8j. Memo

Natural Gas Supply for Airport and CNG Fleet

AGENDA MEMORANDUM                        Item No.          8j 
ACTION ITEM                            Date of Meeting    September 27, 2022 

DATE :     September 19, 2022 
TO:        Stephen P. Metruck, Executive Director 
FROM:    Keithly Espiritu, Aviation Facilities and Infrastructure Utility Analyst 
Keith Warner, Aviation Facilities and Infrastructure Utility Business Manager 
Keri Stephens, Director – Aviation Facilities and Capital Programs 
SUBJECT:  Natural Gas Supply for Airport and CNG Fleet 
Amount of this request:              $12,000,000 
Total estimated project cost:         $12,000,000 
Request Commission authorization for the Executive Director execute a contract for natural gas 
supply to the Seattle-Tacoma International Airport (SEA). 
SEA has two contracts for natural gas supply. One contract supplies local natural gas supply.
This action will reauthorize this contract before it expires on March 31, 2023, to maintain an
uninterrupted supply of fuel. The other contract supplies our renewable natural gas over ten
years and not the subject of this authorization. This local supply of natural gas is consistent with
the Port’s greenhouse gas (GHG) strategy and is utilized in concert with the Port’s use of
renewable natural gas to meet the Century Agenda goals.  The total amount of this request
reflects an increase from the current supply contract due to significantly higher wholesale
natural gas prices.  Gas is used at SEA to provide heat for the terminal, as well as provide fuel
for the Compressed Natural Gas (CNG) bus fleet. 
SEA must maintain a supply of natural gas to the  central mechanical plant  to maintain
consistent heating of the terminal and to the CNG fueling station to provide fuel for the bus
fleet. This supply contract is renewed every three to four years to optimize pricing in a
competitive market, while the Renewable Natural Gas (RNG) contract is a fixed price for ten
years due to its more limited and less dynamic market. 

Template revised January 10, 2019.

             COMMISSION AGENDA – Action Item No. 8j                                   Page 2 of 4 
Meeting Date: September 27, 2022 
The separate contract for RNG enables the Port to reduce the total GHG emissions from Port 
operations. This RNG contract accounts for 100% of the natural gas used at the CNG fueling 
station and approximately 50% of the natural gas associated with heating in the terminal. For 
this RNG contract to be effective, the Port must have a separate contract for a local natural gas 
supply which is the purpose of this Commission request. 
Diversity in Contracting 
Aviation Finance and Infrastructure will work closely with the Central Procurement Office and Diversity 
in Contracting  to  explore  opportunities  to  incorporate  Women Minority  business  component to
the bid which aligns with the Port’s goals 
The Port will engage in a competitive procurement to establish a four-year natural gas supply
contract spanning from April 2023 through March 2027. 
Forecasted usage for central mechanical plant natural gas fuel during this contract period is
projected to remain consistent with the current pattern and makes up the majority of SEA
natural gas usage. Fuel demands for the CNG bus fleet is expected to increase slightly as 
passenger volumes continue to grow.  In aggregate, the natural gas usage at SEA during this
contract period will remain within +/- 5% of historical usage. 
There are studies in-place which examine converting the source of central heating and bus fuel
to an all-electric supply, however those substantial infrastructure improvements would not be
in-place during this 2023-2027 contract period. Therefore, this natural gas supply is necessary
for ongoing operations until those electrification options are fully evaluated. 
A separate, but associated, contract for RNG is used to supply 50% of the terminal heating
demand and 100% of the CNG station demand through 2030. Since the source of the Port’s
RNG supply is in the Midwestern US, both the natural gas and RNG contracts are necessary and
are used to swap supplies. These two contracts work in tandem to provide SEA with the GHG
reductions and the local fuel supply for ongoing operations.
Natural gas prices have increased significantly in the past 18 months, nearly doubling. This is
due to tight supplies in the United States and Russia’s action to reduce the flow of fuel supply 
to Europe. 
Scope of Work 
The supplier will be required to provide full requirements for natural gas supplies to be
delivered at the City Gate delivery point. 

Template revised June 27, 2019 (Diversity in Contracting).

             COMMISSION AGENDA – Action Item No. 8j                                   Page 3 of 4 
Meeting Date: September 27, 2022 
Commission Approval                         September 27, 2022 
Bids/Proposal Due                              November 18, 2022 
Notice of Intent to Award                        December 2, 2022 
Agreement Execution                         December 23, 2022 
Alternative 1 – Do not execute a new contract for exclusive supply of natural gas to the Airport.
Obtain gas from the public utility, PSE, under a retail gas tariff.
Cost Implications: 
(1)   Execution of a contract is not required 
(1)   Subject to PSE’s published tariff rate which may change as required by PSE. 
(2)   Requires 30 days written notice to revert back to PSE as supplier. 
(3)   This strategy is not a cost-effective option as the PSE retail rate is significantly higher
than wholesale market price. 
(4)   Not aligned with RNG contract approach. 
This is not the recommended alternative. 
Alternative 2 – Execute a new contract for an exclusive natural gas supplier. 
Cost Implications: 
(1)   Provides the Port with the ability to obtain gas at a more competitive firm fixed price
(2)   Consistent with existing approach with RNG in support of the Century Agenda. 
(1)   A portion of the gas procured is tied to a monthly market price index, which varies
month to month 
(2)   Administrative effort will be required to renew the contract every four years. 
This is the recommended alternative. 

Template revised June 27, 2019 (Diversity in Contracting).

             COMMISSION AGENDA – Action Item No. 8j                                   Page 4 of 4 
Meeting Date: September 27, 2022 
Cost Estimate/Authorization Summary              Capital        Expense           Total 
Original estimate                                          $0     $12,000,000     $12,000,000 
Previous authorizations                                    0                0                0 
Current request for authorization                          0      12,000,000      12,000,000 
Total authorizations, including this request                  0      12,000,000      12,000,000 
Remaining amount to be authorized                    $0    $12,000,000    $12,000,000 
Annual Budget Status and Source of Funds 
The cost is included in the Aviation Facilities and Infrastructure operating budget request. 
Future Revenues and Expenses (Total cost of ownership) 
Contracts will be budgeted within Aviation Facilities and Infrastructure through the annual
Aviation Division budgeting process The expected annual expense for natural gas supply from
this contract is estimated at $3.0M annually. The term of this contract will be two (2) years,
with two (2) additional options to renew for one (1) year. 
September 24, 2019 – The Commission authorized for the Executive Director to approve the
action to execute a contract for natural gas supply to SEA. 

Template revised June 27, 2019 (Diversity in Contracting).


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