RFP_89243520RFE000016 Trial Purchase 1MMB Sweet.pdf

Department of Energy

Strategic Petroleum Reserve Project Management Office 900 Commerce East

New Orleans, Louisiana 70123

May 13, 2020

Prospective Offerors:

The Department of Energy, Strategic Petroleum Reserve Project Management Office

(SPRPMO), located at 900 Commerce Road, East, New Orleans, Louisiana, has a requirement to conduct a trial purchase of up to one (1) million barrels of sweet crude oil produced in the United States by United States producers.

You are invited to submit a proposal. You are to base your proposal for this requirement on the information provided in the attached Request for Proposal (RFP), 89243520RFE000016. Submission of proposals will only be accepted via email. The proposal preparation instructions are described in Part IV, Section L of the RFP and must be received not later than 1:00 p.m., Central Time, on May 27, 2020 and requires the proposal to be valid thru May 29, 2020 when the Government intends to make notification of awards. Finalized awards to establish purchase pricing per Paragraph B.5 is expected by

June 3, 2020. In order to participate in Federal procurements, potential offerors must register in the System for Award Management (SAM) at https://www.sam.gov/

Notice to Offerors: This acquisition is subject to the requirement for the use of U.S.-

Flag vessels. (Refer to Part II, Section I, Clause I.1 (53)) and the Cargo Preference

Act, as amended, Pub. L. No. 83-664, 68 Stat. 832, 46 U.S.C. § 1241(b).) (Refer to

Part III, Section J, Exhibit F.)

The Government contemplates award of a firm-fixed-priced contract resulting from this

RFP. Multiple awards may be made. The Government intends to evaluate proposals without discussions with Offerors (except clarifications). Therefore, the Offeror’s initial proposal should contain its best terms from a price and technical standpoint. The

Government reserves the right to conduct discussions if it is later determined necessary.

The delivery period is July 1, 2020 to July 31, 2020.

The solicitation is posted to FedConnect (https://www.fedconnect.net), beta.sam.gov

(https://beta.sam.gov/), and SPRPMO (http://www.spr.doe.gov) websites. No hard copies of the solicitation will be made available. Prospective Offerors are responsible for regularly checking the websites for updates, additional information, and changes or amendments to the RFP. Questions and answers will be posted daily on the SPRPMO website only.

https://www.sam.gov/ https://www.sam.gov/ https://www.fedconnect.net/ https://www.fedconnect.net/ http://www.spr.doe.gov/ http://www.spr.doe.gov/

Prospective Offerors 2

This RFP does not commit the Government to procure or contract for any supplies.

Proposal preparation costs as a result of this solicitation will not be borne by the

Government.

Questions concerning the solicitation must be submitted via email to the Contract

Specialist, Mary Catherine Roark, at mary.roark@spr.doe.gov and to the undersigned at kelly.gele@spr.doe.gov by 1:00 p.m., Central Time on May 21, 2020.

Sincerely, Kelly M. Gele’

Contracting Officer

Attachment mailto:mary.roark@spr.doe.gov mailto:mary.roark@spr.doe.gov mailto:kelly.gele@spr.doe.gov mailto:kelly.gele@spr.doe.gov

U. S. DEPARTMENT OF ENERGY

STRATEGIC PETROLEUM RESERVE

PROJECT MANAGEMENT OFFICE

NEW ORLEANS, LA

REQUEST FOR PROPOSAL

89243520RFE000016

TRIAL PURCHASE UP TO ONE (1)

MILLION

BARRELS OF

U.S. PRODUCED CRUDE OIL

FOR THE

REQUEST FOR PROPOSAL 89243520RFE000016

TABLE OF CONTENTS

PART I - THE SCHEDULE

Section A Solicitation/Contract Form - SF 1449

Section B Supplies or Services and Prices

Section C Statement of Work

Section D Packaging and Marking Requirements

Section E Inspection and Acceptance

Section F Deliveries or Performance

Section G Contract Administration Data

Section H Special Contract Requirements

PART II – CONTRACT CLAUSES

Section I Contract Clauses

PART III – LIST OF DOCUMENTS, EXHIBITS AND OTHER

ATTACHMENTS

Section J List of Documents, Exhibits and Other Attachments

Click here for bid package exhibits to download

PART IV – REPRESENTATIONS AND INSTRUCTIONS

Section K Representations, Certifications and Other Statements of

Bidders/Offerors

Section L Instructions, Conditions and Notices to Offerors

Section M Evaluation Factors for Award https://www.spr.doe.gov/doeec/OilPurchaseRFPExhibits.htm

SECTION A

SOLICITATION/CONTRACT FORM

SEE ADDENDUMIS CHECKED

CODE 18a. PAYMENT WILL BE MADE BY

CODE

FACILITYCODE

17b. CHECK IF REMITTANCE IS DIFFERENT AND PUT SUCH ADDRESS IN OFFER

OFFEROR

01601

900 Commerce Road East US 492

SPRO

U.S. Department of Energy

SPRO

CODE 16. ADMINISTERED BYCODE

X

X

424720

SIZE STANDARD:

% FOR:SET ASIDE:UNRESTRICTED OR892435

RFPIFB

10. THIS ACQUISITION ISCODE

RFQ

14. METHOD OF SOLICITATION

13b. RATING

NAICS:

SMALL BUSINESS

05/27/2020 1300 CT

05/13/2020

504-734-4195Mary Roark (No collect calls)

INFORMATION CALL:

FOR SOLICITATION 8. OFFER DUE DATE/LOCAL TIMEb. TELEPHONE NUMBER a. NAME

4. ORDER NUMBER3. AWARD/ 6. SOLICITATION

89243520RFE000016

5. SOLICITATION NUMBER

SOLICITATION/CONTRACT/ORDER FOR COMMERCIAL ITEMS 1. REQUISITION NUMBER PAGE OF

1 2 OFFEROR TO COMPLETE BLOCKS 12, 17, 23, 24, & 30

New Orleans LA 70123

TELEPHONE NO.

17a. CONTRACTOR/

See Section J, Exhibits E and G

15. DELIVER TO

New Orleans LA 70123 900 Commerce Road East US 492 U.S. Department of Energy

SPRO

9. ISSUED BY

7.

