HIGH PRESSURE NATURAL GAS MASTER PLAN

Transcription

1 HIGH PRESSURE NATURAL GAS MASTER PLAN SEPTEMBER 13, 2013 Prepared for: Las Cruces Utilities Las Cruces, NM Prepared by: 425 S. Telshor Blvd Suite C-103 Las Cruces, NM 88011

2 HIGH PRESSURE NATURAL GAS MASTER PLAN SEPTEMBER 13, 2013 Prepared for: LAS CRUCES UTILITIES 680 N. MOTEL BLVD. LAS CRUCES, NM Prepared By: BOHANNAN HUSTON, INC. 425 S. TELSHOR BLVD., STE. C-103 LAS CRUCES, NM 88011

3 CITY OF LAS CRUCES GAS MASTER PLAN TABLE OF CONTENTS 1 EXECUTIVE SUMMARY Introduction Existing System Capital Improvements PLANNING AREA CHARACTERISTICS Service Area Historical Growth Rates Historical Natural Gas Consumption Factors Effecting Natural Gas Consumption Projected Natural Gas Demand Heating Degree Days Growth Projections Peaking Factors Natural Gas Consumption Projections EXISTING NATURAL GAS SYSTEM Natural Gas Supply Natural Gas Transmission Natural Gas High and High Intermediate Distribution Gas Regulator Stations Gas Delivery Agreements Zia Gas Miscellaneous Agreements GAS SYSTEM MODEL Overview Model Development Future Growth Analysis criteria Supply s Future Projected System At Design Heating Degree Day Existing System System Results System Results System Results System Results System Results And 2045 System Results NATURAL GAS CAPITAL IMPROVEMENTS Financial Criteria System Improvements i

4 CITY OF LAS CRUCES GAS MASTER PLAN System Improvements System Improvements System Improvements Miscellaneous System Improvements TABLES TABLE 1 HISTORICAL GAS CONSUMPTION... 4 TABLE 2 GAS SERVICE AND POPULATION PROJECTIONS...11 TABLE 3 PEAKING FACTORS...12 TABLE 4 PEAK HOUR PROJECTIONS...13 TABLE 5 HISTORICAL SUPPLY PRESSURES...13 TABLE 6 SYSTEM PEAK HOUR FLOWRATES...18 TABLE IMPROVEMENTS COST ESTIMATE...29 TABLE IMPROVEMENTS COST ESTIMATE...29 TABLE IMPROVEMENTS COST ESTIMATE...30 TABLE 10 MISCELLANEOUS IMPROVEMENTS COST ESTIMATE...31 FIGURES FIGURE 1 GAS SERVICE AREA... 3 FIGURE 2 SCADA REPORTING LOCATIONS... 6 FIGURE 3 MONTHLY GAS CONSUMPTION... 7 FIGURE 4 HEATING DEGREE DAYS AND DAILY GAS CONSUMPTION... 9 FIGURE 5 HEATING DEGREE DAYS AND DAILY CUSTOMER CONSUMPTION...10 FIGURE 6 EXISTING GAS SYSTEM...16 FIGURE 7 GAS CONSUMPTION ZONES...21 FIGURE 8 FUTURE GROWTH AREAS...23 APPENDICES APPENDIX A GAS DELIVERY AGREEMENTS APPENDIX B MODEL CALIBRATION RESULTS APPENDIX C SYSTEM MODEL RESULTS ii

5 CITY OF LAS CRUCES GAS MASTER PLAN 1 EXECUTIVE SUMMARY 1.1 INTRODUCTION This report is an analysis of the City of Las Cruces (City) natural gas high pressure and high intermediate pressure networks for their ability to adequately supply the City s natural gas customers. The purpose of this report, with its supporting computer model, is to provide Las Cruces Utilities (LCU) a basis to manage and understand the capabilities of the existing gas system, provide a future demand projection and identify necessary immediate and future phased system improvements. It is beyond the scope of this master plan document to review operator qualification procedures, forecast regulatory compliance issues, or evaluate system age and integrity conditions. Each of these items will need to be considered in conjunction with the distribution system modifications and improvements defined herein. 1.2 EXISTING SYSTEM The City distributes natural gas to their customers with three distinct regulated pressure levels, and is supplied by two transmission pipelines connected to the El Paso Natural Gas (EPNG) transmission pipeline running east and west on the south side of the City. The three pressure systems are high pressure (HP), high intermediate pressure (HIP) and low pressure (LP). The high pressure system consists of 8-inch, 6-inch and 4-inch coated steel gas pipelines that operate at a maximum pressure of 350 psig, and supplies gas to both the HIP and LP systems using regulators to reduce the pressure of the gas as needed. The HIP system is made up of 4 steel pipelines and similarly supplies the low pressure system as well. The HIP system is currently being operated at 120 psig, but has an operating range between 120 psig and 175 psig. The intent of the HIP system is to enable an extension to densely populated areas and avoid a HP system extension wherever possible. The LP system consists of gas pipelines 4 inches and smaller and is a mixture of coated steel and polyethylene (PE) pipe. The majority of the LP system operates at pressures less than 30 psig. The City currently has 85 active regulator stations. The regulator stations are used to reduce the gas pipeline pressures to distribute the gas to the three different pressure systems. In some instances regulators are used to supply gas at a specific pressure to meet the needs of an individual customer. The City uses a supervisory control and data P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 1

6 CITY OF LAS CRUCES GAS MASTER PLAN acquisition (SCADA) system at 19 regulator station to monitor and report pressure and flow throughout the system. The 19 regulator stations equipped with SCADA monitoring equipment are labeled on Figure CAPITAL IMPROVEMENTS The recommended capital improvements are based on the anticipated gas consumption during a peak event as the gas system expands and serves additional customers through the year This long-term planning horizon was chosen to review the potential system changes that will be necessary to more closely match the system 50 year life expectancy and is possible due to the linear system nature from source to service. The future improvements outlined in this report totals an estimated 110,000 feet of 12-inch steel gas pipeline; 86,500 feet of 8-inch steel gas pipeline; 26,500 feet of 6-inch steel gas pipeline and 11,500 feet of 4-inch steel gas pipeline. The costs associated with the capital improvements should be used to develop and implement strategies to determine how these improvements will be funded. The costs pertaining to the operation and maintenance of these improvements are not included. Although these improvements are identified by a specific year, in reality, these improvements are related to actual consumption demand growth milestones. Some of the improvements can be implemented incrementally as those specific areas develop. Currently the existing system has the means and capacity to support the estimated design peak hour demand until 2025 with only minor improvements occurring in These improvements are discussed in more detail in Section 4.3 and Section 5. The anticipated present value capital cost for these improvements are as follows: 2025 Improvements $ 4,100, Improvements $ 9,600, Improvements $ 3,000,000 Misc. Improvements $ 7,000,000 2 PLANNING AREA CHARACTERISTICS 2.1 SERVICE AREA The City of Las Cruces currently provides gas service to customers both inside and outside of city limits and has a gas service area that extends beyond the current city limits, see Figure 1. The gas service area covers approximately 340 square miles and was established by an agreement with Rio Grande Natural Gas Association (RGNGA) and P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 2

7 Radium Springs Legend que uer uq Alb To: Las Cruces City Limits City Gas Service Area M,N Parcels Ownership BLM To: Alamogordo, NM Organ Dept Of Agriculture Dept Of Defense Dona Ana Private 70 State Las Cruces Mesilla g, NM To: Demin E To:,T aso lp X 28,000 14,000 0 Feet SCALE: 1"= 14,000' 28,000 Mesquite Las Cruces Utilites Gas Master Plan Figure 1. City Gas Service Area

8 CITY OF LAS CRUCES GAS MASTER PLAN approved as Resolution # by the City Council in July A copy of the approved resolution is included in Appendix A. 2.2 HISTORICAL GROWTH RATES A detailed population projection and analysis will not be presented in this report. Instead, the growth rate presented in the Water and Wastewater Impact Fee Land Use Assumptions and Capital Improvements Plan (IFCIP) by Duncan Associates will be used as a basis for this report. The growth rate was estimated to be 1.86%. The City provides gas service to customers both inside and outside the current city limits. Because of this, a portion of the projected growth of the gas system will occur in areas outside of the city limits would not be reflected in the growth rate for the City. Essentially the gas system will not only grow along with the City but will have an added growth effect from the surrounding county area as well. For this reason, an annual growth rate of 2.0% will be used for projecting the gas demands on the City s gas system. 2.3 HISTORICAL NATURAL GAS CONSUMPTION Historical metered gas consumption data, provided by the City and shown in Table 1, in thousand cubic feet (Mcf) for the years 2005 thru There are five gas user classes to describe the consumption; residential, small commercial, large commercial, irrigation and industrial. While there are multiple factors that influence gas demand on the system and will be discussed in Section 2.4, the total gas consumption will typically increase in conjunction with the growth of the City. Table 1 Historical Gas Consumption Year Total Residential Small Commercial Large Commercial Irrigation Industrial ,559,006 1,044, , , , ,436, , , , , ,685,247 1,087, , , , ,610,890 1,107, , , , ,599,744 1,076, , , , ,845,801 1,283, , , , ,101,921 1,433, , , ,604 For the purposes of designing and planning the gas system average flowrates calculated from historical flow data over any number of time intervals can be used, but the most significant factor in the design and planning of a gas system is the peak hour flow. P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 4

9 CITY OF LAS CRUCES GAS MASTER PLAN The peak hour flow is the amount of gas demand put on the gas system infrastructure by its users in any one hour time interval. It is usually measured in dekatherms per hour (Dth/h) or thousand cubic feet per hour (Mcfh). For municipal gas systems with a small industrial consumption, this peak hour flow typically will take place in the winter months of December, January or February. The City utilizes supervisory control and data acquisition (SCADA) equipment to monitor the flow and pipeline pressures at gas regulator stations throughout the gas system. The SCADA equipment monitors the telemetry data and on an hourly basis reports the flowrate and/or pipeline pressure depending on the SCADA capabilities for these locations. Shown in Figure 2 are the locations of the gas regulator stations that have SCADA equipment installed. There are two regulator stations equipped with SCADA equipment that measure the total incoming flow and pressure from EPNG that supplies the City s gas system. These are located at the Tillman/West Mesa Regulator Station (#19) and the Carver Regulator Station (#17). Based on this data from these locations the highest peak hour flow coming into the City s gas system from 2004 to 2012 has been recorded at 2,434 Mcfh, which occurred February 3, This peak hour flow coincided with lower than normal temperatures over a 3 day period and was summarized in the Las Cruces Utilities Report on Weather Emergency Response February 2-4, FACTORS EFFECTING NATURAL GAS CONSUMPTION Almost all gas use for residential and commercial consumption is from space heating, food preparation and gas powered appliances such as water heaters and clothes dryers. The amount of gas used for food preparation and appliances generally stays consistent throughout the year but the gas consumption for space heating varies greatly between the summer months and winter months. Industrial gas use can vary from one industrial user to another and is not necessarily influenced by the weather but by the needs of the individual user, and can vary dramatically from one industrial customer to another. This makes it difficult to forecast future industrial usage. Shown in Figure 3 is a graph of the monthly gas consumption from 2005 to It shows the correlation between outdoor temperature and gas consumption. During the warmer months of May through October, the gas consumption is generally consistent and represents the period of lowest consumption for the year, while during the colder months of P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 5

10 Legend Regulator Station Radium Springs 1 Metering Station To: Albuquerque, NM Existing Transmission Pipeline Existing High Gas Lines Existing High Intermediate Gas Lines Las Cruces City Limits City Gas Service Area To: Alamogordo, NM Parcels Organ ID NAME CLC_REG 1 NASA REG STA 91 2 PARKHILL REG STA 70 3 SONOMA RANCH MET ST 4 MISSIONS REG STA 63 5 SPITZ REG STA 67 6 APODACA REG STA 4 7 HOAGLAND REG STA 94 8 MARTINEZ REG STA 62,8,7B,ZIA 9 COMPRESS REG STA EL PASEO REG STA KANSAS REG STA MONTANA REG STA S TELSHOR REG STA TELLBROOK REG STA LAS ALTURAS REG STA NMSU CO-GEN REG STA 41,42,43 17 CARVER REG STA 32,33 18 MESILLA REG STA WEST MESA REG STA 69,74,75 Dona Ana Las Cruces To: Deming, NM Mesilla TILLMAN TRANSMISSION LINE FROM EPNG AFTON FROM EPNG TRANSMISSION LINE 10 To: El Paso, TX 28,000 14, ,000 Feet SCALE: 1"= 14,000' Las Cruces Utilites Gas Master Plan Figure 2. Regulator Stations

11 600, , ,000 Figure 3 - Monthly Gas Consumption Gas Consumtpion (Mcf) 300, , ,000 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

12 CITY OF LAS CRUCES GAS MASTER PLAN November through April the gas consumption increases and peaks during the coldest months of December, January or February. As shown in Figure 3 there is a correlation between temperature and gas consumption. One way to describe this relationship is using a term called heating degree days. A heating degree day is defined as the difference between the average temperature over a time interval and a set base temperature. Typically the time interval is 1 day and the base temperature is 65 o F. This relationship is based on the idea that the heat loss of an enclosed space is directly proportional to the difference in the indoor and outdoor temperatures. According to the American Gas Association s Gas Engineering and Operating Practices Series for Distribution the base temperature of 65 o F was established in 1917 and was selected under the assumption that occupants and other non-space heating sources (cooking, lighting, etc.) maintain a comfortable interior temperature above 65 o F. 2.5 PROJECTED NATURAL GAS DEMAND HEATING DEGREE DAYS To determine the correlation between heating degree days and temperature, the historical gas demand and temperature data from the National Oceanic and Atmospheric Administration (NOAA) for Las Cruces was analyzed. Temperature data from the NOAA was available from 1960 to present day and historical daily gas consumption was available from EPNG from 1997 to current. Shown in Figure 4 is a truncated graph of the historical heating degree days and total daily gas consumption. The highest heating degree day is labeled for each year. Since the total gas consumption will also change not only with outdoor temperatures but as well as with the number of gas customers, it is more accurate to compare the gas consumption and heating degree days on a per customer basis. The daily gas consumption per customer per day from 2004 to 2012 was calculated from the total system consumption and the total number of customers specific to each day. This data was plotted against the corresponding heating degree days to determine a relationship that can be used for forecasting the future natural gas maximum day demand. This plot along with the linear regression of the data is shown in Figure 5 and the source data is included in the Appendix. The linear regression equation was used to estimate the total daily gas consumption per customer during the design heating degree event. P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 8

