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HomeMy WebLinkAbout07/10/1995 Item #8BY THE CITY COUNCIL T u CITY OF NEWPORT BEACH Ai_ I U 1995 ppli July 10, 1995 CITY COUNCIL AGENDA ITEM NO. * 8 TO: Mayor & Members of the City Council FROM: Public Works Department SUBJECT: CONTRACT FOR OPERATIONS AND MAINTENANCE TIDELANDS OIL FIELD OPERATION FACILITIES RECOMMENDATIONS: 1. Approve contract renewal authorizing vendor to operate and maintain City -owned oil and gas production facilities. 2. Authorize the Mayor and the City Clerk to execute the contract on behalf of the City. DISCUSSION: At the present time the City owned facilities in West Newport are operated by the Sampson Oil Company of Long Beach. Their present contract with the City of Newport Beach expired on March 31St, 1993. Since that time the City has been paying for their services on a month to month basis, authorized by an annual services agreement. The amended agreement would provide for an increase in the monthly service fee from $4,300.00 to $4,800.00. This monthly service fee has not been adjusted since the original agreement dated March 26"', 1984. The City currently raises approximately $650,000.00 in revenue from the production and sale of oil and gas. Sampson Oil Company has provided an important role in maintaining and servicing the production facilities. Because of this success, it is highly recommended that this agreement be continued. The funds will be provided in the 1995-96 Budget from Account No. 5400-8080 and have been approved by the Public Works/Utilities Committee and the City Manager. Staff recommends approval of the contract renewal. Respectfully submitted, M chael J. Sinacori, P.E. (Acting) Utilities Manager Attachments: Exhibit "A": Agreement for Operating City Owned Oil Facilities, Nov. 1984 Exhibit "B": Modification of Agreement, Contract Number 2428, Nov. 1986 Exhibit "C": Modification of Agreement, Contract Number 2428, July, 1995 TD:mjs (.38) AGREEMENT FOR OPERATING CITY OWNED OIL FACILITIES IN WEST NEWPORT THIS AGREEMENT is made and entered into this day of March, 1984, by and between the CITY OF NEWPORT BEACH, a Charter City and Municipal Corporation, hereinafter "City," and SAMPSON OIL COMPANY, hereinafter "Operator." W I T N E S S E T H WHEREAS, City owns 16 tideland oil wells and related oil production facilities in West Newport, the location of which is reasonably and accurately depicted on Exhibit "A" attached hereto and incorporated herein; and WHEREAS, pursuant to Section 7058 et seq., of the California Public Resources Code, City expressed its intention to enter into an Oil Operating Agreement by inviting bids thereon pursuant to Resolution No. 83-127, adopted by the City Council on December 12, 1983; and WHEREAS, after review of bids submitted pursuant to require- ments of said Notice a copy of which is attached hereto as Exhibit "B", City found and determined that Operator presented the most favorable bid based upon application of the following criteria: 1. Professional qualifications; 2. Monthly service fee and hourly rates; 3. Capability of firm to accomplish the work in conformance with the requirements of the City of Newport Beach; 4. Specialized experience of the firm in the type of work required; 5. Past demonstration of performance similar to governmen- tal agencies or with private industry; and 6. Familiarity with geographical area of the project; and Exhibit "A" WHEREAS, on January 11, 1984, City accepted the bid proposal of Sampson Oil Company, a copy of which is attached hereto as Exhibit "C" and incorporated herein; NOW, THEREFORE, in consideration of the foregoing, the par- ties hereto agree as follows: 1. GENERAL (a) City engages Operator to perform professional ser- vices hereinafter described for the compensation hereinafter stated. (b) Operator agrees to perform said services upon the terms and conditions hereinafter set forth. 2. SCOPE OF WORK (a) Duties of Operator included in the monthly service fee include: (i) Performance of all work necessary to man- age, operate, produce, protect and main- tain City owned tideland wells, tank farm, pipelines and related oil production facilities in accordance with oil field practices. (ii) Respond to all emergencies and provide for personnel to safely and continuously oper- ate the oil facilities 24 hours per day, seven days per week. (iii) Provide full-time, qualified, pump opera- tor with field truck and pay all costs, direct and indirect, relating to the employment of the pumper and use of the truck. (iv) Provide City with detailed recommenda- tions, cost estimates and technical advice to improve production, maintenance and se- curity for all oil facilities. 