2. CONTRACT NO.

EFFECTIVE DATE

18b. SUBMIT INVOICES TO ADDRESS SHOWN IN BLOCK 18a UNLESS BLOCK BELOW

ISSUE DATE

DELIVERY FOR FOB DESTINA-

TION UNLESS BLOCK IS

MARKED

11.

SEE SCHEDULE

12. DISCOUNT TERMS

THIS CONTRACT IS A

RATED ORDER UNDER

DPAS (15 CFR 700)

13a.

SERVICE-DISABLED

VETERAN-OWNED

SMALL BUSINESS

HUBZONE SMALL

BUSINESS

8(A)

Strategic Petroleum Reserve Project

WOMEN-OWNED SMALL BUSINESS

(WOSB) ELIGIBLE UNDER THE WOMEN-OWNED

SMALL BUSINESS PROGRAM

EDWOSB

24.

AMOUNT

23.

UNIT PRICE

22.

UNIT

21.

QUANTITY

20.

SCHEDULE OF SUPPLIES/SERVICES

19.

ITEM NO.

Strategic Petroleum Reserve Trial Purchase of Up To One (1) Million Barrels of Sweet Crude Oil Produced in the United States by United States Producers Period of Performance: 07/01/2020 to 07/31/2020

00001 Crude oil (See Section J, Exhibit A for Offer Form)

(Use Reverse and/or Attach Additional Sheets as Necessary)

HEREIN, IS ACCEPTED AS TO ITEMS:

X

XX

DATED

Kelly M. Gele

. YOUR OFFER ON SOLICITATION (BLOCK 5),

INCLUDING ANY ADDITIONS OR CHANGES WHICH ARE SET FORTH

COPIES TO ISSUING OFFICE. CONTRACTOR AGREES TO FURNISH AND DELIVER

ARE

ARE

31c. DATE SIGNED

27b. CONTRACT/PURCHASE ORDER INCORPORATES BY REFERENCE FAR 52.212-4. FAR 52.212-5 IS ATTACHED. ADDENDA

31a. UNITED STATES OF AMERICA (SIGNATURE OF CONTRACTING OFFICER)

30c. DATE SIGNED 31b. NAME OF CONTRACTING OFFICER (Type or print)

ALL ITEMS SET FORTH OR OTHERWISE IDENTIFIED ABOVE AND ON ANY ADDITIONAL

SHEETS SUBJECT TO THE TERMS AND CONDITIONS SPECIFIED.

27a. SOLICITATION INCORPORATES BY REFERENCE FAR 52.212-1, 52.212-4. FAR 52.212-3 AND 52.212-5 ARE ATTACHED. ADDENDA

26. TOTAL AWARD AMOUNT (For Govt. Use Only)

OFFER

STANDARD FORM 1449 (REV. 2/2012)

Prescribed by GSA - FAR (48 CFR) 53.212

ARE NOT ATTACHED.

ARE NOT ATTACHED.

AUTHORIZED FOR LOCAL REPRODUCTION

PREVIOUS EDITION IS NOT USABLE

30b. NAME AND TITLE OF SIGNER (Type or print)

30a. SIGNATURE OF OFFEROR/CONTRACTOR

28. CONTRACTOR IS REQUIRED TO SIGN THIS DOCUMENT AND RETURN

25. ACCOUNTING AND APPROPRIATION DATA

29. AWARD OF CONTRACT:

REF.

32e. MAILING ADDRESS OF AUTHORIZED GOVERNMENT REPRESENTATIVE

32c. DATE 32b. SIGNATURE OF AUTHORIZED GOVERNMENT REPRESENTATIVE

ACCEPTED, AND CONFORMS TO THE CONTRACT, EXCEPT AS NOTED:

32a. QUANTITY IN COLUMN 21 HAS BEEN

RECEIVED INSPECTED

40. PAID BY39. S/R VOUCHER NUMBER38. S/R ACCOUNT NUMBER

37. CHECK NUMBER

FINALPARTIAL

36. PAYMENT

FINALPARTIAL

35. AMOUNT VERIFIED

CORRECT FOR

34. VOUCHER NUMBER33. SHIP NUMBER

COMPLETE

32g. E-MAIL OF AUTHORIZED GOVERNMENT REPRESENTATIVE

42d. TOTAL CONTAINERS42c. DATE REC'D (YY/MM/DD)

42b. RECEIVED AT (Location)

42a. RECEIVED BY (Print)

41c. DATE41b. SIGNATURE AND TITLE OF CERTIFYING OFFICER

41a. I CERTIFY THIS ACCOUNT IS CORRECT AND PROPER FOR PAYMENT

STANDARD FORM 1449 (REV. 2/2012) BACK

24.

AMOUNT

23.

UNIT PRICE

22.

UNIT

21.

QUANTITY

20.

SCHEDULE OF SUPPLIES/SERVICES

19.

ITEM NO.

32f. TELEPHONE NUMBER OF AUTHORIZED GOVERNMENT REPRESENTATIVE

32d. PRINTED NAME AND TITLE OF AUTHORIZED GOVERNMENT REPRESENTATIVE

2 2 of

SECTION B

SUPPLIES OR SERVICES AND PRICES

Section B, Page B-i

PART I – THE SCHEDULE

PAGE

B.1 INTRODUCTION .......................................................................................... B-1

B.2 DESCRIPTION ............................................................................................... B-2

B.3 DEFINITIONS ................................................................................................ B-3

B.4 DETERMINATION OF RESPONSIBILITY ................................................ B-4

B.5 PRICING INFORMATION ............................................................................ B-4

B.6 RECEIPT OF CRUDE OIL AT THE DOE SITE ........................................... B-5

B.7 CLOSE-OUT RECONCILIATION ................................................................ B-6

B.8 ADJUSTMENT FOR CRUDE OIL QUALITY DIFFERENTIAL ................ B-6

B.9 REQUEST(S) FOR SUBSTITUTION OF CRUDE OIL TYPES

FOR DELIVERY TO SPR .............................................................................. B-9

Section B, Page B-1

B.1 INTRODUCTION

a. The Department of Energy (DOE), Strategic Petroleum Reserve Project

Management Office (SPRPMO) is soliciting to purchase up to 1,000,000 barrels of sweet Crude Oil produced in the United States by United

States producers to be delivered to Bayou Choctaw, Big Hill, and Bryan

Mound SPR sites. See table on item B.6(d) for site allocation. Offers will be accepted on a competitive basis. Offerors will be mandated to provide only Crude Oil produced in the United States for fulfillment purposes.