13 Figure 4 - Heating Degree Days and Daily Gas Consumption November September ,000 HDDs, 56 HDDs Consumption 50 50,000 HDDs, ,000 HDDs, 38 Heating Degree Days HDDs, 34 HDDs, 31 HDDs, 35 30,000 20,000 Daily Gas Consumption, Mcf 10 10,

14 Figure 5 - Daily Consumption per Customer 2004 through /02/ , 1.12 Design HDD=64 Flow=1.3 02/03/ , 1.12 Flow = *HDD Total Flow (Mcf/customer/day) /07/ , /04/ , /02/ , Heating Degree Days

15 CITY OF LAS CRUCES GAS MASTER PLAN The historical temperature data from the NOAA was analyzed to calculate heating degree values back to 1960 to see if there was a day which had lower temperatures than what was experienced in February In 1962 there was a day with a high temperature of 18 o F and a low temperature of -10 o F and results in a 61 heating degree day event, which is higher than the most recent peak of 56 heating degree days in February The design heating degree day for this report was calculated by averaging the two highest historical heating degree days of 56 and 61. A 10% safety factor was also applied because of the limited historical data and the unreliable nature of predicting long term temperatures. As a basis for this report, 64 heating degree days will be used in the analysis GROWTH PROJECTIONS As discussed in Section 2.2, a growth rate of 2.0% will be used to project the total number of residential and small commercial gas services. Shown in Table 2 is the projected number of gas services and the corresponding population served by the City s gas system. Table 2 Gas Service and Population Projections Year Gas Services 1 Gas Service Population ,677 97, ,471 99, , , , , , , , , , , , , , , , , , ,148 1 Based on 2.0% growth rate (Water and Wastewater Impact Fee Land Use Assumptions and Capital Improvements Plan ) 2 Based on 2.0% growth rate and 2.46 people per household PEAKING FACTORS A peaking factor is a ratio used to describe the relationship between an average gas demand and a peak gas demand. For this report the peak hour demand is being used as the basis for planning and analyzing both the existing gas system and the future gas system. The peaking factor will be based on ratio of the historical average hour demands P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 11

16 CITY OF LAS CRUCES GAS MASTER PLAN (AHD) and the corresponding peak hour demands (PHD). Shown in Table 3 are the 10 highest daily flows reported by the City s SCADA system. Using these daily flows, the average hourly flow was calculated and compared to the peak hour flows for the corresponding days. On these particular ten days the peaking factor ranged from 1.10 to 1.62, with an average peaking factor of 1.3. A peaking factor of 1.3 will be used for the peak hour gas demand projections. Table 3 Peaking Factors Date Total Daily Flow (Mcf) Average Hourly Flow (Mcfh) Peak Hour Flow (Mcfh) Peaking Factor February 3, ,094 1,837 2, February 2, ,807 1,825 2, December 6, ,902 1,538 2, December 5, ,435 1,518 1, February 4, ,183 1,508 2, December 7, ,621 1,443 2, December 23, ,468 1,311 1, February 1, ,036 1,293 1, December 8, ,876 1,287 2, December 24, ,071 1,253 1, NATURAL GAS CONSUMPTION PROJECTIONS Using the calculated maximum daily gas consumption per customer and heating degree days from Section 2.5 the maximum day demand (MDD) and average hourly demand (AHD) can be calculated for the growth projections in Section These projected demands will be used along with a peaking factor to determine the estimated peak hour demand on the system as the gas system continues to grow. Shown in Table 4 are the projected peak hour demands during a heating degree day event of 64. P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 12

17 CITY OF LAS CRUCES GAS MASTER PLAN Table 4 Peak Hour Projections Design Heating Degree Days = 64 Daily Flow per Customer (Mcf) = 1.30 Peaking Factor = 1.3 Year Gas Services Maximum Daily Flow (Mcf) Average Hourly Flow (Mcfh) Peak Hour Flow (Mcfh) ,677 51,485 2,145 2, ,471 52,515 2,188 2, ,280 53,565 2,232 2, ,106 54,636 2,277 2, ,488 60,323 2,513 3, ,326 66,601 2,775 3, ,669 73,533 3,064 3, ,567 81,186 3,383 4, ,079 89,636 3,735 4, ,268 98,966 4,124 5, , ,266 4,553 5,919 3 EXISTING NATURAL GAS SYSTEM 3.1 NATURAL GAS SUPPLY The City s gas system is supplied by two gate connections to the EPNG transmission pipeline. Shown in Table 5 are the historical maximum and minimum pressures, based on hourly readings, supplying the Tillman and Afton transmission pipelines as reported by EPNG. Table 5 Historical Supply s Maximum (psi) Tillman Minimum (psi) Maximum (psi) Afton Minimum (psi) Year P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 13

18 CITY OF LAS CRUCES GAS MASTER PLAN Since the Afton and Tillman delivery points are supplied by the same EPNG pipeline the minimum and maximum pressures should be similar. From the table above there are cases where the differences are large, particularly the minimum pressure at the Tillman and Afton delivery points for the years 2008 through These discrepancies were brought to the attention of EPNG to see if they coincided with any similar events involving EPNG equipment, including nearby compressor stations. Their records do not show any drops in pressure that coincide with the unusually low pressures in Table 5. The low pressure readings were not sustained and returned to normal in subsequent readings and should not be a concern that would have a long-term effect on the City s gas system. Another property of the gas supplied by EPNG to take into consideration is the gas heating value. The gas heating value is used to measure the quality of the gas being supplied. It is measured in British thermal units per cubic feet (Btu/ft 3 ) and is essentially the amount of potential heating energy in a cubic foot of gas. From records provided by EPNG the heating value of the gas supplied to the City has ranged from 1,020 Btu/ft 3 to 1,040 Btu/cf 3. 1,020 Btu/ft 3 will be used to convert dekatherms (Dth) to thousand cubic feet of gas (Mcf) and vice versa in the gas model for this report. 3.2 NATURAL GAS TRANSMISSION The City has two natural gas transmission pipelines, Tillman and Afton, and they have historically been operated at the pressures shown in Table 5. As defined by the federal pipeline safety standards, transmission pipelines are defined as pipelines transporting natural gas and operate at a hoop stress of 20 percent or greater of the specified minimum yield strength (SMYS). The Tillman transmission pipeline is an 8-inch steel pipe with a length of approximately 46,000 feet. It carries gas from the EPNG transmission pipeline to the Tillman/West Mesa Regulator Station at a pressure creating a hoop stress greater than 20 percent SMYS. The Afton transmission pipeline is a 12-inch steel pipe with an approximate length of 59,000 feet. It carries gas from the EPNG transmission pipeline to the Carver Regulator Station and also operators at a pressure creating a hoop stress greater than 20 percent SMYS. The two transmission pipelines are labeled in Figure NATURAL GAS HIGH AND HIGH INTERMEDIATE PRESSURE DISTRIBUTION Displayed in Figure 6 is the City s gas system showing the transmission, high pressure and high intermediate pressure distribution pipelines. The City s high pressure (HP) natural gas distribution system begins at the Tillman Regulator Station which is fed from the Tillman transmission pipeline and at the Carver Regulator Station is fed from the Afton transmission P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 14

19 CITY OF LAS CRUCES GAS MASTER PLAN pipeline. The City s high pressure distribution network is made up of 4-inch, 6-inch and 8- inch steel pipelines and operates at pressures less than 350 psi. The City s high intermediate (HIP) distribution system consists of 4 steel pipelines and according to the pressures reported by the City s SCADA system, the HIP pipe network is currently being operated at 120 psi to 125 psi. The HIP system is supplied by the City s high pressure pipelines through regulator stations reducing the gas pipeline pressure to less than 125 psi. 3.4 GAS REGULATOR STATIONS The City currently has 85 regulator stations in service and allows the City to maintain three different pressure networks in their system by reducing the pipeline pressures feeding into them to supply gas to the high pressure, high intermediate and low pressure distribution pipe networks. The outlet pressure of a regulator valve is also called the set pressure. This is the maximum pressure that the gas regulator will provide to the downstream pipe. The typical set pressures of the regulator valves for the three pressure networks are as follows: high pressure = 340 psi; high intermediate pressure = 120 psi; low pressure = 30 psi and 15 psi. In some instances a regulator station is used to supply gas at a specific pressure to meet the needs of an individual user that cannot be met directly from one of the existing pressure networks. The regulator stations also serve as logical and convenient locations to install SCADA equipment for monitoring the performance of the gas system. P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 15

20 4 IN 8 IN Legend Existing Transmission Pipeline Existing High Gas Lines Existing High Intermediate Gas Lines City Gas Service Area Radium Springs To: Albuquerque, NM Las Cruces City Limits Parcels IN 70 To: Alamogordo, NM Organ Dona Ana 8 IN 70 6 IN 4 IN 6 IN 4 IN 6 IN 8 IN 4 IN 8 IN 25 Las Cruces 6 IN 6 IN 10 To: Deming, NM 10 4 IN 4 IN 8 IN Mesilla 8 IN 8 IN TILLMAN TRANSMISSION LINE FROM EPNG AFTON TRANSMISSION LINE FROM EPNG 12 IN 10 To: El Paso, TX 28,000 14, ,000 Feet SCALE: 1"= 14,000' Las Cruces Utilites Gas Master Plan Figure 6. Existing Gas Lines

21 CITY OF LAS CRUCES GAS MASTER PLAN 3.5 GAS DELIVERY AGREEMENTS ZIA GAS In April 2011 Rio Grande Natural Gas Association, along with the agreement with the City, was acquired by Zia Gas Company (Zia Gas). The agreement stipulates that the City must provide up to 15,000 dekatherms (Dth) per day to the Zia Gas system. When converted to a flowrate, the 15,000 Dth requires an estimated 14,700 Mcf per day to meet the terms of the agreement. Currently, there is only one location that connects the two systems together. It is located at the Martinez Regulator Station and a dedicated gas regulator is used to feed the Zia gas system. This regulator is currently set to open when the downstream pipeline pressure drops below 300 psi. As part of the North Loop 8 High Distribution Gas Pipeline Project, a 6 tap was built near the intersection of North Valley Drive and the Las Cruces Outfall Channel intended to be used by the then RGNGA system. There are two locations that supply gas to the Zia gas system that are metered. One is located in Chamberino and monitors the gas flow being supplied directly by EPNG; the second location is at the Martinez Regulator Station as discussed above. Together these two locations make up the total gas consumption in the Zia gas system. Up to and including 2011, the City has SCADA flow data for the two locations. According to the SCADA data provided by the City, the peak day demand for the entire Zia gas system was 9,950 Mcf (10,150 Dth) and occurred in February Of that 9,950 Mcf peak day flow; there was a total of 6,650 Mcf that was supplied through the Martinez Regulator Station, which is 45% of the City s supply agreement with Zia Gas. During the winter months or high demand times, the Zia Gas system has historically accounted for approximately 10% to 15% of the City s total peak hour flows. If the Zia Gas system demands grow at a similar rate as the City s and continues to contribute to the City s peak hour flow at a similar ratio, the upper limit of the agreement will be met at some point beyond 2050, unless Zia Gas changes operational parameters or has an issue develop with the EPNG direct connection pipeline. The estimated peak hour flow supplied to the Zia Gas system at that time would be 920 Mcfh using the same peaking factor of 1.3. Shown in Table 6 are the portions of the City s total projected peak hour flows, from Table 4, that is attributed to Zia Gas and customers of the City gas system. P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 17

22 CITY OF LAS CRUCES GAS MASTER PLAN Table 6 System Peak Hour Flowrates Year Total Peak Hour Flow (Mcfh) City Peak Hour Flow (Mcfh) Zia Peak Hour Flow (Mcfh) ,762 2, ,789 2, ,845 2, ,901 2, ,959 2, ,267 2, ,608 3, ,983 3, ,398 3, ,855 4, ,361 4, ,919 5, MISCELLANEOUS AGREEMENTS Along with Zia Gas, the City also has agreements in place to provide gas to high consumption users and must meet agreed upon conditions with respect to gas quality, pressure and quantity. These contracts and agreements are summarized below and the full agreements are provided in Appendix A. F&A Dairy is located in the West Mesa Industrial Complex, and receives gas through an original distribution agreement with RGNGA that ended in 2002, but has been autorenewing every year since. Per the agreement, the City must provide within 10% of the requested pressure at the delivery point but is not obligated to provide more than 60 psig. Currently the City is providing approximately 50 psig during peak events to the F&A Dairy delivery point. The maximum daily quantity for F&A Dairy is 700 Dth, or approximately 686 Mcf. The quality of the gas should be equivalent to that which is provided by EPNG to the City. The agreement with NASA Goddard Facility has been in place since 1963 and was originally made with RGNGA. The City must provide a minimum pressure of 45 psig to the delivery point located approximately 5 miles north of Highway 70 along NASA Road, which is at the extreme east side of the distribution system. The City is not obligated to provide gas pressure above 55 psig, the heating value of the gas shall not be less than 900 Btu/ft 3 and there is no specified maximum daily quantity. Historically the City has been able to provide pressure above 210 psig during peak events. The current agreement with New Mexico State University (NMSU) has been in effect since December 1, 2009 and expires November 30, NMSU has two systems in which P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 18

