HomeMy WebLinkAbout14 - Amendment No. Two to PSA with Sampson Oil Company for Oil Well Management ServicesQ SEW Pp�T
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z NEWPORT BEACH
c�<,FORN'P City Council Staff Report
June 14, 2022
Agenda Item No. 14
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,
josenbaum@newportbeachca.gov
PHONE: 949- 644-3057
TITLE: Amendment No. Two to Professional Services Agreement with
Sampson Oil Company for Oil Well Management Services
ABSTRACT:
The City of Newport Beach's (City's) oil wells are managed and operated by a specialty
service contractor. The services include daily maintenance, repair and operation of the
City's oil wells and production tank facility; coordination of regulatory agency inspections
and compliance; purchasing of materials; and managing subcontractor repairs. The
current contract expires July 31, 2022, and the Utilities Department is requesting City
Council approval to amend the existing agreement with Sampson Oil Company.
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;
and
b) Approve Amendment No. Two to the Professional Services Agreement with Sampson
Oil Company for Oil Well Management Services, which extends the contract for one
additional year to July 31, 2023 and increases the total not -to -exceed contract amount
by $750,000, and authorize the Mayor and City Clerk to execute the Agreement.
DISCUSSION:
Sampson Oil Company (Sampson) has managed and operated the City's oil fields in West
Newport since the 1980s. The operations and services include daily maintenance, repair
and operation of the City's 15 oil wells, one injection well, a production tank facility and
pipelines. Sampson also coordinates regulatory agency inspections and compliance
reporting, purchases materials; and manages subcontractors that perform as -needed
repairs.
14-1
Amendment No. Two to Professional Services Agreement with Sampson Oil Company
for Oil Well Management Services
June 14, 2022
Page 2
The most current agreement with Sampson, which was approved after an RFP process
in 2017, expires July 31, 2022. With instability in the geopolitical and current oil market,
staff recommends extending the agreement with Sampson. Sampson has decades of
experience with the City and has the expertise and familiarity with the management and
operations of the City's oil fields. During this next year, staff will prepare a new request
for proposals to seek out operators.
For the amendment, Sampson's proposal to continue the routine management and
operations of the City wells is essentially unchanged except for an increase allocated for
higher insurance premiums. This includes all necessary time needed by Sampson's
administrative, maintenance, and office staff to maintain and operate the system annually.
Sampson's staff will perform minor repairs and larger repairs will be done by
subcontractors. The contract also includes allowances for the purchase of materials and
for unforeseen repairs performed by subcontractors. Additionally, the contract includes
allowances for expenses that are a part of the Capital Improvement Program, Project
20M14. This provides one-time capital funds to perform enhanced maintenance repairs
and investigations to maintain oil productivity with underperforming wells.
Staff recommends City Council approval of Amendment No. Two to the Professional
Services Agreement with Sampson Oil Company for Oil Well Management Services,
which extends the contract for one additional year to July 31, 2023, and increases the
total not -to -exceed contract amount by $750,000.
FISCAL IMPACT:
The proposed FY 2022-23 budget includes sufficient funding for this agreement. The
management services and maintenance/repairs are expensed from Oil and Gas
Tidelands Fund account 10090907. The enhanced maintenance and repairs funded by
Capital Improvement Project 20M14 will be appropriated from Tidelands Maintenance
Fund 10001. Oil production, although variable, remains a profitable operation and over
the last five years has provided over $2 million in net revenue for the Tidelands Fund.
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.
NOTICING:
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. Two to Professional Services Agreement
14-2
ATTACHMENT A
AMENDMENT NO. TWO TO
PROFESSIONAL SERVICES AGREEMENT
WITH SAMPSON OIL COMPANY, INC. FOR
OIL WELL MANAGEMENT SERVICES
THIS AMENDMENT NO. TWO TO PROFESSIONAL SERVICES AGREEMENT
("Amendment No. Two") is made and entered into as of this 14th day of June, 2022
("Effective Date"), by and between the CITY OF NEWPORT BEACH, a California
municipal corporation and charter city ("City"), and SAMPSON OIL COMPANY, INC., a
California corporation ("Consultant"), whose address is 301 Ultimo Avenue, Long
Beach, California 90814, and is made with reference to the following:
RECITALS
A. On July 11, 2017, City and Consultant entered into a Professional Services
Agreement ("Agreement") for oil well management services ("Project").
B. On July 12, 2020, City and Consultant entered into Amendment No. One to the
Agreement ("Amendment No. One") to reflect additional services not previously
included in the Agreement, extend the term of the Agreement, increase the total
compensation, update the City's Administration of the Agreement, and to update
insurance requirements.
C. The parties desire to enter into this Amendment No. Two to extend the term of
the Agreement to July 31, 2023, and to increase the total compensation
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 Effective Date, and shall
terminate on July 31, 2023, unless terminated earlier as set forth herein."
2. COMPENSATION TO CONSULTANT
Section 4.1 of the Agreement is amended in its entirety and replaced with the
following: "City shall pay Consultant for the Services on a time and expense not -to -
exceed basis in accordance with the provisions of this Section and the Schedule of
Billing Rates attached hereto as Exhibit B and incorporated herein by reference.
Consultant's compensation for all Work performed in accordance with this Agreement,
including all reimbursable items and subconsultant fees, shall not exceed Three Million
Five Hundred Forty One Thousand Nine Hundred Sixty Eight Dollars and 00/100
($3,541,968.00), without prior written authorization from City. No billing rate changes
shall be made during the term of this Agreement without the prior written approval of
City."
Sampson Oil Company, Inc. Page 1 14-3
The total amended compensation reflects Consultant's additional compensation
for additional Services to be performed in accordance with this Amendment No. Two,
including all reimbursable items and subconsultant fees, in an amount not to exceed
Seven Hundred Fifty Thousand Dollars and 00/100 ($750,000.00).
3. 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]
Sampson Oil Company, Inc. Page 2 14-4
IN WITNESS WHEREOF, the parties have caused this Amendment No. Two to
be executed on the dates written below.
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Date- 7'�
By:"�
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ATTEST:
Date:
la
Leilani I. Brown
City Clerk
CITY OF NEWPORT BEACH,
a California municipal corporation
Date:
By:
Kevin Muldoon
Mayor
CONSULTANT: Sampson Oil Company,
Inc., a California corporation
Date:
By:
Renick Sampson
Owner/President
Date:
By:
Pamela Picard
Secretary
[END OF SIGNATURES]
Sampson Oil Company, Inc. Page 3 14-5