2 (v) Maintain accurate, daily records of all production, treatment of oil, cut and tem- perature of oil, deliveries and field tes- ting on forms provided by City. (vi) Recommend, schedule, coordinate and in- spect the work performed by all oil field service contractors. (vii) Schedule, supervise and coordinate the transfer of all oil and gas sold and gauge and measure promptly the quantity of oil and gas produced, saved and shipped. (viii) Maintain detailed records and submit signed invoices for all material, equip- ment and services rembursable by City. (ix) Perform individual well tests at least every six months, indicating rate of production and quantities of oil, water and sand produced. (x) Furnish small hand tools required in nor- mal operations. (xi) Be responsible for, and pay all of, State and Federal income taxes on Operators' compensation and all transportation, administrative and overhead costs. 3. DUTIES OF CITY (a) Pay Operator a monthly service fee of $4,300 for operation and maintenance of City owned oil produc- tion facilities; (b) Pay Operator $50.00 per hour, not to exceed $400.00 per day, for providing City requested extra engineering work; (c) City to pay nothing to Operator for extra administrative and office work provided in response to City requests; 3 (d) Pay for all major repair and improvement work per- formed on oil wells and related production facili- ties by oil field service contractors and vendors; (e) Unless otherwise specified, pay for all utilities, chemicals, materials and supplies required to oper- ate and maintain oil wells and related production facilities; (f) Be responsible for the marketing of all oil and gas produced; (g) Obtain all operating permits; (h) Pay all property taxes on the production and mining of oil and gas. 4. SPECIAL PROVISIONS (a) Assignment No agreement or portion thereof may be assigned without the specific, written consent of City. (b) Authority of City City shall have final authority in all matters effecting work. (c) Term The term of this Operating Agreement shall be for a period of two years. (d) Cancellation The Operating Agreement may be cancelled at anytime by City without liability for damages when, in City's opinion, Operator is not complying in good faith. (e) Inspection All work and operations shall, at all times, be subject to inspection and approval by City. All materials and work shall be of the highest quality and shall be in accordance with good oil field and construction practices. 4 (f) Protection of Environment All oil production facilities are located in, and situated near, environmentally -sensitive wetland / habitats. Operator shall exercise every reasonable precaution to protect the wetlands, channels and bodies of water from pollution of any kind. (g) Safet The highest possible priority is to be placed on conducting a safe operation. The Operator shall comply with the Safety Orders of the State Division of Industrial Safety and all other applicable safety laws, ordinances and regulations. (h) Cooperation with Others Operator shall cooperate and take direction from City and its authorized representatives. City has a "non-exclusive" property right to operate and maintain its oil production facililties. Other oil companies and utilities have operating rights over the same area. Operator will be required to fully cooperate with others and to schedule and coordin- ate work so as not to interfere with the rights of others. (i) Use of City Personnel It is the policy of City not to use City personnel in connection with normal operations of oil fields, and every effort shall be made by Operator to accomplish the required work by using outside contractors and laborers. (j) Labor Operator shall comply with all applicable Federal, State and Local labor laws. 5 (k) Liability Insurance Operator shall furnish City with a policy or Certificate of Liability Insurance in which City is named as the insured, or as an additional insured. The coverage shall provide the following minimum limits: Bodily Injury: Property Damage: $250,000 each person $100,000 each occurrence $500,000 each occurrence $250,000 aggregate $500,000 aggregate products completed operations A combined single limit policy with aggregate limits in the amount of $1,000,000 will be considered equivalent to the required minimum limits. Insurance companies shall be assigned Policyholders' Rating B (or better) by the latest edition of Best's Key Rating Guide: Property Casualty. All liability insurance policies shall bear an endorsement or shall have attached a Rider which pro- vides that, in the event of expiration or proposed con- cellation of such policies, for any reason whatsoever, City shall be notified by Registered Mail, Return Re- ceipt Requested, giving a sufficient time before the date thereof to comply with any applicable law or statute but, in no event, less than 30 days before ex- piration or cancellation is effective. The cost of insurance shall be included in Operator's monthly ser- vice fee. 5. INDEMNIFICATION AND HOLD HARMLESS (a) Operator shall save, keep, hold harmless and defend City, its officers and agents from all claims, com- plaints, damages, costs or expenses in law or equity that may, at any time, arise or' be set up because of damages to property, or of personal injury received by 6 7 reason of, or in the course o, performing work which may be caused by any wilful or negligent act or omission by Operator, or any of Operator's employees or subcontractors. 