23 CITY OF LAS CRUCES GAS MASTER PLAN the City provides gas, the University s distribution system and cogeneration plant. The minimum pressure the city must provide to the NMSU distribution system must be within 10% of the requested pressure but no more than 55 psig. The required minimum pressure supplied to the cogeneration plant is 190 psig and a maximum of 230 psig. During peak events the City has been able to maintain pressures above 100 psig for the distribution supply and above 280 psig for the cogeneration supply. 4 GAS SYSTEM MODEL 4.1 OVERVIEW In order to verify and recommend future improvements to the City s high pressure gas system a computer model of the gas system was created. The gas modeling software used was GasWorks 9.0 developed by Bradley Bean, P.E. and is used by City staff. GasWorks utilizes steady-state conditions for analysis and design of the gas network components. A steady-state condition is defined as set of parameters and properties that remain unchanged in the model during the analysis. In this model the steady-state conditions are that the customer consumption demands do not change over a time period, instead the consumption demand placed on the system is during a specific hour MODEL DEVELOPMENT The first step was to develop and calibrate a model in GasWorks that would mimic the behavior of the existing high pressure and high intermediate pressure gas system under historical conditions. This method of calibration would verify that the model is operating correctly and the analysis results are comparable to historical performance data. Three dates and times were chosen to calibrate the model by comparing pressure and flow data from the SCADA system and model results. The three dates chosen were February 3, :00AM, August 1, :00PM and December 7, :00AM. February 3 rd and December 7 th were chosen because they were the two highest historical peak hour flows since the agreement with RGNGA and represent the gas system s current configuration. The August 1 st date was chosen to see how the model behaved during low flow conditions. The model calibration result tables for the three dates specified are provided in Appendix B. The tables show the flow (if available), inlet, and outlet pressures for each of the regulator stations and compare what is reported by the SCADA and to what was calculated in the model. The model was considered calibrated when it was able recreate the flowrates and regulator inlet pressures reported by the SCADA system when only the P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 19

24 CITY OF LAS CRUCES GAS MASTER PLAN number of customers were changed to reflect the actual number of customers for each specific calibration date. The physical components of the model were built using information provided by the City. This included GIS files for the size, type and location of the gas pipelines and regulator stations. SCADA and field measurements by City personnel were used for the outlet pressures of the regulator stations. While the low pressure pipelines were not the focus of this report, specific segments were used to connect the regulator stations and to model the flow paths between the regulator stations. Most of the low pressure pipes in the model are the main 4-inch distribution pipelines with some 2-inch pipes to complete low pressure loops. This was done because most the City s gas system is looped and can be supplied with gas from more than one direction and, as such, multiple regulator stations contribute to supplying gas to a specific area. The peak hour flowrates for each of the calibration dates were used in the model by separating the City into consumption zones, as well as, individual industrial and large commercial customers. The consumption zones were determined by visual inspection of the low pressure pipeline network to see what areas of the City contributed the most to the demands put on individual regulator stations. This allowed the model to be loaded with gas consumption demands representative of the total individual customer demands in each zone without having individual customer nodes for every customer in the City s gas system. The amount of gas consumption in each zone varied depending on the specific calibration date s peak hour flowrate and the total number of parcels within the zone with existing structures on them. Parcels with existing structures were considered occupied and contributing demand on the gas system for the model. Shown in Figure 7 are the consumption zones used in the model FUTURE GROWTH The estimated future demands on the City s gas system were incorporated into the model to identify capital improvements for the City s gas system infrastructure. The anticipated routes of the future high pressure distribution pipelines were provided by the City and shown in Figure 8. One of the goals of this report is to determine the size of high pressure distribution pipelines required to provide the necessary capacity to the City s gas system as it continues to expand. In order to do this, customers were added to the model in locations that match the growth areas as determined by LCU. These growth areas were P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 20

25 Legend Existing Transmission Pipeline Existing High Gas Lines Existing High Intermediate Gas Lines City Gas Service Area Radium Springs To: Albuquerque, NM 1 Gas Zones Las Cruces City Limits Parcels 25 9 Organ To: Alamogordo, NM 7 8 Dona Ana Las Cruces To: Deming, NM 10 Mesilla To: El Paso, TX 28,000 14, ,000 Feet SCALE: 1"= 14,000' Las Cruces Utilites Gas Master Plan Figure 7. Gas Zones with SCADA

26 CITY OF LAS CRUCES GAS MASTER PLAN based on the areas identified in the Water and Wastewater System Master Plan Update (2008) and are shown in Figure 8. The number of customers and ultimately the demand in each of those zones was determined in conjunction with the gas service projections in Table 2 and peak hour projections in Table ANALYSIS CRITERIA SUPPLY EPNG is responsible for providing natural gas to the City, however, the agreement that is in place between the City and EPNG does not require that EPNG supply a minimum pressure to the City. Historically the gas pressures provided by EPNG to the City have been sufficient to meet the demands of the City s gas system. City staff indicated that there has not been a situation where the EPNG supply pressures have been detrimental to the City s gas system. For this report and gas system model, 560 psig was used as the pressure at the gates supplying the city. This pressure is what EPNG was able to supply during past peak events and it is assumed that EPNG will continue to be able to provide similar pressures for future peak events PRESSURES According to the LCU Design Standards, there is no minimum pressure for the operation of the high pressure and high intermediate pressure distribution networks. For the purpose of this report and system model it is assumed that as long as the inlet pressures at the regulator stations are above the currently set outlet pressures there will not be negative impacts on the City s gas customers. Currently the City has agreements in place that obligates them to supply a minimum pressure to specific customers as discussed in Section 3.5. The pressure requirements of the gas delivery agreements the City has and inlet pressures at regulator stations downstream of the high pressure network will be used to evaluate the gas system model results to dictate recommendations for the sizing of future gas pipelines as well as improvements to existing infrastructure. P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 22

27 Legend Radium Springs # # 1 1 Future Transmission Pipeline Future High Gas Lines Existing Transmission Pipeline Existing High Gas Lines Existing High Intermediate Gas Lines Gas Zones Future Gas Zones City Gas Service Area To: Albuquerque, NM " HP 9 Organ To: Alamogordo, NM Parcels Future Regulator Station Future Industrial Gas Zones Dona Ana " HP 9 8" HP " HP " HP Las Cruces " HP 62 To: Deming, NM " HP Mesilla " HP " HP PSI 10 8" TRANSMISSION 1 12" TRANSMISSION 10 To: El Paso, TX 28,000 14, ,000 Feet SCALE: 1"= 14,000' Las Cruces Utilities Gas Master Plan Figure 8. Future High Gas Lines and Growth Areas

28 CITY OF LAS CRUCES GAS MASTER PLAN 4.3 FUTURE PROJECTED SYSTEM AT DESIGN HEATING DEGREE DAY EXISTING SYSTEM The estimated system demands for the design heating degree day of 64 were loaded in the gas model of the existing system to analyze the current system s capability to supply gas for this peak event. From the model results the inlet pressure at the Martinez Regulator Station was 270 psi, which is below the 330 psi set pressure for the North and South Loop regulators. However, there were no locations in the HIP or LP networks where the inlet pressure at a regulator station was lower than the regulator s set pressure. Also, the pressures required by the City s delivery agreements were able to be met, therefore no improvements are necessary for the current service population and a design heating degree day of 64. The pressure and flow results at the regulator stations from the model are provided in Appendix C SYSTEM RESULTS The future demands estimated in Section 2.5 were implemented by increasing the demands on the system corresponding to the growth estimates starting with 2015 and every five years after that. When the estimated demand in 2015 was loaded in the gas system model the results were similar to those in Section The 258 psi inlet pressure at the Martinez Regulator Station was below the set pressure of 330 psi for the North and South Loop regulators, but this did not cause any pressure problems at any downstream regulator stations. requirements for the City s delivery agreements were able to be adequately met. The 2015 system model results with these improvements are included in Appendix C SYSTEM RESULTS The 2020 estimated growth and gas loads were loaded into the model and again experienced similar results described in Section and Section The inlet pressure for the Martinez Regulator Station was 233 psi. However, at this point there was insufficient pressure in the high pressure distribution pipeline along Highway 70 to supply the necessary pressure to the NASA Regulator Station. These results are included in Appendix C. One method to remedy the low pressure problems at the NASA Regulator Station is to increase the inlet pressure at the Martinez Regulator Station. This can be done by removing the Martinez South Loop regulator, while leaving the isolation valves in place. This would P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 24

29 CITY OF LAS CRUCES GAS MASTER PLAN allow additional capacity to be supplied to Martinez from the Carver Regulator Station, using the existing 8-inch/6-inch high pressure distribution pipeline that runs along Motel Boulevard. The south loop regulator currently does not serve a function other than to provide redundancy in the event both regulators at the Carver Regulator Station fail or need maintenance on them. The south loop regulator was installed prior to the Carver Regulator Station and Afton transmission pipeline were put in place and fed gas to the southern side of the city. Currently the Carver Regulator Station is serving that function and the south loop regulator is now redundant. Implementing this improvement increases the inlet pressure into the Martinez Regulator Station to 288 psi and corrects the low inlet pressure at the NASA Regulator Station to meet the requirements of the City s agreement with NASA. The 2020 system model results with this improvement implemented is included in Appendix C SYSTEM RESULTS The estimated gas demands for 2025 were loaded into the model along with the improvements mentioned in the previous section. The additional demands caused inlet pressures at regulator stations along Highway 70 to drop below their set outlet pressures. The regulator stations along Highway 70 affected were Holman, Hanger Lake, Galaxy, Butterfield #1 and #2, NASA, Organ #1 and Organ #2. The results of the 2025 system model are included in Appendix C. In order to correct the low pressure problems along Highway 70, two scenarios were tested to see which one would be the most beneficial. One of the scenarios included upgrading existing infrastructure and the other scenario included building part of the proposed high pressure distribution network that will be extended to the east side of the city. The first scenario tested in the model was to return the high pressure distribution pipeline from the West Mesa Regulator Station to a transmission pipeline. This would bring the pressure of the Tillman transmission pipeline all the way to the Martinez Regulator Station. This scenario also includes upgrading the 6-inch portion of the high pressure pipeline from the Carver Regulator Station to the Martinez Regulator Station to an 8-inch pipeline. This segment parallels Motel Boulevard from Avenida de Mesilla to Picacho Avenue where it turns and continues to the Martinez Regulator Station. When these two improvements to the existing infrastructure were tested in the gas model the results showed that they did not correct the low pressure problems along Highway 70. P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 25

30 CITY OF LAS CRUCES GAS MASTER PLAN The second scenario that was tested in the model consisted of extending a 6-inch high pressure distribution pipeline along Calle Jitas Boulevard from Sonoma Ranch Boulevard to the future extension of Weisner Road, identified as Line 4 in Figure 8. Approximately 1,600 feet of this pipeline is already in place along Calle Jitas. From this point the pipeline size would be increased to a 12-inch pipe pipeline and be installed parallel to what will be Weisner Road to Highway 70 where it would connect to the existing HP pipeline. This segment is identified as Line 5 in Figure 8. As a result of the improvements of the second scenario, the low pressure problems along Highway 70 were corrected. These results are included in Appendix C SYSTEM RESULTS The estimated gas demands estimated for 2030 in Section 2.5 were input into the model and again resulted in insufficient pressures at regulator stations located along Highway 70. These regulator stations included Butterfield #1, Butterfield #2, NASA, Organ #1 and Organ #2. The results of the 2030 system model are included in Appendix C. Although inadequate pressures are being reported for the Highway 70 areas, the Tillman and Carver transmission pipelines still contain additional capacity and have not yet been maximized. The pressures in both pipelines are above the necessary pressures to ensure that the inlet pressures are above the outlet pressures at the respective regulator stations. However, the existing 8-inch high pressure loop around the City cannot provide the necessary pressure to the northeastern section of the City at the current maximum operating pressure of 340 psig. In order to maximize the capacity of the existing 12-inch Afton transmission pipeline, a new 12-inch transmission pipeline would be tapped from the Afton transmission pipeline on Snow Road and extended southeast to the southern edge of the City s current service area. This pipeline section is identified as Line 1 in Figure 8. A new regulator station would need to be built to reduce the pipeline pressure to 340 psig, where a new 12-inch/8-inch high pressure distribution pipeline would be built to connect to the existing 8-inch high pressure gas pipeline on Dripping Springs Road. These sections of pipe pipeline are identified as Line 2 and Line 3, respectively, on Figure 8. With these improvements the inadequate pressures occurring along Highway 70 are corrected. The results of the 2030 system model with these improvements implemented are included in Appendix C. P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 26

31 CITY OF LAS CRUCES GAS MASTER PLAN Another option that could be investigated to maximize the capacity of the transmission pipelines is increasing the operating pressure of the high pressure distribution network, specifically increasing the set pressure of the Carver and West Mesa Regulator Stations. This scenario was tested on the 2030 system model and it was found that if the set pressure of the Carver Regulator Station was increased to 380 psig, the inadequate pressures along Highway 70 were resolved. Making this change to the Carver Station regulators could potentially push the need of the new 12-inch transmission pipeline described in the previous paragraph farther into the future. An analysis of the existing high pressure distribution network would need to be completed to determine what the MAOP is of each pipeline within the high pressure distribution network. If historical information is not available to document the original testing, then the MAOP would need to be re-established based on the criteria set in the Code of Federal Regulation (CFR) Section SYSTEM RESULTS The estimated system gas demands for 2035 were input into the system gas model with the previously discussed improvements, and resulted in inadequate pressure at the NASA Regulator Station. The results of the 2035 model are included in Appendix C. In order to provide adequate pressure to the NASA regulator the remaining 12-inch segment of the East Mesa High Distribution Loop would need to be built. This segment is identified as Line 6 on Figure 8. With this improvement implemented into the 2035 system model the low pressure problem was corrected and the results are included in Appendix C AND 2045 SYSTEM RESULTS With the improvements discussed in the previous sections, the City s high pressure gas distribution system would provide sufficient capacity to maintain the necessary pressures to meet the estimated peak demands through 2045 based on the design heating degree day of 64. The system model results for the years 2040 and 2045 are included in Appendix C. 5 NATURAL GAS CAPITAL IMPROVEMENTS 5.1 FINANCIAL CRITERIA The following cost estimates are using present worth values for the anticipated efforts needed to complete the respective improvements. Not included in these cost estimates are P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 27

