exv10w10



 






EXHIBIT
10.10




     u.s. Energy




ENERGY MANAGEMENT AGREEMENT

(Site Development and Operations)




The purpose of this Agreement is to set forth the understanding and agreement between
U.S. Energy Services, Inc. (“U.S. Energy”) and Red River Energy (“Client”) related to the
provision of energy management services.



PROJECT DESCRIPTION: Client is developing a 50 million gallon per year ethanol plant (“
Plant’) to be located in Eastern North Dakota or Western Minnesota. The Plant will have
approximately a 5 MW peak usage in electricity and will have a thermal/heat load of approximately
4,200 MMBtu. The fuel source for thermal/heat loads will be coal, natural gas or fuel oil.



U.S. ENERGY RESPONSIBILITIES: U.S. Energy will provide consulting and energy management
services for supplies of fuel (natural gas, coal or fuel oil) and electricity for the Plant.
These services will be provided during the construction of the Plant (“Construction Period”), and
after the Construction Period when the Plant has been placed in service (“Completion Date”). The
Completion Date shall be determined when the Plant begins producing ethanol. These services will
be provided to Client upon request:



A. Energy Infrastructure Advisory Services During the Construction Period




	1.	 	Provide an economic comparison of using natural gas, coal or fuel oil for each site
identified as a potential location for the plant.






	2.	 	Once a fuel source and site decision is made, U.S. Energy will solicit service
proposals from qualified suppliers, evaluate such proposals, and make recommendations
to the Board regarding supplier selections.






	3.	 	U.S. Energy will participate in final service agreement negotiations, then during the
construction period insure contract compliance.






	4.	 	Provide advisory services to Client regarding electric pricing and service
agreements.






	 	a.	 	Analyze the electric service proposals along with primary, secondary and
generation options and recommend an electric sourcing strategy and plan. The plan
may include a combination of electric supplier agreement and/or installation of
on-site generation.
	 
	 	b.	 	Negotiate final electric service agreements that meet the pricing and
reliability requirements of Client, including options for third party access to
electric metering.




 









 












	 	c.	 	Prepare and implement a regulatory strategy, if required and if an alternative power
supplier is selected. Any attorney fees required for the specific purpose of
obtaining regulatory approval for an alternative power supplier, if any, will be over
and above U.S. Energy’s monthly fee herein, and must be pre-approved by Client.






	5.	 	Evaluate the proposed electric distribution infrastructure (substation) for reliability,
future growth potential and determination of the division of ownership of facilities between
the utility and the Plant.






	6.	 	Investigate economic development rates, utility grants, equipment rebates and other
utility programs that may be available.





B. On-Going Energy Management Services Following the Completion Period



U.S. Energy will provide the following services at Client’s request:




	1.	 	Provide fuel information to minimize the cost of fuel purchased. This will include acquiring
multiple supply quotes and reporting to Client the various supply index and fixed prices.
U.S. Energy will not take title to Client fuel supplies, but will communicate supply prices
and potential buying strategies.
	 
	2.	 	Negotiate with coal mines, railroads, terminals, pipelines, utilities, other shippers, and
suppliers to provide transportation, balancing, and supply agreements that meet Client’s
performance criteria at the lowest possible cost.
	 
	3.	 	Develop and implement a price risk management plan that is consistent with Client’s
pricing objectives and risk profile.
	 
	4.	 	Provide daily nominations to the suppliers, pipeline, railroad, terminals and other
applicable shippers for fuel deliveries to the Plant. This will include daily electronic
confirmations to Client of all nominations and shipments and actual daily usage.
	 
	5.	 	Provide a consolidated monthly invoice to Client that reflects all applicable fuel and
electric energy costs. U.S. Energy will be responsible for reviewing, reconciling and
paying all shipper, supplier and utility invoices.
	 
	6.	 	Provide a monthly usage report of electric energy consumption and costs. Also, where
applicable and available from the utility, obtain monthly interval electric load data and
provide monthly load profile graphs.
	 
	7.	 	On-going review and renegotiation of electric service costs, as required. This may
include:






	 	a.	 	Completing and evaluating annual proposals to identify the most reliable
and economic third party electric energy supply.
	 
	 	b.	 	Identifying new service tariffs or opportunities to renegotiate the service
agreement to provide lower costs.





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	 	c.	 	Identifying on-site generation opportunities as market conditions change.
	 
	 	d.	 	Provide a monthly projection of energy (natural gas and electricity) and
annual summaries.






	8.	 	Provide fuel and electric energy operating budgets for the Plant.
	 
	9.	 	Perform initial sales tax exemption audits for energy consumption costs as required
and allowed by state tax laws.





TERM: The initial term of this Agreement shall commence on June 1, 2005 and continue until
six (6) months after the Plant’s Completion Date. The Agreement shall be month-to-month after the
initial term. This Agreement may be terminated by either party effective after the initial term
upon thirty (30) days prior written notice. Client shall remain responsible for payment and
performance associated with any and all transportation, supply, and storage transactions entered
into by U.S. Energy and authorized by Client, prior to termination.



