve is based on maximum use of the current commercial terminal infrastructure and industry standard procedures.

B. In order to assure the most efficient and expeditious storage placement and distribution of product, in the event of a supply emergency, the following responsibilities and procedures must be agreed to by all offerors:

Receipt of the Reserve:

A. Should new contracts be awarded to different companies or in different locations, it may be required to move the existing ULSD product reserve inventory.

B. The product may be made available to the contractor from current contract locations or other sources, as convenient to the Government. The terminal must be capable of receiving product by commercial vessel.

C. The contractor should be prepared to assist the Government in locating the Reserve at their terminal, in the most expedient, cost-effective manner possible to include, but not limited to, physical transfer, book transfer, or exchange.

D. Shipment of product will be FOB Destination. All costs associated with the transportation of product to new contractors’ location(s), will be in accordance with the contracts awarded. Risk of loss will remain with current contractors until transferred to either the new contractor, at a custody transfer point at the current contractors’ terminal, or accepted for transfer by a winning shipper, whichever applies.

1. The contractor shall provide 24-hour access to their terminal to accept receipt of product.

2. Contractors shall provide access to their terminal(s) for Government Quality

Assurance Representatives (QARs) and/or DOE to verify quality and quantity during the receipt.

Storage of the Reserve:

A. The offeror agrees to meet all requirements for receipt, quality control, quality assurance, product rotation, positive inventory control, sale, delivery, inspection and issue as described below. All Government products will be comingled with commercial products of the same quality and specification.

B. Offeror must submit, along with a terminal layout, methods to accomplish the following requirements:

1. Provide commingled storage of the Government’s ULSD HO Reserve with commercial stocks in accordance with EPA, state and local regulations. Offeror should describe the relationship between their operating stocks and the Reserve stocks, including any potential impediment on terminal management or operations.

2. The Reserve maintained by the contractor must be maintained in accordance with standard federal and state ULSD specifications. All costs to maintain the

Reserve at the terminal, such as: product rotation, blending, throughput, tank-to-tank transfers, injection of dye, environmental requirements, etc., will be at the contractor’s expense. Contractor(s) will be required to provide the Government a full specification analysis of the product offered for storage at contract start and upon exercising the option years. The Government reserves the right to ask for full specification analysis of the product at its discretion.

3. Terminals must comply with best commercial practices and meet all industry standards for receipt, storage and issue of the Reserve Product.

4. Terminals must comply with all federal, state, and local laws and regulations governing product storage and handling, to include safety and environmental regulations.

5. Provide total terminal inventories of the product stored for DOE in electronic format on a weekly basis to the DOE. In times of crisis, a daily inventory report is required by the DOE.

6. Provide weekly inventory certification as shown in Attachment A, signed by the terminal manager and the QAR in electronic format to the DOE.

7. Contractor shall provide reasonable access to the Government QAR to assess all laboratory reports, testing and testing methods, as determined necessary by the QAR or DOE to verify quality and quantity of product stored.

8. Provide continuous product rotation to maintain quality of product stored.

9. The entire Reserve must be available for issue at all times. No portion of the

Reserve may be in unobtainables such as pipelines, manifolds, or tank bottoms.

10. Terminals must be able to deliver the entire Reserve stored within 10 calendar days on 24-hours’ notice by tank truck, marine (barge or tanker), and/or pipeline (desired but not required) to the major distribution centers. Each terminal must have a minimum of four (4), 600 gpm, tank truck loading racks with temperature compensating meters that can operate simultaneously. Offeror should describe how their terminal meets or exceeds this requirement for the quantity bid.

11. Contractor must have the ability to blend Government ULSD with dye at the truck rack.

Issue of the Reserve:

A. The contractor will comply with the following requirements, which will be incorporated into the Distribution Plan as described in Attachment B:

1. When notified by DOE of the potential for a release, the storage contractors shall provide:

a. Information on its terminal facilities and respective inventories available for a sales offering; and,

b. Confirmation of current terminal readiness and capabilities to perform as stated.

2. Keep the QAR and DOE informed of current terminal activities and inventories on a daily basis, as well as scheduled activities that could impact an offering.

