TITLE
Recommendation to authorize City Manager to execute a First Amendment to the Natural Gas Services Agreement with Shell Energy North America (SENA) providing administrative functions related to the delivery of natural gas to the City of Long Beach’s natural gas pipeline system for an additional three-year term with no other change in terms. (Citywide)
DISCUSSION
The supply of natural gas entering Long Beach Gas and Oil’s (LBGO) natural gas pipeline system is delivered via the Southern California Gas Company’s transmission system from various supply locations. These sources include intrastate and interstate sources, local storage facilities and local production. LBGO currently has a Natural Gas Services Agreement (No. 31076) with SENA, in which SENA calculates load forecasts and coordinates the scheduling of natural gas supplies from multiple sources to ensure a reliable source of natural gas for LBGO’s core, non-core, and industrial transportation customers.
The current three-year Natural Gas Services Agreement with SENA, approved by the City Council on March 24, 2009, will expire on March 31, 2012. The SENA contract represented a significant discount from prior service contracts. LBGO has been satisfied with SENA’s performance under the current contract, and does not believe a more favorable service agreement can be negotiated with other providers given the impact of historically low gas prices on the availability of such services. SENA has an excellent reputation in the industry, has extensive expertise in the procurement and transportation of natural gas, and is a major marketer in California with scheduling and trading offices in San Diego.
This matter was reviewed by Deputy City Attorney Richard Anthony on February 22, 2012, and by Budget Management Officer Victoria Bell on February 24, 2012.
TIMING CONSIDERATIONS
City Council action is requested on March 20, 2012 to ensure a Natural Gas Services Agreement is in place by April 1, 2012.
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