32 CITY OF LAS CRUCES GAS MASTER PLAN additional trenching or earthwork that could be required in order to install the gas lines in undeveloped areas that are also planned future roadways. The horizontal and vertical alignments of the planned roadways would need to be considered prior to installing these pipelines. It is assumed that the future pipelines will be installed in established right-of-ways and not within private lands, therefore land acquisition is not included in these cost estimates. The soft costs included in the cost estimates are for the engineering and administrative tasks associated with the improvement SYSTEM IMPROVEMENTS It is recommended that in order to adequately supply gas to the Highway 70 area and to comply with the gas delivery agreement the City has with NASA, that the improvements discussed in Section be implemented by The south loop regulator at the Martinez Regulator Station would need to be removed as this would allow the Carver Regulator Station to provide additional pressure to the Martinez Station. This will also help to take advantage of the available capacity of the 12-inch Afton Transmission pipeline SYSTEM IMPROVEMENTS Based on the estimated growth and gas loads, by 2020 the City s existing high pressure distribution pipelines will struggle to maintain adequate pressures in parts of the City during a peak event. Most of the low pressure problems will occur at the regulator stations along Highway 70 and will continue to be as the City s gas system grows. Based on the areas of growth shown in Figure 8, a high percentage of growth will occur north of Highway 70 and the infrastructure in those areas will need to be supplied with sufficient pressure in order to do so. As discussed in Section a second connection, identified as pipelines 4 and 5 in Figure 8, to the 6-inch/4-inch high pressure distribution pipeline along Highway 70 would help mitigate the low pressures. The 6-inch high pressure distribution pipeline along Calle Jitas would be approximately 26,500 feet and the 12-inch high pressure distribution pipeline along what will be Weisner Road would be approximately 18,500 feet. A summary of the estimated cost is shown in Table 7. P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 28

33 CITY OF LAS CRUCES GAS MASTER PLAN Table Improvements Cost Estimate DESCRIPTION UNIT QTY. UNIT COST EXTENSION Clearing / Grubbing AC 10 $ 1,100 $ 11,000 Concrete Cap at Drainage Ways EA 27 $ 875 $ 23,625 12" Dia. Gas Pipeline LF 18,500 $ 80 $ 1,480,000 24" Dia. Bore and Casing LF 120 $ 300 $ 36,000 Permitting and License LS 1 $ 5,000 $ 5,000 Roadway Replacement LF 350 $ 60 $ 21,000 6" Dia. Gas Pipeline LF 26,500 $ 43 $ 1,139,500 SUBTOTAL $ 2,716,125 Contingency 20% $ 543,225 Total Construction Cost $ 3,259,350 Soft Cost 25% $ 814,838 TOTAL $ 4,074, SYSTEM IMPROVEMENTS In order to maximize the capacity of the 12-inch Afton transmission pipeline, it would need to be tapped with another 12-inch transmission pipeline that can bring transmission pipeline pressures to the eastern side of the City. The new 12-inch transmission pipeline (Line 1 shown on Figure 8) would be approximately 43,000 feet where the pressure would be reduced to 340 psig through a new regulator station. From the regulator station, a new 12-inch high pressure distribution pipeline (Line 2 shown on Figure 8), approximately 22,000 feet, would be built to Dripping Springs Road. A new 8-inch high pressure distribution pipeline (Line 3 shown in Figure 8) would be built to connect the 12-inch HP pipeline to the existing 8-inch high pressure distribution network along Dripping Springs Road. A summary of costs for these improvements is shown in Table 8. Table Improvements Cost Estimate DESCRIPTION UNIT QTY. UNIT COST EXTENSION 12" Dia. Gas Pipeline LF 65,000 $ 80 $ 5,200,000 24" Dia. Bore and Casing LF 1,500 $ 300 $ 450,000 8" Dia. Gas Pipeline LF 11,000 $ 55 $ 605,000 Clearing / Grubbing AC 17 $ 1,100 $ 18,700 Concrete Cap at Drainage Ways EA 31 $ 875 $ 27,125 Roadway Replacement LF 2,500 $ 31 $ 77,500 Permitting and License LS 1 $ 20,000 $ 20,000 SUBTOTAL $ 6,398,325 Contingency 20% $ 1,279,665 Total Construction Cost $ 7,677,990 Soft Cost 25% $ 1,919,498 TOTAL $ 9,597,488 P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 29

34 CITY OF LAS CRUCES GAS MASTER PLAN SYSTEM IMPROVEMENTS As discussed in Section in order to provide sufficient capacity to the City s gas system to meet the estimated demands in 2035, the last section of the 12-inch high pressure distribution pipeline, identified as pipeline 6 in Figure 8, should be built. This would complete the recommended improvements to the City s high pressure distribution system required to meet the estimated demands during a peak event though at least The estimated cost of implementing the 12 high pressure gas pipeline is shown in Table 9. Table Improvements Cost Estimate DESCRIPTION UNIT QTY. UNIT COST EXTENSION Clearing / Grubbing AC 6 $ 1,100 $ 6,600 Concrete Cap at Drainage Ways EA 8 $ 875 $ 7,000 12" Dia. Gas Pipeline LF 24,000 $ 80 $ 1,920,000 24" Dia. Bore and Casing LF 200 $ 300 $ 60,000 Permitting and License LS 1 $ 5,000 $ 5,000 SUBTOTAL $ 1,998,600 Contingency 20% $ 399,720 Total Construction Cost $ 2,398,320 Soft Cost 25% $ 599,580 TOTAL $ 2,997, MISCELLANEOUS SYSTEM IMPROVEMENTS Lines 7, 8, and 9 identified in Figure 8, should be built as development in those areas expands north and additional regulator stations are needed to supply low pressure gas to those developments. Lines 8 and 9 would be extensions of existing high pressure gas pipelines and line 7 would be a new high pressure gas pipeline being fed from the 4-inch high pressure pipeline that is parallel to Highway 70 and eventually the new 12-inch high pressure gas pipeline. The transmission pipeline identified as line 10 in Figure 8 would provide a redundant supply to the West Mesa/Tillman Regulator Station that could be utilized when maintenance is needed on the Tillman transmission pipeline or if an emergency shut-down on the pipeline occurred. This connection between the Afton and Tillman transmission pipelines would also help maximize the capacity of the Tillman transmission pipeline. Shown in Table 10 are the estimated costs associated with building each of the high pressure gas pipelines as well as the transmission pipeline. P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 30

35 CITY OF LAS CRUCES GAS MASTER PLAN Table 10 Miscellaneous Improvements Cost Estimate Line 7 8 HP DESCRIPTION UNIT QTY. UNIT COST EXTENSION Clearing / Grubbing AC 3 $ 1,100 $ 3,300 Roadway Replacement LF 3,400 $ 31 $ 105,400 Concrete Cap at Drainage Ways EA 4 $ 875 $ 3,500 8" Dia. Gas Pipeline LF 16,100 $ 55 $ 885,500 Permitting and License LS 1 $ 5,000 $ 5,000 SUBTOTAL $ 1,002,700 Contingency 20% $ 200,540 Total Construction Cost $ 1,203,240 Soft Cost 25% $ 300,810 TOTAL $ 1,504,050 Line 8-8" HP DESCRIPTION UNIT QTY. UNIT COST EXTENSION Clearing / Grubbing AC 2 $ 1,100 $ 2,200 8" Dia. Gas Pipeline LF 16,300 $ 55 $ 896,500 Permitting and License LS 1 $ 2,500 $ 2,500 SUBTOTAL $ 901,200 Contingency 20% $ 180,240 Total Construction Cost $ 1,081,440 Soft Cost 25% $ 270,360 TOTAL $ 1,351,800 Line 9-4" HP DESCRIPTION UNIT QTY. UNIT COST EXTENSION Clearing / Grubbing AC 2 $ 1,100 $ 2,200 Roadway Replacement LF 500 $ 60 $ 30,000 Concrete Cap at Drainage Ways EA 5 $ 875 $ 4,375 4" Dia. Gas Pipeline LF 11,500 $ 28 $ 322,000 Permitting and License LS 1 $ 5,000 $ 5,000 SUBTOTAL $ 363,575 Contingency 20% $ 72,715 Total Construction Cost $ 436,290 Soft Cost 25% $ 109,073 TOTAL $ 545,363 Line 10-8" Transmission DESCRIPTION UNIT QTY. UNIT COST EXTENSION Clearing / Grubbing AC 12 $ 1,100 $ 13,200 Concrete Cap at Drainage Ways EA 8 $ 875 $ 7,000 8" Dia. Gas Pipeline LF 43,000 $ 55 $ 2,365,000 SUBTOTAL $ 2,385,200 Contingency 20% $ 477,040 Total Construction Cost $ 2,862,240 Soft Cost 25% $ 715,560 TOTAL $ 3,577,800 P:\ \LC\Reports\ CLC-Gas-Masterplan-Final Draft.Docx 31

36 APPENDICES

37 APPENDIX A GAS DELIVERY AGREEMENTS

38 - ~i!1, p~ ~~~.~,~~~.~ Council Action and Executive Summary Item #-22_ Ordinance/Resolution # Council District: For Meeting of -~J=u~ly_6~ ~2=0~1=0- (Adoption Date) TITLE: RESOLUTION AUTHORIZING THE REORGANIZATION OF RIO GRANDE NATURAL GAS ASSOCIATION AS SET FORTH HEREIN. PURPOSE(S) OF ACTION: To request authorization to proceed with the reorganization of Rio Grande Natural Gas Association as set forth in the resolution. Originating De artment Department: Le al Phone: Phone BACKGROUND I KEY ISSUES I CONTRIBUTING FACTORS: Rio Grande Natural Gas Association ("Association") is a non-profit natural gas association established in 1969 pursuant to state statutes by the Village of Hatch ("Village") and the City of Las Cruces ("City") (collectively the "Owners"). In 2005, the Owners and the Association approved resolutions stating that the Owners owned the Association assets jointly and in equal shares. The Owners appointed a task force in June 2008 to develop and recommend alternatives for the future operation and management of the Association. The task force analyzed several alternatives and presented them to the Owners. The preliminary recommendation selected by the Owners (1) would transfer about 93 commercial customers and about 6,000 residential customers from the Association to the City, (2) would obligate the City to pay $1.2 million to pay off the Association's outstanding bonds, and (3) would give the City 10% ownership in the reorganized Association. After the preliminary recommendation was further examined, City staff concluded that it would be preferable for the City to relinquish a 10% ownership interest in the reorganized Association in exchange for not having to pay $1.2 million for the bonds. In the revised recommendation set forth in this Resolution, the Village would own 100% of the Rev. 09/2008 (Continue on additional sheets as required)

39 Council Action and Executive Summary Page2 reorganized Association and would have full control of the new Association Board. If the reorganized Association is thereafter sold, the Village would be solely entitled to the sales proceeds. Under both the preliminary and revised recommendations for reorganizing the Association, the primary goal of staff has been to transfer Association customers within the City limits to the City, and to insure that the City would be the natural gas provider within the newly annexed East Mesa and West Mesa areas and within most of the extraterritorial five mile zone around the existing City limits. The proposed Resolution implements that goal. The original Articles of Incorporation (also referred to as the Certificate of Association) established the Association in 1969 and provided for a service area. The Owners by adopting comparable resolutions will provide for a revised service area for the reorganized Association as set forth in Exhibits "A-1" and "A-2" to this Resolution. The existing Association Board of Directors consisting of three (3) City appointees and three (3) Village appointees will amend the 1969 Articles of Incorporation to provide for the revised service area. The City's proposed geographic service area would generally include all areas within the existing City limits (except for a limited area along Carver Road), New Mexico State University, the Aldershot facility off of South Main Street, and most of the ETZ. The reorganized Association's proposed geographic service area would generally include the north and south valley, the Town of Mesilla, the Picacho Hills area, and areas outside of the City's service area. The respective service areas are shown in detail on Resolution Exhibits "A-1" and "A-2". If the Council approves this Resolution and if the Village Trustees approve a resolution fully compatible with this Resolution, the City and the reorganized Association will need to (1) draft a long term natural gas transportation agreement which will be approved by the Utilities Board on behalf of the City; (2) develop a final implementation plan for the reorganization including technical provisions for the transfer of customers; and (3) implement the plan. The City as fiscal agent will assist the Association in retiring the outstanding revenue bond at the Association's sole expense, which needs to be accomplished before existing Association customers can be transferred to the City. City staff has worked diligently and cooperatively with representatives on behalf of the Village to draft this Resolution. Staff expects the Village to adopt a fully compatible resolution if the Council approves this Resolution. The City Council conducted a work session on Monday, June 14, on the proposed reorganization which was attended by representatives of the Village and of the Association. The information submitted to the Council for the work session included a draft copy of the proposed Resolution. Council directed staff to bring the Resolution forward for consideration. There have been minor changes made to the Resolution since that date. Therefore, the Resolution is attached as support information in both final form and in legislative format showing the changes since June 14, Rev. 09/2008 (Continue on additional sheets as required)

40 Council Action and Executive Summary Page3 A cost associated with the reorganization is the cost of converting approximately 6,000 Rio Grande customers to the City's computer system. SUPPORT INFORMATION: Fund Name I Account Number Amount of Expenditure Budaet Amount $25,000 $350, Resolution in final form with Exhibits "A-1" and "A-2" attached; 2. Resolution in legislative format without the exhibits attached. OPTIONS I ALTERNATIVES: 1. Approve the Resolution as drafted; 2. Amend the Resolution which amendments would have to be approved by the Village; 3. Not approve the Resolution and provide direction to staff whether to renegotiate specific provisions of the proposed reorganization. Rev. 09/2008 (Continue on additional sheets as required)

41 RESOLUTION NO RESOLUTION AUTHORIZING THE REORGANIZATION OF RIO GRANDE NATURAL GAS ASSOCIATION AS SET FORTH HEREIN. The City Council of the City of Las Cruces is informed that: WHEREAS, Rio Grande Natural Gas Association ("Association") was formed as a non-profit corporation and inter-community natural gas association in 1969 pursuant to NMSA 1953, Sections through , which sections were re-codified as NMSA 1978, Sections through , with the Village of Hatch ("Village") and the City of Las Cruces ("City") (collectively the "Owners") as the original members and owners; and WHEREAS, Village Resolution No. 645 and City Resolution No A provided in part that the assets of the Association in their entirety are jointly and in equal shares owned by the City and the Village. City Resolution No A further provided that the City would commit to entering into good faith discussions with the Village to resolve several critical issues, including amending or changing the corporate organization of the Association, redefining membership of the Association's Board of Directors, establishing definitive fiscal agency authorization, and establishing a definitive mechanism for the sale of Association customers and related tangible and intangible assets to the City through payment or other consideration to the Association; and WHEREAS, the Association's Board of Directors thereafter approved an amendment in Resolution RG-05-09, which amendment provided that, upon