3. When notified by DOE of a decision to release product from the Reserve, the storage contractor will immediately select and identify to the QAR and DOE the current inventory and specific tanks the product will be issued from.

4. A certificate of analysis providing full specification test results on the product in each tank the product will be issued from, must be provided to DOE within 24-hours following notification.

a. For ULSD, two hours prior to commencing transfer, a pre-shipment analysis will be submitted electronically to the QAR and DOE providing results on the API gravity, flashpoint, dye concentration, color, appearance and visual check for water and particulates of the product to be delivered.

5. When delivery commences, obtain a continuous line sample from a sampling point as close as possible to the custody transfer point. For tank truck/trailer loading only a sample from the first truck loaded that day is required. Test the sample for the properties identified in paragraphs 4.a. above. Also collect a one gallon sample from this sampling location and retain it for 30 days.

6. The contractor must be able to deliver the Government’s entire quantity of product from their facility within 10 calendar days. The delivery period will begin 24-hours after Day of Award. With the possibility of successive partial sales, the Government expects the storage contractor to perform similarly with delivery of each Government sale quantity from their facility within a proportionate period.

7. The storage contractor shall fully guarantee the quality of the product delivered.

The quality of the product delivered shall be determined at the loading point by a third party inspector.

8. Contractors shall provide access to their terminal(s) for Government QARs and/or DOE to verify quality and quantity during issue.

9. Third party inspections will be required for all quantity measurements and sampling. The third party inspector should not be affiliated with either the purchaser or the storage terminal. Third party inspectors must be ISO 9001 certified. Costs for the third party inspector will be shared equally between the storage contractor and purchaser. However, should the purchaser or storage contractor be unable to agree on a third party inspector, both parties will supply their own inspectors with the DOE COR having final say in any disputes.

10. Mode of delivery will be at the purchasers’ option, scheduled in coordination with the storage contractor.

11. Excise Taxes: All required federal and state/local excise taxes owed on the distribution of fuel covered under IRS Publication 510 will be the responsibility of the Storage Contractor. Collection and Payment of excise taxes must be coordinated and handled between the Storage Contractor and the Purchaser.

Federal excise tax paid should be reflected on the Bill of Lading; DOE assumes no responsibility for the collection or payment of excise taxes.

12. All parties agree to make all reasonable effort to complete delivery and acceptance in accordance with commercially accepted time and physical constraints. Should a dispute or a claim for damages arise as a result of delivery and acceptance, the DOE will provide guidance based on the respective contracts governing the storage contractor and the purchaser.

13. Delivery Imbalances:

a. In accordance with New York Mercantile Rules, a loading tolerance of two percent (2%) above and below the contract volume is permitted.

b. Payment adjustments based on the contract amount and the actual quantity delivered will be made between the Government and purchaser (up to the 2% volume) at the contract price.

c. Any delivery imbalances beyond the 2% limit will be reconciled between the storage contractor and the purchaser.

Scheduling of Deliveries:

A. The storage terminal contractors are responsible for establishing mutually acceptable delivery schedules with purchasers. The terminal will respond to the purchasers’ request within 12-hours, either confirming or proposing alternative delivery dates.

1. Purchaser scheduling shall be on a first-come, first-serve basis in accordance with standard business practices with the following exceptions:

a. Access to the terminal loading facilities by the purchaser will be given within

48-hours of requested lifting for barges, tank trucks, and pipelines.

b. Access for tankers must be given within 72-hours of requested lifting.

c. All deliveries must be completed within the 10 calendar day delivery period.

2. When finalized, the storage contractor shall notify DOE and QARs of the purchasers’ delivery schedules and volumes.

3. Storage contractor shall be liable for all demurrage charges if their facilities are unable to deliver in a normal, timely manner.

B. Quantity Measurement Procedures:

1. Barges and Tankers: Loaded quantity will be determined by calibrated meter or hand gauge of storage contractor’s shore tanks before and after loading. If, for some reason, the third party inspector cannot verify the shore tank quantities, the vessel’s loaded volume corrected by vessel experience factor will apply.