Offerors should take note that delivery into the SPR schedules and or requests will be considered against those requests from the Exchange for

Storage awardees under Solicitation DE-RP96-20PO00001, which will have priority over oil delivery schedules and requests from this Request for

Proposal 89243520RFE000016. (Note: In the event that the site defined in this document is unable to receive deliveries for any reason, the DOE reserves the right to designate alternate locations for receipt. In this event, costs will be evaluated and appropriately compensated with adjustments to the contract delivery quantities.)

b. Offerors, which include regular sellers or distributors of crude oil, must certify (see Section K.3 OFFEROR CERTIFICATION) that all Crude Oil shipments received by the SPR pursuant to this solicitation will be sourced from U.S. entities which employ less than 5,000 employees and identified as: (i) individuals, corporations, partnerships, or governmental entities, (ii) which are either United States citizens, incorporated or organized in the

United States, or governmental entities of the United States or one of its states.

c. The U.S. produced Crude Oil offered for sale to the DOE shall meet the specifications in Section J, Exhibit C. Acceptance of any Crude Oil offered for delivery will be subject to the Contracting Officer’s approval. Gravity and sulfur differentials will be used to determine economic quality adjustments for any Crude Oil delivered which varies from the quality specifications of the Crude Oil contracted. The Offeror is required to supply: 1) an assay of U.S. produced Crude Oil offered at time of bid and

2) the Sweet Crude Oil Quality Checklist – Exhibit C-1.1 as applicable based upon Crude Oil Type offered on Offer Form A. If the checklist and

Section B, Page B-2 assay are not submitted with the bid package, then the bid package may be considered incomplete. The SPR seeks to store US produced crude oil with the widest range of application in the domestic market. To preserve SPR cavern homogeneity and maintain overall integrity of its respective crude streams, only crude oils of similar composition are commingled in storage.

Due to natural geothermic heating, crude oils that demonstrate high bubble point pressures (BPP) and high gas‐oil ratios (GOR) produce increased vapor pressure at standard cavern storage temperatures. High BPP-GOR oils have the potential to impact the existing SPR oil inventory, increasing levels of light end gases (C1-C3) and greatly restricting immediate deliverability which is the critical mission of the SPR. Light ends may not be immediately observed through analysis at ambient temperatures, but are entrained in certain crude types and released during underground storage.

Lighter ends, Methane, Ethane and Propane are the single largest contributor to vapor pressure increase. Crude oils displaying C1-C3 volume percent outside of the required specifications and determined by the allowed methods listed in Exhibit C-1, will be considered outside of the

SPR’s acceptance criteria and deemed incompatible with existing SPR stocks. Blending heavier crudes with light end crudes may cause separation of the blend at higher temperature, thus rendering the stream undeliverable.

SPR reserves the right to reject any crude oil in order to ensure the quality of the crude oil received, stored, and maintained within the SPR

d. The minimum offer quantity is100,000 barrels with a maximum awarded contract quantity of 300,000 barrels per offer line item. An Offeror may submit multiple offers, but total award(s) to any one Offeror will not exceed 300,000 barrels.

e. Crude Oil delivery period to the SPR sites will be July 1, 2020, through

July 31, 2020. Requests for early deliveries will be accommodated to the maximum extent possible on a best efforts basis, terms subject to be negotiations.

B.2 DESCRIPTION

Delivery of the Crude Oil to the Government can be made to three (3) DOE sites, subject to scheduling and meeting quality specs in Section J, Exhibit C-1.

Section B, Page B-3

B.3 DEFINITIONS

As used throughout this solicitation, the following terms shall have the meaning set forth below:

a. “Government,” unless otherwise indicated in the text, means the United

States Government.

b. “Strategic Petroleum Reserve” (SPR) means that DOE program established by Title I, Part B, of the Energy Policy and Conservation Act, 42 U.S.C.

Section 6201, et seq.

c. “Contracting Officer” means a person with the authority to enter into, administer, and/or terminate contracts and make related determinations and findings on behalf of the Government.

d. “DOE” means the U.S. Department of Energy.

e. “Contractor” means the party contracting to perform all work to be done in pursuance of this contract.

f. “Offeror” is an entity that submits an offer pursuant to this solicitation.

g. “SPRPMO” means the Strategic Petroleum Reserve Project Management

Office.

h. “API” means the American Petroleum Institute.

i. “Barrel” means 42 U.S. gallons or 231 cubic inches per gallon corrected to

60 degrees Fahrenheit.

j. “Crude Oil” means a mixture of hydrocarbons that existed in the liquid phase in natural underground reservoirs and remains liquid at atmospheric pressure after passing through surface separating facilities and is marketed or used as such. This product must be produced in the United States.

k. “Affiliate” means associated business concerns or individuals if, directly or indirectly, (1) either one controls or can control the other, or (2) a third-party controls or can control both.

l. “FFPOCOL” means Fluor Federal Petroleum Operations Crude Oil Logistics group. Fluor Federal Petroleum Operations (FFPO) is the Management and

Operating Contractor for the SPR.

Section B, Page B-4

m. “DOE M&O” means Department of Energy’s Management and Operating

Contractor, FFPO.

n. “Static tank” Crude Oil tankage that is dedicated to a cargo destined for delivery to/from the SPR. This tank will not have crude being pumped into it

(active) from a source while deliveries are pumping out of it and into the

SPR.

B.4. DETERMINATION OF RESPONSIBILITY

Upon request, Offeror(s) shall furnish sufficient information for the Contracting

Officer to make a determination of responsibility. At a minimum, Offerors shall furnish enough data for the Contracting Officer to determine adequate financial capability.

