TITLE
Recommendation to authorize City Manager to negotiate and execute Natural Gas Delivery Agreements and future amendments between the City of Long Beach and sellers of locally-produced natural gas in an estimated annual amount of $1.3 million for contract periods not to exceed five years. (Citywide)
DISCUSSION
The Long Beach Gas and Oil (LBGO) Department maintains Agreements with five local oil producers (Locals) to purchase natural gas. The current Agreements will expire on September 30, 2012. Under these Agreements, natural gas is purchased as a supplement to LBGO’s current major natural gas supply from Merrill Lynch Commodities, Inc. The Locals supply approximately 3.5 percent of the annual natural gas requirements of LBGO customers and are paid a per therm cost equivalent to the lowest documented net price paid for natural gas by the City to any contracted natural gas supplier in any given month. These Agreements have been mutually beneficial to LBGO and the Locals. LBGO has benefited from a reasonably priced supply of natural gas, and the Locals are able to allay themselves of their natural gas reserves.
The new Agreements will continue to outline the same terms and conditions under which local producers must operate as the current expiring Agreements. The relevant provisions are as follows:
§ Conditioned on LBGO capacity, LBGO agrees to take all produced gas delivered to the agreed upon Delivery Point by Locals on a best efforts basis. Locals agree to provide LBGO with an estimate of deliveries at the start of each month and notification of any daily fluctuations from this estimate.
§ Locals, at their own expense, are responsible for obtaining all required permits for operation.
§ LBGO is not obligated to accept delivery, receive or make payment for any gas which does not meet the required quality or pressure specifications as set forth under these Agreements. LBGO shall operate an automatic shut-off device which will close automatically in ...
Click here for full text