TITLE
Recommendation to authorize City Manager to enter into and execute five year term natural gas delivery agreements with sellers of locally produced natural gas.
DISCUSSION
The City of Long Beach Gas and Oil Department (LBGO) currently has agreements for
the delivery of natural gas with four local gas producers, which are scheduled to expire
December 31, 2005. On March 1,2005, the City Council approved the amendment and
restatement of the agreements through December 31, 2005, in order to eliminate
inconsistencies between the various agreements and to update gas quality
requirements. These short-term agreements allowed LBGO to monitor the revised gas
quality specifications and to further amend the terms and conditions of the agreements.
Local producers provide approximately 9 percent of the City’s gas supply and are paid a
price equal to the Southern California Gas Company’s (SoCalGas) gas procurement
price. The agreements with the following providers are scheduled to expire on
December 31,2005:
Breitburn Energy Company
Sampson Oil Company
Signal Hill Petroleum
Termo Company
This matter was reviewed by Deputy City Attorney Richard Anthony on December 7,
2005 and by Budget Management Officer David M. Wodynski on December 6,2005.
TIMING CONSIDERATIONS
City Council action is requested on December 20, 2005, as the existing agreements
expire on December 31, 2005. To ensure the continuation of natural gas purchases
from these local producers, new agreements must be executed prior to December 31,
2005.
FISCAL IMPACT
Local gas is traditionally slightly less expensive than non-local gas supplies. Local gas
is supplied directly into the LBGO pipeline system, allowing LBGO to avoid paying
SoCalGas pipeline transportation charges required for non-local gas supplies.
Total estimated costs for the requested delivery agreements are $5,000,000 per year
over the five-year term of the agreements. The cost of the natural gas commodity is
passed thro...
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