B.5 PRICING INFORMATION

a. The contract line item fixed per barrel price(s) will be determined by the average (to the $0.001) of daily settlements for the NYMEX WTI (New

York Mercantile Exchange West Texas Intermediate) prompt delivery month contract for the three trading days commencing with day of notice of award, adjusted for Argus WTI Houston Month 1 WTD (weighted average) for sweet Crude Oil, plus the corresponding monthly “” value for each successful line item offer. The final contract sum value is the per barrel price(s) multiplied by the corresponding award quantity for each line item award as determined on the fourth trading day after notice of award.

b. A maximum contract value will be determined at the time of award notification based on the NYMEX WTI delivery month, adjusted for

Argus WTI Houston Month 1 WTD, settlement for the trading day prior to date set for the receipt of offers, plus the successful offer line item “” value multiplied by the awarded quantity for each line item, or subject to available Government funding

c. Contracted fixed per barrel prices for each line item as determined in B.5.a above shall remain effective for deliveries outside of the contracted month.

DOE retains the right to decline deliveries outside of the contracted month;

unless delays are attributable to DOE.

Section B, Page B-5

B.6 RECEIPT OF CRUDE OIL AT THE DOE SITE

a. Maximum receipt capability of Crude Oil at the DOE SPR site is as follows:

Note: Receipt capability may decline as SPR caverns are filled.

Bryan Mound 170,000 barrels per day

Big Hill 225,000 barrels per day

Bayou Choctaw 110,000 barrels per day

b. All costs associated with the transportation of the Crude Oil to the DOE will be absorbed by the Contractor, to include but not be limited to, tariffs, marine shipment, pipeline shipment, harbor, Oil Spill Liability Trust Fund taxes and environmental fees (including Texas Coastal protection fees), terminalling, and tankage charges.

c. Within 14 business days after contract award, the Contractor shall submit a comprehensive delivery schedule for the DOE Contracting Officer’s approval providing the volume of Crude Oil to be delivered to each DOE delivery location, as well as the most recent corresponding comprehensive

Crude Oil assay(s). The delivery schedule may allow for economic delivery-size marine cargoes not less than 250,000 barrels for vessels and

40,000 barrels for barges and commercial pipeline cargo shipments not less than 100,000 barrels per cargo. The DOE must approve subsequent changes to the original schedule. Contractors are also cautioned that gauging and or testing of all incoming U.S. Produced Crude Oil to determine SPR compatibility as noted in Section J Exhibit C-1 will require the tank to be static. This should be a consideration of all Offerors when investigating terminals/pipelines. and when submitting schedules as noted in B.6(c).

d. The availability of storage capacity and delivery periods for Crude Oil at the DOE site is as follows:

Sweet

Volume

(Million

Barrels)

Delivery

Period

Big Hill .400

7/1/2020 –

7/31/2020

Section B, Page B-6

Volume

(Million

Barrels)

Delivery

Period

Bayou Choctaw 1.0

7/1/2020 –

7/31/2020

Bryan Mound 1.0

7/1/2020 –

7/31/2020

Note: In the event of delayed cargoes, Government may allow for deliveries in subsequent month.

e. While the SPR can receive the site delivery volumes as stated in B.6 (a), Offerors are cautioned that, due to commercial volumes at the terminals/pipelines, delivery time frames may be restricted. Offerors are responsible for ensuring that deliveries to the SPR can be accommodated through the applicable commercial terminals/pipelines.

B.7 CLOSE-OUT RECONCILIATION

a. Prior to the last scheduled cargo delivery, the DOE and Contractor shall use the most current available information in reconciling and determining the final delivery quantity to the Government. The Contractor shall then utilize best efforts in delivering the estimated agreed upon quantity to the

Government within a +/- 5 percent variance of the total contractor volume.

b. The Government shall make payment to the Contractor based on the per barrel price as awarded.

B.8 ADJUSTMENT FOR CRUDE OIL QUALITY DIFFERENTIAL

a. A quality differential shall be computed for each cargo of U.S. produced Crude Oil delivered to the DOE as compared to the U.S. produced Crude Oil assay(s) submitted with the awarded bid as listed in the Contractor’s award or approved substitution, see section B.9.

b. Laboratory tests for API Gravity and Sulfur mass percent, in accordance with tests methods listed in Exhibit C-1, shall be taken when custody of the U.S. produced

Crude Oil is transferred to the DOE.

The quality differential adjustments for the U.S. produced Crude Oil delivered by the Contractor to the DOE will apply in those instances wherein the quality of the

U.S. produced Crude Oil being delivered to the Government is above or below that

Section B, Page B-7 of the U.S. produced Crude Oil assay(s) submitted with the awarded bid as listed in the Contractor’s award or approved substitution, see section B.9.

c. The allowable variations from the contracted quality are as follows:

Quality

Characteristics Sour Sweet

API° Gravity +/- 0.5 +/- 0.5

Sulfur - Mass, % +/- 0.10 +/- 0.10

d. Monetary adjustments will be used to settle the quality differentials on U.S.

produced Crude Oil delivered to the SPR sites based on the following rates:

(1) API Gravity (Sweet and Sour): Quality price adjustments will be applied to the amount of variation by which the API gravity of the U.S. produced

Crude Oil delivered differs by more than plus or minus five-tenths of one degree API (+/-0.5˚ API) from the API gravity of U.S. produced Crude Oil assay(s) submitted with the awarded bid as listed in the Contractor’s award or approved substitution, see section B.9. Adjustment for U.S. produced

Crude Oil will be in accordance with the GravCap table (Exhibit C.2). This will be on a per cargo basis.

Sulfur (Sweet and Sour): Quality price adjustments will be applied to the amount of variation by which the Sulfur mass percent of the U.S. produced

Crude Oil delivered differs by more than plus or minus one-tenth of one percent of total Sulfur (+/- 0.10%) from the total Sulfur of U.S. produced

Crude Oil assay(s) submitted with the awarded bid as listed in the

Contractor’s award or approved substitution, see section B.9. Adjustment for U.S. produced Crude Oil will be in accordance with the GravCap table

(Exhibit C.2). This will be on a per cargo basis.

