Fuel Management

Town Of Oyster Bay Joins Nassau County’s Natural Gas Contract

March 23, 2012

OYSTER BAY, NY – The Town of Oyster Bay, N.Y., is the latest municipality to join Nassau County’s natural gas contract. The natural gas will be used to heat facilities and to power the Town’s sanitation fleet, according to a release from the County.

“It simply made sense for the Town to piggyback on the County’s agreement to get natural gas at a lower cost,” said Oyster Bay Town Supervisor John Venditto.

Oyster Bay estimates it will save 15-25% on its natural gas purchases, paying $.57 per thermal unit instead of between $.76 and $1.08 per thermal unit. Oyster Bay will now compress its own natural gas to fuel its sanitation fleet. The Town has been buying compressed natural gas (CNG) to power its sanitation fleet, but will now be able to buy its own natural gas at a lower price and convert it into CNG at its recently completed fueling station at the Department of Public Works. The Town received a $5,023,529 grant to construct a CNG fueling station and to convert 44 heavy-duty sanitation trucks to CNG.

Nassau County entered into a natural gas agreement with Hess Corporation in 2010 and has so far estimated savings of about $7 million since 2010. The drastic drop in natural gas prices continues to benefit Nassau and other entities that have “piggybacked” on the contract, as it was based on a cost basis contract that is fixed for five years at $.168 per thermal unit, enabling the County to buy the New York Mercantile Exchange (NYMEX) future rate each month, as it descends in price, according to the County.

This contract allows for the flexibility to lock in or trigger any or all of the users natural gas demand at no additional transaction expense. The savings was based on usage, which depends on the weather, and the fluctuating market rate due to storage capacity.

In addition to Oyster Bay, 10 of Nassau’s 56 school districts, along with Nassau Board of Cooperative Educational Services (BOCES) and one local library district have piggybacked on Nassau’s contract. Nassau County Executive Edward Mangano noted that he was disappointed more public agencies hadn't joined the contract.

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