42 dissolution, all assets of the Association shall be owned in severalty by the City and the Village as tenants in common with each Owner owning 50% therein; and WHEREAS, the Owners appointed a Task Force in June 2008 to develop and recommend alternatives for the future operation and management of the Association. The Task Force reviewed and analyzed several alternatives which were presented to the Owners. The alternative selected by the Owners in September 2009 would reorganize the Association by transferring all of the Association customers within the City limits and some of the Association customers within parts of the Extraterritorial Zone ("ETZ") to the City, and by amending the Association's certificate of association (also referred to as the Association's articles of incorporation) and bylaws to reflect the proposed change in ownership interest and in the composition of the Board of Directors as provided below; and WHEREAS, the Owners recognize that in order to reorganize the Association the Association's bonded debt needs to be paid; and WHEREAS, the Association retained the services of Sunrise Engineering, Inc. to perform a viability study for the reorganized Association under the task force's recommended reorganization plan selected by the Owners; and WHEREAS, the Owners contemplate that the City and the Village would remain the sole members of the reorganized Association, and that the Village would own 100% of the reorganized Association; and WHEREAS, the City asserts and the Village shall confirm the City's assertion by adopting a comparable resolution that the Association owns and will retain ownership

43 of the Rio Grande Tap and the Associated Pipeline, commonly referred to as the Rio Grande High Main Line, and the El Paso Natural Gas Company firm transportation contract No. 9823; and that the City owns and will retain ownership of the following major infrastructures which are used in part by the City to deliver natural gas to the Association and to monitor and control such deliveries: high pressure transmission lines commonly referred to as the Tillman Line and the Afton Line, regulator stations commonly referred to as the West Mesa Regulator Station, the Martinez Regulator Station, and the Sonoma Metering Station, and the SCADA System; and WHEREAS, with the adoption of this Resolution, the reorganization of the Association shall be approved by the City and, upon completion of the reorganization as provided for in this Resolution, the City will no longer have any economic ownership in the Association, and will have received its full asset distribution as contemplated by this Resolution. NOW, THEREFORE, BE IT RESOLVED BY THE GOVERNING BODY OF THE CITY OF LAS CRUCES THAT: (I) REORGANIZATION A. As a result of the reorganization as set forth herein, the Village shall remain a member of the Association and shall have 100% ownership interest in the reorganized Association, and the City shall remain a member of the Association to meet the statutory requirements of NMSA 1978, Section (1993) and shall have no

44 ownership interest in the reorganized Association. Effective with the adoption of fully compatible resolutions by the Owners approving the reorganization of the Association, the City's appointees to the Association's existing Board of Directors shall vote in favor of amending the Association's Articles of Incorporation in compliance with NMSA 1978, Section (1990), by separate Board Resolution, to perfect the changes contemplated herein. The amended Articles of Incorporation shall provide that the Village shall be solely entitled to appoint all members of the new Board of Directors for the reorganized Association; and shall set forth the new service area for the reorganized Association identical with the service areas set forth in Exhibits "A-1" and "A-2" attached hereto and as otherwise provided in this Resolution. B. The Village shall then appoint all members of the new Board of Directors for the reorganized Association in accordance with the amended Articles of Incorporation. The new Board shall be solely entitled to amend the existing bylaws in compliance with NMSA 1978, Section (1965) as it deems necessary. C. Effective with the appointment of the new Board, the new Board shall have the sole power to act on behalf of the Association, including proceeding with any future dissolution of the Association, with no further involvement by the City. D. The City shall continue to operate the reorganized Association in accordance with the Cooperative Services Agreement dated June 21, 1971 currently in effect as between the Association and the City by using the existing cost allocation system, which is based on the City's actual costs, for a period not to exceed one year from the date of this Resolution. The City's Utilities Department administrative charges

45 for gas administration and for the gas analyst salary expenditures paid in monthly installments by the Association will be reduced by 50%. The City's annual MIS fee of $90,321 paid in monthly installments by the Association will be reduced by 50%. The City's annual administrative charge for finance functions of $82,433 paid in monthly installments by the Association will be reduced by 50%. In addition, no capital improvements shall be made by the City without the prior approval of the new Board. (E) The City shall honor the Main Line Reimbursement Agreements between the Association and developers of the following subdivisions which are located within the City service area: High Desert Phase II, Las Lomitas, Rincon Mesa Phase I, Desert Song Estates Phase I, and Desert Wind Estates; for new customer connections made after August 1, 2010 to the gas main extensions referenced in the individual reimbursement agreements until the agreements expire. The reorganized Association shall be solely responsible for reimbursing developers pursuant to the reimbursement agreements for new customer connections within the above referenced subdivisions made on or before August 1, 2010, and for paying all of the Association's other financial obligations, including the Main Line Reimbursement Agreements with developers of subdivisions located outside of the City service area. (II) BOND PAYMENT A. Payment of the Association's outstanding revenue bond shall be made as follows: Utilizing cash reserves and other cash accounts held by the Association, the bond will be paid in full by the reorganized Association after July l, 2010 without cash

46 contribution by the City. The new Board shall direct bond counsel, in coordination with City staff as fiscal agent, to prepare the appropriate documentation. B. After payment of the bond and transfer of the customer deposits as provided below, any cash assets whether positive or negative remaining on the books of the Association shall belong solely to the Association. (III) SERVICE AREAS In order to avoid future service area disputes between the reorganized Association and the City, and to implement the intent of the Task Force's recommendation to transfer certain Association customers to the City, the following service areas are established as between the City and the reorganized Association: A. City Service Area. The City shall be exclusively entitled to serve areas shown on Exhibits "A-1" and "A-2" attached and incorporated herein as well as the Aldershot of New Mexico, Inc. (" Aldershot") site. The City's service area as shown on the exhibits generally includes the existing City limits; New Mexico State University; those portions of the ETZ west and south of the City's western municipal boundaries; and those portions of the ETZ east of I-25. However, the City's service area shown on the Exhibits shall control over the general description set forth above. Further, if there is any inconsistency between the map identified as Exhibit "A-1" and the geographic description identified as Exhibit" A-2", Exhibit" A-2" shall control.

47 B. Reorganized Association Service Area. The reorganized Association shall be exclusively entitled to serve all of the area outside of the City service area as shown on the exhibits. C. Aldershot. The Aldershot site is located off of south Main Street at 3905 Meadowlark Lane, is a current City gas customer, and shall remain a City gas customer even though the site is located within the reorganized Association service area as shown on the exhibits. D. Future Annexations by the Town of Mesilla. The Town of Mesilla as its boundaries exist as of the date of this Resolution will be within the service area of the reorganized Association. If the Town of Mesilla annexes lands within the City's service area as shown on Exhibits "A-1" and "A-2" and the City is not providing natural gas service within any part of the annexed lands, then the reorganized Association may serve the newly annexed area. If the Town of Mesilla annexes lands within the City's service area as shown on Exhibits "A-1" and "A-2" and the City is providing natural gas service within any part of the annexed lands, then the reorganized Association shall compensate the City for the loss of the individual gas customers within the annexed area as negotiated between the parties and may then serve the newly annexed area. E. Customer Accounts. The City and the reorganized Association shall coordinate (1) the exchange of customer account information based on the establishment of the respective service areas set forth herein, which information shall include related accounts receivable; and (2) the transfer of cash associated with customer deposits, including any accrued interest, for Association customers being

48 transferred to the City and for City customers within the Rios Encantados subdivision and along Carver Road being transferred to the reorganized Association. Accounts receivable shall be equitably allocated between the City and the reorganized Association as agreed to between City staff and the reorganized Association. (IV) INFRASTRUCTURE AND RIGHT OF WAY A. Infrastructure Within City Service Area. Any distribution infrastructure and gas meters owned by the Association within the City service area shown on the exhibits and associated with the Association customers being transferred to the City shall be transferred to the City. B. Infrastructure Within the Reorganized Association's Service Area. Any distribution infrastructure and gas meters owned by the City within the reorganized Association's service area shown on Exhibits "A-1" and "A-2" and associated with the City customers within the Rios Encantados subdivision and along Carver Road being transferred to the reorganized Association, shall be transferred to the reorganized Association. c. Easements and Rights of Way. Easements and rights of way authorizations associated with the distribution infrastructure to be transferred between the City and the reorganized Association shall be assigned as appropriate. D. Martinez Regulator Station. The Martinez Regulator Station located on City property along west Picacho Avenue is fully owned by the City. However, the City will provide the reorganized Association with scheduled access and emergency

49 access to the Martinez Regulator Station to monitor and regulate the pressures of gas delivered to the reorganized Association's system. If sufficient City owned property exists, the City will grant an easement at no cost to the reorganized Association for a new regulator station within the Martinez Regulation Station site. E. Future Taps. The City will grant the reorganized Association additional taps at locations that do not adversely affect the existing City gas system, as determined by Las Cruces Utility Engineering. The taps and all associated costs will be at the sole expense of the reorganized Association. The costs will include but are not necessarily limited to meters, valves, actuators, power, flow computers, communication equipment, secure enclosure/building, labor, land or right of way cost, and overhead. (V) CONTRACTS A. Existing Natural Gas Sale Contract. The existing Natural Gas Sale Contract between the City and the Association dated June 1, 2006 shall remain in full force and effect until June 30, B. Replacement Transportation Contract. The Las Cruces Utilities Board on behalf of the City and the reorganized Association shall negotiate a long-term natural gas transportation contract on or before June 30, The replacement transportation contract will be for a term of 30 years, will contain an arbitration clause in accordance with the New Mexico Uniform Arbitration Act, will provide capacity for the reorganized Association of 15,000 Dth per day on City transmission lines as designated by the City, and will provide for a two-part transportation rate with a reservation

50 charge of $0.80 per Dth for the 15,000 Dth per day reservation capacity and a usage charge of $0.02 per Dth for volumes transported by the City for the reorganized Association. (VI) MISCELLANEOUS PROVISIONS A. The provisions of this Resolution are binding on the successors or assigns of the reorganized Association. B. This Resolution is of no effect if the Village does not approve a resolution fully compatible with this Resolution before August 1, 2010, and if the Association's Articles of Incorporation are not amended as set forth in Paragraph I(A) above before September 1, C. City staff is authorized to do all deeds necessary to accomplish the intent of this Resolution including the City Attorney's office notifying the City Clerk and the Village in writing that the requirements set forth in Paragraph VI(B) have been completed to the satisfaction of City staff. DONE AND APPROVED on this 6th day of July, APPROVED: (SEAL) ~ Afa!w~ City Clerk

51 Moved by: Seconded by: Connor Small VOTE: Mayor Miyagishima: Councillor Silva: Councillor Connor: Councillor Pedroza: Councillor Small: Councillor Sorg: Councillor Thomas: Aye Aye Aye ~ ~ ~ ~ APPROVED AS TO FORM: Marcia B. Driggers Senior Assistant City Atto

52 EXHIBITA-1

53 ]!.f I I Description.of the City of Las Cruces Natural Gas Service Area June,2010 A boundary line of service situate in Dona Ana County, New Mexico, and being more particularly described as follows to wit: Beginning at the northeast section corner of Township 21South Section 25 Range 3East; Thence in a southerly direction for a distance of73,920 feet, more or less, to the southeast section corner of Township 23South Section 36 Range 3East; Thence in a westerly direction for a distance of21,120 feet, more or less, to the northeast section corner of Township 24South Section 5 Range 3East; Thence in a southerly direction for a distance ofl0,560 feet, more or less, to the southeast section comer of Township 24South Section 8 Range 3East; Thence in a westerly direction for a distance ofl8, 140 feet, more or less, crossing a tract owned by Salopek Foundation and further identified under parcel ID to the eastern right-of-way line of Interstate IO; Thence along the eastern right-of-way line of Intersection 10 due northwest to the intersection of eastern right-of-way line of Interstate 10 and the City Limits which lies on the south side of Las Piedras Road; Thence along the City Limits, crossing Interstate I 0, in a westerly direction to the intersection of the City Limits and the southwest property corner of a parcel of land owned by the City of Las Cruces and further identified under Parcel ID ; Thence leaving the southwest property corner of Parcel ID in a southwesterly direction along the south side of the Elephant Butte Irrigation District (EBID) outfall channel, that is immediately south of Astor Drive, to the intersection of the western rightof-way line of New Mexico State Road 478, also known as South Main Street and the eastern right-of-way line of Burlington North Santa Fe Railway; Thence along the western right-of-way line of New Mexico State Road 478 in a northwesterly direction, to the intersection of the western right-of-way line of New Mexico 478 and the north right-of-way line of the EBID Park Drain; Thence along the Park Drain in a westerly direction to the intersection of the Park Drain and the City Limits at the southwest corner of Mesilla Park Elementary School; Thence along the City Limits to the intersection of the City Limits and the northern rightof-way line of Union Avenue; Thence along the City Limits on Union Avenue, in a northeasterly direction to the intersection of Union Avenue and the eastern right-of-way line of the EBID Laguna Lateral;. Page 1 of4 EXHIBITA-2

54 .,.i 'i I i i :l 1 j., ' I I j Description of the City of Las Cruces Natural Gas Service Area June, 2010 Thence along the Laguna Lateral in a northwesterly direction to the intersection of Laguna Lateral and the City Limits at the southwest corner of the Mesilla Heritage Phase II subdivision and further identified under parcel ID ; Thence along the City Limits in a northwesterly direction to the intersection of the City Limits and the eastern right-of-way line of the EBID Mesilla Drain; Thence leaving the City Limits crossing the EBID Mesilla Drain and the EBID Mesilla Lateral to the eastern right-of-way line ofnew Mexico State Road 292; Thence along the eastern right-of-way line of New Mexico State Road 292 in a northwesterly direction to the intersection of New Mexico State Road 292 and the southeast corner of Interstate 10; Thence crossing New Mexico State Road 292 to the intersection of the New Mexico State Road 292, the southwest comer of Interstate 10, and the City Limits; Thence along the City Limits, crossing the Rio Grande, to the intersection of the City Limits and the southeast section comer oftownship 23South Section 32 Range least; Thence leaving the City Limits in an easterly direction for a distance of 5,280 feet, more or less, to the northeast section comer of Township 24South Section 4 Range 1 East;. Thence leaving the northeast section comer of Township 24South Section4 Range!East in a southerly direction for a distance of5,280 feet, more or Jess, to the northwest section comer of Township 24Sonth Section 10 Range!East; Thence leaving the northwest section comer of Township 24South Section 10 Range!East in an easterly direction for a distance of 6, 190 feet, more or less, to the intersection of north section line of Township 24South Section 11 Range!East and the western boundary line of the Rio Grande; Thence along the western boundary line of the Rio Grande in southeasterly direction to the intersection of western boundary line of Rio Grande and the west right-of-way line of the EBID Westside Canal; Thence along west right-of-way line of the Westside Canal in a southeasterly direction to the intersection of the Westside Canal and the northeast property comer of a parcel of land owned by the Stahmann Family 2001 Et. Al. and further identified under Parcel ID ; Thence leaving the northeast property comer of Parcel ID in a southeasterly direction along the west property line of Parcel ID to the intersection of the west property line of Parcel ID and the northeast property comer of a parcel of land owned by the Stahmann Family 2001 Et. AL and further identified under Parcel ID ; Page2of4

