The URL can be used to link to this page

Home My WebLink AboutColony Energy Partners - Letter Agreement in Relation to Biomethane Purchase and Sale Agreement Implementation I / 1I1iy J,�_ 00 April 1, 2019 t 3 rN - Letter Agreement By and Between Colony Energy Partners LLC (Colony) and City of Fresno (City) In Relation To Biomethane Purchase and Sale Agreement Implementation Based on recent discussions between Colony Energy Partners LLC (Colony) and the City of Fresno (City) (together "Parties"), the Parties have come to the following mutual understanding regarding certain matters relating to the Biomethane Purchase and Supply Agreement, dated as of January 22, 2018 (Agreement), including specifically: (i) the scope of the Agreement and the tasks therein (Project), and (ii) the implementation of such scope of and, in particular, moving the Project to the construction phase. The Parties enter into this letter agreement (Letter Agreement) to memorialize their agreement to advance the Project forward to completion and to amend and restate the Agreement. Notwithstanding entering into this Letter Agreement, the Parties each reserve their respective rights until such time as the Parties enter into a mutually agreed form of an amended and restated Agreement (Amended Agreement). Colony and the City hereby agreed to the following: 1. After several months of delays, the Parties agree to move forward and implement the Project. However, the historical digester gas (DG) volume the City provided to Colony for the basis of design and negotiation of the Agreement is significantly lower than the actual volumes currently produced. The City has stated that it is not prepared to (i) approve the Project's expanded scope Start-Up Repair Plan and (ii) make commensurate amendments to the Agreement proposed to the City in Colony's September 13, 2018, Memorandum (September Memorandum) proposed by Colony as a solution to address the issue and allow the City to benefit from making available 100% of the current DG volumes for sale to the renewable natural gas (RNG) transportation market. It is mutually understood that the City may, without any obligations to do so, revisit the proposed expanded scope of the September Memorandum after start of construction of the Project's initial scope designed to the historical DG volumes provided to Colony by the City of approximately 850 scfm. 2. Colony will implement the initial Project scope by taking delivery of DG volumes to the Gas Conditioning System (GCS) up to 850 standard cubic feet per minute (scfm), the amount of the historical volumes initially provided to Colony at the time the Agreement was finalized (see Exhibit F of the Agreement) and immediately advance the Project to start-up testing and construction upon the mutual understanding and agreement by the parties of the following items: A. The City has approved plans, contingent on the corrections provided for construction of the biomethane compressor and dispensing station. The station will have a single 200 hp compressor configuration with the capacity to process 500 scfm of product RNG from the GCS, which equals approximately 850 scfm of DG to the GCS inlet. The balance of DG volumes produced will be used first for the Thermal Oxidizer (TOX) April 1, 2019 supplemental heat firing, and then the City's Regional Wastewater Reclamation Facility (RWRF) boiler and flare, as determined by RWRF Staff. B_ The City confirmed it has settled a grievance filed by one of the City's labor organizations (Local 39) concerning Colony's operation of the City- owned GCS and has provided a copy of the settlement to Colony. C. Once this Letter Agreement has been finalized and executed by the Parties, Colony will undertake the amendment and restatement of the Agreement to reflect the impacts to the schedule and development costs because of the recent delays in advancing the Project to the construction phase. D. Once the Amended Agreement has been executed and has been approved by City Council, the Parties will schedule a meeting for the transfer of operations of the GCS. The City will provide Colony with all relevant information and reporting in its possession or able to be obtained from its engineers from previously-completed work, to enable transfer of operational control and responsibility of the GCS to Colony (see re- commission and handover checklist, attached here as Exhibit A). E. After handover and transfer of operational responsibilities of the GCS, Colony will conduct a start-up test to demonstrate the ability to operate the GCS as designed at a DG inlet rate up to 850 scfm, and identify any necessary