Section B, Page B-8

EXAMPLE: Quality Adjustment SOUR

CRUDE

SWEET

CRUDE

API Gravity - Awarded bbls 35.8° 35.8°

API Gravity - Delivered bbls 38.2° 38.0°

API Gravity - Quality Variance 2.4° 2.2°

Allowable Variance ±0.5° ±0.5°

Excess Variance - API Gravity 1.9° 1.7°

API Gravity $ Adjustment per bbl +4¢ + 4¢

"- ¢" = SPR owes Contractor

"+ ¢" = Contractor owes SPR

Sulfur Wt% - Awarded bbls 1.33% 0.33%

Sulfur Wt% - Delivered bbls 1.46% 0.39%

Sulfur Wt% - Quality Variance 0.13% 0.06%

Allowable Variance ±0.10% ±0.10%

Excess Variance - Sulfur Wt% 0.03% 0.01%

Sulfur Wt% $ Adjustment per bbl -3¢ 0¢

"- ¢" = SPR owes Contractor

"+ ¢" = Contractor owes SPR

Net Quality $ Adjustment per bbl +1¢ +4¢

"- ¢" = SPR owes Contractor

"+ ¢" = Contractor owes SPR

The quality adjustment owed to the either the SPR or Contractor shall be paid in

U.S. Dollars and adhere to all conditions of payment as noted in section G.2.

e. There is a limit of 0.1% freewater on delivery to the SPR as measured either by contractor's shore tank or on the vessel prior to discharge into tanks designated for

DOE receipts. The inspector’s gauges, witnessed by the DOE representative, either on the vessel at the dock facility or terminal shore tank, will be the method used to determine the final freewater barrel amount. This clause is effective in conjunction with the Water and Sediment [Vol.%] maximum limit of 1.0% as stated in Exhibit

C-1; e.g., a 200,000 barrel U.S. produced Crude Oil delivery to the SPR is limited to 1.0% S&W (2,000 barrels), of which a maximum of 0.1% (500 barrels) can be freewater. Contractor is responsible for all costs associated with removal of excess freewater. Exceeding the freewater limitations specified herein will result in the cargo being rejected

f. If the U.S. produced Crude Oil being delivered to the SPR is outside the contractual limits and is determined to be unacceptable, the Government reserves the right to return the delivered Crude Oil, at the contractor’s expense, to the vessel for marine receipts or to the Crude Oil tankage for pipeline receipts.

Section B, Page B-9

B.9 REQUEST(S) FOR SUBSTITUTION OF CRUDE OIL TYPES FOR DELIVERY

TO SPR

After award, if the contractor requests to offer a U.S. produced Crude Oil substitution for delivery which is not in its contract, the Government will evaluate the substitution request against operational constraints. If no hindrance to SPR operations and the Crude Oil substitute will meet the specifications listed in

Section J, Exhibit C-1, it will be accepted with no additional cost to the

Government. This evaluation will be done on a case-by-case basis for each substituted crude cargo tendered for delivery and the Crude Oil will not be added automatically to the basket of contracted Crude Oils (or single crude) in the contract for future deliveries. For all requests, there will be an administrative cost of $3,500* to process the request. The substitution request must be in the form of a firm request and no “hypothetical” request for crude substitution will be considered.

In addition, any approved substituted volume for a specific monthly delivery period shall be subject to an agreed to premium of a minimum of 90% of that volume for that period.

*The Administrative charge of $3,500 will be applied to each crude type substitution request. All Administrative charges for substitution requests, whether requests were accepted or not, will be included in the contract final reconciliation calculations.

SECTION C

STATEMENT OF WORK

Section C, Page C-i

C.1 SCOPE OF WORK .................................................................................... C-1

Section C, Page C-1

C.1 SCOPE OF WORK

Contractors shall deliver to the SPR sites up to one million barrels of U.S.

produced sweet Crude Oil during the month of July 2020. Crude Oil delivered shall comply with the SPR specifications as specified in Section J, Exhibit C-1.

All costs associated with the delivery of U.S. produced sweet Crude Oil to the

SPR site shall be at the Contractor’s expense. Scheduling of deliveries shall be in accordance with Section F of this contract.

Section D, Page D-i

SECTION D

PACKAGING AND MARKING REQUIREMENTS

Section D, Page D-1

SECTION D

PACKAGING AND MARKING REQUIREMENTS

RESERVED

SECTION E

INSPECTION AND ACCEPTANCE

Section E, Page E-i

E.1 CUSTODY TRANSFER MEASUREMENTS FOR DELIVERY

OF CRUDE OIL TO DOE ........................................................................... E-1

E.2 CRUDE OIL QUALITY DETERMINATION ............................................ E-4

E.3 CRUDE OIL QUANTITY DETERMINATION ......................................... E-5

Section E, Page E-1

E.1 CUSTODY TRANSFER MEASUREMENTS FOR DELIVERY OF CRUDE OIL

TO DOE

Custody transfer measurements will be in accordance with established API standards and will be performed and or witnessed by a U.S. Government representative. The Contractor may witness the measurement and testing of purchased oil for its account and/or may provide, at Contractor’s expense, a

Contractor’s inspector to witness the measurement and testing process. The custody transfer measurements of the purchased oil to be delivered by the

Contractor to the DOE facilities will be based on the following delivery locations:

a. Seaway Freeport Terminal #2, Freeport, Texas for delivery to the DOE

Bryan Mound site.

Primary custody transfer of quantity and quality will be based on the

Seaway Freeport Terminal #2 dock meter and in-line sampler. Note: If deliveries are fulfilled through Jones Creek tankage and into Freeport

Docks, then custody transfer quantity and quality measurements for the delivery of oil to the SPR shall be based on the Bryan Mound site meters and inline sampler. The Government contracted third party inspection company will witness all measurement and testing and perform testing.

Secondary custody transfer quantity and quality measurements for the delivery of oil to the SPR shall be based on the Bryan Mound site meters and inline sampler. The Government contracted third party inspection company will witness all measurement and testing and perform testing.

The Contractor is responsible for terminal throughput charges for oil deliveries performed under these conditions.