55 I j., j :; i Description of the City of Las Cruces Natural Gas Service Area June, 2010 Thence leaving the northeast property comer of Parcel ID in a westerly direction to the northwest property corner of Parcel ID ; Thence leaving the northwest property corner of Parcel ID in a southerly direction to the intersection of the west property line of Parcel ID and the north property line of a parcel ofland owned by the City of Las Cruces and further identified under Parcel ID ; Thence along the north property line of Parcel ID in an easterly direction to the northeast property comer of Parcel ID ; Thence leaving the northeast property comer of Parcel ID along the eastern property of Parcel ID to the southeast property corner of Parcel ID ; Thence leaving the southeast property comer of Parcel ID in a southerly and westerly direction along the eastern section line of Township 24South Section 30 Range 2East to the northeast section comer of Township 24South Section 31 Range 2East; Thence leaving the section comer of Township 24South Section 31Range2East in a westerly direction for a distance of89,760 feet, more or less, to the southwest section comer of Township 24South Section 28 Range 2West; Thence in a northerly direction for a distance of 52,800 feet, more or less, to the northwest section comer of Township 23South Section 9 Range 2West; Thence in an easterly direction for a distance of 47,520 feet, more or less, to the northeast section comer of Township 23South Section 11 Range!West; Thence in a southerly direction to the intersection of the east section line of Township 23South Section 14 Range!West and the City Limits; Thence along the City Limits, crossing the Rio Grande, to the intersection of the City Limits and the east right-of-way line of the EBID Mesilla Lateral; Thence leaving the City Limits along the east right-of-way line of the Mesilla Lateral to the intersection of the Mesilla Lateral and the City Limits; Thence along the City Limits in a northeasterly direction to the intersection of the City Limits and the eastern right-of-way line of Interstate 25; Thence leaving the City Limits along the eastern right-of-way line of Interstate 25 in a northwesterly direction to the intersection of the eastern right-of-way line of Interstate 25 and the north section line of Township 22South Section 4 Range 1East; Thence in an easterly direction to the southwest section comer of Township 21South Section 35 Range 1East; Page3 of4 I

56 Description of the City of Las Cruces Natural Gas Service Area June, 2010 Thence in a northerly direction for a distance of 15,840 feet, more or less, to the northwest section comer of Township 21South Section 23 Range least; Thence in an easterly direction for a distance of 52,800 feet, more or less, to the northeast section comer of Township 21South Section 20 Range 3East; Thence in a southerly direction for a distance of 5,280 feet, more or less, to the northwest section comer of Township 21South Section 28 Range 3East; Thence in an easterly direction for a distance 21,120 feet, more or less, to the northeast section comer of Township 21South Section 25 Range 3East to the place and point of beginning. NOTE: All City Limits and properties referenced in this Description are current as of June, Page4of4

57 L-'-~'-+-3E l H i--4e' -'--'---'---" I i i n-jh--+-'+-'+-+---,f--j ' ~-'--'--il J'_J_j / / / / /~-I---+= '~'--''----' W 1'E, EXHIBIT A-1

58 :i! :[ I I Description of the City of Las Cruces Natural Gas Service Area June,2010 A boundary line of service situate in Dona Ana County, New Mexico, and being more particularly described as follows to wit: Beginning at the northeast section corner of Township 21South Section 25 Range 3East; Thence in a southerly direction for a distance of73,920 feet, more or less, to the southeast section comer of Township 23South Section 36 Range 3East; Thence in a westerly direction for a distance of21,120 feet, more or less, to the northeast section comer of Township 24South Section 5 Range 3East; Thence in a southerly direction for a distance of l 0,560 feet, more or less, to the southeast section comer of Township 24South Section 8 Range 3East; Thence in a westerly direction for a distance of 18, 140 feet, more or less, crossing a tract owned by Salopek Foundation and further identified under parcel ID to the eastern right-of-way line of Interstate 1 O; Thence along the eastern right-of-way line of Intersection 10 due northwest to the intersection of eastern right-of-way line of Interstate 10 and the City Limits which lies on the south side of Las Piedras Road; Thence along the City Limits, crossing Interstate 10, in a westerly direction to the intersection of the City Limits and the southwest property corner of a parcel ofland owned by the City of Las Cruces and further identified under Parcel ID ; Thence leaving the southwest property comer of Parcel ID in a southwesterly direction along the south side of the Elephant Butte Irrigation District (EBID) outfall channel, that is immediately south of Astor Drive, to the intersection of the western rightof-way line ofnew Mexico State Road 478, also known as South Main Street and the eastern right-of-way line of Burlington North Santa Fe Railway; Thence along the western right-of-way line of New Mexico State Road 478 in a northwesterly direction, to the intersection of the western right-of-way line of New Mexico 478 and the north right-of-way line of the EBID Park Drain; Thence along the Park Drain in a westerly direction to the intersection of the Park Drain and the City Limits at the southwest corner of Mesilla Park Elementary School; Thence along the City Limits to the intersection of the City Limits and the northern rightof-way line of Union Avenue; Thence along the City Limits on Union Avenue, in a northeasterly direction to the intersection of Union Avenue and the eastern right-of-way line of the EBID Laguna Lateral; Pagel of4 EXHIBITA-2

59 i I! "i ; j., Description of the City of Las Cruces Natural Gas Service Area June,2010 Thence along the Laguna Lateral in a northwesterly direction to the intersection of Laguna Lateral and the City Limits at the southwest comer of the Mesilla Heritage Phase II subdivision and further identified under parcel ID ; Thence along the City Limits in a northwesterly direction to the intersection of the City Limits and the eastern right-of-way line of the EBID Mesilla Drain; Thence leaving the City Limits crossing the EBID Mesilla Drain and the EBID Mesilla Lateral to the eastern right-of-way line of New Mexico State Road 292; Thence along the eastern right-of-way line of New Mexico State Road 292 in a northwesterly direction to the intersection of New Mexico State Road 292 and the southeast comer of Interstate 10; Thence crossing New Mexico State Road 292 to the intersection of the New Mexico State Road 292, the southwest comer of Interstate 10, and the City Limits; Thence along the City Limits, crossing the Rio Grande, to the intersection of the City Limits and the southeast section comer of Township 23South Section 32 Range least; Thence leaving the City Limits in an easterly direction for a distance of 5,280 feet, more or less, to the northeast section comer of Township 24South Section 4 Range 1 East;. Thence leaving the northeast section comer of Township 24South Section 4 Range least in a southerly direction for a distance of 5,280 feet, more or less, to the northwest section comer of Township 24South Section 10 Range least; Thence leaving the northwest section comer of Township 24South Section 10 Range least in an easterly direction for a distance of 6,190 feet, more or less, to the intersection of north section line of Township 24South Section 11 Range!East and the western boundary line of the Rio Grande; Thence along the western boundary line of the Rio Grande in southeasterly direction to the intersection of western boundary line of Rio Grande and the west right-of-way line of the EBID Westside Canal; Thence along west right-of-way line of the Westside Canal in a southeasterly direction to the intersection of the Westside Canal and the northeast property comer of a parcel of land owned by the Stalnnann Family 2001 Et. AL and further identified under Parcel ID ; Thence leaving the northeast property comer of Parcel ID in a southeasterly direction along the west property line of Parcel ID to the intersection of the west property line of Parcel ID and the northeast property comer of a parcel of land owned by the Stalunann Family 2001 Et. Al. and further identified under Parcel ID ; Page2 of 4

60 ~: I ' Description of the City of Las Cruces Natural Gas Service Area June,2010 Thence leaving the northeast property comer of Parcel ID in a westerly direction to the northwest property comer of Parcel ID ; Thence leaving the northwest property comer of Parcel ID in a southerly direction to the intersection of the west property line of Parcel ID and the north property line of a parcel ofland owned by the City of Las Cruces and further identified under Parcel ID ; Thence along the north property line of Parcel ID in an easterly direction to the northeast property comer of Parcel ID ; Thence leaving the northeast property comer of Parcel ID along the eastern property of Parcel ID to the southeast property comer of Parcel ID ; Thence leaving the southeast property comer of Parcel ID in a southerly and westerly direction along the eastern section line of Township 24South Section 30 Range 2East to the northeast section comer of Township 24South Section 31Range2East; Thence leaving the section comer of Township 24South Section 31 Range 2East in a westerly direction for a distance of89,760 feet, more or less, to the southwest section comer of Township 24South Section 28 Range 2West; Thence in a northerly direction for a clistance of 52,800 feet, more or less, to the northwest section comer of Township 23South Section 9 Range 2West; I I Thence in an easterly direction for a distance of 47,520 feet, more or less, to the northeast sectioncomeroftownship 23South Section 11 Range!West; Thence in a southerly direction to the intersection of the east section line of Township 23South Section 14 Rangel West and the City Limits; Thence along the City Limits, crossing the Rio Grande, to the intersection ofthe City Limits and the east right-of-way line of the EBID Mesilla Lateral; Thence leaving the City Limits along the east right-of-way line of the Mesilla Lateral to the intersection of the Mesilla Lateral and the City Limits; Thence along the City Limits in a northeasterly direction to the intersection of the City Limits and the eastern right-of-way line of Interstate 25; Thence leaving the City Limits along the eastern right-of-way line of Interstate 25 in a northwesterly direction to the intersection of the eastern right-of-way line of Interstate 25 and the north section line of Township 22South Section 4 Range!East; Thence in an easterly direction to the southwest section corner of Township 21South Section 35 Range!East; Page3 of4 I

61 Description of the City of Las Cruces Natural Gas Service Area June, 2010 Thence in a northerly direction for a distance of 15,840 feet, more or less, to the northwest section comer of Township 21South Section 23 Range!East; Thence in an easterly direction for a distance of 52,800 feet, more or less, to the northeast section corner of Township 21South Section 20 Range 3East; Thence in a southerly direction for a distance of 5,280 feet, more or less, to the northwest section comer of Township 21South Section 28 Range 3East; Thence in an easterly direction for a distance 21,120 feet, more or less, to the northeast section corner of Township 21 South Section 25 Range 3East to the place and point of beginning. NOTE: All City Limits and properties referenced in this Description are current as of June, Page4of4

62 - 1 - NATURAL GAS SERVICE AGREEMENT BETWEEN RIO GRANDE NATURAL GAS ASSOCIATION AND F&ADAIRY October 1997 TABLE OF CONTENTS PAGE SECTION 1. DEFINITIONS... 2 SECTION 2. QUANTITIES... 3 SECTION 3. RA TES AND CHARGES... 3 SECTION 4. BILLING AND PAYMENT... 4 SECTION 5. TERM... 4 SECTION 6. QUALITY OF GAS... 4 SECTION 7. TERMS AND CHARACTER OF SERVICE... 4 SECTION 8. DELIVERY OF GAS... 5 SECTION 9. POINTS OF DELIVERY... 5 SECTION 10. METERING... 5 SECTION 11. FORCE MAJE URE... 5 SECTION 12. SUCCESSORS AND ASSIGNS... 6 SECTION 13. NOTICE... 6 SECTION 14. MISCELLANEOUS... 6 SECTION 15. SEVERABILITY... 7

63 - 2 - NATURAL GAS SERVICE AGREEMENT This Agreement is made and entered into this 1st day of October 1997, by and between the Rio Grande Natural Gas Association, a New Mexico corporation hereinafter referred to as Seller, and F & Dairy, a New Mexico corporation, hereinafter referred to as Buyer. WHEREAS, Seller owns and operates a gas utility system in and about the Mesilla Valley, New Mexico and its environs; WHEREAS, Buyer owns and operates a cheese manufacturing plant, which is located in the City of Las Cruces, New Mexico, which will receive natural gas supply from Seller; WHEREAS, Seller and Buyer wish to enter into a natural gas supply and service agreement that replaces all existing agreements; and supply; WHEREAS, Buyer desires for Seller to include its total natural gas requirements in Seller's total system WHEREAS, Buyer desires to pay a fixed price for its natural gas requirements; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto agree as follows: SECTION 1. DEFINITIONS Unless another definition is expressly stated, the following terms and abbreviations, when used in the Agreement and in all exhibits, recitals, and appendices related to this Agreement, are intended to and will mean as follows: 1.1 Day shall mean a period of twenty-four (24) consecutive hours (except for those days that are adjusted for Daylight Savings Time) beginning and ending at 8:00 a.m. Mountain Clock time. The date of the day shall be the date at 8:00 a.m. Mountain Clock time on which such twentyfour hour period begins. "Clock time" indicates that Seller's transporter will adjust its gas day to reflect changes for Daylight Savings Time. 1.2 Month shall mean a period of time beginning at 8:00 a.m. on the first day of a calendar month and ending at 8:00 a.m. on the first day of the next succeeding calendar month. 1.3 Year shall mean a period of twelve (12) consecutive months beginning at 8:00 a.m. on the first day of a calendar month. 1.4 Btu (British Thermal Unit) means the amount of heat required to raise the temperature of one (1) pound of water from fifty-nine degrees Fahrenheit (59 F) to sixty degrees Fahrenheit (60 F) at a constant pressure of fourteen and seventy-three hundredths pounds per square inch absolute (14.73 psia). Total Stu's shall be determined by multiplying the total volume of natural gas delivered times the gas heating value expressed in Stu's per cubic foot of gas adjusted on a dry basis. 1.5 Dth (Dekatherrn) shall mean a quantity of gas containing one million (1,000,000) British Thermal Units (Stu's).

