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Home My WebLink About04-25-1994 Item #12• AN ? 5 IG04 APPROVED TO: Mayor & Members of the City Council FROM: Utilities Department • April 25th, 1994 CITY COUNCIL AGENDA ITEM NO. /a- e - 300.5" SUBJECT: AGREEMENT WITH WEST NEWPORT OIL COMPANY FOR WASTEWATER DISCHARGE FROM THE TIDELANDS OIL OPERATION IVawilu 3_19101NYAY[S]M 1. Approve a "Wastewater Discharge Agreement" for Wastewater Disposal from the City's Tidelands Oil Operation to West Newport Oil Company's facilities. 2. Authorize the Mayor and City Clerk to execute the Agreement with West Newport Oil Company. DISCUSSION: The County Sanitation Districts of Orange County ( CSDOC) directed the City to discontinue discharging wastewater into their facilities after a recent inspection of their trunk sewer system. CSDOC representatives found unacceptable levels of potentially explosive gases in their sewer mains and theorized that the City's waste stream from the tidelands oil operation was contributing to the problem. Without the ability to dispose of the water extracted with the oil from the well operations, the City cannot continue to produce oil or gas or operate the oil wells. Staff pursued several immediate wastewater disposal alternatives: 1. Cease oil operations, thereby eliminating all sewer discharges. 2. Develop a waste treatment system which would remove TTO compounds and allow re- connection to CSDOC's sewer system. 3. Develop a disposal system that will allow re- injection of the wastewater into the off strata it was produced from. 4. Locate a suitable alternate disposal method for wastewater with another entity. (Such as West Newport Oil Company.) The only solution which would allow the City to continue operating the tidelands off field was alternate no. 4 above. As such, staff pursued an interim arrangement to truck wastewater off -site to the West Newport Oil Company (WNOC). WNOC has an existing waste treatment and injection system that is used for secondary oil recovery operations. (3 ?) Page 2 Waste Water Discharge Agreement April 25. 1994 Because the tidelands oil field operation is currently a significant revenue generator for the City, staff determined that any option that would require a cessation of oil operations would be highly undesirable. Staff contacted WNOC about the feasibility of an arrangement for the City to dispose of its wastewater via their existing treatment and injection system. WNOC is currently accepting the City's waste discharge under an informal, temporary agreement, made between the respective staffs. WNOC agreed to accept the City's wastewater from the tidelands oil operations on an interim basis. WNOC has been hauling the City's wastewater by truck at a rate of $40 per hour and $0.10 per barrel. The City's wastewater discharge volume is approximately 1000 barrels (42,000 gallons) per day. Under this temporary arrangement the City is paying WNOC approximately $3,300 per week. For financial reasons it is important for the City to determine a more cost effective long -term solution. (Note: At current market prices, it is still economical for the City to operate the oil and gas wells. They generate approximately $12,000 per week in oil revenues and $1,700 per week in gas revenues.) City staff met and discussed terms for a longer -term agreement with representatives from WNOC. The proposed agreement, attached as Exhibit 'X, has been reached to address the issues. The principal terms of the proposed Agreement include: 1. WNOC will immediately construct approximately three thousand (3,000) linear feet of 3 -inch diameter pipeline from the City's tidelands oil facilities to WNOC's clarifier and injection facilities. 2. WNOC will be responsible for the maintenance of the 3 -inch pipeline from a point of connection adjacent to the City's facilities. 3. WNOC will continue accepting the City's wastewater discharge until December 1994. At that time, WNOC reserves the right to cancel the agreement. 4. City agrees to pay WNOC $0.10 per barrel of Wastewater discharged. 5. City agrees to pay an initial fee of five thousand dollars ($5,000.00) to off -set the capital and labor costs incurred by WNOC for installation of the 3 -inch waste discharge pipeline. 6. City agrees to reimburse WNOC at a rate of $40.00 per hour for temporarily trucking the wastewater between the City and the WNOC facility. Page 3 Waste Water Discharge Agreement April 25, 1994 Given that the current arrangement for waste disposal is temporary and the economics of discontinuing the tidelands oil operation, staff strongly recommends approval of the proposed agreement. Staff will continue to pursue the other long -term options available. (See Item Nos. 2, 3 & 4 on Page No. 1 of this report.) Staff is currently studying the feasibility of a secondary oil recovery/injection disposal system. Because this alternative involves a complicated study, it may be at least several months before another disposal method can be seriously pursued. In the interim, the proposed agreement will provide for continued oil and gas operations. Staff recommends its approval. ._.6- Srq,JEAaT Jeff Staneart, P.E. Utilities Director NUS: sdi Attachments: Wastewater Discharge Agreement