repairs. F. The parties will allow up to four weeks to conduct the start-up test and prepare an assessment and Start-up Repair Plan. Once the parties agree to a Start-up Repair Plan, if necessary, Colony will then be able to proceed to construction of the biomethane compressor and dispensing station and design/install the required repairs to the GCS. G. The Date of First Delivery has not occurred by January 1, 2019, as anticipated in the initial Agreement, and Colony will provide an estimated Date of First Delivery of RNG at the time construction commences, which will be incorporated into the amendment to the Agreement. H. The Parties anticipate the RNG will be delivered to a storage facility for the initial six months of commercial operations of the Project prior to being sold to compressed natural gas (CNG) station customers. All RNG sold out of storage to CNG customers will qualify for transportation environmental credits once the Federal EPA and California Air Resource Board (CARB) has approved such applications. April 1, 2019 The Parties hereby acknowledge and agree to the foregoing to advance the Project. CITY OFF SNO, COLONY ENERGY PARTNERS, LLC A C liforn unicipal oration a ra re imi d Liabilit Company By, By: a Qua , y Manager Name: Dirk Ivor APPROVED AS TO FORM- Title: President DOUGLAS T. SLOAN City Attgr y . -- By: By manna Freem ate Name: Jake Terada Senior Deputy City Attorney Title: CFO ATTEST: YVONNE SPENCE, MMC CRM City Clerk �n n By: Deputy Mgr. MJft+,nC-k Addresses: 7/t;-111 CONSULTANT: City of Fresno Colony Energy Partners, LLC Attention: Michael Carbajal Attention: Kent Hawkins Director of Public Utilities Managing Partner 2600 Fresno Street, Room 4019 4940 Campus Drive, Suite C Fresno, CA 93721 Newport Beach, CA 92660 Phone: (559) 621-8610 Phone: 949-752-7120 Email: michael.carbajal@fresno.gov Email: kent@colonyenergypartners.com Attachments: 1. Exhibit A Ltd Restart/RCx FullReStart/RCx Final Turn Over Post Turnover DGCS Re-commission items/tasks Description COF/SCS CEP/Tt COF/SCS CEP/Tt COF/SCS CEP/Tt COF CEP/Tt Comments 1.0 Deferred Maint. Ideally these are done prior to the restart/RCx. 1.1 Calibrate all meters/analyzers Once completed this task Inspection of all belts,gauges,valves,safeties and 1.2 control panels and wiring Equipment,Filters&Oil levels 1.3 inspection and re-greased DG Inlet Chiller Heat Exchanger Condensate Pump Vilter compressor Air-DG cooler moisture separator H2S Removal Air Liq skid PSA Activated Carbon and Filter Membranes Activated Carbon Polishing TOX media change outs(CEP Colony to perform after 1.4 responsibility after handover) !turn over Sulfatreat Air Liq PSA media Air Liq skid activated carbon(pre- membrane) large polishing activated carbon (post membrane) 'These should be done prior to the restart/RCx. 2.0 Electrical&Safety 7Once completed this task Verify all electrical safety device 2.1 ESD functionality 2.2 Verify all safety devices :Should be done as part of 3.0 Gas Sample Tests each restart/RCx phase. beginning and end of full capacity test run Handover Report& Should be done as part of 4.0 Documentation leach restart/RCx phase. verification system ran Concluding Statement that re- for 48 hrs.functioning 4.1 commission was successful as designed Description of maintenance and repairs required to bring system to functional operations Ideally,these should be supplled early in the process. Once completed,this task should be considered 4.2 As built documents done. PFD and P&IDs Process Narrative Mass balance mechanical drawings electrical drawings control system documentation Process Hazard Analysis and HAZOP Study documentation Vendor Equipment O&M manuals 4.3 and drawings Chiller Vilter Compressor Air Liq Skid TOX O&M Records Up to 2016 shut 4.4 down operational logs Operational logs records need to look if there's any license turn over SCADA records access to plc Maintenance&Repairs Ideally these are done as O&M Record of 2018 Re- part of each restart/RCx 4.5 Commissioning phase. SCADA record installation tests, vendor tests,(existing Pressure Tests or if repairs done) calibration certificates pressure safety valve certifications cause&effect matrices Safety System Testing Records Verification of ESD Provide Control System administrative passwords Provide Control System software licenses Control System Network Information Operating/Preventativ e Maint Procedures/Maint O&M Documentation records Transition Meeting to discuss re- 5.0 commissioning discussion of punch list items performed and remaining verification that all of Final Handover(Turn Over)the items above have Meeting been completed Legend COF/SCS CEP Tt