FEES: U.S. Energy’s fee for services described above during the term of this Agreement
shall be $2,900 per month, plus pre-approved travel expenses. Client may defer payment on
the invoiced amounts until financing for the plant has been secured. Deferred invoice amounts
shall not bear interest. Plant financing shall be deemed to be secured at the time Client and its
project lender(s) actually execute and deliver all required documents for dosing the loans
necessary to finance the complete construction of the Client. In the event that plant financing is
not secured, this Agreement shall become null and void and both parties will be relieved of
professional and/or financial obligations due the other party. Payment of pre-approved travel
expenses shall not be deferred. If Client experiences significant delays in its project timeline
and it is necessary for U.S. Energy to delay work on Client’s energy management activities, U.S.
Energy will suspend its activities and suspend invoicing Client until U.S. Energy’s activities
resume.



U.S. Energy’s fee will increase 4% per year on the annual anniversary date of the
effective date of this Agreement.



BILLING AND PAYMENT: On the first of the month, U.S. Energy shall invoice Client for
appropriate energy costs from the previous month and for the U.S. Energy retainer for the
current month. Client shall pay U.S. Energy within ten (10) days of receipt of invoice.



TAXES: Client will be responsible for payment of all taxes including, but not limited to,
all sales, use, excise, BTU, heating value and other taxes associated with the purchase and/or
transport of natural gas or electricity and the provision of services hereunder.



CONFIDENTIALITY:  U.S. Energy shall not divulge to any other person or party any
information developed by U.S. Energy hereunder or revealed to U.S. Energy pursuant to this
Agreement, unless such information is (a) already in U.S. Energy’s possession and such information
is not known by U.S. Energy to be subject to another Confidentiality Agreement, or (b) is or
becomes generally available to the public other than as a result




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of an unauthorized disclosure by U.S. Energy, its officers, employees, directors, agents or
its advisors, or (c) becomes available to U.S. Energy on a non-confidential basis from a source
which is not known to be prohibited from disclosing such information to U.S. Energy by legal,
contractual or fiduciary obligation to the supplier, or (d) is required by U.S. Energy to be
disclosed by court order, or (e) is permitted by Client. All such information shall be and remain
the property of Client unless such information is subject to another Confidentiality Agreement,
and upon the termination of this Agreement, U.S. Energy shall return all such information upon
Client’s request. Notwithstanding anything to the contrary herein, U.S. Energy shall not disclose
any information which is in any way related to this Agreement or U.S. Energy’s services hereunder
without first discussing such proposed disclosure with Client.



INDEMNIFICATION:  U. S. Energy agrees to indemnify Client for and against all liabilities,
losses, damages, penalties, actions, judgments, costs, expenses or disbursements of any kind or
nature that may be imposed on, incurred by, or asserted against Client, in any way relating to or
arising out of Client’s execution, delivery or performance of this agreement or the consummation of
the transactions contemplated hereby to the extent that such liabilities, losses, etc. arise form
actions of U. S. Energy exceeding the scope of the agency provided in this agreement..



NOTICES: Any formal notice, request or demand which a party hereto may desire to give to
the other respecting this Agreement shall be in writing and shall be considered as duly delivered
as of the postmark date when mailed by ordinary, registered or certified mail by said party to the
addresses listed below. Either party may, from time-to-time, identify alternate addresses at which
they may receive notice during the term of this Agreement by providing written notice to the other
party of such alternate addresses.



	 	 	 	 	 
	Client:

	 	GOLD ENERGY, LLC	 	 
	 

	 	1183 6th Street South	 	 
	 

	 	Wahpeton, North Dakota 58075	 	 
	 
	 	 	 	 
	U.S. Energy:

	 	U.S. Energy Services, Inc.	 	 
	                    (Payment)

	 	c/o US Bank SDS 12-1449	 	 
	 

	 	Account #: 173100561153 P.O. Box 86	 	 
	 

	 	Minneapolis, MN 55486	 	 
	 
	 	 	 	 
	                    (Notices):

	 	U.S. Energy Services, Inc. 1000	 	 
	 

	 	Superior Blvd, Suite 201 Wayzata,	 	 
	 

	 	MN 55391	 	 
	 

	 	Attn: Contract Administration	 	 






ASSIGNMENT OR AMENDMENT: The Agreement may not be assigned or amended without the
written consent of U.S. Energy and Client.



APPLICABLE LAW: The Agreement shall be construed in accordance with the laws
of the State of Minnesota.



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ENTIRE AGREEMENT:  This Agreement constitutes the entire Agreement among the
parties pertaining to the subject matter hereof and supersedes all prior Agreements and
understanding pertaining hereto.



	 	 	 	 	 
	Agreed to and Accepted by:	 	 
	 
	 	 	 	 
	Gold Energy, LLC	 	 
	 
	 	 	 	 
	By:

	 	/s/ L. O Nesvig
 

	 	 
	 
	 	 	 	 
	Name:

	 	[Handwritten: L.O. Nesvig]	 	 
	(Print)
	 	 	 	 
	 
	 	 	 	 
	Title:

	 	[Handwritten: chairman]	 	 
	 
	 	 	 	 
	Date:

	 	[Handwritten: 5/26/05]	 	 
	 
	 	 	 	 
	U.S. Energy Services, Inc.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Todd D. Overgard
 

	 	 
	 
	 	 	 	 
	Name

	 	[Handwritten: Todd D. Overgard]	 	 
	(Print)
	 	 	 	 
	 
	 	 	 	 
	Title:

	 	[Handwritten: VP-Operations]	 	 
	 
	 	 	 	 
	Date:

	 	[Handwritten: 8/17/05]	 	 






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