2. Truck Racks: Only pre-certified trucks will be allowed to move across the truck racks. Quantity will be determined by a currently calibrated, temperature compensating meter.

3. Pipeline Cargoes: Where a temperature compensating meter is available, meter tickets shall be the point-of-custody transfer. If not, quantity determination shall take place by independent hand gauge of the storage contractor’s tanks, before and after shipment, by third party inspector.

4. Terminal-to-terminal transfers: Quantity shall be determined by calibrated meter or hand gauge before and after transfer by a certified third party inspector.

5. All terminal throughput costs are borne by the storage contractor as specified in the storage contract.

6. All risk of loss will be borne by the storage contractor until product passes the vessel’s loading arms / flange, or passes the custody transfer point for pipelines, trucks and inter- and intra-terminal transfers.

7. All quantities will be shipped at net 60˚.

C. Completion of Delivery. When delivery is complete, contractor will assist DOE in compiling and completing all documents necessary to include inventory certifications, delivery tickets, DD 250 series documents and third party inspection reports.

Contract Closeout At the completion of the storage contract, whether by sale, contract closeout, or transfer;

imbalances may exist in the product volumes at the terminals. These imbalances will be reconciled in the following manner:

A. If the DOE sells or transfers an amount of product that exceeds the contracted storage amount, the contractor may invoice the DOE the cost value of the product based on the calendar NYMEX during the physical month of delivery. If no published prices are available, a mutually agreed upon price will be negotiated.

B. If the contractor issues to a purchaser a total volume of product which is less than the contracted storage amount, the DOE will reimburse the purchaser.

C. Upon completion of the contract, should the contractor deliver back to the Government an amount less than the storage contract, the contractor will either be invoiced for the undelivered amount based on the calendar NYMEX during the physical month of delivery, or provide reimbursement to the Government at an alternate location.

Plans Required A. Within 30 calendar days of contract award the contractor will provide the DOE

Strategic Petroleum Reserve Program Office a Distribution Plan in accordance with the outline in Attachment B. Once approved, this plan will delineate the DOE’s, storage contractor, and purchaser responsibilities in the event of a sale, and become a permanent addition to the contract.

B. Within 60 calendar days the contractor will provide the DOE Program Office, in duplicate a Quality Control Plan in accordance with the suggested outline in Attachment C.

ATTACHMENT A – Inventory Certification Spreadsheet

NORTHEAST HOME HEATING OIL RESERVE (NEHHOR)

INVENTORY CERTIFICATION

Terminal Name / Location here BBLS HELD FOR DOE: 000,000 DATE: mm/dd/yyyy Contract # here along with product name

Enter "x" for Tank # if not used.

TANK: TANK: TANK:

x FT / IN GALS / BBLS x FT / IN GALS / BBLS x FT / IN GALS / BBLS

GAUGE 0 GAUGE 0 GAUGE 0

WATER CUT 0 WATER CUT 0 WATER CUT 0

GAUGE TOTAL: 0 GAUGE TOTAL: 0 GAUGE TOTAL: 0

TK BOTTOM (-): 0 TK BOTTOM (-): 0 TK BOTTOM (-): 0

TOTAL (=): 0 TOTAL (=): 0 TOTAL (=): 0

TEMP TEMP TEMP

API GRAVITY API GRAVITY API GRAVITY

CORR. FACTOR CORR. FACTOR CORR. FACTOR

CF (X) TOTAL: 0 CF (X) TOTAL: 0 CF (X) TOTAL: 0

TOTAL BBLS: 0.00 TOTAL BBLS: 0.00 TOTAL BBLS: 0.00

TANK: TANK: TANK:

x FT / IN GALS / BBLS x FT / IN GALS / BBLS x FT / IN GALS / BBLS

GAUGE 0 GAUGE 0 GAUGE 0

WATER CUT 0 WATER CUT 0 WATER CUT 0

GAUGE TOTAL: 0 GAUGE TOTAL: 0 GAUGE TOTAL: 0

TK BOTTOM (-): 0 TK BOTTOM (-): 0 TK BOTTOM (-): 0

TOTAL (=): 0 TOTAL (=): 0 TOTAL (=): 0

TEMP TEMP TEMP

API GRAVITY API GRAVITY API GRAVITY

CORR. FACTOR CORR. FACTOR CORR. FACTOR

CF (X) TOTAL: 0 CF (X) TOTAL: 0 CF (X) TOTAL: 0

TOTAL BBLS: 0.00 TOTAL BBLS: 0.00 TOTAL BBLS: 0.00

TANK: TANK: TANK:

