TITLE
Recommendation to receive and file report regarding a long-term natural gas supply agreement with Coral Energy Resources, L.P. (Citywide)
DISCUSSION
On February 14, 2006, the City Council authorized the City Manager to enter into a three-year natural gas supply agreement with one of the following energy companies: BP Energy Company, Occidental Energy Marketing, Inc., or Coral Energy Resources, L.P (Coral Energy). (See attached City Council letter.) As expected, the contract parameters approved by the City Council gave Long Beach Gas and Oil (LBGO) the needed flexibility in negotiations to structure a creative and innovative gas supply package that meets all of the critical objectives for ensuring a competitive and stable price to LBGO’s customers for the next three years.
After intense negotiations between LBGO and the three suppliers, LBGO agreed to a three-year
gas supply agreement (Agreement) with Coral Energy. The decision was based largely upon Coral Energy’s pricing package, which was the most competitive offered by the three companies. In addition, Coral Energy has been LBGO’s primary natural gas supplier for nearly five years and has done an excellent job in all phases of supplying LBGO with its gas requirements at very competitive prices.
As shown in the table below, the terms of the Agreement meet or improve upon the negotiation parameters approved by the City Council.
City Council Parameters Coral Energy Agreement
Term April 1, 2006 - March 31, 2009 April 1, 2006 - March 31, 2009
Annual Volume Upt to 10 billion cubic feet Total supply requirements
Summer Pricing
Price CA Border less $0.01 CA Border less $0.04
Ceiling None None
Floor $8.50/MMBtu $5.50/MMBtu
Winter Pricing
Price CA Border less $0.01 50% at CA Border less $.04
Ceiling $15.00/MMBtu $10.50/MMBtu
Floor $8.50/MMBtu $5.50/MMBtu
Price 50% Fixed at $8.20
Ceiling N/A
Floor N/A
Monthly Fee $150,000 $84,000
The obje...
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