TITLE
Recommendation to adopt resolution authorizing City Manager to execute the Forms of Amendments to Natural Gas Purchase Agreements, amended and restated Natural Gas Purchase Agreements and assignment consent agreements. (Citywide)
DISCUSSION
The City of Long Beach, Long Beach Energy Department (LBE) had an Agreement (THUMS Agreement) with THUMS Long Beach Company (THUMS) to deliver natural gas from THUMS' gas processing plant. LBE terminated the THUMS Agreement effective January 31, 2005, based on non-compliance with gas quality specifications.
A portion of the City's local natural gas supply comes from the smaller local producers (Local Producers) listed below. The Local Producer Agreements for the delivery of natural gas between the respective Local Producers and the City each have pricing structures that are based upon the price paid by the City for gas under the THUMS Agreement. Because the THUMS Agreement has been terminated, the pricing structures under the Local Producer Agreements need to be amended. The Forms of Amendment to the Natural Gas Purchase Agreements, attached as Exhibits A and B to the attached Resolution, stipulate that the Local Producers will be paid pursuant to Southern California Gas Company's (SoCalGas) published core procurement price and will eliminate all gas pricing tiers. By eliminating all gas pricing tiers, all local gas producers will be paid 100 percent of the SoCalGas published core procurement price.
Existing Local Producer Agreements have various expiration dates. Three (3) of the Agreements have in fact expired. For consistency, the Forms of Amendment to the Natural Gas Purchase Agreements will stipulate all Local Producer Agreements to expire on December 31, 2005.
Expired Aqreements Existing Agreements
Breitburn Energy Company Elmcott LLC
Sampson Oil Company Long Beach Unified School District
Termo Company Signal Hill Petroleum
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