x FT / IN GALS / BBLS x FT / IN GALS / BBLS x FT / IN GALS / BBLS

GAUGE 0 GAUGE 0 GAUGE 0

WATER CUT 0 WATER CUT 0 WATER CUT 0

GAUGE TOTAL: 0 GAUGE TOTAL: 0 GAUGE TOTAL: 0

TK BOTTOM (-): 0 TK BOTTOM (-): 0 TK BOTTOM (-): 0

TOTAL (=): 0 TOTAL (=): 0 TOTAL (=): 0

TEMP TEMP TEMP

API GRAVITY API GRAVITY API GRAVITY

CORR. FACTOR CORR. FACTOR CORR. FACTOR

CF (X) TOTAL: 0 CF (X) TOTAL: 0 CF (X) TOTAL: 0

TOTAL BBLS: 0.00 TOTAL BBLS: 0.00 TOTAL BBLS: 0.00

TANK: TANK: TANK:

x FT / IN GALS / BBLS x FT / IN GALS / BBLS x FT / IN GALS / BBLS

GAUGE 0 GAUGE 0 GAUGE 0

WATER CUT 0 WATER CUT 0 WATER CUT 0

GAUGE TOTAL: 0 GAUGE TOTAL: 0 GAUGE TOTAL: 0

TK BOTTOM (-): 0 TK BOTTOM (-): 0 TK BOTTOM (-): 0

TOTAL (=): 0 TOTAL (=): 0 TOTAL (=): 0

TEMP TEMP TEMP

API GRAVITY API GRAVITY API GRAVITY

CORR. FACTOR CORR. FACTOR CORR. FACTOR

CF (X) TOTAL: 0 CF (X) TOTAL: 0 CF (X) TOTAL: 0

TOTAL BBLS: 0.00 TOTAL BBLS: 0.00 TOTAL BBLS: 0.00

Water Cut is gauge reading ONLY.

VERIFIED BY QSR: Gauge Total = Gauge Reading Totals:

(Signature) Tank Bottoms include water. Gallons Barrels:

Subtotals: 0 0.00 Tank Bottoms: 0 0.00

Gross Available: 0 0.00 I CERTIFY ALL DOE INVENTORY IS ON-HAND AT Net Available: 0 0.00

ALL TIMES AND READY FOR IMMEDIATE SALE.

TOTAL NET BBLS Available: 0.00

TERMINAL MANAGER:

(Signature)

ATTACHMENT B – Distribution Plan EXAMPLE

Introduction A. Storage Facilities:

1. Terminal Address

2. Total product storage capacity

B. Distribution Facilities:

1. Marine (Barge docks, Tanker docks)

2. Truck Racks

3. Pipeline Connections

4. Other Terminals

5. Terminal Data Sheet (see attached)

C. Distribution Procedures

1. DOE responsibilities. (To be added by DOE at contract award)

2. QAR responsibilities. (To be added by DOE at contract award)

3. Storage Contractor responsibilities:

a. Sale Preparation

b. Scheduling of Deliveries

c. Inspection and Issue of Product

d. Quantity Measurement Procedures

D. Purchaser Responsibilities (To be added by DOE)

1. Scheduling of Deliveries

2. Inspections and Receipt

Attachment: Terminal Data Sheet (see next page for example)

ATTACHMENT B – Distribution Plan EXAMPLE

TERMINAL DATA (MAR 2023)

Name: Company Name Terminal Contact: Lead Contact Terminal: Name Manager: Terminal Manager Location: Address Tel. No.: Cell / Office Waterfront Loc: Location Fax No.: Fax Owner: Owner E-mail: Email Operator: Operator Alternate Email / point-of-contact Hours of Operation: 24 hours / 7 days Alternate Phone for POC

Delivery Modes:

Tanker Docks

Dock # Max. Loading Rate (bbls/hr)

Max.