A sample collected from the Seaway dock certified automatic in-line sampler shall be used for quality determination. API Gravity, Sulfur, Water, and Sediment will be determined by the Government contracted 3rd party inspection company laboratory. In the event the Freeport meters fails, the backup measurement will be the Bryan Mound site meters. In the event the Freeport inline sampler fail, the Bryan Mound inline sampler will be used for quality. For this sample, the analysis consisting of API Gravity, Section E, Page E-2

Sulfur, Water, and Sediment shall be performed by the DOE Bryan Mound facility and witnessed by the DOE 3rd party inspector.

Note: The Government requires that testing be performed on shipments prior to discharge. If load-port samples from the Vessel or tanks are not made available for DOE testing, then Disport samples will be taken at the

Seaway dock for testing. Samples from the vessel’s tanks will need to be tested for contaminants prior to any receipts into Site caverns. Light Ends content will also be tested. The Government 3rd party inspector will retrieve vessel samples upon arrival to expedite testing. Delivery and testing can take between 8-10 hours to complete. Vessel may begin discharging into the Bryan Mound Site shore tanks and will be held in tanks until all testing is approved. In the event of any delays in delivery and/or testing, Vessel may have to slow its rate and/or stop if necessary.

In the event Seaway dock personnel detect an H2S reading on the vessel at or greater than 10 ppm, vessel gauging, and sampling will not be allowed by the Terminal. In this instance, the Government will permit sampling at the Bryan Mound site, allowing the vessel to commence discharge into

Bryan Mound tanks until samples can be retrieved and tested.

In the event the terminal does not permit vessel gauging and sampling, Load Port samples will be required to expedite testing by the DOE.

Therefore, upon vessel’s arrival at the terminal dock each offeror must submit a sealed Load Port (vessel cargo tanks) sample to the Government

3rd party inspection company for preliminary testing. Load port samples are REQUIRED for all vessel cargoes to be delivered to the SPR.

b. St. James Terminal to Bayou Choctaw

Custody transfer quantity and quality measurements for the delivery oil to the SPR shall be based on the Bayou Choctaw site meter and quality will be the inline sampler. Secondary measurement for quantity and quality will be at the applicable St. James terminal facility. The API Gravity, Sediment and

Water, and Sulfur content will be performed by the Government contracted third party inspector lab. Contractor shall have the right to have a representative present to witness all sampling, measurements and testing analysis. The Government contracted third party Inspection Company will witness all measurement and testing and perform testing. The Contractor is responsible for terminal throughput charges for oil deliveries performed under these conditions. Note: The Redstick 36” pipeline will be under

Government service; therefore, tariff will not be assessed to the Contractor.

Section E, Page E-3

c. Nederland/Sun to Big Hill

Custody transfer quantity and quality measurements will be the DOE meter skid and inline sampler located in Sun Marine Terminal. Secondary measurement for quantity will be on the Sun shore tank and quality based on manual grab samples taken at the Sun/DOE inline sampler. The API

Gravity, Sediment and Water, and Sulfur content will be performed by the

Government contracted third party laboratory and witnessed by the

Government contracted third party inspector. Contractor shall have the right to have a representative present to witness all sampling, measurements and testing analysis. The Government contracted third party inspection company will witness all measurement and testing and perform testing. The

Contractor is responsible for terminal throughput charges for oil deliveries performed under these conditions.

d. Phillips 66 at Beaumont to Big Hill

Custody transfer quantity and quality measurements will be the Big Hill meters and in-line sampler. Secondary custody transfer quantity and quality measurements will be the Phillips 66 delivery shore tank gauges and tank composite sample for deliveries into the Big Hill pipeline. The API

Gravity, Sediment and Water, and Sulfur content will be performed by the

Government contracted third party inspector lab. Contractor shall have the right to have a representative present to witness all sampling, measurements and testing analysis. The Government contracted third party inspection company will witness all measurement and testing and perform testing. The

Contractor is responsible for terminal throughput charges for oil deliveries performed under these conditions. Contractors will be invoiced an additional $0.13 per barrel throughput for all crude oil that passes through the P66 Beaumont Terminal Connection Point.

e. Zydeco-Shell 20” Pipeline to Big Hill

Primary custody transfer quantity measurements will be based on the DOE

Big Hill site meters for deliveries into the Big Hill pipeline. Custody transfer quality measurements (API Gravity, Sulfur, and Sediment and

Water) shall be based on the Zydeco-Shell 20” pipeline designated manual grab sampler station for deliveries into the DOE Big Hill pipeline. The API

Gravity, Sediment and Water, and Sulfur content will be performed by the

Government contracted third party laboratory and witnessed by the

Government contracted third party inspector. Secondary custody transfer quantity will be based on the Zydeco-Shell 20” designated meter and in-

Section E, Page E-4 line sampler. Contractor shall have the right to have a representative present to witness all sampling, measurements and testing analysis. The

Government contracted third party inspection company will witness all measurement and testing and perform testing. The Contractor is responsible for terminal throughput charges for oil deliveries performed under these conditions

E.2 CRUDE OIL QUALITY DETERMINATION

a. Load port origin vessel or tanks will need to be sampled and tested by the government inspector prior to Discharge at the Sites for U.S. produced sweet

Crude Oil receipts. More detailed information will be provided through the

Nomination form. A disport sample will be taken in order to confirm crude oil quality from the load port.

b. The quality of the Crude Oil that is delivered by the Contractor to the DOE will be determined from samples taken, in order of preference, (1) from a representative sample collected by an automatic sampler whose performance has been proven in accordance with the API Manual of Petroleum

Measurement Standards, Chapter 8 Section 2, Automatic Sampling of

Petroleum and Petroleum Products (ASTM D4177), latest edition; or (2) from the Contractor’s tankage in accordance with API Manual of Petroleum

Measurement Standards, Chapter 8 Section 1, Manual Sampling of Petroleum and Petroleum Products (ASTM International (ASTM) D4057), latest edition; or (3) from a representative vessel composite sample obtained in accordance with the API Manual of Petroleum Measurement Standards

Chapter 17 – Marine Measurement, Section 2 – Measurement of Cargoes On

Board Tank Vessels. Preference will be given to samples collected by means of an automatic sampler when such a system is available and operational.