6. WORKERS' COMPENSATION INSURANCE (a) Operator shall comply with Section 3800 of the Labor Code by securing, paying for and maintaining in full force and effect for the duration of this Agreement com- plete Workers' Compensation Insurance and shall furnish a Certificate of Insurance to City. City, its officers or employees, will not be responsible for any claims in law or equity occasioned by failure of Operator to com- ply with terms of this paragraph. (b) All Workers' Compensation insurance policies shall bear an endorsement, or shall have attached a Rider, which provides that in the event of expiration or proposed cancellation of such policies, for any reason whatso- ever, City shall be notified, by Registered Mail, not less that 30 days before expiration or cancellation is effective. The cost of this insurance shall be included in Operator's monthly service fee. 7. EXTRA WORK (a) When City determines that required work is not covered by the monthly service fee, it shall be classified as "extra work." If the price for extra work is not cover- ed in the Proposal Form and cannot be agreed upon, City will pay for extra work based on the accumulation of costs of labor, materials, tools and equipment, plus a 15% markup for all overhead and profit. Vendor's\, invoices shall be submitted with each request for pay- ment. Operator shall not proceed with any "extra work" unless and until cost estimates have been prepared and authorized by City. 7 8. AUTHORITY OF OTHER AGENCIES (a) All well heads and production facilities are located in the County of Orange, and the operation, at all times, will be subject to the rules and regulations of the County of Orange Environmental Management Agency. (b) All oil reservoirs are located in tidelands under the Pacific Ocean, and the operation, at all times, will be subject to the authority of the State Lands Commission of the State of California. IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT on the date first above written. CITY CITY OF NEWPORT BEACH By. L �1��� I VB/ % M a o r i rro Fe.m ATTE T: City Clerk APPROVED AS TO FORM: ity Attorney RDG/dt AGB/Oil OPERATOR SAMPSON OIL COMPANY By: 8 Renick Samidson MODIFICATION OF AGREEMENT NUMBER 2428 This Modification of the Agreement Number 2428, entered into this �� day of November, 1986 by and between the CITY OF NEWPORT BEACH, a municipal corporation (hereinafter "City") and i SAMPSON OIL COMPANY (hereinafter "Operator"), is made with reference to the following: IpPrITTAi.0 A. In March, 1984, Agreement Number 2428 was entered into by and between City and Operator (hereinafter "Agreement"). B. City and Operator desire to modify the Agreement on the terms and conditions set forth herein. NOW THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. Paragraph 4c of the Agreement is modified to read as follows: "(c) Term. The term of this Operating Agreement shall continue until March 31, 1991,unless terminated earlier as set forth herein." 2. Paragraph nine (9) of the Agreement is added to read as follows: 119. TERMINATION. Either party shall have the option, at its sole discretion and without cause, of terminating this Agreement by giving sixty (60) days' prior written notice to the other party. Upon termination of this Agreement, each party shall pay to the other party that portion of compensation specified in this Agreement that is earned and unpaid prior to the effective date of termination. 3. Except as expressly modified herein, all other terms and covenants set forth in the Agreement shall remain the same and shall be in full force and effect. Exhibit "B" L k-, IN WITNESS WHEREOF, the parties hereto have caused this cation of Agreement to be executed on the day and year above written. PROVED AS,.TO FORM: U ^l City Attorney CITY OF NEWPORT BEACH a mpn-i-opal corporation Mayo ATTEST: 1 l C y Clerk /V OPERATOR: SAiMPSON OIL COMPANY l"1 MODIFICATION OF AGREEMENT TIDELANDS OIL FIELD FACILITY OPERATIONS AND MAINTENANCE THIS MODIFICATION OF THE AGREEMENT NUMBER 2428, made and entered into this day of July, 1995 by and between the City of Newport Beach, a municipal corporation, hereinafter referred to as "City" and Sampson Oil Company, hereinafter referred to as "Operator". ZECITIOLS A. In November, 1986, Agreement Number 2428 was entered into by and between City and Operator (hereinafter "Agreement"). B. City and Operator desire to modify the Agreement on the terms and conditions set forth herein. NOW THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. Paragraph 3a of the Agreement is modified to read as follows: "(c) Duties of City. Pay Operator a monthly service fee of $4,800 for operation and maintenance of City owned oil production facilities." 2. Paragraph 4c of the Agreement is modified to read as follows: "(c) Term. The term of this Operating Agreement shall continue until June 30, 1998, unless terminated earlier as set forth herein. " Exhibit "C" IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the first date above written: APPROVED AS TO FORM: Robin Clausen Assistant City Attorney ATTEST: Wanda Raggio City Clerk City of Newport Beach, a municipal corporation John Hedges, Mayor "City" Sampson Oil Company Renick Sampson, owner "Operator"