LOA(ft)

Max.

Beam (ft)

Max. Draft (ft)

Max. DWT

Examples Shown

Barge Docks

Dock # Max. Loading Rate (bbls/hr)

Max. LOA (ft)

Max.

Beam (ft)

Max. Draft (ft)

Max. DWT

# 1 6,000 550 80 25* Inside Berth 5,500 300 60 15*

Pipelines

Name Size (in) Receipt Rate (bbls/hr)

Issue Rate (bbls/hr)

Pipeline Name(s) 12 7,500 5,500

Truck Loading Racks

Hours of Operation: 24 hours / 7 days Six (6) Bays Top-loading Positions: 5 Max. Loading Rate/Truck:

Bottom-loading Positions: 1 (4 Future) Max. Loading Rate/Truck: 650 GPM

Remarks/Restrictions:

Pertinent notes to the terminal listed here. (Example: Twenty-two (22) feet draft restriction in channel. Army Corps of Engineers expected to dredge this area in 2024.)

ATTACHMENT C – Quality Control Plan Example

ABC Oil Company

QUALITY CONTROL PLAN

Contract Number:

ABC Oil Company Representative:

Quality & Quantity Inspection Company:

Contents A. Organization Chart w/phone numbers B. Facility Schematic C. Procedures

1. General Quality & Quantity Procedures. The contract between ABC Oil Company and the DOE, establishing a Northeast Home Heating Oil Reserve (NEHHOR), is intended to support rapid distribution of product once activated. The contracted quantity meeting specification requirements will be maintained as commingled storage. ABC Oil Company will use standard commercial practices to receive, store, and distribute DOE products.

2. Receiving. The receiving of DOE product into storage is two-fold, initial identification and continuous flow through commingled storage. The initial receipt will be accomplished using our standard commercial practices detailed below. ABC Oil Company will give 3-days’ notice to the DOE Program Office when we are ready to receive product as specified by contract. Product meeting specification will then be identified to the DOE Program Office as available for inspection. Standard Commercial Procedure for Receiving Product :

Before Product Receiving:

a. Ensure adequate ullage is available in receiving tanks.

b. Review shipper’s certification to validate product meets specification requirements.

c. Isolate receipt tank(s) and place on shipping hold.

d. Check receiving pipelines to ensure fill quality and alignment.

e. Obtain hand-line gauge of receipt tank(s), in accordance with API MPMS procedures.

f. Determine receipt tank(s) temperature, in accordance with API MPMS procedures.

During Product Receiving:

a. Verify custody transfer sampler is operational.

b. Check side gauge on receiving tank(s) initially and every 2-hours thereafter.

c. If receiving tender into more than one tank, open second tank before closing first tank

d. Prohibit anyone from climbing tank until completion of shipment.

e. Inject required dye into moving stream as product enters facility.

f. Prohibit shipment from receipt tank(s) until re-certification is accomplished.

g. Maintain communication with shipper’s operator during entire receipt operation.

After Product Receiving:

a. Wait at least 30-minutes before hand-line gauging to allow for product relaxation.

b. Obtain hand-line gauge of receipt tank(s), in accordance with API MPMS procedures.

c. Determine receipt tank(s) temperature, in accordance with API MPMS procedures.

d. Obtain an upper, middle, and lower sample from receipt tank(s), in accordance with API MPMS procedures.

e. Calculate receipt quantity using “up-gauge” and shipper’s quantity measurements.

f. Prohibit shipment from receipt tank(s) until re-certification is accomplished.

With respect to the initial fill of product identified for DOE storage, ABC Oil Company will prepare a composite sample of the upper, middle, and lower spot samples and make available for full specification analysis. This product test report will accompany an invoice that states quantity and quality of product maintain in storage specified in the contract between DOE and ABC Oil Company.

Normal company operations are to receive and ship product on a continuous basis. DOE stored product will lose its identity as it is classified as commingled product until valid orders are placed for sale.