All methods above shall be in accordance with the latest API/ASTM standards and methods. If the measurements are determined by the

Government contracted 3rd inspection company to be inaccurate or not to represent the volume delivered by the Contractor, the subsequent order of preference method, as stated above, shall apply.

c. If the Crude Oil tendered for delivery to the DOE does not meet the Crude

Oil specifications as provided in Section J, Exhibit C (Paragraph B.8(d) may be applicable), the Government reserves the right to refuse the acceptance of the delivery.

Section E, Page E-5

d. The custody transfer quality/quantity oil analysis shall be performed by the

Government contracted third party inspection company lab as described in

E.1 and shall be documented as the official measurements of record. The

Contractor may request a representative portion of the custody transfer sample for their internal purposes, but any varying analysis results obtained by the Contractor shall not be binding on the Government nor override the

Government’s official measurements of record. The Contractor or his representative may, at its option, arrange to witness and verify testing simultaneously with the Government contracted third party inspection company’s lab. Such services, however, will be for the account of the

Contractor. Should the Contractor opt not to witness the testing, then the

Government findings will be binding on the Contractor.

e. For pipeline deliveries of Crude Oil to the SPR storage site, the Contractor shall ensure that the commercial pipeline carriers provide Government contracted third party inspection company access to the pipeline facilities for the obtaining of Crude Oil samples.

NOTE: Any additional costs (including overtime) charged by the pipeline carrier which are directly associated with the Government sampling requirement shall be the responsibility of the Contractor.

E.3 CRUDE OIL QUANTITY DETERMINATION

a. The quantity of the Crude Oil that is delivered by the Contractor to the DOE will be determined, in order of preference, (1) by delivery meter in accordance with the API Manual of Petroleum Measurement Standards, Chapters 5 – Metering Section 3 – Measurement of Liquid Hydrocarbons by

Turbine Meters; or (2) by opening and closing tank gauges (with adjustment for opening and closing free water and Sediment and Water tests as determined from shore tank samples; or (3) by vessel ullage measurements with qualified VEF in accordance with API Manual of Petroleum

Measurement Standards Chapter 17 – Marine Measurement. All volumetric measurements will be corrected to net standard volume in barrels at 60°F, using the API Manual of Petroleum Measurement Standards, Chapter 11.1, Volume 1, Volume Correction Factors (ASTM D1250) (IP 200); Table 5A-

Generalized Crude Oils, Correction of Observed API Gravity to API Gravity at 60°F; Table 6A-Generalized Crude Oils, Correction of Volume to 60°F

Against API Gravity at 60°F, latest edition, and by deducting the tank’s free water, and the entrained Sediment and Water as determined by the testing of composite all levels samples taken from the delivery tanks.

Section E, Page E-6

b. The quantity measurements shall be performed and certified by the

Government’s responsible party for delivery operations and witnessed by the

Government contracted third party inspection company at the delivery point.

The Contractor may, at its option, have representatives present at the gauging/metering, sampling, and testing. Should the Contractor arrange for additional inspection or testing services, such services will be for the account of the Contractor, and any results obtained by the Contractor shall not be binding on the Government. Should the Contractor not arrange for additional services, then the Government’s quantity determination shall be binding on the Contractor.

SECTION F

DELIVERIES OR PERFORMANCE

Section F, Page F-i

F.1 SCHEDULING OF CRUDE OIL MOVEMENTS ......................................... F-1

F.2 DELIVERY AND RECEIPT DOCUMENTATION OF CRUDE OIL.......... F-3

F.3 PERIOD OF PERFORMANCE ...................................................................... F-4

Section F, Page F-1

F.1 SCHEDULING OF CRUDE OIL MOVEMENTS

a. For all deliveries for the month of July, the Contractor shall nominate a delivery program to the DOE not later than June 18, 2020. The Government will respond to the Contractor not later than 5 business days of submittal, confirming the schedule as originally submitted or proposing alterations. The

Contractor shall confirm nominations with the DOE via email using the form included in Section J, Exhibit H.

b. For marine deliveries, the Contractor shall make necessary arrangements with the commercial terminals connected to the DOE. The nomination will include a five-day delivery window for each cargo, the type of oil, and the approximate delivery volume. Certain restrictions may apply if the total volume to be delivered to the SPR precludes the availability of five-day delivery ranges for all of the cargoes. In this case, the Contractor’s five-day delivery ranges will be proportionately reduced. The delivery time allotted to each Contractor during the month shall be limited to each Contractor’s percentage volume of the total volume scheduled by the SPR for the month.

Offerors should take note that delivery into the SPR schedules and or requests will be considered against those requests from the Exchange for

Storage awardees under Solicitation DE-RP96-20PO00001, which will have priority over oil delivery schedules and requests from this Request for

Proposal 89243520RFE000016 Delivery program nominations received by

DOE subsequent to the required time period or those altered as a result of a contract modification will be handled by DOE on a best efforts basis.

Requests for contract modifications will be evaluated after scheduling of original awards. The Contractor shall be deemed to have agreed to such alterations unless the Contractor requests the Government to reconsider its request within two business days of notification of delivery range reduction.

The Government will use its best efforts to accommodate such requests, but its decision following any reconsideration shall be final and binding.

(1) No later than seven calendar days prior to the delivery month, the

Contractor shall narrow the five-day delivery range to a three-day delivery window and nominate the name of the vessel, the vessel quality data, the expected date of arrival, and the volume to be delivered. The DOE will accept or reject the nomination, without

Section F, Page F-2 prejudice, and advise the Contractor within one calendar day of the disposition of the vessel nominated. Due to SPR receipt capabilities as defined in Section B.6.a and possible scheduling conflicts, certain limitations may be applied to the accepted three-day delivery windows. A Contractor may be required to modify the three-day delivery window nomination to an alternate period within the established five-day delivery range.

