HomeMy WebLinkAbout07 - Amendment to Agreement for the Delivery of Natural GasQ �EwPpRT
CITY OF
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z NEWPORT BEACH
<,FORN'P City Council Staff Report
July 28, 2020
Agenda Item No. 7
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Mark Vukojevic, Utilities Director - 949-644-3011,
mvukojevic@newportbeachca.gov
PREPARED BY: Joshua Rosenbaum, Senior Management Analyst,
jrosenbaum@newportbeachca.gov
PHONE: 949-644-3011
TITLE: Amendment No. Three to Agreement between the City of Newport
Beach and Hoag Hospital for the Delivery of Natural Gas
The Utilities Department oversees the West Newport oil fields and the excess natural gas
that is also produced. Hoag Hospital and the City have had an agreement since 1985 for
the delivery of this excess natural gas. Staff is requesting an amendment to the existing
Agreement to extend the term of the agreement for an additional two years.
RECOMMENDATION:
a) Determine this action is exempt from the California Environmental Quality Act (CEQA)
pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because
this action will not result in a physical change to the environment, directly or indirectly;
b) Approve Amendment No. Three to the Agreement with Hoag Memorial Hospital
Presbyterian for delivery of excess natural gas produced from the City -owned oil wells;
c) Authorize the City Manager to sign future amendments to this Agreement for
extensions up to five additional years; and
d) Authorize the Mayor and City Clerk to execute Amendment No. Three to this
Agreement.
FUNDING REQUIREMENTS:
The agreement continues to provide a cost effective manner to remove excess natural
gas.
DISCUSSION:
The City's oil field produces natural gas as a by-product of oil production. In 1985, the
City entered into an agreement with Hoag Hospital to take delivery of excess natural gas
to ensure the long-term operations of the oil fields. A City owned gas line connects the
oil well field to Hoag Hospital. Hoag hospital uses the natural gas at their cogeneration
facility to produce heat and electricity for the campus.
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Amendment No. Three to Agreement between the City of Newport Beach and
Hoag Hospital for the Delivery of Natural Gas
July 28, 2020
Page 2
Over the years, several continuation agreements and amendments have been approved
between Hoag and the City. The most current version of the agreement was entered on
August 1, 2007. City Council approved term extensions and administrative revisions on
April 22, 2008 (Amendment No. One) and on September 14, 2010 (Amendment No. Two).
Amendment Number Two expires August 1, 2020.
Staff recommends City Council approve Amendment No. Three of the Agreement, which
will extend the Agreement for two additional years. Delivery of the natural gas to Hoag
remains the most practical option and ensures that there is no disruption to the City's oil
production. Alternative uses for this excess natural gas may develop in the future and
staff will continue to investigate them. Staff also recommends that City Council authorize
the City Manager to sign future time -extension Amendments (up to five years through
2027) should the terms and conditions of the Agreement remain essentially the same.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
�lei IEel 10Les
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENT:
Attachment A — Amendment No. Three to Agreement with Hoag Hospital
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ATTACHMENT A
AMENDMENT NO. THREE TO
AGREEMENT BETWEEN THE CITY OF NEWPORT BEACH AND
HOAG MEMORIAL HOSPITAL PRESBYTERIAN FOR
THE DELIVERY OF NATURAL GAS
THIS AMENDMENT NO. THREE TO AGREEMENT ("Amendment No. Three") is
made and entered into as of this 28th day of July, 2020 ("Effective Date"), by and between
the CITY OF NEWPORT BEACH, a California municipal corporation and charter city
("City"), and HOAG MEMORIAL HOSPITAL PRESBYTERIAN, a California non-profit
public benefit corporation ("Hospital"), whose address is One Hoag Drive, P.O. Box 6100,
Newport Beach, California 92658, and is made with reference to the following:
RECITALS
A. City owns and operates oil and gas producing wells with appurtenant facilities and
delivery pipelines in the West Newport area of the City. City produces natural gas
as a by-product of these oil extraction activities, and cannot conduct oil extraction
without producing natural gas.
B. On August 1, 2007, City and Hospital entered into an Agreement in which the City
agreed to provide the natural gas produced by its oil extraction activities to the
Hospital at no cost, provided that the Hospital put the gas to use in its operations
(hereinafter referred to as the "Agreement").
C. On April 22, 2008, City and Hospital entered into Amendment No. One to extend
the term of the Agreement, until August 1, 2012.
D. On July 1, 2010, City and Hospital entered into Amendment No. Two to extend the
term of the Agreement, with automatic extensions, until August 1, 2020.
E. The parties desire to enter into this Amendment No. Three to extend the term of
the Agreement to August 1, 2022.
NOW, THEREFORE, it is mutually agreed by and between the undersigned parties
as follows:
1. TERM
Section 1 of the Agreement is amended in its entirety and replaced with the
following: "The term of this Agreement shall commence on the above written date, and
shall terminate on August 1, 2022, unless terminated earlier as set forth herein."
2. INTEGRATED CONTRACT
Except as expressly modified herein, all other provisions, terms, and covenants
set forth in the Agreement shall remain unchanged and shall be in full force and effect.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties have caused this Amendment No. Three to
be executed on the dates written below.
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Date:
By. ��~�•
,,,'.Aaron C. Harp Xw WA -lo
City Attorney
ATTEST:
Date:
IS
Leilani I. Brown
City Clerk
CITY OF NEWPORT BEACH,
a California municipal corporation
Date:
By:
Will O'Neill
Mayor
CONSULTANT: Hoag Memorial Hospital
Presbyterian, a California non-profit public
benefit corporation
Date:
By:
Robert Braithwaite
Chief Executive Officer
Date:
am
Miles Chang
Secretary
[END OF SIGNATURES]
Hoag Memorial Hospital Presbyterian Page 2
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