3. Storage & Handling Products flowing through the terminal will be managed on a first in, first out basis. DOE stored product will be maintained using standard commercial practices. ULSD HO will be dyed in accordance with IRS statute guidance.

Products received into storage will be tested and released for distribution as soon as practical.

Product in storage at ABC Oil Company’s terminal will be held in storage until re-certification for quality is accomplished. ABC Oil Company will review the shipper’s quality documents to ensure product meets specifications. The product will then be sampled in accordance with the American Petroleum Institute’s (API) procedures for a comparative analysis. ULSD will be tested for the following properties:

a. API Gravity, appearance, color and visual for sediment and water

The results of this analysis will be compared to the shipper’s documents and the specification requirements. If test results indicate contamination may have occurred product shall be placed in a “Quality Hold” status pending re-sampling and re-testing. If the results of testing exceed the reproducibility limits established by test method, a full specification analysis shall be performed before release of product is authorized. ABC Oil Company will notify DOE anytime that re-certification testing indicates possible contaminated product that may be destined for sale to DOE.

ABC Oil Company will maintain an accurate inventory of products stored, receipts during the month, and at its terminal. ABC Oil Company will maintain an inventory reflecting receipts and sales of product stored at the terminal. A separate inventory of product maintained as line fill, tank bottoms, and manifolds will be maintained and not considered part of the commingled product in storage available for distribution to DOE.

ABC Oil Company will prepare a weekly inventory certification report stating the quantity of product available for distribution under this contract. ABC Oil Company considers DOE a primary customer of its commingled inventory and will always maintain contracted product storage available for distribution.

4. Loading & Shipping No product identified as DOE inventory will be shipped from the terminal without written receipt of order from the DOE Program Office or the Contracting Officer.

All DOE identified inventory products loaded or shipped from our terminal shall meet the specification requirements identified in the contract.

It is recognized the intent of this contract is to store NEHHOR-ULSD product meeting specifications. This product will then be sold on the open market. The title will transfer from DOE to the purchaser as product passes through the loading header or pipeline connection. It will be the purchaser’s responsibility to ensure conveyance acceptability. For all modes of shipment, ABC Oil Company will provide a certificate of conformance stating that product meets the specification and a shipping document attesting to the quantity transferred.

Tank Truck Loading:

Tank trucks loaded from ABC Oil Company’s terminal must be “pre-approved”.

The approval process is to ensure adequate training of driver/loader, proper equipment used for transport, adequate insurance coverage, etc. Tank trucks are loaded using standard commercial practices. The purchaser’s representative, the driver, is responsible to inspect conveyance and load product safely. ABC Oil Company will provide a meter ticket of quantity and Certificate of Quality for each tank truck loaded.

ABC Oil Company will maintain a summary record of deliveries for each purchaser. This record will indicate the quantities delivered and quantity of product (outstanding balance against delivery order) authorized by DOE.

Tank trucks will only be loaded from re-certified stocks. ABC Oil Company will determine quantity of product loaded onto Tank trucks by meter. The meters will be calibrated in accordance with State guidelines and API Chapter 6-2. Meter tickets will be used at the loading rack to account for net quantities loaded into the conveyance.

Pipeline Operations:

Pipeline movements from the ABC Oil Company’s terminal will be accomplished using commercial practices. The owner, receiver, shipper, and the transporter will all agree as to the pipeline tender.

Marine Vessel Loading Vessels loaded from the ABC Oil Company terminal shall be pre-approved and shall follow established industry policy and procedures.

5. Sampling & Testing

6. Calibration

7. Records & Reports

8. Corrective Action

D. API Manuals:

API Chapter 3-1a, Tank Gauging, Standard Practice for Petroleum Products API Chapter 8-1, Sampling, Manual Method for Petroleum Products API Chapter 4-1, Proving Systems API Chapter 6-2, Loading Rack Metering Systems API Chapter 7-1, Temperature Determination, Static Mercury-in-Glass API Chapter 17-1, Guideline for Marine Cargo Inspection API Chapter 17-5, Guideline for Marine Cargo Analysis API Chapter 17-6, Guideline for Determining Fullness of Pipelines API Chapter 17-8; Guideline for Pre-Loading Inspection of Marine Cargo