(2) The Contractor, or its designated agent, will provide pre-arrival notices 72 hours, 48 hours and 24 hours prior to discharge to both the

DOE and the discharge terminal.

c. For pipeline deliveries, the Contractor shall make necessary arrangements with the commercial pipelines connected to the DOE or its interconnecting pipelines. Nomination information regarding these deliveries will be provided to the DOE not later than five days prior to the month in which deliveries will be made.

d. The Contractor shall be responsible for meeting all delivery requirements imposed by the commercial facilities, including complying with the rules, regulations and procedures contained in applicable port/terminal manuals, pipeline tariffs, or other applicable documents.

e. If there is a conflict between vessel schedules submitted in accordance with paragraph F.1.a., and pipeline schedules submitted in accordance with paragraph F.1.b., the Government will resolve in favor of the pipeline schedule.

f. Whenever an inspector and/or loss control representative is appointed by the

Contractor to witness the delivery operation (gauging, sampling, testing, etc.), written notification shall be provided to the DOE, no later than 72 hours prior to the scheduled date of each applicable cargo delivery to the DOE.

g. Absence of the name(s) of a Contractor’s inspector and/or representative on the delivery documentation constitutes acceptance by the Contractor of the delivery quantity and quality as determined by the DOE and/or its representative(s).

h. The Contractor is solely responsible for making the necessary arrangements with terminals and pipeline carriers, including tankage, to achieve any minimum rate/quantity required by connecting commercial facilities to ensure Crude Oil deliveries are made to DOE delivery location. Contractors are also cautioned that gauging and or testing of all incoming Crude Oil to

Section F, Page F-3 determine SPR compatibility as noted in Section J Exhibit C-1 will require the tank to be static. This should be a consideration of all Offerors when investigating terminals/pipelines and when submitting schedules as noted in

B.6(c).

i. Because this is considered a domestic move, the Jones Act, 46 U.S. C.

§ 55102 Transportation of Merchandise, is the determinative maritime transportation law. See Exhibit F.

j. The Contractor’s vessel agent, who will be nominated for approval by the

DOE, will be responsible for providing the DOE with full delivery information for all Crude Oil deliveries, to include but not limited to, the load quantity/quality, departure timeframes and all pertinent data. The Contractor or Contractor’s vessel agent shall provide to DOE, upon DOE request, the following load port Crude Oil quality results prior to vessel arrival at discharge port: API Gravity, Sulfur, Sediment, and Water. Additionally, pre-arrival information shall be provided regarding ETAs and any special delivery requirements that may affect the expedient discharge of the vessel.

Upon arrival at the discharge port, the Contractor or Contractor’s vessel officer shall provide a vessel load port sample to the DOE third party inspector.

k. Due to varying conditions of vessel delivery and shipping or pipeline transmission, the quantity actually delivered may vary by +/-5 percent for each shipment. However, in accordance with Section B.6 and B.7, the

Contractor shall engage sufficient transportation capacity during the month’s scheduled deliveries in order to ensure that the total contracted quantity will be delivered, without exceeding the agreed upon quantity.

F.2 DELIVERY AND RECEIPT DOCUMENTATION OF CRUDE OIL

The quantity and quality determination of the Crude Oil delivered by the

Contractor shall be documented on the Material Inspection and Receiving Report

(DD Form 250 for pipeline and vessel receipts (DD250-1), see Section J, Exhibit

D for a sample of the form. Copies of the completed DD Form 250, with applicable supporting documentation (i.e., metering or tank gauging tickets and appropriate calculation worksheets), will be furnished to the Contractor and/or the

Contractor’s authorized representative after completion of delivery for signature agreeing to the quantity and quality of crude delivered. Marine Bills of Lading or

Pipeline Statements identifying crude type shipped shall also be provided by the contractor.

Section F, Page F-4

F.3 PERIOD OF PERFORMANCE

a. The window for Crude Oil deliveries to the SPR site is July 1 through July

31, 2020, depending on months awarded. Requests for early deliveries will be accommodated to the maximum extent possible on a best efforts basis, terms to be negotiated. Preference for delivery ranges will be given to those

Contractors who were awarded the highest volume of Crude Oil, in descending order, at each SPR receiving terminal/site, except that conflicts between marine and pipeline schedules will be resolved in favor of pipeline deliveries. Nominations received subsequent to due date (reference section

F.1.a) will negate the order of preference and will be scheduled on available basis. All deliveries must be completed on or before July 31, 2020.

b. DOE will consider a bilateral contract modification (supplemental agreement) canceling further deliveries under the contract where the offeror can demonstrate that such modification benefits, financially or otherwise, the producer(s) supplying crude oil pursuant to the contract.

SECTION G

CONTRACT ADMINISTRATION DATA

G.1 DOE SPR CORRESPONDENCE PROCEDURES ..................................... G-1

G.2 BILLING INSTRUCTIONS ........................................................................ G-2

Section G, Page G-1

G.1 DOE SPR CORRESPONDENCE PROCEDURES

To promote timely and effective administration, correspondence submitted under this contract shall be subject to the following procedures:

Correspondence from the Contractor shall be submitted to the Contracting Officer, the contract specialist, the Technical Representative (TR), Alternate Technical

Representative and FFPOCOL in an electronic format to the email addresses provided below.

a. Contracting Officer’s email address is:

Kelly Gele

Kelly.Gele@spr.doe.gov

(504) 734-4343

b. The Contract Specialist’s email address is:

Mary Roark

Mary.Roark@spr.doe.gov

(504) 734-4195

c. The Technical Representative’s email address is:

Christopher Roark

Christopher.Roark@spr.doe.gov

(504) 734-4134

(504) 638-8372 cell

Alternate Technical Representative’s email address is:

Racheal Baldwin

Racheal.Baldwin@spr.doe.gov

(504) 734-4238

(504) 273-8758 cell

d. FFPOCOL@spr.doe.gov mailto:Kelly.Gele@spr.doe.gov mailto:Mary.Roark@spr.doe.gov

Section G, Page G-2

G.2 BILLING INSTRUCTIONS

The Contractor must submit vouchers electronically through the Oak Ridge

Financial Service Center’s (ORFSC) Vendor Inquiry Payment Electronic

Reporting System (VIPERS). VIPERS allows vendors to submit vouchers, attach supporting documentation and check the payment status of any voucher submitted to the DOE.