64 SECTION 2. Gas or natural gas means any mixture of hydrocarbons or of hydrocarbons and noncombustible gases, in a gaseous state, consisting essentially of methane, including associated liquefiable hydrocarbons produced from gas wells, oil well gas produced in association with crude oil and synthetic or substitute natural gas. Cubic foot of gas shall mean the amount of gas filling a cubic foot of space when the gas is at an absolute pressure of pounds per square inch absolute and at sixty (60) degrees Fahrenheit. Mel shall mean one thousand (1,000) cubic feet. Ccf shall mean one hundred (100) cubic feet. Psia shall mean pounds per square inch absolute. Psig shall mean pounds per square inch gauge. Transporter shall mean El Paso Natural Gas Company, Seller's only interstate natural gas pipeline. QUANTITIES 2.1 Seller hereby agrees to sell and to deliver and Buyer hereby agrees to purchase and to receive Buyer's total natural gas requirements for use by Buyer in its Las Cruces facility. 2.2 Buyer's Maximum Daily Quantity (MDQ) shall be 700 MMBtu per day. Buyer may exceed its MDQ by 10% without notifying Seller. Buyer must request to exceed 110% of 700 MMBtu on a given day by notifying Seller. If Buyer's usage exceeds 110% of the MDQ multiplied by the days of the Month, such excess quantities shall be termed Overrun Quantities. Buyer shall pay the applicable overrun rate for such quantities as specified herein. 2.3 On any Day, Buyer may take less than the MDQ, provided that, in the event Buyer anticipates using less than 50% of 700 MMBtu per day for a period of three (3) Days or more, Buyer shall so notify Seller. In addition, Buyer shall provide no less than seven (7) days notice to Seller of Buyer's scheduled maintenance outages. 2.4 Seller will supply Buyer with quantities above the stated MDQ, but Seller also reserves the right to pass through to Buyer its proportionate share of additional natural gas and transportation charges, penalties or similar fees incurred as a direct result of Buyer's increased usage above the stated MDQ and paid by Seller to its natural gas suppliers and/or transporters. SECTION 3. RATES AND CHARGES 3.1 Except for Overrun Quantities, all Gas delivered and taken by Buyer under this Agreement in any month shall be billed and paid for at a rate of Seller's cost-of-service rate for Buyer plus EPNG transportation (which is currently $ per dekatherm) plus $2.147/dth cost-of-gas from October 1, 1997 to August 31, 2000 or plus $2.105/dth cost-of-gas from September 1, 2000 to August 31, 2002 plus mainline fuel assessment, which mainline fuel assessment may never exceed two and two-tenths percent (2.2%) of cost-of-gas. 3.2 Seller's cost-of-service rate for Buyer may be adjusted on an annual basis and is currently as follows: $0.55 per dth for 1" 18,000 dth/month Incentive rate of: $0.45 per dth for 18,001 to 22,500 dth/month $0.35 per dth for over 22,500 dth/month

65 For all Overrun Quantities, Buyer shall pay its proportionate share of additional natural gas and transportation charges, penalties or similar fees incurred as a direct result of Buyer's increased usage above the stated MDQ and paid by Seller to its natural gas suppliers and/or transporters. 3.4 In the event Buyer reduces its monthly purchases to a level below 50% of its MDQ multiplied by the days of the month during any month of the primary term of this agreement, Buyer shall pay Seller a monthly exit fee. The exit fee shall be a percentage of the firm interstate transportation purchased by Seller calculated as follows: 1 - (monthly usage/(365 x MDQ))) x 700 x 30 x Transporter's rate which may be a maximum of $7, SECTION 4. BILLING AND PAYMENT 4.1 Bills for service hereunder shall be paid at the office of the Seller in Las Cruces, New Mexico. Bills for service furnished during the preceding monthly billing period shall be processed and mailed to Buyer not later than the thirtieth (30th) day of each month. Bills for service hereunder shall be due and payable on or before the fifteenth (15th) day of the following month (or on the next full work day should the fifteenth (15th) day fall on a Saturday, Sunday, or City of Las Cruces holiday). Payments postmarked by the fifteenth (15th) will be recognized as meeting the due date. In the event payment of the current monthly bill (excluding any amounts as to which there is a bona fide dispute) is not received by Seller on or before the due date, Seller may discontinue delivery of natural gas hereunder upon ten (10) days notice to Buyer of its intention to do so, unless Seller receives payment before the end of such ten (10) day notice period. All amounts unpaid by the due date shall be subject to a five percent (5%) late payment penalty. SECTION 5. TERM 5.1 This agreement shall become effective upon execution, but the effective date shall be October 1, 1997, and shall remain in effect until August 31, This Agreement shall automatically renew for successive one (1) year terms unless either party shall notify the other of its intent not to renew at least sixty (60) days prior to the end of such term. SECTION 6. QUALITY OF GAS 6.1 The quality of natural gas delivered under this Agreement shall be natural gas of the quality and characteristics as received by Seller from Transporter with such odorants added as Seller deems necessary. SECTION?. TERMS AND CHARACTER OF SERVICE 7.1 The character of service rendered to Buyer by Seller shall be considered firm to the extent that firm transportation capacity and natural gas supply is available under Seller's firm transportation agreement with the Transporter and under its agreement with Seller's natural gas supplier(s). Seller shall use due diligence in maintaining gas service to Buyer. 7.2 It is mutually understood and agreed to by both parties that during periods of high demand upon Seller's system, emergency, or during construction or maintenance, at its sole option, without liability, Seller may require Buyer to reduce, suspend, or otherwise eliminate, in total or in part, Buyer's consumption of natural gas. Seller shall notify Buyers designated representative at least twenty-four (24) hours prior to service interruption, except in the event of an emergency interruption, in which case notice shall be given as soon as possible. Seller will use due diligence to eliminate the condition responsible for any such reduction, suspension or elimination of natural gas consumption. At such time as Seller determines that such condition requiring reduction, suspension or elimination of natural gas consumption no longer exists; Seller shall promptly notify Buyer that Buyer may resume its consumption of natural gas. Notice under this Section may be given orally if confirmed in writing by telecopier within forty-eight (48) hours. 7.3 Buyer shall consume all of the gas purchased hereunder for F & A Dairy-related purposes and shall not resell such gas.

66 -5- SECTION 8. DELIVERY OF GAS 8.1 All natural gas delivered shall be measured in 1,000 cubic foot units (Mcf) at standard conditions of fourteen and 73 one hundredth (14.73) pounds per square inch absolute base pressure, sixty (60) degrees Fahrenheit base temperature and six tenths (0.6) specific gravity. 8.2 Seller shall deliver gas at pressures according to the following: The Seller will maintain at the point of delivery into the F & A Dairy-owned distribution system a regulated service pressure within ten percent (10%) of the pressure requested by F & A Dairy. Seller shall not be required to maintain more than sixty (60) pounds per square inch gauge, unless prior mutual agreement is obtained. SECTION 9. POINTS OF DELIVERY 9.1 The point(s) of delivery shall be the outlet of the Seller's meter or regulator, whichever is farthest downstream, at the F & A Dairy Facility located at the West Mesa Industrial Park. SECTION 10. METERING 10.1 All meters installed by the Seller shall remain the Seller's property and shall be maintained by the Seller. Buyer shall provide sufficient space for the installation of such measurement equipment at locations mutually agreed upon by both parties. Buyer shall provide all easements necessary for the installation of facilities to provide services under the terms of this Agreement. The Buyer may, at its option and at its sole expense, install, maintain, and operate downstream from any delivery point metering equipment to check the quantity and quality of the natural gas delivered by Seller. The parties and their agents shall have free access to the premises for the purpose of reading meters, maintaining the equipment, and all activities related to providing services under the terms of this Contract. However, the Buyer and its agents shall at no time perform any act whatsoever upon Seller's equipment without Seller's express consent Any meter shall be accurate at the time of installation and the accuracy thereof may be verified by tests by the Seller at reasonable intervals thereafter or upon Buyer's request. Copies of all test results shall be forwarded by Seller to the Buyer. Before any tests shall be made, the Seller shall notify the Buyer of the date of testing and such tests shall be made in the presence of representatives of both parties, if so desired. Any corrections or adjustments of any meters found to be inaccurate shall be promptly made. The expense of any test requested by the Buyer shall be borne by the Buyer if the measurement equipment is found to be in error not more than two percent (2%) Buyer shall not be liable for any undercharges on bills paid more than six (6) months prior to any test of metering equipment Seller shall have the right to change its metering and regulating equipment from time to time for maintenance purposes and to install remote meter reading devices or other equipment Seller deems necessary for monitoring Buyer's delivery of natural gas. Buyer agrees to allow Seller the right to install electric power supply for electronic metering devices in close proximity to metering equipment, as Seller deems necessary. SECTION 11. FORCE MAJEURE In the event of either party hereto being rendered unable, wholly or in part, by force majeure to carry out its obligations under this Agreement, other than to make payments due hereunder, it is agreed that the obligations of such party, so far as they are affected by such force majeure, shall be suspended during the continuation of any inability so caused but for no longer period; and such cause shall as far as possible be remedied with all reasonable dispatch; provided, however, that no party hereto shall be required against its will to adjust any labor dispute. It is agreed that such party shall give notice and full particulars of such force majeure event in writing, telecopied to the other party as soon as reasonably possible after the occurrence of such event.

67 The term "force majeure" shall mean acts of God, strikes, lockouts, or other industrial disturbance, acts of the public enemy, wars, blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes, fires, storms, ftoods, washouts, arrests and restraints of governments and people, civil disturbances, explosion, breakage or accident to machinery or lines of pipe, the necessity for maintenance of or making repairs or alterations to machinery or lines of pipe, freezing of wells or lines of pipe, partial or entire failure of wells, curtailment, interruption or other unavailability of transportation, and any other causes, whether of the kind herein enumerated or otherwise, not within the control of the party claiming suspension and which by the exercise of due diligence such party is unable to prevent or overcome; such terms shall likewise include the inability of either party to acquire, or delays on the part of such party in acquiring at reasonable cost and by the exercise of reasonable diligence, servitudes, rights of way grants, permits, permissions, licenses, materials or supplies which are required to enable such party to fulfill its obligations hereunder. Notwithstanding anything to the contrary contained herein, force majeure shall also include internuption or cessation of deliveries of gas by third parties to Seller resulting solely from force majeure events. SECTION 12. SUCCESSORS AND ASSIGNS 12.1 This Agreement shall be binding on, and inure to, the successors and assigns of Seller and Buyer, provided that the other party agree in writing to the assignment, which written approval shall not be unreasonably withheld. SECTION 13. NOTICE 13.1 Any notice, demand or request required or authorized under this Agreement shall be deemed properly given to or served on Seller if in writing and mailed to: Mr. Tom Bullard Gas Director Las Cruces P. 0. Box Las Cruces, NM (505) Telephone (505) FAX (505) Hour Dispatch Any such notice, demand or request shall be deemed properly given to or served on Buyer if in writing and mailed to: Mr. Jeff Terranova F & A Dairy 355 S. Crawford Blvd. Las Cruces, NM Each party shall have the right to change the name of the person to whom or the location to which the notices are to be given or served by notifying the other party, in writing, of such change. SECTION 14. MISCELLANEOUS 14.1 The terms, covenants and conditions herein contained constitute the entire agreement between the parties and shall supersede all previous communications, representations, or agreement, either oral or written, between the parties hereto with respect to the subject matter hereof. The laws of the State of New Mexico shall govern all respective rights and obligations of the parties. The captions in this Agreement are for convenience of reference only, are not an integral part of this Agreement, and are not to be considered in the interpretation of any part hereof.

68 -7- SECTION 15. SEVERABILITY 15.1 Should any provision or provisions of this Agreement be declared void or illegal by any court of competent jurisdiction, then such void or illegal provision or provisions shall be severed from this Agreement, and all other provisions hereof shall remain in full force and effect. written. IN WITNESS WHEREOF, the undersigned parties hereto execute this Agreement on the day and year first above F &ADAIRY RIO GRANDE NATURAL GAS ASSOCIATION

69 RESOLUTION NO. RG A RESOLUTION AUTHORIZING F&A DAIRY PRODUCTS, INC. TO HEDGE ITS GAS LOAD DEMAND The Rio Grande Natural Gas Association Board of Directors ("Board") is informed that: WHEREAS, Rio Grande Natural Gas Association ("RGNGA") desires to allow F&A Dairy to hedge its gas load demand; WHEREAS, F&A Dairy may elect to accept a fixed price as quoted by Coral Energy Services for a specific quantity of gas, for a specific term based on its own internal analysis; WHEREAS, F&A Dairy will timely communicate its desire to execute the transaction to staff on behalf of RGNGA; and WHEREAS, F&A Dairy and staff on behalf of RGNGA will execute a Memorandum of Understanding in accordance with this Resolution. NOW, THEREFORE, be it resolved by the governing body of RGNGA: (I) THAT RGNGA will allow F&A Dairy to hedge its gas load demand as set forth above. (II) THAT City staff, on behalf of the Board, is hereby authorized to do all deeds necessary in the accomplishment of the hereinabove.

70 Resolution No Page 2 DONE AND APPROVED this 29th day of October Rio Grande Natural Gas Association ATTEST: Ben A Holstein, President Secretary Moved by: M_r_._z_a_ld_o Seconded by:_~m=r~ ~A=d=am=.s~---- VOTE: Byron Adams: Dave Sment: Lee S. Cotter: Thomas R. Halsell: Ben A Holstein: Bruno Zaida: ~A=Y=E~-- AYE AYE -~ AYE AYE -=~-- AYE -----

71 . ',,. :.. i ~"' :..~.; '. CONTRACT NO. DA ENG (NASA) - 26 DEPARTMENT OF THE ARMY., 'i!! I; I t i. i I I ; j I JI J j. i 1 : I ~ I 1 I i I 11 I '. I I.1 I i l j NASA Propulsion System Development Facility (Premi ses t o be s e r ved) Rio Gr ande Gas Company (Contractor) NEGOTI ATED GAS SERVICE CONTRJ\CT Organ (City) Premises are : (X) Government O~ned ( ) Governme nt Leased "Dona Ana (County) P. O, Box 408 Las Cruces, New Mexlco (Contractor' s Address) Symbol No. of Lease Name o f Lessor Estimated annual Cost hereunder $42, Connection ch a r ge $64, Connection Charge will b e paid by: New Mexico (St ate ) None None Finance & Accounting Officer at u. s. Army Engineer Di s t rict, Albuquerque, P. O. Box 1538, lubuquerque, New Mexico, from the following appropriat'ion: 21X P67ll - 32 S OR Recurring b i lls will be rendered to and pa i d by r National Aeronautics and Space Admini stration, P. o. Drawer D, White Sands Mi s sile Range, New Mexico. This negotiated contract is made pursuant to the provisiono of 10, u.s.c. 2304(a) (l0), This contract is assi gned a priority r ating of mc-c-2 certified for Nationa l defense under De fense Materials System R~ gu lation No. l. It is mandat ory that t he rating be sho~m on all subcontracts and pur chase orders fc- - - L--:.,., c: ;ind e quipment that wiu ~ a part 'Cf t his ( PLEA3E RE:'J'URf'J 1'HIS FULLY. EXECUTED CONTRACT TO THE ~ ~ ALBUQU RQUE DISTRICT, for I AW c. J. TRANSMITTAL TO THE CONTRllCT1LL /! llljl.l~s <Gf:fifuu:. ' EXHIBIT "A" /, :-1 ~-,. 4 t..;;_

72 ,.. DEPARTMENT OF Till.: ARMY NEGOTIATED GAS SERVICE CONTRACT \ r CONTRACT NO. DA ENG (Nl\SA) /HIS. CON'I AACT, entered i nto as of 1 8 OCT 1963 by and between the UNITED STATES OP AMERICA, hereinaft er called the Government, represented by the Contracting Officer executing this contract, and the Rio Gra nde Gas Compan~1, a Corporation organized and existing under the laws of the State of New Mexico, whose address is P. 0. Box 408, Las Cruces, Ne"'' Mexico, hereinafter callep the Contractor, WI TNESSETH That the parties hereto do mutually agree as foll ows : l. SCOPE AND TERM OF CONTRACT. (a) Subje1-:t to the terms and conditi ons hereinafter set forth, t he Contractor shall sell a nd deliv'er to t he Government and the Government shall purchase and receive from the Contractor gas service (hen1inafter called service) requested by the Government from the Cpntractor at the premises to be served hereunder (hereinafter called the service l~cat~on), all in accordance with Gas SP.rvice Specifications attached here t o and made a part hereof. {b) This contract shall continue in effect until terminated at the option of the Government by t he giving of not l ess than thirty (30) days advance written notice of the effective date of termination. (c} (i) For and in consideration of the faithful performance of t he stipulations of this contract, the Contractor shall be paid by the designated disbursing office or officer for service herein contracted for, at the rates and under the terms and conditions herein set forth ; provi ded, that the Government shall be liable for the minimum monthly charge specified in this contract corrunencing with the billing period in which service is initially furnished thereto and continuing until t;his contract is terminated, except that the minimum monthly charge speci fied in this contract shall be equitably prorated for the billing per'iod i n which commencement and termi nation of this contract shall become effective. (ii) The Contractor hereby declares that said rates are not i n excess of t he lowest rates" no1.:1 available to any prospective customer under like conditions of service, and agrees that during the life of this contr act the Government shall continue to b e billed at the lowest available rate for similar conditions of service... I! ' DA Fo rm R

73 .. n., (Hi)' neeognition io yiven to tho J:act thnt tl10 Govornm:mt fiacal year ona ol on 30 Juno; ' P a.~nto horounder ohall bo contingent upon the availnbillty of oppropriationo tho~oror. And uhall not bs made in ndvanco of oervico r~ndoreu. ' { (iv) All bill.a for cervico oliall ha paid \'ii'tho'u.t penalty or inte.rost. and tho Government ohall bo 011t.ltl l-d fto nny discountn customarily applicable to payment of billo by all cuatoli\gro of tho Contractor. I (v) Invoicoo for e~rvico rendered hereunder nhnll contain atatcrnento of tho moter readings at t.110 beginni.ng of tlw billir.9 {>'2riod, llleter con.stnnt:a, conoumption during tlw1 billing poi:i od, a.nd aucl& otllor pertinent de.to no ohall bo rc:quirod by tl1e Govornmsnt. 2. TECHNIC1\L J?:ROVISIOWJ. ( a ) l1caanr;on3en!t of. O~t'Vi.9. 1 ('.) All aervice furnished by tho Cont~actor ohall b~ mcnnuroa by suittililo ~torin9 equipment of standard manufnctu~e. to be futni6hed, inutnllod, maintained, calibrated, and read by tile Contractor nt ito oxpenso. When ir.oro than n single motor i r> i.nat«uod nt tha oervico location, tho rcadingn thereof ah«u. J.:ic billed conjunctively. In th<:i event My tnetor fllile to l"egiator. ox: roglator.o incorrectly th» aorvicg furniohcd thorethr.ough, tile pnrtiao ohull. ngrco upon th0 l ccmgth of poriod during vhich auc:h meter failed t 1.> regiotor or regintorea incorroctly and the qunntity of aerviee dolivorcd thorathrough during ouch poriod nnd, upon ngreemcnt, un nppx'oprlato adjustment bar.acl theroon olrnll be made :ln the Gove.rnment o billo. J.l'ox tho purpose of tho p:r.eceding sentence, nny u'letcr which 1 ogiotor 1 not mozo than two (2) porcent slow or fnst ohnll ho deemed correct. (ii) Tho Contractor. eo fnr ns poooj.hlo. shnll rend nll matoru nt pedodic intervalo of approximately thirty (30} ddyo. hl! bilu.ng.o baaed on mater readinga of leoo than twonty-acven (27) daya or moro than thirty-two (32) dayo ohnll bo prorated accord!n9ly. (b } Netcr Tcn.t. The Contrnctoi:, at ito expano0. ahall poriodically inopcct and toot th'3 matoro inatallod by 1.t a t intervnlo not e~weo<ung ona (1) yoar. J\.t the '<lritten x-oql.leat of tho Cont!'acting Officer tho Contr<:1cto~ ohall mako ndditiomil t eoto of ;my or ull of ouch moter!j in tho pxosonco of GovG:mmont rop~ooontative o. Tho cont of auch ~ddition~ l tcoto ohall bo borne by tl1e covox-nmt?nt. 1 tho pqrcon\;o~o 01: orror! a found to. l>o nqt ITIQra thnn t wo (2) p~r.a<m t P!.~"' '1 e r: gun~. ~lo li"~toi: olu.\u P.i;i J?l.ncwt;\ J.n o li\:.ov!qo oi:: nlj.qwqd ~10 ~omt\in ~n ~1o~l.\.!o ~-m~.ah ~\ I.IP M ei:'1:0~ t.n t"cgintr,t>'i:!on ~.n <;i~~coo" of t.wo ( ~ ) pt1,<:c 0a~ U()~o~:< pox1n~ 1 opc;:utip.g con<'.!itiong. PA llorrn 1229-n. 2 ;,.. h

74 I. (c) gim.q_j,n... Y.9.~.h.i.-m.~S:.M~ iv.,nconat.blo oot:io<!l ohoill,. CG for ao poooiblc, b0 9ivon by th<4 contt ocu.ng Officoi' to tlio Ct>tl... triictor roopoctin<j any matarial clulllsoa propoo<xi in tho wlw:a or obbrnctgr!ntica ot tha utility oorvico :-oquircd nt Qacl.l loaut!on.(6)-oont!nuj.s.y...q.f~ ~od conmmptj (i} 'lh~ ControctOJL' ohnll uco ronoonablo dili90nca to provido n ra ~ula r. cupply of oa~!oo nt tho oervico locntlon, but ahall not ba U.ahla end u.ninto~xuvted for.l'lamzl'ifoo, breach of contrnct or. oth0:n.,.!no t.o tlw oovornu:ont fo&" fniluro, c:uoponaion, dimunition or other vuri1ationa of oa7:vico oacnoionecl by or in con~cquono~ of cny c~uoo boyond tho control e~ t:ho Cont1l'nct.or. including but not lira!tcd to ncto of Ced o:i.: of ~lla. pubu.o GUOl'.i\l' f!ree, ~loodu, ci'lrthquukc:io or other cnt.dotrophco, - ~... otdkoa, or fniluro or brcnk~own or trnncmia.nion or othor facil!t:.!oar pxovidoti, thot \then any ouch foiluj:"e, ouupotl.aion, d!mun!tion, OR" varilltion oi eervico chall ng9rogato moro thnn t4ln (10) l1our o 4uring any billin9 pericxl horau.ndar, D.n oquiteblo ad ju~ ~nt oh~ll b3 mndo in tho u:.ontl1ly siatoo epc=if!co in th!a contract (incl~~ tho min~ monthly chargo). J; (ii) In the ovent tho Go\.-ernm~n~ io tm!lhlo to oporotn tho DGirv!co locotion.lo t1holo or in p.:irt for nny cauoo boyond!~o control,!ncluain11 but not limit0a to &oct.13 otr Ood Ol> of tho pu!'>u.a onomy, firoo, i'!looda, enrthc,j\1altoo, or othor cnt.ootrophoe, or ot:r!hco, n~ cqu!tru,10 odjuotment ehlll! beil ma.do in tl10 1aonthly 17<.l'o:.oo opoc!ficil in thio contract (includin9 tho minimum r.iontbly chnrgo)!s! tll..o p~r!ou during t.ihich tho Govornmsnt ia urulblo to opornte ou~h oaxvioo location in ~holo Qr in pnrt ohnll e~coc~ fiftoon (ls) (l;;iyo du~!n9 any bill!n~ pori.o<l horcundor. 3 M'imO filid CilAUGISS. (a) For nll CHin.-V!cCl t'urn1o1io~ urtdo&' th!o contract ~o tha ocn:vi.co location tho Govot7W.~nt. ahnl! p'i:ly tho Con<> 11 trnctolt at tho rato ochsdulo, id~ntified oo BxM.bi t 0, ot~och~ contrnct. horoto ona ~do u p~ of thi~ (b) Yo.r purponoo of cl\<lrgeo under. piuoui;-dpll (o) of th!o olouoo, nny Clor.andrJ duo to f aulty opernt!on of, or o"cooo!vo OX' f:!ucttiat!ng proosurq on, th::> Contr.ao~or'o o:yntol.l oh~u. n'l:i~ b@ AJ1c;lut1od QO [>art Of tho Oovornm<int r a clornzind

75 r~uired to furnioh oorvlce hereunder to nnd measure cuch sorvico as of tho poi nt of clolivory r;pccified in the Servico SpeciHcnt i ons. Titlo to all such fncilitiea nhall be and roma.in in tho Contractor, l.md tho contractor ohall ~ responaibl~ f<:>r al.l lomo of. or dilim'lgo to auch facilities. (b) The Government hereby grants to tha Contraictor, froo ot any renta l or similar charge, but subject to the limitntiono opocifiod in this contract, n revocablo permit to OJntor th~ eorviao l oc11tion for any props"?\ purpose under this contractc.. including uoo of the aito or siteo ngrood upon by tha partics ho.roto for tho!nstallntion, oporation, and maintenance of tho fac.uitioo of tho Contractor required to bo located upon Goverruoont prem!oea, t\ll of which facilltico ohall be and r emnin the solo property or. tl10 Con tractor nnd chnll, at 1111 timeo during the lifu of thia contruct, be opa.ratcd nnd roaintalnod by the Contr<ictor nt l tcj cxpennc 1 nnt'.l o.11 taxaa and other charges in connccl:.j.on therc...,ilth, togethor with all liabilij:y arising out of tho nogligence of tlia C:Ontrnctor in the construc;tion. operation, or maintananco of,such fa.cilitico shall ho assumed by tho Contrnctor. Authorized rapresentatives of the Contractor will be allowccl acce~a to the facilitiea of tho Contractor nt auitablo tunes to perform tho r;)blig<itiono of tho Contractor ~ith reopect to such facilitieo. Such faciliticn eho!l bo removed nnd Goverru:icnl:. preroines rei>tored to thcii:- od.gi.nrll con.,. cutiona by tho Contractor at its oxponso within a rcae;onablo tirilo after the Govornmcnt shall ravoko tho pormtt heroin gr.cjntcd and in ony event within a reaoonabl6 time after tgrroinntion of thir~ contract, provided that in tho event of termination tlue to fault of the Contractor such facilltico may b~ retained in plnco at tho op tion of tho Covernmont until service comptu::able to thnt provi<lcd for hereunder io obt:ainod else..,,.hero. It l s oxproosly underetood, 11owovar, that proper milltary or. Govornnlentnl authority may limit or restrict the r.i9ht of acceos heroin grnnted in any manner conni dercd by auch nuthor ceasary for tho nationnl oecudty. filtl) M.llfilATIONS CLliUSJ s. PUDLIC IlliGULATION t..tm CHIUIGB OF M'l'ES. (a) Rubl ~CJ.UlQ.t}.c;a.. Sorvice furnir.hed under this contract shall b0 aubjoct to rogu!n... tiona in the r.tnnner and to the extant prescribed by lm t by nny Fedex-al, Stat::o, or locnl re~!,l1atory corruo!oaion having jur!acl!ction. If durin9 the torm,::o'f this contract tho public rcgulntol.'y..."l,., coiruaia:;iion hnv~.ng jur4poiction rccoiven for file in outhorii:c!l manner r.ntoo that.,,. ns:e ' 11ighur or re tee that ai:e lo-,,.or than thu:jo \.. ntipuluted her.,,~n for luto c onctitiono of 6ervlco, tho Contracto>: n9reoe to coi': e nuc to furnish onrvico ll:.! etipulntcd j,n t:hia cont&-lloi: and tho Government agxcoa to poy for Guch O<H'."v.J.co l.lt U\Q hir;;jhcr Ci.: lower rnton fr.om and nftor tho Cllltu when oucp riltc.\ll ai::o ra~aii. offectivo.